Posted on 01/30/2021 4:35:29 AM PST by Kaslin
Editor's note: This column was authored by Emilie Dye.
Last January, you could buy a bitcoin for less than $9,000 — that's roughly the downpayment on a 2018 Ford F-150. Today, it costs around $37,000 — that's almost enough to buy the truck outright.
Much of bitcoin’s recent popularity is a product of the times. In 2020, governments around the world spent tax dollars like teenagers throwing around their dads’ credit cards. It’s not surprising that many now wonder if maybe we shouldn’t trust the government to be the guardian of the money supply.
Bitcoin is an entirely digital currency which uses blockchain technology to make and verify transactions. Think of blockchain as essentially a ledger or record of all transactions made with each unit of the currency. Each bitcoin is a computer file with a history of all transactions back to the very first one made on the genius block.
No different from the dollar, bitcoins are valuable because we believe they are valuable. We trust that we can exchange a bitcoin, or a dollar, for certain goods, services, or other currencies.
But unlike the US dollar, bitcoin’s value isn’t determined by governments, and the money supply cannot change. There will never be more than 21 million bitcoins. The founder and originator, Satoshi Nakamoto, remains anonymous. Giving true transparency, the software running the blockchain is open source (anyone can see the code and add to it) and all changes are made by a rough consensus of the developers. But ultimately users must consent to any change in the code.
Throughout the COVID-19 crisis, governments around the world have been reacting. They have cut interest rates and pumped money into the economy through both monetary and fiscal stimulus. While at the moment we are worried about businesses closing and people losing their jobs, inflation is a real threat in 2021.
We are already seeing it in some markets. For example, look at cars again: This time last year I bought a 2002 Mazda MX-5 for $7,500. A quick perusal of used car sites shows that same car is now selling between $14,000 and $16,000. Granted, I’m from Australia and the Australian used car market is hardly a universal measurement, but still it’s concerning that my dollar is worth less of a Mazda than it was last year.
Once our lives finally get back to something that can be called “normal,” many of us will start spending. Those who kept their jobs during this crisis have likely seen their bank accounts grow with restaurants closed and travel restricted. When the flood gates open people are going to want to spend and enjoy life without lockdowns. The increased demand will inevitably lead to an increase in prices.
When the U.S. dollar becomes less reliable, people understandably want their savings in more tangible assets. In the past, when people flocked to safety they bought gold and other precious metals. But in this digital age, bitcoin is the new gold.
Still skeptical? Look at Venezuela: Venezuelans facing extreme hyperinflation picked up bitcoin as a currency. According to coindesk, “expats use bitcoin to send remittances back home, where locals convert it to bolivars to buy food and pay bills.” Venezuela now has a thriving peer to peer bitcoin network as a result of government instability and inflation.
The United States is not facing inflation anything like that which infected Venezuela. However, U.S. debt is now at $26.7 trillion — that’s $81,353 per American. That along with high levels of coronavirus spending should give Americans ample reason to worry about their savings and to diversify into other assets.
If the U.S. cannot pay back its debt the value of the dollar will drop. We can’t quantitatively ease ourselves into prosperity and any attempt to do so devalues our dollar.
Bitcoin is a currency immune to political whims. Anyone looking to protect their savings and to diversify their assets should consider jumping on the bitcoin bandwagon instead of relying solely on money managed by a central government.
Hmmmm.
Gold comes out of a mine and is real. Just because you draw an analogy to mining bitcoins, don’t make it real.
Ponzi scheme on hemmorroids...
Pogs.
There’s a Bitcoin ATM at my local gas station......
That is the least true thing about BTC.
Curtis Yarvin wrote in 2013: Bitcoin dies in two very simple steps.
1: A DOJ indictment is unsealed which names everyone on Planet Three who operates, or has ever operated, or perhaps who has ever even breathed on, a BTC/USD exchange, as a criminal defendant.
The charge: money laundering. The evidence: the defendants knew that BTC were used for organized criminal activity. Therefore, they knew they were transferring money for criminals. This is quite simply the definition of “money laundering.”
(Obviously, prosecution under our modern “rule of law” proceeds according to these broad definitions, without regard to any specific technicalities. For instance, Aaron Swartz downloaded many more papers from JSTOR than JSTOR wanted him to. Therefore, he used JSTOR’s computers in a way that JSTOR didn’t want them to be used. Therefore, he could be prosecuted for “computer hacking.” Indeed he seemed to sense this when he put his bike helmet over his face and ran from the police. The details? They might have mattered, at the trial. But of course there was no trial.)
2: The BTC/USD price falls to 0 and remains there. BTC are permanently worthless. Everyone who was involved in the Bitcoin market and was holding BTC when the indictments were unsealed feels burned. Everyone who got out feels lucky. Many who escape prosecution, in fact, feel lucky. And BTC is remembered as an epic bubble.
#Silvertothemoon!
I wish I were financially aware enough to jump on the bandwagonscearly. I would have sold all my Bitcoin and gotten out, and I would have had millions to my name.
I wonder how many people put down 9,000.00 on their F150 loan?
At least you can hold pogs in your hand. Try that with a bitcoin.
Bought 4 bitcoin when I was working in Saudi not as an investment but as a way to buy on the internet because sometimes my credit card would be blocked because of my location.
Pain 1000 for the 4 bitcoin.
Sold one and made a 2000 profit.
Still have 3.2, plus other crypto that spun off of the bitcoin.
At this point anything is gravy, no risk of a loss.
I’m gonna hang on for awhile and see what happens....
LOL.
When was the last time you held a T bill in your hand?
Or shares of a mutual fund or stock?
Most of the money in the world is digital now.
sure looks like it.
3. Because every transaction is traceable, you lack annominity. If the government ever controls the data base, it just become a visa card.
The only thing Yarvin missed was that holding BTC would be a marker of “white supremacy”.
I bought 1.0 BTC at an ATM at a gas station in Fairfax. I remember feeding in the twenty dollar bills, and getting a piece of paper with the private key. Seemed a little expensive at the time.
It’s fashionable to ignore the underlying value of things.
“ No different from the dollar, bitcoins are valuable because we believe they are valuable.”
The full faith & credit of America and used electricity are the same? I think not.
That would be true if the government said it was money. But it's a commodity and we (properly) pay gains taxes when it is traded for a different commodity or sold for cash. All those transactions are easily traced.
Bitcoin May Be the New Gold - Don’t know about that but I just read that hedge funds are shorting bitcoin. Could be the next gamestop.
I enjoy the comments on Bitcoin threads. They are so 2013.
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