Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
US Overdosing on Debt - 19th Mar 19 -
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19
The Exponential Stocks Bull Market Explained - Video - 13th Mar 19
TSP Recession Indicator - Criss-Cross, Flip-Flop and Remembering 1966 - 13th Mar 19
Stock Investors Beware The Signs Of Recession / Deflation - 13th Mar 19
Is the Stock Market Still in a Bear Market? - 13th Mar 19
Stock Market Trend Analysis 2019 - 13th Mar 19
Gold Up-to-Date' COT Report: A Maddening Déjà Vu - 12th Mar 19
Save Fintech? Ban Short Selling. It's Not That Simple - 12th Mar 19
Palladium Blowup Could Expose Scam of Gold & Silver Futures - 12th Mar 19
Next Recession: Concentrating Future Losses & Bringing Them Forward In Time As Profits - 12th Mar 19
The Shift of the Philippine Peso Regime - 12th Mar 19
Theresa May BrExit Back Stab Deal Counting Down to Resignation, Tory Leadership Election - 12th Mar 19

Market Oracle FREE Newsletter

Stock and Finanacial Markets Trading Analysis Worth

Bitcoin’s Evolution Will be SWIFT

Currencies / Bitcoin Dec 12, 2013 - 05:03 AM GMT

By: Jeff_Berwick


Chris Horlacher writes: A lot of attention has been paid to bitcoin in the last couple of weeks.  As Chinese buyers piled in to the market, a gathering of bureaucrats in the United States gave their blessing to the nascent currency.  The price movements in bitcoin have been jaw-dropping, to say the least.  The naysayers, looking for any reason to belittle this digital innovation, leaped on a Bank of China announcement that prohibited Chinese banks from dealing with the currency.  To those that have been paying attention, China has had a ban on virtual currencies since June of 2009 so this comes as no surprise.  Other investors and speculators are painting pictures of tulip bulbs for us in the mainstream news, but even the Dutch didn’t see action this intense.  Like Rocky Balboa, this new invention refuses to stay down.

So after making parity with gold, retreating and immediately recovering to what still feels like rarefied new heights, the next logical question is where does it go from here?  Bitcoin millionaires are being minted by the hour and they will be leading the development of the bitcoin economy.  Already we’re seeing numerous retailers adopt bitcoin as a system of payment and even if they don’t want to hold bitcoin themselves.  Services like Bitpay and Coinbase allows them to access a market segment commanding over $11 billion in purchasing power.  The message is clear; businesses want bitcoin and they’re willing to give you stuff in order to get it.

Bitcoin’s current valuation may seem high today, particularly when compared against many corporations.  A single bitcoin is worth more than a share in Apple, once the darling of the NASDAQ.  But bitcoin isn’t meant to be equity.  It, like gold, is a currency and should be analyzed as such.  Compared to the world’s major currencies, bitcoin still has a long, long way to go before it could ever rival them.

Compared to the top 6 currencies, Bitcoin is but a grain of sand and therein lies its major opportunity. Bitcoin is destined to supplant these behemoths; it is the automobile in a transportation market saturated by horse breeders.

"Now the advent of the Information Age implies another revolution in the character of money. As cybercommerce begins, it will lead inevitably to cybermoney. This new form of money will reset the odds, reducing the capacity of the world's nation-states to determine who becomes a Sovereign Individual. A crucial part of this change will come about because of the effect of information technology in liberating the holders of wealth from expropriation through inflation. Soon, you will pay for almost any transaction over the Net or World Wide Web at the same time you place it, using cybercash.

This new digital form of money is destined to play a pivotal role in cybercommerce. It will consist of encrypted sequences of multihundred-digit prime numbers. Unique, anonymous, and verifiable, this money will accommodate the largest transactions. It will also be divisible in to the tiniest fraction of value. It will be tradable at a keystroke in a multitrillion-dollar wholesale market without borders." (The Sovereign Individual)

Current payment systems simply can’t compete with bitcoin’s fees, security and convenience.  Why spend hundreds of thousands of dollars on bank fees per year and lose hair as money transfers bounce from bank to bank during a wire transfer sometimes taking days to reach its destination, when it can clear within minutes and for mere pennies?  As a currency, no sovereign can match it.  As a payment system, no financial institution can compete with it.  As a distributed network, no government can stop it.

Therein lays the real power of bitcoin; by granting individual businesses the ability to instantly settle international transactions the creative destruction of the marketplace has obliterated the hold that banks have over these long-distance payments through the SWIFT, TIPANET or any of the dozens of RTGS networks around the world.  As adoption of bitcoin grows, it will displace more and more of the global M2 supply and, consequently, grow exponentially in value.  Below you will see the value of bitcoin in today’s dollars should it expand to a certain portion of the whole of M2.  For convenience, I’ve also put in the fractional units of bitcoin; milli and microbitcoins as you will soon be denominating bitcoin transactions in that manner so best to start familiarizing yourself with them now.

Some of these numbers may seem crazy, but they don’t lie. Keep in mind that if a 25% share seems optimistically high to you, remember that China currently holds a 27.8% share of global M2 and they got there in a relatively short time span.

Banks should not fight this transition. Their core operations as borrowing and lending centers will remain unmolested by the expansion of the new Bitcoin economy. There is much they can do to capitalize on it as well as further its implementation. By granting BTC-denominated letters of credit, providing escrow services, integrating Bitcoin wallet software in to their online portals and connecting Bitcoin to existing capital markets, banks could bring new profits in to their traditional lines of business. There is a very bright future ahead indeed for Bitcoin and for us all.

Chris Horlacher is a contributor to The Dollar Vigilante and a Chartered Accountant practicing in the Greater Toronto Area. Formerly an auditor to Fortune 500 companies with Deloitte & Touche, he now provides project management and consulting services to mid to large enterprises, specializing in financial institutions. His work has included helping launch a successful stock brokerage, insurance and tech company. Chris is also the Vice-Chair of the Mises Institute of Canada and an advisor to the Bitcoin Alliance of Canada. His company website is

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.

© 2013 Copyright Jeff Berwick - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeff Berwick Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules