I’ve recently come to understand how Bitcoin is a far more important breakthrough than I ever realized — a breakthrough with tremendous implications for your own future in a world where bank-created debt is collapsing by the day.
A quick backgrounder: I’ve always been 100% in support of peer-to-peer crypto currencies, but in early 2013 as the Bitcoin bubble exploded, it became obvious to me that Bitcoin was following an irrational, parabolic price spike headed for a crash. It was becoming a little too popular, and too many “tourists” were jumping in, pushing the price into irrational territory.
On April 9th, 2013, as a guest on the nationally syndicated Infowars radio program, I publicly predicted a massive Bitcoin crash, saying, “Eventually it’s going to crash hard. I bet my reputation on that, Alex. I am 100% sure we are going to see a massive Bitcoin crash at some point with an ultra-accelerated velocity. It will be the fastest crash of any currency in the history of human civilization. It will be a high-velocity crash. People are buying Bitcoins who don’t know what Bitcoins are and who have no use for them. These are speculators.”
Within 24 hours, Bitcoin crashed hard, losing around 50% of its value. Many people actually blamed me for the Bitcoin crash, but others thanked me for preventing them from losing their money by buying into a price frenzy.
After being blamed for the Bitcoin crash, I decided to keep my mouth shut on the topic as the next price frenzy unfolded in November, 2013. During that month, Bitcoin surged from under $200 to over $1100, seemingly headed for the stratosphere. You didn’t have to be a rocket scientist to realize this, too, was an irrational bubble (caused in large part by the sudden popularity of Bitcoin across Asia) headed for a certain crash.
Sure enough, the crash came hard and heavy, and by Dec. 17th, the price had crashed back down to $569. Since then, Bitcoin has suffered a slow, steady erosion of value, now settling into the $250 – $300 range, seemingly with less volatility.
The rise and fall of Bitcoin prices, however, does not take away from the astonishing technology driving it. Bitcoin prices are more a representation of irrational human psychology than anything else. Underneath the irrationality of human fads and fetishes, there’s a complex yet brilliant mathematical layer driving Bitcoin. That layer is what makes Bitcoin so far ahead of its time… and much more as you’ll see here.
Bitcoin as “computational holography”
The underlying technology behind Bitcoin is called the “blockchain.” It’s really a ledger of Bitcoin exchanges (and new coin creations) that exists as a distributed collection of mathematical proofs reinforcing the underlying computational infrastructure and integrity of the Bitcoin system.
An easier way to think of this is to consider Bitcoin to be an expression of what I’m going to call computational holography. Or you might called it a “currency hologram.” A hologram, of course, appears to be a real, physical object even though it’s really just optical information projected with a laser. Bitcoin operates much like a mathematically-animated currency hologram that comes into existence because of all the distributed processing being performed on the blockchain.
Similarly, if you cut a hologram in half, you get two WHOLE representations of the holographic data, not merely two halves. In holography, the entire whole of the system exists in each part, and this is also found in Bitcoin, where even if half the blockchain ledgers are destroyed, the entire system continues to exist as a whole in the other half of the ledgers. The redundant, peer-to-peer, crypto-computational nature of Bitcoin is sometimes described by people as a “distributed” system, but I can confidently argue that the term “holographic” is far more accurate. Bitcoin, in my opinion, is an expression of computational holography.
To understand why, you need to dig into the mathematics of Bitcoin. That’s a highly complex subject, so I’m not going to cover it here. (Click here for a brief look at the “difficulty” calculation in Bitcoin mining.) But the good news is that you don’t have to understand all the equations to grasp the bigger point: Bitcoin’s blockchain infrastructure could make much of Wall Street totally obsolete.
How Bitcoin technology could render much of Wall Street obsolete
As research analyst Johann Palychata wrote in Quintessence, “While many describe the Bitcoin as a currency, it is in fact primarily a disruptive open source technology for the financial world. Bitcoin is therefore sometimes called the ‘internet of money’. Its core is the first successful attempt for a secure and decentralized register. It should be considered as an invention like the steam or combustion engine.”
The Bitcoin blockchain, in other words, renders many modern financial functions obsolete. As Palychata writes, “…[Bitcoin] creates a total disruption. In its purest form, a distributed blockchain system allows all market participants direct access to the DSD (Decentralised Securities Depositary), to the exchange and to the post trade infrastructure (clearing & settlement).”
In other words, Bitcoin’s blockchain infrastructure could not only make stock brokers and investment bankers obsolete; it could also make central trading clearinghouses obsolete.
The function of the Wall Street middle man, in other words, can now be replaced by holographic (distributed) computational power donated to the system by self-initiating volunteers (i.e. Bitcoin miners).
Greeks who hold Bitcoin are also carrying big smiles right now
On top of the enormous implications mentioned above, Bitcoin is suddenly being recognized as amazingly useful in a world where central bank-run financial systems are crumbling by the day.
As Greeks are losing their life savings due to bank holidays and banker bail-ins, people who hold Bitcoin have near-100% protection from bankster confiscation. Their Bitcoin holdings are 100% portable and non-discoverable by any normal means of searching someone’s home. An online Bitcoin wallet can be access simply by remembering something that you know (i.e. a complex password), allowing instant access to cash anywhere in the world.
And thanks to Uber-like social networks such as LocalBitcoins.com, a person who holds Bitcoins can trade them for cash, gift cards or other currencies almost anywhere in the world, without going through any banks or governments.
