What The Heck’s Going On With Cryptocurrencies?

(by Wolf Richter)

Up 10,000% in 16 months? These charts truly depict our crazy times

“One word, a question: Etherium,” said the guy at my swim club on Sunday. “What do you think? It’s a ten-bagger since January.” Meaning that the value of the cryptocurrency has multiplied by ten in the four months since January 16.

It’s actually more than a “ten-bagger.” At the end of 2015, it was worth $0.90. As I’m writing this, it’s worth $91.30. Those who bought it at the end of 2015 had a ten-bagger on their hands by January 16, 2017. Those who bought at that time also have ten bagger on their hands. Those that rode it all the way up over the 16 months have a 100-bagger. For percentage fans, that’s a gain of 10,000%.
Here is the chart of this financial miracle (via WorldCoinIndex):

What miracle “asset” did they get when they bought it? Don’t even ask. Just believe in it. It certainly isn’t a usable currency for legit purposes, obviously, given this kind of insane instability. But it really doesn’t matter what it is as long as it is going up.

By “market capitalization,” ethereum is now the second largest cryptocurrency at $8.4 billion.

READ MORE HERE: What The Heck’s Going On With Cryptocurrencies? 


As I mention in my previous article, PAPER vs PHYSICAL: The Amazing Amount Of Leverage In The Silver Market:

Currently, the crypto-currencies are experiencing huge gains over the past several months.  It doesn’t matter if an individual agrees with owning Bitcoin or one of the many crypto-currencies, the important thing to understand is that the tremendous price increases in many crypto-currencies are likely due to concern to the massive amount of Central Bank $1 trillion in asset purchases in the first four months of the year.

Furthermore, crypto-currencies are a likely a GOOD INDICATOR of what will take place in the gold and silver market when investors realize most STOCKS, BONDS and REAL ESTATE values will continue to implode as the U.S. and Global Oil Industries disintegrate.

The gold and silver prices are being capped because paper contracts can be added as more funds move in.  However, crpyto-currencies do not have this problem because the amount of Bitcoins, as an example, are limited.

Precious metals sentiment is very similar to what was taking place in Ripple for the past several years as trading volume and interest were FLAT-LINED:

You will notice since the May of 2015, trading volume and interest in Ripple was very low.  However, in just the past 11 weeks, Ripple’s price has increased 3,500%.  It is interesting that interest in these Crypto-currencies has exploded as the Central Banks purchased $1 trillion in assets during the first four months of 2017.

The reason the Ripple Price is able to surge higher, is due to a LIMITED number of outstanding Ripple coins.  This is much different than Gold and Silver that are traded on the exchanges.  Gold and silver’s prices are capped as more and more paper contracts are added.

However, at some point, what is currently taking place in the Crypto-Currency Market will also take place in gold and silver.

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75 Comments on "What The Heck’s Going On With Cryptocurrencies?"

  1. Dumb ‘money’. That’s what’s going on. And greed of course. Solar panels on steroids.

    • “Dumb ‘money’”

      nope, just money. the european union just created 2.5 trillion in debt currency, didn’t it? it’s all gotta go somewhere, and if you’re first in line at the money spigot then it doesn’t matter where it goes. “cast your bread upon the waters” ….

  2. There are stacks of these % increases in mining stocks over the years (recent years). You only have to look at ExxonMobile 48,000% in 40 years (yes I know it is not in the last 2 years). And there is a “store of value” in mining stocks.

    I have started research on small mining companies either in production or close to it with very little debt. Most of these types of stocks are generally under a $1.00.

    What do you guys think?

    • Yes, it’s worth a gamble (IMHO) with fiat you are ready to lose should a) the stock exchanges and brokerage systems go belly up b) the company goes bust (against all odds and your “good” research / due diligence), c) the company be nationalized, d) other reasons… I think of the miners as a leveraged bet on the metals with the hope of a lot of “good” outcomes (for PMs) and lots of room for things to go really bad.

  3. Diogenes Shrugged | May 16, 2017 at 4:06 pm | Reply

    Commerce can be intermediated with dollars, Bitcoin, precious metals, cigarettes, clam shells, or anything else that the buyer and seller agree to. Naysayers are irrelevant. The parties accepting any particular medium of exchange are the ONLY parties who count. Best of luck to you all.

    With respect to precious metals, the latest X22 Spotlight interview of Charles Savoie is not to be missed. https://www.youtube.com/watch?v=wc3h7Cwz-T0&spfreload=10

  4. Hi Graham,

    I’ll be the first to admit I have been wrong about everything in the past 8 yrs as I left my savings parked in money market funds. But for what it is worth, I am still concerned about what the government might do to the miners, as they might due to cryptocurrencies if things “get out of hand.”

    After all, I am convinced there is an internet/cell phone kill switch (which is why I got all my ham ratings and Elecraft KX3, PX3, and KPA100 etc.LOL)

    and

    there is the national guard or “equivalent” standing by to take control of the mines, gas, food and energy distribution if things “get out hand.” This type of militarized confiscation (probably more difficult to do with small stashes of hidden PM’s) has been played out many times before in modern history.

    So to those who have made a killing on cryptocurrencies, hats off to you. I was too ignorant and chicken., but those are my reasons. Definitely would take some off the table and take profits.

    Finally, to address the topic of Steve’s post, I think the rapid rise in crypto currency nominal price is due to the unusual combination of fear about the topsy stock, bond, and real estate markets against the chronic disappointment in returns on PMs over the past few years. This has created an environment were a new “species” can explode. BTC has become the new “new alternative/only game in town.)

