Could Bitcoin Replace the Dollar?

Armstrong Economics ^ | 7 July 25 | Martin Armstrong

[delta7]

People continue to ask if Bitcoin will replace the dollar. They believe that the recent surge in Bitcoin indicates that it will topple the USD as the world’s reserve currency, but that is merely propaganda. You must understand that Bitcoin is simply a trading vehicle, not a currency. I cannot stress that point enough. My opinion has been unpopular, and clients have walked away due to my stance on crypto. That’s fine, as I am not in this for the money. I can only adequately inform my clients of the unbiased truth and hope that those willing to listen will heed the computer’s warnings.

To begin with, there is much speculation about the founder(s) — Satoshi Nakamoto – who created Bitcoin (BTC) on June 3, 2009. The mystery person or group (or government agency) has been MIA since 2011. Yet 1 million Bitcoins remain in their original account, untouched. His wallet is estimated to be worth over $81 billion at the time of this writing, and if this is indeed an individual, he or she is one of the top 15 richest people in the world. They have never moved a fraction of a BTC from their account. So, one wallet contains 5% of all mined bitcoin. Will this person or entity perpetually hold?

They expect us to believe some mysterious Japanese man created the blockchain technology and simply evaded all world governments. They claim Bitcoin is an anti-government vehicle, but it is a bureaucrat’s dream because it allows them to track where funds are coming from and going. In 1996, the US government released a white paper entitled, “How to make a mint: the cryptography of anonymous electronic cash.” Released by the National Security Agency Office of Information Security Research and Technology, this document explains how a government agency could create something like Bitcoin or another cryptocurrency. They had been attempting to create one for years and then magically Bitcoin came on the scene.

I encourage anyone interested in crypto to read my article regarding this study. Blockchain was created with surveillance at the top of mind.

HowtoMakeaMint2

Bitcoin’s price is akin to the problem that existed when the bubble burst in 1966 with mutual funds because they were listed back then. The value can change at a volatility rate of 10x that of the dollar, making it a highly dangerous instrument as a store of wealth. It is solely a trading vehicle until they weigh it and the value is changed.

In 1966, investors bid the mutual funds up beyond net asset value, so during the crash, people lost everything when they thought it was a secure investment. The net underlying assets may have dropped 20%, but they paid 20% over the net asset value and then sold at 50% of the net asset value. Many mutual funds crashed 70-90%, whereas the Dow drop was 26.5%. Ever since mutual funds have no longer been allowed to be listed. You go in and out at net asset value. Bitcoin must change its structure, or it will never become a valid currency with a stable store of value, which is supposed to be the whole point. It is just an asset class of high volatility.

I have not been bullish on digital currency, as it’s a trading vehicle no different than any other commodity or stock. Sure, a profit could be made, and many have had great success. We do include Bitcoin in our models, and those subscribed to Socrates will see that our arrays are picking up on Bitcoin next year.

Bitcoin is a trading vehicle that is no different from wheat or cattle. It is NOT a store of wealth, as it fluctuates like everything else. It rises and falls no different than any other trading instrument. It is not a “store” of value maintaining some constant value to park your money. We need to get realistic here. The concept of Bitcoin replacing the dollar fails to comprehend what makes something the world’s reserve currency. I will write a piece explaining that aspect since it is crucial to understand.

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TOPICS:
KEYWORDS: bitcoin; btc; martinarmstrong; multiplenicks; ntsa

[Vermont Lt]

Also consider that hundreds of millions of people in the world cannot do simple banking. Yet they have access to a smart phone. The Bitcoin environment allows those people to transact, transfer, and save small amounts of money that normal banks would simply dismiss.

I have to chuckle at the people who want to tax remittances out of the US by immigrants. I would suggest that MOST immigrants have moved to crypto because it’s cheaper, easier, faster, and it’s not going to be blocked or taxed by any government.

Remember how the Canadian truckers were penalized by debanking? That stuff cannot happen in a bitcoin environment. Governments use banking and taxes as weapons to get what they want—and to direct the herds. Bitcoin destroys that ability.

[TexasGator]

"That said, us older ones that have survived more than a few financial crisis don’t trust intangibles, words or promises….with good reason."

Here I am surviving the 2008 crisis!

[Tallguy]

"In 1996, the US government released a white paper entitled, “How to make a mint: the cryptography of anonymous electronic cash.” Released by the National Security Agency Office of Information Security Research and Technology, this document explains how a government agency could create something like Bitcoin or another cryptocurrency."

The present federal government can't roll-out a simple website without botching it. I'd be shocked if some government agency did this AND kept it a secret.

That said... I've come to the same conclusion as Mr. Armstrong. Bitcoin isn't a currency for everyday use... but it might be a sort of reserve currency.

[TexasGator]

“In 1966, investors bid the mutual funds up beyond net asset value, so during the crash, people lost everything when they thought it was a secure investment. The net underlying assets may have dropped 20%, but they paid 20% over the net asset value and then sold at 50% of the net asset value. Many mutual funds crashed 70-90%, whereas the Dow drop was 26.5%. Ever since mutual funds have no longer been allowed to be listed.”

LOL! No wonder the SEC banned you! You are full of fake BS.

[del griffith]

What you say is true. Add to that it is a great device to launder money. Thus the reason the immigrants have an interest in it.

[Vermont Lt]

It is a public ledger.

Trust me when I tell you, the IRS can track every transaction made from your wallet. And buying crypto in the US requires all of the KNOW YOUR CUSTOMER steps that you would have at any brokerage.

Doing sketchy things on the blockchain is not as easy as it was in 2011.

[LegendHasIt]

NO, Bitcoin won’t replace the dollar.

But I fear that some sort of “Fedcoin’ digital ‘currency’ will.

No way the Feds will ever allow some sort of independent ‘monetary’ exchange system to replace their fiat.

[del griffith]

The key words are buying in the US.

[Vermont Lt]

Well, since I don’t plan on being anywhere else, I only know about buying here.

And money laundering still requires you to convert it back into currency. I am not sure what you are making reference to?

We could do 1000x more to curtail drug trafficking if we simply forced a replacement of the $100 bill with new currency. Lots more bad stuff is done with Benjamins that has ever been done with bitcoin.

[TexasGator]

“I have to chuckle at the people who want to tax remittances out of the US by immigrants. I would suggest that MOST immigrants have moved to crypto because it’s cheaper, easier, faster, and it’s not going to be blocked or taxed by any government.”

Over $60 million a year sent by non crypto methods. Doesn’t sound like most immigrants have moved to crypto.

And neither will a 3% tax move them.

[Vermont Lt]

You think $60 million is a lot?

That is maybe a couple of months worth of money moving out of the US.

[TexasGator]

“You think $60 million is a lot?”

Typo: $60 Billion.