Crypto versus Gold versus Banks
As Bitcoin approaches $10k, the old bubble question is raising its head again. Well? Is it a bubble or not? And if it is, was gold considered a bubble when it reached $1.9k? Or the dollar index at 103.80?
The time has come to consider just what we are talking about and when we are talking about it.
Anyone considering this in the same breath as the South Sea Bubble or the Dutch Tulip Bulb fiasco isn’t considering the fact that communication, understanding and acceptance have moved on a great deal since the 1720’s.
The internet has brought about a revolution in every aspect of our lives yet most people (certainly over the age of 40), only have a rudimentary knowledge of computers and computing and code is just that.
Just imagine what the world will look like to Millennials children or even Millennials themselves when they reach their mid-forties.
I am not talking here about ICO’s or other “quirky” capital raising methods that have sprung up, although their time will come once the wheat is sorted from the chaff, or whatever the twenty first century equivalent of that expression is.
Let’s talk Bitcoin
What is the difference between going into Starbucks and using Apple Pay to pay for your skinny cinnamon latte compared to buying it using your Coinbase account through your mobile device? None!
So, the problem with using cryptocurrency isn’t in its acceptance or ease of use. There is a problem however when it comes to its exchange into Fiat currency which will need to happen for the foreseeable future.
Personally, I have two wallets and they both cause me immense difficulty with that task. I am assuming it is a factor of AML and it works, but anyone wanting the instant gratification of switching between Bitcoin and dollars as easily as switching between Sterling and Euros is set to be disappointed for now.
It is glib in the extreme to label bitcoin a bubble simply because an asset has been created that a lot of people want and there is no “traditional” explanation to its rise in value.
Only time will tell unfortunately but in the
meantime, I prefer to call it a new paradigm in the transfer of value.
[Editors’ note: if you agree with Alan, and you’d like to know how to buy and profit from cryptocurrencies, then I would recommend reading our experts special cryptocurrency blueprint right here.]
All that glitters
I am going to be honest. I just don’t get it.
Why do investors like gold?
How is it a store of value when a lot of trade is on paper and most of those who own it have either no idea where it is. It is darn less usable than other determinants of value, it’s like pre-cash cash.
“Oh well it is a hedge against inflation”, I hear you say. Well, since in this post global financial crisis world inflation seems to have disappeared, unless you are in the U.K. or Zimbabwe, that is so twentieth century!
Nixon should have put gold to bed in 1970 when he removed the dollar from the gold standard. The only thing it has going for it is that there are as many bulls as there are bears, and that makes a market.
I wrote an article about the gold market recently, and while doing my research, I read a lot of commentators who specialize in the yellow metal, and I saw as many very cogent pieces talking $2000 as I did $500.
Job for life
When I realized I wasn’t the next Jimmy Greaves (Early 70’s equivalent of Harry Kane) I realized I needed a job. “Join a bank” my mother told me, “It’s a job for life”.
Rather incredibly that was in 1973 and what has followed has led me to see that whatever else banking is, it doesn’t provide anyone with a job for life. Banking has changed out of all recognition over the past fifty years and sadly, virtually none of that change has been for the better.
The advances in technology that have brought a revolution to most people’s lives have, as they apply to banks, been jealously guarded and used to simply increase profitability to an obscene level.
I recently drew cash from an ATM in my home town and had to split a ten pound note for two fives. I innocently wandered into the banking hall (that dates me!) which was deserted and asked the cashier to make the exchange.
She asked to see the debit card I had used and since it wasn’t issued by her bank politely refused and suggested I try my own bank which was “only” a hundred metres down the road.
I then found myself in another bank, this time one I do maintain an account with. I was paying cash into my account and I looked everywhere for a cashier only to be told by the “customer service advisor” that this branch only used machines. I found the machine and then found it was “out of order” I went back to the advisor and she told me that they do have a cashier “upstairs”.
“She only deals with Premium account holders, but you may be able to get her to help you,” if I really wanted to pay in today. Up I went, and she initially refused but I finally managed to persuade her since I had no other choice (although she did actually ask me if I had an account with any other bank that I could use).
To complete the litany, my daughter asked me to pay some money I owed her into her account. This happened to be on a Saturday. I asked the cashier (same bank, different branch) to make sure it was credited “today”. She told me that if I wanted same day value, I should go to the Post Office as banks only open as a “mailbox” on a Saturday and transactions aren’t processed until Monday!
I went to the Post Office and, yes, my daughter was able to draw the money out later to finance a Saturday night out.
Those three incidents have happened to me in the last three months! I think they illustrate perfectly how banks have decided to leave the arena, certainly when it comes to dealing with personal customers which was always their strength.
When talking about banks however, it is impossible not to mention Cyprus. Someone “stole” a large part of Cypriots savings in 2012 at the instruction of the European Central Bank.
Transfer of value is the only use for money. Money is very much a catchall word. When will Bitcoin become money? It is already?
I am not sure if I am a fan of cryptocurrency or a hater of banks. I think a bit of both.
The banks mealy-mouthed efforts to enter the digital market, even though it’s specifically designed to exclude them, typifies the current state of both their value proposition, and the drivers of their boards of directors. Every barrier they put up to “the man in the street” being able to run his life without them hammers another nail into their coffin.