Bitcoin’s Speculation (Short Term) Vs Big Picture (Real Growth) Cycle In The Cryptocurrency Space


Author Rafi Farber wrote an article where he talks about different aspects of virtual currencies, including speculation and the big picture related to cryptocurrencies.

He starts the article by explaining that he had a ‘very small amount’ of Bitcoin Cash (BCH) after being paid for the work he did. When it started to grow, he sold them and bought a car. Nonetheless, he wonders what would have happened if he would have waited until the bull run and sell at the top.

This story could be very similar to several individuals and investors in the cryptocurrency world in the last year. They bought at the beginning of 2017 and had the opportunity to sell at the top. But it is not so easy to decide when to sell and when to hold.

This shows that there is an important connection between speculative investments and virtual currencies. Several individuals bought and sold and do not care anymore about the space and how it evolves.

The author explains that the most important invention in the history of human economic activity has been money. And this is used since the era of the cavemen and worked during different periods of time. Money is used as a unit of account that individuals use in order to measure how much a product produces.

However, money is becoming poisoned with governments that have complete control over supply and value. This is something that totally harms how money should work and what it was created for. And indeed, the same would happen if the government would control food or other goods.

Before Bitcoin, it was impossible to verify monetary transactions without depending on a Central Bank that worked as a middleman. Now, Bitcoin is a new way of transacting money without having to depend on the authority of a central bank.

The author shows that there is an oligopoly in the financial and monetary industry. To show this, he says that the number of independent banks in the United States has reduced to half since 1971 when the US left the gold standard behind.

After this year, the number of independent banks moved from 13,000 to 6,000. At the same time, he shows that as the number of banks goes down, the fees imposed by these institutions go up. As per the World Bank, the remittance fees are currently close to 7.45% but banks are currently imposing fees of 11.2%.

He then compares these fees with Bitcoin Cash’s fees and the difference is surprising. He shows that an average transaction fee in Bitcoin Cash is $0.017 dollars, which is 0.0000819% compared to 11.2%. That means that the cost of sending money using a bank account is 100,000x the cost of sending funds using Bitcoins.

Once the gold standard ended, the fees started to grow faster than how real wages grew in the same period of time.

However, Farber says that there is another point that has increased money transfers, and these are capital controls in countries with monetary policies that went off the rails.

When countries print too much money they impose capital controls to avoid individuals take the money out of the country. Bitcoin and other cryptocurrencies allow users to control their funds and take the power out from financial institutions and governments. This is an example of what happened in Venezuela, Turkey and Argentina.

This is very important, it is not just speculative but it is about life and good quality of living. Governments are not able to control how citizens move their funds and how they use them.

Rafi Farber claims that he is a decentralization enthusiast. He expects it will succeed in the future and that it will grow and help individuals have a better life in the future.

He commented:

“So forget about your personal fortunes and how much money you’ll make in this speculative game, where the bottom may be or anything else other than the shared human effort to further trade, fairly and truly, which starts with fair and honest money, whether gold, Bitcoin or whatever the preferred medium may be.”

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