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Posts Tagged ‘bitcoin’

The $900 Breach

December 24, 2016 Leave a comment

Just three days ago I posted “The $800 Breach“. Well, today we have the $900 breach:

breach900

The news I’m reading implies that the price rise is due to heavy trading in China as investors flee from the yuan and utilize bitcoin as a convenient “store of value” (as opposed to gold). Expect more capital controls from the Chinese government as they attempt to staunch the flow.

When Bitcoin breached the $800 barrier, I thought a modest price pullback would soon follow. I have the same sentiment in mind now that the $900 threshold has been crossed. But hey, in the wild and wacky world of bitcoin you never know what the hell is gonna happen.

Could we soon see the price of BTC eclipsing the $1136 per-ounce value of gold, or could we see an epic crash looming? With so many governments deep in debt and central banks screwing up their economies, I think the former is more likely than the latter. What do you think?

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The $800 Breach

December 21, 2016 1 comment

Bitcoin has breached the $800/BTC price point for the first time in a long time. With failing nation states all over the world recklessly debasing their fiat currencies, imposing negative interest rates, and outlawing the possession of cash, people are increasingly wising up to the financial liberty that the king of cryptocurrency brings to the table.

breach

It’s never too late to buy a Bitcoin or two, or three. Consider investing 1% of your savings in the best hedge ever invented against fiat currency calamity.

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A Hijacked Vision

December 9, 2016 Leave a comment

If you dive into Satoshi Nakamoto’s writings like I have, you’ll quickly discover that his (their?) original vision for Bitcoin was that the network be available as a permission-less, peer-to-peer payment system intended for anyone, anywhere, anytime. And yes, that includes billions of disenfranchised people currently without the ability or opportunity to open a bank account.

In order for Bitcoin to scale to accommodate billions of daily users, the maximum block size currently burned into the network protocol must be increased from the paltry 1 megabyte size that’s been in effect since the birth of bitcoin way back in 2009.

Before disappearing into the ether, Satoshi foresaw the potential growth of bitcoin and had these words to say about the maximum block size:

satoshibloksize

The bitcoin core software development team, most of whom are employed by the for-profit company Blockstream, have hijacked Satoshi’s vision by steadfastly refusing to increase the bitcoin on-chain maximum block size beyond 1 megabyte.

Assuming 200 bytes per transaction, each 1 MB bitcoin block can hold a up to 5000 transactions. Since blocks are validated at 10 minute intervals, that means the network capacity is currently capped at a measly 8 transactions per second (versus Visa/PayPal capacities of hundreds of thousands of transactions/sec).

A quick glance at the home page of Blockchain.info shows that every block is full and confirmations are taking much longer than 10 minutes.

fullblocks

With more and more transactions competing to be added to each block, the per transaction miner’s fee, which originally amounted to pennies, is increasing at such at rate that only large transactions will make economic sense in the near future. In the worse case, people might as well quit trying to enter the Bitcoin ecosystem and revert back to using dinosaur remittance providers like Western Union at 20% per transaction.

As new individual users and businesses attempt to experiment with bitcoin, many of them are not only being turned off by larger and larger transaction fees, they’re increasingly getting annoyed by long confirmation delays – even to the point of having their transactions dropped from the network altogether because of overcapacity at peak usage times.

Of course, the bitcoin core development team (which may as well be called Adam Bach’s Blockstream Inc. team) has a billion technical excuses for keeping the max block size at 1MB, all of which have been debunked by the pro-increase-in-block-size technical community. Everyone knows the real motivation behind core’s uncompromising position: Blockstream’s plan to profit from the side chain products they are developing.

bsproducts

Speaking of the pro-increase-in-block-size technical community, they are on their third valiant try at attempting to put Bitcoin back on track with Satoshi’s original vision:

bitcoincorealts

To hell with the Bitcoin core development team’s self-serving roadmap for Bitcoin, I support Bitcoin Unlimited. So should you.

 

The War On Cash

November 30, 2016 Leave a comment

Let’s see:

The war on cash is in full swing and while the banks are, as usual, winning, the citizenry is losing money and privacy. As physical transactions with cash decrease, electronic transactions with plastic increase, which means that more transaction fees get collected and the banks get richer. In addition, since every transaction is electronically recorded, your privacy can get hacked by criminals and/or your “friendly” government.

The only way I know of for the average Joe Schmoe to fight back is for him to buy, and personally take possession of, precious metals and cryptocurrencies like bitcoin. Taking physical possession of your property is crucial because any asset that you own which resides in an entry on a centralized institutional ledger can be confiscated or frozen by your government in times of a crisis of their own making – even if you are a hard-working, law-abiding, citizen.

Regarding the precious metals and cryptocurrencies, taking possession of, and storing, a physical precious metal is much more costly/risky than doing the same for a virtual cryptocurrency. The larger the amount, the more costly/risky it is….

storage-options

Ah yes, one more thing about precious metals, specifically gold. The government can unconditionally ban the possession of physical gold and demand its return to the US government. It actually has done this before. In 1933, F. D. R. issued executive order 6102, which forbade:

“….the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”

Notice the use of the word “hoarding” – as if trying to protect your hard earned property from seizure is a bad, immoral, thing.

In the future, governments can forbid the “hoarding” of cryptocurrencies. However, since decentralized networks cannot be shutdown and private keys can be stored on tiny devices, large scale enforcement would be next to impossible.

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The Mother Of All Fiscal Catastrophes?

November 26, 2016 2 comments

In 1998, the U.S. treasury and the federal reserve facilitated a $3.6B bailout of the Long Term Capital Management Fund (LTCM) hedge fund by 16 Wall St. banks. No taxpayer funds were used in the bailout.

Ten years later, in 2008, the U.S. treasury bailed out a slew of Wall St. institutions with 100s of billions of dollars in U.S. taxpayer money.

Famous doom-and-gloomers James Rickards and Peter Schiff predict that the next financial crisis, which will be the mother of all global fiscal catastrophes, will require that the U.S. government be bailed out by the International Monetary Fund. In this black swan scenario, the U.S. dollar will be replaced by the IMF’s SDR (Special Drawing Rights) as the world’s reserve currency and America’s reign as the world’s greatest superpower will come to an end.

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I’m not convinced that Rickards and Schiff are right, but they do make a somewhat compelling case – enough so that it makes me feel “uncomfortable” whenever I see or hear them speak about it. Even if you think they are both batshit crazy, you might want to think of adding a touch of gold, silver, Bitcoin, or some other cryptocurrency to your portfolio…. just in case America fails to become great again.

bsdollar

Simply Brilliant

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To The Moon Alice!

June 18, 2016 2 comments

Using the information below as a reference point,

goldandbondmarketcaps

let’s do some rounding and truncating and assume the following:

  • The total market capitalization of gold is $10T
  • The total market capitalization of negative interest bonds is $10T

With 15M BTC in circulation, the current market capitalization of Bitcoin is around $10B. If (when?) Bitcoin eventually manages to steal just 10% of the market capitalization from each of those two assets, its market cap would balloon to $2T, resulting in a gain of 200X. Yepp, that’s “X” and not “%”.

Bitcoin’s current price per USD is around $750. Multiplying this price by 200 yields a new price of $150,000 per BTC.

Of course, the BTC price could collapse to $0 at any point in time. However, since its launch in 2009, it has been declared “dead” by various experts over 106 times – and still counting.

btcobits

If you’ve got $750 of play money laying around, fuggedaboud searching for the next Amazon/Apple/Google/Netflix to invest in and hoping that the esteemed management of your new investment doesn’t fuck up for a decade. Consider doing the following instead:

  1. Opening an account on a reputable Bitcoin exchange (I use coinbase.com (USD-to-BTC exchange fee of 1%)).
  2. Buying 1 Bitcoin
  3. Becoming your own bank and immediately moving your 1 BTC out of your online exchange wallet and into your own PC-based wallet (I use Electrum), or mobile phone-based wallet (I use Blockchain), or hardware-based wallet (I use Trezor).

If BTC collapses or (more likely) you screw up taking full personal control over your BTC, your maximum loss will be $750. However, your upside is “to the moon Alice!“.

alice

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A New Alternative

June 17, 2016 2 comments

Humor me for a moment and assume that you knew your country’s fiat currency was going to collapse soon.

USDcollapse

The traditional response to such an impending calamity would be to exchange all your fiat currency for a precious metal, especially gold.

An alternative way to preserve your wealth in an apocalyptic world would be to exchange your fiat currency for a cryptocurrency, of which Bitcoin is king. If you didn’t take any action whatsoever, your accumulated wealth would disappear in a hyperinflationaty crisis – either slowly or instantaneously. Just ask the citizens of Nigeria, Venezuela, Brazil, Argentina, Zimbabwe or any other country with incompetent, corrupt governments that rack up huge debts and continuously devalue their currency.

The problems with holding physical gold bars are: storing them, transporting them, defending them against theft, and accurately dividing them up to pay others for food/services.

With Bitcoin and other cryptocurrencies, these problems are almost non-existent. You can store the majority of your cryptocoins in a tiny, easy to hide, encrypted and password protected, hardware wallet (Trezor, Ledger, Keepkey, etc). You can periodically transfer small mounts to your cell phone wallet to pay for food and other daily expenses.

bitcoinorgold

So, what would YOU do if you knew for certain that your national currency was about to go poof? Isn’t it about time you started learning about the future of money, cryptocurrencies? I suggest you start with YouTube. There are tons of introductory Bitcoin videos to watch.

Bypassing The Riskiest Link

On the left, we have the traditional method of investment. An investor buys stock in a company that makes a product or service. The investor trusts that both the company’s executives and the company’s product offerings will generate increasing wealth over time.

endrun

As the right hand side of the diagram shows, a Bitcoin investor can bypass the riskiest link in the investment chain – a Bitcoin company’s management. Rather than being concerned about executive incompetence (like Mt. Gox and all the other Bitcoin companies that have gone bust), a Bitcoin investor can buy and hold bitcoins directly – just like he/she can buy gold. Indeed, I have been slowly buying up some Bitcoins over the last 6 months as a speculative investment – just in case we have another 2008-like financial meltdown in the future.

Even if Bitcoin doesn’t succeed as a widespread currency of exchange or unit of account, it can succeed as a store of “perceived value” – just like gold. Like gold and unlike fiat currency, Bitcoin is guaranteed to be scarce. But unlike gold, Bitcoin is easily and quickly transportable, cheap to store, and highly divisible.

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One Word

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