The Three Faces Of Bitcoin

After plunging 20% in the last few days from its $5000 highs - following China's ICO ban, Bitcoin has bounced back to $440 today amid global turmoil...

As reported earlier, Rick Rule, the billionaire Chief Executive Officer of Sprott Global Resources, noted in his recent interview with Crush The Street:

Bitcoin to me is all positive… I’m a consumer of currencies and currencies are a medium of exchange… and the more competing currencies there are the better it is for consumers of currencies… I use U.S. dollars, I use Canadian dollars, I use gold, I use silver, and from time-to-time I use BitCoin.


The more competing currencies, the better the currency has to perform for the consumer.

But, Rule warns, just as we’ve seen historically with stocks, there will be bull markets, bear markets, bubbles and bursts. But astute investors who position themselves in the right blockchains or companies that operate them could see incredible gains. At the same time, however, he cautions that, at least for now, much of the market is based on speculation:

I don’t know [if it can go to $500,000 or $1 million per Bitcoin]… But I also think it’s possible for the market cap to go to zero if people lose faith in the algorithm… What happens in a market that goes from $450 where it was two years ago to $4500 is people only look in the future to directions gone in the past…

It’s an instrument of faith… Could it go to $10,000? Yes. Could it go to $100,000. I guess. Could it go to $0? Yes. Keep both numbers in mind.

Which brings us to the three faces of Bitcoin. As's Jeff Thomas explains, one of them is likely to prove to be the correct one and the reader should consider them all, as each has a valid argument in its favour.

Whenever we see an image of bitcoin, it’s not presented as a blockchain, as it should be, but as a gold coin, which it is clearly not.

Why should this be? Well, many of bitcoin’s staunchest supporters are libertarians, who revile fiat currencies as being of no intrinsic value. And they’re correct. Fiat currencies do not pass the Aristotle test of being durable, divisible, portable and intrinsically valuable. They, unfortunately, fail badly on the last requirement.

Unfortunately, so does bitcoin (and in describing bitcoin here, the same comments apply to other cryptocurrencies); hence the tendency to present it as a gold coin, something that does satisfy all of Aristotle’s requirements.

So, why are libertarians, who, one would think would be just as suspicious of electronic fiat currency as they would be about paper fiat currency, its greatest supporters?

Well, bitcoin has been presented as a currency that’s not produced by governments. It’s a blockchain, created by an unknown person or agency and is promised to be limited in its total production (as are precious metals.)  

Of course, libertarians, by their very nature, tend to be suspicious of such claims. Doug Casey has for years, quite rightly described the dollar as an “I owe you nothing,” a mere promise from a government that it will pay the bearer if it sees fit to do so. He has also quite rightly described the euro as a “who owes you nothing,” as it’s a mere promise from an uber government that controls individual governments that it will pay the bearer.

Following this line of reasoning, bitcoin is, (please forgive the double-negative) “no one owes you nothing.” There is zero evidence of who created bitcoin or whether there is any validity whatever as to the promise of limited production.

So, why on earth are many intelligent people so in favour of bitcoin? Well, if it  proves to be legitimate, it’s by far the most useful form of currency in an age when banks and governments are clamping down on the transfer of currencies and, in fact, are likely to confiscate the deposits now held in banks. Further, it might rival gold as a store of wealth. Therefore, if it proves to be legitimate, it is unquestionably the currency of the future for all those who value the freedom to do as they please with their own money.

Unfortunately, there is that nagging, “if .” And then there’s the recurrent argument that it has no intrinsic value, due to its intangibility. It cannot be physically possessed. Its existence is subject to the vagaries of the internet, without which it can instantly go to zero and remain there, as have all the other fiat currencies over history.

In my view, there are three faces to bitcoin. (Yes, a coin cannot have three faces but, again, bitcoin is not really a coin.) One of them is likely to prove to be the correct one and the reader should consider them all, as each has a valid argument in its favour.

