It is a sign of the times that Bitcoin is doing so well

The past week or two has seen quite a rally in the price of Bitcoin and as I type this it is US $16.700. This gives various perspectives and let me open with a bit of hype, or at least what I think is hype.

An independent report from Citi Bank’s Managing Director argues that Bitcoin is the digital gold of the 21st century. The devaluation of the worlds’ reserve currency—the U.S. dollar—formed the basis of the commentary. ( Crypto.Com)

As a starter Citibank have suggested that the US Dollar will fall or depreciate by 20% which has created something of a stir in itself. There are bears around for plenty of currencies tight now as others suggested that the expected December move by the ECB might put the skids under the Euro. Both roads would look bullish for Bitcoin as it is an alternative. The Citibank view starts with a comparison with Gold post Bretton Woods.

With a relatively free currency market, gold’s price grew enormously for the next 50 years.

The monetary inflation and devaluation of the greenback are the basis of Fitzpatricks’ comparison of Bitcoin with gold. ( Crypto.Com)

This is then linked to what we have seen with Bitcoin.

Bitcoin move happened in the aftermath of the Great Financial crisis (of 2008) which saw a new change in the monetary regime as we went to ZERO percent interest rates.

The next step is this.

Fitzpatrick pointed out that the first bull cycle in Bitcoin from 2011 to 2013 when it increased by 555 times resulted from this.
Currently, the COVID-19 crisis and the government’s associated monetary and fiscal response are creating a similar market environment as gold in the 1970s. Governments have made it clear that they will not shy away from unprecedented money printing until the GDP and employment numbers are back up.  ( Crypto.Com)

He then applies his technical analysis.

“You look at price action being much more symmetrical or so over the past seven years forming what looks like a very well defined channel giving us an up move of similar time frame to the last rally (in 2017).”

Which leads to this.

Fitzpatrick did not stop there; his price prediction chart sees Bitcoin price at $318,000 by December 2021.  ( Crypto.Com)

That in itself will no doubt be contributing to the present rise as it puts us in what is called FOMO or Fear Of Missing Out territory.

The Economics

The issue of the money supply and its growth is an issue of these times whereas the situation for Bitcoin is different.

Bitcoin’s total supply is limited by its software and will never exceed 21,000,000 coins. New coins are created during the process known as “mining”: as transactions are relayed across the network, they get picked up by miners and packaged into blocks, which are in turn protected by complex cryptographic calculations. ( coinmarketcap.com)

So there are two differences. Firstly there is a cap and with the present number in circulation being 18.5 million it is not that far away. Secondly whilst there is growth the process of creation is likely to be slower rather than fiat money which as I am about to discuss has been rather up,up and away.

If we start with the world’s reserve currency which is the US Dollar I note a reference to money printing in the Citibank report which we could argue is QE.

Consistent with this directive, the Desk plans to continue to increase SOMA holdings of Treasury securities by approximately $80 billion per month……Similarly, the Desk plans to continue to increase SOMA holdings of agency MBS by approximately $40 billion per month. ( New York Fed)

So we have US $120 billion a month from the main two efforts where bonds are swapped for electronically produced money.

My preferred way of looking at this is the money supply and if we do that we see that in the year to the 2nd of this month the narrow measure of the US money supply has risen by 41% over the past year. This sort of measure used to be called high powered money although right now due to the plunge in velocity it is anything but. However it has been created and I also note that having gone through US $2 trillion in August the amount of cash in circulation is also rising and was US $2.04 trillion in October. So mud in the eye for those predicting its death,especially as we note the switches to using electronic money in retail. As the Belle Stars put it.

This is the sign of the times
Piece of more to come

If we go to the wider money supply measure called M2 we see that it has grown by 23.9% in the year to November 2nd. That is quite something for a number that is now just shy of 19 trillion. So there is a money supply argument in the background. We can add to it by noting fast rises in other types of fiat money. Japan has been at the game for some time and we have seen notable expansions in Euros and UK Pounds as well.

