GOLD, SILVER or BITCOIN-CRYPTO CURRENCIES: Where Will The Big Money Be Made?

When the Central Banks finally lose control of propping up the markets, will the BIG MONEY be made in owning gold, silver or crypto-currencies?  This is the question many investors who are focused on “alternative assets”, outside the typical mainstream stock, bond and real estate markets, are asking.

Most investors who have been concerned about the massively inflated Bubble Markets and the Greatest Financial Ponzi Scheme in history, have been investing in gold and silver.  However, a new kid on the block, called Bitcoin and the other crypto-currencies, have gained a lot of attention due to the huge increase in their prices over the past few months.

So, now many investors are wondering what to make of these extremely volatile crypto-currencies and if they are nothing more than purely speculative and gambling vehicles.  This is a logical assumption based on the massive spike in many of their crypto-currency values.

That being said, Charles Hugh Smith wrote the following in his article, Projecting The Price Of Bitcoin:

The wild card in cryptocurrencies is the role of Big Institutional Money.

I’ve taken the liberty of preparing a projection of bitcoin’s price action going forward:

You see the primary dynamic is continued skepticism from the mainstream, which owns essentially no cryptocurrency and conventionally views bitcoin and its peers as fads, scams and bubbles that will soon pop as price crashes back to near-zero.

Skepticism is always a wise default position to start one’s inquiry, but if no knowledge is being acquired, skepticism quickly morphs into stubborn ignorance.

Bitcoin et al. are not the equivalent of Beanie Babies. Cryptocurrencies have utility value. They facilitate international payments for goods and services.

This was very interesting analysis done by Charles Hugh Smith who is one of the more bright minds in the alternative media community.  I have watched Bitcoin out of the corner of my eye over the past few years, but have not placed much attention on the leading crypto-currency.  However, as the price of Bitcoin and crypto-currencies have surged over the past several months, I decided to take a closer look… to see what all the hubbub was about.

What I found out was quite interesting.  Bitcoin’s price rise is not just based on mere speculative flows (as many assume), but rather it’s also rising due to the skyrocketing energy and capital costs to produce each coin.  Yes, there is a lot more to this, but there is some METHOD TO THE MADNESS.

Charles Hugh Smith understands this and realizes that cyrpto-currencies will likely to continue to gain in price, interest and market cap going forward due to the way they were designed.  Now, I am not saying I totally agree with Charles, but there is more behind crypto-currencies than just mere speculative flows into digital assets.

So, the question is…. where will the BIG MONEY be made when the Fed and Central Banks lose control of propping up the Markets?  That’s a good question.  Yes, the Central Banks will lose control because they are facing one force that they are unable to manipulate…. ENERGY.

While the Central banks can manipulate the oil price, than cannot manipulate the Falling EROI – Energy Returned On Investment that continues to decline.  So, the more the EROI of oil falls, the more printing and propping up the markets the Central banks are forced to do.  It is really that simple.

Thus, the END OF MARKET MANIPULATION has an expiration date…. and its not decades away.  I wouldn’t be surprised that it takes place within the next 5-10 years… or even less.

To get an idea of the total current value of Gold, Silver and Bitcoin-Crypto-currencies, let’s take a look at the value of above ground gold and silver investment:

According to the data put out by the USGS – U.S. Geological Survey, GFMS, CPM Group and Kitco (market price), all the investment gold held in the world is worth $2.93 trillion versus $51.8 billion for silver.  You will also notice that there isn’t much more above-ground investment silver in the world (2.59 billion oz) compared to gold (2.25 billion oz).

NOTE:  The total global gold and silver value is based upon $1,300 for gold and $20 for silver

Now, if we bring in the total value of Bitcoin and all the other crypto-currencies, we have the following:

All the gold investment (including Central Bank and private investment) is approximately $2.93 trillion versus $89 billion for the total Bitcoin-Cryptos market cap and $52 billion for silver.  So, the current market cap of Bitcoin-cryptos now surpasses the total global value of silver investment by $37 billion.

Of course, the Bitcoin-cyrpto market cap has increased significantly over the past few months.  Common sense logic suggests the recent spike in Bitcoin and the other crypto-currencies will likely experience a large correction… thus a falling market cap.  But, I agree with Charles Hugh Smith that these crypto-currencies will likely gain significantly over the next five years.

However, I also see the value of gold and silver rising considerably as well…. especially silver.  The price of silver will likely increase in a much greater percentage because there isn’t much more physical silver in the world compared to gold, and its price is so low, that when large funds move into the silver market…. the huge pressure will be released by a much higher price.

There is a lot to understand about Gold, Silver and the Crypto-currencies going forward.  Investors need to realize that while the crypto-currencies will likely see large gains in their values in the future, the BIG ENERGY PROBLEMS will are going to face may not be good for Cypto-currency network functionality.  Again…. there is a lot of consider.

Which means… gold and silver will still be the some of the safest physical assets to own in the future.

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68 Comments on "GOLD, SILVER or BITCOIN-CRYPTO CURRENCIES: Where Will The Big Money Be Made?"

  1. OutLookingIn | June 2, 2017 at 1:16 pm | Reply

    “When the Central Banks finally lose control…”

    Most so-called “assets” will turn out to be nothing more than ephemeral financial smoke.

    Minimizing or doing away with financial risk in your portfolio is the priority of the day. Not increasing it. This means holding safe assets which preserve wealth over a large list of contingencies. Of course at the top of these safe assets are physical gold and silver.