Face #1: Bitcoin Is the Future 

Bitcoin is the currency of the Internet. It’s not produced by any government and is therefore a decentralised worldwide digital currency. It can be used to make purchases and other monetary transfers anonymously. It’s easy and cheap to use as, currently, no country regulates it. As other fiat currencies (paper currencies) become less trustworthy, bitcoin is likely to increase in value. As Governments around the world increase capital controls, it promises freedom from governmental control.


The IMF describes digital currency as the way of the future and has declared their intention of getting a digital currency in place by 2018 in what they describe as the “global economic reset.” Most international banks are establishing blockchain tech and cryptocurrencies into their business models. One, Goldman Sachs, describes blockchain technology as the “new technology of trust,” citing the fact that every single transaction remains within the blockchain “ledger.”

Face #2: Bitcoin Will Fail

The most important objective of those who control the world economic system is the coming re-set of the monetary system. The intention is to eliminate paper currencies and any other form of currency other than their own digital world currency. By so-doing, every monetary transaction, no matter how small, would be on record. Additionally, banks could disallow any type of transaction which governments did not endorse. Further, they would have the power to refuse access to and even confiscate deposits.


Bitcoin is the very enemy of that reset, as it would allow the world to simply opt-out of the world’s banking system. But, in retaliation, banks could disallow the conversion of bitcoin to world currency and could count on governments to classify bitcoin as “the currency of terrorists,” making the use of bitcoin a crime.


Governments have already been able to track bitcoin use and have arrested individuals who have made transactions that they disapprove of, but, for whatever reason, they’ve not pursued this tracking ability broadly as yet.


If the €500 note can successfully be eliminated under the pretense that it’s favoured by terrorists, there can be little doubt that bitcoin could be tarred with the same brush and made illegal internationally. If it became illegal to accept bitcoin as payment, bitcoin would quickly lose its perceived value and soon decline to its intrinsic value of zero.

Face 3: Bitcoin Is a Trap and Will Succeed

Globalists support the concept of electronic blockchain currency 100%. So much so, that that the world’s leading banks, have touted it as the way of the future.


Most people will accept the change to the new world digital currency easily, as it will be so easy to use. They’re unlikely to worry overly about the loss of control over their own money or their freedom to privacy when making transactions.


But the flies in this ointment are the contrarians, the libertarians who will do all they can to remain outside this system. Many hope to escape the coming world digital blockchain currency by using … a digital blockchain currency - bitcoin.


Bitcoin was created by the fictitious Satoshi Nakamoto, an admitted nom de plume that could be a cover for the Mises Institute or the CATO Institute, but just as easily could be a cover for the Federal Reserve or the IMF.


Neither of these latter entities is actively opposing the use of bitcoin. In fact, if it were their own system, they would have access to the record of all transactions that are presently assumed to be disappearing into the ozone.


Rather than fight those who oppose currency control, they would be wise to co-opt those who lead it and redirect them to lead the charge into world blockchain currency.

Each of the above is a valid argument and should be considered by the reader. To be sure, the concept of currency is about to change more dramatically than ever before in history.The jury is still out and more information is needed prior to coming to a conclusion as to where this is all headed. At the present time, bitcoin is highly useful for quick transactions and may be worth the risk as a short-term investment. As a store of wealth it remains a gamble. The best move might be to neither love nor hate bitcoin, but to wait and see.

But back to Rule to conclude:

"The truth is, a situation where six pimply faced 21-year olds in a garage can invent an algorithm and call it a currency, then paint that algorithm with a narrative and then turn it into money means that there will be an enormous proliferation of scams, just like there are in the penny stock business. Billions of dollars will be lost to unsupported narratives.


That does not change the fact that crypto currencies, and more importantly the distributed ledger, are an extremely important factor for our time and a factor that is absolutely for the good in aggregate."


Mr. Universe Pinto Currency Tue, 09/05/2017 - 18:39 Permalink

Interesting quote.

