Currencies like USD may fluctuate but they are a bet on the long-term stability of the US, and are tightly regulated, even if that power is sometimes abused to debase the currency.
Pretty much every fact you name in that sentence is part of why I'm storing some of my value in bitcoin. I wouldn't count on the long-term stability of the US.
One of the main problems with Bitcoin from my perspective is that nothing backs its value
Nothing backs the value of gold, either. Come to think of it, I'm not sure the whole "backing" concept is really valid. I mean, yes, saying currency X is backed by metal Y is giving you useful info, but metal Y is always just a commodity.
the value is unregulated and purely arbitrary and thus subject to all kinds of manipulation and confidence tricks.
That's somewhat the case now becuase the market is pretty illiquid (bitcoin is only used by geeks). If/when the market is really liquid and the total value stored in bitcoin is enormous, that won't be the case anymore.
The current price depends entirely on confidence.
That bothers me too. But, ultimately, there will always be a demand to store value, and bitcoin is a good candidate, since there is a fixed number of them. If bitcoin were to become really big, whenever there were a price dip, speculators would jump in and bring it up again. And I think we've already reached that point to a large degree. It seems like there really is a floor on the value of bitcoin (and this will be increasingly true, and the floor will get increasingly higher, as bitcoin becomes more popular). You just aren't gonna see gold go down to $500/oz in current USD; nor are you going to see bitcoin go down to $3 (if it does, I and a ton of other people will be snapping it up as fast as possible... which is why it won't get there in the first place).
Actually, it could go down to (say) $3 if a big holder of bitcoins dumped them all suddenly and irraionally, since the market isn't that liquid, but there would be an immediate price correction, so it would just be a temporary blip.
Pretty much every fact you name in that sentence is part of why I'm storing some of my value in bitcoin. I wouldn't count on the long-term stability of the US.
One of the main problems with Bitcoin from my perspective is that nothing backs its value
Nothing backs the value of gold, either. Come to think of it, I'm not sure the whole "backing" concept is really valid. I mean, yes, saying currency X is backed by metal Y is giving you useful info, but metal Y is always just a commodity.
the value is unregulated and purely arbitrary and thus subject to all kinds of manipulation and confidence tricks.
That's somewhat the case now becuase the market is pretty illiquid (bitcoin is only used by geeks). If/when the market is really liquid and the total value stored in bitcoin is enormous, that won't be the case anymore.
The current price depends entirely on confidence.
That bothers me too. But, ultimately, there will always be a demand to store value, and bitcoin is a good candidate, since there is a fixed number of them. If bitcoin were to become really big, whenever there were a price dip, speculators would jump in and bring it up again. And I think we've already reached that point to a large degree. It seems like there really is a floor on the value of bitcoin (and this will be increasingly true, and the floor will get increasingly higher, as bitcoin becomes more popular). You just aren't gonna see gold go down to $500/oz in current USD; nor are you going to see bitcoin go down to $3 (if it does, I and a ton of other people will be snapping it up as fast as possible... which is why it won't get there in the first place).
Actually, it could go down to (say) $3 if a big holder of bitcoins dumped them all suddenly and irraionally, since the market isn't that liquid, but there would be an immediate price correction, so it would just be a temporary blip.