Interest-rates

There was a time that the lack of an interest-rate from Bitcoin was a weakness. The 0% compared unfavourably to what you could get in fiat currencies. After all pre credit crunch many of the major currencies provided interest-rates of 4 to 5%. But now life is very different as we have seen the US Federal Reserve cut interest-rates to just above 0%. Indeed in some cases now Bitcoin has a relative advantage because the spread of not only negative official interest-rates but of negative bond yields ( which total around US $17 trillion now) makes it look much more attractive than before.

Who would have thought that a 0% interest-rate would be attractive? But increasingly that is true.

Comment

When we look at something like this we see that it requires a combination of reality and psychology/belief. The former gets reinforced because as I have pointed out over the past decade the direction of travel has been both clear and consistent. This morning has seen an example of part of this journey.

Italy’s Ruling 5-Star: ECB Should Cancel Covid-Related Debt It Owns – Party Blog Doing So Would Be “Not Only Fair But Easily Achievable” ( @LiveSquawk )

These sort of proposals appear and will no doubt be denied and rejected. But in a year or two’s time past history suggests it may well be on the agenda and then get implemented. It is quite a cynical game but we see it played regularly and feeds into our “To Infinity! And Beyond” theme.

Also there will be demand from those looking to park what are considered to be ill gotten gains. The official response will be around crime but it is probably more likely to be another version of this.

Many Turkish companies and individuals bought foreign currency last week even as the lira registered its biggest weekly gain in almost two decades, Bloomberg reported, citing currency traders it did not identify. ( Ahval )

Turks are using the Lira rally as a chance to buy more US Dollars in a clear safe haven trade. People will disagree about how safe that is but there will be similar flows into Bitcoin. It has its own risks as we note the issues around security and the wide swings in price. The latter are something of an irony because they are exacerbated by a strength which is the supply restrictions and limit. But this is a time of risk in so many areas.

Another way of looking at the change in perception of Bitcoin is the way that central banks are now looking at Digital Coins in a type of spoiler move as it poses a potential challenge to their monopoly over money.

I will be particularly interested in reader’s thoughts on this topic

 

 

57 thoughts on “It is a sign of the times that Bitcoin is doing so well

  1. Hello Shaun,

    Who would trust them? Even Bitcoin can be confiscated .

    And there’s always the Zollar and the Petro….

    (Venezuela president Nicolas Maduro says the country is to start using cryptocurrency
    in both domestic and global trade)

    Why ? inflation.

    And also

    “Venezuela’s central bank have new instruments which we will activate very soon so that everyone can do banking transactions, as well as national and international payments through the central bank’s accounts”

    Why does this sound familiar?

    Forbin

    PS: given that inflationary use of our currencies I cannot see the CB/governments allowing such a thing unless they can also inflate it too.

    • Forbin, thanks for the link to Venezula’s planned launch. If they can do it then everyone else can do it to. I forecast three Central Bank Digital currency blocks which will be tied together on a ratcheting fixed exchange introducing a NWO DC.

      1) Dollar DC 2) Euro DC 3) RMB DC

      Roll-out in early 2021, following a few more curfews (Xmas sprouts and mince pies). Small country national country currencies will also go Digital on the same timeline but are likely to “float” the NWO DC. I think Sterling DC will probably float badly … 😦

      • Our armed forces and police are not renowned for their left-wing sympathies; whose side do you think they will take in the coming civil wars?

        • There will not be any civil wars. The plebian masses are cowed with debt and that is the ultimate play here for nation states and for individuals. Bizarrely, to make them (both) happy and debt free!

          • Don’t you believe it.
            There are 11m people who have been Just About Managing to pay the bills and the mortgage, some of them for many years.
            Try taking their houses away from them.
            I’m already happy & debt free now, & I’ll die defending what is mine, after all, it nearly killed me getting it.