    • Thanks Hubbs

      That is deep thinking Hubbs… Lol but all feasible. You just reminded me about the “Kill Switch” obviously a must in any governments tool kit. Not sure about the mines in Australia. We could do ourselves more harm than good (even if things get really bad) considering future growth in the Eastern Countries resource sector. We will still need trade.

  5. Thank you Steve for this article.
    As much as I don’t believe in, and even despise crypto currencies, I would be far wealthier had I invested in them vs phys gold and silver. Isn’t that what really matters up until now?
    Had I invested in them, I’d probably still sell them all today and bought phys with all the profits.
    So, is the party over? I don’t think so. As many have said, when the dollar’s value starts being questioned by the mainstream, there will be a rush into phys far stronger than 2008 when retailers were all sold out for months. You couldn’t get phys if you wanted. So what will people turn to?
    Why not crypto currencies? Even though I think a unique set of number/letters has no value, even though there are unlimited types of cryptos that could be invented, even though theft/fraud could wipe them out in seconds mt gox, even though governments could make them illegal over night, even though they depend on a functioning internet/electrical system/exchange all working smoothly… all that matters is what someone will pay for them in the future. Most people are stupid and uniformed and don’t understand the basic characteristics of money. If a bitcoin can be worth more than an oz of gold, why not many of the other cryptos?
    I think I am going to invest in a crypto not because I think they’re a good idea, but because I think most people are stupid enough to think they will have a higher value in the future.
    I’m really not trying to troll the crypto believers, I’m just sharing my thoughts on why a non-believer like myself is going to buy into them, as a gamble on the ignorance of the masses.

    • You used the word “invested”. What you intend to do though is called “gambling”. These are different intents, processes and outcomes.

      • All investments have risk, at what level does risk mean it’s gambling? Stock markets a gamble. I don’t consider gold or silver investments, they’re just money… no risk, no return. Cryptos aren’t money imho, they’ve an investment.

        • With investment, there is risk that can be analysed and managed. If one invests in gold and silver, the plan can be the energy crisis, or supply and demand change, or geopolitical events, or money moves due to collapse of bubbles, and so on. Either way, if one holds some metal, that metal will remain regardless of how risks materialise.
          With gambling, the risk is luck, chance, emotion and such. That cannot be analysed at all — there is nothing to analyse. If casino wins with probability of 51%, the outcome for casino is easily analysed: 1% of cash that passes through the door. For the gambler, the outcome cannot be analysed. That is why running a casino is an investment, visiting it is gambing, and continuous gambling is a guaranteed loss. Cryptos are an investment for people who run them, issue them and probably sell them. For everyone else it is classic gambling.

      • Reader
        I have a mate who puts most of his money in banks; he tells me he is not a gambler. I put much of my money into PM’s and he calls me the gambler!!!!

        • As Henry Ford said, if everybody understood the banking system, it would collapse tomorrow. I only have my understanding because of the internet, unintended consequence of information sharing? I give the current system 10 years max, that’s not a long time.

        • He is a believer. And for him you are an infidel. 🙂

  6. Behold the ultimate tulips. If anything in this universe can go to zero, it is the make believe digital currencies.

    • Agreed, but could they be a highly profitable short term bet before they go to zero? I’m willing to risk money I can afford to lose. I read that significant buyers are from China, capital flight perhaps, a real vulnerability.

      • Yes they can. So are the mining penny stocks. Cryptos are far more liquid though, but more volatile too. If you can afford to lose that money, and you are actually mentally parted with that money, you may consider that an entertainment budget with a possibility of an unexpected gift. Like a good movie.

    • Well said!

  7. MillenniumWright | May 16, 2017 at 6:42 pm | Reply

    Imagine it’s 1980 and someone tells you that one day you won’t send paper letters anymore, and that the US Postal Service will in coming decades be brought to the edge of bankruptcy in spite of a growing population and massive increases in paperwork and communication.

    Email did just that. There are more digital documents emailed across the country in perhaps a single minute, than the USPS ever conveyed in a year.

    Humanity has some pretty serious challenges going forward, and many of these challenges can be traced back to the hijacking of entire societies through centralized control (abuse!) of fiat currency. The cryptocurrencies–the Distributed Ledger in particular–were specifically created to help us get past this problem.

    Remember Napster? Pirate Bay? True, the governments found ways to shut these sites down repeatedly, but only because THESE SITES HAD CENTRAL NODES THAT COULD BE INDIVIDUALLY ATTACKED. The blockchain is the next development in this lineage. The way these file sharing networks worked became a seed of the idea of how the (legitimate) cryptocurrencies work. Keep in mind that not all the crypto currencies are legitimate, and there are hundreds globally.

    If you wanted to download the song Hotel California through Napster or Pirate Bay, you would basically connect to a global network of people like you, who had connected their own computers as well. Then, the Napster program or the Pirate Bay program you installed, would take a tiny sliver of the overall song from 1000 different computers on the network. Next the program would reassemble the song and you would have your own copy of it.

    Similarly, there is a Bitcoin network, and there are Ripple and Ethereum networks of computers all accross the globe, and all of the computers on these networks have a copy of the blockchain which is updated every few seconds or minutes, and that blockchain is a ledger of all the Bitcoin transactions, or all the Ripple or Ethereum transactions that have ever occurred. In order to kill bitcoin the government would have to shut down a GLOBAL network, from the Bitcoin mining interests in China, to the nodes in America, to Venezuela, to the growing Japanese network and the Russian ones too. Could the government destroy the whole internet? Maybe, but it would destroy itself in doing so.

