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Bitcoin Bubble: Is Bitcoin Going To $1 Million Or Is it Going To Zero?

The price of Bitcoin continues to rise at an exponential rate, and the financial world is in a complete state of shock.  Just yesterday, I marveled that the price of Bitcoin had surged past the $13,000 mark for the first time ever, but then on Thursday it actually was selling for more than $19,000 at one point.  As I write this, Bitcoin is sitting at $16,877.42, but a few hours from now it could be a couple of thousand dollars higher or lower than that.  Those that got in early on “the Bitcoin revolution” have made extraordinary amounts of money, and many believe that this is just the beginning.

Of course many of the most respected names in the financial world were convinced that this would never happen.  For example, back in 2014 Warren Buffett encouraged investors to “stay away” because he believed that Bitcoin was a “mirage”.  And not too long ago JPMorgan Chase CEO Jamie Dimon said that “if you’re stupid enough to buy it, you’ll pay the price for it one day”.

But for now, it is Bitcoin investors that are having the last laugh.  If you would have gotten into Bitcoin back at the beginning of this year, your investment would be worth 16 times as much today.  The following comes from CNN

Bitcoin cracked $1,000 on the first day of 2017. By this week, it was up to $12,000, and then it really took off: The price topped $16,000 on some exchanges Thursday, and $18,000 on at least one. Other cryptocurrencies have seen similar spikes, though they trade for much less than bitcoin.

There’s a long list of factors people may point to in an attempt to explain this. Regulators have taken a hands-off approach to bitcoin in certain markets. Dozens of new hedge funds have launched this year to trade cryptocurrencies like bitcoin. The Nasdaq and Chicago Mercantile Exchange plan to let investors trade bitcoin futures, which may attract more professional investors.

At this point, Bitcoin has a market cap of approximately 280 billion dollars, and that means that if it was a stock it would “rank among the 20 largest stocks in the S&P 500“.

To put this another way, Bitcoin’s market cap is now greater than the GDP of the entire nation of Greece.

Earlier today, Zero Hedge posted a chart that showed how meteoric Bitcoin’s rise has been…

  • $0000 – $1000: 1789 days
  • $1000- $2000: 1271 days
  • $2000- $3000: 23 days
  • $3000- $4000: 62 days
  • $4000- $5000: 61 days
  • $5000- $6000: 8 days
  • $6000- $7000: 13 days
  • $7000- $8000: 14 days
  • $8000- $9000: 9 days
  • $9000-$10000: 2 days
  • $10000-$11000: 1 day
  • $11000-$12000: 6 days
  • $12000-$13000: 17 hours
  • $13000-$14000: 4 hours
  • $14000-$15000: 10 hours
  • $15000-$16000: 5 hours
  • $16000-$17000: 2 hours
  • $17000-$18000: 10 minutes
  • $18000-$19000: 3 minutes

So where is Bitcoin headed next?

Whenever we see anything go up this fast, it is inevitable that there will be a pullback, and that is precisely what we are witnessing at the moment.  After soaring past the $19,000 mark, Bitcoin dropped back to under $17,000.  But this pullback could just be temporary, and there are some that are absolutely convinced that Bitcoin will blow well past the $20,000 mark by the end of December.

In the long-term, experts such as John McAfee and James Altucher believe that the price of Bitcoin will reach one million dollars.  But there are others that believe that Bitcoin is one of the biggest financial bubbles in history and that it will eventually end in an absolutely horrible crash.

So who is correct?

Well, it is entirely possible that both sides are correct.

Bitcoin could theoretically continue to skyrocket for the next few years if the economy remains somewhat stable.  And it is also true that given a long enough time frame, virtually every financial investment goes to zero.

Just like every other financial investment, the key is to get in at the right time and to get out at the right time.

For now, Bitcoin has sparked a worldwide craze that is absolutely unprecedented.  The following comes from the Washington Post

Such warnings have not stopped the craze surrounding the currency as the sharp rise in value creates ever more demand. In South Korea, people are pouring their life savings into bitcoin and other digital currencies. In Venezuela, after observing the rise of bitcoin, the government announced it would launch its own virtual currency called the “Petro” to get around U.S. sanctions.

And of course Bitcoin has spawned a whole host of competitors.  At this point there are more than 1,000 virtual currencies in existence, and that number is constantly growing.

