inflation

Does Bitcoin provide any stability?

| roger nunn

There have been many new crypto currencies since the gradual acceptance of bitcoin started.

Much of the criticism of bitcoin is linked to its speed of operation, its wild fluctuations and its massive use of energy.

There are many (very many) pretenders to the Bitcoin throne, literally thousands of crypto tokens, currencies, etc.

As far as I can see, Bitcoin is the only crypto asset that doesn’t have any inflation. All the others are designed so that the administrators can get rich on the backs of hopeful investors.

So, while all the criticisms above can reasonably be levelled at Bitcoin, it is the only one that has survived multiple government attacks.

Of course Bitcoin is volatile and people lose money by FOMOing and then selling on the dips, but that will settle down one day.

Spreading the word on crypto

| roger nunn

Yesterday I made a short presentation to family members to explain what crypto is all about.

I have been interested in bitcoin since around 2015 and spent many hours reading and watching videos before starting to trade it myself.

I went through the 2017 boom and the drop that followed, all the while learning about it and watching new developments.

Now I am even more convinced as to its long term viability, especially as I believe that the decentralised consensus is an excellent way of linking the power of spending to real democracy.

However, finding a way to present this view of the future without appearing to be a fanatic proved to be very difficult.

I ended up by talking about the reason for bitcoin’s development and the benefits it can bring wherever value needs to be maintained or transferred.

I am working on totally non technical presentation that gives a newcomer an idea of What and Why, followed by How.

How to keep my money safe

| roger nunn

We all want, I think, to keep our money safe. After all, what’s the point of going to work and finding that the money you have been working for is not worth what it was. Even if you keep your money safe from theft or loss, there is a nasty and constant drain on your value.

Inflation.

Inflation is so much part of our financial world that it seems to be inevitable and we just get used to the idea that our hard-earned money is worth a bit less this year than last. This loss of value is what happens in good times, it is so insidious that most of us just put up with it.

I read an interesting comparison where it seems that in Roman times, I full suit of clothes for a soldier cost around 1oz of Gold. As far as I can see, it is still the case. This shows that inflation is only the result of the usefulness of inflation to decision makers. I am not going to write about how central banks work, it tends to be technical and doesn’t really add to the point I am making.

In the current climate of zero interest rates for savers and massive “quantitative easing” I can not see any easy way to avoid the likely inflation that is on the horizon. Gold is a store of wealth but it has quite high storage costs.

I believe that this uncertainty is the reason for the current increase in interest in buying Bitcoin. No one, at least so far, is able to take it away from you. When you link this to the big profits that can be made in trading in “ALT coins”, it is not surprising that so many people are getting into crypto.

Bitcoin is designed to be immune to inflation. Let’s hope it stays that way.

The internet begat Bitcoin

| roger nunn

The power of Bitcoin comes from belief in its value which stems from its immunity from inflation, its immunity from government interference, its inherent rarity and its ease of transfer around the world.

When I say Bitcoin I include some other parts of the Blockchain that share its inherent stability whose parts are listed above.

Bitcoin’s transactions are registered and verified by computer calculations, thousands and thousands of them all across the world. There are groups of computers that work together, called mining pools, that have a lot of the required computing power (hash rate) to complete verification. As these mining pools are located in different countries, they are not easily susceptible to being corrupted or controlled.

In recent years some countries have banned Bitcoin and there have been many attempts to regulate its activities. Attempts to monitor the use of Bitcoin are ongoing and are usually accompanied by comments that Bitcoin is used for crime or tax evasion. These can only be excuses, as a lot of crime relies on cash, something that is far less traceable than Bitcoin.

The real power of Bitcoin relies on the internet and the ability to transfer data around the world constantly. There are many cases where access to the internet from within a country is controlled by government. Control of this kind unfortunately stifles trade and certainly has not had a negative effect on Bitcoin.

The internet is constantly evolving with a steadily increasing proportion of the population having access to it. As the development of commerce, international trade and development relies on the internet it is unlikely to disappear soon.

I am especially interested in the effect of Bitcoin on countries with high inflation and the unabnked population, something I will talk about another time.