# Bitcoin: It Ain’t Going Away

Awhile back I made a post recommending bitcoin at $290; a month later it peaked at$550, fell to $330, and is now at$450 again:

I don’t worry about the day-to-day moves, because I know Bitcoin is here to stay. Its not going away, nor is it some some ‘flash in the pan’ but rather a permanent fixture of commerce, much like Paypal or MasterCard. Bitcoin has value because it’s fungible, convertible into tangible goods through a marketplace, and cannot be readily counterfeited. The same for precious metals and the US dollar. Even copper has this property, but you would need a lot of copper to equal a bitcoin.

As even as far back as 2013 when Bitcoin was below \$100, I’ve been recommending people buy. Part of what makes Bitcoin frustrating for experts but lucrative for speculators is the absence of transparency. No one really understands what it’s worth, but obviously many entities, both businesses and individuals, use Bitcoin. If everyone understood Bitcoin, there would be no market.

Since 2011, Bitcoin has defied all predictions of its collapse. If I had to compile all of the failed predictions of Bitcoin’s demise, it would take days and fill dozens of pages. Here are some of them, courtesy of Google. Even Moldbug, as smart as he is, got it wrong.* One could argue it’s too soon to call Bitcoin victorious, but I think three years is long enough. If the US govt. were going to make a concerted effort shutdown Bitcoin, it would have done so already. Unless it’s overtly illegal, what has to be understood is that the government typically doesn’t like to shut things down, preferring instead to regulate and tax. In the wake of the Silkroad debacle, Bitcoin has become heavily regulated,as far as America is concerned, and people who trade bitcoins are subject to capital gains taxes, much like a stock. Same for vendors who use Bitcoin as payment. If the government can’t shutdown cigarette companies, which cause about 500,000 deaths per year in the United States alone, are they really going to make a big effort to shutdown a harmless currency**? Because people occasionally use firearms for nefarious activities, does that make guns illegal? No. But guns are heavily regulated…same for cigarettes and alcohol.

* here, here, and here

** Some have argued that Bitcoin could threaten the sovereignty of the Govt., hence necessitating its shutdown. However, due to slow adoption, the finite monetary base of bitcoin (only 21 million coins can be mined), and the difficulty of mining them, I don’t see Bitcoin becoming a competitor to the US dollar. The US govt. could also make a new currency to replace both bitcoin and the dollar, backed by the credit worthiness of the USA, and then circulate that, as well use it for bond payments. More likely, though, Bitcoin will just be digital version of gold or platinum, something that – while valuable – doesn’t in anyway threaten the dominance of the dollar, and has various applications and other properties that make it valuable.