Taylor: This is your bitcoin warning

That’s not a prediction.

What do I think is the right price for bitcoin? I’d say, roughly, zero. But it could take a while to get there.

Now, blockchain — the innovative technology of which bitcoin is the best-known example — may have real uses. I’m open to that idea. Blockchain allows for anonymous transactions that can be verified between parties who neither know nor trust each other. Theoretically, blockchain obviates the need for government regulation or third-party verification.

Applied to money, bitcoin, using blockchain technology, theoretically allows us to remove transactions from the purview or limitations of existing financial infrastructure.

Dollars, the theory goes, involve pesky government issuers, unreliable central banks and the meddling institutions of the existing global finance system. To its proponents bitcoin is like money unshackled from politics, regulators and borders.

To be clear: I totally disagree with the need for unshackling. I think dollars are awesome. I even buy products and services with them! I’ve honestly never felt limited by dollars, except obviously by the amount of them that I control at any given time. By contrast, I believe bitcoins are — at their essence — useless. A useless fiction, and therefore a fraud. I prefer my fictions to be useful.

What is the real-world use of bitcoin?

Bitcoin is not a useful store of value in the way that dollars are. Anything that can soar 500 percent in the past year, as Bitcoin has, can also drop 80 percent the following year. Or the following month. That makes it entirely inappropriate for “storing value.”

Can bitcoin be delightful as a pure gamble, like buying a lottery ticket? Sure. But no sensible person advocates lottery tickets as a store of value.

(The South Sea Company was created by charter in 1711 with a mandate to engage in an implausible business, in a far off place, that none of its British investors had ever seen. It was just exotic and mysterious enough to capture the whiff and elan of possibly unlimited wealth. It enjoyed the imprimatur of the government of England, and for a time legitimately traded in English government bonds. Shares began at 100 pounds, reaching 1,000 pounds a decade later. Fortunes were destroyed shortly thereafter, when the laws of financial gravity returned. We return to this cautionary financial story over and over because, while no two bubbles are alike, history does rhyme.)

Bitcoin has all the makings of collective financial madness. Magical thinking! A difficult-to-grasp technology! Breathless media coverage of its ever-increasing price! Celebrities might be buying it!

Bitcoin’s only plausible real-world use cases — as a medium of exchange rather than a speculation — are tax evasion, drug dealing, prostitution, child pornography, assassinations, arms-dealing, illegal gambling and ransomware for computer hackers. As I have yet to engage in any of these activities, I have yet to find an actual use for bitcoin in my own life.

Incidentally, bitcoin is probably not even anonymous. One of the features of the blockchain is that all transactions are traceable and reproducible. That’s the plausible key to blockchain technology’s usefulness in the future — that all transactions create a permanent record, visible to all counterparties.

But that feature of permanence undermines anonymity. A blockchain-sophisticated FBI should be able to see…