There has always been the claim around bitcoin specifically that many have been using it to avoid capital controls in places with strict governments that either A, restrict your from exchanging your currency into another freely, or B, severely limit the amount of money you can actually transfer and transact with. I have had heard many conflicting statements from many different people over the years and I think it is time we evaluate this claim. I want to see what amount of people are actually using crypto for capital controls versus those mostly just speculating on the price increases.
Once bitcoin had started gaining value in the 2011-2012 period, many people started to bring up the idea of using bitcoin as a mechanism to avoid capital controls or even to avoid inflation, but after the bubble up to 10 dollars and the large drop afterwards, it was clear that in order for this to work, the price would have to continuously move up or stay much less volatile in its movement. At that point in time it wasn’t clear if bitcoin was going to survive long term and many believed that in order to have real utility, we would need to get to a higher price point. It took a few years , but the 2013 European Union Crises was where people started to actually talk about real people using bitcoin to avoid capital controls.
Cyprus initiated a bail-in to pay for debts and everyone panicked overnight. Banks were shut down, ATM withdrawals were limited and had massive lines. No one had access to their money, but people like Max Keiser were claiming that many people were using bitcoin to get past these controls. This started the bubble of 2013 that skyrocketed bitcoin to massive highs. However in reality many people on the ground in Cyprus were saying it was untrue and the localbitcoins volume seems to back that up. People had no access to money to actually buy bitcoin and those who might have, flew to other countries and accessed their accounts. In hindsight it seems that we were probably wrong.
The same idea emerged in China after devaluation of the RMB that people were buying bitcoin to thwart capital controls, which is actually half true. People in China were and continue to buy massive amounts of bitcoin, but the reason isn’t capital controls for the most part. The people who I have talked to in China and on the ground say that people are mostly treating bitcoin like a stock. They arent using it as a transitory mechanism to move money out. They are buying it holding it for a price rise and sometimes selling it. To them it is just seen as an alternative security, like it is to many other people in countries like the United States.
I think overall the majority of the price is and will most likely always be due to speculation and the use as a store of value. There are some people using it to thwart capital controls, but in many cases you have to be so rich to do so that many other options are already available to you. I will say that I think there are some countries where people are using it as a store of value, but again they are mostly staying within their own currency while doing so or speculating that the price will move up in the future. We are still at a point where bitcoin is small enough and volatile enough to scare off a large amount of people. In order for any cryptocurrency to be a real utility in terms of capital control aversion, we need to reach a marketcap level where a group of people cant hurt the price in an afternoon. We also need liquidity on much higher levels so quick movements can be easily done.
Agreed with your conclusions.
"I will say that I think there are some countries where people are using it as a store of value"
Venezuela comes immediately to mind. Any economy under severe monetary distress can deal with even ruthless volatility, as long as sometimes that volatility is to the upside. It sure beats holding expensive toilet paper or oven fuel.
You bring up a great point. I wonder how long it will take for bitcoin to reach that marketcap.
Yes I guess most people hold it like stocks and speculate on it. However I feel Bitcoin is turning into a real store of value but most alt coins are in a speculative Bubble. I believe only in Bitcoin and Steem for now. They don't make you 10x gains but you can sleep peacefully at night knowing they won't fall by 10x the next day you wake up
Yeah i completely think bitcoin is being used as a store of value, but avoiding capital controls are a bit different. It is happening a bit but I think not yet on a mass scale. I definitely see it working on a mass scale in the future.
"Avoiding capital controls" sounds like exactly where the regulators are going to lay down their nails and rails. Dumb-ass rich folks may very well screw this whole thing up for everyone.
Too volatile to be considered store of value. Secondly, many people see only solid = material; using something so 'imaginary' might be a huge limit.
Followed/upvoted/appreciated. Love this post. Very well written. Very well articulated. Agree completely.
Anecdotally, I'm hoping to use it as a means to get my money OUT of China, which is never easy...
Ohhhh ugh I wouldnt say that to much. Better hurry up though before Grassleys dumb bill comes up for vote if it hasnt already.
If you are being watched, just type "Rutabega". We'll get an agent out there asap.
Is there a fiat currency that has this level of stability?
Many of the peaks any valleys in the fiat currency exchange are caused by a group of influential people having a bad afternoon.
I am looking forward to when many of the "giant" retailers (Walmart, Costco, Tesco, Gome, etc) accept Bitcoin (Or other Cryptocurrency) directly at checkout.
I believe this will happen in our lifetime. (They will get to control the exchange rates though :-( )
The USD, EUR, RMB have a very very high level of stability. Were talking about needing little volatility for shorter periods like a week or so if we want to have utility as a transitory currency. Over a long time is a totally different thing that realistically I dont think any currency will ever be stable in that case.
Agreed.
For the USD, EUR, RMB and GBP, the fluxuations (by percentage) are much easier to accept from an investment standpoint.
@calaber24p thank you for sharing this.
Will you share the approximation of the marketcap needed?
No one really knows. I mean it might end up coming down to a better distribution than a specific market cap. I would say anything that doesnt move more than 2.5% daily would be ideal. I pulled that number from my ass by the way.
Yes, I know - which is why I asked for an approximation.
