The Bitcoin Phenomenon Part 3

If you have been following this series on bitcoin then you should have a pretty good handle on this cryptocurrency by now. Part one gives a brief history of bitcoin and talks about some of the risks. Part 2 talks about why bitcoin will never be a viable currency. It also covers the limitations it has functioning as a legitimate currency. Read part 1 here. Read part 2 here.

If you have invested in bitcoin and made money then you are fortunate. If you invested in bitcoin when it was at an all-time high then you learned a valuable lesson about investing in assets like this. The truth is you take an enormous risk every time you invest in an asset that is at an all-time high and it is smashing records at an incredible rate. Yet somehow new investors are always drawn to these types of investments. Many of these people are first time investors. Let’s review why the risk is high.

For our example we will look at gold. Gold’s all time high was hit in August of 2011. It was going for $1,917.90 an ounce. It pulled back that same day to $1880.00 an ounce. It’s all time high is officially 1889. 70. Later in that same year gold began to drop. Eventually it bottomed out in 2013 as we saw a drop by 28 percent. By 2014 gold hovered around $1140 to $1180 an ounce.

Many gold experts blamed the fall in price on bitcoin. At the time bitcoin was just starting to become popular. The story is that most people were pulling their money out of gold and buying bitcoin. This hype helped those that sold precious metals for a while. Then these gold merchants began to spread a false narrative of a Global Currency Reset. The more they attacked the dollar, the more sales they got. Now the hype was going to be that the dollar was going to crash any minute. This seemed easy to believe simply because the 2008 meltdown was still fresh on everyone’s mind. Many people were still hurting from those events, but the real truth about gold’s fall in value is much different.

The thing that drove up the price of gold was the fact that the world went through a financial global meltdown in 2008.  This meltdown was produced in large part by government intervention into the housing market, and triple A rated mutual funds acquiring junk CDO’s that represented bad debt. Insecurity in the dollar caused the price of gold to skyrocket dramatically creating a gold bubble. As the dollar recovered the price of gold came back down. By 2014 gold was below the $1200.00 mark. It turns out that 2014 was the best year the dollar had since 2005!

https://www.marketwatch.com/story/dollar-index-on-track-for-best-year-since-2005-2014-12-31

Here we are at the beginning of 2018 and gold is just now at the $1,305.60 as of this writing. If you purchased gold close to its high in 2011, you watched your investment dwindle in value. If you spent over $1,800.00 for an ounce of gold, and many people did, you now had two choices to consider. First you can get out and take a loss, or you can ride it out until the price of gold goes back up.

Even if gold recovers in 2018 and passes it’s all time high your investment was still tied up for over 6 years making you no money at all. Breaking even actually means you lost value when you factor in the rate of inflation. During this time you could have profited from mutual funds or other investments. This is the danger of investing in assets that have gone through historic and drastic price increases.

Bitcoin start out in 2017 trading between $930.00 and $978.00. Throughout the course of the year it rose to almost 20,000.00.  Just a few days later it dropped by 30% percent. That drop alone took billions of dollars away from the total cryptocurrency market capitalization. It was a big market correction. It was responsible for sending bitcoin’s price falling below $11,000.00.  Over the next few days, the price of bitcoin would rally, climbing back beyond $16,000 and higher on other cryptocurrency exchanges worldwide. However, bitcoin’s value has begun falling as it fell to the mid-$13k’s area after opening the day above $15,000 on December 28 2017.

This is extremely volatile, and it represents the classic bubble scenario that many first time investors don’t understand. It you purchased bitcoin close to its all time high then you’re stuck holding on to your investment until it recovers, or you can sell it and take a loss.

When will bitcoin recover? Nobody knows for sure, but typically with these things, you will hear a lot of hype and blame from those responsible for selling bitcoin, and from those holding bitcoin. They may blame other cryptocurrencies, and there might be some truth to that. They may make claims that the dollar crash is emanate. They may even spread some of the same global currency reset nonsense that was used to hype precious metals and foreign currencies from third world nations!

https://www.globalcurrencyresetfacts.com/

The truth is bitcoin is a bad currency. The currency gets its value from demand. So if demand is high the price is high. If demand drops, the price comes down. Standard currencies like the U.S. dollar has contraction measures in place in case demand drops. This makes these types of currency much more stable. Cryptocurrencies have no contraction measures. When demand drops investors suffer. Demand is also created through the use of taxation. It has been historically proven that when governments tax their people, and then requires them to pay that debt in the government’s currency, it creates demand. Because of the volatility of bitcoin it is not a stable store of value. This is the most basic function of a currency. This was covered in greater detail in part 2 of this series.

