I got into trading crypto currency, such as Bitcoin, early in July out of curiosity and to flex my libertarian muscles and maybe pick up some anarcho-capitalist street cred along the way. I bought a couple of grands worth of coins then sat back to watch with interest as the whole market fell about 40 % in 48 hours. Luckily, we libertarians are made of the sterner stuff as laissez-faire capitalism requires a certain amount of sangfroid.
The price of a Bitcoin was down to US$1900
and market confidence was at an all time low. When the price started
to climb eccentric cyber-security millionaire and staunch libertarian
John McAfee tweeted that if Bitcoin didn't go to $300,000 in three
years he would “eat his own dick on national television.”
Meanwhile, I was busy getting my shirt back
without losing my pants in the process - thrashing about like a noob and down to my socks and underwear
until the steady upward march of Japanese coin called NEM got me back
in the black at the end of August - just in time for the Bitcoin
Fork.
Bitcoin soared to a
record high just short of $5000 US dollars and Bitcoin investors were
given a free bonus coin called Bitcoin Cash which settled at $300
apiece. Had I traded my NEMs for Bitcoin I would have doubled my
money in a few days. Then the good ship NEM started to sink and I was
getting a little hot and bothered, so I called it a day, cashing out
of the market and back into my life.
So as much as I would
love to tell you a greed-is-good story of my triumph over the crypto
markets - it is instead one of survival on the harsh and unforgiving
anarcho-capitalist frontier. But I was there - I saw the First Bitcoin
Crash, the Bitcoin Fork, the Second Bitcoin Boom. I saw alt-coins
glittering in the darkness by the Poloniex Exchange.
And all the while I
thought about Mr McAfee's dick.
We know how a Bitcoin
went from $4 to $4400 in 8 years - it was through a process known as
hodling. Investors bought 'em cheap and hodled 'em close. As the price
went up they bought some more and hodled them through the good times and bad. These brave hodlers became the
Bitcoin billionares - they get to fly on Space X and marry Miranda
Kerr.
So how might a Bitcoin
get from $4000 to $300,000 and save us from watching an old man
perform such an obscene and intricate task three years from now?
Well, because of supply
and demand.
Because Koreans love
cryptos. They are buying up all the coins in the world and driving
the second Bitcoin boom. While Americans are selling off their
Bitcoins to realise some profit the Koreans are buying them up like
there is no tomorrow.
Because cryptos, like
gold, are a hedge against tomorrow, against the prospect of war and
the chaos and expense of a re-unified Korean Peninsula. And since
there is no end in sight to their 70 year old cold war they will
continue to invest and the market will continue to grow and the price
of a Bitcoin price will go up and up and up.
Imagine fleeing a war
zone with only what you can carry. Your cash is worthless your
valuables can be stolen - but you carry in your head a password to a
crypto wallet. Open a bank account in any country you find yourself
in then access the internet and you have funds. You may even be
pleasantly surprised to find your funds have grown by several hundred
percent. 65 million such people are permanently or temporarily
displaced on this planet.
Because the Chinese are
very keen on cryptos too. They too feel the heat from their Korean
neighbours and uncertainty about the health of their economy. But
more importantly they love making a profit even a small one. If I
make a hundred dollars profit in a week it's nothing to me – but to
a salaryman in Hubei that's a huge win. He can throw a party for all
his friends and family in his favourite restaurant and bask in the
glory of his good fortune. There are 1.5 billion such people in China
and the one child policy is no-more.
And because it is all a
game. The trading coins in the crypto market is an exciting global
online computer game that you can play anywhere and anytime with only
a smartphone. If you are good at it you are rewarded with dollars and
you don't need to know anything about finance to play. There are 2.5
billion computer gamers in the world and a billion of them are in
Asia. How many of them aspire to playing games for a living? Much has
been said about the re-distribution of wealth through the
gamification of work in our post-industrial future. I say it's
happening already – but due to the stealthy nature of crypto you
just can't see it.
Because the informal
economy, not just the worldwide black market but the entire untaxed,
unlicensed, and unregulated cash economy is worth an estimated 10
trillion dollars and rising. Imagine if all it needs is an
unregulated, untraceable, untaxable currency for it to surpass it's
only serious rival - the US economy. Well folks, it's here and it's
happening.
When cryptos become a
serious threat to the stability of conventional markets governments
worldwide will try to regulate the crypto market or shut it down
entirely a la the War on Drugs. Important to this is that not all
cryptos are decentralised. Coins such as Ethereum, NEM and NEO are
corporate products that reside on servers in Switzerland, Japan and
China respectively. All can be shut down overnight leaving the value
of the coins left standing like Bitcoin, Monero and Dash to rocket to
the moon.
And because fiat
currencies (the stuff in your wallet and bank account) do collapse.
You buy stuff in Zimbabwe with US dollars and get your change in
rand, yuan or cannabis if you are lucky enough to have cash at all.
The Venezuelan economy is kaput and their fiat is literally worth
less than toilet paper. Which currency do the think the 31 million
locals will favour, the soaring Bitcoin or the worthless bolivar?
Most importantly because
the blockchain, the technology which makes these coins, works. The
crypto market is worth about US$145 billion dollars and grows by at
least a billion dollars each day as God only knows how many millions
of users furiously trade more than 850 coins 24 hours a day across 66
exchanges. The networks have handled everything that has been thrown
at them and just kept humming along for the last 8 years.
Conventional markets also are booming as confidence in the technology
that gives access to those markets drives investment from people like
you and me, and that guy in Hubei.
And finally, and this
pertains to you my friends, because of the prohibitive cost of
housing in cities all over the world. You are about to retire and
enjoy the life of a grey nomad but you have three daughters about
whom you worry will rent for the rest of their lives. You cannot buy
them each a house so they will need money – lots more money than
you will will ever have. So before you pack the Winnebago you invest
$13,000 and buy them a Bitcoin each – a hedge against tomorrow. And
if in 2020 they have not $900,000 between them, well – you all can
console yourselves watching John McAfee eat more than just his words.
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