    Which is why Venezuela and India, and other governments hell-bent on bankrupting their populations have proven unable to do anything about growing adoption of crypto currencies by the unfortunate people subjected to their idiotic rule.

    Gold and Silver are great if the world heads into another dark age. But humanity also has the opportunity to grow out of the problems it faces now, and decentralized currencies are one of the best hopes of doing that. If successful, we might still explore the stars.

    MillenniumWright

    • Very well written and insightful explanation of the technical resilience of the technology, sincere thanks.

      What about this: your government declares it illegal to own or transact any cryptos with the punishment of complete confiscation and a fine 100x the crypto value. Any computer’s ip accessing any exchange or transaction is flagged and all internet providers agree to co-operate and provide your location.
      Not shut down by technology, by law.
      Gold and Silver work great today, not a dark age strategy. They’ve protected their purchasing power for the last 100 years – 5000 years. That’s what real money is supposed to do, not make you rich, preserve your buying power.
      Your thoughts are sincerely appreciated by me and others, it’s a helpful debate.

      • That’s what real money is supposed to do, not make you rich, preserve your buying power.

        I think that one sentence of yours says it all Chris! ….. 🙂

        • Farah Bazzrea | May 16, 2017 at 8:01 pm | Reply

          It looks unanimous.
          Question: Bitcoin is primarily a spec play. As proof, a poster above is abandoning his better judgment to finally speculate with BTC in hopes of dreamy capital gains. Listen to Bix Weir and other BTC bugs. They’re always concerned with whether the price is moving up or down. I never hear or read comments regarding the ease of spending or other attributes associated with “money.”
          So at this point, I’m confused. Are BTC adherents proposing bitcoin is money or investment (speculation)? Cause the money argument is weak, at best. Who wants to spend their “money” knowing if they hold on to it longer, it will be worth more?
          If it’s an investment, then for all the reasons already argued, primarily, imo, the ease of government shutdown/outlaw vis-a-vis legislation, technological dependency and general uncertainty involved with any developing technologies, ie., Beta vs. VHS, etc., delegates it to spec play.
          I’m not knocking it. I’m just saying, “Own it.”

          • MillenniumWright | May 16, 2017 at 11:53 pm |

            Sure. It’s the wild wild west. See my reply to Graham down below.

            I put 5 bucks in XRP a couple months back (another cryptocurrency that is not truly decentralized but serves as a bridge between modern financial institutions and the crypto ecosystem), now I have 40 bucks. I can shoot that 40 bucks anywhere in the world instantly, for maybe .05, unaffected by, well, anything really. Russia, Japan, Venezuela, crossing borders is no problem. Ripple could go to zero and I wouldn’t be too upset except that maybe I didn’t sell out when it was up. But I don’t think it’s going to zero, I think it will continue to appreciate over time. XRP is an in-network currency that serves a *function.* It’s a little like a hybrid between money and stock in a company, except it’s stock in a network and a protocol. These things are revolutionary.

            I’m learning about the space, and I also believe I’m learning about the future of our systems.

            It’s an ideological discussion as much as any. Do you *really* want to go back to a world where you use gold and silver bits to buy groceries? Imagine that for a moment. Imagine Venezuela’s woes, where there you might not have toilet paper or food today. That’s where the world has to go for your gold and silver to drastically revalue.

            Or what if the seven planets they just found in the habitable zone around Trappist 1F turn out to be habitable, do you think you’ll be carrying 5 lbs of silver into space? Nope. Digital distributed ledger currency, or you’re not going.

            Which world seems more fun to live in, the one that’s bright and full of new wonders, or the one that’s dark and looks like the medieval past?

            I may not bet the farm–especially since I’m just a carpenter–but I am taking a position on a bet for the world I want to see in the future, rather than the dark age we would have to regress to before gold and silver explode in value relative to things like food, water, and the toilet paper you probably won’t be able to get.

            MillenniumWright

          • “I can shoot that 40 bucks anywhere in the world instantly, for maybe .05, unaffected by, well, anything really. Russia, Japan, Venezuela, crossing borders is no problem.”

            the money can cross the border, sure. but what about the goods/services you purchase? can that cross the border so easily? you do know that everything that is shipped is tracked, right?

      • I own all the above. There is a difference between a currency and a store of value. Gold and silver are stores of value. Bitcoin and the rest of the crypto currencies are mediums of exchange. This medium of exchange protects the identity of its users. That is why it is in demand. Think of all the dark money in the world. They will flow into the crypto currencies at some point. That is the investment draw for me.

        • “Gold and silver are stores of value. Bitcoin and the rest of the crypto currencies are mediums of exchange.”

          g/s don’t store anything any more than any digital currency. their value is determined absolutely by 1) their quantity, 2) the goods/services available for purchase, 3) their acceptance as a medium of exchange. outside of that, they are deadweight.

    • Good article MilleniumWright

      How many (In Government) would understand what a “Decentralised Currency” is? And if TPTB are silly enough to start another war then they are silly enough to shut down the GLOBAL Network!

      • MillenniumWright
        I like your optimistic point of view of the potential digital future of currency but with all due respect I don’t think you understand gold and silver. Informed people don’t buy Gold and Silver because they think they’re going to ‘explode in value’ and become rich. They maintain their purchasing power. So if the dollar collapses… yes an ounce of gold may be worth $12,500 but food will also go up 10x.