To me, this whole phenomenon is absolutely amazing.  Bitcoin and other cryptocurrencies are digital creations, and they don’t have any real intrinsic value.

But something doesn’t have to have intrinsic value in order to be extremely expensive.  For example, a single painting by Pablo Picasso once sold for more than 100 million dollars.  You and I may consider it to be just a silly painting, but because there are people out there that are willing to pay more than 100 million dollars for it, that is how much it is worth.

The same thing is true with cryptocurrencies.  At this moment there are people willing to pay more than $16,000 for a single Bitcoin, and therefore that is what it is selling for.

Someday if this craze fades or global governments really start cracking down on cryptocurrencies, things could change very, very rapidly.  So anyone that is considering investing should be aware of the risks.

But for the moment Bitcoin is on a wild ride, and it has been fun to watch.  And since Bitcoin and other cryptocurrencies are not controlled by the authorities, it is easy to root for them to be successful.

However, now that they are getting so much attention it is inevitable that the heavy hand of government will come down hard at some point.  In the end, government usually ends up ruining just about everything, and I have a feeling that cryptocurrencies will be no exception.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

In January 2017 Bitcoin Was Selling For $1,000, And Now It Is Selling For $13,000

I have never seen anything quite like this in my entire life.  As 2017 began, Bitcoin was selling for about $1,000, and many were optimistic about what the new year would bring.  But nobody could have imagined this.  When Bitcoin hit $5,000 in October, it made headlines all over the world, but it has continued to rise at an exponential rate since then.  My friend Joseph told me that Bitcoin would hit $10,000 “by December”, and it actually happened.  This week, the euphoria has hit an entirely new level, and as I write this article the price of Bitcoin is sitting at an eye-popping $13,899.50.

The price of Bitcoin is going up so fast that it is difficult to keep up with it.  Just check out this chart.  Bitcoin hit $12,000 on Tuesday night, and it could very well be above $14,000 by the time this article gets to you.  The following is how CNBC summarized the price movements that we have been witnessing over the past few days…

Bitcoin climbed above $13,000 Wednesday afternoon after topping $12,000 Tuesday night.

The volatile digital currency leaped 11 percent to hit a record high of $13,017.96 and was last trading near $13,000, according to CoinDesk. Bitcoin topped $12,000 Tuesday night in a rapid recovery from a 20 percent drop last week.

I have been writing a lot about Bitcoin lately, and I will probably be writing about it a lot more in the months ahead.  We are in uncharted territory, and the financial community is having a difficult time coming to terms with what is happening.  In all my years, I have never seen this sort of exponential growth over an extended period of time…

Just in the year 2017, Bitcoin, in particular, has seen unprecedented increases in value relative to the U.S. dollar. On January 1, 2017, the price of Bitcoin had just topped $1,000 per coin. Fast-forward to December 1, 2017, and the price of Bitcoin blew right on past $10,000 per coin.

So how high could Bitcoin ultimately go?

At this point it seems like the euphoria will never end, and some analysts are predicting a price of 1 million dollars by the year 2020.  Books with titles such as “Mastering Bitcoin For Dummies” are starting to pop up all over the place, and there is no shortage of people that are willing to teach the finer points of trading Bitcoin (for a fee of course).

But there are trouble signs on the horizon as well.

For example, on Wednesday we learned that “the largest crypto-mining marketplace” in the entire world has been hacked

As Bitcoin explodes higher on what now appears to be constant demand out of South Korea, there were unconfirmed (at least until recently) reports that Nice Hash, the largest crypto-mining marketplace, has been hacked with over 4,000 bitcoins worth over $50 million stolen.

50 million dollars is a lot of money.  If Bitcoins can be stolen this easily, will investors really feel safe having so much money tied up in cryptocurrencies?

This hack is one of the biggest news stories in the world right now, and NiceHash has put out a lengthy statement about this incident.  The following is an excerpt from that statement

Unfortunately, there has been a security breach involving NiceHash website. We are currently investigating the nature of the incident and, as a result, we are stopping all operations for the next 24 hours.

Importantly, our payment system was compromised and the contents of the NiceHash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken.

Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency.

The future of Bitcoin remains unclear at this point, but many of us that missed out on investing in the early stages are deeply regretting it.

