Bitcoin Will Be Made Illegal Tender

London (Sept 5)  The 19th century was dominated by the British pound, the 20th by the U.S. dollar, and the 21st may be by Bitcoin, apparently. Indeed, it has been hard to stay grounded while watching Bitcoin soar to new heights each month. The Bitcoin euphoria is real, but is it justified?

Control over a nation's money supply yields great power. A government can use this control to cool or heat its economy, erode the true value of its debts through inflation, and much more. The acceptance, adoption, and proliferation of Bitcoin, or any virtual currency, in a nation decreases the power that control over the money supply and cost provides to governments. This is why some governments have banned them and most other governments are still figuring out what to do with them. I believe most governments will defend this power and not allow Bitcoin, or any virtual currency, to become prevalent in their economies.

The sky-high price of Bitcoin has not factored in the possibility of mass governmental rejection. When this is announced on a country-by-country basis, expect Bitcoin's price to drop toward its cost of production of around US$500.

SeekingAlpha