Well, TDVers, how fortunate that you're here for your Friday tradition. Bitcoin ATM is taking the world by storm, and as a TDV regular, you're being supplied with daily, up-to-date information on this economic revolution. As long as North Korea doesn't start WWIII or an O'Bomber drone-kills you, coming back here every day will help lead the way to a better life for you and yours.
Want to join in the discourse? Send your questions, comments, queries, and concerns to tdv@dollarvigilante.com, comment on a post, or get on the forums.
On to the feedback…
BITCOIN PLUMMETS
Dear TDV,
What happened with Bitcoin this week? It went from a high of $265 to nearly $105 before bouncing around between $110 and $170? Is it over?
Pappy
Jeff’s Response:
Hi Pappy,
Don’t believe the hype. Bitcoin isn’t “over”. In fact it is just trading at the same level now that it was trading at last week. Hardly cause for panic. That said, despite my having told TDVers to begin to get into Bitcoin nearly two years ago at $6 I’ve always said it will be a volatile ride fraught with risks that most state-coddled and unadventurous people can’t handle. The biggest issue is that Bitcoin is still a very small market. At today’s close near $120 the total outstanding value of all Bitcoins is $1.3 billion. Compare that to other currencies in which it competes like the US dollar. The total amount of dollars outstanding is approximately $3 trillion. So, Bitcoin has a total valuation compared to US dollars of 0.043%. It is a much, much smaller market and because of that any major swings in sentiment or demand and supply can move it dramatically. If all Bitcoin owners were to sell at today’s price, Bill Gates could buy them all with his pocket change.
I see Bitcoin as a free market revolution in money. If it were to ever reach the acceptability of the US Federal Reserve Note (aka the dollar…You know, that unbacked piece of green paper with pictures of dead criminals painted on it and, a picture of a pyramid with an all-seeing eye that no one ever seems to notice?), then Bitcoin would be valued at $272,000. Of course, if that were to ever occur (and I don’t expect that to happen in the immediate term), then that would mean that the US dollar would be all but dead as it wouldn’t have any demand for use anymore. So, in that environment, Bitcoin could be worth $272,000,000,000,000,000 in US dollar terms, but the people at McDonald's would sneer at you for even trying to buy a Big Mac with that amount… Zimbabwe style.
To play my own devil’s advocate, if Bitcoin does not ever catch on as a widely accepted money then it is quite possible it could become worthless.
How is that for hedging my bets? Either Bitcoin could be worth $272 sextillion dollars in the coming decade or it could be worth $0.
Do you see now why there is a fair amount of volatility? Bitcoiners are really just trying to gauge the future value of fiat currencies and, at the same time, trying to gauge whether Bitcoin is getting sufficient traction to continue to grow as a society wide way of transferring value.
In either case, we at The Dollar Vigilante, fully support it as a true free market currency and I personally am pushing as hard as possible to have it gain widespread exceptance including various business ventures like the world’s first Bitcoin ATM which I’ll again be in mainstream media all week next week for and we’ll likely have a large press conference in Los Angeles in the next two weeks to unveil.
Where will it go? Nobody knows. But we do know the US dollar will soon reach its intrinsic value and its better we move on to a more free market currency now while it is still comfortable rather than be like many who won’t realize TEOTMSAWKI until it is too late.
YOU GOOFED!
Dear TDV,
C'mon. Admit it. You goofed about Bitcoin.
Don't get me wrong. We are on the same side and I can understand why you got so excited about this "crypto" currency. But be honest. Bitcoin was in bubble mode and it is not the next Big Thing.
Otherwise, I love your stuff. Keep up the great work.
Daniel
Gary's Response:
I was just speaking to mutual friend Kerry Lutz about this the morning before Bitcoin's price drop. We agreed that Bitcoin could go to $5,000 or it could go to zero. Just a few hours later the newbie decentralized currency did indeed take that ride down from over $250 to $105.
