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Mazzei Minute: 03/08/24

Bitcoin is back! As of March 6, the price of bitcoin was up 196% over the last 12 months. It traded as high as $69,000 after descending to $17,000 during the 2022 bear market.

Is bitcoin a true investment with inherent value or a speculative commodity, waiting to be crushed like the tulip of the Dutch Republic in 1637? At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled artisan. 

Bitcoin, the world’s first decentralized cryptocurrency, is a type of digital asset that uses public-key cryptography to enable and record instant payments to anyone, anywhere in the world without relying on central banking authorities. Its founder has the coolest name – Satoshi Nakamoto, a pseudonym for a still underdetermined identity.

If you want to speculate on bitcoin, there is more than likely a better entry point to buy after its next price correction. Financial planners like me tend to caution interested investors to only put money into a high-risk asset that they can afford to lose. Exchange-traded funds (ETFs) have recently made it easier to invest in bitcoin, but this week, after the price of bitcoin reached its new high, it dropped like a rock, falling 8.9% in one afternoon.

I’m more concerned about the prospect of central bank digital currencies (CBDC), which purportedly could use the advantages of blockchain technology to shift our deposits from being held by a commercial bank of our choice to the Federal Reserve. However, government issued digital currency could lead to increased surveillance over financial transactions in an era in which the government has already grown too big and too oppressive.

For this reason, the Florida Legislature and Gov. Ron DeSantis passed a bill last year that banned CBDC to protect the personal finances of Floridians from government overreach and woke corporate monitoring. Oklahoma officials need to do the same.


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