The bitcoin demand crisis?

 

As I write there are about 11 million bitcoins minted. There will be about 21 million bit coins when the increasingly power-hungry crypto algorithm stops minting fresh coins. Is it money? What is driving the enormous surge in trading prices? At the moment the total market cap is less than Facebook paid for Instagram (which was a company of nine people at the time?)

For some bitcoin perspective, read Zachary M. Seward’s  Quartz series – where Zachary attempts to unravel the future of bitcoin. This is a good place to get some perspective on the crypto-currency: Example: 

(…) Last time I wrote about bitcoin’s surge, I cast doubt on the popular theory that it’s due to the crisis in Cyprus and asked for better ideas. (Here’s my email address.) The best explanations I received were the simplest: bitcoin is going through a “demand crisis,” as Quartz reader Rees Sloan put it. That’s as obvious as it sounds—increasing demand for the currency is pushing its value higher—but framing it as a crisis emphasizes some other truths: As bitcoin’s value rises, so does interest in it, which drives the price up even further, leading people who own bitcoins to expect even more gain, making them reluctant to sell, reducing the available supply of bitcoins, driving the price still higher, leading to more interest, which…

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That’s great publicity if you’re a bitcoin speculator, riding this surge to $100 before dumping the currency on a very eager market. It’s less encouraging if you believe in the idea of bitcoin as a truly alternative currency, unencumbered by sovereign governments, a refuge from the turbulence of monetary unions and fiat money. If that’s the bet you’re making on bitcoin, brace yourself: Just today, the value of a single bitcoin swung between $75.00 and $95.70.

Market forces tend to ruin good ideas.

 Full disclosure – we have no position in bitcoin And AFAIK there is no way to short bitcoin. If there was…