        As far as using gold and silver coins in the future for transactions, no. If digital currency is the future, then the best option imho is a company called Goldmoney.com A 100% fully allocated gold ownership non-bank storage that can be sent or transacted on line in seconds globally just as easily as a bitcoin BUT it’s actually backed by physical gold in a vault.
        I think it’s a far better digital option for the future.
        Money is not supposed to change value as crypto currencies are doing, that makes them an investment with risk. Therefore they are not money, they are a speculation.
        Money based on Gold is not medieval looking, it’s our history and future. It just needs to be transacted with the ease of digitally as Goldmoney has solved.

        • I think silver will explode in value because it is used in everything. It’s production is declining, and once the Seneca cliff hits…then there will be no more coming onto the market.

        • MillenniumWright | May 17, 2017 at 9:27 am | Reply

          Thanks for the response! Please don’t get me wrong, I’m not telling anyone to sell their gold, and that one itty bitty coin that I have somewhere I’m not selling either, not even to buy crypto.

          Your discussion of “value” and the many concepts that go along with it are one of the reasons that I am so optimistic for the crypto currency space. My theory formed from observation is this: digital currencies will and are bringing us *closer* to the things we truly value, with less and more trustworthy intermediaries (open-source computer code based on logic), and with less opportunity for bad actors to hijack and pervert our society.

          We all know that you can’t eat fiat, nor can you use it as toilet paper because the nasty filth it’s covered in will give you a rash. We all also know that you can’t eat gold or use it as toilet paper either. And here is where our discussion of value could get really interesting. What IS value? Value is purpose; more specifically true value is discovered in the function that something can serve for a human being.

          Clean toilet paper has value. Shelter, food, water, these things all have *value* for humanity. In point of fact, there are almost *zero* things that we truly need in life that we can directly get from gold. Gold, unlike paper, cannot even be burned to keep us warm. Logic actually dictates that gold, like any other asset, derives the majority of its value from counterparty risk; it is the belief that you can trade gold to someone who knows how to make toilet paper and grow food that makes it valuable to you. It is your belief in that *other human* and their willingness to accept your gold that gives it value.

          The crypto currency space is different. There are hundreds of digital coins being developed that are in fact protocols. In some cases, like Ethereum, the coin itself is not only a currency, but a computer program which can execute faithless contracts. Or take xrp, what it really is, is a token within a network that allows banks to digitize the value they may have in US dollars, shoot it across the planet to South Africa, and have that digital value immediately converted back into SA Rand value, which you could then use to buy a cheeseburger or a house. The value to many of these tokes comes not from serving as a currency, but from the *function that their protocol and network serves.

          When you extrapolate where this could go…imagine a power grid that is not centrally controlled (and fantastically FRAGILE!) like our power grid is, but one that is shaped like a network, decentralized, and has an internal currency for electricity that no one can exert excessive control over. If a power plant goes down, then the price of electricity will immediately momentarily rise and a thousand homes with solar, or some guy who put up his own wind generator, will suddenly fill the power void. Or, it could be that people will decide they don’t need to run the pool lights or tv overnight and a relatively immediate reduction in demand will occur.

          It will be cheaper to heat and light your home, more efficient, more robust, and the *Price Discovery* mechanism will be more intimate. One of the HUGE problems with our economy right now is that our mechanisms of price discovery are so f*$%^D up because of government interventions in free markets on behalf of centrally controlled interests. How much does a gallon of gas cost? $2.25? Bullshit. Factor in the TRILLIONS of dollars in oil wars, regime changes, and hundreds other transgressions, and the true cost of oil is orders of magnitude more.

          Take a look at one of Steve’s historical charts on global oil production. Notice that huge crash around 1979? A properly functioning free market would have immediately and aggressively begun developing alternatives, efficiencies, and generally solving the problem of an unstable global energy supply. Why did that not happen? Conspiracy theorists argue that ours did, but technologies were buried. Either way, why are we at war in, what, 4 different countries, with covert military operations in a hundred more? To keep the peace? Really?

          The reason is: Government intervention in free markets.

          When Jesus said that money is the root of all evil, he would have been referring to a metal-backed fiat currency. It is the central control of our mediums of exchange that allows the devils among us to hijack our whole economy. If we solve that, then maybe we don’t need the apocalypse to happen before a new age arrives.

          MillenniumWright

          • I have copied your comments MellenniumWright. You put your thoughts into words very well. You obviously know what you know you know… Lol

            You are way ahead of most, much of our energy has been wasted on false productivity (Military equipment and Finance Instruments). True energy cost are fast becoming a reality here in Australia BUT most still remain in denial.

            I tell my friends (The ones that listen) to make your homes as energy independent as you can. My house is set up with a low cost generator of EBay for AUD $750.00 7KVA. It runs the whole house and stables. I forwent the Solar Panels because I reckon I will have more problems with “Electricity” than “Oil” in the near future.

            And the sooner we can get into a “Global Digital Currency” for International Trade and Transactions the better of we will be. I like the idea of BlockChain.

        • Informed people don’t buy Gold and Silver because they think they’re going to ‘explode in value’ and become rich.”

          (laugh) yes they do! “the dollar will collapse, but the markets will just carry on as always and g/s will exPLODE in value and I’m gonna buy up EVERYTHING and EVERYBODY will work for ME!” (laugh)

          “So if the dollar collapses… yes an ounce of gold may be worth $12,500 but food will also go up 10x.”

          more’n that.

  8. “However, at some point, what is currently taking place in the Crypto-Currency Market will also take place in gold and silver.”

    No, it won’t. The gains in gold in silver in the foreseeable future will not begin to approach 3500%. To think they are is deluding yourself.

