When bitcoin first appeared it was an odd curiosity that very few people took seriously. It was assessed as a fad that wouldn’t last. Yet strangely, it didn’t fade away as expected.

Its price shot up, then collapsed as the critics predicted, to a fraction of its former level. What would one expect of something that has no tangible value and isn’t linked to or supported by any other asset?

Then surprisingly its price recovered and rose further to new heights. That very volatile pattern repeated. It has continued to be highly unpredictable since. However the long term trend continues to be higher.

Bitcoin has been copied by many other cryptocurrencies established since. Yet they have no use. You can’t buy a coffee with them, you can’t buy the groceries. They aren’t really currencies at all.

Bitcoin pays no interest or dividend. There is no income or reward from owning it. It appears unattractive. Initially its only appeal was its secrecy of ownership, so it was dismissed as only being useful to money launderers, tax evaders and crooks.

That’s a clue to why it hasn’t died but instead survived and grown in price. It is good for tax evasion as it isn’t tied to any country. That makes it difficult for countries to claim the right to tax it or its price gains.

There is little doubt cryptocurrencies are used by crooks, but they are also used by people with wealth in authoritarian countries. These can be people who have made money legitimately and are trying to avoid dictatorship regimes stealing their assets.

In Australia we aren’t troubled with the burden of corrupt governments and officials trying to tax or confiscate our assets. That may be why most Australians didn’t see cryptocurrencies as a sensible investment.

There are many countries around the world where your money, whether earned legitimately or not, is not safe from the government and criminal gangs. Crypto solves that problem. It is stored in an electronic wallet in the cloud in a way that makes its owner very difficult to identify.

The bitcoin supply is known and strictly limited, defined by its inventor. It does not increase as the money supply of a country does when central banks think it needs a boost, or politicians spend more and run bigger deficits to win votes. Fewer and fewer new coins are released or ‘mined’ each year.

Investors and speculators are now involved, so demand continues to grow. In the uncertain Trumpian world it may increase more. You cannot use bitcoin for any daily purpose, but it is here to stay. Other cryptocurrencies may also do well depending on how limited their supply is.