Not only is bitcoin an unstable currency, it is also a very unstable investment. It seems that there have been times in the past when the servers were down for days because they could not handle the volume of traffic. This means that if the investment begins to fall rapidly, it will be hard to get out creating an even bigger loss. See the link below

https://finance.yahoo.com/news/heres-big-bitcoin-problem-just-discovered-211912644.html

GBL is a Chinese bitcoin trading platform. Many subscribers were unable to log in creating a loss of up to $5 million worth of bitcoin. The server suddenly shut down on October 26, 2013. In September of 2017 China has banned cryptocurrency exchanges. This also caused bitcoin to drop temporarily. The People’s Bank of China ruled that these unregulated sales violated Chinese law and must stop immediately.

http://www.businessinsider.com/china-ban-bitcoin-exchanges-2017-9

Tether is an online company which backs bitcoin cryptocurrency with fiat currency. They were hacked on November 21, 2017. The hacker took $30,950,010 in USTD from their primary wallet.

http://www.businessinsider.com/bitcoin-ethereum-prices-fall-on-november-21-after-31m-tether-theft-2017-11

In February 2014, cryptocurrencies made national headlines because the world’s largest bitcoin exchange was declaring bankruptcy. The company called Mt. Gox stated that it had lost nearly $473 million of their customer’s bitcoins likely due to theft. This amount was approximately 750,000 bitcoins which equals about 7% of all the bitcoins in existence. Because of this crisis the price of a bitcoin fell from a high of about $1,160 in December to under $400 in February.

As of September 2017, there were over 1100 digital currencies in existence. As more of these currencies become popular it will likely pull revenue from those who invest in bitcoin. This action will decrease demand for bitcoin thus driving down prices.

Bitcoin could also recover sooner than expected. Who knows for sure? The main point in all of this is the fact that bitcoin was never a sure thing, and the investment is much more volatile than it seems! This investment is always presented by investors and cryptocurrency markets with great bias.

The Bitcoin Phenomenon Part 2

In part 1 of “The Bitcoin Phenomenon” we covered all the background about this currency. We covered a brief history of cryptocurrencies, and we covered some problems associated with them. We also covered some of the risks. If you have not read part 1 then click here.

Make no mistake, people have made money by investing in bitcoin, people have made money by investing in other cryptocurrencies too. This is not like the dinar in the sense that only the dealers and the gurus are making money. There has not been anyone that has ever become wealthy by investing in the dinar. In fact, the word is out that the dinar was pretty much an investment scam.

This is not the case with bitcoin. If this cryptocurrency was a known scam, as some have claimed, then NASDAQ would not consider trading it, and the exchanges would leave it alone. One of the main reasons bitcoin has soared in price is that the exchanges are now trading bitcoin. The dinar and other third world currencies were sold based on hype about a fictional revalue. The networks of gurus were actually getting kickbacks from dealers to promote the hype, while at the same time appearing to be independent.

However, I do see something that disturbs me. There seems to be a lot of hype based on fiction with bitcoin as well. Because of the potential to make money, common sense has left many investors. Reasoning and understanding is left in the dust as people rush out to buy it. Some of the same patterns we have seen in the dinar world are starting to emerge with bitcoin. This cryptocurrency has acquired its very own set of gurus, and information is made up. Nothing is vetted or verified, and total fictional fabrications are made up to make the investment more attractive. This causes many people to over-leverage, and they are not aware of the risks.

This seems to be the same identical behavior that has happened with other cryptocurrencies too. This is part of the pump and dump process.

  • Step one; your group buys a cryptocurrency in massive quantities and drives the price up through demand.
  • Step two; make up lies and events to promote the currency. The reason for this is to present the appearance that the currency is going to go much higher. “Oh my, how high will it go?” This will attract many new investors. It’s like the shiny part found on a fishing lure.
  • Step three; once the new investors are in, dump your investment and get out.

