As someone who dedicated 15 years to Precious Metals - during which, I saw them miserably fail to maintain their sound money distinction - I naturally gravitated toward Bitcoin. Particularly, as readers would let me know every time it had a big jump – asking if it was the “next gold.”
I’m not going to rehash the evolution of my thought process, starting with my first Bitcoin investment in late 2013; to going all-in in 2016; starting my own crypto business in 2017; and selling my Bitcoin last month (for capital preservation purposes). However, what I will say is that, five years into the process, the one thing I’m sure of is that cryptocurrency is here to stay – inevitably, playing leadership roles in both the store-of-value and transactional realms…not just domestically, but worldwide.
Bitcoin has a monstrous lead in both categories, but the future is far from set – as while the “Beanie Babies” argument (that the first mover loses its leadership role) has historical precedent, there’s no precedent for what Bitcoin is, or how it came to be. Thus, while it’s easy to be skeptical during times like these – fostering countless theories of why it’s going to fail – the fact is, that despite the price decline, there’s nothing “wrong” with Bitcoin to definitively point to.
What’s “wrong,” quite frankly, is that financial markets are deflating after two decades of Central bank price support caused by unprecedentedly abusive money printing, market manipulation, and propaganda; particularly cryptocurrency, whose meteoric rise coincided with the top of the “everything bubble.” To that end, the creation of hundreds of useless altcoins – for all intents and purposes, pump and dump schemes to capitalize on Bitcoin’s success – is being met by the cold, hard fist of financial market reality; crashing in the same manner as dotcoms, tulip bulbs, and all of history’s greatest bubbles.
Cryptocurrency’s evolution has been a perfect case study on the best and worst of human nature. As a student of monetary history; and someone who fought the Precious Metal wars; the fact that crypto is changing money before our eyes, after centuries of fiat currency destruction; is absolutely incredible – as quite literally, we are in the early stages of a major inflection point in monetary history. From the near spiritual creation of Bitcoin by “Satoshi Nakamoto” amidst the worst financial crisis in generations; the proliferation of the remarkable cryptocurrency technology; and simultaneous collapse of dozens of fiat currencies; there has never been a more exciting time in financial history.
Unfortunately, the key phrase is “early stages” – as creating an omelet always requires the breaking of eggs…particularly when so many violently opposing forces are trying to break them. From the status quo to the Bitcoin community itself, there are just as many who want Bitcoin to fail as succeed; and in the past two years - as demonstrated by the still ongoing “scaling debate” – we have seen as many destructive forces in the cryptocurrency landscape as productive.
Bitcoin works just fine, but has much work left to PROVE it is infinitely scalable. CLEARLY, big blocks don’t work – and for the life of me, I STILL cannot figure what Craig Wright is trying to accomplish; as unless his goal was to destroy crypto, and what’s left of his already tarnished reputation, I cannot fathom how he believed SV could usurp Bitcoin. Heck, it can’t even usurp BCash – by far, the biggest scam in cryptocurrency history.
Back to Bitcoin…yes the Lightning Network is an exciting concept; but no, it has not been utilized in scale. Bitcoin works fine, but it’s unclear if it can grow fast enough to usurp credit card processors. Additionally, the question of whether Bitcoin can be used as BOTH a global store of value and ubiquitous transactional medium is very much unsettled. Sure, it sounds easy to say it can serve both functions - but I think there’s a great degree of uncertainty about this concept in the global investment community.
Additionally, the 50% plunge in Bitcoin’s Hash Rate since the SV fiasco commenced six weeks ago has investors wondering if something is going on behind the scenes we’re not yet aware of. Could it be entirely due to Craig Wright’s sinister scheme – to suck hash rate out of Bitcoin to fight a prolonged Hash War with BCash? Or more simply, a lot of the mining equipment that went online at the height of the bubble is starting to be taken offline? I believe it’s more likely the latter, but there’s no way of proving it.
Irrespective, what I KNOW about Bitcoin is that it is FAR superior to any money the world has ever known – certainly in terms of its store-of-value; and even in its early, unscaled version, as a transactional medium. After having performed hundreds of cryptocurrency transactions, I continue to be blown away at how anachronistic fiat currency and Precious Metals appear in comparison – like watching the Flintstones in George Jetson’s day.
However, what I also know is that Bitcoin will not, and should not, be the ONLY cryptocurrency. To that end, I find “Bitcoin Maximalism” to be as dangerous to crypto development as fraudulent altcoins – as frankly, to believe a Digital Age will be dominated by ONE cryptocurrency is as naïve as it is narrow-minded. There are simply too many potential uses for one crypto to dominate – particularly when the currently dominating crypto, Bitcoin, has so many unanswered questions.
Inevitably, the crypto bear market will end – fostering a new, far more powerful bull market…in which ADOPTION will be its focal point, not SPECULATION. However, there’s no way of knowing if it will start tomorrow; next year; or in a worst-case scenario, 2020 or beyond. My guess is we’re near the bear market’s end, as capitulation is clearly setting in – as evidenced by the implosion of BCash and SV, the most malignant cancers in cryptocurrency history. Not to mention, that by the Spring, we’ll be within a year of the 2020 Bitcoin halving – that bottom-fishing investors will start to discount.
When the new bull market commences, I expect a new, massive wave of altcoin development – only this time, the focus will be on creating VALUE, not pump-and-dump opportunities. This is why I love BRhodium so much – which I expect to be one of the leaders of the new crypto economy; as in my view, it was created for a specific niche the market desperately needs; i.e., an “investment grade” store of value altcoin, as far from Bitcoin’s political wars as possible.
When the new bull market commences, opportunities will be greater than at any time in financial history. Bitcoin will unquestionably be a major part of it – and perhaps, will grow more dominant over time. But perhaps it will never represent more than 50% of crypto’s market cap – and perhaps, it’s use case will be more narrowly defined. Either way, at $3,300, the long-term value proposition is more than discounted, in my view. Consequently, any further declines from this point should provide historic buying opportunities.
Until then, be very careful not to close your mind to potential short-term outcomes – some very good, some very bad; as while cryptocurrency is unquestionably one of the greatest technological innovations of our lifetime, it is amidst a period of powerful near-term uncertainty.