Bitcoin is a digital currency that’s been around since 2009, and has exploded in value in the past few months. Here’s a quick video of what exactly bitcoin is:
In December last year, I met up with my friend Steve of keepyourassets.net and freemarketincome.com and had a long discussion about Bitcoin. I had known about it for about a year and a half prior to this meeting. However, I was extremely skeptical of the whole concept and when the security breach with one of the online bitcoin exchanges, Mt Gox, happened in 2011, I wrote the whole thing off.
But I understood very little about why that was not indicative of the validity or stability of this currency.
Bitcoin itself is untouchable. It’s literally bits of information. It’s not controlled by central banks or any bureaucracy. No one can “take it down”. Governments can’t attack it (or like my friend Trace from runtogold.com likes to say, “they can’t point guns at a math equation”!), and no one can “print” bitcoins from thin air (like they are currently doing with the US dollar).
Now, bitcoin is slowly being accepted at various places out there. WordPress.com opened up to accepting bitcoin in November last year. This year, reddit.com and namecheap.com both started accepting bitcoin. Online poker and gambling sites have been booming with bitcoin- suddenly, American poker players can legally gamble online again.
Every piece of news seems to make bitcoin go up even more. Everyone is looking for a currency that may actually increase in value, instead of being devalued like most of the fiat currencies out there.So this year I dove in to bitcoin and bought my first batch when they were $14 a piece. Then a month later I bought again at $27. I was sure that there would be a pullback, but here we are at the end of March, and there’s no stopping it. Today, I bought some more at $80 each.
The Argentinian government is instituting price controls, and this is driving people into the black market and into bitcoin.
So why else would I be crazy enough to buy more of this invisible currency at it’s all time high? A few things:
- It’s not a speculative investment for me. It’s simply trading value. I don’t think bitcoin is going to the moon (although it might!), but I trust in it more than the US dollar, which I do believe is heading to the grave. So, I don’t believe it’s possible to time bitcoin. It may well have a pullback at some point. I hope it does, I’ll buy more. But I will keep trading my US fiat dollars for bitcoins as much as I can afford to.
- It’s the biggest invention since the internet itself. Who knows if bitcoin will survive forever and become a mainstream currency? However, digital currencies are now here to stay, whether it’s bitcoin or one of the many other competing currencies already on the market…or something new that we haven’t seen yet.
- Governments are not here to protect our money, in fact, they are a drain on our money. I choose to take my financial security into my own hands and diversify into gold, silver, and bitcoin. The worse the financial picture looks, the more likely the government right here in the US will do crazy things like seize bank accounts and create hyperinflation. I refuse to be part of the masses who will drown in this mess.
- Bitcoin trading is as private as you can get. I can send as many bitcoins as I like to anyone in the world. There’s no limit, and there’s no bureaucrats snooping around my business like they do with Paypal.
- Holding dollars is a deflationary position. In other words, by holding dollars, you are losing wealth. Gold and silver I believe will be stable and safe for a long time, but bitcoin is the new frontier. My original investment into bitcoin is now up 571%, while the dollar, gold, and silver have sunk.
What about the argument that goes, “But bitcoin is not a real currency…it’s a fantasy and backed by nothing!”
To this I say:
1. The US dollar has been backed by nothing since 1971. Yet, we still use it as currency!
2. Gold and silver are backed by nothing. Yet, it has an agreed upon market value.
The secondary argument goes something like this:
“Ok, but gold and silver have purposes other than trade. They have industrial uses.”
Yes, this is true. But to this, I say:
1. Most of the value built into gold and silver is from speculative investments and safety from the collapsing dollar- not gold necklaces and silverware.
2. Bitcoin is simply the best currency available to us in the present state of the world. This doesn’t mean that if somehow we arrive at a world in the future where central banks and governments aren’t colluding to inflate away wealth via money printing, currency controls, and other financial nonsense, that another form of currency (perhaps gold-backed) wouldn’t be a better option. Bitcoin is a solution to today’s problems.
The tide has shifted and the veil has been lifted from the banksters who are robbing people blind worldwide. Many people will eventually be using bitcoins, not because they see the sound principles behind it, or because they were convinced of its stability and legitimacy, but because they will be forced into it by the looters who would otherwise extort their wealth like a thief in the night.