I had initially written this article 6 days ago but forgot to publish it before I went out of town and came back. That being said it still is a pretty relevant article and brings up some very very interesting questions that require a ton of research and legal clarifications.

Federal Reserve Comments on Bitcoin

Different people within the Federal Reserve or the Fed as a lot of people call them made quite a few interesting remarks the last couple of weeks. The biggest of these comments came from the St. Louis Federal Reserve President who stated that Bitcoin will not usurp the dollar as the world's reserve currency. While I understand why he would say this it really shows the lack of understanding with Bitcoin.

Bitcoin is expensive and over half of them have been mined. When you couple that with the psychology of people preferring whole numbers (this is one of those psychology facts I learned that I have loved ever since I mean the human brain is crazy!). Bitcoin prices out the majority of the population from interacting with it regularly. What it can do though and has done very well during the COVID economic crisis is being an amazing store of value! It is easier to buy and sell than precious metals and you can cut down the middle man getting your whole value a lot easier! A basket of independent cryptocurrencies though could provide the future world reserve. This would prevent currency manipulation something that countries currently do to each other. 

Treasury Secretary Janet Yellen

Secretary Yellen's comments were not great about Bitcoin but she has done some research and brought to the surface some serious issues with Bitcoin. When I read through the interview it appeared to me that while she mentioned illicit activities being paid for with Bitcoin she had another even more pressing issue. That issue is energy consumption. President Biden came into office with huge support from environmentalists and those who wish to see a reduction in fossil fuels. Due to Bitcoin's immense energy needs the power needs to be supplied as cheaply as possible this means they need to "best bang for their buck" which more often than not is going to be some fossil fuel-based energy source. 

Ms. Yellen is also correct that it really is not the most efficient way to conduct a transaction but that is also due to how new it is. Bitcoin again has really carved out an amazing niche as a store of value and stores of value are not meant to be used for transactions all the time! You do not buy an oz of gold one day to sell it the next you buy it for a long-term store of value! With the energy consumption though I feel a big point was missed... How much energy does the United States spend on producing its own currency? I do not have the numbers nor do I know if the data is even available but with the gathering of all the resources with the refining for the metals in coins, the creation of the paper and plastic I feel the United States' currency is also extremely energy-intense! Every currency will need energy but in my eyes, you are measuring two immense things that are really the same. 

Elon Musk

I love Elon Musk to death I mean who else can smoke a blunt on Joe Rogan's Podcast after signing a launch agreement with the US military and get away with it?!? He has brought Bitcoin quite a bit of credibility through Tesla, but as Elon often does he has brought considerable scrutiny/issues with him. Elon has also brought Dogecoin to more people's attention but.... not all of it has been good. What we have instead seen in my eyes is really currency manipulation.

Now, this only works if you believe in dogecoin and other cryptocurrencies being typical currencies. If you do believe in this like I do then when someone like Elon pumps up the idea of dogecoin to $1 without providing reasons or adaptation of the currency then really he is manipulating the price is he not? If this was a one-time thing you could convince me that it was a one-off thing however now it is becoming more and more constant. During the Super Bowl, he tweeted about it and that weekend sent it up over 30% at one point. When Bitcoin broke $50,000 he tweeted out how he thought it was too high and then when Yellen made her comments once the markets opened last Monday it sent the currency plummeting. Since Bitcoin is being used as a currency by some people and companies, even if the government decides it should be an asset, they are by default manipulating a currency. Just like it would cause outcry and upset people if the US attacked the Euro to cause its price to plummet I do not see how this is much different at all.