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Do Bitcoin Exchanges Have A Future?

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bitcoin-exchange-newsOver the last few months more and more Bitcoin Exchanges in different countries have ether stopped trading or been restricted in some way, the latest being MtGox ceasing all withdrawals.

In other countries such a Russia, Bitcoin is being outlawed altogether. As Bitcoin gains ground as a global, independent quasi-currency, governments will protect their own controlled fiat currencies. Once government realise that fiat currencies and control is under threat, Bitcoin exchanges may no longer be viable.

The only reason that Bitcoin has not been either banned or regulated to oblivion by many countries, notably the USA, UK and EU countries, is that the governments of those countries neither understand Bitcoin or are taking it seriously. Once they do then expect the situation to change dramatically.

An excellent example is Gold. If the Gold price today was based purely upon market forces, price discovery based upon supply and demand as should be the case, then the true price of Gold would be orders of magnitude higher than it actually is - probably in the region $5000 to $7500 per ounce. If the US Dollar was totally backed by Gold, as is used to be, then the price of Gold would probably exceed $100,000 per ounce, which is probably where the Bitcoin price could go for the same reasons.

However - because Gold, like Bitcoin, is true money with an exchange rate, a higher Gold price implies a lower value for the Dollar, because buying Gold is the same as selling the US Dollar and vice-versa.

The US Government and their cohorts manipulate all financial markets to convey whatever they wish, such as a strong economy - which is far from the truth of course - by artificially boosting the stock market to insane levels we see today, not based on the usual fundamentals and PE ratio, dividend yields etc  - but by using computerised trading to buy stocks with printed fiat money for no other reason than to convey the illusion that all is well - it is not.

In the case of Gold the favourite tool of the government is the Gold futures markets of LBMA and in particular the Comex where leveraged "paper Gold" is sold in vast amounts, billions of Dollars at a time, to drive the Gold price much lower in order to perpetuate the illusion of a strong Dollar - which is a joke - the US Dollar is worth nothing in real asset backed terms. No individual traders can compete with the US Government and its infinite supply of fake Dollars printed by the private Federal Reserve, so the Gold price is always crushed.

Finally however the "chickens are coming home to roost". Comex is one huge ponzi scheme with approximately 120 legitimate claims on ever single ounce of Gold available for delivery.  

Comex will likely run out of deliverable Gold in February or March causing a huge panic as it is realise that there is no more physical Gold, driving the Gold price massively higher, and the Dollar massively lower. Silver will tag along for the ride as always as a leveraged play on Gold.

Once people realise that their Dollars are worthless and worth nothing all along - an illusion - then there will be a mass exodus from the US Dollar and other fiat currencies to Gold, and yes, Bitcoin.

 However, the US government will not stand by and watch this happen, and neither will other governments.

They will regulate Bitcoin exchanges to oblivion so people can no longer convert fiat currencies to Bitcoin without onerous rules, controls and regulations, losing all anonymity and privacy in the process.

So what is the end game?

When enough merchants and those offering a wide range of good and services, including big players such as Amazon, accept Bitcoin payments, then fiat currencies will no longer be required. Bitcoin will become the new de-facto Global Monetary system with people being paid in Bitcoin, saving in Bitcoin and buying with Bitcoin, so there is never any need to convert to fake fiat currencies.

Bitcoin will be a global monetary system, by the people, for the people, with privacy and anonymity, while fiat currencies, notably the US Dollar, will be consigned to the trash can of history where they belong. 

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