Gold and Silver have historically been used as currencies. Besides that, however, they actually have real value as they can be melted down and used for useful purposes. Electrical devices, for example, often require them. The same is true of other industrial and precious metals.
But what use does the dollar have? It is not exchangeable at the Federal Reserve for gold anymore. You cannot melt down a dollar bill and do anything with it. The only reason it has value is because we pretend that it has value. But that pretend power is actually pretty strong. I can buy a nice car and house with those pretended things of value. That’s why I accept this make-believe money for my time at work. That’s why I sell things, such as my books, for it.
But could other make-believe currencies, even newly created ones, also have value? Of course. And that is exactly what a Bitcoin is. Some guy just created Bitcoins. But people have made money from them and have used that money to buy real things of value. I’m not asking you to like the idea of fiat currencies. I’m not asking you to accept this concept as good or viable in the long term. But I am asking you to recognize that people have done quite well with Bitcoins and people will also do well in the future with it and other fiat currencies.
I’m not an expert in Bitcoins. I’ve discussed the concept previously in this book and you may still have more questions than answers about how they work. But they do work and they are something that you should be aware of.
The main advantage of Bitcoins is that they are supposed to be anonymous. Granted the nice people working at the NSA probably have already decrypted this encrypted this so-called anonymous currency, but if they have they haven’t done anything with that information yet. And unless you are using your Bitcoins to fund terrorists or enemy states, they may not care what you do.
If you have extra money to throw around it makes sense to keep some of that in cash, to keep some of that in the bank and to keep some of that money in precious metals. But it also makes sense, in my opinion, to diversify and to keep some of that money in digital currencies such as Bitcoin. You also make want to look at some of the other alternatives such as Litecoin that are coming along.
How do you buy Bitcoins? Well, this is a tricky issue. You can create an account somewhere like Coinbase, link it to your bank account or provide other identifying information and buy Bitcoins. But if you want to avoid the government knowing what you are up too, then this is a terrible way to go about it. Again, you might not be doing anything illegal, but you just don’t want government agents snooping around your affairs. Another alternative is that there are some Bitcoin reverse-ATMs out there in the world. You slip money into the machine and it sends you Bitcoins to your anonymous address. Another alternative is to get on the Tor Network (by downloading the free software) and go to the Darkweb where you can get Bitcoins by sending some person cash or prepaid cards. Or you might be willing to find people willing to sell Bitcoins for cash on Craigslist or other sites. Finally, check out Localbitcoins.com for willing sellers.
Of course, our elected officials are generally control freaks who don’t like the idea of people buying and selling anything without them knowing about it and taxing the transaction. They hate the idea of Bitcoins and other digital currencies and are always agitating for regulations that would have a negative effect on the currency. These people pose a very real threat to your investments. Still, if you had managed to buy a ton of Bitcoins when they were pennies per coin and resold them when they were worth over $100, then you would have made some serious cash. In the alternative, there were are people online selling silver and gold for Bitcoins. If you had bought the Bitcoins when they were mere pennies, you could buy a ton of precious metals now and get something of real value for your money. Bitcoins may rise greatly in value. Or they may become worthless. Another digital currency, like Litecoin, may take its place. But you would be wise to keep an eye on these trends, keep some money in the game, and be prepared to buy and sell when the opportunity strikes to make some serious cash.
It bares repeating that even if you manage to buy, trade, barter, or sell Bitcoins or other fake currencies in such a way to make a profit that you are obligated to pay the appropriate taxes, even though if transactions were completely anonymous, in order to fund the Federal government so it can kill people, imprison people for no good reason, give money to those who refuse to work, and engage in all sorts of other immoral activities. It’s your civic duty!
