Unnoticeably, bitcoin is moving and, what in 2017 felt like the stratosphere, now feels like nothing.
This thing was at $3,000 just a few months back in March 2020, and December 2019, with it now at $16,000.
Huge increase, but it doesn’t feel like a quick rise. It doesn’t even feel real. It’s like this is normal. This is the least. When the real euphoria, the real stratosphere, the unbelievable price, the up and up everyday, the boredom of saying the new all time high or worse, the boredom of listening to that story about that guy with his castle where he and his crypto rich friends do rich things?
To that we have nothing to say because the when is for time to tell, but we have a few theories as to why this is rising.
The simplest one is that it fell too much and thus there was no one left to sell, with a sell side liquidity crisis then unfolding.
Miners basically, by the orders of Nakamoto, had to re-adjust their bear beats as their stack was halved.
We’re talking billions here, and the code in effect took away billions from miners, so marking potentially the beginning of a new cycle.
Some of you may have been around during that brief period when
Sisi’s mouthpieces the Egyptian Imams were saying bitcoin is not halal, while sheiks were saying it is, with Indonesia closing the debate by saying:
“Blockchain gives you mathematical proof of ownership and that’s overall much more in line with the spirit of Islamic finance than any digital fiat money.”
God in our day is blamed for certain things, but one can easily see religion as more a blockchain really, a condensed ledger of humanity’s experience with the lessons told generally through metaphors, passed on through a verbal chain, generation to generation.
Debt based money is certainly not a new thing and its illnesses are not unknown. No surprise all three main religions ban debt based money and usury.
Here you may have your own views, our point is somewhat simple. Bitcoin has certain qualities which are self evidently good or at least if not good holistically, then good as an alternative or as an option.
The certainty of bitcoin’s supply and the very fair way of how bitcoin is initially distributed through the free market forces of mining, makes its overall design to be a neutral and a somewhat objective measurer of value.
This is now a recognition that has gone beyond techies or ideologues or expert economists (the proper sort not the TV propagandists). And in this cycle that is perhaps the real reason why this is rising.
Where lies real power? In the pen of course. A certain sort of pen. The one that can reveal objective reality generally through ideas, or truth as more obfuscatevly it is called.
There’s a reason afterall why some of the pen get assassinated and why such acts can often provoke revolutions. You don’t kill gods.
Then power lays in banks which coordinate through the Bank for International Settlement (BIS) and other open-secret forums where a dynastical decision making process is not often revealed.
Then there are the mini banks. The hedge funds, the family wealth offices, and depending on their assets, pension funds.
We do not think pension funds are here. Maybe dabbling, touching the waters, somewhat scaredly, but no where near even beginning to be here, let alone doing so systematically.
Then real power lays in a dual system of somewhat giant corporations and the state.
Corporations have the duty of ordering man, generally speaking, from 9-5 to produce and so create wealth, with a very small proportion of that wealth now finding its way towards this space.
Corporations happen to be sitting on a ton of cash at a time when fiat money is being devalued at the greatest rate in a century or more and for America, in the greatest rate since the 1800s when the saying ‘not worth a continental’ arose.
Some of them therefore are taking what to them seems like a risky bet in diversifying to bitcoin. Square, Microstrategy, perhaps other companies that have not announced, are among them.
Whether these are outliers or a trend isn’t too clear except it is more likely than otherwise that the response in boardrooms would be a look of ‘are you nuts’ if you suggest diversifying into bitcoin.
Yet doing so is precisely what all academic papers that have looked into bitcoin as an investment suggest, and yes we don’t fully believe it either, especially when reporting on them during the bear years.
But, that’s what the data says, and it’s up to everyone to choose between data or feelings especially now that these academics are being proven somewhat right.
Here, the theme is a lot bigger than corporations. It is effectively everyone that has investable savings.
Diversify, is what we were told in 2018 financial advisors were telling their customers, put 1% in bitcoin.
Should it be 10%? And more importantly, did they really give such advice? Maybe here and there, but there is no good indication this is anywhere near being systemic advice.
However, even light takes some minutes to reach earth, so these things naturally take time. Months, years, and that’s within United States, to say nothing of something fairly advanced like South Africa.
At the beginning of the last century, there was still in circulation gold money.
This was gradually phased out, but in the diverse European continent of many governments, these gold coins were passed by the elders to their sons and daughters.
The latter were not quite aware these coins were daily money, but they were aware of their previous value, and of their increasing value.
Yet in the end, poverty led plenty of them to exchange such gems for a mere TV, albeit a very new thing back then, or other perishable things.
And thus today it is completely forgot what the value of money is and even what is money, but not where it really matters.
Central banks still transact with each other in gold. Governments still stack gold. They know that is money.
However, through this above process of a ‘knowledgable’ generation passing value to a new one that doesn’t know its value, gold has gradually passed to the hands of very few, and mainly banks.
They have cornered the gold market, and somewhat totally, thus they have the ability to somewhat fully ascertain what is money at their pleasure.
It just so happens what they hoarded and cornered may now be mere stone, for bitcoin is quite superior to gold, not least because it is not in the hands of bankers.
It is also superior because anyone can have a bitcoin mine, anywhere in the world, rather than be stuck at the fate of where earth landed a gold mine, which probably was taken over a very long time ago.
Hence you have Iran mining and using bitcoin for imports. In Venezuela, bitcoin is becoming a more daily life thing. In Argentina and many places, bitcoin is in many ways how some of these people can keep from falling.
Yet it is not easy to know the value of bitcoin, the value of an objective measurer of value, because our generation and even that of our fathers has never known such a thing.
Our grandpas have, but their time is a very long time ago even as we now recall it amore while met with this digital gold.
This function of a reserve currency or of real money is a fairly powerful idea especially due to its global nature and global accessibility.
With that base, bitcoin can facilitate international trade and it doing so to some extent is one reason why it is rising, but the scale is no where near where it could be as shown by the fact its market cap is still a relatively minuscule $300 billion.
It’s no where near it because this is still a very new thing that required and still requires much infrastructure, with one of its biggest hurdle being people knowing just what is bitcoin.
Everyone knows gold of course, but it wasn’t until a couple of years ago that people generally knew what is bitcoin and obviously in more remote areas you still can find people that don’t.
So setting up that infrastructure was the story so far. Only now that a very base of it has been set up, can bitcoin move into international trade, something that it has began doing especially this year, but naturally at a relatively small scale.
A scale that should increase however as more connection points are created, with its knock on effects then being less awkward conversations in corporate boardrooms or indeed state treasury halls.
The New Money?
Maybe we all live in a bubble, but one can say a bubble is being formed where bitcoin is the real money.
And many changes will come from that, even fundamental changes, in power relations and value measurments.
The world is changing and the world we will leave to our children will be very different from today’s world.
How different and in what way will partially be decided by bitcoin holders who will have the right and privilege to choose what to fund.
For the history of fiat money has been only one: it collapses. Throughout the millennials of civilization, there has been no other story.
Our pounds and dollars, euros or yuans, will go too, and when they do, there will be bitcoin, and even if they don’t, there will still be bitcoin to tell you just what is one dollar worth.
This is known, but only now. And thus it is now that bitcoin enters a very different stage. A stage where what was is not quite what is, where what is money, does not shy from the answer of bitcoin.
The currency thus is rising because it is entering the halls of power. It has only began to do so, but it will most likely continue its transformation from a coder’s toy to a powerful force.