But I also think it’s possible for the market cap to go to zero if people lose faith in the algorithm…

Here is the kicker, faith in an algorithm? Yeah I have just as much faith letting my Tesla drive me across America.The part he really gets wrong is you can't lose faith in something you never had faith in to begin with. Cryptonerds are buying hope, not faith.

In reply to by Pinto Currency

sleigher Pinto Currency Tue, 09/05/2017 - 20:56 Permalink

"Intrinsic value is zero.It will reach its intrinsic value as all currencies do." When?  What if it goes to 100K and then 0 like it says above.  If I hold and sell at $99K does that make me a bad person?  Or a speculator? Or stupid?  What about $99.99K  What if I bought at $25?  Can anyone tell me why it is ok to buy and sell or buy and hold other commodities / currencies in order to trade and make $ but when you do it with bitcoin you are stupid?  Why does everyone hate it so much?  Isn't the whole finance sector about making money?  Save the lecture about "value for the client" or some god damn Edward Jones commerical. I got in BTC for all intents and purposes at 0.   Why should I sell?  

In reply to by Pinto Currency

mmanvil74 bwh1214 Tue, 09/05/2017 - 19:13 Permalink

There are so many flaws in this article, I don't know where to start. The author clearly has not done any research.The author seems to be confused as to why people trust the max limit on number of bitcoins to be created, as though we are meant to trust the creator about this point... wrong, it's the open source code that enforces the supply cap.  The code that runs bitcoin is not a secret, it's publicly available, and has been audited by the best cryptographers and hackers in the world.  Bitcoin transactions do not "disappear into the ozone", every Bitcoin transaction from the beginning of time is recorded and publicly available (yes, including governments) and may be stored by anyone at their convenience using any basic internet connection.The fact that bitcoin is so transparent in its operation is what makes it valuable. Bitcoin is far more transparent than us dollar based record keeping and far more transparent than gold in terms of measurable supply and demand.Bitcoin can be physically possessed, you can store a private key on a piece of paper, etch it into stone, or memorize it in your head. You can carry a full copy of the blockchain on a hard drive. It's getting annoying to see these gold bugs take their shot at explaining bitcoin on zh and failing miserably.As far as the "three faces" theory, sure I guess any one of those faces could be the real face of bitcoin, although if you are conspiring to create a global currency to control everyone with, bitcoin is not a very good candidate because, as the author (correctly) indicates, any 21 Year old in his parents' basement can fork the bitcoin (or ethereum, or x coin) code and call it money, and if others agree with him, then it IS money. So not very easy to contain cryptocurrency if complete and total control over everyone is what you're after. The Chinese gov are surely control freaks and they don't seem to like the proliferation of thousands of different coins.Bitcoin represents the birth of the new financial system. That doesn't mean it won't fail, but the blockchain genie is out of the bottle and crypto is never going away, at least not this century. Use the frequent crashes in the market to get yourself a position in crypto. Yes it can go to zero, but on a long enough timeline, everything goes to zero. 

In reply to by bwh1214

Jack's Raging … mmanvil74 Wed, 09/06/2017 - 00:27 Permalink

While I agree that it is the future, none of the current incarnations have any real value. The closest is Iota, which is still faith based. Currency is a facsimile for money, money is a facsimile for barter, and barter is a method to alleviate scarcity. Presently, these cryptos to not address the root. That matters. Anything else/less is hope, faith, and hysteria.

In reply to by mmanvil74

CCanuck giovanni_f Tue, 09/05/2017 - 20:29 Permalink

I don't think this crash (correction) is over yet, looks like a dead cat bounce to me. The dip should go down to around $3000 resulting in a push back up to 6k or 7k for Q1 2018. Just my 2cent opinion.

Do you want to increase your BTC count?
Convert btc to tether now, wait 2 weeks and buy at the bottom of the dip. Could add 25-50% to your btc holdings, in 4-5 weeks with very little risk.
Again just my opinion, this is not financial advice, I am not telling anyone what to invest in. Use at your own risk.


