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Nationalist Pundit

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Bitcoin Futures Launched, Crypto-Currency Mania

On Sunday, the Chicago based Cboe Global Markets exchange launched Bitcoin futures trading. By close of markets on Monday, Bitcoin futures settled at $16,680 after flirting over $18680. Bitcoin is an alternative currency, digitally based created in August of 2008 by Satoshi Nakamoto. At that time, it had essentially zero value. Throughout most of the next several years, you could ′buy′ as many as 3 to even 33 Bitcoins for just $1US. But, the digital currency began to catch on as some retailers and smaller banking services began to accept them as cash. By 2013, 1 Bitcoin was worth over $260. It even briefly spiked in 2014 at around $1,200. The controversial currency ebbed and flowed for the next several years from about $60 to $1,500. Today, some say it is worth at least $2,000 a ′coin′. While many ′experts′ say that Bitcoin is a Ponzi scheme, a fraud, or at the very least, a ″speculative bubble′, others claim that Bitcoin is the future and could be worth as much as $250,000 each by 2020.




The subject of currency is a tricky one, based primarily on psychology. Take our own U.S. Dollar, created by the Federal Reserve Bank. Many describe it as ′Fiat Currency′, having no real value at all, only that value which others widely place upon it. In many respects, such descriptions are accurate. The American Dollar lost much of its foundational support, mandated by the U.S. Constitution, from gold and silver in 1933. That is when FDR made owning physical gold illegal, except in cases of ′collectable′ numismatic coinage. In 1964, LBJ orchestrated the end of silver coinage and by 1972, Richard Nixon removed the United States from ′The Gold Standard′ entirely.


The result of this separation of paper and coin currency with precious metals was the devaluation of our money. From the mid 1960s through the 1970s, U.S. currency suffered from inflation. The Federal Reserve Bank was printing money at an accelerated rate well beyond actual growth in our economy. Primarily to pay for excessive government spending. Mind you, we have had inflation and deflation throughout our national history even when we backed our currency with precious metals. Whenever there was a major find of new gold or silver sources, inflation reared its ugly head. Likewise when the economy grew beyond the ability to mine enough to keep up with growth, we had periods of deflation. A good deal of these lows and highs were also caused by foreign trade and the cost of labor here and overseas.


However, for the most part, these changes in currency valuation were short-lived and generally at or below 10% in exchange rates. But once the U.S. Dollar was completely off any connection with precious metals, the game changed for the worse. The buying power of the Dollar had been fairly consistent from the beginning of America through 1933. But today′s Dollar will barely buy a nickel′s worth of goods and services from 1964. So is our Dollar a fraud, a Ponzi scheme, a ″speculative bubble″? Many say, ″Yes!″


Enter Bitcoin. While gold and silver a ′scarce′ due to the fact that people are still mining the them, Bitcoin is fixed at 21 million coins. Or, at least we think so. What we do know is that some 40% of all Bitcoins are owned by a small number of people. Tyler and Cameron Winklevoss, who run Gemini Trading, are said to own about 1% of all Bitcoins created. There are some 1,700 or so registered Bitcoin ′wallets′. People earn Bitcoins by ′mining′ them, downloading software or using particular server networks. An estimated 3 to 6 million people are said to have digital wallets, owning a piece of a Bitcoin or more. As a crypto-currency, there is no real official means of knowing how Bitcoins are actually distributed and who possess them. Some say that this is why Bitcoin is so popular with drug dealers and others in illegal activities.


Recently in Venezuela, where rampant inflation exists, many citizens have turned to Bitcoin as a financial refuge, since governments cannot track them. Across the globe, many investors have been using Bitcoin as a hedge, much like gold or other ′hard commodities′. China, where currency devaluation has become a way of life, many of their freshly minted millionaires and billionaires have become Bitcoin enthusiasts. So, it is easy to see why Bitcoin has some genuine potential to become a valid investment with a long and bright future. If you had been among those who had acquired a few thousand Bitcoins back when they cost $0.39 or less, today, you would be living the dream on your 150-foot long Fedship crewed by large-breasted women in bikinis.


For more REAL NEWS and views, follow Andrew Zarowny on Facebook and on Twitter @mrcapitalist.


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