In the first place, what is Bitcoin, and what are its pros and cons? I’d read and heard enough to be both intrigued and confused. So I sought some answers.
My thanks to Michael Snyder of The Economic Collapse Blog for putting me in touch with Robert Wenzel of EconomicPolicyJournal.com. And Robert kindly agreed to be my guest on DestinySurvival Radio for yesterday’s show.
Below I’ll try to summarize Robert’s viewpoints to the best of my ability. It doesn’t take much that’s related to economics to make my head spin. Any errors on my part are unintentional. It’s best if you listen to this week’s show and make up your own mind about what you hear.
Who is Robert Wenzel?
Robert Wenzel is editor and publisher of EconomicPolicyJournal.com, a daily internet commentary on economics and politics. He has received praise for the site from across the political spectrum from libertarian Ron Paul to former Treasury Secretary Robert Rubin.
Wenzel is known for his warning about the 2008 financial crisis and the “tear the building down” speech he gave at the New York Federal Reserve. He also delivered the 2013 Henry Hazlitt Memorial Lecture at the Austrian Economics Research Conference that took place at the Mises Institute.
What is Bitcoin Anyway?
What’s Bitcoin’s Appeal?
While he made some good points, I’m turned off by too much enthusiasm. Besides, Bitcoin is totally dependent on computers and a functioning Internet. What if there’s an EMP that wipes it all out?
What’s the Down Side?
Robert says transactions can be readily tracked, which takes away its alleged anonymity. You can hide transactions if you know how to jump through complex technological hoops. You and I are better off using paper currency or silver and gold if we want our transactions to be unseen.
Computer security issues come into the picture as well. In other words, you could pick up malware and viruses if you’re not very careful.
If you were to attempt to use Bitcoin to make a purchase from a retailer, you might think you could get around paying the fees credit cards charge. Robert says there are still middle men involved who make such Bitcoin transactions possible, and the government may come down on them. They’ve already closed down some Bitcoin exchanges, some of which were engaged in illegal drugs and the like.
Getting Bitcoins can be complex. It involves getting an online wallet. Of course, you want to be sure the exchange you’re dealing with is reputable. I’m not sure how one would check that out. It all sounds quite risky.
Bitcoin is still not accepted in most retail outlets. And some countries are wary. China doesn’t want to deal with it. It’s possible legislation may come along in the U.S. which regulates it further. What if they outlaw it altogether and call it money laundering?
There’s no patent on Bitcoin. It’s open source. In fact, Bitcoin is just one of many digitized alternate currencies. To me that adds to the confusion.
As if that weren’t enough, Bitcoin’s value fluctuates wildly, too, and it’s best left to speculators who can afford to play. Robert foresees a price collapse at some point in the future. As for the present, he contends some people are engaged in a “pump and dump” scheme.
As for the possibility of an EMP knocking out Bitcoin, Robert believes the day to day concerns with it are more pressing.
“Our Money” Vs. Theirs?
So what makes the dollar different from Bitcoin or other digitized currencies?
Robert explained there’s a progression which currency goes through before it’s deemed trustworthy and secure enough to be considered as money. Bitcoin hasn’t achieved that status.
As a result, you have to use an already established form of currency on either end of Bitcoin transactions. In other words, use dollars (if you’re in the U.S.) to acquire Bitcoin. When you make a purchase with Bitcoins, the seller has to convert them into the equivalent value in dollars.
With that in mind, why not just use a regular credit or debit card? That way there’s no question about value in dollars. Besides, what’s the advantage in using Bitcoin if transactions are as trackable as the plastic you already carry?
By this time, if you’re observant and a cynic, you might be wondering, isn’t Robert Wenzel ultimately standing up for the status quo? If you listen to our conversation, I think you’ll agree with me that he’s plenty concerned about things that aren’t right in our country, including the ongoing slide toward totalitarianism.
But if you’re interested in knowing more about it, I strongly recommend you hear my entire conversation with Robert Wenzel and come to your own conclusions. Listen to DestinySurvival Radio for January 2, 2014. (Right click to download.) Find his blog at www.EconomicPolicyJournal.com. You’ll need his perspective in what promises to be another bumpy year economically.
Get additional perspective on Bitcoin from Brandon Smith here.
Find more insights on Bitcoin here.