FUNDAMENTAL ANALYSIS
specially tailored to this task. As of May 2013, the Bitcoin network processing power “exceeds the combined processing strength of the top 500 most powerful supercomputers”. The operators of these computers, known as “miners”, are rewarded with transaction fees and newly minted bitcoins. However, new bitcoins are created at an ever- decreasing rate. Once 21 million bitcoins are distributed, issuance will cease. As of August 2013, approximately 11.5 million bitcoins were in circulation.
Got it? OK, neither have I. But neither do I understand how QE positively changes the outlook for the world’s debt-laden economies, so I must be a super-simpleton!
IT IS BECAUSE IT IS
The point is, not how it is created but that it has been created and stands up to the most rigorous testing and analysis. And to me that means that is has a chance of surviving as the medium of exchange for the cyberworld and potentially the real world too.
THE REBEL’S CURRENCY
In essence, Bitcoin’s success is due to the fact that the man in the street understands that central banks and governments are going to take their money via confiscation or default or devaluation and it is their way of voting against it and them (since gold is not easily exchangeable for them).
This is the 99% sticking their fingers up at the authorities and saying we don’t need you or want you...
WE ARE REBELS TOO
There are many of us who share the same fears. We are tired of our money being used as the collateral of others and tired of living in a system that simply refuses to correct its imbalances in any way except devaluing, debasing, taxation and theft.
Looks kind of like a bubble doesn’t it? Well, I’m not so sure…
Firstly, let’s look at the logarithmic chart to give us better perspective. (Chart 2)
FX Tis is why I am interested in Bitcoin.
So let’s look at the price of this new currency. (Chart 1)
Chart 1: BTC Market Price (USD)
Source:
blockchain.info
Chart 2: BTC Market Price (USD) – Logarithmic scale
Source:
blockchain.info
FX TRADER MAGAZINE January - March 2014 37
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