In the US, we have a strong Fiat currency, the dollar. (perhaps you have heard of it?). Bitcoin shines when the Fiat, or local, currency is not strong, and fees and bank charges are large. Think Venezuela, Argentina, South Korea. Bitcoin activity in these countries is large, and growing. Those governments can just print more fiat currency (which makes for rampant inflation) making Bitcoin a viable option for payments and moving money around. (This happened in India, where their fiat currency was briefly worthless).
There is also a finite limit to the number of Bitcoins in circulation; 21 Million. No government or “Bitcoin regulator” can just create more – like the governments do with paper currencies – it is fixed and will allow the price to rise once all 21 million are created through Bitcoin mining.
As I see it, there is a lot of activity in Bitcoin going on, and volatility, mining, facebook bans, etc., will all have an effect – but not kill off Bitcoin. You can see the current stats on how many times Bitcoin has been declared “Dead” on 99bitcoins. (spoiler alert – 273 times as of this writing)
Hodl on, and (if you feel like I do) Go long on Bitcoin!
To the Moon!
Thank you for reading my blog, and feel free to share! Best of luck with Bitcoin and all your investments!
Bitcoin purchases and transfers are “peer to peer” transactions. Using the Blockchain (the Bitcoin ledger system) no central clearinghouse is required to regulate any transaction; it occurs between two parties. The Blockchain is a transparent ledger that just records the transaction (in very simple terms). Individuals keep their Bitcoin in “Wallets” on smartphones or computers, or on specific websites that deal in currency transfers (like BTC to USD).
Governments regulate volume of money, interest rates, fee structures, and monitor it’s value against other fiat currencies. Financial transactions outside of government control (with no fees going to the monetary “gatekeepers”) are a nightmare for financial ministers everywhere.
In my opinion, Bitcoin is one component of the financial mechanism any government needs to work effectively. I am not convinced that cash (or precious metals) are going away anytime soon, but governments fear that losing their money-printing ability will weaken them considerably.
Banks and some governmental entities are scrambling to utilize blockchain technology, while publicly denouncing or denying Bitcoin as a monetary vehicle. Most notable among the nay-sayers was Jamie Dimon, of JP Morgan Chase.
Dimon himself has publicly said he sees potential in blockchain tech, and his company just announced this month the launch of a blockchain-based pilot to “significantly reduce” the number of entities needed to verify global payments, which would cut down transaction settlement times.
Countries with High inflation and unstable Fiat currency (Argentina, Venezuela, as examples) have seen Bitcoin transactions flourish as there are low or no fees, and Bitcoin valuation is more stable than the Fiat Currency.
If the government behind the Fiat currency becomes insolvent, or acquires extensive debt, their currency may be devalued (relative to other Fiat currencies), their ability to borrow money will be affected (lenders will demand higher interest rates because of the risk), and prices will climb as the currency loses value. At present, Venezuela, Argentina, Zimbabwe, and other countries are suffering due to the inflation they are experiencing.
Bitcoin to the Rescue When fiat currency is failing, the citizenry need a mechanism to trade and move money out of the country without fees and taxes; Bitcoin is an obvious choice. As a “peer to peer” unit of value, Bitcoin has minimal fees and a global reach. It is an ideal mechanism to prop up people when their monetary system is in a shambles, and the value of the local fiat currency drops.
In Venezuela, Zimbabwe, China, and other countries, Bitcoin is the method of choice for doing business without government oversight, transfer fees, and excessive taxation. Even in countries with stable currency, Bitcoin is a welcome addition to the mix of fiat currency, gold, and silver, for acquiring wealth and conducting business transactions.
By Alan Chenkin – Was mining Bitcoin back in the Gold rush days of 2011
When you get close to fully mining the entire 21 million bitcoins that can be mined, what do you do with all that mining equipment, optimized by being in areas where cooling and low cost power is available? The answer is simple – Initial Coin Offerings! Each coin requires:
· Its own blockchain
· People and groups mining, and using existing equipment and computers, etc., to mine the ICO
· Getting listed on exchanges, so people can buy the new coin with Bitcoin, crypto, and fiat currency
· Technology based on Satoshi’s work (essentially a Bitcoin clone, with some bells and whistles)
· Claims of additional utility and security, with white papers and some “reason for existing”
· Coins to be “Pre-Mined” (sold at a discount, to finance operations), sometimes as much as 50-60% BEFORE the coin is released
· And a ton of Hype (Have I told you about my new Chenkin Coin – it’s using the Blockchain to cure hunger, banish diseases and create world peace – GET IN ON IT NOW! – NOT.)
· FOMO. Fear of Missing out – for all the people who did not buy Bitcoin very low, “and want to get in on the ground floor” in the new coins ICO
This is not a small or capricious undertaking. According to Morning Brew, a daily news feed,
ICOs have raised $1.7 billion so far this year, on track to pass last year’s $6.5 billion.
An MIT report estimates that up to $317 million from ICOs has gone to scams.
Hedge funds and private investors receive special treatment to buy tokens at discounted rates. Some immediately flip them for large profits.
This is big business. At this writing, activity in Crypto-mining is way up. Hedge Funds are in it big time (and those guys are all about making big money). Here is the point that caught my eye, $317 Million (approx 20%) HAS GONE TO SCAMS. Don’t get me wrong, I am a big fan of Bitcoin and Cryptocurrency in general, but bad actors are making a killing here – and pumping out legitimate seeming coins for only one purpose – pump and dump. For me, a 20% chance that I will lose my money is a big risk. The landscape is littered with coins that tried, and couldn’t match the success of bitcoin, Litecoin, Ethereum, etc. So I watch the ICO show – filling my inbox and littering the chat boards with claims of being the next best thing, and keep my damn hands off the buy button! Big money is in this, and I am tempted, but I am not an insider in these coins, so I treat it like stock tips. If someone is telling ME about a hot investment, it’s usually not a good tip.
Invest with your head, don’t bet more than you can afford to lose in new ICO’s, and have fun. A few hundred dollars invested in my Chenkin Coin can give you months of excitement before I cash out and it’s value drops to zero. You can buy it on the worldwide Crypto exchange (designed for suckers, er, “Savvy Investors”), I hope you, like me, will enjoy the show, and invest in ICO’s with spare change and a well-earned skepticism, as the hedge funds and Winklevii work the room. And it’s a big room! Thanks for reading, and may your crypto investment give you enjoyment as it goes – wait for it – TO THE MOON!