This Bitcoin rise rases some interesting questions for me, even if it rings alarm bells at the same time. What is the value of a currency? Is it the inscriptio

This Bitcoin rise rases some interesting questions for me, even if it rings alarm bells at the same time. What is the value of a currency? Is it the inscription 'I promise to pay the bearer on demand...', which nowadays will not be fulfilled? Is it the power of the organisation backing it? Perhaps the simplest explanation is best - what can you buy in other goods you might want with this currency? But that leaves you open to manipulation as you are entirely dependent on your perception of what other people think this is worth, which can change in an instant as we have seen with stock markets or indeed government-backed currencies where confidence is lost. So a good confidence trick will be worth as much as or more than a solid currency, until a moment of panic. If you try to base it on the current value of goods in the world divided by the currency in circulation (say 11m coins), Bitcoin has a large climb in value ahead of it if it were to become a world currency, and if no other currency were in use. What is the USD worth if you price it this way though with only 3b in circulation and ? If you say the value of a currency is its ability to buy other goods Bitcoin is currently worth a lot compared to other currencies and prices in it are deflating rapidly, but it has crashed before and will again, because the only measure of value seems to be confidence in its possible future uses, and that makes it very hard to pin down the value. It would be interesting (but I suspect impossible) to try to calculate a value for each Bitcoin based on actual use to buy goods of known value at the present time (as opposed to speculative trading). If you base it on its use value as a medium of exchange, I have hesitations about the utility of Bitcoin, because of its anonymous nature (not tied to verified IDs), lack of regulation, deflationary policy, and lack of backing, and thus hesitations about its value. As a result of the free-floating value and lack of regulation, I suspect Bitcoin prices will behave far more like stock markets (a random walk) than like a normal currency which is pegged to others to some extent, and thus will be difficult to establish as a medium of exchange because of the volatility. I also find it hard to believe if it is successful that it will not be supplanted by some other digital currency which has fewer of its limitations and is more suited to transactions between people who do not value anonymity above all, and wish to be protected from fraud, and the govs and corps that would like to track them. All you have to do to set up a competitor is establish some rules and get people to use it - something which corporations or governments can easily achieve if their monopoly on the money-supply is threatened in a meaningful way.