Category Archives: Fintech

Strong Dollar vs. Weak Bitcoin

Trump’s platform is all about “America First.” That probably means he wants a strong Dollar. Bitcoin balances look less appealing, measured in Dollars, if the Dollar performs better than Bitcoin.

Also Trump is talking about “bringing that money back” (I think referring to “Double Irish” tax schemes) during his entire campaign. While relatively small, Bitcoin might seem to be a loophole around new trade tariffs, which means Bitcoin could be on Trump’s radar. Bitcoin is not really anonymous, so for the most part it isn’t impossible to regulate.

That said, Trump says he hates regulations that clog the gears of capitalism. So what will happen? Bitcoin could become more a quagmire of confusion as the rules of engagement aren’t really established yet. Diehard Bitcoin Libertarians will be at odds with more mainstream users wanting to comply with intricate cobwebs of regulations, resulting in a sort of stalemate of concerns.

Here’s what I predict. Eventually, the stalemate will end and Bitcoin will try to comply with all the governments it comes in contact with, driving away all but a few special-case enterprise users that can afford the best accountants and lawyers. When the mainstream users lose interest, the music stops and the lights come on, and Bitcoin becomes very serious and boring.

That said, Bitcoin can’t really go to zero because maybe half of Bitcoin is comprised of users that either lost or forgot their passwords or can’t or won’t access their Bitcoins for any number of reasons, use your imagination. However, miners could shut down their machines if they don’t see the returns they need to stay in business, further weakening an already slow, unreliable network, which is slower and more expensive to use compared to faster, cheaper alternatives.

Also consider Peter Thiel, Trump’s technology advisor, is the founder of Paypal, a powerful Bitcoin competitor. Paypal is superior to Bitcoin in several ways. It’s more convenient to send out an invoice with Paypal, and the cost is only 50 cents for business transactions, and your bank will process a Paypal deposit in 1 day without any drama. Is Bitcoin cheaper than 50 cents? Not really, once you add up the transfer and exchange fees. Bitcoin is arguable more secure than Paypal, but you don’t need a hardware wallet to interact with Paypal, so there’s no clear winner in terms of security.

I predict Bitcoin becomes increasingly complicated to deal with, and a less appealing alternative to existing technology that works well enough for most of the world. Diehard cryptonerds will shift their attention to relatively obscure Bitcoin forks that further entrench their blockchains back to the basics of decentralization, but this time prioritizing privacy and secure open-source, cross-chain wallets.

Ultimately, I think Bitcoin has reached its “Netscape Navigator” nerd-climax and the torch will eventually pass to more nimble altcoins that can continue experimenting (regardless of Bitcoin’s fate) without the pressure of potential financial loss, regulatory compliance, meetings with lawyers, and so many fragile egos.

I could be proven wrong, but I think Bitcoin is a waste of time and money and I don’t think it’s a good investment. Rather than holding Bitcoins, fiddling with unproven technology that’s already plagued with the same problems it aimed to avoid in the first place, you would be better off buying advertising, building your website and email list, building a business where you’re more likely to see greater ROI.