Bitcoin, Gold And Silver As Bail-ins and Capital Controls Loom
Earlier this week in an interview with Max Keiser, I emphasised the importance of owning physical gold and silver outside the financial system and in safer jurisdictions in the world such as Zurich and Singapore. The transcript of the interview and the video can be accessed here.
I also mentioned owning bitcoin as a way to protect wealth from bail-ins and capital controls.
This provoked quite a few emails, some irate, accusing me of ramping and promoting bitcoin.
Many of the emails made the point that bitcoin should not be compared to or included with physical gold and silver as a store of value or as financial insurance. I have sympathy for this view and remain skeptical of bitcoin as a store of value … at this time. See some of my reasons in the conclusion.
However, in the medium and long term, I believe that bitcoin is becoming and will become an alternate means of exchange and important form of payment.
In order to further debate and increase knowledge about bitcoin and how it compares to gold and silver as a form of financial insurance against the many systemic risks of today, we think it is important to look at one of the more insightful and interesting commentaries on bitcoin in recent weeks.
The following is a research piece by John Butler, the respected investment manager and author of the 'The Golden Revolution : How to Prepare for the Coming Gold Standard’ and author of the Amphora Report.
BITCOIN: THE MONETARY TOUCHSTONE by John Butler
Created in 2008 by the mysterious ‘Satoshi Nakamoto’, in the past few months bitcoin has gone from a fringe financial technology topic to a mainstream media phenomenon. The debate is now raging as to whether bitcoin is, or is not, a sound form of alternative money. As the Amphora Report has, from inception, focused regularly on monetary theory and the financial market implications of activist central banking, in this edition I survey a handful of prominent, diverging views on bitcoin and then share some of my own thoughts. In brief, I believe that bitcoin’s ‘blockchain’ technology enables a low-cost payments system capable of disinter-mediating the banking industry, but I do not believe bitcoin presents a viable, alternative store of value on par with gold. In any case, bitcoin serves as a monetary ‘touchstone’ of sorts, distinguishing those who lean toward economic and monetary authoritarianism from those who favor market-based organization instead.
To Understand Bitcoin One Must First Understand Money Satoshi Nakamoto, the initially mysterious and now legendary creator of bitcoin, finally became a mainstream celebrity last week, having been ‘outed’ by US periodical Newsweek. Many who have followed the bitcoin story, however, find Newsweek’s claim rather dubious and instead believe that ‘Satoshi Nakamoto’ is a pseudonym adopted by either a single individual or team responsible for researching and publishing the original 2008 paper describing the specific, ‘blockchain’ algorithm behind bitcoin.
I have no strong opinion on Newsweek’s specific claims, nor on who, or what group, created bitcoin, although I am curious, for reasons that will become apparent. More important is to understand whether bitcoin could function as a sound, alternative money.