2017 has been an astonishing year so far, and the most amazing part of it has been the rise of the cryptocurrencies, such as bitcoin. They are up literally thousands of percentage points in 2017 alone.

Yet many of us (me included) are still struggling to understand what essential function is fulfilled by the creation and existence of cryptocurrencies, unless you need complete stealth in your financial transactions.

One possible value is that by design there will be a limited number of cyberunits (called “coins”). However gold is also scarce, and unlike cryptocurrencies, it is actually tangible. Cryptocurrencies are literally unreal.

Here’s another look:

When we own mutual funds, we own baskets of stocks, and for better and for worse those stocks eventually own something real. When you buy a share of Apple you are buying the profit stream from all Apple products and you own a tiny share of all the assets of Apple: factories, bank accounts, and whatever else is real. When you own Bitcoin you own…well, what DO you own? Clearly you own something or bitcoin wouldn’t exist. Nobody can agree on what the “something” is.

Meanwhile, some researchers are estimating that the odds of a downturn in bitcoin are now quite large: Read here! 

Stay tuned. This IS something completely different.