It’s always amusing when the front page of a mainstream newsroom runs a bitcoin article. CNBC regularly runs bitcoin pieces now. So does Bloomberg. The Aussie papers love it too.
The ABC isn’t afraid to publish articles on the ‘digital currency’. The Australian, Herald Sun, Sydney Morning Herald, The Age, they all love the allure of this mysterious ‘bit-coin’.
The Australian Financial Review isn’t shy from a bitcoin article here or there either. In fact they probably publish more on bitcoin than the other Aussie publications. Considering the boring mainstream line the Australian Financial Review usually tows, we can only assume they’ve gone bitcoin-crazy to bring in more clicks.
We know this because of the deluge in questions we now get about it all. Four years ago no one cared about it. Four years ago if you spoke about bitcoin to any banker or fund manager they would laugh at you — that’s if they’d even heard of it.
Most didn’t even know what it was. Most that did thought it was a fad. Just some silly experiment run by a bunch of ‘teenagers in their bedrooms’.
And boy were they wrong. So very, very wrong.
Today I field questions and queries from CEOs, high-ranking executives, small business owners, fund managers, private equity, and even cryptocurrency developers.
The awareness and hype that’s building around this new world is nothing short of astonishing. But with so much interest, so much hype, have we reached a peak?
Is this as good as it gets for crypto? Or is there more to come? Or worse to come? That’s perhaps the biggest debate raging right now. What is the future of bitcoin and cryptocurrency? A bubble ready to pop, or the start of a long-term change to the fabric of society and the financial system?
Why we have bitcoin today
If you work in the financial industry we can forgive you for thinking it’s one big bubble. When you apply historical financial principles to bitcoin you only see one thing; incredible price rises.
But there’s a fundamental problem with that idea. Bitcoin isn’t stocks. It’s not a company. It isn’t dollars or pounds. It isn’t gold. It isn’t silver. It isn’t oil, tulips, scratch cards, or frequent flyer points.
Before 3 January 2009, there was nothing like it. Well that’s not entirely true. There were examples of digital money before bitcoin. DigiCash was a cryptographic digital cash company formed in 1990. David Chaum started it and it was at the time the groundwork for the idea of a cryptographic (crypto) system of money.
In 1998 Nick Szabo created an idea of a decentralised digital currency called ‘bit gold’. It never made it into the wild, but again, it helped lay the foundations of what we see as bitcoin today.
These are just two examples of experiments with decentralised ‘crypto’ before we got bitcoin. But back then there was no real mainstream awareness or interest in any of it.
Why would there be? Traditional markets were flying. Greed was good. If you were a banker you could mint millions without too much fuss.
And then the tech wreck came. And went.
From the ashes comes greatness
From the ashes of the tech wreck came something extraordinary. Left in the wake of it all were some of the most outstanding companies the world had ever seen.
Today these are the giants of industry that dominate global commerce. The likes of Google and Amazon were born from the devastation of the tech wreck.
While these tech pioneers would create greatness, those too slow to realise it simply missed the ride. The opportunity was there if you could see it. But most people couldn’t.
And as for the financial system? Well it went about its merry way again. Crashes like that hurt, but they inspire Wall Street to figure out more shifty ways to make money from the average punter.
And for the next eight years we again saw an attitude of ‘greed is good’. Wall Street and the 1% making easy and fast money. They created complex products, selling returns to average investors and taking their large clip off the top.
It was a good time to be one of the financial elites.
And then 2008 came. And went.
This time though the wreck was bigger than before. In fact it was one of the biggest ever. Not only did it devastate Wall Street, it hit everyone across the world.
Even today we’re still paying the price for the debt bomb that exploded in the US. It was nothing short of a cataclysmic event. This time however from the ashes came something that wasn’t to be expected.
In the wake of 2008 we were left with the most significant financial event since the invention of money. We were left with bitcoin.
Join the monetary revolution and never look back
At the very core of the bitcoin philosophy is a decentralised system free from influence and control by the global elites. It’s a network rooted in cryptography and mathematics. It’s a system designed to create a medium of exchange — a financial system if you will — that exists externally to the ‘traditional’ system that has existed for so long.
Bitcoin is an alternative financial system. Its future lies in the ability to use it independently of the fiat money system you use today. It’s not designed to be an ‘investment class’ in the same way stocks, bonds or even precious metals are.
It’s a system which you can operate in without needing fiat money. You can get paid in bitcoin. You can buy things with bitcoin. And one day in the distant future, you will only ever think about ‘gains’ based on what a bitcoin can buy.
And that’s where the ‘traditional’ financial types get it so wrong. They see bitcoin as a way to make dollars and pounds. They see it as a quick fire way to deliver fiat money returns to their clients. The price it in dollars, just so they can try figure out how to trade in and out of it.
They don’t realise that it’s an existential threat to the very system they’re trying to link it to.
Their financial principles don’t apply. Their charts and predictions are fundamentally flawed. Their desire to make dollars from bitcoin is exactly what will come back to burn them, long term. Seeing bitcoin as a way to make fiat money profits proves they are just another cycle of the ‘greed is good’ attitude that plagues the financial elites.
The point here is simple. When you buy bitcoin you decide to turn your back on the existing, broken system. You decide that this is an opportunity to create wealth — bitcoin wealth. And that one day you will use those bitcoins to buy goods and services. You won’t pay in dollars. You won’t cash out back to fiat. Bitcoin’s inherent purchasing power and ease of use will be enough that you won’t ever need fiat money again.
You will have joined the financial revolution, and you will never need to look back.
Editor, Australian Small-Cap Investigator