BACK in 2017, many in this column asked me if bitcoin was a good idea. Those questions are back in abundance again. And it’s here to stay.
Bitcoin is regularly pushed at me along with blockchain ledger as if it is the same thing. It is not. They are not related in price at all. Drop that.
Bitcoin has been asleep since 2017. I said it would survive, but in what form?
Amazon choosing to use it as a payment tool would be a big move of course. With nearly $300 billion of annual revenue Amazon is a juggernaut. A company with nearly 47 per cent market share of the US e-commerce retail market not accepting payment in the currency is a pretty big deal.
If that altered, the surge could be immeasurable in its price.
But I mentioned that in my column in 2017. Supposedly, Amazon was sniffing around then.
That is when confirmation bias and emotional overload takes over, and we make our dodgiest decisions.
Fear is an extraordinary thing. Psychologically the cortex shuts down the logical part of the brain and not only do we become binary in our thinking, we are highly suggestible.
As the movie Sixth Sense states: “They only see what they wanna see”.
Fear in this instance is the ‘Fear Of Losing Out (Folo)’. Most people I spoke to in 2017 could not give me 5 per cent of the logic to support their decision yet some simply stated: ‘I’m gonna have a go anyway’.
For some, that blinds them to the obvious – if I were Amazon, would I use bitcoin, or create my own currency. It has the ability without any effort at all, and this would indeed add to its walled ecommerce garden.
The key to making any good financial decision is to understand the potential for return or loss. Clearly, you cannot do that fully with crypto currency and our bias and beliefs play a large part.
The global management system has been shocking. Banks acted like they were bankers! Economics and common sense went out the window and umbrellas offered when it was sunny, were taken back when it rained. People became tired.
Bitcoin, or other reasonable coin versions, will do well whilst the state do not fulfil their responsibilities, instead driving society further into debt with atrocious policies that do not serve society fairly or economically.
Control, or the autonomy to make our own decisions, is a fundamental human need.
Having the value of your capital swung around by inflationary pressures by unstable policies which should not apply to you, has moved society to another way.
A monetary society where minds can be bought through subliminal and false advertising is not a fair society. Some $470m was spent on the Georgia Senate runoff race. Read that again. That is not a democracy.
I like a barter system. You want some advice and can make me happy with some product or service solution? Excellent.
That system does not exist in the mainstream world and so money became a convenient instrument used to get things done. It was an instrument that also gave ‘things’ an easy convertible value.
My money advice was not as important as the heart surgeon, so I receive ‘x’ pounds for that, and need 3x that to have my ‘heart work’ completed.
Bitcoin is trying to show that money can be successfully privatised. Can they be successful?
Money, as shown above, is a tool of the state. It’s a promissory note created by a central bank. Whoever controls the supply of money, controls everything:
Inflation, asset prices, liquidity, your ability to borrow, interest rates, your standard of living.
How governments will allow this control to be moved away from them is beyond me. I cannot see it. Dislike for authoritarian policies, centralized control and monetary control is the oxygen tank of crypto currency.
Like it or lump it, its here to stay. In what form we do not know as governments could easily create their own having let others destabilise the arena by letting one fail.
Over the next two weeks, I’ll give the pros and cons of crypto-currencies. In the meantime, think and walk slow.
:: Peter McGahan is chief executive officer of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. If you have a financial query call Darren McKeever on 028 6863 2692, email firstname.lastname@example.org or click on www.wwfp.net.