          • There is no escaping big government even for your BTC/ETH/gold – they can (and will) make possession illegal and/or worthless (not for gold though).
            The only escape is removal, change or destruction of the existing method of Governance and (((they))) can’t stop such happening as time has proven in EVERY example of repressive/suppressive Government.
            There are aspects of human nature that have developed over millennia and ‘legislation’ cannot ever remove such desires as freedom or greed. These human demands will always persist in the same way that power consumes the wealthy and influential.
            This either ends amicably with Government acceding to the needs and wants of the people or it ends violently as we take those needs back by force.
            Either way – the PEOPLE will win. They always do.

    • It is a bit late now but I think Bitcoin should have been banned in the UK as some countries had done.

      Who would have thought there could have been trading in fresh air which it is imo no asset backing at all a large run and the currency could collapse at any time.

      What it does tell us is the general public lost faith in where to put there money and the frenzy has created gamblers not savers.

      The public have lost faith in the financial system and other assets as well.

      I would have banned all other types of crypto currencies years back, more should have been done to make them illegal as they are probably being used for money laundering and drug pay offs.

      • I agree with you, it should have been nipped in the bud. The coming great reset will sweep it all away. I feel sorry for the young people who have particopated in the “fork” and all the other blundering diversity in this space. The ONLY digital currencies of power are ones accepted by nation Governments to pay taxes.. bitcoiners will find out shortly… just like EasyJet management, employees and shareholders.

      • The argument about bitcoin being largely for criminals is a mainstream media propaganda myth. Every transaction from every bitcoin wallet is available to see, not just for law enforcement but for anyone anywhere. Find a wallet address for some organisation or blogger or whoever and then paste it into the search block on https://www.blockchain.com/explorer That will show you every transaction in detail in or out of that wallet to any other wallet. Your bitcoin wallet is way more public than your bank account. Law enforcement can far more easily track bitcoin movements through wallets of interest than they can through the international banking system. If someone tries to convert from bitcoin into national currencies they generally have to use an exchange where there are Know Your Customer requirements to establish identity and then the money goes into a bank account where identity has also been established. So you would need to have false identity documents to try and be untraceable in bitcoin in which case why not just use your false identity within the normal banking system channels. And then do you also want to ban cash, gold sovereigns, etc to stop criminal transactions. Finally there’s also the issue that the biggest launderers of money around are the launderers out there are banks who just prefer to pay the regular fines as a cost of doing business..

      • Governments wanted the technology so they let it happen. Now they have it so will ban cryptos unless it is an agreed Government one.

    • And hasn’t China already outlawed Bitcoins? Central Banks are anxious to create either their individual digital currencies, or probably more likely a universal global crypto currency – this is ultimately about control of individual citizens’ monetary activity, including direct taxation.

    • I believe China has already outlawed Bitcoin. The Central Banks want to create their individual, or preferably (to them) a global digital currency, in order to track every citizens’ transactions and to take tax directly.

  2. Shaun, thanks for asking us today. I posit the solution is actually very near. I think this can work and scrape it from my response to Forbin.

    I forecast three Central Bank Digital Currency blocks which will be tied together on a ratcheting fixed exchange introducing a New World Order Digital Currency (NWO DC).

    NWO DC (administered by WB & IMF)
    1) Dollar DC 2) Euro DC 3) RMB DC

    Roll-out in early 2021, following a few more curfews (Xmas sprouts and mince pies). Small country national country currencies will also go Digital on the same timeline but are likely to “float” the NWO DC. I think Sterling DC will probably float badly …

    There will also be rest of world (ROW) paper currencies.. Namibia,, Syria, DRC, Argentian, Chile etc. These will remain offline and will naturally filled with volatility and eventual default.

    What do you think all this lockdown is for really…?

  3. There are many assumptions on BTC. I prefer a more critical view. There is the benevolent Satoshi assumption from day 1. I’m yet to hear anyone propose otherwise. Should not such a proposition be considered and in light of the day?

