Screw with the dollar long enough and the free market was inevitably going to step in.
Ironically, though the Chinese and Russians have been complaining against the soft tyranny and proxy world taxation by the US on every nation on earth represented by the endless printing of the dollar, they can’t countenance a currency they can’t control either.
Bitcoin is a Nobel-worthy breakthrough, in that it is the antidote to the 100 percent failure rate of fiat currencies throughout history.
The single reservation I have with bitcoin is that digital is ephemeral, and I worry about having bitcoin accounts wiped or the general failure of the world grid.
With commodity-backed currency, you can always go back to the vault and count it again, physically.
Having said all of that, the fact that the bitcoin ledger is distributed to every bitcoin participant mitigates against a massive failure of the currency (albeit not against having your digital wallet swiped).
Prediction - once central governments have figured out a way to manipulate this without us knowing about it, they will suddenly support it. If central governments are for bitcoin, it will be time to cash out.
What MAY end up happening is that there will be MULTIPLE digital currencies, with fixed exchange rates (since the ledgers are public and open, and since the total units of currency also fixed and known, there will never be a fluctuation in digital exchange rates).
Where the swings will be wild is in the fiat dollar exchanges vs digital currencies. If the Chinese demand you purchase in yuan, and their presses go white hot with all the printing, the firm peg represented by the digital currency will mitigate the inflation factor. Less bitcoin will buy way, way more yuan on the world exchange.
The scary thing here for governments is that with bitcoin the days of monetizing your debt will be over. Keep on printing if you will, but per unit bitcoin it will just take more dollars to balance it.
Today, when we print more dollars, foreign governments have to print more of their currency in response in order for their currencies to not to be so strong against the dollar, and disadvantage their countries exports.
Bitcoin represents a truly independent reserve bank that, for now, appears beyond political manipulation.
We’ll see.
Very well put! And perhaps a Nobel prize will flush out the inventor(s)? :)
"The following chart clearly shows that 2013 was a pivot year in which the monetary base M0 grew exponentially while net M2 (expressed on the chart line as M2 minus M0) declined significantly."
Inflation Vs Deflation – The Ultimate Chartbook Of 'Monetary Tectonics'