Ep. 25: The Rise of Bitcoin with Daniel LaCalle

Listen to Episode 25 on Bitcoin

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Episode Description

In this episode Economist Daniel LaCalle and I discuss bitcoin, its rise and fall, and what its future holds. He describes how we can expect cryptocurrencies, like bitcoin, to compete with traditional fiat currencies. In the process we learn some precautions investors should take before investing in the volatile currency. Be sure to tune in.

Brief Show Notes

You can find my first discussion with Daniel here.

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Bitcoin

There are two ways of looking at cryptocurrencies: first, as an investment in a startup business, and second as a currency that might overtake a state-controlled currency. Either way there will be high volatility; the value could fluctuate 50% up or down at any given time.

Government measures regarding bitcoin

Currently, governments are repressing cryptocurrencies because they want to maintain their control over their own fiat monies. They are taking measures to block the utilization and mining of cryptocurrencies; however, these measures have a limited effect: miners are finding ways to circumvent regulations.

The benefit of having a currency like bitcoin is that you are not under the threat of a central bank just “printing money.”

“It is not a coincidence that the rise in cryptocurrencies is strongest in countries in which citizens perceive a strong risk of governments continuously depreciating the currency.” ~Daniel LaCalle

The success or failure of these startup currencies, as Daniel coins them, is up to us, the consumers, and whether we decide to use them.

Investment Recommendation

Investing in bitcoin comes with a tremendous risk. Before investing, you ought to realize the extreme volatility of the currency and that you might lose all of your investment. It is an enormous risk. An investment in cryptocurrencies is like an investment in a tech start-up.

“From that perspective, do I invest in cryptocurrencies? No I don’t. The reason why? Because my fund has a headline, ‘Low volatility.'” ~Daniel LaCalle

There are three things we need to see for cryptocurrencies, like bitcoin, to continue growing. First, wide acceptance of them as means of payment. Second, they need to be a reserve of value. Third, they must keep their purchasing power. However, as long as fiat currencies are competing with cryptocurrencies, they will be subject to fluctuations in value.

Bitcoin’s Limited Supply

Bitcoin’s supply is limited to 21 million units. It will never have more. As a result the currency is not subject to the whims of a central bank creating more money, thus it is presumably more stable. However, the concept of a currency not manipulated by a central bank is broken by the multitude of different cryptocurrencies becoming available––this creates a similar effect.

Bills with Luke Scorziell does not provide investment, tax, or legal advice or recommendations. This material is solely intended for educational purposes based on publicly available information and may change at any time. Additionally, this article’s content is a summary of the Interviewee’s comments and, while rephrased by the Author, are not from the Author himself.

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About Luke Scorziell

Mr. Scorziell created The Edge of Ideas when he was 15 years old. After a few years of blogging he found a passion for podcasting and now regularly has guests on his show, Bills with Luke Scorziell. Find out more about Luke and his unique journey. Feel free to send Luke a message below.