Time for my yearly Bitcoin post! Global financial collapse edition.
People following Bitcoin have been discussing this since the dawn of time, also known as “The Genesis Block”. These days, the reality of it is becoming more and more apparent to anyone who cares to look: the entire, global, non-backed-fiat economy, where central banks and governments are in a position to issue money at their whim, is showing its cracks.
It’s a textbook example of control tightening more and more until reality is squeezed out of its grip, shattering the old machinations of control and leaving space for something new to emerge — to hopefully better harness the underlying reality for the greater collective good.
How Did We Get Here?
The way governments have been handling money since the “Nixon Shock” of 1971, where the value of the US Dollar was disconnected from gold, is increasingly going against the spirit and purpose of value exchange and use of money. The less money, a way of storing and exchanging work energy as potential energy, based in the collective agreement of people to treat it as such, is reliably, and in actuality, tied to work and value creation, the more this agreement, this shared story, this collective hallucination, is stretched to a degree that may burst it completely.
The policies put in place — originally, creating more and more debt that’s impossible to ever repay — and now, plans to simply print money without even that feeble justification — make the basic relationship between work and value creation and monetary reward tenuous at best, and non-existent at worst. When only the controlling elite get to decide who gets rewarded, and based on narrow interests disconnected from the intelligence of the markets, the instrument of reward loses its meaning.
This isn’t a post about the history of money and its use, though. There are many good resources on the web to explore this deeply, and I’ll post some (and encourage you to) in the comments. What I want to point out is that -
* When government debt, i.e. money allocated by governments at their discretion with the expectations their constituents work to repay it, are ever expanding without recourse
* Where political interest is to delay a recession and prop up the economy, leading to so much money flying around that no one wants it such that there’s now 17 *T*rillion dollars of debt being traded at a _negative_ interest rate
* Where a special class of people in the world are essentially _being paid to borrow money_ while everyone else is struggling to pay mortgages, credit card debt, and student loans
* Where all major global fiat currencies are being devalued against each other…..
What is our money being devalued against if ALL fiat currencies are being devalued?
The answer is — it’s being devalued against other things in the world that ARE finite, that do have a non-, or less-, imaginary value. Chief among them are gold, which throughout human history has been seen as the de-facto store of value, as well as a refuge against crazy monetary policies and the collapse of economies, and Bitcoin — which more and more is seen as a better version of gold.
Yes, both these still hold imaginary, agreed upon value. The use of gold in industry doesn’t warrant even 1% of its nominal value, and Bitcoin doesn’t have even that going for it. However, they are FINITE. i.e. no entity can create more of these out of thin air. With Bitcoin in particular, the total amount ever in existence is a known quantity that no one can sabotage, alter, or mine out of asteroids. Unlike fiat money, and to some degree, gold, Bitcoin is not bound to or controlled by the imagination and will of a select few; more of the participants in the economy can use it in any way they wish, allowing the economy to expand in new ways without needing agreement from supervising entities.
I’m electing to only provide a small taste of things here and prod you to go do your own research. While the current state of affairs may last for years to come, patch after patch applied, it’s not unlikely that we’re on the cusp of a revolution in how we organize our economies on both the local and global scale, moving away from the experiment of centrally-controlled, non-backed fiat money. When that happens, or even if more people simply believe it’s a possibility, both gold and Bitcoin are going to see a surge in interest — and price — against fiat. Whether that situation persists into a new economic model or not, both gold and Bitcoin may be the only safe havens in the tumultuous times between the downfall of the current economy and that future.
I am much more interested in Bitcoin, myself — it being superior to gold in every way except in its reliance on the digital realm — and have begun treating it as a hedge against the meltdown of the global economy… with gold remaining a hedge against some more cataclysmic event entailing the collapse of the Internet. ^_^
Improving Bitcoin Fundamentals
Other than that, Bitcoin fundamentals are better than ever, with more and more people using it, more institutions treating it as a robust financial instrument as part of their investment strategy, and with the next halving, May 2020, bringing a further reduction in the supply of Bitcoin released to miners. There are only 3 out of 21 million Bitcoin that have not yet been released, and the rate of their release is being cut in half, as demand continually grows…
If you bought in when I posted last year, you’d have made ~35–85% selling any time over the past 4 months… which I hope you haven’t, as price is primed to skyrocket if and when more people tune in to the flaws of our existing economic structures. I believe now is a great point of entry again — with a MAJOR potential upside as Bitcoin experiences another growth spurt towards the next order of magnitude — and with little potential downside.
There’s a lot more to say about the risks involved with being married to the fiat economy, the dwindling value of our pensions and ability to provide for us, the inability of governments to regulate their way out of this mess…. suffice it to say that I hope all of my friends and family hold on to at least one Bitcoin as we move deeper and deeper into these uncharted territories.
Originally posted on FB, 10.19.19