Precious Metals, Cryptocurrencies and Blockchain Technology

I’ll be the first to admit that I am no where near proficient in understanding how crptocurrencies work.
What I do know is that a $1000.00 investment in Bitcoin back in 2010 is worth millions today. Talk about opportunity lost. Who new?
What’s interesting to me is the relationship between Bitcoin and Precious Metals. Or more specifically, their similarities. Neither are subjected to third party interference, and for all intents and purposes are private and considered real money.

The 5 characteristics of sound money as defined by Aristotle back in the 4th century B.C. are:
Must be durable, divisible, convenient, consistent and have value.

Back then he believed that gold and silver were best suited to be used as money. And to a certain extent that sentiment still exists today.
Bitcoins, as well as other cryptocurrencies pretty much meet the same criteria except for their dependency on computers.
We can kiss them all goodbye should an electromagnetic pulse or solar flair disrupt the internet.
Like precious metals, bitcoins are governed by the fact that only a finite amount can come into existence. Whereas precious metals are considered a commodity currency bitcoins are a fiat currency and more akin to paper money like the dollar. Of course the dollar can be printed at will thereby increasing the money supply to levels that will eventually cause inflation to rise and the dollar to fall. A real boost for precious metals by the way.
Again, like precious metals, cryptocurrencies will likely continue to increase in value as more individuals get involved and as banks become less and less worthy of our trust. But unlike precious metals bitcoins can go out of favor with investors and become worthless at some time in the future. Especially if governments and big banks have something to say about it.
You see banks have a real problem with the electronic world of money because it’s a big threat to the old paper money system that they can control, track and tinker with. Ain’t no paper trails here partner. Sentiments similar to owning real silver and gold.
Recently Jamie Diamon of JP Morgan said that Bitcoin is a fraud because it’s not real and will eventually be closed down. Sounds like a credible threat from the largest bank in the world. BTW, this is the same guy leading the charge to suppress the price of silver and gold. Hmmm! Guess he wants all the balls in his court.
I suppose I would consider Gold and Silver more conducive to the preservation of wealth as an investment asset to accumulate and Bitcoin more of a speculation to trade. A speculation that can be quite lucrative, at least for the time being.
Obviously, if a diversified portfolio is the goal, then I would say crytocurrencies belong in there as a speculative play.
Of course there are a multitude of cryptocurrencies available for acquisition other then bitcoins and more are coming to market every day, so buyer beware.
Now the underlying technology that supports all of these currencies may be the real story and revolutionary in itself. Blockchain Technology is a digital ledger that verifies and secures all transactions instantaneously. It allows consumers to connect directly to suppliers without third party intervention ensuring secure transactions via a network of computers that must verify a transaction prior to recording it thereby making that transaction virtually impossible to be hacked, unlike traditional credit card transactions.
Furthermore, this blockchain network of computers is free of any interference by government or banking agencies as well.
It is truly a secure and private way to exchange a currency for goods and services.
This technology may very well revolutionize the way a variety of industries track inventories of anything that needs to be controlled. Think of the food industry, shipping companies, banks, local governments to entire countries. The list of potential beneficiaries is endless and goes way beyond cataloging cryptocurrencies.
Walmart has already partnered with IBM’s Hyperledger Fabric, a blockchain system to track food products from procurement to shelving and every point in between.
Even JPMorgan is spending Billions researching this technology for their banking businesses.
Yes indeed, Blockcahin Technology has caught the attention of many of the big players in various industries.
Maybe it should catch ours as well.

John

The Real Money Man