By | Robert Brown
Bitcoin gained $2,000 during the last week of November, causing internet exchange sites to freeze up as people attempted to buy whatever amount of Bitcoin they could afford.
If asked, the majority of people would more than likely not know what Bitcoin is, despite the fact that it is the most well known and widely used cryptocurrency, valued at over $10,000 per coin. A debate has sparked online whether or not Bitcoin is experiencing a bubble.
Many financial analysts and cryptocurrency experts say Bitcoin will continue to rise through the summer, reaching $40,000 by August. Others say it will crash and become worthless, causing people to lose all of the money they have invested. Since its creation, people have continuously claimed that the Bitcoin bubble will pop every time it has reached a new high. People said the bubble will pop when it reached $100, and again when it reached $1,000. Now that it has reached $10,000, many predict the same invevitable outcome.
As if that wasn’t enough to peak a person’s interest, there is a very mysterious element to Bitcoin. Bitcoin is the first decentralized digital currency invented in 2009 by an unknown person using the name Satoshi Nakamoto. Although some claim the real creator may possibly be Artificial Intelligence. The revolutionary software is open-source and peer-to-peer, and is considered to be the future of technology. Transactions take place between users directly, are verified and recorded in a public ledger called a blockchain.
There is a unique Bitcoin culture that has been created with new lingo, specific technology and intricate knowledge of how the system works. The nuances of authentication, how to buy, sell and trade, managing wallets and vaults, mining coins, Tether’s and Bitcoin’s blockchain is enough to make any computer nerd think they have died and gone to heaven. The real question is whether or not Bitcoin is a medium of exchange or a tool for the purpose of growing sovereign wealth.
“It’s both, it is a safe store of value. Fiat currencies are collapsing when measured against Bitcoin,” technology entrepreneur and researcher Steve Outtrim said. “In the Greek Financial crisis in 2014 the opposition leader suggested converting their entire economy to Bitcoin. If they had done that, Greece would have repaid all its debt already and the Greek citizens would be the world’s richest people.”
Bitcoin has generated a unique ecosystem in which many people are willing to trade and accept it while remaining anonymous. Although it may be disconcerting not to know who is behind the currency or even who its users are, some people perceive Bitcoin to be more valuable than other currencies in that it is a better option for certain purposes, such as digital transfers and use across borders. Also, because there is a cap of 21 million set on the total number of Bitcoins that will ever exist, the currency cannot be devalued through inflation.
Another key benefit of Bitcoin is known as censorship resistance, which is its ability to be used for transactions that could normally be censored by other payment networks or by government. Julian Assange is well known for leaking out cables of controversial information with Wikileaks during the 2016 election cycle. In retaliation to his leaks, he was blocked and boycotted from receiving funds or donations through any bank, PayPal or other financial institutions. Bitcoins were used to keep him and his organization running.
Bitcoin was originally used for underground transactions, such as black market trafficking on the dark web. It has become a target for regulation by the United States government, requiring exchanges such as Coinbase to turn over financial information and the identities of over 14,000 users to the IRS. This recent move has made black market traffickers switch to a more anonymous cryptocurrency called Monero.
Bitcoin has no central control, no central repository of information, no central management and no central point of failure. However, there are two sides of the coin. On one side, Bitcoin is decentralized, taking power away from big banks and the Federal Reserve. On the other hand, it is a fertile ground for predators to scam people out of their money. With the increase in regulation also comes legitimization, which will likely bring more people wanting to buy, sell and trade Bitcoin without the fear of being hacked or scammed.
Security is a major factor with digital currencies. Millions of dollars in Bitcoin have been scammed, swindled, hacked and stolen from people. One of the greatest in Bitcoin history was the Mt. Gox exchange scandal, involving 800,000 missing Bitcoin worth over half a billion dollars. Recently, over $31 million in Bitcoin was stolen out of a Tether treasury wallet. The address the Bitcoin was sent to happened to be the same address that was responsible for stealing 19,000 Bitcoin from Bitstamp exchange in 2015.
With the rise of Bitcoin, different products, businesses and services have popped up to support cryptocurrency. These include loan services, brokerage firms and exchanges, ATM’s, Tether’s and external wallets to safely store Bitcoin and other cryptocurrency. One of the more popular wallets is made by Trezor and costs about $100 or a paper wallet can be created for free at bitaddress.org. MyTime, Stream and Brave Browser are other cryptocurrency platforms that have sprouted up that expand the open-source concept, helping people to diversify their own income by converting music, art, video and energy into cryptocurrency which can then be converted into U.S. dollars if desired.
It’s only a matter of time before all currency is digital. Many countries are developing cryptocurrency, like Kyrgyzstan, Japan, China and Russia with their CryptoRuble. Large investment firms are adding cryptocurrencies to people’s portfolios if anything were to ever happen to the U.S. dollar, which has been speculated to be on the brink of collapse for many years.
Currency experts like RT’s Max Keiser claim that cryptocurrencies like Bitcoin could eventually replace the U.S. dollar. However, Bitcoin claims to have been created to exist alongside the U.S. dollar – one being used as currency, and the other being used as an investment tool for raising funds.
BitcoinCash CEO Rick Falkvinge said in an interview on RT’s Sophie & Co. that the U.S. dollar will collapse under its own weight. All Bitcoin needs to do is survive the collapse. He also said that when the value of Bitcoin rises to $2 million per coin, comparing it to the U.S. dollar won’t even be viable. That is because the dollar won’t be worth anything at that point, and won’t be a base of comparison anymore.
Any way you look at it, it’s apparent that capital flight is occurring. In economics, capital flight occurs when assets or money rapidly flow out of a country or currency due to an event of economic consequence. People are fed up with the Federal Reserve and the U.S. economic dominance over the world, inspiring them to invest in other currencies.
The U.S. Government has taken notice and is trying to come up with ways to continue to receive the necessary tax dollars from people under their jurisdiction. One idea is for the U.S. government to issue its own form of cryptocurrency tax coin that would be required to be purchased by citizens in order to remain in good standing.
Internet data mining expert Clif High mines the internet with a web bot he designed, collecting billions of data points to produce forecasts of the future called Predictive Linguistics.
When asked about financial markets, High says, “We’re screwed. The equity markets in our data sets are highly manipulated. So, if you ask will there be a crash? I say there already is a crash. Everybody that is not part of the financial system at the top end is currently living in a depression, and the media does not acknowledge this.”
Whether or not you understand exactly what Bitcoin is or how it works makes little difference. All that matters right now is if you have some and how much of it you have. Part of what is driving the Bitcoin market into a frenzy is people’s fear of missing out. A person who bought $100 worth of Bitcoin in 2010 would be worth over $70 million today.
On the edge of a new precipice, where technology blends with virtually everything in reality, it is expected that cryptocurrency will be an integral part of the future evolution of humanity. We could be witnessing the greatest wealth transfer in the history of mankind.
As with other forms of investing, it pays to do your research. Be careful with who you do business with or give your money to. Before you start trying to live the Bitcoin life, calculate the risks and rewards, and never invest more than you are willing to lose. One of the more popular and safest internet sites to invest in cryptocurrencies is Coinbase.
High says, “With cryptocurrency, we are going to be able to say for the first time in history that great fortunes are being made, without their being a great crime.”