Bitcoin Goes Legit

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Right now, you have the chance to be part of biggest overhaul to the financial system since the US dollar was taken off the gold standard.

In 1971, when US President Richard Nixon completely decoupled the US dollar from gold, he unleashed an unprecedented credit boom fuelled by fiat currency.

A fiat currency backing a global financial system that has done nothing but make you poorer.

Through inflation — which is just another form of theft — governments believe that, if the value of your assets increase, you won’t notice your dollars slowly buying you less.

In other words, your purchasing power is lost. But hey, your house is worth more. Of course, that’s assuming you were lucky enough to buy a house in Australia before our credit boom boosted prices…

The rise of Bitcoin

This year will be the year that Bitcoin goes mainstream. No longer is the cryptocurrency something for geeks, finance nerds and weirdos that just want to keep their money away from governments.

Of course, when a currency appreciates 181% in seven months it’s hard to ignore.

Yes, you heard me right. I called it a currency. Bitcoin is rapidly becoming a legitimate alternative to the fiat dollars we have offered to us today. But I’ll get to that in a moment.

Bitcoin kicked off the year around US$997 (AU$1,254) per bitcoin, and by July this year it was worth an incredible US$2,808 (AUD$3,532).

Bitcoin US dollar — 12 months chart

Source: Coindesk
[Click to enlarge]

As of this morning, one bitcoin is worth almost double an ounce of gold.

Let me put that another way for you.

Physical bullion — the shiny yellow metal that has been used as a currency for a millennia or two — is worth half a bitcoin.

In my view, bitcoin now falls into line with gold. That is, it’s either a currency or an asset. Like gold, bitcoin can act as a medium of exchange for goods and services. However it also has the potential to be a store of wealth outside of fiat currency. Furthermore, governments can’t fiddle with wither gold or bitcoins by suddenly devaluing the currency, like they can with fiat dollars.

The growing importance of bitcoin has encouraged some countries to embrace the cryptocurrency.

Japan, was the first — and to date only — country in the world to recognise bitcoin as legal tender. Many other countries merely tolerate its presence.

Surprisingly, the next push for Bitcoin will come from Russia. One of the country’s largest retailers, Ulmart — the Russian version of Amazon — is planning on accepting bitcoin as payment from 1 September this year.

This move clearly shows the softening of Russia’s stance on cryptocurrencies.

Last year, the Russian Ministry of Finance was pushing for legislation that outlawed any cryptocurrencies. But then, either accepting defeat or finally seeing it as a way to sidestep the US dollar, the Russian deputy finance minister hinted that Bitcoin and other cryptocurrencies may become legal tender in 2018.

However, waiting on bitcoin-friendly legislation to pass pay not matter anyway if a Singapore tech start up has its way.

Bitcoin meets Visa

A couple of years ago, ‘Bitcoin’ ATM’s were being rolled out across the US. Us Aussies even scored a few machines. According to the CoinTrader map, Australia has 13 bitcoin ATMs.

While there are nearly 1,000 bitcoin machines worldwide, they are expensive to use. The average US fees for buying bitcoin is 10% of the total purchase price. And then when you sell them back to the ATM, you’re slugged with another 6.3% as a seller’s fee.

Ouch. Those sorts of fees add up.

Yet outside the US, bitcoin ATMs haven’t really become popular, with claiming that 73% of all bitcoin transactions come from the US.

However, Singapore start up TenX has plans to make bitcoins useable around the world. And this innovative tech company has come up with a way to bypass governments not accepting cryptocurrencies.

In fact TenX, are going to enable people to use bitcoins in a much cheaper way than ATMs. More importantly, they’ve thought like a consumer.

As Bloomberg explains, TenX have developed a program makes spending Bitcoins as easy to use as your debit card, writing:

TenX is pitching its debit card as an instant converter of multiple digital currencies into fiat money: the dollars, yen and euros that power most everyday commerce. The company said it takes a 2 percent cut from each transaction and has received orders for more than 10,000 cards. While transactions are capped at US$2,000 a year, users can apply to increase the limit if they undergo identify verification procedures.

Tenx’ bid to make digital currencies easier to spend comes amid massive volatility and infighting within the cryptocurrency community… The company has built an app that serves as a digital wallet connected to the Visa card so that when it’s swiped at a café or restaurant, the merchant is paid in local currency and the users’ crypto account is debited.’

Until now, most people haven’t had the ability to spend their crypto monies freely within the economy.

Yet TenX development gives consumers that power. The power to use an alternative currency as simply as we use a debit card. To boot, the software TenX has created works in real time. So the user gets the bitcoin exchange rate in that moment, plus it automatically ‘debits’ the bitcoins spent from the card. Just like an ordinary bank would debit the money from your account.

One of the biggest things holding cryptocurrencies back was their lack of acceptance. From both governments and retailers.

TenX has manoeuvred around all of that. One simple innovation has enabled you to spend your crypto currencies, and circumvent the government slow-balling the embrace of crypto cash.

With new developments in the cryptocurrency story coming every week, and often daily, things can change very quickly. If you’re thinking that it’s too late to profit from the really big moves in crypto, our in-house cryptocurrency expert, Sam Volkering, is here to tell you otherwise. Check out his special research report here.

Kind regards

Shae Russell,
Editor, Currency Wars Trader

About Shae Russell

Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Fat Tail Investment Research eight years ago, Shae has worked across a…

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