In the second half of calendar year 2017, there are several factors converging that will have significant ripple effects throughout the world in general, but North Korea and the United States in particular. These events will serve as catalysts towards fundamental quality of life changes for everyone as we come to grips with this coming change and the evolving revolution that is cryptocurrency.
The North Korea situation for President Trump is complicated not only by what outwardly appears to be opposition from both Russia and China, but Trump’s options are limited by an establishment political class coupled with corporate mainstream media opposition at home that seemingly doesn’t respect, nor accept the fact that he was the people’s legitimate choice to be the Commander-in-Chief. Enter Kim Jong-Un, nuclear weapons, and our country’s predisposition to be the world’s policeman.
We are all witnessing a ‘perfect storm’ brewing with the challenges of not only the North Korea nuclear dilemma, there is also the fact that paper and electronic fiat currencies, held in banks, and our debt based systems are in a race to their intrinsic value of zero. There are also the massive national debt, the various public pension crises, derivatives, and bubbles in several sectors of consumer debt to contend with; auto, student loan, credit card, and mortgage. The Federal budget and tax policy issues, along with the severe impact of natural disasters such as the aftermath of Hurricane Harvey and the very real potential for added severe devastation by Hurricane Irma only add to the headache facing President Trump. Those are only some of the factors and variables. Did I say perfect storm?
As a result, Bitcoin, and all of the other myriad blockchain technology based cryptocurrencies, currently stand at a historical point. They’re at the cusp of a massive transfer of wealth and an opportunity to revolutionize how ALL transactions are done, away from governments and the banking system, as the often conjured fiat currencies teeter at the bitter edge of manipulated collapse. A nuclear exchange, in any form, can have significant implications for cryptocurrencies, for the better.
Bitcoin, even with its recent pullback from over $5,000 down to $4,300 per unit, commands a market cap greater than a significant portion of companies in the S&P 500. Even with the rocket-like rise, it’s is not in a bubble as many may think. To be in a speculative bubble, the asset must have two characteristics, have a value or price that highly exceeds its intrinsic value, and be widely held. Relatively speaking, it isn’t widely held and opinions vary widely on its intrinsic value. What is of concern though are the implications of present day nuclear brinkmanship by the immature leader of North Korea.
Unlike Gold and Silver which can be physically possessed and have been universally considered as money for over 5 millennia, cryptocurrencies have no substance and reside in the digital ledgers that compose the blockchain system on the internet. An electromagnetic pulse (EMP) can render the technology inert if a regional nuclear exchange, starting with, god forbid, Kim Jong-Un ordering the nuking of Seoul, Tokyo or even Taipei or Hong Kong for instance, creating a domino escalating effect into a wider world war.
I say ‘inert’ purposefully because the beauty of blockchain cryptocurrencies, unlike their fiat/paper counterparts, is that there is no central authority. There’s no controlling central bank or overarching, taxing, regulating government. It’s a decentralized, anonymous global network that manages and records all transactions across the entire network, so if only a few servers and the internet survives (both are necessary), technically the cryptocurrency survives. In such a scenario, value may remain, but as the internet and e-commerce are imbedded indelibly into our society, will there be a practical ability to trade with the world wide web impacted by war induced EMP? Past internet shutdowns have cumulatively cost $billions. Add deliberately targeted EMP to the mix and the impact will be costly to both traditional e-commerce and cryptocurrency transactions. Overall impact? To be determined.
Another concern given the very real North Korean nuclear problem is what happens to the cryptocurrency in the blockchain whose owners are deceased and their anonymous encrypted authentication is lost without clear, legal instructions left behind to pass on digital currency? Are these units out of the loop forever? Can they be recovered? Also, to be determined.
As cryptocurrencies go more and more mainstream, not only will governments and central bankers object, they will become a force to be reckoned right along with Kim Jong-Un’s hydrogen bombs. Bankers know that, for now, cryptocurrencies, in large part, must be redeemed for a fiat currency as the cryptocurrency trading infrastructure is still developing. In wartime, this becomes an even more critical issue as the internet is a critical means of communication, and cutting off communications is a war planner priority. This attacks the very digital core of cryptocurrencies and the practical ability to exchange them for cash or precious metals to acquire basic necessities.
The ongoing currency war against the US dollar hegemony also factors into cryptocurrency’s tactical and strategic value. As countries turn away from the US dollar as the primary medium of international exchange and trade, currency war policies such as economic sanctions are effectively neutered. China has upped the stakes by announcing that by the end of 2017, the Shanghai and Hong Kong exchanges will offer crude oil futures contracts denominated in yuan which will be fully convertible to gold. This will allow oil exporters to bypass the dollar entirely. This is a game changer which bodes well for cryptocurrencies as the fiat currency war continues.
The monetary flow by the smart money is away from zero and negative interest fiat currency-based financial instruments to fast rising cryptocurrencies which early adopters and true believers know to be the future of money. Bitcoin transactions and businesses accepting it as payment are steadily increasing, and while the blockchain is highly resistant to single vector attacks by hackers, the jury is out and the laws of unpredictable, unanticipated, and unintended consequences will preside if Kim Jong-Un and the North Koreans force President Trump’s hand with a nuclear launch.