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indicates that large holders, the so-called whales, would own about 92.4 percent of the 2 percent, with crypto exchanges accounting for nearly 7 percent.6 What a brilliant phenomenon it is to get people to want it despite this.
A beautiful précis of the theistic aspects of cryptocurrencies7 was published by Bloomberg early in 2021. It begins thus:
Bitcoin is the first true religion of the 21st century. Sometimes people call Bitcoin a religion pejoratively,
as a way to sneer at its disciples. Or they call it a cult. Or they just use “religion” to imply that the whole thing is irrational. But I mean it with no judgment one way or another. Just that it’s literally a religion. There’s plenty of evidence for it.
This piece was followed up a couple of weeks later by an equally riveting reinforcement.8 Like the author, Joe Weisenthal,
I reserve the right to be non-judgmental while analyzing
the phenomenon. And yet, I sort of enjoy watching it. Most religions fizzle out and become rumps or insignificant cults.
The most prosperous religions, however, are often promoted as continuations of a successful model, or at least an established one. One need go no further than the Judeo-Christian-Islamic narrative to evidence this point. So long as the Bitbugs are a bit tolerant
of the gold bulls’ denial of their exclusive right to the future of
hard currency, all will be well. Gold is tested by time, and, even if technically demonetized for the time being, it is still a recognized and safe store of value that will continue to be seen as such by central banks. Not unlike that Old Testament/New Testament/ Quran dynamic, I for one have a deepening suspicion that the evangelism of cryptocurrencies’ true believers may metamorphose in a way that will reaffirm and enhance the case for gold itself as part of a mix of alt-currencies. After all, the fundamental rationale for ownership of cryptocurrencies is pretty much grounded in the intrinsic justification for owning gold.
Crypto bulls recognize that the monotheistic principle of “money that can’t be printed by fiat ad infinitum” began with gold (and, to be fair, silver too). Both assets hence are part of a wave against the paganism of what began as a creeping and inchoate irresponsibility and has now crystallized into a new creature altogether – namely, Modern Monetary Theory. True, this heresy remains the state religion. But with gold gaining new adherents, and the hyping of cryptocurrencies’ various successor testaments and catechisms, the neo-monetary monotheists of what I am here and now christening “Modern Monetary Theology” are taking the thesis to a new generation that many of the gold bulls, and I for one, would never have been able to reach on our own. Thus, I do believe that what Bitbugs refer to as the “new gold” bodes very
6 https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-whales-ownership- concentration-is-rising-during-rally (accessed February 6, 2021)
7 https://www.bloomberg.com/news/newsletters/2021-01-04/five-things-you-need-to-know-to- start-your-day
8 https://www.bloomberg.com/news/articles/2021-01-21/bitcoin-is-a-faith-based-asset-joe- weisenthal
well for the old gold. History shows that, when people behave civilly, multiple models derived from a common gene can survive in tandem – and indeed thrive.
Want and need are two distinct things; the difference between freedom and dependency. For our purposes that is to say that, while I genuinely want crypto to succeed, I don’t actually need crypto to succeed for Donlin and scarce assets in safe places to become their own juggernauts. This is an excellent position in which to find oneself. To go from the sacred to the profane, this reality actually applies to numerous asset classes. After all, Old Masters are reaching new highs at auction and in private sales. In fact, an Old Master painting – Leonardo’s Salvator Mundi – holds the record at auction for any work of art ever, despite being sold in a market swirling with modernist and contemporary creations. There is a lot to be said for pedigree and scarcity.
I shall not, however, say much for why one should own gold – or crypto, for that matter. While each asset boasts some bells and whistles that are unique to itself, their commonality of purpose should form a sea change that is embraced by the gold bulls, who have witnessed the triumph of the essential arguments with a new generation. And by now, practically all of these NMM evangelicals have heard their favorite asset referred to as “digital gold” or “the new gold.” Millennials logically associate the received wisdom
of crypto as being the natural extension of something that has
an actual multi-millennial pedigree. This rebooted applause for gold is enormously bullish for the metal – for the zeitgeist has the potential to boost gold’s brand recognition as an aspirational asset benchmark, at just the right time for an industry that cannot find sufficient quantities to replace their reserves. Think about it: Every time a Bitbug refers to crypto as “the new gold” or “digital gold,” they are paying a compliment to gold. True, they may be saying
it as a backhanded compliment. But considering that this crowd probably never owned – or thought of owning – any non-fiat currency (or was even familiar with the idea that they should or could) until recently, any revelation at all regarding why gold has worked can only be accretive to the brand of a most under-owned financial asset. Some, led by reputable aficionados such as Mike Novogratz himself, actually espouse buying gold and, as seen most quixotically but very intelligently, there is clearly a strong retail (as well as institutional) interest in silver. If, as I suspect, these fellow leverage lovers happen to look for a new hit of octane, they will be pivoting to the miners with enough enthusiasm to create a new bubble in that beaten-down asset class.
For those who want some practical advice, therefore, I can only express how I am choosing to trade the gold/Bitcoin phenomenon. It is through the equities of gold and silver mining shares. If crypto does well, it is a very good sign that gold will do fine. If digital currencies are themselves disrupted by governments and their market deepens, crypto:gold ratios will emerge that will be tradable. The relative illiquidity of gold and silver will cause them to be revalued upward. And so it goes. I have always held that gold needs a $3,000-5,000 price for an equilibrium to be reached simply from a gold industry standpoint – with multiples of that
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