Day of the Cryptocurrency Is Here

An outlier since 2009, Bitcoin and other cryptocurrencies are now taking center stage
January 13, 2021 Updated: January 13, 2021

Commentary

The age of digital currency has arrived. Unfortunately, it’s less of a brave new world than it is an uncertain one, marked by political upheaval and economic excesses.

Anyone not living under a rock knows that the world today is very different—and far less stable—than it was even a year ago.

Of course, on the flip side, these times are also marked by transformative innovations. In fact, cryptocurrency and its blockchain technology are, without doubt, two of the most powerful technological innovations to come about since at least the invention of the internet.

Context of the Times

But understanding the context surrounding the current economic times in which we live is the key to understanding why Bitcoin is leading the cryptocurrency renaissance.

First, America’s pandemic economy is marked by our expanding reliance on meager government checks to millions of Americans amid layoffs, salary cuts, and failing small businesses. And yes, those payments have been insufficient, inefficient, and riven with fraud. What’s more, there was no controlling how people spent the money when they received it.

That’s why a digital dollar is imminent. In April 2020, when the first round of pandemic lockdowns was put in place, I wrote about the coming of the digital dollar: “Requiring the Federal Reserve member banks to establish digital dollar accounts or ‘digital wallets’ for every American would make it much easier and quicker for the relief funds to reach them.”

I also wrote, “But does that reason alone make it the worthwhile or even right thing to do?”

Of course, it doesn’t. The digital dollar is designed and intended to streamline delivery (pdf) and replace the existing paper currency system and the individual privacy and personal control that comes with it.

Why Bitcoin’s Value Is Skyrocketing

As of today, the digital dollar still hasn’t emerged. But with or without the digital dollar, the day of digital or cryptocurrency has certainly arrived.

How do we know this?

Simple; Bitcoin, the original cryptocurrency, has seen its value more than double in the past 30 days, from around $19,000 to almost $42,000 per coin (currently around $34,000).

Why would that be?

The reasons are as simple as they are compelling. For one, the current political crisis is causing people around the world to lose faith in the dollar. For another, the rapid escalation of debt is undermining faith in the dollar. More to the point, American leadership is losing credibility at home and around the world.

In short, the loss of faith in the established American system is expressed in people’s desire for alternative currencies. That’s completely understandable, but let’s focus on the debt question in this discussion.

Debt Destroying the Dollar and Raising Bitcoin

The reality is that most major currencies—and most conspicuously the U.S. dollar—are now saddled with unsustainable debt levels. This is due to either locking down economies or the repercussions of the lockdown in terms of falling market demand around the world.

A pandemic-crippled U.S. economy, trillions of dollars in new debt, and a very publicly divided political establishment, all damage the perception and desirability of the U.S. dollar.

“But wait,” you may wonder, “what value do Bitcoin and other cryptocurrencies bring to those who own it?”

After all, there’s neither a national economy nor precious metal backing Bitcoin or any other cryptocurrency. But none of those things matter for Bitcoin, because economies and precious metal prices can be—and are—manipulated by central banks.

Today, the most compelling answer for Bitcoin’s popularity and rise in price is that it, along with other cryptocurrencies, enjoys the status of not being a national currency. They’re much less subject to the manipulation, debt, and devaluation that attaches to all national currencies.

Does that mean cryptocurrencies can’t be over-valued, manipulated, or inflated? No, it doesn’t. But the risk of that is lower. In fact, even if—according to conventional thinking—Bitcoin may have reached bubble status, there’s a reasonable argument that it hasn’t.

That argument boils down to the fact that cryptos carry no debt and users can remain anonymous. Privacy and control are critically important to those who hold Bitcoin and other cryptocurrencies. In short, it’s what Bitcoin is not that is proving to be its most crucial advantage, and is what’s driving its skyrocketing price.

The Bitcoin Threat to Jealous Gods

Will Bitcoin and other cryptos such as Ethereum et al. continue to rise in value indefinitely?

Will they replace the dollar and other world currencies?

And will people be able to remain anonymous and hide their wealth in cryptocurrencies indefinitely?

The answer to all of these questions is “No.”

Again, the reason is simple. Global banks and national governments must have control over their currencies. The very name “cryptocurrency” means hidden currency, and hidden wealth threatens monetary institutions around the world. Allowing the masses to do as they choose with an untraceable currency is anathema to all governing authorities.

Banks and governments, to put it politely, are jealous gods.

That’s why, one way or another, Bitcoin and all other cryptocurrencies will eventually be either seized or otherwise co-opted into the global financial system, whether they want to be or not.

The day of cryptocurrencies is here; but sooner than later, that day will be over.

James R. Gorrie is the author of “The China Crisis” (Wiley, 2013) and writes on his blog, TheBananaRepublican.com. He is based in Southern California.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.