Bitcoin went from $1 on April 13, 2011, to a peak of $29.60 on June 7, 2011, a gain of 2,960% in just three months.
Safe haven? None.
Are you one of them? Then I have to warn you, that price swings are huge, not only in times of crisis but at any time of the year.
And to be honest, Bitcoin is not the new gold. It is not a safe haven in times of crisis.
On the contrary, cryptocurrencies are just the gold rush between many speculators and an unexpected desire to become millionaires.
Unlike stocks, bonds, real estate, or real-world assets with real values, bitcoins can be created out of thin air at any time and by anyone. With just a computer, this doesn’t even require technical knowledge.
Bitcoin is not a smart means of payment
There is a very simple reason why gold is so popular as currency in times of crisis. Gold can be used as a real means of payment anywhere in the world in case of economic and financial crises.
With Bitcoin, things are quite different.
Even if some companies accept payments in Bitcoin, Bitcoin as a universally accepted means of payment will be impossible.
Cash has enormous advantages.
For example, if the electric power sources fail or the smartphone battery runs out, cash will work in literally every emergency. You do not need any technology, nor do you need a third party to confirm transactions. A transaction can take place immediately and, above all, anonymously.
Bitcoin is no store of value. Not even gold is.
So far it has been shown that the value of Bitcoin does not protect you from falling markets, high inflation, or world crises.
Events such as the current inflationary trends, and financial and economic crises, have pushed the Bitcoin price down.
And when the regime in Kazakhstan shut down its Internet to suppress unrest in the country, the Bitcoin network’s computing power dropped to 14%. Kazakhstan is home to the second largest Bitcoin mining industry in the world.
Meanwhile, North Korea is suspected of funding its missile program with Bitcoins stolen by government-backed hackers.
As I write this from a coffee shop, the price of Bitcoin is currently at $23.658. To be fair, this is still a multiple of what it was ten years ago. But also much less than last November, when it reached $69,000.
If you went into debt or even put your savings into Bitcoin after the hype, then you are not very smart. This is even worse in third-world countries, where Bitcoin is hailed as the savior of the traditional financial system. The villain of the US dollar and the euro.
Bitcoin fails as a currency of exchange in El Salvador
Bitcoin fails to serve as a means of payment for millions of people.
The attempt by El Salvador’s increasingly authoritarian president to prove otherwise to the entire world is in total failure.
It has been 1 year since El Salvador’s CEO Nayib Bukele made Bitcoin the official tender alongside the US dollar for his people.
It is now clear that the El Salvador CEO’s calculations about Bitcoin do not add up.
To make matters worse, the Central African Republic also got on El Salvador’s bandwagon and also declared Bitcoin as legal tender. Only that was a long shot. Most people in the Central African country have yet to make any transactions with Bitcoin.
In El Salvador, both individuals and companies show little interest in Bitcoin.
Since the price development is very volatile, large transaction volumes are not possible and the system is slow and expensive.
With the price of Bitcoin falling non-stop, even more, people are losing faith in El Salvador, and economists already fear the bankruptcy of the nation.
Bitcoin was not made to buy bread and butter.
Since Bitcoin was not made to be used as a means of payment, Bitcoin fans try to prove otherwise. They cite two reasons.
Either the Lightning network is able to make Bitcoin more suitable for everyday use, thanks to its higher speed. Except that they forget that this technology is already being used as an experiment in El Salvador, which makes the fans’ theory a bore.
So perhaps the second argument is better.
Satoshi Nakamoto did not create Bitcoin to be used as an everyday means of payment, but rather as a safe store of value in times of financial and economic crises.
And to be honest, not even gold is a safe haven in times of crisis.
Contrary to what they would have us believe, Bitcoin should be understood as a technology for risk-averse traders who want to get rich overnight, and which cannot serve as a store of value or as great protection against high inflation.
I see no objective basis that would give Bitcoin any fair value. The price of Bitcoin is not real. It is all speculation.