  9. You might wait a long time for gold to catch up with bitcoin and others. The central banks have gold under control as long as they want (forever). Bitcoin will be 10000 per coin and gold will be $1200 per Oz. For gold to move it will take a loss of the reserve status for the dollar or some econmIc collapse. Taking profits from bitcoin and buying gold will be an excellent strategy someday. If you don’t want to buy the coins then buy gbtc the bitcoin etf. Bitcoin will turn into a gigantic bubble someday.

    • That’s a very good point about central banks not having a method to interfere in crypto currency values unlike the comex paper market does with phys.

    • It’s hard to see things changing when we live within the empire. All appears stable. I am fairly certain things are changing right now and the Dollar will at some point hyperinflate. Just because you can’t see it or imagine it doesn’t make it so…in 1971 no one could have imagined gold at $1200. I am certain we are on the edge of another big run. What’s a fungible, universally accepted store of value worth when your “savings” are being ravaged by hyperinflation. I am sure the Soviets didn’t see it coming either.

  10. Thanks Steve, appreciated.

  11. MillenniumWright | May 16, 2017 at 11:35 pm | Reply

    Graham B: At this particular moment (remember I’m no social scientist) I would estimate that less than ~2% of any population actually understands what a blockchain is, what a distributed ledger is, or anything having to do with the actual protocols or technology. That is my opinion. It is formed from living in the San Francisco bay area where I periodically rub shoulders with folks who are mavens in tech, and from crawling the forums and researching maniacally on my own. It is also fair to say that less than 1 in a million people have even a shadow of idea how revolutionary this *could* be for all of us.

    Also my opinion: not everyone in government or existing institutions are actually hostile to things like freedom, privacy, or the growth of decentralization in human society. When dealing with government I assume incompetence much of the time, and outright malice only a small portion of the time. The people that want war and other calamities in order to expand their own powers are (in my belief) a small contingent of the population with an unfortunate ability to prey on the unwary and uncritical.

    Keep in mind that there is also an equally small contingent of the population that fights just as powerfully “to do the right thing.” Make no mistake, there are likely ways that central banks/TPTB could crash the crypto currency ecosystem. Also make no mistake: there are some fantastically brilliant minds at work creating fixes for the vulnerabilities that would allow that, and even if it gets manipulated or crashed, these people will quickly find ways around the problem. Think of how many times they shut down the file sharing sites and those sites just popped right back up, the tech nerds are even better at tech today.

    Note also that there are nations such as Japan that are quickly jumping on board in support of these technologies (perhaps because they understand that a falling tide drops all boats as surely as a rising one floats them). As quickly as some a-holes write viruses and malware (NSA, anyone?), other people are writing patches and fixes to smash them. There are too many diverse interests at play here, and some of them will fight to advance humanity instead of retard it.

    On a systemic level, I would say that the battle for our path is happening in this space as much as any, and the decentralization of currency and exchange is the brightest light on the horizon of the future. It is the place where we (the “good” guys, right?) have the best chance at actually staying ahead of the vile warmongering scum, of finding an escape from the cattle chute to slaughter that incompetent and malicious actors have boxed us into with profligate money printing et al. The global financial system is on a precipice, yes, but there are really only a small handful of people stupid enough to think letting it go over the edge is a good thing for anyone.

    In exactly the same way that industrial society could have entered a new dark age when coal supplies began to wear thin, modern society could today enter a dark age as the fabric of our financial system wears thin. But it doesn’t have to go that way. Just as the switch from coal to petroleum fueled a golden age, the switch to decentralization of control of everything from daily exchange to how energy is distributed, created, and utilized could do the same. The thing that a person needs to understand is that Bitcoin is only the beginning. It is like the Model T of transportation. Today we have everything from Cadillacs to Helicopters to SPACE STATIONS and personal ridable drones. If humanity again takes the path of a bright future, the distributed ledger, the blockchain, decentralization of *value* will spawn just as many wonders.

    There is no shortage of resources, there is only a shortage of resourcefulness, and that is almost completely due to the fact that parasitic government institutions have hijacked nearly 50% of GDP on a global level into largely unproductive–even outright destructive–enterprises. We literally spend more money as a society on blowing wealth up and burning shit to the ground than on feeding ourselves. The blockchain can staunch this hemorrhaging of human resource.

    If you’re a philosophical sort, and can wade through slightly technical but readable essays discussing enchanting social ideas and reasons for HOPE, I highly recommend “The Cathedral and the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary” from Eric S. Raymond. Before there was Napster there was Linux. Linux is another inspiring story in the ideological lineage, especially if you’re ever dealt with the irritation of Microsoft’s flaky bloated products. There are many free downloads available. The critical thing to notice is the way that a bazaar-style project (Free Market to the point of near-Anarchy) could produce what is in my opinion a superior product to Microsoft’s top-down offering.

    Crypto currencies today are the wild wild west. If you’re a frontiersman, perhaps saddle up your horse, strap on an iron, and see if you’ve got what it takes to be a part of creating a new world. You could lose everything, so learn about digital security the way you’d learn how to shoot a bear if you went frontiering. Learn to buy things digitally. Many of the silver and gold retailers accept bitcoin, and that’s great if you want safety and relative security, because now you have more options.

    MillenniumWright

    • “In exactly the same way that industrial society could have entered a new dark age when coal supplies began to wear thin, modern society could today enter a dark age as the fabric of our financial system wears thin. But it doesn’t have to go that way.”

      … what if it’s INTENDED to go that way? what if that’s the point?

