www.armstrongeconomics.com
QUESTION:
You have talked about bitcoin and are rightly skeptical as we all
should be, yet creative destruction rolls on. What insights do you have
to share about the Dapps and Ethereum? In reading your blog for several
years now you have truly opened many peoples minds. Thank you for your
insight!
KS
ANSWER:
If you want to trade Bitcoin, use the futures. The futures market will
bring stability to the price and open the door for hedging what is
otherwise at times an illiquid market. Understand one thing. This is all
part of the shift from Public to Private. Cryptocurrencies are marketed
as some magic money that will be free of the fiat world of government.
That is total nonsense for governments will by no means allow that to
happen. Nevertheless, this is part of the same anti-government movement
that brought Trump to the White House, BREXIT, Catalonia uprising,
Ukraine revolution and so on. This is the rise in the stock market and
the shift of capital from government bonds to equities. This will all
end in a monetary crisis event perhaps as soon as 2021.
Keep in mind that Coinbase had to give up everyone’s name to the IRS
and they sent out notices warning people they better claim their profits
because the IRS will be looking to audit anyone trying to hide their
gains from taxes. The technology of Bitcoin is inferior to other
currencies. I believe in the end, we are moving toward electronic money
but the governments will control it. This idea that somehow it is safer
because it is outside the central banks is really nonsense. So is gold,
commodities, real estate, and shares. There is a huge void with respect
to counterparty risk in the cryptocurrency world and the fees to use
this stuff are outrageous. I do not see this as a viable situation
moving forward in time. It also requires a power grid. Take that out and
you have nothing. The good old tangible things will always survive. If
society collapsed, electronic money in all forms may not survive. Also
remember that today only about 4% of all transactions take place in
paper money. We already live in an electronic monetary system.
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