No wonder Bitcoins drive the central bankers absolutely crazy. This is a disruptive technology that thumbs its nose at the post-9/11 banking police state infrastructure put in place by America’s banking Gestapo. If purchased and spent intelligently, Bitcoins are essentially untraceable. (Even though the blockchain is public, the origins of new ownership of Bitcoins is easy for intelligent people to conceal.)
That means a person in Greece, or China, or the USA who converts something like 5% of their savings into Bitcoins now has a 5% buffer against currency catastrophe. Even if all the other financial systems collapse, Bitcoin still exists as long as there is computational power and network connectivity. Of course, in a total grid-down Mad Max collapse of the world, Bitcoins are worthless. That’s why you should also own gold, silver, farm land and firearms. A smart prepper owns them all. A sheeple owns none.
Bitcoins cannot be (readily) shut down by any government authority
Bitcoins have a very important and strategic role to play in any person’s financial preparedness plans. And it’s the blockchain hologram (distributed computational infrastructure) that makes the crypto-currency truly independent. There isn’t a single centralized clearing house. No one government can shut it down. No single institution keeps all the records. By definition, Bitcoin evades all attempts at shutting it down, controlling it or destroying it.
Although I’m a pretty smart guy overall, the full extent of all this didn’t really sink in for me until recently, when I was reading the technical documents of the blockchain computations. (Don’t ask me why. Yes, I’m a total nerd.)
When I saw the absolute brilliance of the self-adjusting computational complexity for Bitcoin mining, I was just blown away at the foresight of the people who set this up in the first place. Now I’ve come to fully realize that Bitcoin really is as important an invention as the steam engine. It’s such a crucial and powerfully disruptive technology that I expect it to play a key asset protection role in the coming global debt collapse and the possible overturning of criminally-run central banking systems across our planet.
The sudden truth is that central banks are obsolete. They do not create wealth; they destroy it. Only a people-centric, decentralized “holographic” currency like Bitcoin can truly support global economic liberty and abundance, and I believe there’s a good chance that Bitcoin (or some similar crypto-currency) may be embraced as the next wave of global finance after our current system of global debt experiences a catastrophic collapse. “Centralized” money will always be subject to corruption and criminality. “Decentralized” money (like Bitcoin) will always be more structurally immune to such attempts.
What to consider before buying Bitcoins
Does this mean you should run out and buy Bitcoins? Only you and your investment advisor can answer that question, and chances are that your investment advisor has no idea what a blockchain is, or how peer-to-peer crypto currencies even work. So he’s not really qualified to answer that question for you.
Bitcoins are best owned by people who are really, really good at remembering their passwords. If technology intimidates you, I wouldn’t recommend buying them. But if you’re okay with the idea of a distributed, computationally-intense transaction clearinghouse that’s ruled by no one (yet built by everyone), then Bitcoin might make a lot of sense. It’s not without risk, but then again we now live in a world where banks suddenly believe YOUR deposit is THEIR bailout money! Right now, the most unsafe money in the world is money in a globalist bank.
That’s why I recommend Abundanceflow readers get up to speed on Bitcoin and consider making the currency part of your own “last ditch backup plan” in case the entire world of central banker debt goes to pot. This is even more important to consider when you realize that as the dollar crashes downward, Bitcoin is very likely to experience an inverse spike upwards. In other words, Bitcoin serves as a counter-balancing currency investment that’s like to move in the opposite direction of a dollar currency collapse, thereby sharply reducing your aggregate currency risk. Farmers do the same thing by purchasing grain options, thereby “locking in” a reduced but more predictable profit from each year’s harvest. (In fact, when used in this way, options, short sales, puts and calls can actually reduce your risk exposure rather than increasing it. Sadly, most people don’t understand this and inadvertently use these financial instruments to multiply their risk exposure rather than limiting it.)
The bottom line with Bitcoin? In the context of the financial chaos headed our way, I think you’d be wise to investigate Bitcoin and see if it might be wise to own some. The price has fallen way down from its crazed high of late 2013, and it’s not in an insane bubble right now. Nobody is buying Bitcoin in a mad frenzy, which is a great sign for those of us who wish to own it at reasonable prices.
Do your own research, however. Bitcoin may crash again one day. It might be ruled illegal by the Obama administration. You might have all your Bitcoins stolen by another online wallet cashing in and fleeing to the Cayman Islands. You may legally be obligated to pay taxes on Bitcoin “profits,” depending on the tax jurisdiction in which you live. Bitcoins come with risk, so be sure you understand those risks before deciding to buy in.
If you do wish to buy Bitcoins, arguably the best-known online wallet is Coinbase (www.Coinbase.com). Also, here’s a list of other wallets you might want to review. Be sure to read this page describing what you need to know before owning Bitcoins (i.e. privacy, security, transactions, etc.)
As a great example of the potential risks with Bitcoin, consider the recent event of what’s now being called the “July 4th weekend fork” in which large numbers of Bitcoin miners were generating invalid blocks, causing losses of around $50,000 to certain Bitcoin owners. You can read about this strange event at this link or this explanation.
Even this $50K loss, however, pales in comparison to the losses the world’s Central Bank-run systems are experiencing on a daily basis right now. Risk exists in all systems of monetary storage. The smart person learns how to minimize that risk while possessing the wisdom to realize it can never be entirely eliminated.