Bitcoin (BTCUSD)

[davidsson10]

"Bitcoin's underlying value is pinned only to what you can buy with it. What can you buy with it? Dollars via an exchange at today's speculative rate, the few goods on the shelf in Venezuela where the local currency has collapsed, and drugs on the darknet, at least until the darknet adopts another currency.

"In a Ponzi scheme, the new investors pay off the old investors until there aren't any new investors. Then the scheme collapses and everybody still in it loses everything. Though not intended, this is the function of the bitcoin exchanges: new buyers pay off the folks ready to get out.

"It's not quite a Ponzi scheme because there are some products that can be bought with Bitcoin. But, there are so few and they are so fickle that when Bitcoin collapses you won't be able to tell the difference."