Bitcoin + Precious Metals = How To of An Alternative Financial System
With silver rangebound, stuck below $28 for quite some time, the Silver Liberation Army must be growing anxious, waiting for their young and enthusiastic demand to be joined by rising prices. As we saw before, when silver ran to $49.80, this price rise will be joined by considerable mainstream interests and then increased demand. Granted, the retail demand will not dry up the physical market. But, paranoid industrial demand – scared that this price run could dry up the supply – will create the feedback loop needed to spell week, if not month, long waits for silver products in the future. But, we’re not quite there yet.
In the meantime, though, as the precious metals continue to consolidate, so should the movement take this time to consolidate itself, and take a look back at how far it has come. Whereas just three years ago gold, silver, platinum and palladium were the only potential candidates for people who wanted to exit the Dallah System, we now have new and exciting options to streamline the process towards an alternative financial system.
One main problem for the SLA when it comes to transacting in silver is payment. Let’s say one wanted a pair of alpalca socks. It would be a pain to send silver through the mail for the socks. That’s why silver, gold, platinum and palladium are not the best medium of exchange for long-distance transactions. These are obviously important any viable global economy. That’s where bitcoin comes into play. Precious metals are for saving, bitcoin is for transacting…especially over long distances.
The bitcoin platform is decentralized, encrypted and open-sourced. That it is open-sourced is already more than we can say about the global financial system and the Federal Reserve System, shrouded in secrecy as they are. The way bitcoin works is straight forward, as well. As Trace Mayer of How to Vanish has put it: “Just like you can make telephone calls with Skype, you can send value to people with bitcoins.”
What is also nice about bitcoin is one does not need setup an account with any institution, in the process surrendering all sorts of personal information. The bitcoin value? It is based on market demand. So, whereas today hundreds of thousands of people and millions of dollars are active on the bitcoin market, what if in the future the open-source technology has grown like other p2p softwards, such as bittorrent or Skype? What if the bitcoin market cap approaches that of Skype’s, ten years after the advent of that p2p communication technology? If this were to happen, that would mean a market cap for bitcoin of around $8.5b. That’s$540 per bitcoin.
The network is secure. As Trace has pointed out, the Dept. of Energy just bought a $1.2b supercomputer. This supercomputer has just 10% of the processing power of all the servers running the bitcoin network. That would therefore make it very, very expensive to crash the bitcoin server.