Please allow me give you an example of the current bitcoin hype,

Central Banks Buying Cryptocurrency in 2018

The above article claims that the G7 central banks will buy bitcoin in 2018 due to the problems associated with all fiat currencies. Inflation seems to weaken fiat currencies because they have no intrinsic value, and bitcoin is immune to that. Because bitcoin is rising in value and is worth more than fiat currencies, the G7 central banks will buy bitcoin to use as a reserve for their currency. It will be used in SDR transactions, and placed in the basket of currencies. Because it is well-known that the definition of fiat means “no intrinsic value”, bitcoin will replace all currencies as reserves over the course of time. At least this seems to be what this article claims to me. Maybe I am wrong.

CNBC has produced an article with the same information, but then it says these are the claims made by the CEO of blockchain. Ah ha! Something does not sound right to me. The two currencies presented to be picked up by central banks according to this CEO are bitcoin and ethereum.

CNBC article

The Truth Is……

Let me explain a few things and give my analysis. First, “fiat” does not mean “no intrinsic value”. Fiat currency is currency that is used by a government because of decree or law. Outside of that decree or law it has no intrinsic value. When gold was used for money it had value outside of any law or decree, whereas our paper currency does not have value. The law that gives the U.S. dollar value is the Federal Reserve Act, and a series of laws were passed during the early 1930’s which modified the act, making it even stronger. These laws serve to protect the dollar against counterfeiting and declare that it is the official currency of the United States. When you pay your taxes it must be in dollars!

Dinar gurus constantly made the claim that the definition of “fiat” is ‘no intrinsic value”, as if to imply that the dollar really has no value and it was all based on faith, even in regard to the law of the land. This is where some of the GCR propaganda comes into play. I now see bitcoin gurus making the same arguments that we debunked when the dinar was popular! The reason for this is to hype bitcoin so investors can make more money.

Well I’ve got news for you. Bitcoin has no laws issued by governments to protect it. In fact, the value of bitcoin is also based solely on faith! It is also perceived! “Cryptocurrencies are, at the moment, treated universally as assets, and not as currencies for tax purposes. This means that if the price of bitcoin rises against the dollar and you cash in, then you are liable to pay capital-gains tax on the appreciation of the currency. If the value of the U.S. dollar rises 20% against the pound, then you are not liable to pay capital-gains tax on that appreciation!

Bitcoin started out as a currency independent of a central banking system. Without a central bank to regulate bitcoin there is no way to control the supply. In the past, the Federal Reserve has reduced the physical money supply in the USA as demand drops. When demand increases, more physical currency is put back into circulation. This action preserves the value of the dollar and it controls inflation. The Federal Reserve can also reduce the money supply to match a reduction in demand!

https://tradingeconomics.com/united-states/money-supply-m0

While bitcoin expands due to mining, there is no built-in contraction mechanism should demand drop. This is probably the main reason bitcoin has been so volatile in the past. This is why all cryptocurrencies are subject to pump and dump schemes. Cryptocurrencies will almost always have massive imbalances in supply and demand, because there is effectively an unlimited supply of them but a clear demand ceiling. The fatal issue for cryptocurrencies is that the supply can only go up! There is unlimited upside to the supply of all cryptocurrencies.

Even though an individual cryptocurrency may have a ceiling on supply, there are many of these currencies out there. If a new cryptocurrency is introduced in the future, and if it is believed to be superior to all existing cryptocurrencies, then you would likely see a massive move out of existing cryptocurrencies and into the new superior currency!

Furthermore, because you cannot reduce the supply of a cryptocurrency, that drop in demand would not be matched by a drop in supply! If demand goes down but supply does not, we will all see a drastic reduction in the value of that cryptocurrency. Its economics 101.

The ever-increasing supply of cryptocurrencies can be seen in the recent boom in so-called “initial coin offerings”. One of the main problems with bitcoin and other cryptocurrencies is that people still view them as investments rather than a means to exchange goods and services. New cryptocurrency startups will issue digital coins or tokens in exchange for real money. This real money is then used to fund projects. Billions have been raised using this method.

