Is Bitcoin the New Rage Against the Machine?

In case you missed it, it’s not too late to wish a happy birthday to Bitcoin (BTC). The Bitcoin network came into existence on Jan. 3, 2009. And since then the digital currency has enriched some and bemused others.

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Back in the 90’s there was a band known as Rage Against the Machine. The urban legend has it that the band got its name because of their disdain for capitalism and the “oppressive structures at the highest levels of society.”

Oh to be back in the 90’s again. Today, there seems to be a lot of raging going on. And that is leading to a new group of people that are raging against the machine. In this case the political machine in Washington.

And no, I’m not talking about Antifa or QAnon.

I’m talking about cryptocurrency investors and for the purposes of this article, those investing in Bitcoin. Back in 2018, my InvestorPlace colleague, Dana Blankenhorn, wrote an article that hit on a point that fascinates and concerns me about Bitcoin. It’s a ride that everyone likes to get on when it’s going up. But when it goes down, a lot of people get sick really fast.

Who is raging and what are they raging against?

Like a child that is growing up, Bitcoin has pushed boundaries. But as Bitcoin approaches its teenage years, it seems to be raging like it did when it was just a toddler. And as someone who’s helped navigate a few humans through those years, I wouldn’t have bet a lot of money on that volatility either.

Then again, Bitcoin isn’t really the problem. That may be coming from those who are buying and selling the cryptocurrency.

In his 2018 book “Life After Google,” George Gilder wrote this about Bitcoin:

Bitcoin gains momentum with every governmental campaign against cash…the alternative peer-to-peer vessel for anonymous private transactions. Bitcoin appreciates every time a central bank promotes spurious growth with negative interest rates and inflation targets…

That makes sense. Bitcoin entered the world at a time when quantitative easing allowed the Fed to “make it rain.” Of course, the fact that nobody knew exactly how to pay for it was exasperating.

So it surprised me that shortly after the United States inaugurated a new president, who set the printing presses rolling with a flurry of executive orders, the digital currency had an absolute fit, dropping over 20%.

I would have the bet the other way. But as it turns out, Bitcoin is now drawing the attention of some institutional investors. And that may be setting off the true believers who see Bitcoin as a hedge against hedge fund managers.

A currency or a collectible?

I’m trying to love Bitcoin. I’m like this close (trust me my fingers are really close) to pulling the trigger. But then, I came across an article from Bloomberg regarding the alleged “double-spend” that would have, by my understanding, kicked one of the legs of the Bitcoin stool out and sent it crashing to earth.

I’m glad that Bitcoin will live to see another day. But it leaves me to wonder if Bitcoin is a currency or a collectible. Let me be clear. I’m not an expert on Bitcoin (if you couldn’t tell) and I’m a skeptic.

But I’ve always understood the store of value argument. However at some point a store of value has value because it’s a medium of exchange.

A complete set of mint condition baseball cards has a value. But I can’t walk into a car dealership with it and buy a car. For that I need cash. At this moment, many transactions that I could do on a daily basis still require dollars in physical or digital form.

And I get the idea that you can exchange Bitcoin into dollars or some fiat currency. But if the ultimate end game is to work around the machine, than that seems like a one-step forward, two-step back proposition.

Bitcoin is calling, but should you answer?

Bitcoin is fundamentally a piece of digital code. It is not backed by anything except a belief among those that trade it that it might be worth something. I know, I know it’s all about the blockchain. Or maybe I don’t. What I know is that in my life, right now, Bitcoin wouldn’t be much more than a baseball card collection unless I traded in the cards.

Someday I may be able to pay my utilities and pay for my takeout with Bitcoin. But I can’t today.  And I know that by the time I can, I’ll probably have missed the big payoff. At a certain point, I may move past the “analysis paralysis” stage. Right now, I’m okay with that. But you may feel differently. Just understand what it is that you’re buying. Or maybe, like a tween, ignorance is bliss.

On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.


Article printed from InvestorPlace Media, https://investorplace.com/2021/01/bitcoin-continues-to-rage-against-who/.

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