Nick’s Note: There’s a lot of misinformation floating around about cryptocurrencies… and it’s scaring unwitting investors out of the market.
No one in our industry knows more about cryptos than PBRG’s very own Teeka Tiwari, who was recently voted the No. 1 advisor in the space. In today’s essay, he exposes the latest propaganda central bankers are using to defame bitcoin—for their own gain…
By Teeka Tiwari, editor, Palm Beach Confidential
Over the years, I’ve heard just about every argument there is against bitcoin (and cryptocurrencies in general):
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“Bitcoin is for criminals.”
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“Bitcoin is for buying drugs.”
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“Bitcoin is for money launderers.”
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“Bitcoin is for pornographers.”
The latest knock against bitcoin comes from a June 17 report by the Bank for International Settlements (BIS).
Based in Basel, Switzerland, the BIS is owned by 60 of the world’s central banks, including the U.S. Federal Reserve. The BIS acts as a “central bank” for central banks.
According to the BIS, bitcoin’s energy consumption “will break the internet.” The general thrust of the argument is that bitcoin’s energy consumption is reckless and unsustainable.
Here’s a snippet from the report:
To process the number of digital retail transactions currently handled by selected national retail payment systems, even under optimistic assumptions, the size of the ledger [bitcoin’s blockchain] would swell well beyond the storage capacity of a typical smartphone in a matter of days, beyond that of a typical personal computer in a matter of weeks and beyond that of servers in a matter of months.
The BIS leveled many more charges against bitcoin in its 24-page diatribe.
It said bitcoin and cryptocurrencies are too unstable and are subject to too much manipulation and fraud to ever serve as bona fide mediums of exchange in the global economy.
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Today, I want to focus on the charge that bitcoin consumes too much energy. (I addressed the other charges in a previous interview.)
Before I do that, you need to ask yourself a question: Why does the BIS even care about bitcoin’s energy consumption?
Is it up in arms about the energy used by the gold mining industry? According to a recent Forbes article, gold miners use five times more energy than bitcoin does.
What about the energy used in the banking system?
According to the same Forbes article, the three million ATMs deployed worldwide use the same amount of energy as the bitcoin network.
But that’s only part of the banking system energy use story.
What about the resources needed to maintain the world’s one million bank branches? What about the resources used by the 60 million people hired by the global banking system?
According to a recent article on the tech blog Hacker Noon, when you account for the energy costs of the global banking infrastructure, the banking business uses three times more energy than the bitcoin network.
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So what’s really going on here? Did the hard-nosed moneymen of the BIS suddenly turn into bleeding-heart environmentalists?
Ask yourself, why should the BIS care about cryptocurrencies?
At a shade under $300 billion, the crypto market is tiny. It’s a pimple on the backside of the $280 trillion global financial system.
The BIS getting angry with bitcoin is the like the NBA issuing a polemic against a third-grade basketball league. Why would the NBA care?
The BIS cares because it knows that—unlike our imaginary third-grade basketball league—the crypto market presents a massive competitive threat.
Imagine a world where you can move money between accounts in minutes instead of days. Imagine a world where bank fees are pennies instead of dollars. Imagine a world where loans originate on a peer-to-peer basis with no bank involvement?
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In this future, the role of traditional banks will be greatly diminished. No wonder the BIS is coming out swinging. It’s fighting for its life.
The kicking and screaming of entrenched players like the BIS is nothing new.
Seeing the threat from the automobile, I’m sure horse-and-buggy manufacturers heavily criticized early cars… calling them slow, expensive, and a danger to the public.
In fact, in 1903, the president of Michigan Savings Bank reportedly advised people to not invest in Ford Motor Company: “The horse is here to stay, but the automobile is only a novelty—a fad.”
Faced with betting on the BIS or betting on bitcoin, I’ll take bitcoin over the BIS any day of the week.
Let the Game Come to You!
Teeka Tiwari
Editor, Palm Beach Confidential
P.S. Bitcoin and cryptocurrencies are facing an onslaught of attacks by central bankers and the traditional finance industry… How do you deal with the misinformation? Tell us right here…
CHART WATCH
Nick’s Note: Each morning, Palm Beach Trader editor Jason Bodner runs his proprietary system and pulls more than 120 data points on over 4,000 U.S. stocks. But only a handful trigger his buy signal. Today, his system is signaling that a once-hated sector is on the rise. See what it is below…
This Hated Sector Is on the Verge of a Breakout
By Jason Bodner, editor, Palm Beach Trader
The rise of the retail sector has taken everyone by storm…
Last year, the “retail apocalypse” narrative was blared all over the financial press. Wall Street feared Amazon would put all retailers out of business.
However, last fall was a great time to pick up retail names at beaten-down prices.
As you can see, the SPDR S&P Retail ETF (XRT) is less than $1 from surpassing its previous high in 2015.
Although this price action caught many off guard this year, Palm Beach Daily readers shouldn’t be surprised.
In September 2017, my colleague Nick Rokke alerted you to bargains in the retail space. That’s about the same time my system began showing unusual institutional (UI) activity in the sector.
The subsectors that have shown the most unusual trading action are apparel and retail (e.g., Macy’s and Abercrombie & Fitch) and internet and direct marketing (e.g., Amazon and Land’s End). These subsectors make up nearly 40% of XRT.
Signs still point to further buying in retail… I expect XRT could take out the five-year highs soon.
Keep the $51 level on your radar as this sector gains momentum.
Stay bullish…
—Jason Bodner
IN CASE YOU MISSED IT…
Wall Street pros are clueless about where the market will head next. But not this master trader…
He knows with 100% certainty that this year will be like the last 15—at least, when it comes to the millionaire-making power of a phenomenon he calls “Quantum.”
Every week, the Quantum allows him to isolate a radically different, yet powerful trade… which has proven to return as much as three years’ worth of profits in as few as three hours.
