You Can’t Reign in the Virtual Wild West of Cryptos

The lesson from the internet is that anything that China bans, invest in.’

 Web 2.0 investor Fred Wilson

In the 2014 landmark court case of New York vs Bitcoin, Fred Wilson spoke these words in the hopes it would preserve the freedom and innovation of cryptocurrencies.

Listing off China-banned websites such as Facebook, Google, and Twitter, he argued that stifling crypto growth with too many rules would be a step backwards for the free market.

As of late, his advice is extremely relevant.

This month, the Chinese government decided to ban Initial Coin Offerings (ICOs). And there are rumours of China’s plans to shut down domestic bitcoin exchanges.

Why do they want to do this? The People’s Bank of China said it has fears about the legitimacy of ICOs. And of their potential for financial and economic disruption.

But really, what they fear is revolution. And they’re not the only ones.

Technological change is always at odds with morals and tradition. And when it comes to money, banks would never let go of the puppet strings without a fight.

But in many ways, their monopoly is waning. The face of how we transact has already changed.

In my lifetime, I have never held a cheque. And my dealings with cash are increasingly limited. The realm of digital finance is all I know.

Many people under the age of 30, have grown up in an electronic world. A world where news, goods, information and even identities are created and negotiated. Everything is fast and connected. More importantly, everything is public.

However, consider the ‘cypherpunk’ movement of the 90s. Its focus was the need for an anonymous system to empower individuals. This is important in a digital world controlled by a small number of media companies.

Eric Hughes, in his 1993 cypherpunk manifesto, stated:

We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak. To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free.’

This concept evolved with key figures like the elusive bitcoin creator Satoshi Nakamoto. He longed for a free marketplace with an honest currency to drive it.

Ironically, even Steve Jobs and Bill Gates were involved in the early days. They started as hackers with a vision of making information and tech hardware accessible to all.

It goes without saying that hackers and software creators know all about the weakness of banks. Which is why bitcoin and other decentralised blockchain cryptos are so appealing.

In short, money is an accounting system. And as cryptos remove the need for a third party who charge fees for transactions, it’s one of the most efficient systems there is.

China’s recent ban only confirms the snowballing effect of cryptos. It’s clear that they should be embraced rather than feared. Because they won’t disappear anytime soon.

For more on this crypto rebellion, and how you can take advantage of it, click here.

This week in Markets and Money

On Monday, Vern covered the importance of preparing for complex change in the global economy. He warned that our obsession with GDP growth could lead us to the same fate as China. That is, being over US$30 trillion in debt:

The exponential growth of the past 150 years has conditioned us to believe that this is normal. When in fact it’s not normal. In particular, the last 30 years or so of that growth has been decidedly abnormal.

Trying to keep up with this growth curve is why the world is in such a mess. We’ve created a monster that cannot be tamed without severe repercussions.

For the full story, click here.

On Tuesday, Jason shared a simple piece of advice. Resource stocks are soaring higher, and you should be taking note. In the last month, copper stocks have tripled. Nickel has doubled. And while investment banks aren’t profiting from this surge in commodities, you certainly can.

To find out how, click here.

Following on from this story, on Wednesday Jason noted that the US dollar’s unexpected decline in strength is great news for commodities. They are skyrocketing and set to go even higher. If the US Federal Reserve continues with their plans to hike interest rates as the dollar plummets, this can only be positive for commodity prices.

For the full story, click here.

On Thursday, Shae covered the currency on everyone’s mind: cryptos. She noted that there is a simple explanation for why bankers keep bashing bitcoin. They’re threatened. This is why JPMorgan’s top brass calling bitcoin fraudulent and stupid should encourage, rather than deter, you to invest.

For the full story, click here.

On Friday, Shae took the government to task over official unemployment figures. Unofficial figures paint a starkly different picture, suggesting that unemployment is over 10%.

That should put to bed the idea that interest rates could head higher in the near future. With both unemployment and underemployment likely higher than official figures suggest, there’s little room for the RBA to move on interest rates. And it’s why you should expect rates to stay lower for longer.

For more on this story, click here.

Markets and Money offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, Markets and Money delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors.

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