The headline in the London commuter freesheet City A.M.
yesterday was Bitcoin price hits $500 as demand soars for virtual currency in China
. Those of a certain vintage may recall that not so long ago China was still a backward country. Having shrugged off the mantle of Communism in all but name, it is now not only a rising super-power but is increasingly delivering a high standard of living to more and more of its citizens, as should be evident from the streams of Chinese tourists in London, Cambridge
and other cities in the UK, the US and elsewhere.
The backbone of China's economic success is manufacturing and exporting
which requires both real work and real investment. It is easy to see how some people in China might think there are easier, quicker ways to make money. People in America, the UK and elsewhere had that same idea in the 1920s; the Wall Street crash of 1929 taught them this was not so. Or did it? The Black Monday crash of 1987 and the more recent crashes, duplicities, scams
and bailouts have likewise taught Western investors nothing and their governments little. The only people who have learned at all are those who have been left to pick up the tab.
Bitcoin has now reached an all-time high
of $750.00, not bad for a commodity that has no tangible existence, but at the risk of boring the reader, did you read or watch any of the critiques of bitcoin
that were posted here recently? If you bought it at $50, lucky you. If you bought it at $170 prior to last week and sold at $500, again, well done. On the other hand, if you have just bought it at $750 hoping to sell next week for $1,500, that might not happen.
Chinese bitcoin investors should take special note. Gambling is illegal in China, theoretically at any rate, and it may be that at some point your still basically authoritarian government decides to clamp down big time on all forms of speculation.
The other thing you should bear in mind is whatever laws China may or may not have now or in the near future, the law of gravity is universal - what goes up, must come down. Bear that in mind before your buy bitcoin at $1,000 next week, next month or next year.