After President-elect Donald Trump’s improbable election victory, the American public focused on another unexpected development — a market rally. Despite the fact that futures trading for the Dow Jones Industrial Average were volatile once it became apparent that Hillary Clinton would lose the bitterly contested race, the markets quickly recovered. Theoretically, Trump’s promise of reduced regulations would be a net positive for the Dow.
A week after the election, the Dow Jones index gained more than 3%. Following a brief respite, the benchmark continued to move higher toward an unbelievable threshold. All everyone could talk about was “Dow 20,000.” Indeed, in the final days of 2016, the Dow was achingly close to breaching that all-time record. Yet it was the digital currency bitcoin that was first to hit its own psychological target of $1,000 per coin.
This is not to call the Dow a disappointment. But let’s be real with the facts. The venerable index gained just under 8% between the election date and the end of the year. Bitcoin, on the other hand, jumped approximately 35% over the same time frame. On Jan. 1, bitcoin breached the $1,000 barrier while the Dow was recovering from the New Year festivities.
Those that may not be familiar with bitcoin and the “cryptocurrency” revolution can surely appreciate why it is that these platforms are overwhelmingly popular. Ironically, it is the movie title Wall Street: Money Never Sleeps that best illustrates the case for bitcoin and cryptocurrencies. When you think about it, money — under the traditional platform — does sleep. The Dow Jones doesn’t open on weekends, nor on national holidays. And for regular investors, the markets have a short window of accessibility — and on Eastern Standard Time.
Bitcoin and digital currencies are truly free markets, open 24/7 and accessible to anyone with an internet connection. There are no stiff-necked traditions, no centralized portal, no vetting process to approve individuals for advanced trading vehicles. It’s what brokerage firms pretend to be, but underneath the hood is nothing more than the same old game.
At the same time, I have no pretenses about people’s reservations. Cryptocurrencies are still in their infancy, and there’s a lot of growing pains associated with them. My purpose here is not to provide an exegesis on digital currencies. Rather, I hope to provide a basic framework so that you can make an informed decision.