      • MillenniumWright | May 23, 2017 at 7:57 pm | Reply

        It may very well be intended by some…and while I have a personal belief in a spiritual realm, I don’t conflate my Belief with material data. If you believe that there are forces among us that intend to plunge mankind into darkness (and I agree that there are) then your answers come not from material things like gold and silver, or even purely logical things like blockchain; they come from the spiritual realm, faith, belief….Grace. If you’re looking for those answers here, you’re in the wrong place.

        The battle will always appear lost, just before it’s won. The darkness will always be deepest, just before the dawn. A man or a woman’s spiritual journey is an entire series of hopeless causes that somehow pan out. The species may be no different.

        MillenniumWright

    • Just read this MillennialWright :)… Good Stuff! I (try to)study the old “Master Chartists” from the turn of the 20th Century; so I tend to read stuff no one else would bother with. I am old enough now to understand some of the history attached to past trends and technologically savvy enough have an opinion on the future.

      I think many people have an idea of what is happening and quietly go about making changes in their lives; adapting to future paradigm shifts in their lives. TPTB are in trouble and they know it.

      • MillenniumWright | May 23, 2017 at 8:03 pm | Reply

        Thanks GrahamB. I hope you’re right that the tide is shifting against TPTB. A philosopher once opined that the most important question in anyone’s life is whether or not God is Good. Everyone has a God, whether it’s Reason, Money, or some more mystical diety. My God, by my choice, is Good, and in the end what is Good will triumph, but only because that’s what I want to believe.
        MillenniumWright

  12. What has no value or little and goes up must come down when people sake. Crypos are like a new share issue with no value thats been hyped.

  13. Crypos are a good store of paper promises, like a balloon is as good store of hot air. turn off the burner and what happens?

  14. When bitcoin went public in January 2009 it changed the world. You just didn’t know it yet. In a digital world it is the perfect form of money. Decentralized, not controlled by a government, proven by cryptographic mathematical equations not people, borderless, and fast. These features are what give it value. That and its inherently deflationary. There will never be more than 21 million bitcoins to exist, ever. This is a limited supply. Sure there will be other cryptos, but the free market will determine which has value. I hold PMs, but I surely hold and transact in crypto as well.
    Because bitcoin is deflationary its price will rise as more people adopt it. Therefore it isn’t perfect as a currency, and that is why you see other cryptos with different inflation algorithms, different governance structures, come to light and also have success. Don’t fall for Ripple though. That is the banker’s coin that they control (centralized) which they pre-mined and hold the majority of the supply (fake thin liquidity). Don’t get into crypto for the freedom and decentralization and then buy the banker coin Ripple [facepalm]. Go with bitcoin, etherium, Monero, Z-cash, PIVX or any of the other privacy-focused alt-coins. It is easy to be a critic and say cryptos are a scam, there is no real value, they aren’t backed by anything, etc. Those are shortcut arguments from a person who hasn’t researched the technology and doesn’t understand how truly disruptive this tech will be. Volatility is very high because this is so new, and we are nowhere near any type of mass adoption from a merchant or user perspective. Imagine any company selling anything online, and all one needs to do is click a button, pick which cyrpto you want to pay in, confirm, and done. It will get here one day. The question is will you have acquired the crypto early on, or at the prices that exist once mass adoption is reached? Crypto is both an investment, and a currency – but this is only the case because government controlled and inflated fiat currencies are all going to their real value – zero.

    • “perfect form of money” not true. Money is supposed to have stable purchasing power, not appreciate or depreciate. Goldmoney.com is a far better digital money actually backed by physical gold in a vault with all the ease of digital savings and transactions.

      • Goldmoney requires that I put my TRUST in them that they have the gold they say they do. Sure, what could go wrong? I’m sure every person they hire is honest, non-corruptible, and not interested in squeezing out extra profits when their clients wouldn’t really know the difference anyway. And let’s say they are all class-act’s today. How do we know that won’t change in 25 years when a new batch of employees takes over? This is how we got here in the first place. Banks screwed the people over by handing out IOUs for their gold that wasn’t all there. They TRUSTED a third party to hold their gold and exchanged IOUs. No thanks.
        I prefer a decentralized system, that purposefully trusts NOBODY. It is the public blockchain that is trusted, because it is immutable. You put your trust in people, I’ll put mine in God, and math.

    • MillenniumWright | May 17, 2017 at 9:42 am | Reply

      I understand the “problems” with Ripple in the sense of not being decentralized, etc. At the same time, you cannot just take the whole finance industry and shove them out in the street to starve. There are thousands of good, ordinary people just trying to get by in life working in finance, and only a few here and there who are really bad actors.

      This is not a world where someone has to starve for someone else to eat. There is plenty for everyone. Ripple serves as a bridge between the current system and the system of the future. We can give these interests the opportunity to transition gracefully, and the Ripple network does that. If current institutions and interests go to war with the crypto ecosystem because they think it is an attack on their ability to feed their families, it’s going to be a bad thing for everyone.

      We have time to do this whole process in a cooperative manner. No reason to go starting fights, I’m sure plenty will appear on their own. But as a society we should always extend the olive branch to entrenched interests before we blow them up.

      There will be plenty of grandmas and grandpas who never transition over to crypto before they leave this world. The banks can serve those dinosaurs the way the Post Office serves people who still send paper letters, as a novelty, for nostalgia, or just for those who never grew into the new systems.

      MillenniumWright

  15. Just a few thoughts about cryptos:
    They are limited in quantity not like tulips which could be multiplied over and over.
    They do have value in that they have utility as a currency which can easily and cheaply transfer wealth anywhere.
    They are very very far away from being in a bubble because a bubble requires that a large percent of population is involved.
    Millennials are electronically minded, when the stock mkt craters they will view cryptos as a store of wealth before they will turn to “old fashion” PMs.
    The dollar was fine so long as annual printing matched annual pm production, remember silver certificates.
    Cryptos could very well act as dollar did pre Nixon.