    Holding “financial products” such as crypto digital script carries higher risk. The ultimate amount in your portfolio by percentage, is your own personal choice according to your risk appetite and depth of hubris in your character. Caution is warranted. Caveat emptor.

    • OutLookingIn | June 2, 2017 at 5:57 pm | Reply

      “Raoul Pal, one of the most effective critics of mainstream economics, is cashing in his Bitcoins. Gold is a better wealth preservation tool, he says”.
      Story now posted on ZH dashboard.
      When Raoul Pal and his business partner Grant Williams speak, its very prudent to carefully listen to the message.

    • I personally believe that it will be a mix of the three, that is what I am doing. But at the moment, Bitcoin has simply gone parabolic and is scary to say the least.

      All will protect your wealth in the coming collapse and are far better than the horribly flawed fiat currencies that the mass majority of people use today.

      Most assets will lose money in the coming collapse, precious metals, bitcoin and mining stocks may be the only safe haven assets.

      http://marcfabersblog.blogspot.com/2017/06/most-stocks-are-going-to-lose-money.html

  2. Steve,
    Bitcoin is surging now on pure momentum trading and illegal money transfers out of China. The trading on bitcoin us thin. Just a sell order of 100 bitcoins can send the price down by at least 10%. If all these investors think they can get out, they are mistaken. Once the bubble pops, watch out below. Also, bitcoin is hard to buy. The etf for bitcoin. Is currently selling at a 100% premium. Finally, the power consumption on bitcoin us very high and there are relatively few trades. The block chain keeps getting longer all the time. What happens when the miners cant make money maing new ones. Who will maintain the network? They will hsve to impose usagage charges. Finally, what happens when there are hundreds of cryto coins. This will dilute the value of all of them. Bitcoin might go to 10000 dollars who knows. However, I’m sticking to gold and silver myself. At least it us broad market and something I can actually hold

    • Eddy,
      I’ve come the same conclusions on the current schemes. This is not to say that “blockchain” technology is not useful! If a hard-crypto system were attached to stock shares, it would be difficult for the fraud of selling-forward things a seller does not have or produce to continue. A blockchain verification system for a national fiat currency advertised as “non-inflationary” might be useful in restraining public spending if there was a virtuous population and group of representatives to enforce it. I like pm’s in-hand (or safely “gardened”), because that is real and not depending on trusting people to do other than want my pm’s when it’s time to trade. The energy/skill to make a genuine 20 Franc coin was used a century ago, is embodied in the coin and can’t be recovered or gotten more cheaply. The usefulness of the small coin (and the premium) keeps it circulating (or hoarded as the last money spent, according to Gresham) instead of being melted for the central bank Big Bars. If I stumbled onto some BitCoin/Etherium/etc., I’d try to spend it for some silver and write an article detailing my adventures doing so.

    • Eddy,

      Sounds like you are quoting that fella’s article that Jim Sinclair linked on his site. I find it hard to believe that 100 bitcoins sold or traded would send the price down 10%. According to the trading data, 63,000 bitcoins have already been traded on the exchanges today, and this is only in US Dollars. Another $238 billion was traded in “Other Fiat”. Probably in mostly Yen and Yuan.

      That is all I am going to say on the matter right now. I believe there is a great deal of MISINFORMATION and CRAPOLA being regurgitated about Cryptos currently. So, before I write more about them, I will be doing a great deal of research.

      However, I will end with this. The notion that Bitcoin is in a Bubble has been going on for nearly five years. Hardly anyone in the public knows about Bitcoin. So, I highly doubt it has reached anywhere near BUBBLE TERRITORY yet.

      steve

    • Ah ah !!!! The reality is that crypto gains are 10 x Or more . Instead gold and Silver gains are simply ZERO

  3. Big wounds need big solutions. Crypto’s ain’t one of them.

  4. Steve,
    In the past, currencies (franc, then sterling,then dollar) were backed by gold, could in principle be exchanged with gold, and used as such by the states or central banks. Fiat currencies, be it paper or now digital, have been largely used for easy flows and transfers of money but have now (vastly) decoupled from gold with the exponential creation of debt and energy consumption, and gold cannot be redeemed any more.
    Today, cryptos allow in principle easy money transfers, so can be considered as currencies but contrarily to fiat currencies, cryptos which are not “controlled” by a third party are also not “supported” by central banks and could collapse abruptly during panic sales. In addition, cryptos are not money, are not backed by anything and cannot be redeemed against gold.
    So why should the total value of cryptos be linked or compared to the total value of gold?
    Serge

    • Serge,

      You bring up some excellent points about crypto-currencies. Which is why I plan on researching and discussing more about them.

      However, you seem to OVERLOOK one important VITAL FACTOR about Crypto-currencies versus FIAT CURRENCIES such as the DOLLAR, YEN, YUAN & EURO. Those Fiat Currencies are backed by MASSIVE amounts of Debt. That’s correct, they are backed by tens of $Trillions of debt.

      HOWEVER, Crypto-currencies have NO DEBT… or very little. So, they aren’t backed by debt. This is something most still haven’t gotten around their BRAINSTEMS yet.

      While I am not saying crypto-currencies aren’t fraught with risk and a great deal of speculation, they have a great deal less DOWNSIDE than most Fiat Currencies. When I say DOWNSIDE, I mean over the longer term. Yes, their prices are overextended currently, but I am not looking at them in the short-term or at their present values. Rather, it is likely we are going to see a great deal of movement into them over the next five years.

