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Robert Reed: One man's quest to comprehend cryptocurrency

Robert Reed, Chicago Tribune on

Published in Business News

Dimon's not alone in his disdain.

Warren Buffett recently called bitcoin "a mirage"; Carl Ichan, a veteran corporate raider and no stranger to disrupting business models, concedes he doesn't "get" bitcoin and is avoiding it like a plague.

Intrigued by these strong reactions, I asked the head of a cryptocurrency investment fund, on the condition of anonymity, why such financial honchos are anti-bitcoin.

His take: They are behind the curve, as is the U.S. compared with some European and Asian markets like Hong Kong, Singapore and London that are already tapping into cyber currencies.

Eventually, the fund chief told me, U.S. businesses will overcome their bitcoin concerns and get into "blockchain" technology, a series of private, computer-network-based transactions that use digital currencies. Why? Lower fees and its quicker pace, I'm told.

Right now, it's not saving money that's lighting the fire under bitcoin. It's making money and investor speculation.

 

When bitcoin exchanges began in 2010, a single bitcoin was worth just a fraction of a cent. Monday it was trading for over $11,000 -- an all-time high.

That's great for those getting in early, like the Winklevoss twins -- best known for suing Facebook founder Mark Zuckerberg after claiming he boosted their idea for the social network site. They reportedly invested $11 million in 2013 and now are touted as the first bitcoin billionaires.

If you're still confused about how bitcoin gets its value, so am I.

But I do understand supply and demand.

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