    That BTC cannot be intrinsically quantified is criticized only as a fault. I’m of the belief this is by design and quite brilliant rendering BTC uncorrelated to anything in the world other than itself. It’s literally a vault in the sky to hold all the world’s money or none. Whatever gets put in divided by currently mined BTC is its value.

    Consider, the events of today and you are fearful and choose to go to cash. Now consider you have all the world’s money where would you store it? Under you mattress? At commercial banks?? The mattress is probably safer. Forward/future physical contracts are the best option but there’s not enough of them meaning you cant bid up WTI to $1000 simply because you could not sell it for $999 or $1001. There’s a threshold to every commodities store of value tethered to its intrinsic real world quantification of how much energy is in a barrel and what the market can pay for such.

    BTC is the solution to this problem. It has no intrinsic threshold. Its the ultimate crisis alpha vehicle and an impenetrable vault. Any one miner/data centre could go down, insolvent, shut down by its local gov and the network is unaffected.

    Global state action, well that’s another question and likely a problem if Satoshi is benevolent, but for today’s problem, BTC seems the best solution and fit for purpose.

    The events of today, one could argue are somewhat unique and requires a special tool. BTC appears that SPV to ring fence unlimited value form events of today and transact it to tomorrow. Its transaction throughput does not serve use as a day to day Main St currency but does as a digital vault.

    Once we get from today to tomorrow and normalcy the need to store all the world’s money will have passed and BTC very well could go to zero and the likely transmission mechanism will be into CBDC and sCBDC which will transact fast enough and be trusted more by the majority of Main St.

    Time will tell.

  4. Hi Shaun,
    The whole Bitcoin story is fascinating, overcoming the sheer disbelief a few years ago that anyone would buy thin air. I am always amazed that the green lobby doesn’t have a go at it, given its colossal use of electricity…running at 657kwh per coin now.
    I have never owned any Bitcoin, but would say that a whole series of different things are coming together to make it more attractive, including:
    1. The astonishing money-printing going on around the world. When this started (at a much more modest scale), people talked about the Weimar Republic or Zimbabwe as examples of the debasement of currency through hyperinflation and money creation. It now seems to be standard part of policy and at greater and greater amounts and I suspect people have at the back of their mind that we could all suddenly lose confidence in the major currencies;
    2. The sense of unreality in government spending and the gigantic printing presses. The equation used to be relatively simple – we paid taxes, the government spent money and the difference was funded by bonds. The bond vigilantes (remember them?) would keep check on expenditure by forcing up interest rates if deficits were excessive. There are no bond vigilantes any more, as the CBs have destroyed the real market in bonds by buying everything in sight, so there is no real link any more between government spending and taxes, as the gap is easily filled by CB buying;
    3. We used to use cash for most things, but now everything is electronic and therefore Bitcoin seems just part of the modern e-world. Covid has given this an almighty shove, as a lot of places won’t take cash now;
    4. As you say, the lack of interest rates on bonds has made Bitcoin more attractive;
    5. For some reason, gold is not being seen as the safe haven it once was. I bought a little gold som moths ago and it has moved 3% upwards, hardly a sign of panic buying.

    Overall, therefore, I would say that the Bitcoin popularity derives from the loss of faith in “real” money, low interest rates and a general move to electronic payment.
    I am still not buying any!

    • James, all your observations are on the “money” 🙂
      However it is worth noting that CB’s have been big buyers of gold these past couple of years….

    • James

      “thin air” is correct which I alluded to earlier but didn’t mention the “colossal use of electricity” which is causing other damage to our ozone layer.

      The GOV states and leaders should never have allowed this to happen it just shows how the public have lost faith in our financial systems gambling on hype.

      Tulip bulbs and Ostrich eggs comes to mind.

      Buying thin air is an illusion which at some time which may disappear like the morning mist.

