Satoshi’s Revolution

[Editor’s Note: The following post is by TDV contributor, Tyler Yasaka]

For the past 100 years, the private entity known as the Federal Reserve has been manipulating the American economy and destroying the dollar. From the Great Depression of the 1930’s to the Recession of 2008, millions of ordinary people around the world have suffered the consequences.

Enter cryptocurrencies. In 2008, in the midst of the recession, a shady figure known as Satoshi Nakamoto released to the world a brand new technology. It was a digital currency called Bitcoin. Now, to be fair, this was not the first digital currency to be created. However, it was unique in one particular aspect—it was entirely decentralized. There was no central issuer of bitcoin. Rather, it was a network with a particular framework in place. That framework was not enforced not by any one person or group. That framework was enforced by the users of bitcoin. For the first time in history, there was a digital currency whose legitimacy was derived directly from its users.

At first, Bitcoin was just used by programmers and computer geeks. It remained under the radar for quite some time, slowly gaining value and attention, but still remaining largely unnoticed. It began to gain recognition among libertarian circles as an alternative to fiat currencies, and more and more people began to jump on board. Offshoots of bitcoin (such as Litecoin) that had been created began gaining traction during this time as well.

But bitcoin’s big break came in March 2013, when the bank accounts on the island of Cyprus were frozen and “taxed” large percentages as part of an “emergency bailout”. Realizing that this could happen in other countries too, people all over the world began moving some of their money out of the banks and converting it into bitcoin. Bitcoin’s price shot up to over $200 per bitcoin in April, before falling back down to around $100 shortly after. Bitcoin began to gain the interest of financial experts in the media, and TDV’s own Jeff Berwick appeared on several major networks to talk about this new technology.

For several months, bitcoin trotted along at approximately this price. There didn’t seem to be much major movement until early October, when the Dread Pirate Roberts of Silk Road was arrested, and the online black market shut down. This, it seemed to some, would spell the end of bitcoin.

But nothing could be further from the truth. Shortly after the shutdown of Silk Road, bitcoin’s price began to surge. By the beginning of November, bitcoin had again reached $200 on the Mt. Gox exchange. And in a mere 2 weeks, its price doubled.

On Monday, November 18, the United States Congress held a hearing to discuss “virtual currencies.” Bitcoin had gained enough mainstream media attention that it caught the government’s eye. The world eagerly anticipated what the US government would have to say about the new currency.

The hearing was cautiously favorable towards the potential of bitcoin being accepted by Big Brother as a legitimate medium of exchange. The market reacted positively to the hearing, with bitcoin peaking at over $700 shortly after.

As I write this on November 27, 2013, bitcoin has just surpassed the $1000 mark on Mt. Gox. Litecoin also has begun to surge, climbing from around $10 to currently over $29 within the last few days. All over the world, from Argentina to China, people are buying into the phenomenon. In Argentina, farmers are using bitcoin to sell their products to customers. BTC China has become the world’s largest bitcoin exchange.

And bitcoin is beginning to gain acceptance in the business world as well. Online businesses such as WordPress, Shopify, and Gyft are accepting bitcoin as a payment method. Some Subway stores in the US are accepting bitcoin.

You can now book a flight with bitcoin. And apparently, you can even use bitcoin to go to space.

Perhaps what is even more interesting is a major business startup called Circle. Intending to help make bitcoin more accessible to customers and businesses, Circle has recently received $9 million in funding from one of the early Facebook investors.

Cryptocurrencies are booming, but there are many questions to be answered. Is this just a speculative bubble? Can cryptocurrencies work as real currency? What is causing the surge in price?

While I could speculate all day, I ultimately do not have definitive answers to these questions. But there is one thing that I am certain of—the future of money will never be the same. Satoshi Nakamoto has started a revolution in money. There is no going back.

Comments or questions? Email us at [email protected] and we may use your email in our Feedback Friday each week.

Tyler Yasaka is a Dollar Vigilante contributor and young rebel who grew up in the Heart of the South: Alabama. Tyler was homeschooled from kindergarten through 12th grade. Upon turning 18, Tyler began looking into politics and discovered that things were not what they seemed. He graduated at the top of his 10-student homeschool class, and gave a valedictorian speech titled, “The Role of Government.” Tyler then began attending The University of North Alabama on a full scholarship. But after one year, he became fed up with the system and quit. Since then, Tyler has dedicated his life to combating the pervasive deception enslaving mankind known as “government.” He has developed his own website VoluntaryAnarchy.com, to help him on his quest to liberate the minds of the people. 

But…What If It Goes To Zero?

“Bitcoin is going to zero.”

So said TDV legal correspondent, Jim Karger, during one of TDV’s latest internal discussions. The debate has been raging for over a week. Unlike the other old school liberty curmudgeons who hate Bitcoin irrationally, Jim actually makes a couple of really good points. Like what if the US government declares Bitcoin illegal (they can do that) and labels all Bitcoin-supporters as terrorists who want to sell your kids crack and then blow them up. 

Whatever the means, Jim remains certain of the outcome: zero. As Bitcoin sits nearly 50% off its recent highs (yet again!), the threat of further steep price declines seems very real. 

Our editor-in-chief, Jeff Berwick, pointed out in response:

“I did say a few weeks ago that there are weaknesses and potential risks with Bitcoin. It could easily go back below $300. We saw one of the big things in the last few weeks… China went crazy for Bitcoin, but then the Chinese government came in and cracked down. So the Bitcoin price ran up from $700 to $1300 very quickly and now is back down to $700.

“We can expect all kinds of volatility from Bitcoin. It is not an ‘investment’. It is a speculation… one that could possibly go to zero. (That, however, is highly unlikey. Maybe if they turn off the Internet and all the electricity, then Bitcoin will it go to zero. But if they do that, we have MUCH bigger problems than Bitcoin being at zero.)

“Or the electricity and the Internet could stay on as the US dollar dies. And Bitcoin could go to $1m if it replaces US dollar in coming years…”

TDV will have a special report on Bitcoin in the next few months to help readers figure out what this digital upstart will do next…and where it will ultimately go. This report will be free to subscribers to the TDV Newsletter, which is also chock full of investment insights. It was in the TDV Newsletter, by the way, that Jeff Berwick told subscribers to load up on bitcoins after the price crashed to $3 and everyone else mocked the idea that it would ever rise again.

Those subscribers who took Jeff’s advice saw their dollar worth go up 400 times during Bitcoin’s recent peak. Even after the nearly 50% fall since then, they are still up 200 times in dollar terms from where they started. 

To get the upcoming TDV Bitcoin report free – and to get all the other investment insights TDV has to offer – learn more about subscribing to the TDV Newsletter by clicking here. 

Regards,

Gary Gibson
Editor, The Dollar Vigilante