[Wayne 962]

Well, I have some opinions on this subject obviously. All money is fake - simply fiat currency backed by the government. Don't believe me? How much were Confederate dollars worth after the South lost the war? How about Reich marks after WWII? Pretty much zero. Another thing that's fake? Real Estate (huh?). Yup, the value of real estate is only dependent (again) on the government that supports it. Back in the Middle Ages, the people with the most real estate had the biggest armies to a) get more real estate and b) defend the stuff they already had. Without the government (and our system of laws, etc.), real estate is pretty much worthless in the grand scheme of things (disclaimer - I'm a big investor in real estate right now).

So, on to Bitcoin. First of all, Bitcoin is not used as a method of transaction currency. It's just too expensive per transaction and not convenient at all. The notable exceptions are with the illicit trade, where the cost of a transaction is not as important as evasion from the authorities and anonymity. Secondly, Bitcoin is on a self-destruct Titanic-like journey with no good end in sight. For those who know about how it actually works, the miners keep the system going, and if the cost of a single Bitcoin drops below the actual (power + equipment) costs to create a Bitcoin, then the miners will stop working and the whole system will probably collapse. Don't take my word on this, Google it. Bottom line - as Bitcoin gets older and older, the more difficult each transaction will be, and eventually it will be very costly and very difficult to make one Bitcoin (it's already close to that). Without the miners processing transactions, it's almost doomed to fail. Eventually. We just don't know when.

Having said that, the Bitcoin experiment is indeed a fascinating one to watch, and the "next gen" currency that solves a bunch of these problems will probably be very successful. Keep an eye out for that one (I don't think it exists yet). I do believe that the blockchain will need some type of gate keeper (like a central bank) that can roll back transactions in case of fraud or theft - something that Bitcoin lacks currently.

Just my opinions. I've talked to a lot of people about this, studied the back architecture of Bitcoin, and I know relatively well how markets work. Due to the Bitcoin problems that are inherent in it's structure, it's become more like digital gold - where it's just a "store house" of value instead of an actual currency used in commerce.

-Wayne