- Internet & the Web
Cryptocurrency and Cryptogold
It should be a private matter between you and your computer. That is, if there is really such a thing as digital gold or even fairy dust.
But when it comes to the current state of global economic affairs, this kind of fairy dust might just hit the spot.
Which cryptocurrency is best?
It often depends upon one’s view of reality. If one feels that all financial transactions must be public, then Bitcoin, Litecoin, Feathercoin – even one of the Ethereum coins – are good choices.
Even physical gold, unless it is confiscated by governments, is also an excellent choice. Okay, toss in a little silver for good measure. Maybe some platinum. You can keep the plutonium.
Regardless, as of this writing, Bitcoin is not dead and the potential for profit is difficult to ignore. Halving or not, BTC is holding.
And isn't that the point?
Perhaps it is the capital flight from China. Maybe the problems in Argentina or Venezuela are giving Bitcoin the boost. Both assertions seem reasonable. Or is it Greece still? India? (I hear they like Bytecoin. Poor guys.)
You would think that recent 'gold backed' moves by China and Russia would at least slow the money escaping from those bastions of freedom. But that isn't happening. They leak like old car engines.
In the past, Bitcoin spiked in value. It was thought that the Cypriot mess caused the surge. It has also been suggested that false buying signals had been sent by large Bitcoin exchanges. Sort of a pump and dump scheme, but maybe accidental in origin.
In any event, after Bitcoin spiked in 2014, it retreated. Still, it has not yet fallen to its previous lows. As it is, it continues to climb...to be a safe haven?
When was the last time Bitcoin was valued under one dollar? Prior to 2014. Since that time, Bitcoins have consistently been worth thousands of dollars each.
But it has only been a few years. Many concerns still exist.
Pump and Dump
The infamous “Pump and Dump” schemes bother many.
“Pumpers,” often called “whales,” purchase large amounts of a particular crypto and entice other buyers into the market. It’s an old game.
The “Pumpers” then sell hard and leave the “bag holders” slack jawed.
Governmental regulation is another reality. Governments outlaw private currencies. Drive up the prices and thereby encourage the criminal elements – indeed, create criminals out of common citizens.
Taxation is yet another issue. How much will one owe (in the U.S. especially) when one sells, trades or uses Bitcoins? Can the revenue service track Bitcoins?
Please tell me you knew that Bitcoins can be tracked.
How about another "fear?"
The fear of a crash. Bubbles that go pop in the night.
The fact that Bitcoin values can go to zero at any given time. This is perhaps the 'Nightmare on Crypto Street" -- unless you live in Argentina or Venezuela. There, the monetary nightmare has become a socioeconomic reality.
Fears gives us that queasy feeling when we put cash in and receive Bitcoins in return.
For those in certain parts South America, Bitcoin is a Godsend. When nationalized currencies devalue, even Bitcoin is better than nothing. But don't forget, BTC can be traded for USD.
In China, where massive amounts of “paper wealth” has been accumulated and the Chinese government is devaluing the currency, thereby appropriating huge sums of money -- that money is finding an escape valve: Bitcoin. (Some say Feathercoin is next.)
Again, with all the gold they are amassing, why is capital still fleeing?
No matter -- the long game is being played. Amass gold to make sure that when the United States goes belly up, that at least they (the PBoC?) have something. At least the cronies in Beijing can buy a glass of wine. (Do the Chinese drink wine? I heard they were buying a lot of the French stuff.)
Certainly, Bitcoin is acting as a pressure relief valve for those who are being economically suppressed.
Within the last few years, Bitcoin buying volume has ticked up, following China's move to cheapen its currency. (Wait...and the US bid to do the same!)
Retirement Funds Grab
And in the U.S....
Recently, the government, seeing trillions of dollars just sitting in retirement accounts realized they could easy and legally 'use' that money.
Welcome, citizens. Your government, which is not bankrupt, has taken it upon themselves to ensure that all money market funds everywhere are safe and secure -- in government bonds.
Don't worry, those safe bonds and securities will never have negative interest rates. There is no such thing as the inflation tax.
How did Uncle Sam do this? Simple: over-regulation. It is now fiscally sensible to use government treasury instruments. So most investment houses are towing the line -- the 'party line.'
Uncle Sam will soon have trillions of extra dollars and not need a "QE" for several more months; unless investors pull their money out or move away from money market instruments.
And when investors do move away from these government instruments they will remove their cash -- especially from retirement accounts -- or reinvest in an already bloated market.
Uncle Sam makes a buck from any early withdrawal fees, if you are under the minimum retirement age and make early withdrawals; and your broker makes a commission if you reinvest. It's almost like "churning," but with a boost from the Feds.
And what are the big players doing with their money?
According to Matt Krantz, writer for USA Today, the money is going offshore. In his article, "A third of U.S. cash is held by 5 U.S. companies," dated May 22, 2016, Apple has the most cash: 215 Billion in 2015.
And of Apple's cash, 93% is offshore. Why?
Microsoft holds 94% of its cash offshore. Again, why?
Money Grab...Pushes Crypto higher?
It's the money grab and it's going international. This fact will only serve to push crypto’s into the stratosphere.
In fact, it's rather telling that Microsoft "partners" with various cryptocurrencies.
Bigger questions lurk in the cypto-stratosphere, however.
Such as: can Bitcoin take the pressure? Are other coins better suited to absorb the transaction volume, should savers come in droves?
In fact, it is well-known that Bitcoin may not be able to handle the ever-increasing volume of transactions. This is a hot debate, however.
As the current developers of Bitcoin squabble over improvements and changes, the original developers have moved on. To the originals, the ship is sinking.
The Private Cryptos
Perhaps it’s high time to diversify into other crypto's. And keep some of your hard-won crypto’s, private.
When the first pizza was purchased with Bitcoin, many thought it was a fluke. Now you can buy almost anything with them – with no intervening bank.
Naturally, many of us want to get in on the ground floor of something great. Some even want to make sure that nobody knows where their crypto’s are, how many they have or where they send them.
Are Monero and Aeon waiting for the rest of us? Or will it be Zcash? They are private. Only you know how many you have. If you send them, the receiver cannot track your transaction.
Which ever CryptoNote or cryptocurrency you choose, what matters is that you make an informed decision. And like the big companies stashing their cash beyond the reach of Uncle Sam, if one buys or mines, for example, your currency is beyond the reach of all governments.
And don't forget to look at the long-term price stability of crypto’s versus Bitcoin. You might be surprised.
Pan Private Digital Gold at your own risk, however -- or wait and miss out.
Remember, they are watching your Bitcoins.
But one added thing here. With the invention of the Lightening Network, privacy coins, such as Monero -- might be old hat.
(Note: the contents of this blog are the opinions of the writer. Do not base any investment decisions upon said information. Do your own research.)
© 2016 Jack Shorebird