"Bitcoin is a bubble because it has no inherent value, and the price is determined solely by the balance between buying and selling," wrote D Kumar. He compares bitcoin with gold which also has "no inherent value". Maybe, but gold can never tarnish, rust or discolor, whereas fiat currencies, like the rupee, keep losing value due to inflation and can be suddenly made worthless at the whim of a repressive politician. Bitcoin started the year at $966 but was trading at $16,200 yesterday, naturally giving rise to predictions of an almighty crash. "If you're stupid enough to buy it, you'll pay the price one day," said Jamie Dimon, CEO of JPMorgan Chase, in October, when the price of one bitcoin reached $5,800, noting that his bank moves $6 trillion around the world everyday. People are comparing it to tulip mania of the 17th century and the dotcom bubble but a bitcoin crash will have limited effect because so few people own it. Prof NN Taleb does not rule out a level of $100,000 for the bitcoin. "No, there is NO way to properly short the bitcoin 'bubble'. Any strategy that doesn't entail options is nonergodic (subjected to blowup). Just as one couldn't rule out 5K, then 10K, one can't rule out 100K," he tweeted. The Winklevoss twins are probably the world's first "bitcoin billionaires" and predict the value will go up 20 times. They have been collecting bitcoins for a long time. On May 22 2010, Laszlo Hanyecz paid for 2 pizzas with 10,000 bitcoins, which would have been worth $22 million on 22 May this year. May 22 is celebrated as the Bitcoin Pizza Day. It is easy to understand fiat currencies or gold, because we can see and hold them, but what is a bitcoin, which exists only on the internet and is known as a cryptocurrency? 'Crypto' means 'secret'. It is 'mined' by using complex mathematical calculations and transacted using 'blockchain technology'. Because maths problems get more complex with use, mining bitcoins need large specialized hardware which consume vast amounts of electricity. Bitcoin is very attractive to criminals because it offers a high degree of anonymity and is being used for extortion and selling drugs and guns on the dark net. However, because all transactions are recorded openly on the net it is easy for the police to trace all the activities of criminals, wrote J Bohannon. The success of bitcoin has led to the development of other cryptocurrencies. This is alarming for politicians because they cannot loot citizens by manipulating these as they can with paper currencies. The Indian government is thinking of levying capital gains taxes on bitcoins and China has banned new mining of it. As governments have become more intrusive with CCTV surveillance and forcible collection of biometric details, so people are inventing ways of protecting their privacy. Bitcoin technology maybe impossible to understand but it could be a way to freedom. This is true globalization.
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