On the Fringe of the Dominant Financial World
[Editor’s Note: The following post is by TDV contributor, Justin O’Connell]
When CNN wrote recently, “Bitcoin, a virtual online ‘currency,’ seems to be gaining traction and legitimacy among those who need to transfer or launder their cash outside of the prying eyes of regulators,” they were elevating convenient prejudices over reality. For, although the prying eyes of regulators are something most people would rather avoid, the destructive policies of central bankers lead people to alternatives that may attract those eyes just the same. CNN referred to Bitcoin as “sketchy” and in so doing used a technique of identifying anything outside the purview of official transactions as “black market,” “gray market” or otherwise shady. The press outlet whittles Bitcoins’ userbase down to Iranians, hit men and drug dealers and others “who prefer to be paid in an untraceable currency.”
Flip that statement on its head, and what is it Bitcoin users prefer? A banking system in which every little thing they do is not scrutinized and reported.
Bitcoin is swiftly becoming a legitimate instrument on the fringe of the dominant financial world, as people the world over turn to the system for its practicality and convenience—and, let’s face it, security. You’re not going to get much of that from the Western-based financial system, and that’s no lie. According to the FDIC website:
From December 31, 2010 through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the account balance and the ownership capacity of the funds. This coverage is available to all depositors, including consumers, businesses, and government entities. The unlimited coverage is separate from, and in addition to, the insurance coverage provided for a depositor’s other accounts held at an FDIC-insured bank.
A noninterest-bearing transaction account is a deposit account where:
· interest is neither accrued nor paid;
· depositors are permitted to make an unlimited number of transfers and withdrawals; and
· the bank does not reserve the right to require advance notice of an intended withdrawal.
A noninterest-bearing transaction account also includes all deposits placed in an Interest on Lawyers Trust Account (IOLTA) or its equivalent.
Note: Money Market Deposit Accounts (MMDAs) and Negotiable Order of Withdrawal (NOW) accounts are not eligible for this temporary unlimited insurance coverage, regardless of the interest rate, even if no interest is paid.
For more information see FDIC Frequently Asked Questions on the Dodd-Frank Act at www.fdic.gov/deposit/deposits.
Simultaneously, Bitcoin is “threatening major profit centers for both the banks and payment operators like Visa and MasterCard.” CNN does not just imply criminals and rogue nation-states will use the Bitcoin network to launder money, but that that is essentially Bitcoins’ only purpose. The press outlet admits that “passing money and making transactions outside of normal pay channels has serious repercussions for the financial industry.”
CNN understands the advantages – at least vaguely – of Bitcoin, such as that the network is free and can be used by anyone to send/receive payment 24/7, but hopes the average ignorant and easily led viewer will fail to see the usefulness in Bitcoin so as to keep them within the dominant financial system paradigm. As the press outlet writes:
But just because the Bitcoin network is free to use doesn’t mean it’s the best way to move wealth. Indeed, it is by far the riskiest way to send money as it is only as good as its medium of exchange — Bitcoins. Unlike currency backed by the full faith and credit of sovereign nations, Bitcoins are backed up by, well, nothing, leaving it open to wild swings on the international currency market. Since Bitcoins are still a virtual currency, buyers and sellers take on massive exchange rate risk moving money to and from their Bitcoin accounts. In the two years it’s been around, the Bitcoin has been valued as high as $30 to as low as $2. A wild swing occurred last summer when security concerns cause people to dump their Bitcoin en masse. Casual observers wrote off Bitcoin and moved on, but it has slowly and steadily regained its value, last trading at around $14 per Bitcoin.
Bitcoin is now at the $18 handle. It poses a threat to Visa, MasterCard, and PayPal. While holding value for long periods of time in Bitcoin carries risks, the transaction ease makes the system a more attractive medium than any dominant financial system option. It’s a way to pay for things in an extremely convenient manner. Moreover, it doesn’t matter if you’re paying for a fraction of a bitcoin or millions of dollars worth of them. What’s the use of any fiat currency after that? Other than, of course, national security.
One thing Bitcoin does not totally replace is gold and silver stored internationally. In our short lifetimes, there is scant chance for a technology – no matter how positively revolutionary – to supersede objects that have been held as money for centuries across civilizations. That is my opinion. Others disagree.
Like gold and silver, bitcoins can be internationalized. But, bitcoins cannot be held in the “analog world” like gold and silver coin can. That’s why they are not a one-size-fits-all option for the committed rebel when it comes to freeing his or her money. However, both bitcoins and internationally stored gold and silver can go a long way towards safeguarding your hard-earned labor in something other than fiat currencies. One of the best arguments in favor of internationally storing gold and silver is the diversification of risk, and the ability to hold tangible assets that only stand to appreciate in value as G20 nation-states lead the way in open currency devaluation. What better way to further diversify your internationally stored gold and silver with a digitally trade-able medium? No more waiting for bankers to initiate wire transfers. You do it yourself. Of course, with freedom comes responsibility.
Bitcoin can oil the wheels of an international lifestyle, no doubt, but on its own does not qualify one as a global citizen fully prepared to globetrot amidst uncertainty and volatility. There are many steps one can take in order to fully take advantage of Bitcoin as a global citizen, and many of the services are offered by TDV. In our January 9 Dispatch we spoke with a fellow Dollar Vigilante in Chile, who had recently spent some time in Argentina during the currency crisis. To avoid the “politically rigged” interest rates, this Dollar Vigilante sold off bitcoin, for which he received a much more satisfactory exchange rate on the free market.
Not only can TDV help you acquire precious metals at some of the lowest retail prices in the nation, the team can also assist in storing your metals overseas, while at the same time setting you up with second passports. If you’re interested, call us (US) 646.568.5518 today to find out more.
Justin O’Connell studied History and German Language at Linfield College in McMinnville, Oregon, where, in his spare time, he researched current events and their relationship to history. In his studies he has found that societies have been managed by philosophically-kindred ruling classes seeking persistently a singular, total order across the planet. Justin does not believe in government as a medium for human relationships, preferring instead the race of human ideas stemming from a diverse, vibrant culture. Currently, he is a proponent of physical silver as a means of wealth preservation and disobedience to the financial system, and lives in southern California. He writes at the Dollar Vigilante-inspired site, Silver Vigilante.