Thoughts on Bitcoin

by Doorman

I know, I know.  Another Bitcoin article.

I know that's immediately what you're thinking.  Or that you already know plenty about it and don't see what I'm going to say that you don't know.  Or you're not a fan, and you are tired of hearing about it.  Well, if you're reading this, obviously the folks at 2600 (whom I have enormous amount of respect for and I think all of us can pretty much agree to that) thought it was informative at the very least, so maybe you should bear with me a tiny bit.  Plus I promise to not go into a huge rant, I'll be as brief as I can be to express my message.

As we all know, there are virtually unlimited articles, posts, and statements about Bitcoin out there.  Problem is 99.9 percent of those are biased.  Heavily biased, actually.  They are not looking out for you, they are trying to sway you one way or another based on their own agendas.  And I'm not saying every comment made about Bitcoin is by people like this; I know some good hearted people have written or talked about it.

But let me tell you, they are few and far between.  Trust me.  O.K., I'm not going to give you the Bitcoin 101 class, because that would require quite a bit of space.  Plus Google is your friend (well... while using a VPN maybe, but that's a whole other article).  Just saying the facts are extremely easy to find online.  But that brings up another point.  Usually when you read or hear something about Bitcoin, they are interweaving facts with opinions, without saying which is which.  That is a huge red flag to begin with.  So in this article, everything not otherwise specified is a fact, and when I say something that's a personal opinion (no matter how true I believe it to be), I will clearly state that.  O.K.?

All right, some basic facts.

There's an absolute cap of 21 million bitcoins.  Not a single one after that can possibly exist.  So we are talking about a finite currency/asset/whatever you want to call it (there's whole articles just on that).  Point is - it has value.  And there's a finite supply.  Now I know exactly what everyone says here: what value?  And, of course, you're right, it does not have intrinsic value on its own (you can't eat it, you can't use it as a weapon, so, yes, in an apocalypse it's not going to be of much use, I totally agree).  But then again, what intrinsic value does fiat (paper) currency have?  What about gold?  Diamonds?  Even real estate is questionable if the world really goes to shit, because there's nobody there to say you own said property, and also nobody there to protect you either.  So let's also make the assumption that we aren't entering an apocalypse and not going back to being cavemen (at least anytime soon, hopefully).  If that happens, all forms of investments and businesses are worthless, obviously, and it becomes a moot point.

This paragraph is my opinion and not fact, but I truly believe it (and I can only hope you believe I don't have an angle that I'm trying to "pitch" to you).

So I personally argue that Bitcoin does have just as much value as cash, gold, diamonds, stocks/bonds, 401(k) plans, and even real estate.  Personally, I say it has more value and investment opportunity then all of those.  Bitcoin is absolutely finite.  Not even gold or diamonds can say that, because they're being mined out of the Earth every day.  Even real estate isn't truly finite when you think about it, because can't someone buy a lot with a house on it, tear it down, and build an apartment building there?  You just created more residential dwellings, have you not?  But I won't get bogged down on that.

Oh, and cash (the dollar, the euro, and every other paper currency out there), don't get me started on that.  We (and by we I mean all governments) print our currencies like they're going out of style.  It's insane.  Obviously, people in the government don't understand some simple arithmetic and economics, because clearly when you massively increase the supply of something, demand goes down (i.e., it's worth less).  And we just don't stop doing this.  All governments.

Just to make a crude example to make my point here, if you were to bury $10,000 (or £10,000 or whatever - it doesn't matter which currency) in your backyard as a gift to your grandkids to open up 60 years from now, how much do you think that would be worth to them?  Probably about the equivalent of a couple hundred bucks.  Wouldn't you agree at least that it would have drastically less value when pulled out of the ground by your grandkids?  Of course.

Bitcoin really grabbed me when I truly figured out it really was finite.  Just think about that for a second.  Given enough time (and assuming it doesn't go away - which I really don't see happening), doesn't it have nowhere to go but up in value (over a long enough time period)?

As I mentioned, most people talking about Bitcoin have an agenda for doing so.  I do not.  I honestly am only trying to educate my fellow 2600 readers on something I believe to be revolutionary.  And in the interest of full disclosure, yes, I do own some Bitcoin, of course, but I'm blue collar and have made many bad mistakes in the past with my Bitcoin, and I really don't have as much as you think.  Put it this way, in dollars (as of the time of writing this) I have a five figure number's worth in Bitcoin.  And not close to becoming six digits unless a drastic price increase happens.  But be very wary of people trying to convince you fiercely about it (whether it's pro Bitcoin or against).  They have an agenda, trust me.