      This does not change my opinion about owning GOLD & SILVER. NOT ONE BIT. But, it does make sense to me now that a lot of Funds are going to flow into Cryptos over the next five years.

      We can disregard it, or learn and pay attention.

      This is all I am saying here…

      steve

      • You do not find “strange” that producing a bitcoin is going exponentially ?
        Energy/money required to mine gold is changing very slowly, with bitcoin it increases very fast, so it is a very strange asset…
        However I think bitcoin can multiply by 10 easily or even more as a capitalist production so completely illogic and useless for basic human needs.

        • cacamoulox,

          Again… you continue to miss the entire reason why money is moving into Cryptos. However, you are more than welcome to continue to say they are worthless digital assets while their values are likely to go up even more exponentially as funds move out of DEBT LADEN ASSETS.

          Please feel free to add as many negative comments to your hearts desire over the next 2-5 years as crypto prices go up and up. Actually, there is a lot better things to do with the electricity, BUT I DON”T RUN THE SYSTEM… LOL.

          steve

          • cacamoulox | June 4, 2017 at 2:04 pm |

            Fiat are backed by debts which are the reason of their success despite your “negative comments to your hearts desire”.
            “crypto prices go up and up” : if you are not going up FULL crypto you are just a cheerleader.
            When when I say buy it is 100 kUSD to 1 million USD, not 1000 USD…
            PS : last remark, you made complete U turn about crypto after researching a bit, maybe you will one day do the same with the basis rules of capitalism and societies based on exchange.

  5. Bitcoin certainly has a place in the financial ecosphere, and its inelastic supply gives it one of the positive features akin to gold.

    My biggest issue with projections of its global dominance as a currency is, how do you expect a 60 yr old granny to have the tech savvy to acquire and use it – safely and efficiently, I’ll add. That’s not to say it wont go to $10k, and it certainly seems to be a force with historical momentum like Asimov’s ‘Foundation’ empire.

  6. The ultimate tulip bulb. Back then, a tulip bulb peaked at about 22 ounces of gold per one bulb. Futures and derivatives on futures were created and traded. It ended badly, very badly, even by the medieval standard.
    As an ultimate tulip bulb, even if they go to 22 ounces of gold per whatever unit they are counted in, homeless cryptocurrencies will not go back to $1000 or $100, but $0 — that coal burnt to compute the numbers cannot be recovered, and there is no one to fix their value by decree. The governments and banks would benefit by letting them fall to zero, as then they will be able to make their own (printing money is their hard-earned priviledge), “even better”, and sell them for real value (including metals) to the already indoctrinated market.

    • Indeed, bitcoin is capitalism triumph, a mere social illusion useless in term of human needs. According to SRS Rocco it is great because it has no debt to back it and it is more and more costly to produce it : so if producing a bitcoin in 2020 requires 1 million USD, this site promoter will explain that 999 990 USD would a bargain.
      Money, debt and force (power) have been linked since the end of prehistory, that is no hazard at all. If bitcoin is declared by IRS it will be game over. If not the bubble can expand for a while for sure, but that’s just an illusion no more no less.

      • cacamoulox,

        Let me be a bit more blunt if you don’t mind. I never said I promoted the crypto-currencies. That is an assumption that you came up with. All I said, if you read my words CLEARLY, was that Bitcoin and the cryptos will likely experience a great deal more funds moving into them because most everything else out there is DEBT LADEN SHITE.

        Now… you can sit on your computer all day long and describe just how much Bitcoin and cryptos are an illusion. Really, I could care less… but you don’t have to CONVINCE ME…. LOL.

        I am just sharing how I see the market reacting to cryptos in the future.

        Again… you are more than welcome to continue WHINING, BELLY ACHING, and COMPLAINING as the market continues to move into crypto currencies and out of FIAT MONEY and DEBT LADEN ASSETS. I am not saying I agree with it, but the huge movement into Cryptos before the PHAT ENERGY LADY SINGS, is a highly likely outcome.

        steve

        • “I never said I promoted the crypto-currencies” : a few hours later :

          “just watch as the world really starts to move into this digital asset market.”
          “the next 2-5 years as crypto prices go up and up”
          Frankly, is it a joke ?

          • cacamoulox,

            Yes its true.. I haven’t promoted cryptos YET.. .but maybe you have given me a good idea… LOL.

            Keep the comments coming. It drives more traffic and responses. All good for the site ranking.

            Thanks…. steve

  7. Sorry Steve. I understand your argument about energy being highly correlated to PM mining output, but that doesn’t really hold true with Bitcoin mining. The system was designed from the start to produce new BTCs and and confirm transactions every 10 minutes regardless of how many (or few) miners are at work. It merely adjusts the calculation difficulty based on the power of all of the mining computers at work. Gold/Silver doesn’t keep getting mined at the same rate regardless of the number of miners.

    As long as there is an Internet and at least one PC with energy, then it is possible to mine bitcoins and confirm transactions. Right now, there are is a lot of computer power (and energy) being thrown at BTC mining because is is a competitive market and the energy is available. If the pool of miners shrunk by 90% due to high energy costs then the exact same number of transactions and new BTCs would be created every 10 minutes.

