Whenever we see an image of bitcoin, it’s not presented as a
blockchain, as it should be, but as a gold coin, which it is clearly
not.
Why should this be? Well, many of bitcoin’s staunchest supporters are
libertarians, who revile fiat currencies as being of no intrinsic
value. And they’re correct. Fiat currencies do not pass the Aristotle
test of being durable, divisible, portable and intrinsically valuable.
They, unfortunately, fail badly on the last requirement.
Unfortunately, so does bitcoin (and in describing bitcoin here, the
same comments apply to other cryptocurrencies); hence the tendency to
present it as a gold coin, something that
does satisfy all of Aristotle’s requirements.
So, why are libertarians, who, one would think would be just as
suspicious of electronic fiat currency as they would be about paper fiat
currency, its greatest supporters?
Well, bitcoin has been presented as a currency that’s not produced by
governments. It’s a blockchain, created by an unknown person or agency
and is promised to be limited in its total production (as are precious
metals.)
Of course, libertarians, by their very nature, tend to be suspicious
of such claims. Doug Casey has for years, quite rightly described the
dollar as an “I owe you nothing,” a mere promise from a government that
it will pay the bearer
if it sees fit to do so. He has also
quite rightly described the euro as a “who owes you nothing,” as it’s a
mere promise from an uber government that controls individual
governments that it will pay the bearer.
Following this line of reasoning, bitcoin is, (please forgive the
double-negative) “no one owes you nothing.” There is zero evidence of
who created bitcoin or whether there is any validity whatever as to the
promise of limited production.
So, why on earth are many intelligent people so in favour of bitcoin? Well, if it
proves to be legitimate, it’s by far the most useful form of currency
in an age when banks and governments are clamping down on the transfer
of currencies and, in fact, are likely to confiscate the deposits now
held in banks. Further, it might rival gold as a store of wealth.
Therefore, if it proves to be legitimate, it is unquestionably the
currency of the future for all those who value the freedom to do as they
please with their own money.
Unfortunately, there is that nagging, “if .” And then
there’s the recurrent argument that it has no intrinsic value, due to
its intangibility. It cannot be physically possessed. Its existence is
subject to the vagaries of the internet, without which it can instantly
go to zero and remain there, as have all the other fiat currencies over
history.
In my view, there are three faces to bitcoin. (Yes, a coin cannot
have three faces but, again, bitcoin is not really a coin.) One of them
is likely to prove to be the correct one and the reader should consider
them all, as each has a valid argument in its favour.
Face #1: Bitcoin Is the Future
Bitcoin is the currency of the Internet. It’s not produced by any
government and is therefore a decentralised worldwide digital currency.
It can be used to make purchases and other monetary transfers
anonymously. It’s easy and cheap to use as, currently, no country
regulates it. As other fiat currencies (paper currencies) become less
trustworthy, bitcoin is likely to increase in value. As Governments
around the world increase capital controls, it promises freedom from
governmental control.
The IMF describes digital currency as the way of the future and has
declared their intention of getting a digital currency in place by 2018
in what they describe as the “global economic reset.” Most international
banks are establishing blockchain tech and cryptocurrencies into their
business models. One, Goldman Sachs, describes
blockchain technology as the “new technology of trust,” citing the fact that every single transaction remains within the blockchain “ledger.”
Face #2: Bitcoin Will Fail
The most important objective of those who control the world economic
system is the coming re-set of the monetary system. The intention is to
eliminate paper currencies and
any other form of currency other
than their own digital world currency. By so-doing, every monetary
transaction, no matter how small, would be on record. Additionally,
banks could disallow any type of transaction which governments did not
endorse. Further, they would have the power to refuse access to and even
confiscate deposits.
Bitcoin is the very enemy of that reset, as it would allow the world
to simply opt-out of the world’s banking system. But, in retaliation,
banks could disallow the conversion of bitcoin to world currency and
could count on governments to classify bitcoin as “the currency of
terrorists,” making the use of bitcoin a crime.
Governments have already been able to track bitcoin use and have
arrested individuals who have made transactions that they disapprove of,
but, for whatever reason, they’ve not pursued this tracking ability
broadly as yet.
If the €500 note can successfully be eliminated under the pretense
that it’s favoured by terrorists, there can be little doubt that bitcoin
could be tarred with the same brush and made illegal internationally.
If it became illegal to accept bitcoin as payment, bitcoin would quickly
lose its perceived value and soon decline to its intrinsic value of
zero.
Face 3: Bitcoin Is a Trap and Will Succeed
Globalists support the concept of electronic blockchain currency
100%. So much so, that that the world’s leading banks, have touted it as
the way of the future.
Most people will accept the change to the new world digital currency
easily, as it will be so easy to use. They’re unlikely to worry overly
about the loss of control over their own money or their freedom to
privacy when making transactions.
But the flies in this ointment are the contrarians, the libertarians
who will do all they can to remain outside this system. Many hope to
escape the coming world digital blockchain currency by using … a digital
blockchain currency - bitcoin.
Bitcoin was created by the fictitious Satoshi Nakamoto, an admitted
nom de plume that could be a cover for the Mises Institute or the CATO
Institute, but just as easily could be a cover for the Federal Reserve
or the IMF.
Neither of these latter entities is actively opposing the use of
bitcoin. In fact, if it were their own system, they would have access to
the record of all transactions that are presently assumed to be
disappearing into the ozone.
Rather than fight those who oppose currency control, they would be
wise to co-opt those who lead it and redirect them to lead the charge
into world blockchain currency.
Each of the above is a valid argument and should be considered by the
reader. To be sure, the concept of currency is about to change more
dramatically than ever before in history.
The jury is still out and more information is needed prior to coming
to a conclusion as to where this is all headed. At the present time,
bitcoin is highly useful for quick transactions and may be worth the
risk as a short-term investment. As a store of wealth it remains a
gamble. The best move might be to neither love nor hate bitcoin, but to
wait and see.
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Jeff Thomas is British and resides in the Caribbean. The son of an economist and historian, he learned early to be distrustful of governments as a general principle. Although he spent his career creating and developing businesses, for eight years, he penned a weekly newspaper column on the theme of limiting government. He began his study of economics around 1990, learning initially from Sir John Templeton, then Harry Schulz and Doug Casey and later others of an Austrian persuasion. He is now a regular feature writer for Casey Research’s International Man (http://www.internationalman.com) and Strategic Wealth Preservation in the Cayman Islands.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