This ultimately means that cryptocurrencies fail in the two key areas of what makes a currency a currency! A currency has to be a widely used as a medium of exchange. Cryptocurrencies are never going to achieve that as long as they are used as an investment.

Second, you cannot use cryptocurrencies to settle tax liabilities. On average, around 34% of all economic activity is taxed. Governments are not likely to accept cryptocurrencies that they do not control to settle tax debts. You are therefore removing one of the main sources of demand for a currency. One of the key issues, whenever we talk about monetary economics, is that the money supply should never be considered in isolation of demand.

All money supply needs to be considered against money demand. If you do not have the ability to use cryptocurrencies for the largest single transaction in the economy then it will never be used as a major medium of exchange.

The Jiaozi was a banknote that was used around the 11th century. They first appeared in the Sichuan capital of Chengdu, China. Many numismatists (currency collectors) regard it as the first paper money in history. The banknote came from the Chinese Song Dynasty (960–1279 AD). It was highly successful at first because the kingdom of Sichuan insisted that people pay their taxes using this paper currency. Because of this requirement there was an enormous demand. For a while the paper currency kept its value.

There were no economists in the kingdom of Sichuan. Unfortunately they just kept printing the stuff. They were in serious trouble when the money supply exceeded demand. This is why governments won’t accept bitcoin to pay taxes. It removes demand for the currency they control.

Another key feature of a currency is that it acts as a store of value. This means you can put your money into it and be reasonably sure that in normal circumstances its value will not fluctuate on a massive scale. Cryptocurrencies cannot do that. Bitcoin has had many hyperinflation episodes. In a few cases it has dropped as much as 80 percent in value. In some cases its ability to purchase goods has dropped more than 25% in the course of just one week. That is not a stable store of value.

The G7 countries (Also known as The Group of 7) is a group made up of Canada, Germany, Japan, France, Italy, the United States and the United Kingdom. These countries have the 7 largest advanced economies in the world. These economies represent more than 62% of the global net wealth with an approximate value of $280 trillion. It is highly unlikely that these countries will use a cryptocurrency that has a track record of being 18 times more volatile than the US dollar! Furthermore, if these central banks ever accept bitcoin it will remove demand for the currencies these countries already use and control.

Will the International Monetary Fund allow bitcoin to be used along with SDRs to settle debts when the value of bitcoin changes so rapidly? That is highly unlikely! Let us recognize these assertions for what they really are. This is hype to make these cryptocurrencies appear to be an investment without high risk!

I think that in the end it would be ironic if central banks controlled a cryptocurrency like bitcoin through buying all of it as an asset. They would control a currency that was never designed for them to control.

Podcast- The Global Currency Reset

Recently I sat down with Sam I am and we started to discuss the global currency reset. One hour and twenty minutes later we finished our conversation. We went into many aspects of this belief system. We covered a lot of the same information that is in the book and we talk about other areas of our websites where you can go and find much of the same information that is in the book. I put together a new website that promotes the book and it has links to the articles on ICW that contains much of this information. The link to the new site will be posted below the podcasts.

We recorded this conversation because we wanted to bring out areas of this belief system that are seldom talked about. I wanted to bring you the conversation in its entirety without chopping it up into weekly segments. Therefore I made two parts. If you are short on time then this should allow you to take a break. You can listen to the second half at a later time.

This should generate a lot of conversation in the comment area. So join us and get your tinfoil, fold it into a hat. Now kick back and join us as we discuss “The Truth About The Coming Global Currency Reset”

Global Currency Reset Podcast Part 1

Global Currency Reset Podcast Part 2

http://www.globalcurrencyresetfacts.com/

Investment Scams

I know it has been a while since I posted anything about the dinar on this site. I have been working on other projects. My music website has gone through a complete overhaul and my other websites have been getting some much-needed updating. In addition to this, I have been spending many hours in the studio creating content for the music site. So I took a brief break from the dinar, but I see that things have not changed much.

As I look at Google Analytics I see that searches conducted on the Iraqi dinar have dropped significantly. There were many more searches regarding this currency just one year ago. People are beginning to wise up about this investment. When I called this so-called currency investment a scam in January of 2012 most people involved in this said I lost my mind. These days many people have joined the bandwagon. State and federal agencies have also called it a scam. Dealers have been rounded up and some are still being prosecuted. Some have already been convicted. We were surprised to find out from the indictments that law enforcement agencies have been watching some of these dealers since 2010!