    • Charles,

      I understand what you are saying. However, You would be surprised how much energy and capital it now takes to mine ONE BITCOIN. It takes a lot more energy and capital to produce one Bitcoin than it does a FIAT DOLLAR.

      steve

      • Who cares how much energy is used to mine bitcoins?
        There is no intrinsic value to Bitcoin.
        Bitcoin relies on the Greater Fool for its value not how much energy it takes to mine one.

        • Steve,

          Ah… another commenter with a BOGUS EMAIL ADDRESS… LOL. Very nice. Well done.

          Anyhow, you said… who cares how much energy is used to mine Bitcoin? LOL… BIG MONEY DOES. Again, you folks have no idea just how much BIG MONEY is getting ready to move into these cryptos. While you debate whether they are worth anything… I CAN ASSURE YOU.. that the U.S. DOLLAR, EURO, YEN and YUAN are in much worse shape than Cryptocurrencies.

          According to the most recent data released in a Zerohedge article today, Central Banks own about a THIRD of the $54 Trillion Global Bond Market… LOL. This does not include the CRAPPY MBS or STOCKS these clowns have been buying.

          YOU FOLKS BETTER WAKE THE HELL UP…. LOL

          So, again… while you continue to BELLY-ACHE about the crypto-currencies.. just watch as the world really starts to move into this digital asset market.

          I have no control over it… the market does. It just took me a while to finally figure it out.

          steve

  8. Jesus said “Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s”. The meaning is that things belonging to the country (government and private coin and money) are the country’s or private belongings not belongings of man from god. So if we think about this then gold and silver (we can say made by god or made by nature depending on your belief system) is what we want not government money or private money (bitcoin) because their value may be worthless and will be worthless. What can you make with a bitcoin or a paper Federal Reserve note? All speculation and I do not want to hold much items that really have no value (I did not say it has no price). Value is the key which is to say “what is the item used for?” If only for trade and not for use then it is fiat and worthless. Copper is used for electrical conduction and metal products and in the past for weapons and tools in the bronze age which gives copper value. We can see gold and silver have uses in production which gives gold and silver value. We are seeing the price of currencies change and the increase in printing and increase in debt will finally show the true worth of fiat currency. Bitcoin might be finite but it is useless in production so it will have a price of zero sooner or later. I will hold gold and silver over other people’s currency or Caesar’s (government) currency.

  9. Dear Steve,
    I am so frustrated that Bitcoin has surged to such astronomical proportions. This not a case of sour grapes I assure you. Congrats to all those that made it big with Bitcoins. Really. I mean it from the bottom of my heart. It’s just that I find what’s happening in the crypto environment so disillusioning. After all what is a Bitcoin or any other crypto for that matter? They are nothing but a finite quantity of binary codes. You can’t see them nor touch them. Where is the real value in them? I thought the very concept of buying into gold and silver was to get out of these artificial currencies or assets that are backed by absolutely nothing and getting into real money that can’t be produced without without honest blood and sweat. I mean, how honest is it for the few people that started this gig and became billionaires off of the public that bought into these schemes? Sure, the idea was to find an alternative to fiat currency. Well how is it different from a creating say finite quantity of piece of lead that is shaped and bent in a certain way that can’t be replicated? How about setting this scheme loose into the public and see how they will buy into it. And what of the late developers getting on board to make a big buck out of the unsuspecting public that is now slowly panicking to get into cryptos. Won’t the increasing numbers of new greedy developers competing in the market cause a diluting effect in the value of cryptos so that collectively they will all collapse to their intrinsic value of 0 in the true sense of the word? From this perspective, in the long run it seems like a ponzi scheme that is so far going strong.

    • That’s not too late, I strongly advise you to go full long crypto as 100 baggers is nearly GUARANTEED in the next “2/5 years”.
      Go full crypto man, the world will never be the same, greedy governments will disappear and the paradise of 19th free markets capitalism will reign in its superb.
      What a beautiful world !

  10. Personally I think encrypted blockchains will be built on known reserves of gold or silver and then digital coins created from the reserves. The coins will be completely fungible with physical coin or bar, perhaps even at gold atms.

    That’s the issue with crypto currencies, new currencies can be created all the time, so they will eventually need to tie to something tangible.

  11. There are some basic problems with BitCoin, one of them being it just isn’t large enough for Main Street to take part in. That is why it has huge price volatility, as in a lot of those in it are traders using it for speculation and some rather dodgy business people in China trying to diversify out side of the Yuan. The best way to learn about digital currencies is to read Crypto community boards. Some of them are awash with people in Nigeria, India etc who are using Cryptos as a way to escape the deteriorating situation of the modern banking system in their own countries.

    There is a huge, ‘geek’ following in Cryptos (loving the complexities of what is still the birth of this currency). In its early days BitCoin could hardly be described as, ‘User friendly’ (you all but needed a degree in IT to set up a wallet, purchase and trade). There was – and still is – the problem of hacked wallets and exchanges suddenly going bust. As Cryptos evolve they are becoming more user friendly but there is still one very big elephant in the crypto room called, ‘government’. None of us know if and when Banksterville in the West or the East (or both) may get their political puppets to pull the plug on Cryptos. We know Banksterville wants cashless societies (therefore gaining complete control over us all). What happens when the mega banks perfect their own crypto currencies? Are they going to stand back and allow private ones to exist and thus compete with them? I doubt it and think world governments will outlaw all private Cryptos. We must remember that the forces of usury (banksters) have controlled our use of money, used it, abused it and made vast profits from it ever since the first bank was built. Are these same forces of greed and corruption going to stand back and ever allow Main Street to be free of them? My answer to that is a resounding, ‘NO’?

