I see a lot to like in cryptocurrency. It’s anonymous. It’s decentralized. It bypasses the need for banks. It’s not controlled by any government.
I’m for any means of exchange that’s secret and shuts out bankers and governments.
I also see a lot to worry about with cryptocurrencies. I think the underlying technological concept shows promise and may form the framework of a new economic structure free of government interference.
However, there are troublesome reasons to tread very carefully with digital currencies. Not the least of which is that Banksters, who control fiat money, hate any form of currency they can’t control. Many banks have banned their customers from purchasing cryptocurrency with bank-issued credit cards, for example.
Here’s what several banskters say about cryptocurrencies.
- Sweden’s central bank (Riksbank) Governor Stefan Ingves said at a banking conference in Stockholm that buying and selling Bitcoins is like trading stamps, and that “Private money usually collapses sooner or later.”
- Top German banker, Jens Weidmann, commented that digital currencies like bitcoin could cause a financial catastrophe. He added that banks would have to adopt digital currencies for the average citizen to begin to have faith in them.
- John C. “Jack” Bogle, founder of the mutual fund company Vanguard Group, said, “Avoid Bitcoin like the plague,” he said at a Council on Foreign Relations event. “Did I make myself clear?”
- Former Goldman Sachs CEO Lloyd Blankfein said, “I don’t like it. I’m not comfortable with it. I’m kind of an old dog to be absorbing that kind of a new trick.”
- Nobel Prize-winning economist Joseph Stiglitz said bitcoin is unregulated, “So it seems to me it ought to be outlawed… It doesn’t serve any socially useful function.”
- JPMorgan Chase CEO Jamie Dimon called bitcoin “a fraud” although he likes the underlying technology, and JP Morgan invests in Bitcoin-based ETFs
- BlackRock CEO Larry Fink said it was an “index of money laundering.”
No, the banksters don’t like crypto. That either means they’re buying them like crazy and want to sell to the masses at the highest prices or that they’re a threat to the banks.
Remember, the sign that easy money is ending comes when an asset breaks out and the public still avoids buying, but institutions will begin to do substantial buying. The public only buys in at the height of the market, just before a correction. They buy high and sell low. Bull markets always climb a wall of worry and bear markets slide a slope of hope. This is human nature and mass psychology.
Another concern is that the blockchain and cryptocurrencies are hard to understand. They’re mysterious to most regular folks.
What exactly are they? Where do they come from… who creates them? Why do they have value?
Cryptocurrencies — or cryptocoins — live in their own world that makes them half commodity, like gold, and half currency. They’re mined through solving complex mathematical equations (solve one and you are awarded tokens or coins, and that award is recorded in the “blockchain” or the public record of transactions, i.e. coins awarded). They are like gold in that there is a limited number of them, just like there’s a limited amount of gold.
Unlike a commodity, there is a market for them where they are traded and used as currency. Yes, people are willing to trade them for dollars and other currencies as well, but as long as people want them and value them, then they act as a store of value themselves. The unique twist is, it’s a currency that isn’t backed by a nation.
There’s nothing physical to hold, and the digital tokens have value because people collectively agree they have value. They’re not backed by government promises or gold or anything of intrinsic value. No government is involved in the creation or regulation of cryptocurrencies. In a very real sense, they are the people’s currency.
Bitcoin was the first cryptocurrency and accounts for more than half of the cryptocurrency market. All other digital currencies that have been created since are collectively known as “altcoins,” or alternative coins. They include Ethererum, Binance, Cardano, Solana, Dogecoin and hundreds of others. The total cryptocurrency market cap is about $2.7 trillion according to CoinMarketCap.
Storage
For convenience, I’ll just use bitcoin as an example. You keep bitcoins in the form of digital entries as part of the “blockchain” in your digital “wallet” on your own hardware at home — computer, smartphone, tablet, or whatever, called cold storage — or online, called hot storage. If you lose your storage device or it’s destroyed and you have no backup or if you lose or forget your password, your bitcoin wealth is gone, for good. There is no insurance to cover your loss. There’s no government agency you can turn to for help.
If you keep your digital wallet stored online, you’re vulnerable to hacking and cybertheft. Don’t expect the cops or Feds to help you track down the thief and recover your money.
Although the massive computer network that manages the cryptocurrencies and the mathematical algorithms themselves supposedly provides airtight cybersecurity, hackers and scammers are having a field day stealing digital currencies nonetheless.
Initial Coin Offerings or ICOs, sometimes called “crowdsales,” are like Initial Public Offerings (IPOs) of stocks except that they are completely unregulated.
Crypto is said to be the favored currency of the underworld. Yet consider that should anyone want demean and degrade a new currency, having it associated with crime would sure be one way to sully its reputation as a free medium of exchange and store of value.
Perhaps their biggest attraction is anonymity. That opens the obvious temptation for investors who’ve made a ton of profit with the bitcoin rocket ride to keep it to themselves so they don’t have to pay taxes on the gains.
The IRS of course, as the enforcement arm of the central banking system, won’t stand for that.
Bitcoins themselves may be anonymous, but transactions with them on an exchange obviously are not. Crypto is considered property, and selling it creates a taxable event. And Forbes reports that “The IRS is laser-focused on criminal and civil enforcement in this emerging area of taxation.”
Some say the taxation helps “legitimize” virtual currencies. Hogwash. Governments simply want in on the game, if they aren’t in control of several virtual currencies already. Justin Danneman claimed on Squawker.org that the “Federal Reserve Controls Coinbase, Coindesk, Kraken, Ripple …” Danneman cited numerous connections among prominent financial figures, the Federal Reserve, and digital currency interests. He said their motive is simple. “When you can print as much money as you want, it becomes meaningless. This is about control,” he said.
Maybe that’s why the CEOs of Goldman Sachs, JPMorgan, Vanguard and other financial movers and shakers have unkind words for bitcoin. Maybe it is to mask their real interest in it behind the scenes.
The blockchain technology that underpins the cryptocurrency system has merit in its own right and may eventually revolutionize the global economic structure. And digital currencies are somewhat mainstream… but the only way the dollar — or any currency that replaces it — will lose the power of control over us is if a currency exists outside of the corruption of the state and government.
Investment vehicle or money?
As of now, these coins only have value to the masses because you can trade them for fiat money. Using them as money isn’t widespread among the general population.
Also, governments are finding ways to regulate crypto, and it’s not as anonymous as once thought. And the financial industry is already looking for ways to “financialize” bitcoin, with ETF offerings, so that you can “invest” your hard-earned money in a stock market-controlled investment vehicle that purports to track the ups and downs of the cryptocurrency market.
Instead, you should consider diversifying into a range of crypto projects, rather than having your entire crypto investment tied up in one or two coins. This will give you the best hedge against the collapse of a coin due to an Elon Musk tweet, or a huge selloff by a large coin holder.
For more information, news, prices and of course ratings of each coin, I would recommend you visit our friends at Weiss Ratings.
Yes, I still believe in gold. I always will. But I am also for any currency that enables freedom of trade and a free economy. That is obviously not the dollar, although you need to hold some cash as long as the U.S. is still a world power.
The dollar is there to control you, through debt, restrictions and surveillance. I am truly sorry if this makes you feel less free, but it’s up to you to protect yourself and your loved ones. The government does not wish to do it for you. On the contrary… they are working against you.
Cryptocurrencies have the potential for you to work for yourself without government interference.
Yours for the truth,
Bob Livingston
