Friday, January 10, 2014

David Morgan's Belief on Bitcoin

I’m free market. I think if you want to do the Bitcoin situation, do it. I mean I’m not going to tell anyone how to run their lives.

There are a lot of advantages to Bitcoin as a fiat system over the current one. But, the only truth that concerns me somewhat is that it is not a specie currency. In other words, it’s not a tangible money, just like gold and silver are.

If you take a worst case scenario as a thought experiment and you look at everything that takes place in the financial world, it’s basically a bunch of digits moving around. When I sell a stock on the Internet it’s basically a code that goes to the ebroker that sells the stock and puts the digital money into my account, and I get a statement at the end of the month.

So, if anything were to happen to that process either electronically… In other words, if there were some kind of electrical failure in one part of the country or whatever, or there were some natural CME event, or whatever, if something like that happened there’s no way to escape out of the system.

Whereas physical gold and silver are about as basic as you can get and historically for thousands of years. So, that is a wealth, as long as you can go touch it, that really is preserved forever and ever until you either spend it or pass it on to a family member, or trust, or whatever.

I am an advocate of fund freedom. If you want to do the Bitcoin thing, great. I kind of like Jeff Berwick, The Dollar Vigilante’s take. I think he’s an advocate of doing both. I’m okay with that.

I thought about getting into it to be able to take subscriptions in Bitcoin, because I have something that I can market and then take those Bitcoins and deploy them into something that I need for the business or whatever. But I think it’s a little overdone. I know it’s limited.

I think the market will decide. The markets usually decide these things. It looks to me as if it’s in a bit of a bubble. I’m usually pretty good at calling tops, although I’m usually a bit early, and I learned that the hard way. I’d rather sell early into a bubble than late, because once it has peaked it’s really hard to get out at a decent price.

I love to sell into strength, and that comes from a very strong commodities background. If you look at my trades in the silver market, I’ve caught every top on the way up. I caught the $8.50 or $8.60, I forget the exact number, top which was just way, way back in the beginning, then the $21 top and the $48 top. I sold into strength in every one of those.

I don’t really look at Bitcoin that much, but buyer beware. That’s what I would say. Buyer beware. Do your own research. Make up your own mind.

I think there will be some kind of hybrid system at some point. There probably will be some kind of electronic currency.

And, there’s one now, really, that’s kind of similar to that, and that’s a silver and gold backed debit card that a friend of mine has started here in Spokane, Washington where I am. That is certainly not going up like Bitcoin. It’s based on the price of precious metals. But, it’s precious metals backed and it’s also electronic, because you can go into a merchant with this card and it’s transparent to the merchant. They just swipe the card and get the information off of it, and you’re debited either on the cash side of your account or the precious metals side of your account.

I think that’s a little bit more practical than the Bitcoin. But, I don’t want to speak too much about it. I’ve already probably said more than enough, because I’m not that familiar with the internal workings of the Bitcoin system.

- David Morgan via a recent Sprott Money interview: