As Bitcoin continues to pump to $18,000 on it’s way to $20,000, $30,000, and probably even past $50,000, you are bound to come across articles that warn you to stay away from Bitcoin. The commentary will be endless about how Bitcoin is just speculation, that there is nothing to support such a crazy high price, and there is no way to value it. This is why I created my Bitcoin Primer Course. In 2017, as I was doing my own research and saw my investments increase, I wanted to know and understand all the different perspectives on Bitcoin. I wanted to know if this was for real or if it was just another tulip bubble or Ponzi scheme. On more occasions than I can count, I have fallen for the FUD (fear, uncertainty, and doubt). But now after 4 years of continual research, I no longer have to fall for it.
Instead of taking my word for it, here are two articles that highlight the common complaints and perspectives as to why you should avoid Bitcoin.
Please Stop Asking Me About Bitcoin by Jesse Felder
10 Reasons Bitcoin is a Terrible Investment by Sean Williams of Motley Fool
It’s really disappointing for me to see a post like this by Jesse Felder because I have been following his content since I started investing in gold in early 2016. His message has always seemed to resonate with me. If I had read this article 3 or 4 years ago, I probably would have fallen for it and missed out on huge gains.
As for Sean Williams from Motley Fool, well, it makes sense. He works for a firm where they publish stock recommendations. Motley Fool’s entire business model is around buying stocks and Bitcoin is seen as a competitor to their precious stocks. Plus, Bitcoin is a completely different asset class that has a completely different valuation model to stocks, so of course Bitcoin will be outside of their expertise.
In my Bitcoin Primer Course, I tackle every one of the issues outlined by Mr. Felder and Mr. Williams. For today, I’m only going to focus on the issue of scarcity. Both Mr. Felder and Mr. Williams claim Bitcoin isn’t scarce and that there’s not really only 21 Million Bitcoin in existence. I mean if this were true, I would completely abandon my Bitcoin thesis.
The reason Felder and Williams claim that Bitcoin isn’t limited to 21 Million coins is because Bitcoin is just code and can be copied. Felder states the fact that there have been multiple forks of Bitcoin and that if you add up all the forks of Bitcoin, there’s actually more Bitcoin created than all the money printed by the Fed. Here’s the reality, every time Bitcoin forks, they are indeed copying the code of Bitcoin, but in doing so they are creating their very own version of Bitcoin with different characteristics and rules. Examples include Litecoin, Bitcoin Cash, Bitcoin SV, Bitcoin Gold, etc. All of these spinoffs don’t make more of the real Bitcoin. All of these coins have market caps less than $5 Billion whereas Bitcoin’s is $325 Billion. People can copy Bitcoin all day long, but they aren’t making more of the real thing. It’s like worrying about counterfeit Dollar Bills.
As For Williams, he claims the developers can just make a change to the code (basically change the rules of the game) and make it so there’s no limit to the amount of Bitcoin. Again, if this were possible, I would get out of Bitcoin immediately. But he’s wrong. If a group of developers wanted to change Bitcoin in a significant way (like changing the amount of Bitcoin) there would be a division amongst the community. For those that wanted to change the rules, they could in fact ‘Fork’ (change) the code and start a modified version of Bitcoin that doesn’t limit it to 21 million. Then there would be the original Bitcoin that only has 21 million and then there’d be the new Bitcoin that doesn’t have a limit. The new Bitcoin would have to gather a network of supporters just like Bitcoin has for the last 10 years. You can find examples of these modifications in coins like Litecoin, Bitcoin Cash, and the others listed above. Any new coin is going to have go through the same vetting process that Bitcoin has gone through the last 10 years. Good luck getting any of them to surpass the validity of Bitcoin as it is already recognized as a store of value by countries, public companies, hedge funds, endowments, and merchants.
The moral of the story is there are only 21 Million Bitcoin. Don’t let uneducated financial experts convince you of something they don’t fundamentally understand. I say this coming from experience. I trusted a gold enthusiast, Peter Schiff, who hated on Bitcoin and made me prematurely sell some Bitcoin in 2017. He still claims Gold is superior to Bitcoin and will die on that claim. As for me, I’ve finally sold all my gold and put it in Bitcoin.
If you have questions about the other ridiculous claims against Bitcoin, please do your own research and if you want a guide, sign up for my course.
Weekly Price Analysis
We have seen Bitcoin skyrocket over the last month to over $18,000. Over the next 12 months, we are going to see a much higher price of Bitcoin, so of course it’s still a bargain in the long term. In the short term, I’m expecting a pull back to $13,000. In 2017 we saw multiple 30% retracements. I could be wrong, but even if Bitcoin runs up to $20,000, it will eventually pull back. I want to be adding to my position on pull backs instead of chasing it higher.
The next 2 weeks will come with a lot of uncertainty as the U.S. Dollar bottoms, the Stock Market looks to be rolling over and Covid Cases starting to escalate.
More importantly, enjoy Thanksgiving and time with family and friends!