An Alberta-based Bitcoin company is making moves to expand into the US even as states like Texas are rolling out plans to introduce their own gold-backed crypto currencies..Edmonton-based Bitcoin Well announced last week that it is setting up a waiting list for US customers who are losing faith in its own Greenback’s ability to hold value in the face of a near-constant devaluation and its ability to stem the corrosive effects of inflation as the world’s reserve currency. .According to the US Treasury Department’s own numbers, the US dollar has lost about 87% of its purchasing power since it was decoupled from the Gold Standard by the Nixon administration — to pay for foreign imported oil — in 1971. The value of one US dollar — 100 cents, not to be confused with the penny which is ‘one per cent’ of a dollar, hence a ‘cent’ — is worth about 17 of the copper-minted coins. In fact, the scrap value of the copper exceeds its purchasing power in today’s monetary value..According to Bitcoin Well founder Adam O’Brien, the US is a logical extension of his company’s long term goal of protecting the long-term value of assets such as property and real estate. In an interview with Western Standard, he described paper money as essentially “worthless” compared to hard assets — like gold for instance. .That in turn is driving up the price of everything, from food to property values. It’s not that the intrinsic value of these everyday things we all rely on is going up, but rather, that the purchasing power of the currencies we pay them in is going down, he said.. Global money supply .“The value of those commodities hasn’t changed. What’s happening is that the money that is being used to buy them is being devalued..“Governments have manipulated the value of money to make it less volatile, when in fact they’ve made it more volatile. What’s happening is that money is being made worth less (as opposed to worthless).” .There is always an intrinsic value in owning your own home. But the reason house prices keep going up isn’t because you’re any richer — in fact it’s the opposite. The dollars you use to pay for hard assets like property is going down, in a race to the bottom. It’s a direct correlation of successive government’s desire — and necessity — to print more money to keep the system afloat..And governments have indeed been printing more money. It’s called ‘quantitative easing’, starting (but not limited to) the financial crisis of 2008 and continuing through the pandemic. The US money supply has increased from 10 trillion dollars to about 40 trillion the last three years alone. .“This was caused by the US Federal government that printed extra dollars, and brought those extra dollars in circulation to cover their expenses. When the government multiplies by 4X the available money, and the supply of goods and services grows remains identical, it is clear you will have to pay a lot more when buying those goods and services. So the purchasing power of your savings reduces because the government increases the money supply,” according to binance.com. .It’s a technique called "fractional reserve banking.”. US money supply vs. Inflation .Fractional reserve banking is a system in which banks hold only a portion of their deposit liabilities as reserves and can lend out the remaining amount. This means that banks can create new money by lending out more than they hold in reserves, which leads to an increase in the money supply. .The fractional reserve requirement in the United States is set by the Federal Reserve (the central bank). Currently, the reserve requirement for most banks is only 10% of the received deposits. This means that a bank must hold 10% of its deposit liabilities in reserve, and can lend out the remaining 90%. .In junk bonds, for example. Which is exactly what caused the financial crash of 2008..Despite the volatility in Bitcoin, O’Brien is confident in its value over the longer term. Unlike paper money, the number of bitcoins has been capped at 21 million which means “the currency’s scarcity ensures it will continue to hold value,” he told Money Sense magazine. As opposed to speculating on Bitcoin — after the crash it’s up about 65% this year — he advocates a long term savings plan..“Volatility is a law of Earth, just like the weather. We accept this volatility, when you cross the street…” he told Western Standard. Ironically he compares it to oil prices, which went negative last year after traders actually paid to have contacts unloaded. .In fact, Bitcoin’s value is underpinned by the energy used to produce it, he said. Every engineer knows it, the First Law of the Conservation of Energy: “Energy cannot be created or destroyed, but can be transferred from one form to another.” In this case, Bitcoin. .And it’s not so outrageous, considering oil — a consumable — has become the de facto gold standard for currency translation, backed by the energy contained in it. O’Brien notes that you can’t actually use gold, or oil for that matter, to pay your credit card bill..That’s exactly what his company is trying to do. Establish a method of payment that facilitates easy payment of transactions in Bitcoin. The company’s web site insists users can convert Bitcoin to dollars in 30 seconds or less through its online network and physical Bitcoin ATMs. You may have noticed one in your favourite local bar and watering hole in Alberta..It has teamed up with an undisclosed American partner to navigate the US banking system targeting what he calls, rural “Western Standard-type readers” — likeminded “Alberta states” — who “understand the risk of government overreach.” Otherwise it would have to apply for 50 separate licences in 50 separate states to operate..In recent weeks, Texas has become the latest American state to introduce its own gold-backed crypto currency. Under proposed legislation introduced into both its houses, depositors would be able to exchange a Texan-based crypto denomination at par value for gold held in a proposed secure vault..Although he isn’t opposed to the idea in principle, O’Brien says it has problems. Namely, it’s a “custodial” system which means dollars are essentially held in escrow on behalf of the rightful owners. The proposed gold reserves would have to be audited and continuously administered which adds layers of complexity. Under Bitcoin Well’s system, users exclusively hold their own accounts without government interference. .“You have to audit the supply of gold?” he rhetorically asked. “What happens if it’s miscalculated? What happens if they change the rules? That will never happen with Bitcoin.”.Bitcoin Well (BTCW.TSXV) trades on the Toronto Venture Exchange. Its shares were worth about four cents in Monday trading.