In reply to by giovanni_f

tmosley CCanuck Tue, 09/05/2017 - 20:40 Permalink

>The dip should go down to around $3000If there were more downside pressure, that would certainly be the target, but I wouldn't bet the farm on it getting there. In cases like this it is always best to hedge your bets. Buy (or sell) a little now, and if it goes down buy or buy back then. Long term the trend is pretty clear. BTC is set to take a run at gold in terms of market cap. That is a 20-30 bagger from here, IIRC.

In reply to by CCanuck

tmosley VD (not verified) Tue, 09/05/2017 - 19:21 Permalink

That isn't any evidence of anything though. They just had an idea for a digital currency. That is about all their idea had in common with bitcoin. No mining. No algorithmic limitations on issuance. No smart contracts. No digital signatures. Nothing.It's like pointing out that both Trump and Hitler drank water.

In reply to by VD (not verified)

nizeoni tmosley Tue, 09/05/2017 - 21:35 Permalink

why will deep state create bitcoin ?? This makes no sense, when they have free dollar printing machine which controls everything. Its only people who don't understand cryptos toe this line. Pure disinformation.Why will deep state want a currency whose integrity is based on crytograpy which is again maths? This is a system where value to the currency is given not by a central authority. Everything is transparent, nobody has any undue advantage.For all silver/gold bugs, this is an age of information and with it disinformation as well. Metals don't provide easy means of exchange, but its good to have as a hedge.So crypto will rule over metals. Whether it will be Bitcoin ( not segwit one, thats infested by banksters ), or Ethereium or even IOTA ( !! ), that remains to be seen. But it is never going to zero. 

In reply to by tmosley

blentus VD (not verified) Tue, 09/05/2017 - 20:33 Permalink

This has absolutely nothing do to with BitCoin (or blockchain, rather). Even remotely.Not sure why you'd post such nonsense.Digital currencies, electronic wallets and shitload of other buzzwords have been around since early nineties. Nothing comes even close to blockchain.And get it once and for all. It's not BitCoin that is 'the future'. It is the blockchain.

In reply to by VD (not verified)

tmosley oddjob Tue, 09/05/2017 - 19:18 Permalink

The picture everyone always posts of the "physical bitcoin" is a fucking 100% copper round. That is why it looks ORANGISH rather than YELLOWISH. Similarly, the icon for bitcoin is ORANGE rather than YELLOW.I just can't understand being so fucking butthurt about something like bitcoin that you whine and make up lies about it all day and all night instead of just BUYING some and taking advantage of it.

In reply to by oddjob

The Cooler King (not verified) malek Tue, 09/05/2017 - 19:53 Permalink

For someone supposedly so tech saavy, the issue of color of bitcoins in these fotos should be easy to determine. Just take a flippin' screenshot and do an RGB HEXADECIMAL conversion of a pixel (then compare the pixels to a bar of gold & a penny).

In reply to by malek

Fizzy Head SILVERGEDDON Tue, 09/05/2017 - 21:38 Permalink

I'd also like to throw in that not only did the chain creator of Bitcoin lift it's color from a metal, it also swiped a small part of the $ symbol on its "B". Making it almost a complete ripoff of fiat paper. I think that's ok because neither of them are true money in my opinion... All that said, I have nothing against someone betting the crypto market to line their safes with real money, bet only what you can afford to lose.

In reply to by SILVERGEDDON

Thinkpad Fizzy Head Wed, 09/06/2017 - 00:48 Permalink

Bitcoin was created by Satoshi Nakamoto, who published the invention on 31 October 2008 to a cryptography mailing list in a research paper called "Bitcoin: A Peer-to-Peer Electronic Cash System".What the fuck are you talking about it was a whitepaper on a new technology. The MSM media made it's physical form I'm pretty sure the furthest thing from his mind when he wrote that thesis was "what color should it be?" I don't think the BTC symbol is a rip off the Japanese yen get a grip man.Do you know anything?

In reply to by Fizzy Head