New Record Highs Could Be Just the Beginning for Bitcoin
Have you checked out the price of bitcoin today?
If you skimmed through any financial news recently, the answer is likely yes.
The once-obscure asset with an even more obscure name is making mainstream headlines across the world. It even garnered top spot honours on Bloomberg’s home page.
The digital currency is within a whisker of breaching US$10,000. At time of writing, one bitcoin is trading for US$9,949.97 (AU$13,081.74).
According to data from CoinMarketCap.com, that pushes bitcoin’s market cap up to around US$161 billion.
It all makes 12 November seem so long ago. That’s when bitcoin plunged around 25% to bottom out at US$5,857. That brought out the naysayers in droves. The end of bitcoin was here. Sell now!
We hope you didn’t take their advice. Bitcoin has now gained over 68% in the past 17 days.
With the recent surge in prices, the total value of all cryptocurrencies now stands slightly over US$300 billion.
To put the pace of growth of these numbers into perspective, the total value of all cryptocurrencies first exceeded US$100 billion in June…this year. And it crossed the US$200 billion threshold just this month, on 3 November.
Ether, the second biggest crypto, also hit a new record Monday, peaking at US$493.27. It’s currently slipped a touch to US$475.03, giving it a market cap of roughly US$46 billion.
Any guesses what the price of one ether was this time last year?
90 US cents.
That’s right. If you’d invested $1 in ether on 28 November 2016, you’d be sitting on $528 today.
If you’d been a bit braver and invested $1,000, you’d now have $528,000. That’s life-changing wealth. And all from simply buying and holding what is now one of the core cryptos. Though, of course, it was still a humble newcomer way back then…one whole year ago.
Of course, there are no guarantees these kinds of gains will be repeated. Cryptocurrencies remain notoriously risky.
Kind of makes you wish you had a time machine, doesn’t it?
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To some folks, bitcoin is a speculation. To others, it’s a fad.
But to the people of Zimbabwe, it’s a lifeline.
That’s because Zimbabwe’s economy is a basket case. It’s been this way for years.
A decade ago, the central bank of Zimbabwe tried to solve its economic problems by printing money…with predictable results.
In 2007, the inflation rate in Zimbabwe was running at 24,411% per year.
By 2008, the situation was so bad that the government stopped tracking inflation.
But experts say the annual inflation rate hit 231 million percent in July 2008. By November 2008, inflation hit 79.6 billion percent.
That’s when the government finally admitted that its currency was worthless…
It abandoned its own currency and started to use the U.S. dollar and the South African rand instead.
But this hasn’t fixed the country’s problems—not by a long shot.
Inflation in Zimbabwe is still sky-high. Unemployment is at 90%. About 74% of the population lives on less than $5.50 per day.
It’s a complete disaster.
According to Bloomberg, one bitcoin in Zimbabwe will now set you back $13,000. That’s almost double the international price.
It seems hard to believe.
But you’ve got to understand something. Cash is still hard to come by in Zimbabwe. Some banks can’t even give their depositors $20 per day.
Plus, many people in Zimbabwe don’t have bank accounts. But a growing number own smartphones. And that’s all you need to buy bitcoin.
But this isn’t just happening in Zimbabwe.
People in Venezuela are loading up on bitcoin, too…
That’s because their economy is also in shambles.
Unemployment is through the roof. Food shortages are common. And the annual inflation rate is in the triple digits…and rising.
In fact, the International Monetary Fund (IMF) estimates that inflation could top 2,800% next year.
The people of Venezuela are becoming increasingly desperate. And many are buying bitcoin to survive.
That’s because bitcoin doesn’t lose value by the day like the bolivar, Venezuela’s currency. Instead, it becomes more valuable.
Some Venezuelans are even using their bitcoin to buy essential items for survival such as medicine and food.
Others are also “mining” bitcoin…
Mining is how new bitcoins are created.
But you obviously can’t mine bitcoin like you would copper or gold. It’s a digital currency.
Instead, people mine new bitcoins by using computers to solve complex math problems. People who successfully mine bitcoins earn money.
Now, mining bitcoin is normally expensive. That’s because it requires a lot of energy.
But energy is basically free in Venezuela. That’s why an estimated 100,000 Venezuelans are now mining it. Their costs are next to nothing.
According to Bloomberg, some people are now earning $500 per month doing this. That’s a small fortune in Venezuela these days.
Doug Casey predicted this would happen…
Here’s what Doug told me over the phone back in September:
In all of Africa, most of South America, and a great part of Asia, fiat currencies issued by governments are a joke. They’re extremely unreliable within those countries. And they’re totally worthless outside the physical borders of the country. That’s why those people want dollars.
I think that the Third World will adopt Bitcoin and some other coins in a huge way.
