Bitcoin Popular with Preppers & They’re Wrong

Much has come out recently about Bitcoin becoming more popular than Gold as a hedge against calamity. This makes inherent sense to me for “mainstream” investing. Bitcoin is outside of the banking system and control of government. Its (on its way to becoming) universally accepted and has shown great utility for people in escaping governments which are collapsing (see Zimbabwe and Venezuela).

Whats odd to me is when the Preppers come in and we see stories that they are looking to Bitcoin as an alternative to gold for use in a doomsday scenario. Bloomberg highlights this here:

Across the North American countryside, preppers like McElroy are storing more and more of their wealth in invisible wallets in cyberspace instead of stockpiling gold bars and coins in their bunkers and basement safes.

They won’t be able to access their virtual cash the moment a catastrophe knocks out the power grid or the web, but that hasn’t dissuaded them. Even staunch survivalists are convinced bitcoin will endure economic collapse, global pandemic, climate change catastrophes and nuclear war.

“I consider bitcoin to be a currency on the same level as gold,” McElroy, who lives on the farm with her husband, said by email. “It allows individuals to become self-bankers. When I fully understood the concepts and their significance, bitcoin became a fascination.”

On one side she exhibits a true understanding of the value of Bitcoin – becoming a “self-banker”. This to me is the greatest value of Bitcoin. On the other points I am lost.

If the power grid goes out for a sustained period or there is a nuclear war then forget Bitcoin. Firstly the Bitcoin network would most likely grind to a halt particularly if the power problem is in China or any other place where mining is concentrated. If they can’t run then the network crashes and you can’t trade those precious bitcoins. In a true doomsday scenario you are going to want food, toilet paper, etc and are going to want to trade for things with true utility.

What I suspect is happening is people are jumping on the bandwagon here for bitcoin as a speculative investment betting that prices will rise. They then claim that Bitcoin is useful (even if the power grid is down) to support their speculation. If you are a truly wanting to get out of the system you can convert all of your fiat cash to Bitcoin and use Bitcoin exclusively to buy and sell everything (get a Bitcoin Visa card). I don’t get the impression that is what preppers and others like them are doing.

This brings me to my final point. Bitcoin can be a beautiful answer to much of what is wrong in this fiat/central banking dominated system. If people all started to use  bitcoin rather than hold it because it will make them rich – then Bitcoin has a real future. I suspect that it will take a systemic shock to get people to switch to using Bitcoin to transact. An event wherein everyone sees the value of being outside the banking system.

For now it appears Bitcoin is more of a “get rich quick” scheme.

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