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Is Bitcoin (Crypto Currencies) Central Bank's Ultimate Weapon against Gold?

The frenzy is On, Full Steam! There are reports from Japan of People taking Mortgages on their Houses to fund Bitcoin buying. Sounds familiar? Rewind back to what was happening at the height of Real Estate bubble. Actually it wasn't this bad! We are living in times which will be remembered for ever; we never how it felt at the top of Tulip bubble we could only read about it. No need to be disappointed, we will be part of a similar history with the Bitcoin mania encircling everyone around us. No one wants to make sense of it, instead everyone wants to enter into the exceptional frenzy. The 'Fear of Missing Out' is too much for people!

It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces. It’s far worse than anything I was ever doing Jordan Belfort

Jordan Belfort on whom the movie 'The Wolf of Wall Street' is based on, recently came out and spoke against Bitcoin. He believes it is one of the biggest scam which is played upon people currently. May be he is a proven fraudster, but when it comes to scam and Ponzi scheme who better than him to give a verdict? The reactions to that statement from Bitcoin enthusiast were not kind. They believe him to be a Central Bank sponsored guy who is worried about Central Banks losing control of the financial markets!

It's not surprising the kind of reactions people who question the Bitcoin mania ends up facing. The Bitcoin fan crowd has turned themselves into some kind of cult group where they react violently against any sensible question, forget criticism that is directed at the Crypto system. They believe the Bitcoin as the only way the ever popular dream of 'True Free Market' emerging. A market which will be free from the clutches of the ever-manipulating Central Bankers; but instead in the hand of a bunch of Techies who will replace the current elite as the new elites. How will they prevent the so called new-elites from doing what the present elites are doing is not to be questioned!

Does Bitcoin's emergence means Central Bankers are losing Control?

To answer this, one needs to answer the big question - What have the Central Bankers (Governments) done to thwart the rise of Bitcoin? Apart from the normal statements of "Bitcoin could be a Bubble" or "Bitcoin does not matter"; no Government have till date ever did anything to thwart Bitcoins or any other Crypto currencies. Not even the Chinese who were actually getting worried did anything spectacular to thwart the rise of Bitcoin. Now add one more question - Why haven't they done anything if the entire concept is to remove Government's control of the financial markets?

Answer those two questions and you will understand that Bitcoin or any other Crypto Currencies are no threat to Government but instead it's a way they can control us more. Bitcoin could be their ultimate weapon to the emergence of a zero-cash society. I know the usual arguments will be laid upon why Government can't control or stop crypto currencies. Let's get out of the Utopian world and ask ourselves whether Government's are unable to control Cyrpto Currencies?

They easily can outlaw it. What do you think the Chinese Bitcoin investors will do if Chinese Government pass a law making Bitcoin holding unlawful and anyone who is found holding it will be subjected to 10 years of imprisonment! The Government's can without any remorse make this unlawful as they don't have to compensate the millions lost. Remember when US Government confiscated the Gold they had to compensate the holders in dollars as Gold was lawful. With Bitcoin there is no problem, it was never been legal not accepted as legal. When it's your life is on the other end of scale against Bitcoin, you most probably hold on to your life rather than wealth. There is no point in having the wealth if you are not alive?

But Then Why Governments are Stopping Bitcoin?

I think Jim Rickaards in one of interview answered this question very precisely - "It's not that governments' want to ban it, they actually want to control it". And that is what their ultimate goal is! The end state of this mania will result in each Government's bringing out their Crypto Currencies and taking control of the same. By allowing the Bitcoin futures trading, bitcoin is all set to be taken over by the Central Bankers. Who can control any futures market - the one with money and who hold that - "The Banks". Look what is happening to Gold in futures market; it's being played on by every bank. The interesting part is each of them are getting caught in the act of manipulation but still escapes unhurt.

Is Gold the Real Target in the Bitcoin Mania?

If you look the chart of Bitcoin versus Gold you find a strange behavior - the time when Bitcoin went in super flying mode Gold was beaten down. Which simply means the money which was supposed to go to Gold as the actual source of real wealth was going to Bitcoin instead. And that would be the most enticing aspect of crypto currencies for the Central Bankers. Remember there has been an enormous flow of physical gold from West to East. It is safe to say that West's Gold holding apart from what the Governments's have (not sure if they have) is minuscule compared to what East has, especially the household gold. So in case of a financial disaster, if money tries to go to Gold it will erode the control of West over the entire World Financial market.

In that sense Bitcoin will play the perfect spoiler for Gold, if the money starts flowing into Bitcoin instead of Gold West will have more resources to control it as the futures market will be in it's control. Bitcoin in it's current form and volatility is just a speculative stock not a storage of money or labour. Do you actually want to get paid in something which may drop enormously the very next day?

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