Investment scams are the kind of thing that happens to other people. As dinar investors, we assumed we were smarter than the average investor. We thought we had inside information. We assumed we were talking to people who were connected to “boots on the ground”! We were even told that Donald Trump purchased dinar. We never considered that we were the victims of a massive investment scam. We never thought that we were being fed lies on a massive scale. Most dinar investors had no investment experience outside of this so-called investment.

We survived the 2008 meltdown and a mistrust of the stock market led us to seek investments outside of stocks. The 2008 meltdown hurt many people on many levels. Many people suffered major losses in retirement funds such as 401k and 401b accounts as these accounts were invested in the stock market. We received a good lesson in risk assessment. Nothing is a sure thing. Even though we learned that lesson we soon forgot it as gurus continued to hype the dinar as a sure thing. We investors were looking for the any minute now revalue that would bring a tremendous windfall.

Now people are finally starting to wise up. Many have sold off their currency and many others avoided the scam altogether because of this site and others like it. In its struggle for survival this dinar investment scam has embraced absolute absurdity. This scam attempts to rewrite history. It has embraced the very flawed Global Currency Reset viewpoints. Now it seems that scammers are making money from the investors that remain by selling services such as setting up a trust fund for their soon-to-come windfall. These are the hardcore investors who refuse to accept the facts. Logic or reason are absent from their decision-making process. False hope and pipe dreams rule their actions. They even sign non-disclosure agreements in an effort to keep the fine details hidden.

It is the embracing of the Global Currency Reset that really set me off. This package of lies began to revitalize the dinar investment just as people were beginning to come to their senses. It has prolonged the life expectancy of this scam. As I began to debunk this and write about it I began to realize that this was much bigger than the dinar. In fact, Many different types of investment scams are tied to this viewpoint. CMKX stocks, NESARA, Omega Trust, and hyped up gold and silver sales are just some of the past investments that were tied to this GCR nonsense.

As I wrote in my last post the endless predictions of a coming global currency reset resemble the endless predictions that dinar gurus spew out of their mouths. This is done because it creates urgency and it sells the product. It also causes many people to overleverage and spend more than they should! As I dug into this I soon discovered that it seems that even more scams are based on this Global Currency Reset viewpoint. That is why this is so much bigger than the dinar. I looked on Amazon and found many books that promote the global currency reset lie. As I read through samples of these books I discovered that much of the material presented was based on false narratives and misrepresentations. There was a twisting of historical economic events.

Apparently, this is big money. We are approaching yet another date that will contain another failed prediction. The dollar is supposed to crash on April 5th, 2017. Frankly, I am very surprised they did not pick April 1st! At least that day would be more appropriate. This day will be like the many other days these GCR gurus have predicted a crash. It will come and go and the dollar will still be in good shape.

I should point out that I don’t discourage investments in gold or silver. In fact, I have precious metals too. However, if you are buying a massive amount of precious metals because of a so-called coming GCR event then you are buying these metals for all the wrong reasons. Chances are you are over leveraging on a massive scale. Now people are buying these metals because they are preparing for the end of the world.

This is the reason why I decided to write a book and place it on Amazon and other eBook retailers. Not one GCR book told the other side of the story. Not one book debunked all the junk economics that could be found in this conspiracy theory. These guys were making many converts. So for that reason, I decided to throw my hat into the ring and debunk the garbage that is never addressed in this conspiracy theory.

Recently I built a new website as a way to promote the book. This site contains much of the history behind this belief system. The main goal here is not to sell books. The main goal is to provide an alternative point of view based on the facts. The samples of the book will provide enough information to debunk many of the monetary conspiracy theories that are based on historical events. Many book samples provide 1 chapter while my sample provides 3 chapters. It will at the very least cause people to research this whole thing with caution. Don’t believe everything you are being told by me or anyone else! Do your own research! Come to your own conclusions! You will find a link to my new site below.

http://www.globalcurrencyresetfacts.com

I had a conversation with Sam I am about the information in that book. Another podcast will be released shortly.