There was that one fellow over at Natural News who had predicted and warned of a huge crash the day before who was beside himself with excitement for having called it…and who went further to claim that the central banks were behind it, testing the waters to figure out what it will take to crash the Bitcoin price, scare people back into the "stability" of government currencies, and then outlaw decentralized digital currencies entirely (you know, to protect us from such a libertarian Ponzi scheme).
On its face it actually makes a lot of sense. That sounds like the sort of thing the lying, thieving, murderous state and its crony central bankers would do.
But I can't help but have a bit more faith in technology being the key to outrunning and eventually defeating the disease of statism. Heck, it's technology that's making possible the rapid spread of the logic of liberty and explaining how all progress comes from it. This same Internet technology makes the knowledge and use of competing, decentralized, digital currencies possible.
These currencies, of which Bitcoin is the first, may — just may — show the world that money really is a market creation, not a state creation. And that — gasp! — it can and should actually increase in value over time, not be inflated away to worthlessness. Sure Bitcoin increased in value way faster than any money would in a real free market…but that's because it's brand new and coming onto a stage crowded with fiat currencies in various stages of collapse. These prices fluctuations are just the wobbly first steps of an infancy.
Tokyo-based exchange Mt.Gox said in a recent statement about the panic selling:
"To give you an idea of how impressive things were here are some numbers that we would love to share with you guys: – The number of trades executed tripled in the last 24hrs. – The number of new account opened went from 60k for March alone to 75k new account created for the first few days of April! We now have roughly 20,000 new accounts created each day."
Is it really any surprise that this surge of interest would spike the price…or that there would be wild swings to the downside in response to that surge?
Bitcoin itself isn't meant to make buyers rich any more than gold or silver are meant to make buyers rich. (Though Bitcoin-related business of the gold and silver miners in the TDV Newsletter portfolio ARE meant to increase wealth. Vastly.) These are all just ways to get out of the paper lies of the state. But as the world lurches and stumbles toward understanding of the violence and lies that are the state, there will be corresponding surges and drops in the fiat price of Bitcoin, silver and gold.
Personally, I'm relieved that Bitcoin finally took a breather. This reminds me of when silver (my favorite) was all over the place in price after it woke from a twenty-year, single-digit slumber. I, along with the rest of the TDV staff, want to start getting paid in Bitcoins because of a naked desire to avoid dealing in Uncle Sam's untrustworthy and heavily monitored scrip.
It goes without saying that I'd rather get bitcoins at $100 than at $200. But right now, and as I told Kerry Lutz, I'd rather use Bitcoin merely as a transfer vehicle and not a store of value or a lottery ticket. But I am still happy to use it. Sure, I'd love to get it while it's worth 4 oz of silver and then sell it a couple hours later when it is worth 8 oz of silver…but that's not why I'm using it. Honestly, I'd prefer stability without the wild swings between the moment I get it and the moment I trade it for silver and gold. But again, I'm willing to stick with it during its wobbly infancy for the little bit of privacy it affords me.
Make no mistake about this, however. As much hope as I have in Bitcoin and the other decentralized digital currencies that are sure to follow…I know that Bitcoin is a competitor that governments cannot abide. The state cannot let a decentralized currency flourish because that currency would give the lie to the benefits of the state-managed fiat that people are forced to use by law. So expect the government to turn its violence-backed laws on Bitcoin and digital currencies.
Don't let that stop you, however. The state and its violent shenanigans are going down, but it will get even more dangerous toward the end. It may help to remember the words of John Adams during the Revolutionary War: "We cannot guarantee success, but we can deserve it."
If you're going to take Jeff's advice and make the most out of Bitcoin, take Jeff's other advice and do it safely outside the immediate reach of the US. Now would be a great time to secure a bit of Galt's Gulch for yourself in a much safer, more civilized and prosperous non-Western country from which you can run your Bitcoin-related business.
P.S. While we focused on Bitcoin today and would like to hear your thoughts on the subject, feel free to send us and and all questions here.