I often think that the current worldwide capital flows transacted have a hidden surprise that only a few are privy to.
The massive capital flow into FINTECH signals the urgency, and will cryptocurrencies be accepted by the populous before the hidden surprise - is it literally a race for (market?) events?
I think market cap is a bit overemphasized because of how thin the crypto trading markets are. It's tough to say what Eth's real market cap is after seeing that flash crash, for example.
Just a thought, I'm sorry I can't estimate an answer to your question.
Thanks, I want people prepared for the market correction(s) coming...
If they are they shouldn't take the wild west for granted. It should be done with caution as the political systems and government of the world will eventually look for capitol (and that will definitely involve looking into the crypto space).
Be careful people and set aside at least %30 of your profits for the eventuality that it will all be confiscated and you could be fined if found to be withholding. All exchanges will eventually be under surveillance. If you are able to do things locally like cash than you might be safe.
Hi @callaber24p , I share the same thought. As a Dutchman, I have seen the introduction of the Euro and transition from Gulden to Euro. Nobody was happy it happened, and now, 17 years later, the Euro is still not very stable.
Same goes for the British Pound now the Brits decided to have a Brexit.
Same goes for the $ USD, which heavily decreases in value now Trump is F*ing things up in America.
I think this is all very depressing to read, but it all increases the value of the Bitcoin or any other Cryptocurrency for that instance.
Kind regards,
@steve-speaks
I'm using crypto currency .
I have yet to make a purchase with Steem, but I'm waiting for someone to give me cash for Steem. Lol
Hello. @calaber24p
I am always enjoying reading your articles.
Can I translate this post to Korean with the link?
Sure if you would like anyone can use any of my content freely just acknowledge I made it.
Well thought out. It is also my belief price movements in crypto currencies reflect the worst inflationary expectations, in a country where buyers reside. Accordingly, Bitcoin and other cryptos may not correlate with inflationary expectations for relatively stable fiat currencies, but will have high correlation for countries with the worst inflationary expectations. This makes them a very attractive investment for people holding relatively stable fiat currencies.
Like any good things, there is a dark side to it. We just need to promote and educate the population so that they make the right use of the technology.
Followed/upvoted/
yeah correct its to many speculater everywhere, the only Thing witch work with future is to bring it up to real market, like normal Money. Bitcoin is the wrong way because to slow in Transaction. Or did you want to wait at your Shopping tour more than 10 Minute until payment is verified ? @SVtechnik is an good article to it and what Kind of alternative is possible. in development and soon near at your Bank
This is the third time I've mentioned this this past couple weeks on Steemit but I think Cryptocurrencies are the post Boomer generation's way around being left holding the bag the Boomers are about to leave everybody.
Thanks for the quality content, you'be been upvoted, followed and resteemed.
one of the reasons that i am using crypto is that,the capital controls in greece.
Mindset is the key, everybody can be looking at the same thing but totally see something different!!
Very True
Yes, it seems to me that people use bitcoin to store money so that they are not taken away by the bank or the state.
Failing and falling dollar, manipulated Gold and Silver markets, an economy that is FAKE and imploding. I'm not trying to make a quick buck with Crypto's, I'm trying to become my own central bank. Neither the Government NOR the Dollar give a flying rip about you, diversify to stay secure, plain and simple.
I would guess South Koreans use it for that based on the volume. I have also heard of coworkers in Brazil, Venezuela, and Canada use it because they worry about their local currency deflating, but it's not very widespread.
Sometimes I think we are specifically driven in the virtual world (it is easier to control the vast majority) in the real world still can escape...
I am interested in your opinion about my topic. I think both has same content https://steemit.com/cryptocurrency/@zedgo/alert-cryptocurrency-price-is-dropping-should-we-worry-about-it-let-s-discuss
100% would like to do that. I first want to stay on my small coin strategy.
https://steemit.com/cryptocurrency/@jrose1010/the-small-coin-strategy-potential-to-make-hundreds-of-thousands-maybe-millions
Crypto can also be used as a digital asset too to influence others. Some ppl use crypto bc easier to send it to friends and families than paypal or by banks.
great words
Imagine you could turn back time and you could buy 1 million Bitcoins when they were like $0.0001 each.. That would be hilarious lol
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Nice
Wise thoughts
I think using it as a store of value can be quite good.
I am more interested in making extra money to pay off student loans and only saving some. The Steem extra money really helps and I do some posting on bitcointalk on my legendary name.
Steem has a ways to go to expand into grabbing more users. A lot of people Ishow Steemit to do not like the fact they have to give a phone number and email. You can alernatively create an account by paying anonsteem service to make it, but it costs .6LTC. It is what I did.
Long term invest in BTC/Steem/ETH/LTC/XRP/XMR. Have some of each and put majority into BTC/Steem/ETH for sure :)
My best selling point so far in evangelizing is that 25 mil+ people are using Bit but it is already basically global. The potential is still through the roof. Though I am doubtful America will pick it up as soon as others. It's almost like a foreign investment with all the risk in the computer scientist's/Blockstream's? hands.
Crypto capitalization is folling down ^(
https://steemit.com/cryptocurrency/@niceviewsua/bitcoin-and-altcoin-capitalization-is-down-this-week-did-you-now-why