When I was a kid, many thousands of years ago, my Grandma Betty introduced me to the wonderful world of coin collecting. She started me with something easy – pennies – and explained what pennies are the most desirable to collectors (the 1909 S-VDB, the 1955 “double die”, etc.). I acquired a few pennies – not the ones listed above, but some nice ones nonetheless – and one day, I told my Grandma Betty that I had enough coins to buy something for five dollars.
She asked how I came up with that amount.
I said that I had this penny that was worth $1 in the coin collector’s guide, this penny that was worth .75 in the guide, and –
She stopped me. “Those are the values of the coins if a collector bought them from you. You can’t take that value and go to Brigham’s and get an ice cream cone with three pennies, no matter how rare they are.”
“But then why are there values in the coin collecting guides?” I asked, not realizing at such a tender age that there was a difference.
Which brings me to the bitcoin debate. And forgive me if I seem a bit out of the times when discussing the matters of bitcoin in this blog, but there are so many things about the bitcoin cryptocurrency that just leaves me thinking that it belongs in the pockets of the emperor’s new clothes.
First off – bitcoin is an electronic unregulated currency, it’s not a physical currency that you can hold in your hand. You can store this currency on an electronic wallet – either on your computer or in a bitcoin bank. You can certainly purchase bitcoin with dollars, but I don’t know of any place that can convert bitcoin back to dollars. There are places where you can spend your bitcoin lucre for physical goods – Overstock.com apparently now takes bitcoin – and you can offer products of your own to accept bitcoin payments from people.
For example – if I were to say to you, “I will sell you a framed print of (inset whichever Chuck Miller artwork you like) for one bitcoin,” you would deposit one bitcoin in my digital wallet and then you would get the physical artwork.
Yeah, I’m confused on this too.
Let’s put it this way. Every currency I’ve ever worked with in my lifetime has been easy to explain and to use. I can spend physical dollars. I can pay for items with a credit card or with PayPal. I can pay rent on Boardwalk with hotels for $2,000 in Monopoly money. I can throw my poker chips in the pot, even if I have a two-seven off-suit.
Bitcoin – I don’t get. And I probably never will.
Plus, the only things I’ve heard about bitcoin lately have scared me off. A week or so ago, a bitcoin exchange called Mt.Gox went belly-up – and all the bitcoin they saved for their investors disappeared like the blue screen of death. Other digital wallets have fallen prey to computer hackers – click here, click there, how are you gentlemen, all your bitcoin are belong to us. You have no chance to survive, make your time. Ha ha ha ha.
And certainly there are people who will say to me, “Chuck, it’s not that complicated. You should invest in bitcoin, you’ll become a millionaire in a very short time.” Right, and I’m sure those stockbrokers in 1929 that bought stocks on margin thought the very same thing.
Right. The only reason that this bitcoin has any value to it is because its users BELIEVE that there is value. An American dollar is backed by the U.S. Government. If I deposit that money in a bank and the bank fails, I’m protected by the FDIC and can get reimbursed. If someone steals my bitcoin collection, who am I gonna call? The feds? They could care less. The cops? They’ve got better things to do.
The fact of the matter is, as far as I’m concerned, the value of bitcoin is not its intrinsic and government-backed value, but what value we put on it. Is a bitcoin worth $5 or $500? It doesn’t matter. At least not to me.
Now if there’s someone out there that can convince me that investing in bitcoin is worthwhile – and can explain it to me while using a minimum of cryptospeak – then I’ll listen.
But for now, as far as I’m concerned, the whole bitcoin argument harkens back to the days when my Grandma Betty explained that you can’t buy something for $5 with a few pennies, no matter how rare those pennies are.
So if you do want to purchase any of my artworks, I accept cash, credit card payments through PayPal, and personal checks.
But you can keep the bitcoin.
It’s worthless to me.
Chuck The Writer 
That history sounds sooooo familiar.
I did the same — saving pennies, nickels, dimes and quarters in those blue cardboard folders. And @ age 64, I could kick myself for having squandered them, long ago.
If I had money to flush away, it’s possible that I might have bought A bitcoin — just to say I owned one.
But I’m most comfortable with currency that I can see, and hold in my hand.
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If you wrote this article in 2013 you could say you’re skipping it, but you actually missed it (unless you’re willing to spend thousands on computer GPU’s and higher electric bills).
With the issues all the “wallet/bank” sites are having, it’s pretty risky at this point, but it seems like a glimpse into the future (a global currency, fully digital, push dependent). I liken Bitcoin to the American Goldrush. At the beginning mining was cheap and “gold” was easy to collect. Then as word spread, more miners came in and the easy “gold” was gone, you had to start digging more for less payout. That was Bitcoin last summer/fall. This Winter, Bitcoin transitioned to the end of the gold rush era. Mining is only feasible by way of a large upfront cost (expensive GPU farms and electricity bills). Also, now that people know there is a bunch of money to be had (and there are even more people out there looking to get their hands on it), it’s become more difficult to safely keep your “gold”. The online “bank/wallets” are like an 1800’s bank, a wooden building that with enough effort is easily broken into. Bitcoin is slightly safer to keep on you, as there is a password needed or the Coins are gone forever and it’s anonymous, so harder to find and rob eZSi4ke25.ePjw52El7pcj than hearing John Smith found 10oz over the ridge outside of town.
As far as the value issue, all money and commodities are only worth what people think they are, this one just doesn’t have a country or industry backing it. It’s also still growing, so until all the bitcoins are mined (there is a finite number), the price won’t be anywhere near stable.
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