    • PS
      There are a few risks with cryptos:
      They won’t all be used long term, one or two will rise to the top and the rest will go away.
      They depend on the power grid, but hey if the grid is lost forever we are all doomed.
      If stored online, they could be lost or stolen, think hacker.

      Just like PMs are best in your hands, so go cryptos. One should download wallet on own computer, transfer cryptos from exchange wallet to your own then copy to disk or thumb drive.
      No different from PMs in personal possession or stock certificates in your filing cabinet.

  16. The dollar is a Keynesian debt creation which has worked out very well throughout it’s lifespan. The only problem with that plan is that it someday will arrive at “0” which it is rapidly approaching. Crypto currency has what to back it ?
    Physical gold and silver have EROI to back them. I don’t think that it will take anyone left of a rocket scientist very long to know what to do when the SHTF .

    • Except when the SHTF, there won’t be any physical gold or silver to buy.

      If you don’t get it before, you won’t benefit from it.

    • What does crypto currency have to “back it”? What is backing the USD, or any of the other hundreds of fiat currencies in existence today? Two things: CONfidence and government force. Currently most governments don’t need force because they are all playing the long con game. It has value because “we” say it has value; there is no other reason, except that you can pay your government debts with it. The belief exists that if I receive $100 today, I can buy $100 worth of goods and services next week with that same bill. How did that work out for India months ago? The war on cash is actually hurting the CON game. The more the bankers and governments try to strip away cash, the more they expose the con of fiat money. This is good for both PMs and crypto.
      The beauty of crypto is that the confidence of the system does not rely on a few people (who are easily corrupted) or a government (who can shield themselves from their own laws). The confidence is in the network, and math. And it can’t be shut down – it is decentralized. So unless you turn off the entire grid everywhere, you can’t stop bitcoin. And you can’t intimidate math either. There are tens of thousands of full bitcoin nodes running all over the globe, you can’t stop it. You purposefully don’t trust the people running bitcoin, you trust the blockchain which is immutable. In this way, you don’t need to CON people and say “trust us” we won’t inflate and destroy your currency, and there is nobody threatening force, and ordering you to use bitcoin either. It is the best possible open currency ever invented, and it doesn’t need to be forced on anyone; its own utility is what gives it value. Physical silver and gold actually have less utility as currencies, but they do have a long history as money. Hence, I own both. So unless you believe the grid will be down for an extended period of time, get some of both and you will have both historical money, and the money of the future.

  17. Which crypto will rule them all? I believe the cryptos are here for a while at least, but which ones will JP Morgan use for their illegal money flows into their dark pools? Which ones will your local coin store accept for payment? Which one will the drug kingpins use to launder their ill gotten gains? Bitcoin was first, but it’s still early in the game and another innovation could kill it quickly. If you follow Steve’s work then you know we have an energy problem. If the cost of energy goes up how many Bitcoin miners will continue functioning at a profit? Once the energy dynamics really start kicking in then the technology will simply die because cheap power is no longer available. Another bottle neck could be silver availablity. There is less above ground silver then gold. Bitcoin miners are computers that need silver as well as energy. Will the crypto miners get it? Where are they on the priority list when silver becomes so scarce that it’s allocation is controlled? That is the future I see coming.

    • MillenniumWright | May 17, 2017 at 9:49 am | Reply

      The most important thing about this whole revolution is that nobody rules.

      That is the POINT.

      It is not a unipolar heirarchical world anymore. There are options for everyone to find their own niche and serve their own purpose.

      MillenniumWright

      PS The energy problem is created by poor distribution of resources, which is the result of government intervention in free markets. Look up Steve’s historical chart of global oil production. 1979 should have marked the beginning of a massive transition away from dependence on petroleum but the guvmint “saved” us from moving forward.

      MillenniumWright

      • Yep..The last time the world witnessed a uni-polar world break apart was the fall of Rome which proceeded The Dark Ages. I’d say the Soviet Union break up was Uni-polar lite. I’m sure we will have lots of options, just not sure you understand the significance of what’s occurring and the impact on societies.

        P.S. The energy problem is caused by EROI. Gov’t intervention and poor resource allocation just exasperate the problem. The only thing left to see is how the death of cheap energy manifests itself upon a just in time delivery system, in midst of a failing empire. Should be…colorful.

        • MillenniumWright | May 23, 2017 at 8:10 pm | Reply

          The fall of Rome proceeded the Dark Ages? I wonder what it would be like if you read a history from the perspective of someone other than a subject of and believer in Empire. Take, for instance, the many small, peaceful, agrarian type societies around the world that were spared subjugation and forced assimilation in the Empire of Rome because Rome never quite reached them. Perhaps the dark ages were only dark because you learned about them from the vassals of a fallen and rotting Empire.

          MillenniumWright

    • Crypto is already overcoming this issue. Bitcoin is a Proof of Work coin that requires massive energy to mine. Some second generation coins have switched to Proof of Stake (PoS) to specifically combat this issue of wasted energy. I can “mine” (or stake) coins with a basic computer that I could run off a single solar panel if I wanted too. Nobody can beat me with more or faster mining power with PoS – it is merely dependent on the algorithms and the amount of coin that you already hold.

