Tag Archives: cryptocurrency

How the Chorus of Crypto Criticisms Discredits Itself

The same rationale used to discredit cryptocurrency markets gets used to defend stock markets

crypto

“Bitcoin gets crushed again” has been trending today. The comment threads mostly contain rants about a crypto  bubble that has burst and a technology that has died for the 249th time. The few rational voices pointing out multi-year patterns get drowned out by an army of internet trolls labeling them wishful thinkers, although often with much harsher language. At the current stage of this most recent “crash”, BTC/USD is up 700% year-over-year and 13,900% over the past five years assuming a $50 price in Q1 2013 and a $7000 price today. By comparison, the Dow is up 200% since 2009, assuming a bottom of 9,000 points and a top of 27,000 points today.

“Dow falls 1,500 points” has also been trending. The comment threads seem to mostly contain defenses of stocks and how this is only a blip on the radar. Those who proclaim it to be the start of a bigger selloff or a bubble bursting are written off as hysterical or ignorant. Long-term trends are cited in order to put things in the context of the big picture. Notice how this reflects a total inversion of the same arguments used against crypto.

 A Tale of Two Asset-Classes

Yet when crypto enthusiasts point out long-term trends, they get labeled delusional zealots incapable of coping with reality. Despite the fact that no historical precedent exists for this new technology or its value relative to fiat currency outside of the past nine years, those who do not understand it feel justified in their predictions and analyses based on a few weeks. And their vitriolic assertions mimic the zealous tone they perceive in those who understand otherwise. Many such critics cannot even tell you what a blockchain is, what fiat currency is, or what a central bank does. This paradigm shift has gone so far over the heads of those who do not care to grasp it that they have formed a chorus of incoherent rambling.

Even the most well-respected financial experts and mainstream publications have joined this chorus, as I mentioned in a piece for GoldStockBull.com in December 2017. Hit pieces on blockchain and crypto often have little to no factual underpinnings. Bitcoinobituaries.com shows this quite well. One of the best articles ever written on this subject was published by Business Insider in August 2017. In it, John McAfee compares the invention of blockchain technology to the invention of agriculture:

 It is like the first pueblo cultures being warned by their past sages that they will perish in their stone houses when it is time for the village to move. They understood that the concept of “moving” had no meaning in their new world. Likewise, what people see as a bitcoin “bubble,” from the perspective of the new paradigm, is merely the predictable and systematic devaluation of fiat currencies that will continue, with obvious ups and downs, until all fiat currencies reach the zero point.

The decline of fiat currencies is almost never mentioned as a factor affecting cryptocurrencies, even though it can be seen as the single most significant variable. Likewise, corporate buybacks are often overlooked with regard to the stock market.

An Irrelevant Reference Point

These criticisms operate based on the same fundamental misunderstanding. The value of an asset, whether it be a stock or cryptocurrency, is often perceived in only one dimension – the price as measured in fiat currency. Underlying fundamentals or potential manipulations are often never considered.

The stock market rise has been fueled in large part by corporate buybacks. An excellent piece on this subject was penned by Forbes contributor Bert Dohmen just weeks before the aforementioned Business Insider piece by McAfee:

 Only 20 stocks accounted for 42% of all buybacks last year. It’s easy to see that manipulation of the EPS of 20 stocks can produce bullish sentiment in the market. The media usually just tells you about the rise in EPS, without telling you what the total profits were. In fact, total profits can decline while the EPS rises. It’s all a game of “smoke and mirrors.” It’s “fool’s gold.” I have been writing about this deceptive financial engineering since 2013. In my January 20, 2014 issue of the Wellington Letter I wrote: “In the U.S., the most significant factor for rising stock prices has been the very large corporate buybacks of their own stocks. Companies have been the biggest stock buyers over the past five years, while every other major, traditional buyer has been on the sell side.”