I'll give you a beautiful example: one fine day I was watching a major TV network news program, and they had an "important announcement regarding Bitcoin" coming up.  O.K., interesting, so I stayed tuned to watch it.  Out comes the CEO of one of our (American) banks, and I'm talking one of the big boy ones, and he goes on a rant for 20 minutes saying how Bitcoin was a complete scam and how we should all stay the hell away from it basically.  Well, just as you'd imagine Bitcoin dropped around five percent that day (because a lot of people followed his advice).  What most people don't know is that another company under the same umbrella corporation that owns that bank bought 800 million in Bitcoin eight hours after his announcement (exactly when it was down the five percent), and guess what?  Its price was back up the five percent and even a little higher the next day.  And they just made a quick 40-50 million in a single day off the gullibility of the average hard working John Doe.

Now you're thinking "I call bullshit, no way they could get away with that."  They can, they have many times, and they will continue to get away with it.  See, Bitcoin is a completely unregulated market.  Completely.  The SEC doesn't have any jurisdiction, nor any other government agency (of any country).  Most things you can buy are regulated, so if someone were to give you false information and make money off that, they'd find themselves in a world of hurt.  But not with Bitcoin.  Totally unregulated.  It's the Wild West, it really is.  On a side note, if you haven't figured this out after the whole 2008 recession (which I find impossible unless you live under a rock), then I'm telling you right now and very clearly - these "big banks" are not your friends.  They would have no problem taking everything you own and leaving you and your family on the street like serfs (slaves).  I know this is an opinion, but please, I beg you, stop thinking they are out to help you.  It's really quite the opposite.

Now back to facts.

Bitcoin is not regulated by anyone, as I just mentioned.  Nobody.  Even the person/group (we don't even know who the real creator is, by the way) who designed it locked themselves out.  There's no president, no CEO, no board members or chairman, nothing.  Nobody even works for Bitcoin.  There's no Bitcoin headquarters.  It's like the Internet - no country "owns" it or can even regulate it (well, at least if you don't have every person blocked from it in your country).

Again, please feel free to fact check any and everything I'm stating as facts.  I want you to, actually.  That means no government or corporation or private entity can tell you what to do with your Bitcoin, nor stop you from sending whatever amount you want to anyone you want, and, on top of that (as if that wasn't enough already), it's pretty damn anonymous.

In that regard, it's like cash or gold.  Whoever has possession of it is the owner.  That simple.  Notice that I didn't say completely anonymous, because with enough effort (and if you move it around stupidly), it can be identified as you making those transactions.  But there are very easy ways of avoiding that ("tumbling" for example - look it up or else I'll be writing forever).  But every Bitcoin address (a big mess of numbers and letters) is unique and is not attached to your identity by default.

So I think we all agree that fiat (currency/cash/paper money whatever you want to call it) is a highly depreciating asset.  The other ones are usually appreciating assets - gold, diamonds, real estate...  Given enough time, they always go up.

And I think people should invest in real estate and gold, and other assets as well.  It's always good to have hedges (a fancy word bankers made up, meaning don't put all your eggs in one basket).  Most people tend to agree with this.

Trust me, I'm not saying to liquidate everything you have and put it into Bitcoin (after you own some and study more about it, you'll probably do that on your own!).  But in all seriousness, you never know what's around the corner (just look at 2020 with China COVID-19 and how many people found themselves in really hard positions).  So even I agree it's always good to be diversified with your assets and businesses.  Absolutely.

Now everything I've written above is fine and dandy, but most of you knew a lot of that.  So here's where I'm going to share some info with you guys regarding its future and future value.  And it absolutely goes without saying that this is an opinion (anyone making any kind of prediction on anything and saying it's "guaranteed" is either full of it or not right in the head).  Please make your own decisions, people, and base them on your own research and experience!  Stop looking for messiahs who claim to know everything.  They don't exist, otherwise they would be multi-billionaires themselves.  I hope everyone here understands that concept.  Good.  O.K., moving on.

Here's the fun part.

I have definitely noticed what appears to be a pattern in Bitcoin markets, Bitcoin's value, and certain time periods.  Without going too in depth, it's all about breaking its previous price record.  So here's what I believe happens.  The moment Bitcoin crosses its previous all-time high, it gets mentioned in the news and media outlets.

Nothing special, but a quick bleep about how Bitcoin has broken its all-time high.  That's it.  No frenzy or anything.  When that happens, the seasoned and smart investors start buying because they know what's coming.  So just from those "smart" investors, it gets a quick 30 to 50 percent boost in price within days.  Now it makes news again, saying something like "Bitcoin has had an amazing last couple of days," but still not much more.  Still no frenzy.  Now other investors come in and buy some.  Not stupid people, but not your typical shark businessman who does this for a living (they are the ones who buy when it first breaks the all-time high).

Here's where it gets really interesting.

