Is Bitcoin, or any Cryptocurreny for Preppers?

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Editors Note: Another guest contribution from Jim Watson to The Prepper Journal. The article contains the opinions of the author unedited. As always, if you have information for Preppers that you would like to share and possibly receive a $25 cash award as well as be entered into the Prepper Writing Contest with a chance to win one of three Amazon Gift Cards  with the top prize being a $300 card to purchase your own prepping supplies, enter today.

In recent months, one of the biggest news stories that has been sweeping the nation is the rising value of a “cryptocurrency” known as Bitcoin.  (Note: While Bitcoin, introduced in 2009 was the first, there are now more than 45 others listed by Wikipedia and literately a thousand or more others.) People who invested in Bitcoin early are now earning thousands of times what they invested in the system, even if they only began a few months ago.  It appears as though Bitcoin is gaining traction in the world of finance, as banks and other financial institutions are rumored to be investing in the cryptocurrency marketplace as Bitcoin grows in popularity.

Is Bitcoin something for Preppers to consider?  Perhaps.  Each person will have to make their own decisions about investment, and that’s certainly what Bitcoin is, but for all of it’s non-traditional and “get rich quick” appeal, the idea of cryptocurrency has some very appealing aspects for preppers.  It is not government controlled, it has a history of maintaining and growing it’s value, and it may signal a major shift in how money works.

What is Bitcoin?

If the concept of cryptocurrency seems foreign to you, then you’re not alone.  While Bitcoin technically was invented almost ten years ago, it’s not until recently that the majority of people started hearing about it.

Bitcoin was invented as an alternative to government issued money – a true “peer-to-peer” transaction with no involved third party.  Your paper money, and whatever you have stored in the bank, is obviously government issued, but it’s something that only has value so long as your home country is a trusted, respected, and a financially viable nation.  Take a look at your old American History textbooks, and you’ll note a large number of financial catastrophes related to currency losing value during the fall of the Confederacy and during the period of the Articles of Confederation.  Money that was issued by failing governments lost all value, and lost it quickly, leaving those in possession of it with nothing.

Bitcoin, on the other hand, is specifically designed as a non-government controlled currency, never to be issued in physical form, that can ideally be used to pay for any online transactions.  In that way, even if your country’s government fails, if you have Bitcoin, you can still redeem it for goods and services, assuming that Bitcoin itself holds any value.  It is, at the time of this writing, very easy to exchange Bitcoins for quite a bit of money, as there are a lot of people willing to purchase them.  Online merchants have not gotten entirely on board with Bitcoin yet, although many have dabbled in accepting direct Bitcoin transactions, and more will likely accept Bitcoin as a form of payment as it becomes more requested.

That said, because Bitcoin is fairly new, quite misunderstood, and on the verge of being a fad, there is little price stabilization in the market for this new currency.  You could purchase Bitcoins for multiple thousands of dollars today just to wake up tomorrow and find that it’s worth nothing, or worth millions of dollars.

Preppers have traditionally invested in silver and gold as ways of diversifying their investments, and certainly, in an SHTF situation, it will certainly be better to have the physical assets that these precious metals have rather than a digital currency we may have no access to.  In almost all circumstances, however, the investment in Gold and Silver is about diversifying your assets, and Bitcoin is certainly another option for diversification, particularly if you think that digital is going to be the future.

How to Earn Bitcoins

It’s certainly possible to purchase Bitcoins from currency exchange markets if you want to invest money in the coin, however, it’s probably not the most cost-effective way to purchase an investment in Bitcoin.  With prices in the multiple thousand dollars for a single coin, it’s difficult to justify the price.

What makes Bitcoin perhaps most interesting is that you don’t need to invest anything in the market to begin to build your Bitcoin bank account.  All cryptocurrency can be “mined” using simple software programs on any computer or device (even your smartphone can run a mining program if you want).  The concept of mining is far too expansive to cover in the context of a single article, as books have been written on the subject, but suffice it to say, that what you’re doing is directing your computer’s processing power into solving vastly complex math questions. The purpose of doing this allows Bitcoin transactions to be verified by everyone who is mining the data, and in return for the service of verifying transactions, you can earn a small fraction of the coin that can be delivered to your own wallet.  In other words, for the computing resources you’re devoting to secure the transactions of others, you get a small amount of your own coin.

