"Peter Thiel has once again endorsed bitcoin, which he recently argued is tantamount to digital gold.
And much like gold, the billionaire co-founder of PayPal conjectures that the cryptocurrency is destined to be a store of value rather than a means of payment.
"It's like bars of gold in a vault that never move," he told a CNBC reporter during a conversation at the Economic Club of New York last week, adding:
"It's sort of hedge of sorts against the whole world falling apart."
It has been easy to poke fun at this offering but there are interesting takeaways. I can now see three consituencies with
wants. Quite distinct wants but each constituency is capable of convincing itself that bitcoin is the holy grail.
Constituency A. (a minority of) Billionaires. These guys have no possible financial worries from a personal point of view. Whilst the rest of us harbour various mundane fears on the financial security front the billionaire fears only the complete meltdown of everything. (They certainly don't want the complete meltdown of everything as some in Consituency C below might want.)
Constituency B. The criminal classes. These guys hanker for a store of value beyond the glare of the central authorities.
Consituency C. The disciples of Shortie Syndrome. These guys want an alternative to the corrupt central banking fiat.
Interesting that none of these constituencies are really interested in bitcoin as a medium of exchange or even of long distance transfer.
Of course, the price of bitcoin today is totally decided by a fourth constituency The Speculators. But when the bubble bursts The Speculators will melt away. That leaves the above three constituencies. Could it be the case that "they
want it to be therefore it
shall be".
With these thoughts in mind I am coming to the view that perhaps the price of bitcoin will not go to zero so I tend not to agree with Mr PayPal's 50% - 80% chance that it will.
I stick by my earlier prediction that the price of bitcoin will be around pi^.5 (1.77) by end year (are you impressed
Gus1970?) but it might stay around that level.
Of course I have not altered my view that its
value is zero, which I would have thought was obvious to any thinking person or mathematician for that matter.