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Stock Investor: Five Justifications for Owning Bitcoin


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    Five reasons to own Bitcoin offer a bullish view of how buying the most popular cryptocurrency can pay off.

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    The five reasons to own Bitcoin are intended to educate but not necessarily to endorse cryptocurrency as a place to put one’s own funds. Bitcoin also has proven to be volatile and prone to big jumps and deep drops, so investors should consider their own risk tolerance and goals before including any cryptocurrencies in their personal holdings.

    Bitcoin is one of the only truly decentralized forms of cryptocurrency that cannot be manipulated, said Tim Skousen, who takes the lead in offering cryptocurrency investment recommendations in the TNT Trader advisory service. Indeed, one of the biggest complaints among free-market economists is that central banks and governments can inflate the money supply, thus devaluing sovereign currencies such as the U.S. dollar, the British pound, Japan’s yen, China’s yuan and the euro.

    First of Five Reasons to Own Bitcoin: Blockchain

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    When Satoshi Nakamoto wrote the code for Bitcoin, he created a blockchain that links together all the bitcoins created and acts like an open, but anonymous, digital ledger, Skousen told me. This means all the Bitcoin can be publicly seen, making it impossible for the existence of fake Bitcoin, he added.

    “So, no group can add more Bitcoin to the total amount,” Skousen said. “This is one reason the cryptocurrency is so popular in places like Argentina, where their currency is constantly devalued and manipulated.”

    Tim Skousen leads the cryptocurrency coverage in TNT Trader.

    Then, Satoshi Nakamoto, if he is a real person or simply a pseudonym, disappeared from public life, Skousen explained. So, there isn’t even a person to petition to make changes even if a government wanted to do so, he added.

    Second of Five Reasons to Own Bitcoin: Supply is Capped

    The supply of total number of Bitcoins that are supposed to be produced is capped at 21 million, Skousen counseled. This means that once all the Bitcoin is mined, no more Bitcoins can be added beyond that limit, Skousen continued.

    “Bitcoin is ultimately a scarce commodity when you think there are 8 billion people on earth that will share 21 million bitcoins, Skousen said.

    In contrast, countries can increase the money supply of their national currencies, causing inflation. Under normal conditions, if the money supply grows faster than real output, it creates inflation. Real output, also known as real gross domestic product, measures an economy’s total goods and services in a year, while also accounting for the effects of inflation or deflation.

    Third of Five Reasons to Own Bitcoin: Digital Gold?

    A bitcoin is created by a computer solving a difficult math equation that requires a large amount of computing power. Due to the need to use energy, there is a production cost.

    As a result, each bitcoin takes time and money to create. This initial value gains additional value in the form of human trust in the idea of Bitcoin as an accepted currency.

    “Bitcoin has become digital gold and is seen as a safe place to hold your money for long-term value,” Skousen continued. “Like real gold, it costs time and money to produce it, and then speculators buy it, driving the price higher as people value the scarcity of the commodity.

    Chart courtesy of www.stockcharts.com

    Fourth of Five Reasons to Own Bitcoin: Big Transactions

    Despite the price of each bitcoin currently exceeding $40,000, it is not a good form of currency for small transactions, Skousen said. However, Bitcoin can be used to transfer large amounts of wealth anonymously and cheaply across international borders, he added.

    “It is possible to transfer millions of dollars in 20 minutes for a tiny transaction fee,” Skousen said. “You wouldn’t buy gum with Bitcoin, but you may someday buy a house, a car, or more with Bitcoin.”

    Anyone who has tried to move large amounts of money knows how long it can take, and how expensive the transaction fee can be, Skousen said.

    Fifth of Five Reasons to Own Bitcoin: Borderless Currency

    Bitcoin is borderless. That characteristic can be helpful in navigating between countries to complete a business deal.

    “You can keep your Bitcoin off the grid on a thumb drive and bring it with you anywhere in the world,” Skousen said. “It gives the ultimate freedom in moving wealth around privately.”

    Governments everywhere always want to control all the money in circulation, Skousen said. Bitcoin is designed to allow transactions to remain confidential, he added.

    In contrast, anyone hoarding gold knows how “very difficult” it is to move large amounts of the precious metal from country to country, Skousen said.

    Unless someone puts a gun to one’s head and demands a cryptocurrency owner’s passphrase, confidentiality can be maintained, Skousen continued.

    Five Reasons to Own Bitcoin Combine to Establish Value

    “All these reasons explain why people are increasingly seeing the value in cryptocurrency, and Bitcoin in particular, as a safe place to store long-term wealth,” Skousen said. “The time will come when a single bitcoin will likely be worth $1 million or possibly several million dollars in 20 years.”

    In the latest TNT Trader update, the price of both Bitcoin and Ethereum were reported to have dipped from recent highs. The price of Bitcoin slid from $45,000 to around $41,000, while Etherium slipped to $2,200.

    “It would not be unusual for the cryptocurrencies to trade in this range for the next couple of weeks, as consolidation occurs and volume lowers,” Skousen predicted.

    Both cryptocurrencies are expected to rise in the coming months, Skousen told me.

    All seven of the current investment recommendations in the TNT Trader advisory service are profitable, as of Dec. 12. A blockchain exchange-traded fund and two cryptocurrency recommendations all are up by double-digit percentages.

    Skousen is not just a cryptocurrency trader, he expressed confidence that Bitcoin will retain and build value in time for the five reasons he identified.

    Skousen partners on in the TNT Trader advisory service with his father, Mark Skousen, PhD, who also heads the investment newsletter and serves as an economics professor and presidential fellow at Chapman University in California. The TNT Trader advisory service produced a 164.8% return on an 86-day investment in Grayscale Bitcoin Trust (OTCMKTS: GBTC) that closed in 2021.

    Mark Skousen, scion of Ben Franklin and partner in TNT Trader, talks to Paul Dykewicz.

    Five Reasons to Own Bitcoin: Geopolitical Risk Heightens

    Russian’s ongoing invasion and military activity in neighboring Ukraine, the war Hamas started in the Middle East on Oct. 7 by attacking communities in Israel not far from its border with Gaza and other global hotspots are adding to geopolitical risk. Such conflicts actually may enhance the value of cryptocurrency as a way to store and transfer value without lugging around large supplies of gold or stacks of money.

    Claims by Russia’s President Vladimir Putin that the West may incur fatigue from supplying Ukraine with military equipment to defend itself from the onslaught of Russia’s forces spurred Poland’s newly appointed Prime Minister Donald Tusk to voice the need for renewed support to protect for freedom. When Tusk addressed the Polish parliament on Dec. 12 following his appointment, he vowed to “loudly and decisively demand the full mobilization of the free world” to help Ukraine fend off its attackers.

    Strengthening international support for Ukraine will be one of Polish government’s priorities under the new administration, Tusk said. The United States also is continuing to support Ukraine, despite Congressional infighting about the next allocation of aid.

    U.S. President Joe Biden announced an additional $200 million military aid package to Ukraine to help the war-ravaged nation fight back against its Russian invaders. The announcement accompanied Ukraine President Volodymyr Zelensky’s visit to the White House and a meeting with congressional leaders on the same day to plead for further U.S. help.

    Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Holiday gift buyers should consider purchasing Paul’s inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many othersCall 202-677-4457 for special pricing on multiple-book purchases. Paul, who can be followed on Twitter @PaulDykewicz, also is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper, after writing for the Baltimore Business Journal and Crain Communications.

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