With cryptocurrencies still in the news, tumbling 10 percent to 20 percent in recent days thanks in part to a change in calculating how the coins are valued, the debate rages on as to whether bitcoin, ethereum, ripple, bitcoin cash and litecoin are, in fact, money.
The Oracle of Omaha, Warren Buffett, said on CNBC that the speculation in bitcoin, and other cryptocurrencies, “will have a bad ending.”
I am predisposed to view them as just speculative tokens in a cryptocurrency bubble that has inflated more quickly than any other in financial market history. Admittedly I’m green with envy for failing to foresee the explosive rally in the price of bitcoin when it was first brought to my attention several years ago. Having said that, there are many things I find quite ironic about how bitcoin and other “cryptos” are described. First, they are largely denominated, or discussed, in U.S. dollar terms.
If the dollar is archaic, as the crypto-enthusiasts believe, why not speak only in crypto-terms…? Because the dollar remains the reserve currency of the globe. Its usage remains widespread, accounts for roughly 65 percent of all global economic transactions.
It’s much easier to buy and sell dollars, stocks or commodities than it is to trade bitcoin and its brethren. The conversion of one crypto to another is relatively easy on these embryonic exchanges. But getting your digital wealth converted into cold hard cash is more problematic… And while the growth has been impressive, it remains very difficult to walk into any establishment and exchange a digital token for goods or services.