A Cautionary Tale for Bitcoin and Cryptocurrencies

by Matt, SGT Report:

Historically speaking, I’m pretty sure the blockchain will go down in history as one of mankinds greatest inventions. Hundreds of years from now high school students will look at old videos of Ben Bernanke and Janet Yellen and have to write an essay on ‘What were these people thinking’. Hopefully they will then watch Sean/SGTreport on a youtube video and go ‘whoa, these guys were on the ball’.

Exam papers in the next century could well be on discussing the merits of the wheel, internal combustion, flight, the microchip and the blockchain and which was better for mankind’s evolution.

As I understand it, it offers a decentralised means of maintaining a ledger that is beyond manipulation. Apply that kind of thinking to a monetary system and bingo!!! No more Rothschild and Bilderberg level control over mankind.

Better yet, what kind of productive person who produces more than he consumes goes around daily thinking ‘I need to save some cash so I can start a war’. You could quite literally see an end to serious conflict between nations as prosperous people, well, prosper.

The potential for this kind of technology is mind blowing even for people who understand monetary history. For those who are clueless about gold and silver and their role throughout history this technology could well rock your world. Free from the puppet masters mankind could return to peace and prosperity through a genuine freedom, never to be undone.

That is tomorrow. At the moment Bitcoin, the undisputed king of the cryptocurrencies has just smashed through the $2000 mark with ethereum just having gone through $170. It hasn’t done it gently either. On a daily basis the cryptocurrencies are rocketing skywards like the proverbial tree that grows to the sky.

Can it go highter? Yep I’d say so. Can it go a lot highter? Quite probably. The amount of money trying to flee government lockdowns as this global ponzi bubble inflates makes any short term guess largely irrelevant. Any moment a hedge fund billionaire or Chinese property maganate could work out that he is in danger of a serious ‘lock’ on his cash in any bank holiday announcement and decide Bitcoin is the answer and it will move highrer still. Who the hell knows in all honesty, but the cryptocurrencies are coming of age.

Mike Maloney warns of a massive deflation ahead of a threat of hyperinflation and makes note that this is going to be a rollercoaster crash. That’s a warning that seems likely. One minute there’s hysteria, the next panic and I think it’s fair to say we will see wild gyrations in all assets. Including the cryptocurrencies.

Some sort of correction seems in order at some point. The tricky part is working out at what levels that takes place. Will it go up another $1000 dollars from here before a pull back. Who knows? I don’t. And neither do you.

In any deflationary crash all manner of things get sold and I think Bitcoin won’t escape this.

All that aside, I have a nagging feeling about the cryptocurrencies that I find impossible to shake. Gold and Silver have been money for over 6000 years for a reason. With a pedigree second to none they will surely see the enlightened through this crisis as well.

Only a baffoon (can you name one?) would think that the Venezuelan bolivar or the USD will be a better place to store wealth than Bitcoin or Ethereum. I’d hold both over ANY fiat currency as we sleepwalk towards this disaster.

However, are they a better place than Gold and Silver?

The word of caution I’d strike here is that individually a cyrtocurrency may be limited to a fixed quantity, but as a group space, there seems to be no limit to how many can be created. Bitcoin is limited to 21 million Bitcoin but what about the next one? And the next one? And the one after that?

The economic pronciple of substitution states that as the price rises in one asset, people switch preferences and pick something else. This could well be what is explaining the rise of Ethereum. Bitcoin getting a little beyond the reach at $2000 dollars, hey, you can buy 12 or so Ethereum. And that’s going to the same price isn’t it?

And therein lies the problem.

As each one rises it incentivises the next to be created. And that process is without limit. As each days passes and price rises occur, the next techological egghead is working on providing the world with another one.

What is worthy of note here is that this is not possible with Gold and Silver. As silver develops into an insane mania nobody is going to come out of the woodwork and declare they’re working on a new precious metal. Alchemists have been trying that since time immorial. Modern science pretty much declares that idea dead.

That’s not to say the current favourites won’t skyrocket from here over time. The amount of people that know about Bitcoin is tiny. Most of those who do don’t own any and this explains the small market cap compared to say, the American stock market.

If say, the free market decides to use Bitcoin as the means to transfer national debt wealth then Bitcoin is going well north of here. Well, well, north. Take your guess as to the telephone number pricing of Bitcoin if hedge funds start using it as a global liquidity pool for that purpose.

Now don’t get me wrong. I’m a huge fan of what the free market is attempting to do here. To create an easily available escape to the storage of weatlth outside government control is of the uppermost significance. Bitcoin and all cryptocurrencies are the most fabulous way to circumvent government capital controls and I’m all for that. As everyone should be.

For me though, NOTHING beats Gold and Silver in the lead up to this monetary debacle.

Anyway, with all that said I’m off to brush up on my coding skills. Look out for SGTcoin soon.

Matt

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