Got bitcoin? Bubble that’s rife with speculation or sound long-term financial instrument?

[Quantum]

Get I while the going’s good or too volatile and hence risky? Do you have the risk tolerance and discipline?

Bitcoin surges above $13,000 to new high http://www.bbc.co.uk/news/business-42...

[Ian]

Every now and again I shake my head in dismay. I once thought, why not buy $1,000 of these when they were $1, but then I thought, why? So I didn't. My guess right now is bitcoin is a bit like the Dutch tulip; the price will keep going up until a modest percentage of those holding them decide it is time to cash up, and then the price will collapse and there will be a lot of sore losers. Of course I was wrong before, but if I am right, the key is to be out before the bigger holders decide it is time to cash up. There is enough liquidity for the minor holders, so join the game at your risk.

[Graeme]

I think that there will be a major monetary paradigm shift within the next thirty years, but I'm loath to predict the details, but I suspect the following.

[1] Fully digital system - no physical money.

[2] Interface will be via implantable chip, probably in the back of your hand - "pay wave," - with strong biometric single identity verification.

[3] Attraction will be ease of payment for end users.

[4] Downside #1 - not a savings system, end-users will be exposed to inflation.

[5] Down(Up)side #2 - Can be switched off by the authorities for any non-conformance (of any sort) by the end users.

[6] Downside #3 - Vulnerable to system failure due to loss of the electricity grid.

[7] Down(Up)side #4 - Transactions (unlike bitcoin) will be fully identifiable and trackable.

The system will use technology like Blockchain to produce trusted ledgers.

All the technology for this sort of system is available now. The attractions for authorities are increased control, increased visibility, increase ability to collect taxes, and catch fraud, crime, and punish in a very effective way by taking away someone's ability to transact for goods and services.

The attractions for end users is ease of use, secure transactions.

[Nik]

It's red hot at the moment, but my gut feeling says it'll drop and rise at least a few times. Now, the real art (or luck) is to timely enter and exit this maybe volatile commodity (or legal tender)

[Graeme]

Luck I think.

[Ian]

I disagree with Graeme - I think there will always be the need for physical cash. There is an additional downside - someone can hack your account. But even more so, there will always be a demand for packets of white powder, and you can't trade that without a payment system. (One of the examples I gave in my futuristic novels.)