Does the Internet Depend on the Survival of Bitcoin?

Does the Internet Depend on the Survival of Bitcoin?
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The market capitalization for Bitcoin has exceeded $1 billion so people are asking: What's next?

We can see the growth pattern for adoption of this new virtual money take off in places where there is financial stress. In Cyprus, people were desperate to obtain as many bitcoins as they could ahead of deposit confiscations. In Cyprus and other EU countries where the Troika (EU, ECB, and IMF) have providence over these country's sovereign governments, there is growing alarm and a growing scramble for bitcoins.

Bitcoin is not subject to government control or manipulation like the popular fiat currencies in the world; the U.S. dollar, euro, yen, pound and renminbi, so its value is the result of its utility as money (see my; "Is Bitcoin Money").

As money, Bitcoin achieves two objectives; it's both a unit of transaction as well as being a store of value. The U.S. dollar for example, is a unit of transaction, but it is not a store of value. The supply of dollars grows without limit and we can see how the purchasing power of the dollar has dropped more than 90 percent over the past few decades. Bitcoin's supply is capped at 21 million. This is one of the prime reasons the purchasing power of bitcoins will remain constant.

But for all the advantages and popularity of Bitcoin there still remains one question. Is Bitcoin vulnerable to a take-down of the Internet most likely by a government that is not keen to give up its ability to control money? My answer to this takes us back to that $1 billion valuation I mentioned at the top. There are a few key milestones that Bitcoin will achieve that will make this question fade away. As Bitcoin grows in price, the number of millionaires holding bitcoins also grows. There are quite a few anonymous Bitcoin millionaires already and that number is set to expand sharply. I expect that we'll see a Bitcoin billionaire emerge before too long. (Certainly anybody who is building ancillary Bitcoin servicing companies that play off the ubiquity of Bitcoin stand to make a billion or so when these companies go public).

One example of an 'accidental' deca-millionaire is Butterfly Labs, the company that makes Bitcoin mining equipment. They took pre-orders of bitcoins from people reserving equipment Those bitcoins, thanks to the recent price surge, are now worth over $100 million.

But getting back to the question, will Bitcoin be able to survive a governmental attack? It's a matter of market cap I think. The first major goal for Bitcoin's market capitalization will be to exceed the current market capitalization of the above ground stock of Silver bullion that stands at approximately $30 billion.

Silver would already be a lot higher, but it is unfortunately being held down by coordinated efforts of central bankers (per recent lawsuits to that effect). So, since it looks like silver won't be able to escape being imprisoned by banksters in the short-term, we'll probably see Bitcoin eclipse silver's market cap. This implies a price per Bitcoin, at current supply number, of approximately $2,700 per bitcoin. More importantly, this surge past silver's market cap will be an important signal to anyone trying to manipulate currencies (Wall St. and various governments) that a new sheriff is in town: Bitcoin.

Large wealth generation equates to increased political power and I think this is the answer as to whether Bitcoin will be threatened by a political takedown of the Internet at some point. As more wealth and political power is amassed -- as bitcoins rise in value -- Congress and various lobbying groups will be influenced to an ever greater extent by the interests of Bitcoin owners who -- in turn -- will lobby to keep the Internet and Bitcoin alive and growing.

Bitcoins' success will guarantee Bitcoin's success.

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