      • the ozone layer is not destroyed by electricity use , ie CO2 CFCs do that ( amongst other things )

        A rise in the CO2 level of the Earths atmosphere that causes a temprature rise is the issue that is most contencious today . Enough for it to cause heated debate on all web sites.

        just saying

        Forbin

          • correct – A single chlorine atom is able to react with an average of 100,000 ozone molecules before it is removed from the catalytic cycle. This fact plus the amount of chlorine released into the atmosphere yearly by chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) demonstrates the danger of CFCs and HCFCs to the environment

  5. The current rise in bitcoin has been on a tiny trade volume. The suspicion is that someone is trying to organise a punp’n’dump over the holiday period when people are often slow to respond to changes.

    We’ll see in the new year what happens.

    • Hi TW

      You pose an intriguing implied question which is what is a good volume? According to investing.com some 172,478 Bitcoins have been traded today so somewhere around 0.9% of the total in issue. Is that bad?

      Such issues will bother institutional investors as there is no point buying amounts you cannot sell as investors in the Milan stock exchange found out some years ago.

      • Shaun,
        If you look back to 2018 you see sustained (in the order of a month or so) volumes of over 1½ million per day, so we’re a very long way from that. It’s a pain finding data as some report value of coins traded rather than simple numbers of trades.

        The central question is: is Bitcoin a currency or an investment? Is it a gamble or a store of wealth that will still be there when I order my new Blue Öyster Cult CD?

  6. Hello Shaun,

    I guess the use of HMG bitcoin will be made more palatable by the use of mRNA injections ……

    “Biologists ‘transfer’ a memory through RNA injection
    Research in marine snails could lead to new treatments to restore memories and alter traumatic ones

    Date:
    May 14, 2018
    Source:
    University of California – Los Angeles”

    two years later we have mRNA vaxcines , perhaps this is just a WAG , er , umm …..

    Forbin

    • Forbin, are PCR tests a form of currency we can use. We certainly print a lot of those each day. Is a negative result worth more than a postitive one… well I guess that depends on your perspective of this new “economy”.

      • In which governments are spending billions of dollars of tax payers’ money on, a rest which was never designed as a diagnostic test.

  7. Really enjoyed this piece, Shaun. Thank you for writing it. I have been watching with awe, and perhaps a bit of envy, as this new electronic currency gains favor. I’ve had many opportunities to participate, and have been pushed by friends and family as well. I have not. And so far, they’ve been right, and I’ve been wrong.
    The latest round of Very Smart People jumping in seems to add credibility to the platform, but each article I read, or forum handling objections seems more like people that have made a decision to buy BTC. Because it’s going up! Fast!, and then handle the objections only to buttress their initial purchase with reason. Often specious reason, IMO
    I don’t see that governments will voluntarily surrender their (God given!?) monopoly on money creation. Maybe they’ll get serious about creating their own digital currency. And tax others. Or maybe they’ll add an examination of digital currency transactions to tax reporting forms. With penalties. Who knows? Really, who knows? No one, that’s who.
    What i do know is that this feels bubbliscious, and there are is absolutely an oversuppy of long winded justifications/rationales out there for the run up in the price of BTC.
    The words that come to mind for me is FOMO, and Ponzi.
    If I’m wrong, pls explain to me why you think so, I’d like to learn why.

    best
    jb

    • Hi Jonathan

      The issue that concerns me is the control one. Central banks will not want to give up their control of money. But even if they do introduce digital coins themselves I am sure some and maybe many will stay with Bitcoin. How they will block it I am not sure but I would not rule out moves to make it illegal.

      • While its a plaything on the margins, they will leave it be. If it interferes with control, they will squash it. IMHO anyone who thinks otherwise is delusional.

      • Yes, exactly my thought. CBs won’t want to give up their control of money. THAT, I think, you can bet on. And how far would they go to protect that control? IMO far. Very far.In such a scenario, the masses of BTC, and other block chain users would absolutely want to stay with their preferred currency. (Indeed that’s precisely why many love BTC as an asset.) So in a sudden grab to regain control of money, and perhaps even without advance notice, the startling rise in the value of the asset might slam quickly and harshly into a wall of government objection. Not tulips; but the same price mayhem ensues.

