Bitcoin farce

Bitcoins are accepted almost nowhere, and some cryptocurrencies nowhere at all. Even where accepted, a currency whose value can swing 10 percent or more in a single day is useless as a means of payment.

Store of Value. Extreme price volatility also makes bitcoin undesirable as a store of value. And the storehouses — the cryptocurrency trading exchanges — are far less reliable and trustworthy than ordinary banks and brokers. Thing in Itself. A bitcoin has no intrinsic value.

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It only has value if people think other people will buy it for a higher price — the Greater Fool theory. Some cryptocurrencies, like Sweatcoin , which is redeemable for workout gear, are the equivalent of online coupons or frequent flier points — a purpose better served by simple promo codes than complex encryption. Indeed, for the vast majority of uses, bitcoin has no role.

Even the best-intentioned cryptocurrencies can become scams.

Dollars, pounds, euros, yen and renminbi are better means of payment, stores of value and things in themselves. Cryptocurrency is best-suited for one use: Criminal activity. Because transactions can be anonymous — law enforcement cannot easily trace who buys and sells — its use is dominated by illegal endeavors. Most heavy users of bitcoin are criminals, such as Silk Road and WannaCry ransomware.

Too many bitcoin exchanges have experienced spectacular heists, such as NiceHash and Coincheck , or outright fraud, such as Mt. Gox and Bitfunder.

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Hackers are getting into the act. So is there anything truly valuable about bitcoin? Bitcoin is built on the blockchain , a public ledger containing all the transaction data from anyone who uses bitcoin. Transactions are added to "blocks" or the links of code that make up the chain, and each transaction must be recorded on a block. Even bitcoin critics like Dimon have said they support the use of blockchain technology for tracking payments.

Is there a legal and legitimate way to invest in bitcoin? Bitcoin exchanges have a checkered history. Gox, once the largest exchange, shut down in after losing hundreds of millions of dollars worth of bitcoin after a hack.

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Square SQ , the payments service, is also rolling out a bitcoin product. There are also bitcoin ATMs in scattered bodegas and convenience stores around the country, through companies like Coinsource. The ATMs let you exchange bitcoin for cash, or vice versa by scanning a QR code from the digital wallet application on your phone. Related: Millions of dollars stolen in bitcoin hack. With Coinbase, you must first give the app permission to connect to your bank account. As with other stock trading applications, you pay a small fee for each transaction, buying and selling.

But the transaction can take significantly longer.

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The price I bought it at remains the same, but I won't be able to sell at the earliest until Friday. Where's the skepticism as bitcoin keeps soaring? Inside a Russian cryptocurrency farm.

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CNNMoney Sponsors. By their logic, holding onto any currency is akin to holding onto sand as it runs through your fingers — your hard work which earned it literally turning it to dust as the US government debases the global reserve currency to pay for ever spiralling public services bills, military spending, and bailing out American Big Business. And I basically agree with this — Bitcoin is a good hedge against the US dollar dropping its status as the global reserve currency.

But this is not the only possible outcome. A general point about investing: if the price of an asset is closely tied to the probability of a particular future event, and you disagree with the probability that the market assigns to it, then in your view that asset is mispriced. Gamestop should have been the wake-up call.

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No one bought Gamestop because they thought its stock would become the reserve currency of the future, but perhaps they might as well have done. The party was over. What GME demonstrated was the power of the meme in the stock market, and that an asset price could increase its value by over 20x for no fundamental reason.

People point to the rising price of bitcoin as evidence of the truth in their narratives, but the reality is that bitcoin could be rising for no reason at all.