An Alberta-based Bitcoin company is making moves to expand into the US even as states like Texas are rolling out plans to introduce their own gold-backed crypto currencies..Edmonton-based Bitcoin Well announced last week that it is setting up a waiting list for US customers who are losing faith in its own Greenback’s ability to hold value in the face of a near-constant devaluation and its ability to stem the corrosive effects of inflation as the world’s reserve currency. .According to the US Treasury Department’s own numbers, the US dollar has lost about 87% of its purchasing power since it was decoupled from the Gold Standard by the Nixon administration — to pay for foreign imported oil — in 1971. The value of one US dollar — 100 cents, not to be confused with the penny which is ‘one per cent’ of a dollar, hence a ‘cent’ — is worth about 17 of the copper-minted coins. In fact, the scrap value of the copper exceeds its purchasing power in today’s monetary value..According to Bitcoin Well founder Adam O’Brien, the US is a logical extension of his company’s long term goal of protecting the long-term value of assets such as property and real estate. In an interview with Western Standard, he described paper money as essentially “worthless” compared to hard assets — like gold for instance. .That in turn is driving up the price of everything, from food to property values. It’s not that the intrinsic value of these everyday things we all rely on is going up, but rather, that the purchasing power of the currencies we pay them in is going down, he said.. Global money supply .“The value of those commodities hasn’t changed. What’s happening is that the money that is being used to buy them is being devalued..“Governments have manipulated the value of money to make it less volatile, when in fact they’ve made it more volatile. What’s happening is that money is being made worth less (as opposed to worthless).” .There is always an intrinsic value in owning your own home. But the reason house prices keep going up isn’t because you’re any richer — in fact it’s the opposite. The dollars you use to pay for hard assets like property is going down, in a race to the bottom. It’s a direct correlation of successive government’s desire — and necessity — to print more money to keep the system afloat..And governments have indeed been printing more money. It’s called ‘quantitative easing’, starting (but not limited to) the financial crisis of 2008 and continuing through the pandemic. The US money supply has increased from 10 trillion dollars to about 40 trillion the last three years alone. .“This was caused by the US Federal government that printed extra dollars, and brought those extra dollars in circulation to cover their expenses. When the government multiplies by 4X the available money, and the supply of goods and services grows remains identical, it is clear you will have to pay a lot more when buying those goods and services. So the purchasing power of your savings reduces because the government increases the money supply,” according to binance.com. .It’s a technique called "fractional reserve banking.”. US money supply vs. Inflation .Fractional reserve banking is a system in which banks hold only a portion of their deposit liabilities as reserves and can lend out the remaining amount. This means that banks can create new money by lending out more than they hold in reserves, which leads to an increase in the money supply. .The fractional reserve requirement in the United States is set by the Federal Reserve (the central bank). Currently, the reserve requirement for most banks is only 10% of the received deposits. This means that a bank must hold 10% of its deposit liabilities in reserve, and can lend out the remaining 90%. .In junk bonds, for example. Which is exactly what caused the financial crash of 2008..Despite the volatility in Bitcoin, O’Brien is confident in its value over the longer term. Unlike paper money, the number of bitcoins has been capped at 21 million which means “the currency’s scarcity ensures it will continue to hold value,” he told Money Sense magazine. As opposed to speculating on Bitcoin — after the crash it’s up about 65% this year — he advocates a long term savings plan..“Volatility is a law of Earth, just like the weather. We accept this volatility, when you cross the street…” he told Western Standard. Ironically he compares it to oil prices, which went negative last year after traders actually paid to have contacts unloaded. .In fact, Bitcoin’s value is underpinned by the energy used to produce it, he said. Every engineer knows it, the First Law of the Conservation of Energy: “Energy cannot be created or destroyed, but can be transferred from one form to another.” In this case, Bitcoin. .And it’s not so outrageous, considering oil — a consumable — has become the de facto gold standard for currency translation, backed by the energy contained in it. O’Brien notes that you can’t actually use gold, or oil for that matter, to pay your credit card bill..That’s exactly what his company is trying to do. Establish a method of payment that facilitates easy payment of transactions in Bitcoin. The company’s web site insists users can convert Bitcoin to dollars in 30 seconds or less through its online network and physical Bitcoin ATMs. You may have noticed one in your favourite local bar and watering hole in Alberta..It has teamed up with an undisclosed American partner to navigate the US banking system targeting what he calls, rural “Western Standard-type readers” — likeminded “Alberta states” — who “understand the risk of government overreach.” Otherwise it would have to apply for 50 separate licences in 50 separate states to operate..In recent weeks, Texas has become the latest American state to introduce its own gold-backed crypto currency. Under proposed legislation introduced into both its houses, depositors would be able to exchange a Texan-based crypto denomination at par value for gold held in a proposed secure vault..Although he isn’t opposed to the idea in principle, O’Brien says it has problems. Namely, it’s a “custodial” system which means dollars are essentially held in escrow on behalf of the rightful owners. The proposed gold reserves would have to be audited and continuously administered which adds layers of complexity. Under Bitcoin Well’s system, users exclusively hold their own accounts without government interference. .“You have to audit the supply of gold?” he rhetorically asked. “What happens if it’s miscalculated? What happens if they change the rules? That will never happen with Bitcoin.”.Bitcoin Well (BTCW.TSXV) trades on the Toronto Venture Exchange. Its shares were worth about four cents in Monday trading.
