Friday, November 10, 2017

Bitcoin Can't Be Domesticated

Funny how this album almost looks like a coin. The name of the album is "The Revolution Will Not Be Televised", which is a poem and song by Gil Scott-Heron.

In some ways, this is exactly what's going on in Venezuela. Bitcoin is enabling countries like Venezuela, which is in the midst of currency collapse, to sidestep the devastating effects of inflation with an alternative. Adding fuel to the fire, that alternative can be created with the right hardware and energy.

The creation of bitcoin with computer hardware and energy is referred to as mining. Countries with the lowest prices in energy production are the most profitable in making bitcoin. This is why China dominated in the bitcoin mining sector for so long (a point Bobby Lee made recently at the 2020Money Conference in Las Vegas). Chinese bitcoin miners were stealing energy. Now that the government is cracking down on that, mining has become more expensive.

Mining is gaining in popularity in Venezuela due to a combination of hyperinflation and subsidized energy prices. In other words, Venezuela is one of the most profitable places to mine bitcoin in the world. In some ways, what's going on in Venezuela is a digital currency revolution.

What does that mean -- a digital currency revolution?

In monetary terms, it means Venezuela is dying as a sovereign state. The new king is Bitcoin and its offspring. It appears the revolution may not be televised, but it will certainly be backed with digital currency.

At the heart of the issue is whether or not bitcoin is a system of storage or payments. It is a constant debate, but it deflects from the truth which is both. In addition, bitcoin provides transparency into the central bank and guards against government intervention or manipulation. For example, the global inter-bank payment system known as SWIFT threatened Russia, China and North Korea with removal. Is it any wonder that these nations are looking for alternatives.

Enter the Crypto-Ruble

From a practical perspective, the Crypto-Ruble is a national bitcoin. Russia wants to subsidize energy for those wanting to mine these "crypto-rubles" (even though energy is already much cheaper in Russia). The country plans on doing this through a kind of regulatory sand-box/incubator to see if it works before scaling. Unlike petro-dollars, "crypto-rubles" connect currency to ANY form of energy, even stolen energy. With this connection, Russia is trying to set up something akin to an energy payout for all residents -- much like the dividend that Alaska pays its people for oil.

Final Thoughts: Bitcoin Can't Be Domesticated

Ultimately, this is an experiment. "This" refers to the crypto-ruble, not bitcoin. Bitcoin has arrived -- it is its own asset class and there's nothing the central banks/nation states can do about it because it is decentralized by nature. Any country, including Russia, trying to create a national bitcoin will fail. After all, bitcoins that can only be mined by Russians are not bitcoin.

If you like what you're reading, please join my mailing list to receive blog posts and updates as they occur. If you're an investor with all of your assets tied up in the stock market and cash, you might want to consider a few diversification strategies. Gold is the oldest asset in the world and it's inflation proof. Bitcoin is the gold standard for the cryptocurrency world, which is the fastest growing asset class in the world. Diversifying your portfolio into one or both of these assets can help to insure your portfolio against a stock market crash or inflation. Most importantly, it can help to safeguard the gains you've made over the last 10 years.

Please note that there are other companies that sell gold and Bitcoin on the market, and you should always do your research when making decisions about your portfolio. Just like your personal health, if you're planning on having major surgery, you need to get a second, and sometimes a third, opinion. You want to make sure your surgeon is good and has performed the procedure many, many times.  In the same way, you need to trust your broker and you need to make sure they are reputable. This is the process I used when looking for a broker to recommend.

Full disclosure: RegalAssets compensates me for everyone I send their way, but I would receive compensation from any company I chose to recommend. The only broker I'm recommending is Regal, primarily due to its innovative product offering in my favorite commodities - gold, precious metals and cryptocurrency like Bitcoin. They also have a distinguished track record for success (see below).

Next Steps: Use Regal as one of your options and compare against them. Your other brokers should be able to offer the same level of service and the same low rates. The kit is free and it will provide you with a basis for comparison. Don't wait, get started today. Fill out the form below to get your free investment kit.

If you're interested in learning more about gold investments, click here to receive a free gold investment kit from Regal Assets.

If you're interested in learning more about Bitcoin investments, click here to receive a free Bitcoin investment kit from Regal Wallet.

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