  18. Hi All,
    In my humble opionion “none of the above” are that great. If we look at human heirarcy of needs then [ air ] water & food would be the best stores of value & something everyone needs. [ not wants!- needs ] Unfortunetly food is perashable & water is heavy, & both are relatively bulky so neither work that great as a long term store of value unless even if you have a warehouse to store them. Thats why we have government I.O.U’s or currency.The characteristics of currency [money] are durability, portability, divisibility, uniformity, limited supply, and acceptability.So in my opionion they would be listed as most desirable first.
    1. Gold physical
    2. Silver physical
    3. Goldmoney – gold backed currency – internet based
    4. Currency – USD, Yuan, Swiss Franc, Euro, etc
    5. Bitcoin – internet based
    6. Ethereum – internet based
    7. Other cryptocurrencies
    The reason I would not get involved in crypto currencies is :-
    a. requires internet access
    b. remember the guy that lost his laptop with the “key”?
    c. what can I buy down the local shops with it ? I can’t.
    d. remember the 50 million ethereum “hack” ?
    Just my opionions . . .

    R.M
    United Kingdom

    • I like gold and silver too, as stores of value. Not easy to transact in gold and silver in a global world where a large percentage of commerce happens online and across national borders. You could do it, but it will take weeks and you need to have a high level of trust in your shipper. Good luck with that. The problem with GoldMoney (gold backed currency) is you have to TRUST some third party to not screw you over. Hint – that is how we got into this position in the first place, with gold receipts. And your #4 is government controlled currency? That goes against your durable and limited supply factors bigly!

      Your reasons against crypto are weak and here is why:
      a. Internet access is required for crypto, yes. But if you think we are going to have a prolonged global grid down situation then currency really isn’t a first concern. Land, bullets, beans, supplies, and a knowledge of growing food will be necessary and you can use these items as currency.
      b. Crypto is similar to cash. If you lose it, or throw it away, or burn it – it’s gone! Or you could take common sense precaution and store it on a KeepKey or Trezor in a safe just like you would your PMs. Or you could just memorize a 12 word passphrase too. It just takes a little education.
      c. This is an interesting objection. Crypto is so new that you have the opportunity to buy in cheap today. But you want to criticize it for not already having mass adoption so you can easily use it at any store you go to. If it were already mass adopted, we wouldn’t be having this debate, and it would be much more expensive relative to your USD or British pound. Also, what can you buy down at your local shops with your gold coins? Take advantage now BEFORE the mass adoption, which is coming. Crypto is at the “dial up” stage now of where the internet was. Give it a few years.
      d. Yes, hacks can occur. Remember Mt. Gox. That is why it is highly encouraged that you physically hold your own coin on your own wallet or cold storage device as I’ve already mentioned. If you leave your funds with a third party – be that a crypto exchange, or even a PM storage company – you risk a situation where you lose your asset.

      • “Land, bullets, beans, supplies, and a knowledge of growing food will be necessary and you can use these items as currency.”

        bullets are likely to be the dominant currency ….

    • “divisibility”

      to a point. if it’s divided to so small a portion that a human looking at it can’t determine if it’s real, then that’s the limit of divisibility.

      • About a 1/25th oz (Isle of Mann “little cat”, or Mexican “dos pesos” coin) requires a holder to not be lost. A tenth is dime-size (nice!) and a quarter-ounce is just right for handling. South Africa had the right idea in making Krugerrand a hard non-999-pure circulating coin. An ounce coin of gold is serious money for normal-worker spending, even in the suppressed system. Below 4 or 5 percent of an ounce gold, small purchases are better made in silver or local fiat/favors/barter.

  19. Steve (SRSROCCO),

    Your latest series of articles have been better than ever – and they were always good. I see you have some new responders with different and interesting thoughts . This is good.

    Mike

  20. I grab my little bit of gold and silver when I get a little spare cash.
    I think a lot of the crypto price ranges show that people are scared of what’s happening. I also think “wannacry” was a false flag to get people to stay away from them. There are just too many crazy things associated with this “hack”.
    My 2 cents. No change given.

  21. DisappearingCulture | May 18, 2017 at 7:49 am | Reply

    “Given the inability to manipulate its market via paper derivative instruments and short selling, this is the message that Bitcoin is signaling:

    Bitcoin is signaling a rush out of fiat currency into a wealth preservation mechanism.

    In the absence of the ability to manipulate the market, this is the same message that gold and silver would be sending to the world, only the scramble for gold and silver bullion in any form would be more frenzied and it would be widespread. There actually is a somewhat frenzied scramble for gold and silver in eastern hemisphere markets based on the premiums to melt being paid for refined products in places like India, China, Turkey and Viet Nam.
    http://investmentresearchdynamics.com/is-the-u-s-ponzi-scheme-about-to-end/

    • “Bitcoin is signaling a rush out of fiat currency into a wealth preservation mechanism.”

      crazy. like putting your “wealth” in one lifeboat while you yourself get into another ….

  22. Now hot air (Bitcoin) is more expensive that an ounce gold?
    If anyone believe humans are not crazy he should go directly to the doctor.

    • This comment completely misses the point. What if instead of measuring the bitcoin price in full bitcoins (of which 21 million will ever exist), we said each mBTC (millibit) is worth $1.93, and only 21 billion of these will ever exist? Would that make you feel better in relation to the USD price and the gold price? You are just anchored to seeing things in prices relative to USD so this is your comparison. A better comparison would be pricing bitcoin in relation to supply of overall gold or fiat dollars. If one conducts this experiment, you would see bitcoin is vastly underpriced relative to either item. If bitcoin gets anywhere near the mass adoption it ought to, a $2,000 USD price per bitcoin is supremely CHEAP.

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