This is almost comical considering critics cite the lack of regulation in crypto markets as a worrisome issue that opens the door for price manipulation. As if regulated markets such as the Dow, S&P 500, and Nasdaq are somehow immune to such financial engineering. To be fair, a large number of people use cryptocurrencies as a speculative tool for fiat gains. This says nothing of the underlying technology. Nor does it make fiat currencies have more value. It’s yet another indication of the broad lack of understanding of the significance of this invention.

A New Perspective

Bitcoin and currencies like it may be the biggest invention since that of the internet. And blockchain may be the most significant technological advancement for human society since agriculture. That’s what inspires me to write about it. The vast sea of disinformation needs more contrarians.

I’m thankful to have the opportunity to work for companies like Blue Chip Crypto Education and GoldStockBull.com. They allow for publication of factual material relating to blockchain and cryptocurrency. I believe in the stated mission of Blue Chip Crypto, and I know many others do as well: We want to give our readers clear, concise information, and an objective view that would help break through the confusion and misunderstanding surrounding digital currencies. In short, those who dismiss the significance of blockchain have begun to look like those who wrote off the internet as insignificant decades ago. “It’s only for criminals, it will never work, it won’t last, it’s useless”, were all real criticisms against the internet years ago. It’s no coincidence that crypto faces similar scrutiny. Quantum leaps in technological advancement have a tendency to create paradigm shifts that only become widely accepted and understood sometime after their implementation. For crypto, that time is close at hand.

[Note: this article was originally published on LinkedIn at LinkedIn.com/in/bdncontent on

Bitcoin has died 235 times in the last nine years

Bitcoin

 

The price of bitcoin and other cryptocurrencies as measured in dollars has fallen sharply in recent days and weeks.  Despite this, crypto in general has still seen a steady rise of epic proportion over the long-term.  Every single times this happens, doom and gloom abounds.  Many people seem to have incredibly short memory spans.  Bitcoin makes banks obsolete.  Big banks have been responsible for the very crimes that many accuse bitcoin of enabling.

Memory span blackout

As a species, we have incredibly short memory spans.  We tend to only look at what has happened in the most recent past.

For example, each and every time there is a temporary decline in the price of bitcoin or the cryptocurrency markets in general, the doomers cry out.  The end is nigh, the bubble has gone bust, it’s all over.

Such naysayers never seem to consider the long-term trends.

Bitcoin has fallen almost 50% from its all-time record high near $20,000.  And yet, even if it were to fall to $10,000, that still represents a 1,000% increase year-over-year.  But you will not hear a single soul talking about that.  All you will hear are those spreading FUD (fear, uncertatiny, doubt).  Somehow, these voices have been elevated above all the rest.  And this is no coincidence.

Banks no longer necessary

Crypto poses a grave threat to the traditional banking system.  With cryptocurrency, users become their own bank.  There is no need for a third-party financial system any longer.

That means that corrupt, fraudulent, insolvent, and criminal institutions like HSBC will no longer exist.  HSBC was convicted of laundering hundreds of millions of dollars for the Sinaloa drug cartel in 2012.  And yet, many people fear that bitcoin has the potential to assist money launderers and criminals.  How can this be?  Has everyone forgotten about the criminal acts of the international banks?

From rigging financial markets, as Deutchebank and others have been convicted of, to outright defrauding customers, as Wells Fargo was convicted of in 2017, there is no end to the criminality of such institutions.  They have no moral capacity.  There are little to no consequences for their actions.  They simply receive a slap on the wrist in the form of a small fine and continue business as usual.

Surely no one can forget the crisis of 2008.  The crises revolved around this international banking cabal and its crimes.  And what happened as a result?  They were handed trillions of dollars created out of thin air by central banks.  Their crimes not only went unpunished.  They were rewarded in masse.  Instead of bailing out the debtors (those who lost their homes due to predatory lending practices), governments and central banks bailed out the creditors (the criminal banks).

The end is not nigh

All in all, many doomsayers have begun to change their tone, as they can no longer afford to lose credibility.  Jamie Dimon and Mark Cuban are two recent examples.  Cuban has even gone so far as to allow his NFL team, the Dallas Mavericks, to accept Bitcoin and Ether.