  8. Well I began to take an interest in BTC a couple of years ago and currently hold about £30K in it. Up to a few years ago most people going into BTC were doing it for anti government/anti financial system based reasons (instead of separation of church and state the idea here is separation of state and money). But as its mathematical beauty and potential disruptive power became better understood interest has shifted to people wanting to use it as store of value or for a capital gain. In the hedge fund world some of the biggest names such as Paul Tudor Jones & Stan Druckenmiller have now come out as BTC advocates. In the business world you have the CEO of MicroStrategy (MSTR) getting a lot of attention in the last couple of months after persuading his board to invest their entire cash holdings into BTC; indeed the share price of MSTR has been soaring since the announcement as some people now invest in the company’s shares as a proxy holding of the 38250 BTC they bought. Also ever more digital apps and platforms are offering ordinary people a way into BTC, most recently paypal announcing it will be offering its hundreds of millions of users the chance (not so long ago people used to complain about paypal suspending their accounts if they transacted with anything related to bitcoin).

    The bitcoin market pricing projection of most interest is the stock to flow model popularised by “Planb” (https://twitter.com/100trillionUSD). It basically highlights how as the rate of creation of new units of an asset slow relative to the existing stock the price rises in a well defined way. Using other scarce assets such as gold there seems to be a fairly well defined correlation between stock to flow and price. So as the flow of BTC halves every 210000 blocks added to the blockchain the price is expected to go up in a well defined way. To some extent now so many people are beginning to believe that it will happen that it may become self reinforcing. At the moment BTC market cap is only around $300billion so a long way to go before getting to gold ($10-12trillion) or net world risk assets often quoted as around $400trillion. But if BTC market cap does rise in line with the predictions (ie reaching around $300K/BTC in this current halving cycle that started in May) then the market cap would be about half that of gold and possibly large enough for nation states to start holding it as part of their strategic reserves which would then provide the next leg up in a price rise. At current level of mining activity a block (containing about 3000 recent transactions) is added to the blockchain ledger approximately every ten minutes so that’s only about 5 per second (compare with tens of thousands for Visa). So its not really very practical for day to day transactions. Its strength is as an incorruptable settlement layer for more frequent transactions being done off chain, eg using the lightning network, and then the single net transaction written into the blockchain. If enough people accept that BTC does represent an immutable non physical asset, digital gold if you like, then it becomes exactly that.

    The advantages of BTC are it being an internationalised asset not under control of any government, it doesn’t rely on any government or financial system as counterparty, it doesn’t require anyone’s permission to create a bitcoin address (wallet), wallets can’t be suspended by any government and nothing physical moves across borders. So you can move yourself to another country and all you need to have is some private information (private key) to control your BTC wherever you go; that certainly beats trying to move your money via cumbersome bureacratic national financial systems or carrying your wealth around via a suitcase full of gold/diamonds or whatever.

    There are of course several potential long term survival concerns over an asset that has only been around for 11 years.
    (a) Government action to try and contain it. The main thing they might try is ban exchanges which is where you can transfer to/from national currency but unless every jurisdiction did it would probably not work very well. Also as institutions and important individuals are increasingly jumping onboard BTC its difficult for politicians to take actions that harm the interest of their important donors/backers.
    (b) Any algorithms or computational that are developed which have the ability to break the encryption functions would render BTC useless.
    (c) If any attacks are possible to the mining network itself.
    (d) If BTC were to be be discarded in favour of another cryptocurrency. This is unlikely now that BTC has achieved such dominance (over 60% of entire cryptocurrency market capitalisation) and it is the only crypto that doesn’t allow “trusted parties” to modify the protocol which they might do either for their own benefit or if put under pressure by criminals or governments.

