January 19, 2015—Hello, everybody and thank you for tuning in. I want to give an update on Bitcoin.
Bitcoin is in the news right now because the price is very low. At one time it was over $1,000. Now it’s hanging around $200 and sometimes a little bit below $200. A recent article in the Washington Post brought the subject up and they claim that it’s a Ponzi scheme for redistributing wealth from one libertarian to another. I don’t endorse that. I don’t think it’s a true Ponzi scheme. It was a cryptocurrency that was brought about.
I didn’t understand it. Quite frankly if I can’t understand it or feel it and hold it in my hand, I don’t think it’s real money. That’s why I keep thinking gold is real money and reserve notes are not real money. Nevertheless, it’s been used and my position has always been as long as there’s no fraud people ought to have the choice of using it. Even though I want to legalize competing currencies and someday they’ll be much more relevant, it’s very hard to think in terms of a new currency. Those individuals who are using Bitcoin are using them now. They still think in dollar terms.
If something costs $100 and they calculate it in Bitcoins, hey transfer the funds in Bitcoins. So it’s a transfer mechanism rather than it being use as a true currency. As a matter of fact, that is actually true with gold. Gold is real money and traditionally for thousands of years it’s been used. If you wanted to institute a truly parallel currency with gold it would be difficult to get people’s mindset off dollars. You might say, “Well, a gold ounce is worth $1,500. Okay. I’ll give you one ounce of gold for this $1,500.”
People still think in terms of dollars. It doesn’t mean it isn’t necessary to think about parallel competing currencies. There will be times when it will be much more hectic and they will need to have an alternative. It emphasizes that this paper currency doesn’t work.
The article in the Washington Post emphasized that last year it lost 76 percent its value in this year already over 30 percent of its value. If you’re looking at it from a fundamentalist and chart viewpoint it doesn’t look very good. It keeps going down and where this ends nobody knows exactly.
Gold has suffered through periods like this. As a matter of fact, somebody had an article the other day that gold was the best currency in the world right now in maintaining its value because of a sharp blip upward which has been anticipated. It’s logical that it is doing that. Gold ultimately will be and is the true currency. One of the things that people did when they used Bitcoin as a means of transaction is not only did they still think in dollars, it was I guess almost instantaneous. They would receive the Bitcoin and it would automatically in their account shift to a dollar. That means this is a game that people are playing.
My main contention was that it’s hard to understand. How do they create it? I’ve never thought, “Well, I know what’s happening there.” You don’t have to have a Ph.D. You don’t have to be very sophisticated and you can live in a very very primitive culture and you knew that gold and silver were precious because it was precious for a reason. It was beautiful, it’s divisible, everybody liked it, it was made into jewelry and it would maintain its value.
This universality of people wanting to use precious metals—gold and silver—as currency, none of those characteristics are true about Bitcoin. But like I say, it should be legal. No fraud should be committed. You should know what you’re doing.
Quite frankly I’m probably not going to be involved in using Bitcoins. It looks like a lot less people are using Bitcoins as the moment. Thank you for tuning in and come back soon to the channel.