The Phaserl


Should You Buy Bitcoin Right Now? Don’t Be Stupid

by Marin Katusa, Katusa Research:

Bitcoin has rallied 175% in the past five months.

Should you jump on board for the ride?

Early this week, I offered my take on the subject in a Twitter post. It garnered a lot of interest and comments from Bitcoin fanatics.

My take on Bitcoin and cryptocurrencies in general? It might make you angry… but hear me out.

Bitcoin was initially designed to be a digital currency and a store of value. It was going to be a key component in the global commerce system, seen to many as owning Bitcoin was a way to reserve a slot on the Internet’s ledger. Many people believed it would revolutionize the online financial world.

Guess what?

It didn’t happen.

Right now, there is no meaningful amount of global commerce being transacted with Bitcoin. There’s some niche retail, but that’s about it.

Computers have advanced so much that cryptocurrency engineers are creating alternatives to Bitcoin, and the whole argument of “reserving a slot on the Internet’s ledger” has proven to be false by the rise of the many competing cryptocurrencies.

In addition to facing competition from other cryptocurrencies, Bitcoin is at risk of being diluted. The core Bitcoin community is debating the current reality. The debate is on, and it’s only a matter of time before human greed destroys the designed store of value factor. A quick Google search shows these discussions are ongoing in real time—dilution will be coming to Bitcoin.

My team knows of and tracks about 700 crypto and digital currencies. The top three by market cap are Bitcoin ($28.7B), Ethereum ($7.9B) and Ripple ($6.8B). Bitcoin is by far the behemoth of the industry… for now. (To put things in perspective, the world’s largest gold producer, Barrick has a smaller market capitalization than Bitcoin.)

The original intentions of Bitcoin were great, I’ll give them that (but then again, so were communism’s, and we all know how that turned out). For example, Bitcoin and Blockchain were supposed to destroy credit cards such as Visa. But guess what, they’re still here. Blockchain didn’t destroy Visa. Visa has already created its own technology to handle the issues. With trillions of dollars on the line in transactions, large companies that have the majority of market share will make big waves into this arena and maintain control.

The global financial biosphere has evolved and solved its own issues with in-house applications. The desperate need for Bitcoin’s blockchain came and went.

The social media and commerce platform WeChat in China is a great example. It doesn’t use Bitcoin’s blockchain. The whole Bitcoin blockchain revolution didn’t happen. Competitors to Bitcoin, all promising better features than Bitcoin, arose from this “coming need.” There are numerous amounts of blockchains (such as Ethereum blockchain trying to gain traction), and frankly, the Bitcoin blockchain missed its window of integration.

But let me get back to the flawed basic logic of the Bitcoin argument.

Counter to what many people believe, Bitcoin is NOT an irrefutable store of value.

Gold is.

So, if you’re sitting on big Bitcoin profits, sell some Bitcoin and buy gold with it. And if you’re thinking about jumping on the Bitcoin train, don’t do it. Buy gold instead for a store of value.

For the record, I support the spirt of cryptocurrencies, as I believe in the free markets. My issue with the Bitcoin crowd is the BS theory that Bitcoin is a “store of value.” Because of the incredible growth in computing power, what was once a “complex” algorithm is no longer complex. So, the rarity of Bitcoin fundamentally is flawed because the design rule of one block every ten minutes will eventually be changed to perhaps nine minutes… then seven… then five… and you get the point. If people can find a way to debase a currency, they will debase it.

On the other hand, I do see gold as money. Thanks to its unique physical properties, gold has been used for money for thousands of years.

Folks have used everything from butter to seashells, stones, livestock, salt, and cigarettes to transfer wealth and trade for goods. Yet, gold is the undisputed tangible king of the “store of value” argument for six fundamental reasons…that of which Bitcoin cannot meet.

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7 comments to Should You Buy Bitcoin Right Now? Don’t Be Stupid

  • Rdawg

    Fonestar and Mike to the rescue in 3, 2, 1…

    • mike

      Okay…My take, hear me out..This joker is 100% clueless lol. Although it might be good advice to wait btc is in the big correction right now..Might fall a bit more or it might be over already?…10k is on the way…then 40k,then 100k then 1mil then billions.
      It will takeover the financial markets completely..Other cyptos will serve local areas like different currency’s do today but btc will be the world reserve money.Nothing in this world can stop it.

      • Eric

        How many millions of dollars do you manage? I mean besides your 7 bitcoins.

        • mike

          Are you asking my net worth? Then yes it is millions. You only need 1 btc Eric the fact have a little over 8 now is way overkill I agree. But I like to use them as much as possible.

  • Mike, I believe you are spot on! These Cryptocurrencies are the proverbial genie from the bottle and she cannot be put back in? They cannot be stopped, nor should they be stopped. This will free humanity from this financial slavery we have been subjected to for over 100 years! 

    Thank God for Cryptocurrencies!

  • videoctr

    The author failed to mention Smart contract aspect of Ethereum.

    I will post this again, regarding how a decentralized, open source, Ethereum based news network can defeat the fake, mocking bird main stream news. As well as offer a token based monetized model for alt-media reporters and producers to post their news. This use case is a new business model. A paradigm shift. This new blockchain based network is called DNN = Decentralized News Network.–dnn-will-operate-on-the-ethereum-blockchain

    1. In summary, Ethereum Blockchain protocol and Smart contract, is more than being about a digital currency.
    2. If you are a demonetized political news Youtuber, you may want to support this and spread the word about DNN and the monetization capability of a public Ethereum blockchain news network.
    3. This paradigm shift can literally empower the people and not the globalist media minions and deliver the truth to the masses.
    4. Monetization can be with the Ethereum Token as payment to producers, reviewers, and authors of content.
    5. Decentralized model means no overlords enacting draconian rules and censorship.

  • Cmore

    To me it seems that btc is getting blacklisted as the latest viral attack assholes from the NSA want to be paid in btc

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