Now this group will typically boost it up around 100 to 200 percent more within a couple weeks.  Now here's where it gets insane and people loose their minds (not to mention their life savings).  After that jump in price, it makes widespread news across the world and it now becomes a major talking point with everyone.  And this is where what I call "stupid money" comes in.  Forgive the term, but these people usually have no idea what Bitcoin is, couldn't care less about the technology, and couldn't even tell you the very basics of it (like that it's finite, for example).

These are the people who want to be millionaires overnight without any idea about what they are doing.  They boost the price up another 100 to 400 percent.  Now it becomes a complete frenzy and it's all everyone is talking about everyday.

Everyone is consumed by it.

You have people who know nothing about Bitcoin refinancing their grandparents' house to buy during this time, and they don't even know the first thing about Bitcoin.  Usually this all happens within a period of four to eight weeks.  And I'm talking about a 10 percent increase in price.  That's huge, in case you're wondering, especially in that time frame.

Now everyone knows that something that rises that quickly in value is clearly a bubble and cannot be healthy growth, right?  And, of course, it corrects (crashes) hard.  Once it has hit its new all-time high and it's over, it usually goes down around 60 percent in value, sometimes more.  And, of course, the people who didn't know what they were doing then sell, and end up losing a lot of money.

But, if you notice, even at the lowest price when it crashes, it's still above the price it was before this rally began (when it crossed the all-time high before).  Always.  Then usually what happens is it pretty much bounces up and down in small increments for two to four years.  Basically, it has very little activity (price-wise) during that time.  And typically, everyone forgets about Bitcoin and writes it off as a scam or it's done for, or something of that regard.

Then slowly (and I'm talking over years), it starts inching its way back up to the previous all-time high and the whole cycle repeats itself, over and over.  Rinse, wash, and repeat.  Take a good look at the all-time graph for Bitcoin regarding price.  You'll clearly see the 2017 rally, but if you look really carefully, you'll see a much smaller looking one in 2013 (it looks like nothing, but once you zoom in to only 2013 you'll notice it's the same pattern).  There are previous ones as well, but they are literally impossible to see on the all-time chart, because the numbers are so much smaller, but the percentages are extremely similar (which, at the end of the day, is all that matters).

And guess what?  We are very close to crossing the latest all-time high right now.  Might be a good time to be liquid and have some cash to put in.  But make your own decisions, people.  And please don't use other people's money, or money from your child's savings/education fund.  Don't be irresponsible, please.  Because at the end of the day, I don't know where the price is going any more then everyone else.  I'm just sharing a pattern that I believe I have seen over the years.

Now here's the craziest part of all of this.

And, for the record, this is totally my opinion.

Everyone always thinks about making money by investing in Bitcoin and also how it makes transactions much easier (myself included).  But just recently something dawned on me.  Has anyone actually sat down and thought about what happens if Bitcoin goes much further?  At a certain point (which is not that far-fetched), Bitcoin will surpass the market cap of gold (which is roughly ten trillion dollars).  To surpass gold's market cap means we'd be talking about (roughly) a million dollar Bitcoin - which not that long ago was an absurd fantasy.

Today not so much anymore.  If that happens, the world will be faced with the undeniable reality that Bitcoin is real, because it just surpassed the asset which we have used for millennia as our reserve/hedge currency - the "golden standard."

At that point it will pretty much make gold (I'm talking about its value) obsolete, which means most of that ten trillion will almost immediately come pouring into Bitcoin as well (again, my opinion).  Now at this point, you do realize that Bitcoin would now be the largest currency or asset in the world by far, right?  Yes, even past the dollar or euro (and anything else you can think of).

I don't want to dive too deep into conjecture here, but what happens when nobody even talks about Bitcoin's value in dollars (or euros)?

What happens when Bitcoin is the standard currency?  What happens when homes and cars are valued in Bitcoin and not some country's paper currency?

That's a huge game of musical chairs with a lot of people left without chairs when the music stops, if you ask me.  Just stop and think about it for a second - if Bitcoin actually were to overtake fiat (paper) currency, how would that play out?  You realize the immense shift of power that would take place?

And there's nothing anyone on the planet could do to stop this from happening either (remember, it's not run by anyone or any country - kind of like the Internet or dark web).  Might not be a bad idea to look into this a little further and do your own research.  That's all I'm saying.

P.S.  For those wondering about every other type of cryptocurrency out there (Etherium, Litecoin, etc. - there are literally thousands of them), I personally would say stick to Bitcoin.  Why?  It's very simple.  All of the other cryptocurrencies have a president or CEO or whatever - bottom line: a middleman that your transaction has to go through (meaning they can stop it).  And guess what, every person is accountable to some government somewhere.  Bitcoin is not accountable to anyone, nor will it ever be.  That is the plain and simple reason why I wouldn't mess around with others.