Carl said:
Bitcoin is not so much a 'currency' as it is a digital gold and cross-border wealth transfer tool. In a way, it's deflationary aspect serves as a perfect counterpart to inflationary fiat currency. As for a method of value storage it is not much different than gold or silver. I don't see cryptos taking over the monetary system any time soon, but they are here and growing quickly.
Yes, and this is an important point. Bitcoin is a commodity with no intrinsic value, the only value it has is what I can get out of it in terms of USD. That is the reason it is so volatile, it is a derivative of the world reserve currencies. You have a few people who I will call Bitcoin purists, who believe it is the money of the future, and most of the rest are traders trying to make a quick buck, and there are a few others who are using it to circumvent capital controls. The purists see that the dollar is due for a collapse and see it becoming part of the basket of reserve currencies. If the USD blows up, it will leave an intense vacuum for Bitcoin or other currencies to fill. The biggest problem for Bitcoin is confidence, outside of a narrow circle of the avant-garde or hipster techies, basically no one accepts it, it has no history. Gold on the other hand can be converted into cash in any town with a population higher than 1000 or so. If cash is worthless, gold becomes the cash. Assuming Bitcoin gets around that problem, due to lack of credible alternatives, then there is the huge deflationary leverage the early adopters have based on the rigid cap on minable Bitcoins. If Bitcoin becomes widely used, the hoard that "Satoshi," which I really think is a pseudonym for some entity like DARPA, has would literally be able to buy up entire countries. That possibility, the fact that it is more fiat than fiat currency itself, combined with the mysterious origins of Bitcoin leave a bad taste in my mouth as to the intent of the system.
The elite can use either inflation or deflation to buy up the entire world, and I think this has been one of the arguments for moving away from gold, but since we're all so tired of inflation this has been forgotten. I don't really like using gold as money either, I just see it as a currency of last resort that tends to work over long time scales, even if it doesn't work very well. Gold is not as deflationary as Bitcoin, because the technology exists to mine more of it if it is given a fair value. I just don't think you could increase the supply of gold at 5% a year for a long time if you had to. So the size of your economy is limited by how much gold you can mine and/or steal. If you have an oligarchy with a significant fraction of the gold, they can row the economy back and forth between booms and busts, making people who are unable to save more desperate to acquire some money by devaluing their assets.
Paper money actually frees you from this restriction if you expand the money supply at exactly the same rate as economic growth. Society can actually create all the money it needs without being constrained by artificial scarcity. Then the bankers realized that this would also take the constraints off of their debt schemes and gamed it to their advantage. In order for something like Bitcoin to work, you would need a complete social package, take something like the blockchain idea and allow mining based on population and productivity growth, and it would be backed by some kind of social capital instead of complete abstraction; that is a subject for another post. The only way gold and BTC as it is currently constructed would work really, really well would be in a solid state economy where growth is near 0. If money had a relatively stable value over time, there is less incentive to hoard excessive amounts of it, and while you can still play games with the business cycle, the gains from it are lessened.
Carl said:
People in the crypto/gold space often bring up the idea of the total collapse, 'SHTF' scenario. If we do see a catastrophic collapse that cuts of the internet then of course yes, bitcoin will be useless. But will anyone really care about some shiny useless metal either? And if they do, why wouldn't they just shoot you and take your gold?
Short of a complete SHTF scenario, the way I see it, the government would have to expend actual energy and resources to take my gold. I may be wrong in thinking this, but I am not as enamored of the security of the blockchain and wallet keys as BTC enthusiasts. I don't see how the NSA, with all of the array of secret hypertech that they have, in conjunction with being the partial architects of many of the protocols used on the internet, could not just write some kind of super sophisticated virus, surreptitiously install it as a back door into various operating systems, which would be set up to activate at a certain coordinated time, turning the processing power of the network against itself. Knowing how deeply they are in bed with companies such as Microsoft, the only way you might be able to get around it is if you were backing up on some kind of Linux system you basically designed from scratch. While it would be a lot of work to set up initially, they would have a lot of time to create it while no one was suspecting it, and it would give them an effective "kill switch" with which to control everything. It could even be as prosaic as some sort of spyware, to see which devices have BTC wallets, and then using social networking or whatnot to see who the device is registered to and then arresting that person for money laundering. I think BTC is too obscure and unimportant for them to worry about it right now, it is just an interesting experiment in social engineering for them. This may be an unfounded fear, however that is why I innately distrust something that puts all of it's eggs in the digital world, especially something with sketchy beginnings, because I know that world is built largely on the back of deep state black budget projects.
So to bring all of my bantering in for a landing, what you really have is basically a highly speculative currency derivative. Despite all of the volatility surrounding it, I'd say if you have a $1000 that you can afford to lose, throwing it into BTC may not be such a bad idea. It all depends on when you get in and get out and like any speculative investment, you may make out like a bandit, but don't cry if you lose everything. I myself toyed with the idea of investing in BTC due to the profit potential and had an account set up on Mt Gox, ready to go. The exchange crashed two weeks later after one of BTCs parabolic climbs and before I had really invested anything and that pretty much cured me. I guess as long as your coins are in your wallet and not in the exchange you're much safer, but I felt sort of like that was a sign that it wasn't a direction I was meant to go in.
... yes.... the rug is being pulled... and Bitcoin seems like one of their R&D projects for NWO digital fiat... based in the new SDR.. with China now content as a new member... RUssia left out as usual of course, and India still too screwed up to be concerned with or matter much... the undercurrent flows with or without the state manipulation. The problem with Bitcoin recently is it seems to be in 'blowoff' mode as of late... will the usual suspects BFTD yet again and prop it up once more? a little time to consolidate to make it look legit and then the game continues... all of these bubbles are aligned in the same game... only Mother Nature or the SG 'rug pull' can change that.