Is it too late?

Has the bubble burst on Bitcoin?  Perhaps.  On December 8th, 2017 one Bitcoin was worth more than $18,000, a far cry from the $800 it was worth in just January of this year, or the $.0003 it was worth shortly after its inception.  The volatility in pricing has caused a few online merchants to stop accepting Bitcoin, although this may simply be temporary.

However, as Bitcoin gains popularity, it becomes less and less viable for common users to begin mining Bitcoins, because the sheer volume of people maintaining the network has increased.  It is now nearly impossible for a solo-user to mine Bitcoin successfully because it requires so much processing power, and because companies in other countries, particularly China, have almost monopolized what it’s possible to mine.  It’s estimated that if you purchase a $2,000 computer specifically for the purpose of mining bitcoins, you can make only earn .12 Bitcoins per month, running that computer 24 hours per day.  As more users begin to mine, that figure will decrease.

After considering all resources, including electricity, hardware, software and transaction fees, mining Bitcoin might not be a good first starting place.  It is possible, however, to mine other cryptocoins – the fewer miners a cryptocurrency has, the more coins you can earn with limited processing power – and there may be some value in other coin.  Because of the wild price swings in the Bitcoin market, many users are con other already existing “Altcoins” and new currencies that have new security features.  Litecoin, for example, is worth $145 at the time of this writing, and Ethereum is worth $464.

If cryptocurrency is something you think you want to explore, make sure to do a lot of research.  Purchasing and using a cryptocurrency mining computer is a big decision, and one that should not be taken lightly.

Overall

Preparedness is about being ready for anything, even if that “everything” is something like a national or global shift to a new type of currency.  If this happens, your American dollars might be completely worthless, with little to no warning about the impending change.  As written just after the Civil War, the exchange rate of Confederate to Union money was “Early 1863, 4 [Confederate dollars] to 1 US Dollar.  After Chancellorsville, 6 to 1.  A week after Gettysburg 10 to 1.  December 1864, 30 to 1.  January, 1 1865, 60 to 1.  A week later 70 to 1.  After that, no one interested.”

Can you imagine having nobody interested in accepting your money?  I can, so I’m starting to invest very lightly in some cryptocurrency, just to be prepared.

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5 Comments on "Is Bitcoin, or any Cryptocurreny for Preppers?"

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woodchuck
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Since most of the shtf scenarios we try to prepare for include loss of electric power and communications, bitcoin and other cryptocurrencies seems to me a bad investment. Gold and silver will always be good. Good old greenbacks will probably be good for a while. Barter of goods and services, (skills) will be increasingly necessary and accepted. Something requiring electricity and a web connection isn’t going to work. Don’t succumb to the lure of a quick buck as part of your survival planning.

Bob
Guest

SHTF doesn’t have to be a bomb, EMP or natural disaster. What if the SHTF scenario is the collapse of the American economy or government? Bitcoin becomes accepted across the globe – your American dollars are potentially worthless. It’s less likely, certainly, but it is possible.

Bob
Guest

If you are not already into cryptocurrancy and don’t understand them completely, it is best to watch from afar. At this point in time “cryptocurrancies” are not currencies or even investments. They are more like speculating or gambling. Just like the beanie baby craze, you don’t want to be the last one holding the bag when their market implodes.

Walt E
Guest

Another way to get bitcoin (or other cryptocurrency) is to take them as payment for services/products. This would work best (I think) with services and digital products, but could also work with physical goods.

I should also point out that cryptocurrencies are high value targets for cyber attacks.

eric
Guest

Bitcoin seemed to be a complete failure in Puerto Rico after the hurricane.
Bartering and precious metals got people through