    Lastly, BitCoin is like IBM, as in the first out if the gate. Who still uses an IBM computer from the 1980s? The technology in Cryptos is becoming more sophisticated. Etherium is BitCoin on steroids in terms of transaction times. The entire sector is still in its infancy, has shown its potential but until it is more widely available we won’t know where it is going. The early email format was too complex for most people to understand how to use. It is by simplification that techno products and gadgets start to attract Main Street. When Main Street can set up an account with an exchange easily, buy cyptos easily and know there is little chance their wallets will just vanish in cyber space, that is the day the whole thing will turn into a Tulip mania. It is when that happens that I believe Banksterville will tell governments to either ban it or strictly control it. At the moment Cryptos are helping Banksterville by taking investment heat away from the true forms of money the banksters loathe beyond all else, gold and silver. So for now they are not worried about it and no doubt many individual banksters are heavily invested in Cryptos (a nice way to hide some of their mainly ill gotten gains). Both Goldman Sachs and JP Morgan have invested millions in producing their own crypto currencies. When these White Sharks develop a Crypto currency that is more secure than BitCoin, easier to use and can be managed in such a way as to avoid huge volatility, that is the day everyone in BitCoin etc should seriously think about getting out.

  12. “Cryptocurrencies have utility value. They facilitate international payments for goods and services.” I think this is the heart of the matter. And, it may become increasingly relevant When Money Dies. It doesn’t even have to be a long term store of value, to have value as a functional currency. Anyone that tells me FRNs are worthless can please send me some; I can trade them for silver and gold (and maybe some Bitcoin).

  13. One thing that bothers me is the fact that cryptocurrencies are infinite in number. BTC is merely the most popular RIGHT NOW, dominating the market niche RIGHT NOW. However, I wonder if we aren’t seeing a dynamic similar to the staged transition in televised entertainment from Beta to VHS to DVD to Blu-Ray to online streamers, or the process of refinement in coding that has given us the modern World Wide Web. At what point does everyone agree on a standard and stick to it?

    Maybe it’s destined to remain subjective, like art. To suggest that a particular creation is ‘great’ is to establish a standard against which others are judged. But that means it’s always subjective, and I for one cannot accept that in the sphere of monetary theory. We need some kind of yardstick.

    Transaction security isn’t enough. We have that already. As for privacy, there’s something about these things that smells like a trap. Jim Willie recently referred to BTC as a product of the intelligence community. I wonder what he knows.

  14. J. Singh’s Top 8 Qualities of an Ideal Money Material, 1. General Acceptability
    2. Portability 3. Indestructibility or Durability 4. Homogeneity 5. Divisibility
    6. Malleability 7. Cognizability 8. Stability of Value!

    With crypto currencies, there are clearly lots areas for discussion and disagreement. It seems to me to be that it is just another variation (electronic version) of fiat. If you can’t hold it and trade it to another without the participation of a third party it is just not money. It has absolutely no inherent value so it is doomed to the same fate. At least with cowrie shells you can wear them as jewelry.

  15. Hi Steve,

    Great analysis there, current cryptocurrency market capitalization is nowhere near to gold, soon when more public are pouring in fund, the price for a BTC probably will soar to new height.

    And here in Singapore, a few bullion stores are accepting bitcoin as payment for Gold and silver. In case of unexpected crash happen, I still can purchase some physical gold with a few clicks. So I am lucky to have the best of both world currently.

    Best regards
    Justin

  16. I find it interesting that so many people can just use the term crypto bubble and coming crash, or a comparison to the dot com bubble and the next one for crypto is right around the corner and nobody challenges this bubble mentality because the price (in fiat dollars) is going up. Perspective….

    Market capitalization of single companies:
    Google: $682 billion
    Apple: $812 billion
    Microsoft: $556 billion
    Verizon: $188 billion
    Cisco: $161 billion

    All of these single companies have market caps larger than the TOTAL market cap of EVERY crypto out there at $89 billion currently. But it is a huge bubble about to crash? Is your hairdresser giving you crypto advice? Is your uber driver giving you a hot crypto tip on the next big decentralized smart contract ICO? Not a bubble. People want it to be a bubble so that they feel justified sitting on the sidelines and can think themselves smart for not getting caught up in the crypto “fad”. The internet was a fad first too.

    Yes, there will be price corrections. Yes, some coins will fail miserably. Yes, there is a lot of money floating around and that attracts scam artists. So do your own due diligence and pick the promising projects. Not all cryptos want to be currencies – in fact most don’t. They are trying to solve problems in the real world where a decentralized, trustless network can add value to an industry or disrupt it entirely – like the Basic Attention Token wants to do with online advertising.

    The dot com bubble lost the market over $1.7 TRILLION in a 52 week period: http://cnnfn.cnn.com/2000/11/09/technology/overview/

    Even if all crypto dropped 50%, that would be a loss of $45 billion – not even a comparison. That drop would be 0.026% drop compared to the dot com bubble loss, and that doesn’t even account for inflation in the dollar price over the last 17 years.

    It is funny to read some of these comments. The bankers won’t “allow” us to do it. Talk about a defeatist attitude! With the invention of crypto there is literally a new method to fight against corrupt bankers and people want to waive the white flag of defeat before investing a single dollar. How about throwing a punch or two before you cower and run to the bankers might. They are more fragile than you think; they win because that attitude allows them to win. If people put up even a modest fight, their reign would end in 5 years.

