Morgan Stanley…bitcoin…a poster child for speculation


blockchain_illustration
Wikimedia

It’s fashionable, right now, to bash Fintech — especially bitcoin. So get your blockchains while they are hot!

This is the latest on the banking/investment front. When bitcoin (BTC) loses value, the traditional financiers let it be known that it just will not work and, in all honesty, they might be right — in the long term. But so too will the US dollar devalue — probably sooner than we think — unless a rabbit is pulled from the proverbial hat, in the short term.

Bitcoin may be the reigning prima donna of the crypto market but Morgan Stanley is not impressed.

Source: Morgan Stanley thinks bitcoin is nothing more than a poster child for speculation – MarketWatch

In a nutshell, the Marketwatch article, by Reporter Sue Chang, at first tells us that bitcoin has soared by over 250% in the last year. “Great!” we say, but then she drops the bomb. She cites Morgan Stanley’s analysts and James Faucette in particular. Bitcoin is on a wild ride and it’s probably not a legitimate currency we learn. I guess that all depends upon how one defines legitimate, because nearly anything can be a currency — or as I have indicated in the past — “functional money.”

On the other hand and we need to face the music. There is, according to Faucette, virtually no merchant acceptance. Again, virtually is another one of those weasel words. And we are so surprised. Aren’t you surprised, dear reader?

Sure, I can’t buy a gallon of milk at the corner store with my BTC, but I can buy a TV or a chair or even bike, on Overstock.com. Microsoft, Virgin Galactic, Steam are other well known vendors and the list goes on. So are we really losing vendors? Yeah, probably. Okay then, why?

According to the article, bitcoin does not appeal to retailers — and that is one reason it is not so good. Let’s examine that objection. Why does bitcoin appeal to the country of Japan say, but not the local supermarket in New York City? Is it because we, as a nation are less technologically advanced? Probably not. Is it because the regulations in the United States, the tax laws, the trading laws, the money laundering laws — you name it. The short answer? It certainly puts the kibosh on the whole thing, does it not? Only the big players, such as Coinbase or Subway Sandwiches, with a bevy of lawyers and tax accounts, seem brave enough to wander into that quagmire. On the other hand, the small players and the hidden ones (not all criminals by the way) can also wade into that pond.

Hoarding was another objection. Sure, bitcoin has appreciated. People are holding it, but there is still a lot of BTC available. One can’t simply worry that there will only ever be approximately 21 million BTC’s in circulation. It would be like saying, if we put cash under our mattresses, hoarded large denomination fiat bills, we would somehow make it less usable. The thing is, there’s plenty of cash out there. Too much actually. In a manner, hoarding can serve to increase and stabilize bitcoin values.

The objection to bitcoin’s accelerating costs and slowing transactions time is a legitimate concern, however. We will know, probably within the next 30 to 60 days, if bitcoin will adopt new perimeters allowing for faster confirmations, but the applications — the coding — is still being hashed-out. And there are associated centralization of power risks as well. Only a few developers control the code, but don’t forget, anyone can copy (clone)  the code and “improve” it.

Surprisingly, the apparent objection that bitcoin’s own skyrocketing — I would say its volatility — worth, is somehow a minus, is ludicrous. Speculators are certainly present, but as I have submitted, the fact that regulators stand in bitcoin’s way, is the primary culprit. The Great American Regulatory Wall, against mass adoption — that it the goblin.

Government oversight is needed, they say. And that, my friends, is the big snow-job. It is not required at all. The real reason bitcoin cannot, in this environment, ever be allowed to function unhindered is that it threatens the dollar. It threatens all fiat currencies in existence. That is plain. When a digital currency, not printed into oblivion does that, no debt-based economy can abide it. Even Japan, mired in its eternal economic crises, probably hopes that cryptocurrencies can save their century.

Is bitcoin funny money? That’s another implied objection and it’s an ignorant one at best. If so, then the dollar is funny money. A reserve note that represents a slowly failing — bankrupt system. Most intelligent people know this already. We just have little choice. We are required, by law, to use this debt based system. Is it moral to force people to use a monetary system that has no real value? Even less of a perceived value than bitcoin? That’s a no brainer, right?

Morgan Stanley is the sixth largest bank in the United States. Banks take our fiat dollar deposits and create more fiat dollars — out of thin air. Now I’m not against honest banking services, where money is real — like gold and silver — and where fractional reserves are quaint memories, but to attempt stay the high road in a FED-made swamp? What magic is this? Answer? The emperor is naked.

And finally, we the people also know, us speculators and hoarders alike, that bitcoin could fail. The blockchain tech might fork. China might continue to build BTC mining farms and essentially own the network.  But, my Morgan Stanley late-comers, the Fintech field is just getting started. I’d keep an eye on the Fintech start-ups and the giant Cloud Servers owned not by the banking system, if I were you.

I’d hate to know what they think about Monero or Aeon. Kind of reminds me when the car replaced the horse. Many objected back then. It was certainly a learning curve.

Thanks for reading. Let me know if I bored the hell out of you.

 


Image: Wikimedia

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6 thoughts on “Morgan Stanley…bitcoin…a poster child for speculation

  1. Not at all! Good reads are hard to find. My only thing is that physical metals like gold and silver are just, if not more of an illusion of wealth. If the same can be said about Bitcoin and a gallon of milk, the same can be said about gold and silver.

    Though I am skeptical about cryptos, I know fiat currency will fail in time. I’m impressed with bytecoin because it follows the same train as Bitcoin in the early days.

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      1. Exactly! I didn’t jump on Bitcoin in those early days because it was so shady. Perhaps there is some merit now, with the crumbling nature of fiat currency.

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  2. gilgmes, I am actually torn between “public” blockchains and “private” ones — the CryptoNote Family. There are trade offs either way and both types are essentially centrally controlled by developers and/or miners (or bag holders in the case of the POW coin types). The prospect of fiat hyperinflation of nationalized “reserve” currencies is perhaps the single most pressing reason many people buy cryptocurrencies today, IMO. Gold and silver have not (in the US) been used as money in decades. Although metals used to be good as a back-up plan, it would take a Venezuelan style economic shock to push them back into use. If that ever happened their value, in terms of fiat, would soar.

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    1. Truly. Which is case in point, then. Most gold bugs, believe that there will be some sort of Venezuelan situation in the US. That’s why they buy gold and silver, in the hope that they can preserve their wealth. The problem with that mentality is that, much like with what is happening in Venezuela, is many people will be killed, hurt and left starving. If there is rumours that you have a cache of gold and/or silver, unless you have a private security service or some other means of protecting said wealth from a mob of people. You get the drift.

      The issue comes down to barter trading. That market is far more volatile. Yesterday’s ounce of gold that could buy you a ten loaves of bread, could change to 10 ounces of gold because they need for grain is much higher.

      My point is, to preserve wealth, you need to have the trust of a people backing said form of wealth representation. Be it gold, silver, cryptocurrency, seeds, water or paper money. There has always been a place for “wildcat currencies”, and cryptos are bringing back a long forgotten method of wealth representation. The difference is that the algorithm puts a cap on how much can be made.

      What are your thoughts?

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