Dollar Crashes Against Bitcoin, I Wish it Bought More of Them

Yesterday afternoon Bitcoin broke through the 900 USD mark with so much momentum that it made my ears pop.

I keep a realtime Bitcoin price tab open at all times these days. One second the price was bouncing around $880 or so and the next it was over $930. As of this writing the USD price is batting its head against $970, just inches away from $1000. I wonder if by the time this goes to “print” whether $1000 will have been broken…or if those four significant digits will prove to be the barrier off which the Bitcoin price bounces and crashes.

As much of a proponent of Bitcoin I am, I am among those who are strenuously hoping for its price to tumble. But last I checked there were three distinct types of people who are dreaming of a crash: bitter gold bugs, bitter state-worshiping dollar-lovers and bitter free market true believers who wish they’d bought a lot more a long time ago. Your editor is a vocal member of that last group.

Like many of the more digitized liberty-minded, I wish I had just one more chance to get some Bitcoins for relatively cheap before it charges to new heights, never to look back. Others calling for Bitcoin’s fall are doing so because Bitcoin is making their favorite currency or store of value look bad. The more economically astute Bitcoin detractors keep reminding us that Bitcoins aren’t gold, have no “intrinsic value”, etc. The less economically astute (and more prone to worship centralized violence) keep reminding us that Bitcoin has no central banker or government guns to back it up.

So as Bitcoin pushes into higher highs, you have three different kinds of people calling for a tumble…

a) Those who will always hate it because it’s not gold…

b) Those who hate it and say it’s a bubbly fad because it’s not backed by government guns like a proper currency ought to be…

c) Those who think it’s a great free market answer to money and who see a much higher price, but who wish they could buy in at much lower prices.

Today, well before the Bitcoin price shot up to its new milestone, I saw a debate with Peter Schiff representing the “gold rules, Bitcoin drools” camp and then caught the odor of a New York Times article making fun of Bitcoin because there was no tyrannical state force to back it.

Here’s the debate between Peter Schiff and Stefan Molyneux:

You probably know the usual complaints: that Bitcoin is only accepted because people believe it has value. Sort of like gold is. Or the dollar. The additional argument is that Bitcoin can only be used for exchange unlike gold which can be used to make a bowl, or worn as decoration, or fashioned into toilets in case its monetary value disappears. The rest of Mr. Schiff’s points are parroted in that bastion of central planning cheerleading, the New York Times, in an article titled fittingly enough, “Render Unto Caesar” (emphasis mine):

Which merchants in their right mind are going to accept a currency that seemingly changes its value in wild swings every other day? Mr. Branson’s experience with bitcoin is instructive: While he happily accepted bitcoin as a form of payment, he quickly converted the payment into dollars.

Then there is the issue of how limited the supply of bitcoin truly is. Bitcoin is digitally “mined” by computers running an algorithm. (If you just rolled your eyes, you’re not alone.) The algorithm limits the total number of bitcoin ever mined to 21 million units.

But there is no Bernanke (or Janet Yellen) of bitcoin. Nobody knows who created it and no one controls it. That’s supposed to be a benefit. It’s also why the currency is often associated with illicit sales. Bitcoin can be transferred anonymously and without banks taking transaction fees. But if, and this is a big if, your peer-to-peer transaction doesn’t work properly, there is no central clearinghouse to complain to.

Whether the government ultimately seeks to regulate bitcoin is an open question. It seems hard to believe that the government would allow the growth of such an unregulated market in which moms and pops, widows and orphans, and other individuals may be subject to all kinds of fraud…

Finally, there is the question of what happens if other alternative digital currencies also rise. More than a dozen digital currencies are trying to compete with bitcoin. Can you imagine a world in which we all transact with dozens of different currencies every day with different rules? Neither can I.

There is plenty of overlap between the gold bugs and the centralized fiat-lovers in their reasons for hating on Bitcoin. Too much dollar price fluctuation, not enough penetration among merchants (though you can buy lots and farm equity shares in Galt’s Gulch Chile with Bitcoins), with the possibility of coming regulatory disincentives. The NYT, however, has a very big lament that the gold bugs don’t: that there is no central banker empowered by any gun-toting state thugs behind Bitcoin to control its supply.

The fear of having to deal with — gasp! — lots of competing currencies also reveals a mind free of understanding markets and how proper money is just another service/commodity competing for our interest, not something controlled by a centralized authority whose use is encouraged by the threat of violence. You really should ignore these people. They worship gangsters and regularly feature the writings of Paul Krugman.

As Bitcoin charges toward a thousand, I keep having flashbacks to the first time then-fellow Agora Financial employee and anarcho-capitalist Joel Bowman told me about Bitcoin in 2009 (Memory fails, but I think a Bitcoin cost about a dime at the time). And then to the time friend and TDV editor-in-chief Jeff Berwick helped me set up a Bitcoin wallet and deposited some Bitcoins in it to get me started in San Diego in 2012.

October, 2012

Jeff: “Don’t forget to put some more bitcoins in that wallet we set up for you this morning. They’re a great buy now at around $10.”

Me: “I’m sure I’ll get around to it.”

Of course, Jeff was predicting Bitcoin at these prices even when Bitcoin prices took a tumble down to $3! Honestly I, too, was expecting big things from Bitcoin. Still am. In fact I consider Bitcoin to be just one of many very promising ways to keep a step ahead of the impoverishing police state for those who can’t or won’t leave the USSA.

As much as I hate to admit it, the bitter gold bugs and dollar-lovers are right. There is a lot of room for utter ruin in Bitcoin. That’s why as much hope as I personally have in it, I and the Homegrown crew are always on the lookout for other ways to survive and thrive in the US as the available wealth shrinks and the police state expands.

This is the sort of stuff we analyze in TDV Homegrown, which is specifically geared to be an economical tool to provide subscribers with TDV’s best advice for those who for whatever reason will be in the US as the government makes everyone even poorer and less free. Click here to learn more about TDV Homegrown and how it can help you.

Gary Gibson cut his teeth writing for liberty and profit as the managing editor of the now-defunct Whiskey & Gunpowder financial newsletter. He now writes for and edits The Dollar Vigilante. In his capacity as managing editor of TDV’s monthly subscription letter TDV Homegrown, Gary insists on playing Russian Roulette by basing himself in the USSA heartland. He braves arctic blasts and black helicopters so he can round up content on how the TDV readers stuck in the USSA can best survive and profit in the increasingly turbulent times in the morally and financially bankrupt empire.