    • SD,

      Yes, I agree with you. However, I have been the same way in my responses to considering Bitcoin and the other cryptos in the past. Unfortunately, if I knew how Bitcoin was mined and how it functioned, I would have seriously considered purchasing some years ago. Of course, I am not talking about a lot of money, I still believe the best assets are PHYSICAL GOLD AND SILVER, but I would have understood the PROOF OF WORK methodology and how Bitcoin was set up to become more difficult to mine going forward.

      There’s a lot here to understand, but most people will continue to stay in the DARK because they don’t know all the data.

      steve

      • Blockchain technology and considering all this electronical bits as something useful for humans are two different questions…

    • I agree with some of your comments but calling people like me, ‘white flag waving, defeatists’ for believing Banksterville will not allow private, crypto currencies to ever endanger their hold on the monetary system, is pathetic. You obviously have done little to no research into the extent of power Banksterville has over Western governments. Go look who is running the Oval Office for starters (it is full of Goldman Shysters). UK and EU political depts. are also awash with ex banksters. Politics and banking got married a long time ago and divorce isn’t coming any time soon. Look what happened to BitCoin some months ago when the Chinese government put in some restrictions. Yes, it roared back but what if the regime at some stage bans it on pain of death (they did that to short sellers by the way when the Chinese stock market was tanking a couple of years ago, banning all short selling on pain of death!). If you seriously think crypto outfits (some of which are operating out of Mum and Dad’s garage now) and the exchanges that hook up to them can defy the might of heavily armed governments and their beloved Goldman, JP Morgan, HSBC, Rothschild etc banksters then you are either very stupid or very naive. In 2008 every Western government handed over countless billions to Banksterville and merrily handed Main Street the bill. Did Main Street rise up against that….NO it didn’t. Will Main Street rise up against its governments if Cryptos are banned…NO they won’t. Main St will only rise up when their bellies are empty. In that kind of situation there will be utter chaos and even if you have Crypto currencies good luck buying bread at $200 a loaf from your empty and looted local supermarket.

  17. Stephen Gibson | June 3, 2017 at 2:19 am | Reply

    Not all crypto currencies are proof of work like btc, which uses a lot of energy. Some are run proof of stake algo,s which is a much more energy efficient approach .

  18. One should not buy gold and silver to make money because you can’t sell it easily or short it. Making money from gold or silver is what futures are for because you can sell it easily and short it.
    Futures, ETFs, currency and bitcoin etc are all derivatives. Gold and silver are not. Derivates are better when the sun is shining, gold and silver are better when comes the rain.

  19. As industrial civilization collapses due to a sharply falling EROEI, will there be energy to maintain the interwebs? I highly doubt it given that the internet came at the peak of net energy production. On the way down to thermodynamic collapse the server farms will shut down, cyber conflict will take the internet down and bitcoin will reach its true value of ZERO.

    • Stephen Gibson | June 3, 2017 at 10:25 am | Reply

      Blockchains don’t use server farms they exist on computers running wallets or computers mining . A little research goes a long way . bitcoin profit has been responsible for every major purchase in my house this and last year .my computer,tablet,sofa,cooker,TV,printer,etc,etc,etc.from an initial investment of £400 . and I still have £5000 worth. Works for me.

    • As I explained to Steve above, EROEI doesn’t apply to Bitcoin. As energy prices increase relative to BTC values, there will be fewer miners, but just as much new BTC will be mined and just as many transactions will be validated. That is not true for precious metals. If a single miner is active, running on a small computer powered via solar cells and batteries, then the BTC network will continue to run.

  20. Crypto currencies are NOT currencies according to the IRS. I did some research in a lot of ways, but once I started looking into the tax situation for Bitcoin, a lot of my questions have been answered.
    Start here:http://www.investopedia.com/university/definitive-bitcoin-tax-guide-dont-let-irs-snow-you/
    Then Here: https://www.irs.gov/pub/irs-drop/n-14-21.pdf
    And finally, what is the IRS doing right now about Crypto Property (NOT CURRENCY) right now: http://fortune.com/2016/11/29/bitcoin-irs/

    These three article told me quite a bit about the speculative nature of crypto currencies. BITCOIN and all other similar products are investments rather than currencies and VERY speculative investments at that. The best sentence I read was: Every cup of coffee purchased with Bitcoin is a “capital gains or loss event” and must be documented. That same article went on to say there are companies that are changing that scenario whereby the bitcoin is purchased instantly during the purchase which is tax neutral, but does that mean it still must be documented?

    Bottom line, the IRS views Bitcoin as property, NOT as currency. So it will never be a competitor to the US dollar.
    Alternatively, I can sell my SILVER or GOLD in a couple states in the US right now (AZ,UT,and OK) and answer to no one, pay no taxes on my currency transaction, and of course document nothing. THAT is a currency.
    I am still wary of crypto currencies at this point, but not because I don’t understand them, but because of their highly speculative nature. Crypto investments also have risk in security and I’m not talking about Blockchain, rather the venues for getting in and out of the cryto properties. There is also a risk in governments using tax collection such as the IRS or even other depts. when investors bypass any governments source of revenue.
    A government doesn’t have to obey any rules and believing yourself to be invisible and leave no trail investing in Crypto properties is as foolish as believing every single thing you do electronically is not recorded and stored on a super cray housed inside the NSA.
    Is risky speculation stupid? Of course not, you can make a lot of money doing this and as long as you know the risks, then go for it. But DO, know the risks. And, pay your taxes.

