Why Cryptocurrencies Aren't Really Money Yet

Steve Forbes, the owner of Forbes magazine, has some interesting - some might call them quaint or outdated - ideas about such topics as the need to return to the gold standard.

He has run, unsuccessfully, for President of the US at least a couple of times. 

But even as ardent an enemy of government as he effectively describes why crytocurrencies will not become mainstream until they take steps to make themselves acceptable to...governments.JL


Steve Forbes comments in Forbes:

Money isn't viable if it fluctuates in value, particularly with the wild swings characteristic of this sector. To be a true alternative, a cryptocurrency must be easy to use for day-to-day transactions. The supply can't be artificially restricted. Fabricated scarcity doesn't create value; utility and trustworthiness do. Look at the Swiss franc. Its supply is enormous. But because its long-term stability has been better by far than that of any other currency in the world over the past 100 years, people find it highly desirable.
THE ASTONISHING FACT about the explosion in cryptocurrencies is that their creators have overlooked a fundamental fact: Money isn't viable if it fluctuates in value, particularly with the wild swings characteristic of this sector. Most buyers are looking to make a quick buck, treating Bitcoin et al. like penny stocks of yore. They forget that the very instability of government-produced money is one of the two critical reasons cryptocurrencies were created in the first place (the other being privacy). If in 2013 you had taken out a mortgage for $250,000 in Bitcoin, you'd owe the bank roughly $18 million today.
Until one of these digital monies effectively ties itself to gold, a basket of commodities or a bundle of major currencies, it will never replace the flawed, traditional central bank currencies we're currently stuck with. To be a true alternative, a cryptocurrency must also be easy to use for day-to-day transactions. Moreover, the supply can't be artificially restricted. Fabricated scarcity doesn't create value; utility and trustworthiness do. Look at the Swiss franc. Its supply is enormous. But because its long-term stability has been better by far than that of any other currency in the world over the past 100 years, people find it highly desirable.
As wise monetary gurus such as Nathan Lewis and John Tamny have pointed out, Bitcoin's wild swings graphically underscore why monetary unreliability is so destructive. The dollar's instability since we abandoned the gold standard in the early 1970s is a slow-motion version of what is happening to cryptocurrencies.