Possible Bitcoin Death Nell Scenarios
Government Ban – No government ban of Bitcoin could happen at this time. It should have been tried in 2014 when Mt Gox failed. Bitcoin has too much adoption now. Ban Bitcoin in 2020 and it goes to the moon very quickly. You might have to cash out to a drug dealer or something - but currency black markets in India, Israel, Argentina, Venezuela, Lebanon, Iran are well documented. Banning Bitcoin now would bring about the exact opposite result versus the intended.
Government Issued Crypto – They have to compete on a level playing field. Currency issuance has been usurped, without a shot fired. They might persuade the masses to use it. The markets are a whole other animal and as much as they wriggle and squirm and give speeches and try to pass legislation. Free market will win. Fed Coin, you give a green light for Bitcoin to go to $1M as the gold standard. This would bring about a death nell to the Fed Coin. Demand would leak to Bitcoin. Bitcoin has a known supply quantity. Miner rewards are halved every 4 years and supply is constant on a daily basis and tracked down to one Bitcoin. It will not ever be printed to exponentially increase money supply as fiat currency is. There is no comparison to which would be better for the people in a free market comparing Bitcoin to Fed coin.
Alt Coins – There may be some interesting propositions. Only one crypto is required to surpass the gold standard. We would not need a Neutral coin for every different part of the economy. There is a good reason why everyone loves the USD, it makes life easy. There's a good reason why we use gold, not all the rare earth metals. Tried storing plutonium? Can you go to your local gold shop where you can sell any scrap or bullion for cash and sell your bars of Rhodium, Palladium, Lanthanum?
Smart Contracts – We've been buying and selling commodities, real estate, commercial goods for hundreds of years without automated smart contracts. We believe smart contracts on the Blockchain will be around for a while. Ethereum can co-exist with Bitcoin. For that reason, Neutral ATM is not Bitcoin maximalist. Many things will get tokenized in the future. However, that does not make them a currency. Digital Art, Digital payment systems on the lightening network, and tokens to monetize transactions on the Blockchain like smart contracts. However, those transactions are separate from Bitcoin. You can tokenize transactions which can be done more efficiently on the Blockchain or Lightening network, but those tokens don’t have what Bitcoin has. Proven scarcity, and verifiable supply, provable at any time, with programmatic supply halving’s every 4 years. Ethereum and Bitcoin attempt different things. They are independent of each other. Smart contracts will not interfere with Bitcoin’s store of value proposition!
Some defi (decentralized finance) tokens do have a conflict of interest having the currency issued by the service provider. It won't work in the long run. Imagine if VISA started issuing their own currency. Therefore, many less known defi tokens will cease to exist. It would be nice if there was a genuine defi automated system, but it will always have bugs. Thus, what we're talking about here is two different things. One is monetary value and issuance, while the other is financial functionality.
Once you have the gold standard coin, you can over lay it will all the smart contacts, intermediary services, but NONE of them should be issuing currency themselves. Smart contracts can smooth the process and make it really cheap and fast. Buying land or a house will be done online in 5 minutes with a smart contract and blockchain is updated, etc. Sorry to all the millennials reinventing the wheel, but some defi coins should not be touched with a 10ft pole. Ethereum, XRP, Monero, Rune, YFI and a few others will likely stand the test of time.
Whales - Why didn't Jeff Bezos dump all his stock and buy a huge island and live in peace and harmony? Because he enjoys the game, same holds true for the whales in anything. Why doesn't Elon Musk cash out? Because he wants to be in the game and do something productive, it’s not even about power. He needs the creativity as many entrepreneurs do.
Yes, the whales can have influence and certainly in the coins they can dump and exit They can and will cause volatility, but will they cause the end of it? As they sell, they lose their controlling stake. It's no difference to land ownership 1000 years ago it was all Lords and Kings, now that % is far smaller. Slowly over time the Lords had to or decided to cash out. Someone dies, someone goes broke and that 5% holding becomes 100 x 0.05% holdings and there goes your whale.
NSA - there is some considerable evidence that bitcoin came out of an NSA project. If they have a backdoor and tank it to zero when the moment comes, that could herd everyone into the Fed Coin. There are those, just like there were with the internet, that are ready to decentralize it and put it out of Government hands. Quality and human ingenuity, over Government heavy handedness.
The chart below illustrates the points I made last week about Bitcoin being a Honey Badger. It does not die easily and despite the headwinds against it, it does grow steadily as 2020 represents. The charts in the short term show a convergence and Bollinger bands tightening. This month-long consolidation Bitcoin has been in appears ready to break out late this week or sometime by mid next week. I struggle predicting time frames and to Neutral ATM they don’t matter much with our long-term view. Bitcoin trading close to $10,000 may come to an end of the time being whenever this break out does occur. Let Neutral ATM help you get off zero Bitcoin.
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