  21. Stephen Gibson | June 3, 2017 at 10:29 am | Reply

    I also purchased most of my silver with bitcoin profit.

    • Stephen Gibson | June 8, 2017 at 2:34 am | Reply

      Purchased another 500g silver bar with some of this weeks profit . People can sit on the sidelines and say it is doomed to failure, but ultimately I no longer have to go to work and I am sitting here with 3 kg of silver bars that I would not have been able to afford without btc.

  22. Ok, i understand. Thanks.

  23. When the Central Banks finally lose control of propping up the markets, will the BIG MONEY be made in owning gold, silver or crypto-currencies
    ? This question is irrelevant because the real problem here, excluding the speculation, is not which assets will absorb more FIAT but which assets will be able to have VALUE once we will have the current system behind us. Once the USD & all FIAT currencies go to zero, gold and silver will break away from USD
    and maybe become money or they will
    be priced in the new currency. Their fundamentals are anyway great. Now, what will happen for an investor that has 10.000 EURO or USD on an account? All of us will agree that he will loose this sum since the FIAT will become worthless. So my question now is: what will happen to an investor holding 1BTC =10.000 USD? Will the market bring the value of that btc to zero since it’s made up of a dead currency or will it recognize some value to that btc for some mysterious reasons ? in this case… please why and how? I think btc will face the same destiny of the above mentioned account because the concept of cryptocurrency is a fallacy, it has nothing to do with currency it’s just a digital financial asset that can’t exist outside a determined and preexisting MONETARY SYSTEM … in our case FIATS. Sorry for my English … I hope the idea is clear… greetings from Italy

    • IMO, 1 BTC (the series of bits on a USB) will remain 1 BTC, as 1 oz of gold will remain 1 oz of gold.
      Even though I don’t trust cryptos, they may remain useful to transfer money and to buy/sell items. They are (fiat)currencies with enormous risks and volatility, they are not money for wealth storage.

      • Even though I don’t trust cryptos, they may remain useful to transfer money and to buy/sell items… This is the point. WILL THEY HAVE ANY VALUE ONCE THE FIAT BECOME WORTHLESS??? I try to explain my point of view using a practice example: A&B go to a casino in which they have the choice to exchange their USD in Gold tokens or in digital tokens to have access to the machines. A chooses to have gold tokens while B prefers digital tokens. They pass a nice evening there but once they leave the casino they bothh prefer to keep their tokens for next time. The day after the monetary system collapses and both turn back to that casino. Now will the casino still accept the digital tokens? or will B get the answer: sorry but those digital tokens are no more valid since they are tied to a dead currency. Against that, gold tokens will still be valid.

      • ven though I don’t trust cryptos, they may remain useful to transfer money and to buy/sell items…
        So ask yourself: once the monetary system collapses and USD with FIAT goes to zero
        1- which “money” will you transfer using the cryptocurrencies? the Dead Fiat?
        2-Goods and services will cease to be priced in USD and FIAT (waiting for the new monetary system) so how can you pay for items using btc = 10.000 USD in the last trade before the demise of fiat.
        Technology can’t change the nature of wealth or replace money (gold and silver). As we have eternal and immutable laws in nature and physics, the same matter with economy and wealth, they are governed by laws and rules.

        • When fiat goes zero, the social order will change, and it is tough to say what will come next. For the answer anyway, it is useless to ask a capitalist apologist who cannot imagine life beyond money and so exchange…

        • Actually I should have said transfer BTC’s and buy items costed in BTC’s.
          Any item (a gun, a house, etc.) may be priced in BTC’s, whatever the BTC’s “value” is. You don’t care anymore in the value in fiat dollars.
          Btw, I have only PM’s to store my wealth and am not ready to buy BTC’s. Curious to better understand cryptos, though.

    • 10 000 USD for bitcoin ? No 1 million by 2020 miminum according to Rocco, all bitcoin holder will be the chosen few !
      Funny to see somebody praying for gold and silver and make a complete U turn in one month.

      • 10000 USD or 1 billion, it doesn’t matter. At last the cryptocurrency ponzi scheme will fail as all ponzi schemes did before. However there is a good thing about the cryptocurrency experiment:IT IS HAPPENING under a FIAT monetary system, once (both) they’ll be wiped out, then humanity will NEVER accept fraudulent MONETARY systems and ILLUSIONS like these again. Imagine if the cryptocurrency experiment is happening under a representative money or gold standard? It would be really hard to unmask it. Fortunately,under a fiat system, we have an expiry date of this experiment, then NOBODY can anymore twist the concept of money and wealth…

  24. Great article!

  25. When the Central Banks finally lose control of propping up the markets, will the BIG MONEY be made in owning gold, silver or crypto-currencies? This is the question many investors who are focused on “alternative assets”, outside the typical mainstream stock, bond and real estate markets, are asking.

    Investors should really be asking themselves if they will be safe and make it through the currency collapse. When Central Banks lose it…the American people will lose it in a worse way.

  26. Crypto are really interesting topic and good thing about them is they have no “debt attached”to them…thanks Steve…looking forward to more from you on them

    Cheers-

  27. <>

    Take note that the energy cost in mining bitcoin depends on the difficulty which is based on average cost of energy across the world and the price of Bitcoin (since the rewards are currently at 12.5 bitcoin per block to miners). If there was a problem with energy and lots of miners were closing shop, the difficulty level to mine bitcoin would drop, and everything else will stay equal. And it would be mined in places where electricity is cheap – like Iceland.

