'Bitcoin' is on a tear away rally. Its' performance, over the last year, has
been outstanding and it has outperformed most 'asset classes', by a wide margin.
It is probably the only asset class which beats out both gold and silver, in
2016. Why is it shooting into outer space?
People look at alternate asset classes when their confidence in traditional
assets fades. Since the beginning of the year, both the stock and the commodity
markets have been on a roller coaster ride while catching both the bulls and
the bears, on the wrong side.
The macroeconomic situation of the world does not give confidence to the astute
investors which is evident by the return of the legendary George Soros, who
has come out of retirement to short the overblown markets. Similarly, other
hedge fund managers are stocking up on gold, which supports our view that a
'financial crisis' is right around the corner.
The "Brexit" results have also opened up a possibility of another round of
easing by the central banks, around the world. The Bank of England will most
likely resort to an easing schedule during the next meeting which will be followed
by the European Central Bank and the FED. Post victory in the elections, the
Japanese Prime Minister Shinzo
Abe is likely to push the Bank of Japan to announce another round of 'easing'.
Since the last 'financial crisis', the combined central
banks have pumped massive amounts of money into the system and they continue
to do so, at a rapid pace, nonetheless, the world is closer to a 'financial
crisis' than ever before.
The FED's money printing policy had led the commodity Guru Jim
Rogers to remark: "The FED will continue to print money until there are
no trees left in America."
'Bitcoin' is doing the opposite of central banks:
Compare this with the cryptocurrency 'bitcoin'. Unlike the traditional currencies,
the 'Bitcoin' has an upper limit of 21 million coins, post which no more Bitcoins
can be mined.
Every subsequent mining will become difficult and will reduce the reward associated
with mining each block. Satoshi
Nakamoto programmed that post-mining of 210,000 blocks, the rewards will
be halved.
Initially, the reward was 50 'Bitcoins' for every block, which was halved
by the end of 2012, at which time the reward was reduced to 25 'Bitcoins' per
block.
The next round of halving took place, last week, when the rewards were reduced
to 12.5 'Bitcoins' per block.
While the central banks have been on a printing spree, the 'Bitcoin' is on
a tightening route which boosts its' price, as is visible in its' sharp rise,
this year.
A few miners will find it difficult to
continue mining at the halved rewards which is likely to slow down new mining
as halving will continue, in the future.
"The block halving will dramatically decrease the bitcoin being added as we
approach 75 percent of all bitcoin issued. People understand that in this world
of ever expanding assets and printing of money, we have something that's fixed
and limited in issuance. It gives a decent alternative for people who want
to hold assets that can have sustained purchasing power," stated Bobby Lee,
Chief Executive of BTCC which is one of the largest' bitcoin' exchanges, in
the world, based in China reports CNBC.
I recently watch a fantastic TEDX talk on Bitcoin and digital currencies and
how they are changing the world, financial systems, and lives in huge way,
and this is only the tip of the iceberg. This TEDX Talk makes so much logical
sense why bitcoin and other currencies are so important for us as individual's
- Watch Video
However, the 'Bitcoins' volatility has dropped dramatically over the past
few years with the lowest linear level of volatility seen since is this asset
class started. It has become easier to use for trading, purchasing and using
for purchases. I am presently only highlighting that readers will do well to
keep an eye on 'Bitcoins' and other crypto/digital currencies, along with gold
and silver.
In fact, I have been researching the digital wallet solution where I can purchase
many up and coming digital currencies within one location as a NEW ASSET class
for my portfolio. Why? Because I firmly believe the masses will slowly migrate
their money into various digital currencies a safe haven store of wealth and
for ease of use. Payments can be made with your mobile phone to anyone, anywhere
in the world and for any amount with ZERO fees/costs, and in many cases it
cannot be traced.
Sir John Templeton, the legendary mutual fund manager and founder of Templeton
Group, said:
"Invest in many different places - there is safety in numbers."
So in short, I will share with you in future articles and as a subscriber
to my trading
and investing newsletter exactly which digital wallet, and digital currencies
I will be buying and interested in learning more about as the world and financial
systems evolve. When the time is right to invest my followers will know.
