Bitcoin is Becoming The New Capital Flight
What is Capital Flight?
Before getting into why Bitcoin has become the new capital flight, we must first determine what makes a capital flight. A flight capital is anything of value that investors fly to in tough times.
The current capital flight is gold bullion.
During the great recession of 2009, the price of gold skyrocketed. The reason is that investors took their money out of the various stock markets throughout the world and purchased gold.
By putting their money into gold, investors flew away from other types of investments, like stocks and bonds, and into a capital flight.
Gold remains the current capital flight. However, there are signs that cryptocurrencies, especially Bitcoin, are turning into the new capital flight.
Signs Bitcoin is Turning Into the New Capital Flight
The main sign that Bitcoin is turning into the new capital flight is because when Kim Jong Un and Donald Trump were having their war of words, the price of Bitcoin fluctuated like crazy.
Often, when there’s the chance of a war, investors balk at buying stock. Instead, they buy gold or some other precious metal.
During Trump and Kim Jong Un’s battle about the size of their rockets, the price of gold barely fluctuated. The price of Bitcoin went nuts.
That’s a sure tell sign that the next time a crisis emerges, investors will fly to Bitcoin or Ethereum before putting their money into gold.
Reason’s Why Investors Will Fly To Cryptocurrency
- 1. Gold is tough to purchase
You can’t just go online and purchase gold. You can, but it will cost you more money than the price of the gold itself.
- 2. Gold is difficult to move
Let’s say you pull a Rand Paul and buy actual gold. How are you going to move it? You can’t move it into a fiat currency. You can’t move it into a different cryptocurrency.
Pay per head agents can’t use it to do business transactions.
- 3. Gold is scarce
It’s tough to find gold where you can look for someone willing to exchange their Bitcoin for cash every minute of every day of the week.
However, Bitcoin turning into the new capital flight is wrought with questions. Here are those questions.
Why Bitcoin Won’t Become the New Capital Flight
- 1. No central governments back it up
Gold backs up almost every currency in the world.
The U.S. Government has a gold reserve. The Chinese Government has a gold reserve. In the event of a war or some other catastrophe, governments will back up their currency with their gold.
- 2. Governments will never perform transactions in a cryptocurrency
If a war were to start, investors might flee to Bitcoin. That could mean nothing, though. Bitcoin is still backed up by, well, Bitcoin.
Governments certainly won’t perform transactions with other governments in Bitcoin. That calls into question the true value of Bitcoin.
Without something tangible like gold backing up Bitcoin, who’s to say that Bitcoin, even if investors purchase a ton of it during a war, doesn’t become worthless simply because governments like the U.S. say it’s worthless?
- 3. Gold is a standard form of currency
Gold remains a standard form of currency. Governments that have large investments in gold, like the U.S. and China, have a vested interest to ensure gold keeps its value.
In any nation on the planet, gold is considered a real currency. Its value is the same no matter where you go.
Bitcoin’s value is based on a much smaller market. The difference is huge.
While gold has value no matter the nation, no matter the currency, no matter the service, Bitcoin’s value is only in terms of the Bitcoin market.
There is a chance Bitcoin could become a capital flight. For pay per head agents, it doesn’t really matter. Bitcoin will be one of the best ways for pay per head agents to perform transactions no matter what it becomes.
If you’re a pay per head agent who doesn’t accept bitcoin or other cryptocurrencies, you should reconsider.