Wednesday, October 25, 2017

Bitcoin: Why and Why Not?

What is this thing called, "Bitcoin?" There are pictures of a coin with a big, "B" on it everywhere. The picture implies that this is the bitcoin except there is no such actual coin. So, if you want to buy, what do you get? What is its purpose? How do you buy it?
Use Caution 
Anytime something catches the public's eye, scams will arise. There are many ways to buy a bitcoin, but the easiest is to go to a reputable firm like Coinbase. You can do it by wire transfer. This company has 10 million customers. They will take your dollars and exchange them for bitcoins. You won't receive any coins in your hand, but an asset in a column indicating how much of the digital cryptocurrency you own.
Facts 
There are many stories out there about using the Bitcoin as your digital money. This is the facts on it:
Bitcoin is just a computer program that sets the number of coins at 21 million. However, just like the dollar has 100 pennies in division, each bitcoin can be divided by 100 million. Dear reader, this makes the coin extremely volatile.
The security of any transaction along with privacy is really limited. Only the transfer action in a deal is encrypted. All transactions of spending are recorded.
Now, consider those facts. The present market for its use is limited because governments do not like it. Governments will have to spend to find information so that they can collect taxes. They will also have to spend to counter criminal activity, but I think prosecuting criminals at that point will be easier due to the digital trail. Keep in mind what we already know. Fiat governments fight gold, so this will be a piece of cake for them.
There are bans already in place in China, Russia and S. Korea. However, China is easing and Putin stated that Russia will issue its own cryptocurrency. He better move fast because the field is already crowded. The following is a list of cryptocurrencies:
Ethereum, Litecoin, Monero, Ripple the dollar, Dash the dollar, Zcash, Peercoin and Namecoin. Do you know what I see when I read the list? People are more than willing to take your money even if its fiat, for make believe electronic ledger somewhere on the internet. You could argue that this is no different, but more secure as to what central bankers and banking itself does. They press a button to wire transfer digital accounts. They could and do get hacked except that they have insurance to back up their transactions. When and if the bitcoin gets hacked, you will lose everything. There is no backup and no insurance to cover the program. I like what Prince Alwaleed said, "Bitcoin is Enron waiting to happen." How about this tidbit? Bitcoin approached US home builders to use their coin and the builders rejected the idea.
People, you are letting your imagination run wild with riches. The Bitcoin stories that saw the value explode from $8 to over $6Gs in one year are enticing. You hear and read articles about mogul's like Mike Novogratz who predicted the coin will hit $10Gs by next year. There are others who scream $25G in five tears. Don't let the siren catch your ear. Know your human history like the tulip craze in Holland.
Stand Alone
is never easy especially when you hear that the Bitcoin recently eclipsed $100 billion in capitalization this year which is more than all the gold ETFs and gold mining ETFs. Yeah, this is true for the moment, however many of those ETFs are backed by real gold to which can never be hacked and its value never compromised by governments, central banks or anyone. If your digital ledger goes blank, you are out. If the program gets hacked, you lose everything with no chance for redemption. At that point another will appear seeking to lure you and more importantly, your money with their idea. There is conflict in the world. People like or dislike something like gold, cryptocurrency, euro, whatever. Get what is real, you can hold in your hand, time tested and lasting. Get some GOLD!

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