To the cryptocurrency punter – “good luck !”

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The word crypto comes from the Greek word kruptos meaning “hidden.” When used to describe cryptocurrency the term is somewhat inaccurate, because for something to be hidden it must first exist.

In many ways, cryptocurrencies, or as I prefer to call them “cyber-cryptos,” are similar to the legal tender fiat currency they claim to remedy, in that they only exist on a computer generated ledger. It matters little if it’s the US dollar or the AU dollar or the Yen, only a fraction of the “money” we are told is in circulation, actual exists in tangible paper or coin, therefore the majority of circulating fiat legal tender currency is non-existent, just like cyber-cryptos.

To be clear, the Bitcoin is a non-existent coin. You can’t put a Ethereum in your pocket, nor will you ever find a Factom in your leather wallet and you can’t save MaidSafe or Ripple in a jar, because these currencies don’t exist in the real world. They are not tangible and void of intrinsic value. They only exist in cyberspace and in your imagination, just like ledger fiat currency.

Crypto’s, and fiat currencies will come and go. Many have already. Not so with tangible gold and silver as currency. These have offered function and stability for 6,000 years. The difference is that these metals have intrinsic value. They existed before the birth of cyber-cryptos in the 80’s, served as “money” even before the birth of legal tender coinage (circa 600BCE), and will continue to exist and function well after the demise of the last standing cyber-crypto.

We have seen how legal tender currencies intermittently “vanish” due to computer malfunctions or power blackouts, and the same is the lot of all cyber-crypto currencies. No computer, no cyber- crypto. No electricity, no cyber-crypto. Tangible currency with intrinsic value? Well, they need no computer or electricity supply to sustain life.

So, as a currency and medium of exchange, with no intrinsic value or tangibility, in my book cyber- cryptos fail to impress, but as a speculative investment ? That’s a different story. So now our focus shifts to the real reason why a significant section of the public scramble for cryptos.

Bitcoin appears to be the better known cyber-crypto today, even though it wasn’t the first. At the time of writing this article, Bitcoin had experienced an incredible year to date growth in the price of its non-existent coin. It had gone from $1,020 on January 3 to $4,668 by September 3. That’s an increase of 450%. Pretty impressive ! But not as impressive as Ethereum, another cyber-crypto. On 3 January this year it traded at $8.36 and today (3 September 2017) it’s trading at $350.09. Thats an increase of 4,100% ! From what I can see the main attraction for buying a crypto is the hope that it’s the “get rich quick” savior many have been waiting for, in the same vein as the frenzied buying of the tech bubble stocks, pyramid schemes and the ever recurring Ponzi investments.

In defense of Bitcoin, their promoters hold the view that with a published cap on production of 21 million Bitcoins, they are one better than fiat currencies as they have solved the “just print more money” inflation dilemma. In theory this would be correct if Bitcoin was the only issuer of a cyber- crypto, but they are not. There are over 1000 cyber-cryptos on the market today. Thats over 5 times more alternative cyber-crypto’s in the marketplace than all the independent legal tender currencies in the world !

When a crypto collapses and vanishes into the cyberspace abyss, it leaves no trace. Well, that’s not quite true. You can always find the misery stories, because when the value of the cyber-crypto goes to 0%, holders of the crypto not only loose any money they spent buying their preferred non- existent crypto, but because cryptos possess no intrinsic value, the accumulated “capital growth” they thought was their asset, also vanishes. Everyone knows before they get involved in their favorite crypto that the “currency” is non-existent, yet they “cash up and step up” to take their share of the invisible vapor. It’s a bit silly when you think about it.

With so many new cyber-crypto’s on the market and no doubt 1,000’s more to come, from a speculative investment point of view, people can only hope that they are backing the right horse in the crypto race because when the race is over, for many, there won’t be a horse in their stable, or even a stable, or a jockey, nor a pile on manure for the garden. Just a bookie with the latest cyber- crypto looking for fresh punters wanting to switch their cyber-crypto fiat currency into one of the latest hidden alternatives.

But going back to the precious metals comparison, we know how much gold and silver exists above the ground worldwide today and at what ppm it’s found in the earths crust. Nothing hidden there, so unless we discover that Mars has huge gold reserves or that Atlantis has been found beneath the Mediterranean Sea and is made of solid silver, there will not be any radical shifts in global bullion volume. Neither can we expect to see 1,000 “inventors” making new test tube gold in a lab to flood the market like we are seeing with cryptos; just the same old mining of tangible metal that has taken place for millennia.

In 1931 when Australia stopped producing its gold Sovereign, the tangible coin didn’t vanish. That’s because it was minted from the intrinsic asset of gold. It just gained in value. A Sovereign back then was valued at One Pound Sterling, that’s AUD2.00. Today the gold in that Sovereign1 is worth AUD3912. That’s 19,500% growth (so far) since the Australian Sovereign mint project “closed its doors”.

So, if you hold a crypto, and are now reconsidering your position, maybe you could go out and buy an American Silver Dollar coin3 with your Cyberbucks4 issued by DigiCash5… Oh thats right,that cyber-crypto closed its doors in 1998, 10 years before Bitcoin opened theirs, and the silver content in the American Silver Dollar is now worth over 1,300%6 more today (and growing) than the US dollar it represented when it was minted.

As a speculative investment, crypto’s are up there with the best of them, but in the current economy and with the political, military and social uncertainties on the world stage, I’m not convinced that now is the time for anything but asset protection and prudent investment strategy.

Graham Daniels
September 3, 2017
graham@danel.ch
www.danel.ch

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1 a Sovereign has 7.3224 grams of gold

2 Gold price USD1,324.40 – Friday 1st September 2017 – currency exchange rates as at 3 September 2017

3 The American Silver Dollar which was first minted in 1878 contains 24 grams silver. The 1986 Silver Dollar (American Eagle) contains 31.101 grams of silver, which means the silver content is worth 1700% more today than the US dollar it represented when it was minted.

4 “Cyberbucks” were the crypto currency units of DigiCash in 1994

5 DigiCash born in 1990 – collapsed in 1998

6 Silver price USD17.69 – Friday 1st September 2017