    There are also two big downsides to holding BTC for most people. The first is that many people are not great at implimenting the security needed to properly protect their private key (a long number or some other information that you use to generate that number). To move/spend BTC from your BTC public address (wallet) to someone else’s wallet you need to know the private key associated with your wallet in order to authenticate the transaction in the blockchain. So if you either lose a record of your private key or inadvertently allow someone maicious to see it then you have lost your BTC. Its actually quite hard to achieve this security. Especially so when a hacker elsewhere in the world could maybe capture you private key by copying it off a file in your computer, capture it via a keystroke logger, accessing your computer’s webcam to see it written on a wall, or such like. In that regard BTC is less safe than physically held cash because in that case someone has to get physically close to you or break into your house to access it. The usual recommended solution is to use a “hardware wallet” which is a small USB device that plugs into your computer and stores/broadcasts the private key in a secure fashion with the hardware device being such a simple circuit that in principle it can’t be remotely hacked. However you still have to remember a long pin number/password to access this device which you might forget or it might be found by someone else if you write it down. Also if you do manage to keep you private key completely secure what happens if you get hit by a bus – without the private key your BTC can’t be transferred to your heirs or anyone else ever (its thought about 5million of the existing 18.5million BTC are already in wallets with lost private keys). On top of that there is the issue of BTC transactions not being reversible. So if you send BTC to the wrong wallet address (whether belonging to a scammer or just because you mistyped it) then there is no call centre/website to try and get your BTC back – within an hour the transaction is written into the blockchain and that’s that. Same problem if you ask someone to transfer to your wallet and they send it to the wrong address.

    Regarding Central bank digital currencies these are just a way for central banks to bypass the banking system and hand themselves more control over ordinary citizens financial behaviour. So everyone in the country gets a wallet with the central bank and if say they want to generate some inflation they could send everyone say £3000 and mandate that any unspent wallet money expires in 4 weeks. This just provides a faster way to hyper inflate the currency as the central bank cryptocurrency will be 1:1 with the existing cash version of currency. Also they can suspend someone’s central bank wallet at any time for any number of reasons (eg if they refuse vaccination), they can apply tax more easily and directly, etc. BTC is not challenged by these central bank cryptocurrencies as its attractions are the fixed max supply meaning its sound money and also wallet assets can’t be confiscated at the whim of government since the blockchain ledger is distributed rather than centralised.

  9. Someone remind me why “cryptographically guaranteed thin air” is any less risky as a “store of value” than lumps of a yellow metal that has very few practical applications and it’s industrial useage volume is mere fractions of it’s “stored as bars in vaults” use.
    Still MASSIVE amounts of gold in the ground yet to be mined.
    What’s wrong with Lead? Tin? Some much rarer metal with limited amounts in the ground?
    What’s the human obsession with this weird yellow metal that makes it “apparently” valuable at all?
    It’s all illusory.

    • re “It’s all illusory.”

      yes it is , which is why I believe gold is also fiat / faith based currency .

      others disagree .

      All currencies / money are human inventions built on faith that the participants will accept what ever it is in any trade transaction.

      gold does not rust or rot and is a pretty yellow colour , that helped in the past when ypu could bury it and come back later when trouble has passed .

      Forbin

  10. ‘A unit of account, a store of value, a means of exchange.’ Three in one and one in three.
    Given what governments worldwide have got away with this year, is the pound in my bank account any less ethereal, any less subject to government fiat than a bitcoin?
    Gold has been favoured for thousands of years, because it does not rot or rust, looks quite nice, has a relatively limited supply, and unlike land you can put it in a sack and carry it with you (or hide it for later recovery) when an invading army comes your way … but mostly because that is what everyone else will find acceptable and negotiable.
    It is all down to a web of trust, a reasonable expectation that in an exchange of value you will come out of it with what you have bargained for.
    If governments move against bitcoin because they see it as a threat then that is an admission that their own versions of ‘money’ are not to be trusted.

    Historians will look back and see 2020 as marking the end of the 20th century, I do not know, but fear, what is to come.

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