It looks like a big Ponzi scheme to me and somebody is going to get wise to it eventually. A currency based on nothing tangible will probably collapse back to that nothing and I just hope my pension fund isn't investing in it.
"It looks like a big Ponzi scheme to me and somebody is going to get wise to it eventually."
Let's take Bitcoin as an example. The first thing to say is that it is certainly not a ponzi scheme as suggested by canarieslover. Ponzi schemes are based on a fraud, and Bitcoin isn't that.
"Surely the cost of something rises because of limited supply. the supply of none of these currencies is limited in any way"
In Bitcoin's case, the supply is limited to 21 million Bitcoins.
"But what causes the price to rise?"
In a word, demand. When demand exceeds supply the price rises. You might well say that a response to this would be to make more Bitcoins, but it's not that simple; if it was, we would all be doing it.
Bitcoin mining is the largest distributed computer operation in the world, and anyone can become a Bitcoin miner. Unfortunately, mining has become highly competitive, and to stand any chance these days you need some pretty expensive equipment - the hardware and its running costs alone will set you back many hundreds of thousands of pounds, and even then you are not guaranteed success. Mining is frustrating and financially draining, and you need to acquire a great deal of expertise before you even start.
I know you can mine gold and diamonds and they actually exist, but aren't bitcoins just an internet invention and don't exist physically? Figments of the imagination come to mind. Perhaps I'm just jealous that I didn't get in on the ground floor, and get out when I had sold them for a great profit!!!
The first bitcoin robbery recently if you read the news. I tend to take Quickbeams view, I would rather have something I can see i.e. cash or gold than something that does not exist other than in hyperspace. All these things can go up and down in value, it is a gamble one takes. For every winner there has to be a loser or it does not work.