This is because people who own cryptocurrencies, at least for the time being, are making money. They’re saving an appreciating asset rather than a depreciating asset. You’re on a Sisyphean treadmill if you try to save a Third World currency—but ¾ of humanity have no alternative.
In other words, Zimbabwe and Venezuela are just a taste of what’s to come.
Think about it. Right now, central banks across the world are recklessly printing money.
Every paper currency in the world is now rapidly approaching its intrinsic value of zero. It’s a giant race to the bottom.
Until recently, there was very little that people in places like Zimbabwe could do to protect themselves. Gold was really their only option.
But it’s not always easy for people in the Third World to get their hands on gold, especially when ruthless dictators are in charge.
Bitcoin is a much better option for these people…
That’s why Doug thinks the Third World will be a major buyer of bitcoin in the coming years.
Most people haven’t considered this. They think the only people buying bitcoin are millennials in search of quick profits.
But, as you’ve seen today, many people are buying it out of necessity. And that’s not going to change anytime soon…
So, consider buying bitcoin if you haven’t already…
Just remember to treat it like a speculation.
Have an exit strategy. Take profits when you get them. And most importantly, don’t bet more money than you can afford to lose.
If Doug’s right, you won’t need to own a lot of bitcoin to make an absolute fortune.
“Cryptocurrency is the most exciting thing I’ve seen since I first used the world wide web in 1992,” says crypto-millionaire and Agora Financial contributor James Altucher.
James has been big on digital currency since its advent in 2009. He likens the recent crypto backlash to the time when people said the internet was a passing fad and only for basement-dwelling hacker types.
James’ take on cryptocurrency? It’s here to stay… and it’s not just for computer nerds. “Cryptocurrencies,” he said recently, “will be the only chance in our lifetimes to make 100,000% on our money.”
That’s a sky-high rate of return but James has sound reasons to buy into crypto now; he might just settle some of your qualms about the nature of crypto and why it’s not going anywhere.
First, James says cryptocurrency is the next step in the evolution of currency — and 5,000 years of progress. Take a look at James’ nifty summary of currency’s march to crypto:
Humans are hard-wired to throw stones at progress and settle for the status quo. That’s why financial big shots like Jamie Dimon tweet bitcoin’s a passing “fad”… but James is right to ask, “What’s his agenda?”
“Jamie Dimon runs a bank with dollars in it,” James notes. “If people stopped using dollars, they would stop using Jamie Dimon’s bank. So of course he’s going to say bitcoin is a fad. He doesn’t want his bank to go out of business.”
James concedes most cryptos are frauds: “A persentage of cryptocurrencies are scams or will go to zero.
“Like any field that is ‘hot’ the scammers have arrived. Ponzi schemes. Fake currencies. Hacked exchanges, etc.
“But like in every field of life,” James says, “this will get regulated, criminals will get caught and the legitimate coins will thrive. This is exactly like the internet in the late ’90s. You didn’t want to avoid the internet then because of the enormous gains. But you did want to avoid the scams.”
Avoid fake cryptocurrencies, James says, and keep uncovering hidden agendas. “Always look for agendas, even with me.
“What is my agenda?” he asks. “I want to make a lot of money by identifying which cryptocurrencies are legit and which are not. I’ve built the team and network to do that. I also am happy to always be the first in trends.”
RBA (Reserve Bank of Australia) governor Philip Lowe is not a fan of bitcoin.
That news is about as shocking as hearing that Donald Trump isn’t a big admirer of Hillary Clinton.
Bitcoin, and cryptos in general, are proving to be a big headache for central and commercial bankers. They’ve grown accustomed to their monopoly over the control of currencies for the better part of a century.
Not only the supply of these currencies. But control over international money transfers. Bitcoin threatens all of that.
And Lowe, in typical central banker form, was quick to try and tie bitcoin to criminal activity.
From The Australian Financial Review:
‘Reserve Bank governor Philip Lowe said bitcoin was a “speculative mania” that was unlikely to become an everyday method for making payments, although it would be attractive to criminals…
‘When thought of purely as a payment instrument, it seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions, he said.’
The idea that bitcoin enables black market activity is intended to alarm. It’s the same line Australia’s Black Economy Task Force trots out to tarnish cash transactions.
The reality is that bitcoin’s distributed ledger system — the blockchain — tracks and verifies every transaction. Meaning, it’s not really anonymous at all. At least not to powerful government agencies determined to uncover users’ identities.
In that respect, cash is still king.
Lowe was correct in pointing out one concern, though. The energy costs of mining new bitcoins and verifying existing bitcoin transactions are going through the roof.
Estimates vary. But ABC News thinks it’s more than the electric use in all of New Zealand.
You can likely see where this is going. Keep an eye out for headlines like, ‘Environmentalists unite against bitcoin’.
A headline that may well be followed by, ‘Bitcoin soars to new record highs’.