Bitcoin state of mind

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Bitcoin is back in the news, as some moves cause the value to rise again in November to over 400 USD.(http://www.coindesk.com/price/)

Speculations on different causes exploded in the bitcoin and financial communities, and of course the bitcoin demise profeets made a comeback to once again declare that this is a.. bubble! a ponzi scheme! that it will be gone and it is only a matter of time! that the price instability comes to show that this is a tool for opportunistic gamblers and crooks and not much else – and that the only good thing that may come of bitcoin is the blockchain technology.

What can I say? maybe I am one of those opportunistic gamblers who believes in Bitcoin for some strange reason. I’ve been interested in it for a few years now, and through all the ups and downs, I still see it as a viable, and much better alternative to paper (or actually, mostly electronic) money. The current state of money is such that the only ones in charge of it are Banks and governments. And they are VERY reluctant to give away their control.

They have the ability and mandate to print money. To actually make money out of nothing. Unlike back in the 70s, when dollars were still backed up by actual hard value gold, now money is backed up by.. you guessed it: nothing!

Bitcoin is not real! How is it any less real then made up dollars, euros and yens? Bitcoin is supported with belief, that’s right. So is actual money. Otherwise it would be very expensive to make pieces of plastic paper and various alloys.

Another popular argument against bitcoin is: It is the most popular currency for terrorists and drug dealers. That’s not exactly true. Bitcoin is used in such transactions, but it still has to be converted to fiat money to be actually used as profit. And fiat money (dollars, euros, yens) is still the most commonly used currency in terror and drug transactions. ISIS for instance, don’t sell their hard stolen oil for bitcoin, but for dollars and gold.

Bitcoin is untraceable and so can be used to evade tax and hide money trails. That’s partly true. It is somewhat untraceable, but as Ross Ulbricht can tell you, it doesn’t eliminate (electronic) paper trails, and human errors can still get you caught even in this brave new world. To get bitcoin, you need to buy it with fiat money (again). If you’re buying more than small amounts and want to get it in a more secure way than finding individuals on the internet that sell it, you’ll need to use Bitcoin exchanges. Those take a nice fee (usually 5%-8%), and provide you with a receipt – they report their business to the big brother. So, your bitcoin purchase/sale may be traced.

Yes, you can use cash to buy bitcoin at such places and avoid feeding your name into the system. Usually that incurs a higher fee as you need to use a Bitcoin ATM to achieve that. Or you can find sellers/buyers on the internet. But  that may be a crap-shoot, as you are trusting strangers with large amount of money, or value.

So bitcoin is not exactly what the bitcoin-doomsday profeets cut it out to be. Things are generally more shaded than simply black or white.

When I bought Bitcoin, back in 2013, the value was around 13 USD per coin. Today it’s at 376 USD per coin. On the way it passed a high of 1200 USD, and a low of 5 USD and even less.

This is volatility, but in the last few months it was quite stable on a scale between 220-300 USD. That may still seem volatile but it is a symbol of a gradual maturing in my eyes. Considering the much higher fluctuations in the past, it’s almost a stand still.

Yes, most people who buy or hold any significant amount of Bitcoin do so to turn a profit. It does not mean that they don’t believe in Bitcoin as a possible future currency, on the contrary.

Some like to compare Bitcoin to gold. Back in the old wild west, the first prospectors took a big risk when they invested their savings in buying equipment, and went to risk their skin in unexplored areas to search for their fame and fortune. Today it works more from air conditioned homes and offices with mouse clicking and electronic transfers, but the people who risked their cash and/or savings on Bitcoin during the early years (and to some extent, more so now) had no assurances that they are not throwing good money into the drain. They took a leap of faith in believing this amazing new idea.

Today, Bitcoin’s worst enemies are not the governments, but the actual puppet masters – the Banks. The Banks see Bitcoin for what it really is – a threat on their hold of power. A currency that does not go through them, that is not printed by them, that is not in their control – that’s the biggest threat they could ever imagine!

The banks have been given great power and responsibilities from the political powers that be – the various governments and people in power. They have proved to abuse it repeatedly. The most recent events were the 2008 financial crisis. Instead of letting the banks collapse, the american government covered their losses with the american tax payers money. Instead of arresting the people in charge of those failures and criminal acts, the people responsible simply moved on – either in their previous positions or in new ones.

Will banks destroy Bitcoin? They can’t. At most they can do their best to discredit it through the media and their political allies. With research papers funded for certain results to show a scientific reasoning against Bitcoin. But since it’s already out there, in millions and millions of computers, and in the electronic wallets of people of influence (who would not like to lose their investment) as well as simple Joes, they are fighting a losing battle.

Will Bitcoin replace money in the future? they say “prophecy has been taken from prophets and given to fools and children”, and I hope I’m neither. I am optimistic though. Financial reality as it is, Bitcoin is a viable alternative to cash in places where cash failed miserably. Once an economy of any reasonable size (I’m talking a state, or a country, not a neighborhood or a city) will adopt Bitcoin even as a secondary currency, things will change in a rapid fashion. And I do believe it is only a matter of time.

But Bitcoin cannot be used for day to day things! there are a few that will contradict that:

Life on Bitcoin

Morgan Spurlock’s Inside Man – Living on Bitcoin

A (partial) list of business that accept Bitcoin

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