On New Year’s Day 2017, Bitcoin, the world’s most well-known cryptocurrency, finally hit $1000 per coin. It has been up here before, reaching $979 in 2013, and has been as low as $214 in January of 2015. Since then, it has made a steady advance. Perhaps it stems from economic instability in Europe and Brexit, the Chinese lying their way into the IMF’s currency basket, the US elections or a looming rumor of a global currency reset. Whatever the current cause is, people are spending serious money on something that a few short years ago was a sci-fi joke, but at its heart has intrinsic value due to the mathematical reality that there can never be more than 21 million Bitcoins.
Scarcity means that a money cannot be generated at will, like the US Federal Reserve Note and every other fiat government currency. Real money, like gold and silver, has scarcity as a key attribute. Hard money types will of course point out that Bitcoin has no physical intrinsic value, yet in the world of mathematics, its built-in scarcity is a metaphysical intrinsic attribute. It’s a wild thought.
Cryptocurrency sounds scary. It is math, frozen into reality by our global internet, made up of millions of computers and everyone who possesses at least a smart phone. Is the Internet real? Consider this: When the Fed decides to conjure up another trillion for the politicians, is a mile-high stack of paper bills printed? It is just zeros on a form, typed during a meeting of elder criminals. Is that number protected from being a $100 trillion mistake made by a typo? Anything can happen, any amount can be waived into existence. Bitcoin protects against arbitrary creation of money using unbreakable math. Math is real, as real as the Internet.
Gold too, as misunderstood it seems as Bitcoin, will begin its slow climb back up again to wherever amazing number we can imagine. Like Bitcoin, it cannot be wished into existence, it requires mining: massive investment, risk and effort.
While it is tempting to fixate on world monetary affairs, we must bring this home. True, some gamble on both Bitcoin and gold as investments, yet this is not the purpose of money. Focusing about how to manage our own personal finances, outside of a “Road Warrior” scenario, we are challenged to find the best ways to protect and grow the fruits of our labor. Even though the Fed has held off on printing more money in 2016, the banking system has not had their counterfeiting pass revoked, so massive inflation is always waiting just outside the door, in the form of trillions of fraudulent reserves. There is serious doubt if these bailouts will ever be used for real industry, e.g., agriculture, transportation, housing, energy, textiles, etc., or the long-term capital it takes for research and development to make the next technological breakthrough.
Even though we are forced by law to use the increasingly worthless Fed notes, using privatized banking principles we can convert this into productive value while not allowing the banks to counterfeit using our wealth. Our savings is securely converted to useful capital like a truck, a power station, an electronics factory, a farm, a jet. It is our rational self-interest to want to place our future in the hands of productive individuals who will produce goods and services all can use, and pay us a reasonable return.
Playing into the rigged game of the stock market, stocks and mutual funds, fuels the economic collapse and inequality bred by the vampiric financial sector. Anyone who lost a big chunk of their savings in 2008 knows this all too well.
The eminent economists Robert P. Murphy and Carlos Lara in How Privatized Banking Really Works defined three steps to reviving our economy: 1) use real money, 2) use privatized banking and 3) end the Fed. Combining our appreciation of good hard money (gold) and good cryptocurrencies (Bitcoin) as well as privatized banking we are well on our way to making the Federal Reserve and its banking cartel irrelevant. This is not up to the government. Two thirds of the victory are in your hands and require only your action to make them real.