Bitcoin strengthens as a reserve value despite its volatility
I will use 2 short examples to argue the great properties of Gold (2.0), the young Bitcoin, to protect you from the government tools it uses to rob you since it not only has inflation as a way to screw you up and destroy your savings. He can literally steal from you and whenever he did it was “legal.”
Without going to the extremes of telling the stories of socialist or communist countries, let’s start with the most recent:
El Corralito — Argentina — 2001
On December 3, 2001, one of the most disastrous events in its history occurred in Argentina, an economic nightmare decreed by the Argentine government, specifically by President Fernando de la Rúa.
The “corralito” consisted in limiting the freedom of the population to dispose of the cash deposited in the banking entities. Furthermore, the exchange to other currencies and the transfer to foreign accounts were prohibited.
Debt and crisis caused by expansive fiscal and debt policies. I generate a lack of liquidity and a flight of capital that has not been seen in decades, approximately 100 billion dollars.
In the early days, some $ 18 billion was withdrawn from banks and this was just the boost the government needed to start the restrictions. Obviously this triggered protests, lawsuits, deaths, the resignation of the president, and an even larger deficit that left people bankrupt, not to mention the state itself.
Executive Order 6102 — United States — 1933
The Executive Order (April 5, 1933) was an order signed by the President of the United States, Franklin Roosevelt, which prohibited the possession and accumulation of gold in all its derivatives to the citizens of the country.
Those who failed to comply suffered fines of up to $ 10,000 or ten years in prison, or both penalties simultaneously.
Thanks to this disastrous order, the federal reserve stored large amounts of gold and consequently, the price of this metal rose to $ 35 an ounce, which saved them from their lack of liquidity, since having even the Gold Standard (the monetary regime depending on the gold) they could not print banknotes without having the gold backing. Instead of inflating the coin, they resorted to armed robbery.
“The best strategy to maximize profits from inflation is to be the owner of the fastest horse”, “If I am forced to forecast, my bet is that it will be Bitcoin.”
– Paul Tudor Jones, Macro Investor
In both examples I give you an idea of how the state has and can rob you in unfair ways, without you noticing (inflation) and robbing you for saving yourself so as not to die, leaving aside the taxes that in themselves are already robbery for definition. And the solution came in digital form, Bitcoin, which separates the state from money, a currency from people to people, cryptocurrencies enter the world in a timely manner, but Bitcoin adds the scarcity factor, important to ensure its value characteristic refuge. Something that a Keynesian would never understand since for them the central bank is necessary as a regulatory entity and that we trust their “experts” who are nothing more than stupid charlatans to guarantee value to their paper money. In the case of bitcoin, our regulator uses the same Blockchain technology and demand. The market and computers. I don’t know who would be prouder of this, Adam Smith or Elon Musk?
The non-fiscability comes from this same technology that makes you and only you have access to your cryptocurrencies, what’s more, nobody has to know how much you have in your virtual wallet. Now putting the case that if for some reason governments try to destroy themselves by buying and accumulating bitcoin to have liquidity, they would only end up destroying their own currency for the same reason that in their actions they accept bitcoin as a safe haven, increasing its value and its security (hash).
Gold has always been mentioned as a safe asset and store of value. And it is. But bitcoin too, although much more secure and scarce. The only fundamental difference as a reserve value in the intrinsic sense is that the appreciation of both assets, which is very different according to their unique or technological qualities. A few months and years are coming where only a few countries will see freedom and savings as a solution seeing bitcoin as an ally, since, unlike gold, we can all buy it without physical restrictions.
Sorry for the delay, happy halving for all my friends and readers who own bitcoin, which happened by chance on the same day as my birthday.
Stay safe. Manage your risk and get comfortable in the chaos.