NO BACKING? NO PROBLEM.

How could Bitcoin, created to be an electronic currency for people who did not trust fiat money, and that was worth $0 only a few years ago, end up selling for over $100,000?

I was going to write "end up being worth more then $100,000," but that would not be accurate, because Bitcoin itself isn't worth anything. It has no intrinsic value, is not backed by anything of value, cannot be held in your hand or buried in your backyard, does not meet the definition of currency, and no one knows the real name or whereabouts of the man in Japan who invented it.

Of course, most people who buy Bitcoins have no idea what they are buying. What they do know is that some "investors" or "miners" or "lucky ducks" made millions of dollars when Bitcoin prices soared. 

They might also know that some lost millions of dollars when they misplaced their irreplaceable passwords and discovered there are no backups and the Bitcoins they owned disappeared.

I wrote The Bitcoin Book because, as an economist, I thought the Bitcoin story was interesting.

And because I thought a few facts might help those who read it make sense of the storm before "investing" in Bitcoin or some other cryptocurrency or crypto token.

For example: Why doesn't it matter that Bitcoin has no inherent value and nothing of value backing it?

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DENNIS F. PAULAHA, Ph.D.

Dennis Paulaha received B.S. and M.A. degrees in economics from the University of Minnesota and a Ph.D. in economics from the University of Washington. 

As a college and university professor, he taught macroeconomic and microeconomic theory at the principles, intermediate, advanced, and graduate level, monetary theory and policy, environmental economics, and special issues courses. 

In the real world, he wrote economic/investment newsletters for some of the largest precious metals and coin dealers in the country and was vice president of research for a national brokerage company.