by Jeff Thomas, Sprott Money:
Whenever we see an image of bitcoin, it’s not presented as a blockchain, as it should be, but as a gold coin, which it is clearly not.
Why should this be? Well, many of bitcoin’s staunchest supporters are libertarians, who revile fiat currencies as being of no intrinsic value. And they’re correct. Fiat currencies do not pass the Aristotle test of being durable, divisible, portable and intrinsically valuable. They, unfortunately, fail badly on the last requirement.
Unfortunately, so does bitcoin (and in describing bitcoin here, the same comments apply to other cryptocurrencies); hence the tendency to present it as a gold coin, something that does satisfy all of Aristotle’s requirements.
So, why are libertarians, who, one would think would be just as suspicious of electronic fiat currency as they would be about paper fiat currency, its greatest supporters?
Well, bitcoin has been presented as a currency that’s not produced by governments. It’s a blockchain, created by an unknown person or agency and is promised to be limited in its total production (as are precious metals.)
Of course, libertarians, by their very nature, tend to be suspicious of such claims. Doug Casey has for years, quite rightly described the dollar as an “I owe you nothing,” a mere promise from a government that it will pay the bearer if it sees fit to do so. He has also quite rightly described the euro as a “who owes you nothing,” as it’s a mere promise from an uber government that controls individual governments that it will pay the bearer.
Following this line of reasoning, bitcoin is, (please forgive the double-negative) “no one owes you nothing.” There is zero evidence of who created bitcoin or whether there is any validity whatever as to the promise of limited production.
So, why on earth are many intelligent people so in favour of bitcoin? Well, if it proves to be legitimate, it’s by far the most useful form of currency in an age when banks and governments are clamping down on the transfer of currencies and, in fact, are likely to confiscate the deposits now held in banks. Further, it might rival gold as a store of wealth. Therefore, if it proves to be legitimate, it is unquestionably the currency of the future for all those who value the freedom to do as they please with their own money.
Unfortunately, there is that nagging, “if .” And then there’s the recurrent argument that it has no intrinsic value, due to its intangibility. It cannot be physically possessed. Its existence is subject to the vagaries of the internet, without which it can instantly go to zero and remain there, as have all the other fiat currencies over history.
In my view, there are three faces to bitcoin. (Yes, a coin cannot have three faces but, again, bitcoin is not really a coin.) One of them is likely to prove to be the correct one and the reader should consider them all, as each has a valid argument in its favour.
Face #1: Bitcoin Is the Future
Bitcoin is the currency of the Internet. It’s not produced by any government and is therefore a decentralised worldwide digital currency. It can be used to make purchases and other monetary transfers anonymously. It’s easy and cheap to use as, currently, no country regulates it. As other fiat currencies (paper currencies) become less trustworthy, bitcoin is likely to increase in value. As Governments around the world increase capital controls, it promises freedom from governmental control.
The IMF describes digital currency as the way of the future and has declared their intention of getting a digital currency in place by 2018 in what they describe as the “global economic reset.” Most international banks are establishing blockchain tech and cryptocurrencies into their business models. One, Goldman Sachs, describes blockchain technology as the “new technology of trust,” citing the fact that every single transaction remains within the blockchain “ledger.”
Face #2: Bitcoin Will Fail
The most important objective of those who control the world economic system is the coming re-set of the monetary system. The intention is to eliminate paper currencies and any other form of currency other than their own digital world currency. By so-doing, every monetary transaction, no matter how small, would be on record. Additionally, banks could disallow any type of transaction which governments did not endorse. Further, they would have the power to refuse access to and even confiscate deposits.
Bitcoin is the very enemy of that reset, as it would allow the world to simply opt-out of the world’s banking system. But, in retaliation, banks could disallow the conversion of bitcoin to world currency and could count on governments to classify bitcoin as “the currency of terrorists,” making the use of bitcoin a crime.
Governments have already been able to track bitcoin use and have arrested individuals who have made transactions that they disapprove of, but, for whatever reason, they’ve not pursued this tracking ability broadly as yet.
If the €500 note can successfully be eliminated under the pretense that it’s favoured by terrorists, there can be little doubt that bitcoin could be tarred with the same brush and made illegal internationally. If it became illegal to accept bitcoin as payment, bitcoin would quickly lose its perceived value and soon decline to its intrinsic value of zero.
Face 3: Bitcoin Is a Trap and Will Succeed
Globalists support the concept of electronic blockchain currency 100%. So much so, that that the world’s leading banks, have touted it as the way of the future.
Most people will accept the change to the new world digital currency easily, as it will be so easy to use. They’re unlikely to worry overly about the loss of control over their own money or their freedom to privacy when making transactions.
But the flies in this ointment are the contrarians, the libertarians who will do all they can to remain outside this system. Many hope to escape the coming world digital blockchain currency by using … a digital blockchain currency - bitcoin.
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