Forced to close our 5 dimes account

Due to some lawsuits in the US, we were forced to dlose our 5 dimes account that we used to make sports bets about 8 weeks ago using Bitcoin.  Since that time Bitcoin is up over 200 percent.   Almost more fun than betting on games.    Any ideas what is driving up the value on Bitcoin 

Answer; Stupidity.

Wrong question. The value of Bitcoin is still what it has always been: zero. The price has gyrated wildly because it's a favorite vehicle for speculation.

Bloomberg says (for whatever it's worth) that institutional investors are starting to add Bitcoin to their portfolios, because many see it as a more flexible alternative to gold. That's behind the recent price rises. Also, unlike other investment vehicles, there's an automatic inflationary driver built into Bitcoin; every time there's a new "miner," the supply of Bitcoin artificially increases.

Stocks, bonds, commodities, real estate, etc. have intrinsic value. Bitcoin has none. That's why its price is so unstable---it's worth what people think it's worth.

This is a rare occurance when Kevin and I agree on a topic.

"Stocks, bonds, commodities, real estate, etc. have intrinsic value. Bitcoin has none. That's why its price is so unstable---it's worth what people think it's worth."

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You can say the same exact thing about the US dollar.   Its just a piece of paper with a number on it.   And we've added about 6 trillion more of them to world supply this past year from legislation and FED policy.  Its only worth what people want to say its worth.

Its not wild speculation that is fueling Bitcoin - its the fundamental understanding that it is a currency that has better supply controls than government run currencies.    I dont know what the future holds for it - depends on how well adopted it becomes.   But if nothing else it shows a lack of faith in traditional currencies and their management. 

Gold has no intrinsic value. It is worth what people think it's worth. Like everything else.

Crap, then, I must be wrong.

Actually, gold DOES have intrinsic value--it's useful as well as decorative. It's highly malleable and--I think the term is--ductile, which means than it can be stretched into an extremely thin wire. Also, unlike most metals, it does not corrode. That's why it's used in tooth fillings and on semiconductor boards.

I thought about what you're saying as I was writing my earlier post, and no, you have it somewhat wrong. The difference between the dollar and Bitcoin is that the latter is backed by the most powerful government and economy in the world. Crucially, people are legally obligated to accept the dollar as payment for debts, while Bitcoin is not. That's a WORLD of difference.

This is reminiscent of the time when the US went off the gold standard. Before then, you could technically (regular currency) or actually (gold certificates) present the government with a dollar and ask that it be exchanged for a dollar's worth of gold. What scuttled that idea was that the supply of gold didn't grow nearly as fast as the need for more dollars circulating in the economy.

What we have now is called "fiat" currency---"fiat" being Latin for "let it be" or "so be it." It has worth because people think it does. That's the same as Bitcoin, but Bitcoin doesn't come with a guarantee that it'll be honored no matter what. It's the same reason why US Treasury bonds continue to sell like hotcakes despite paying very low interest rates (at times, zero). People know that a US government guarantee is about as strong an assurance as there is. Or to put it another way, if the US ever defaults on its obligations, we'll be in Mad Max times and we'll have more to worry about than the value of the dollar.