Have you noticed, you can’t get a straight answer as to what causes a bitcoin to be “worth” such and such a price? If you ask 100 economists you’ll get 100 different answers. This little story illiterates what is happening with Crypto Currency:
Not long ago a merchant found a lot of monkeys that lived near a certain Village. One day he came to the Village saying he wanted to buy these monkeys. He announced that he would buy the monkeys at $100 each.
The Villagers thought that this man must be crazy. How can somebody buy stray monkeys at $100 each?
Still some People caught some monkeys and gave it to this merchant and he gave $100 for each monkey.
This news spread like wildfire and People caught monkeys and sold them to the merchant.
After a few days, the merchant announced that he will buy monkeys at $200 each.
The lazy villagers also ran around to catch the remaining monkeys. They sold the remaining monkeys at $200 each.
The merchant then announced that he will buy monkeys for $500 each.
The villagers start to lose sleep. They caught six or seven monkeys which was all that was left and got $500 each.
The Villagers were waiting anxiously for the next announcement.
Then the merchant announced that he is going on holiday for a week, but when he returns, he will buy monkeys at $1000 each! He also said that his employee will be in charge, and would take care of the monkeys he bought pending his return.
The Merchant went on holiday.
The Villagers were frantic and very sad as there were no more monkeys left for them to sell at $1000 each as was promised by the Merchant.
Then the Merchant’s Employee contacted them and told them that he would secretly sell them some monkeys at $700 each.
The news spread like wildfire. As the Merchant promised on his return that he would buy monkeys at $1000 each, they would achieve a $300 profit for each monkey. The next day the Villagers queued up near the Monkey Cage.
The Employee sold all the monkeys at $700 each. The rich bought monkeys in large lots. The poor borrowed money from money lenders and bought the rest of the monkeys.
The Villagers took care of their monkeys and waited for the Merchant to return. However nobody came! Then they ran to find the Employee. However he was not to be found.
The Villagers then realized that they had been duped into buying the useless stray monkeys at $700 each, and were now unable to sell them.
This Monkey Business is now known as Bitcoin!