By Brett Arends, MarketWatch
Mark Wilson/Getty Images
Thank you, Mr. President.
Donald Trump’s comments about bitcoin and the other cryptocurrencies on Thursday were right on target.
He’s right: Their value is “based on thin air.” Your typical cryptocurrency is basically a “frequent flyers” program, only without any airline attached. You hope someone will accept your “miles” for something real. But there’s no guarantee.
He’s right: They are ”highly volatile.” In the past two years bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.49% has gone from $19,000 to $3,200 and back up to $11,000 and change.
He’s right: They can “facilitate unlawful behavior.” I’d argue that’s their main use.
And he’s right: If Facebook /zigman2/quotes/205064656/composite FB +1.06% wants to launch its own currency, it should seek a banking charter.
The president made his comments after palling around with techies at a “social media” summit at the White House. (His glowing references to the U.S. dollar — “...stronger than ever... by far the most dominant currency anywhere in the World...” — also suggest that Larry “King Dollar” Kudlow, his chief economic adviser, has been whispering recently in his ear.)
They come as another cryptocurrency bubble, or mania, threatens to reinflate.
Bitcoin has trebled so far this year, and is back above $10,000. Cryptocurrencies are like a virus that won’t die. They keep metastasizing. There are still more than 2,000 cryptocurrencies in existence , and their theoretical total value is about $318 billion — more than the value of Procter & Gamble /zigman2/quotes/202894679/composite PG +0.40% , and only slightly less than that of Exxon Mobil /zigman2/quotes/204455864/composite XOM -0.67% .
I know which I’d rather own.
Cryptocurrencies are a pure gamble with no discernible fundamentals whatsoever. The cryptocurrency “markets” are rife with fraud, scams and manipulation . I’d love them if I were a con artist.
Have fun. But you are better off wagering your money at the race track: At least there you can see the horses.
Cryptocurrency fans were cheering Trump’s comments on Thursday, because their market feeds on attention. Trump caused a brief — very brief — spike in the price of Bitcoin.
But they can’t contradict a single one of his arguments. He’s right. He’s so right, his comments are truisms.
It was Ohio State coach Woody Hayes who said allegedly that when a quarterback throws a pass, only three things can happen, “and two of them are bad.” But cryptocurrencies are even worse. When cryptocurrencies boom, only two things can happen, and both of them are bad.