Warnings about financial markets seem to be coming thick and fast. Senior commercial and central bankers are warning that valuations are high and discounting a great deal of future growth.
This is perfectly true, but timing is everything, and markets normally fall when no one is expecting them to, rather than when the Cassandras are in full voice, for the obvious reason that markets balance buyers and sellers. They peak when no one is selling and crash when they stop buying.
At the point when warnings are being given, people are obviously still selling, so the peak has probably not been reached. That does not justify heady valuations, it is merely a reflexion on market experiences. In this speculative discussion, one area continually comes to the fore and that is cryptocurrency. I thought it might be useful to explain what it is, and then try to see if it has any value.
Cryptocurrency, as it name suggests, is a new form of money which begs the first question, what is money? It is a store of value and a means of exchange. This is the classical definition and all effective forms of money must match it.
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