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Getting poorer with Bitcoin

Is it time to boast yet?

Actually, I wouldn’t boast, but it is time for an annual review of Bitcoin.

You know Bitcoin. It is a cryptocurrency.

It has no intrinsic value. There is no gold or silver behind it.

It has no physical existence at all. Bitcoin doesn’t even take the form of a piece of paper.

The only thing that it has is a price.

It also has a cult-like following.

Many Bitcoin buyers got in too late. They are nursing losses.

I wrote blogs on Nov. 20 and Nov. 28 last year when Bitcoin’s quoted price moved above $8,000 and then to $10,000.

I made two forecasts in the second blog.

The first was buyers at that price would lose money.

The second is that the price would move high enough from that point to make the forecast look foolish before it became correct.

I was two for two.

The mania to own Bitcoin, which infected even an office temp here at the Numismatic News office, took the price to about $20,000 before 2017 ended.

Then the crash set in.

I hope the temp didn’t end up buying it.

From the high, Bitcoin is down 72 percent.

From the $10,000 level where I expressed an opinion, it is down over 44 percent.

It is now quoted as being worth $5,576.

Where does Bitcoin go from here?

Figuring out its price is more like going to Las Vegas and placing a bet.

If you are good at reading market psychology, you might just make a profit trading in and out of the market. Just don’t hold it for the long term.

It will continue to fall.

Someday, it will be worth nothing.

The drop to nothing won’t happen in the next 12 months, but at the time of the next annual review, I expect Bitcoin owners will be nursing losses from the current level.

However, Bitcoin will very likely rise above the present $5,576 price for a time and lure in new buyers.

It is far better to own gold than Bitcoin.

Even though gold lost money in the same one-year time frame – by just over 6 percent – gold has an eternal existence.

Had Bitcoin owners swapped their cryptocurrency for gold on Nov. 28, 2017, they would be 68 percent richer today even though gold dropped in price.

If you want to check the math, $10,000 would have purchased 7.72 ounces of gold.

Now the gold would be worth $9,372 compared to the $5,576 current Bitcoin price.

The larger number is $3,796, or 68 percent, greater than the smaller number.

But do Bitcoin buyers do this golden math?

Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017. He is editor of the weekly newspaper "Numismatic News."