Only time will tell if Bitcoin continues to soar or if it comes crashing back to Earth, but without a doubt this is one of the biggest financial stories that we have seen in a very long time.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

‘The Currency Of The Apocalypse’? Doomsday Preppers Flock To Bitcoin As It Surges Past $8000

Once upon a time preppers would hoard gold and silver in anticipation of the meltdown of society, but now Bitcoin is becoming the alternative currency of choice for many in the prepping community.  On Monday, Bitcoin hit an all-time record high as it surged past $8,200, and it has now gone up nearly 50 percent in just the last eight days.  As I have admitted previously, one of my great regrets is not investing in Bitcoin when it first started, because we have never seen a meteoric rise quite like this.  Bitcoin hit the $5,000 mark for the very first time just over a month ago, it is up more than 700 percent so far this year, and it is up almost 40,000 percent over the past five years.  At this point Bitcoin has a market cap of over 130 billion dollars, and many believe that this is just the beginning.

At one time many preppers were quite skeptical of cryptocurrencies such as Bitcoin, but now that is starting to change in a major way.  The following comes from a Bloomberg article entitled “These Doomsday Preppers Are Starting to Switch From Gold to Bitcoin”

“Not too long ago, people in the prepper community were actively warning against crypto, and now they’re all investing in it,” said Tom Martin, a truck driver from Washington who runs a social-media website for people interested in learning skills to survive disaster. “As long as the grid stays up, people will keep using bitcoin.”

In addition to gold, silver and stocks, Martin invests in bitcoin and peers litecoin and steem because they’re easier to travel with, harder to steal and offer better protection in the event of the kind of societal breakdown that would unfold if a fiat currency like the dollar collapsed.

He’s among those confident that bitcoin can withstand even a complete blackout through the strength of the underlying blockchain, the anonymous public bookkeeping technology that records every single bitcoin transaction.

At the end of the day, cryptocurrencies only have value because people believe that they have value.  If the global financial system completely collapses, will there still be demand for Bitcoin and other cryptocurrencies?  And will they be accepted for food, medicine and other basic emergency supplies when everything falls apart?

These are legitimate questions for preppers to consider, because cryptocurrencies do not actually have any intrinsic value.  At the end of the day these cryptocurrencies only exist in cyberspace, and some of the biggest names in the financial world continue to be skeptics

J.P. Morgan CEO Jamie Dimon thinks bitcoin is a “fraud.” Investor Mark Cuban called it “a bubble.” Goldman Sachs CEO Lloyd Blankfein is still undecided. But whether or not executives believe in the potential of bitcoin, ethereum or blockchain technology, they and their companies can’t avoid talking about cryptocurrencies.

And there is a very real possibility that the marketplace could soon become absolutely saturated with “cryptocurrencies”.  At this point it seems like a new crytpocurrency is being started on almost a daily basis.  Here is more from CNN

Dragonchain, a crytpocurrency startup originally backed by Disney (DIS), has held an ICO. Filecoin, a cloud storage company, raised more than $250 million earlier this year from an ICO — the biggest ever.

And online retailer Overstock (OSTK) is even planning an ICO for its tZero blockhain unit.

“In an effort to bypass the rules and costs associated with getting listed on an exchange, many startups now are opting to raise funds by issuing their own digital currency based on blockchain technology,” Holmes wrote.

For now, we will probably continue to see wild up and down swings in the price of Bitcoin.  Those that were able to buy low and are able to sell high will make an extraordinary amount of money, but those that hold on to the bitter end may ultimately lose everything.

As is the case with so many things in life, timing is everything.

And for all of the preppers that are getting into Bitcoin, even Bloomberg is skeptical that the cryptocurrency will be of much use in an apocalyptic situation…

Still, it’s hard to envision people walking around spending digital coins to buy Spam, canned beans or bottled water at a local supermarket when they don’t have electricity at home to charge their smart phones, let alone a working internet connection to access their digital wallets.

Of course up to this point those with the last laugh have been those that invested in Bitcoin despite what the skeptics were saying.

Countless numbers of “Bitcoin millionaires” have already been created, and many believe that this is just the start of the cryptocurrency revolution.

But will this revolution end up resulting in heartbreak for those that don’t get out before the bubble bursts?

Only time will tell…

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

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