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What Bitcoin is trying to tell you about your financial future

BitCoin Bubble Bankruptcy or Bailout

BitCoin and all the talk about bubbles, bankruptcy and bailouts are not the real story. Once you get beyond all of the technical and political arguments for BitCoin comes the part that stops them in their tracks… the psychology of financial manias.

Some people have figured out that BitCoin is a useful tool for the CIA, criminals, and other black ops. Also the creation of speculative markets and strange spot market values. As new mediums emerge for the exchange of Bitcoin, there’s even an ATM in America to exchange into other currencies, you might know by now all can be used for better or for worse. What are we going to do with this new found treasure. But first a quick review of what already is in place and if that is really what you want in an exchange system.

Here are some things to take into Account:
-New much stronger ASIC (Application specific integrated circuits) miners will be hitting the network soon.
-All the new people excited about Bitcoin will be throwing whatever miners they can get their hands on at the network. Even though if you do the math, it makes no sense.

-The Mt. Gox Bitcoin Exchange in Tokyo filed for bankruptcy protection Friday and its chief executive said 850,000 bitcoins, worth several hundred million dollars, are unaccounted for.

Appearing before Japanese TV news cameras, bowing deeply, CEO Mark Karpeles said a weakness in the exchange’s systems was behind a massive loss of the virtual currency involving 750,000 Bitcoins from users and 100,000 of the company’s own Bitcoins. That would amount to possibly a half Billion at recent prices.

The online exchange unplugged earlier this week. Revelations it had suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.

Now a film about this nefarious world,
The Rise and Rise of Bitcoin, a fictionalized
Documentary showing the recent History of this movement.

This is about a computer programmer becoming fascinated with Bitcoin, and its digital ecosystem. Through his involvement in the Bitcoin community, we learn about the impending global impact of this amazing new technology.

It’s practically impossible to follow the financial news in recent months without coming across daily articles about Bitcoin and all of its wild gyrations. Not a surprise considering the fact that this virtual currency sextupled in the past two months alone, while rising ninety-fold in the last year – at least until its recent plunge that caused prices to fall by nearly half.

Many people have been debating whether Bitcoin was experiencing a speculative bubble or not. Though virtual currencies in the longer-run act as a hedge against debasement of fiat or “paper” currencies. These gyrations with their parabolic surges resemble much of the silver’s bubble in late-2010 and early-2011. In both cases, the initial surges were driven by well-meaning amateur economists and investors who were too fearful of an imminent currency crisis or currency regime change, and were therefore too early in hedging against this scenario. Eventually, greed became the dominant driver of these markets as speculators clamored in to take advantage of the price mania. No matter how virtuous the underlying market is, greed-driven manias always end the same way – with a total price implosion.

The surprising result is that a collapse like that of GOX in fact makes for a stronger process as these security lapses are cured. The big take away from this story is that the currency collapse that you need to worry about is the American Dollar.

About RC Stanley


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