The year is almost over, and economist Justin Wolfers tweeted out this Bloomberg chart showing Bitcoin as the world's worst-performing currency:
Techno-libertarians believe that one of these fantastic stores of value should be the world’s preferred form of money pic.twitter.com/yFx3X5L5i6— Justin Wolfers (@JustinWolfers) December 23, 2014
Wolfers is absolutely right that Bitcoin is a poor store of value. And people who prefer the currency as a hedge against the inflationary tendencies of the dollar are deeply confused.
But the smart argument for Bitcoin focuses less on its properties as a currency and more on its potential as a technology platform. Bitcoin is the first system in the world to allow totally automated, software-based financial transactions. That could enable a lot of innovation in the payments industry, even if Bitcoin-the-currency never achieves dollar-like stability.