⚡ Get All Content for 20% Off ⚡

The Strange Positive Effect Political Uncertainly Has on Bitcoin Brexit was boost for the virtual currency, which in some ways is become to the digital age what gold has always been for people worried about current affairs.

By Darin Stanchfield

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

umaxse | Getty Images

Are you betting on a Trump victory this November? Las Vegas bookies would give you 11/4 odds on that play. Nate Silver, of FiveThirtyEight fame, gives Trump a 13.5 percent chance of an election win. Most polls and political pundits appear to have gravitated towards agreement: it is quite unlikely Trump will be successful this fall. If you do happen to have a hat in this November's race, it might be wise to consider a hedge: bitcoin.

From Brexit to TrUpset?

After the surprise Brexit victory in the United Kingdom last month, it is difficult not to draw parallels to Trump's current low expectations for winning the presidency. In fact, less than a year ago, very few people correctly estimated Trump's chances of locking up the Republican nomination. To hear the certainty of seasoned analysts should bring pause. In the past, such confidence led to complacent investments without hedges. When the very thing that was unlikely occurs, the markets roil and quickly rebalance. Such seismic shifts can feed on themselves, where market uncertainty breeds further market uncertainty. With enough momentum, this is how financial crises start.

Bitcoin has proven to be a resilient asset during times of market upheaval. In early 2013, during the financial crisis in Cyprus, bitcoin began an epic sprint to higher valuation. Later that year, as the debt-ceiling debate reappeared and government shutdown fears loomed, bitcoin price again saw remarkable gains. Last year as the Greek bailout referendum results came in, bitcoin demand immediately jumped. And in July, while markets were shaken as Brexit referendum results were announced, bitcoin prices again jolted upwards. Whether it is speculators buying bitcoin in anticipation of it rising, or an actual flight to safety, the end result is the same: a higher bitcoin market price. Through crisis after crisis, something that may started as pure speculation and gambling has slowly become a self-fulfilling prophecy.

Related: 5 Ways to Use the 'Trump Effect'

Why bitcoin?

The technology was forged during a time of extreme uncertainty: the housing financial crisis of 2008 - 2009. While banks at the time feared their counter parties, bitcoin was designed to not have a counter party. Central banks began fighting deflation by printing money. Bitcoin, on the other hand, has a fixed supply and can not be printed. As a result, Bitcoin has been referred to as digital gold, an asset with many similar qualities. The difference of course, is that bitcoin can be sent to the other side of the world instantly. There's little wonder it has soared in popularity.

Related: Why Billionaire Investor Reid Hoffman Is Betting Big on Bitcoin

Imagine if history repeats itself this November, and the unexpected occurs. The Brexit vote outcome reminds us that the future is never certain. If there is a "Trump Upset," we may find markets on an even less confident footing than we did after the Brexit referendum. Boats tend to rock when passengers move from one side to the other. When a widely accepted consensus gets it wrong, many passengers find themselves in the wrong seat. If the rocking gets too rough, investors might seek safety in bitcoin, just as they have in the past.

Darin Stanchfield

Founder of KeepKey

Darin Stanchfield is the Founder and CEO of KeepKey, the Seattle-based manufacturer of the world's premium bitcoin hardware wallet. A serial entrepreneur, Darin sold his first company at the age of 26 and then co-founded a successful lead generation company, Engage Traffic. After discovering bitcoin in 2011, Darin founded KeepKey in 2014, to ensure digital currency could be simpler and more secure for the average user. Darin is a graduate of Utah State University with a degree in business and computer science.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Business News

Costco CFO Reveals Uncertain Fate of $1.50 Hot Dog and Soda Combo

CFO Richard Galanti reveals that the price will stay the same — but only "for a while."

Business News

The Most Unexpectedly Popular Side Hustle of the Decade Has Low Startup Costs and High Markups

A new report shows that vending machines are a popular investment — and the industry is set to grow up to $3 billion by 2031.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.