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.
Remember U R Free - to check out Free to Change your Mind on Facebook. You are free to like, share, follow or disregard it completely. Whatever makes you happy.