    Take also note that there are other cryptocurrencies that are partially or eventually fully working on proof of stake rather (you need the cryptocoins to mine) than proof of work (you need energy to mine)

    I personally don’t have the answer about which one between Bitcoin and Silver has the most potential move up. But consider this: silver could at most match the price of gold (and its market cap), (gold/silver ratio 1 to 1) but only for a very brief time at best, while Bitcoin could potentially stay or surpass gold in market cap.

    • Silver which is used in almost all modern technology can’t have a higher price then gold? The 1 to 1 ratio is a magical limit? Your Bitcoin bias is evident. The world doesn’t need bitcoin (which I own). The world needs silver and the easy supply of silver is approaching exhaustion. The EROI will make it harder to source silver. Keep in mind that electronics and the usage of silver didn’t really start until the 1950s with the widespread use of vacuum tubes. We’ve only been using silver in technology for about 67 years. Since that time we’ve managed to consume centuries of above ground stock. As those stocks approach depletion, silver mining is declining. How are we going to continue the technology age for the next 50 years? Bitcoin? The world has never experienced this before. silver has never been more important to modern life. I suspect at some point Silver will be a very costly element to acquire. Why don’t you read some of Steve’s previous articles before comparing Silver and Bitcoin. Other then as a store of value, Bitcoin and Silver aren’t comparable. You can’t manufactuer a computer with Bitcoin, and you can’t instantly pay someone in china with Silver.

      • Sean Griffiths | June 4, 2017 at 5:39 pm | Reply

        I second that…silver is the best conductor but much pricier than copper….with smart phones all vying for greater processing power and longer battery life, they need to switch from copper circuitboard tracks to silver to squeeze out another 5% conductivity. Its less than a gram per device but tens of millions are sold every year.

        • Last I checked all circuit board runs are made of solder. Solder contains silver. All computers, micro chips, phones, cars, all modern electronics, and all weapon systems, contain silver. In addition to its conductive powers silver is also the most reflective. It’s contained in solar panels and I believe expensive mirrors and lasers. Silver also contains anti-bacterial properties so we see it being sprayed in hospitals to combat MRSA , coating surgical instruments, and added to sports and under garments to combat oder caused by bacteria. Silver is magic in a mundane world. Too bad we never thought to conserve and recycle any. Silver is value…just not a transmitter of value. That’s where the cryptos shine.

    • RH,

      Yes.. I read that article. Unfortunately, Mike Adams forgets that if EVERY AMERICAN wanted to remove all their money from the bank, about 1-2% would get their money… LOL. Also, if every POOR SLOB with a PENSION PLAN or RETIREMENT ACCOUNT wanted to pull all their funds out at one time, again… only 1-2% would get their DOUGH.

      So… his exercise in suggesting the same thing with Cryptos is pointless. We know that already.

      steve

  28. Have you considered that it all really has to do with the blockchain technology….. not essentially the “money”…. bitcoin, litecoin, ripple, etc….

    Yes…. the utility. It will be once again about positive productivity and free energy.

    Its more importantly about “Just weights and measures” – “honest scales”!

    Here comes the Kingdom… HalleluYah!!!

  29. The AntiKeynes | June 4, 2017 at 1:34 pm | Reply

    Steve,

    This is my first post, so 1st things 1st: Thanks for sharing your knowledge publicly. You have a fantastic site.

    I’m a big fan of what is often listed as the 4th attribute Aristotle defines as a good money, which basically states that money should have value outside of its use as a money. Considering bitcoin from this perspective, the tulip mania had more legitimacy as a money than bitcoin does now. Of course I realize that bitcoin does possess other attributes of Aristotelian money, but this seems to be the one that nearly all enthusiasts completely ignore. Alternatively, they believe the ability of the bitcoin to protect itself is its value, which is utterly absurd if that is its only value. If a cryptocurrency were providing a service via distributing computing, such as working on an algorithm to help cure cancer or some such cause that would benefit humanity, I think it might begin to give cryptocurrencies some real legitimacy as a money.

  30. Okay everyone, let’s go thru a step at a time.

    If you or I created a currency of any kind, what would happen? We would be arrested immediately for fraud and counterfeiting. Counterfeiting because we have created a currency, which we are not permitted to do, and fraud because we then try to hand that worthless crap to a sucker and receive goods and services in return. Does anyone not agree that this would happen?

    So why then is Bitcon and other cryptos allowed? Because they ARE allowed. They are not an escape from fiat currencies as claimed. They MIUST be controlled by governments and banks since they have not passed any legislation to outlaw them, nor have they made any arrests. As expected, their “investigations” reveal a guy allegedly called Satoshi Nakamoto but of course they cannot find him or anyones else who invented these frauds.

    Steve, you have been conned by Bitcon. By the way, it seems interesting that this Bitcon fraud was pushed HIGHER than gold. I believe that might be an intended goal to make Bitcon appear so much more valuable and gold just a worthless rubbish. It’s all part of the psyop IMO.

  31. Please understand this is what Saddam Hussein and Gaddafi wanted to do by selling oil for gold. the Americans killed both of them. why has bitcoin been allowed by the the USA government.
    this stinks but a lot of money can be made over the next few years and all profits should be put into gold.

    one question for readers please try and answer where is the fiat used to buy bitcoin being parked.??????????????????????????????????

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