If you don’t know much about how our Federal Reserve works, then Rule #11 of Monopoly is a decent place to start.
The reason I bring up Monopoly (and tyranny) is that as the Fed continues to conjure money out of thin air, people seek to protect capital for themselves and loved ones.
Tangible assets like real estate, gold and silver are commonly used to protect against inflation and have a long history of doing so. But what about crypto? What is it, and could it be a viable solution?
Cryptocurrency is a digital currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Crypto is “decentralized” as it has no issuing government.
From a farmer in Uganda to a fisherman in Peru, anyone in the world with access to a cell phone manufactured after 2013 can own crypto potentially making it the most inclusive asset class in world history.
Other positives include portability, divisibility, inflation resistance, transparency and near zero transaction costs.
Obviously, there are concerns. As of now, the prices of crypto are extremely volatile. For example, last week Bitcoin was over $37,500, then briefly dropped to $23,000, and at the time of this writing, trades at $30,000.
The idea is that over time this will settle. Unfortunately, as of now it’s exactly that— an idea.
The largest downside of crypto is that it can be made illegal at any given time by any government in which you reside, or people may decide on a different medium of exchange.
Should cryptocurrency become corrupt and centralized (in the hands of government), imagine a dystopian future where your “credits” are at the whim of a government agency, and should you “misbehave” or act in a way the government disapproves, your credits get removed.
If you think this is the only the stuff of nightmares or B-Movie horror-flicks, then you may not know about the “social credit system” currently active in parts of China.
We do not know the exact effect of the trillions of U.S. Dollars being created in response to the virus. We do, however, have a window in which to prepare to the best of our abilities. Does crypto have a place in your financial strategy?
Our mission is to help passive investors become financially free by providing high quality alternative investments. If we can help you in that way, it would be an honor to do so. Feel free to schedule some time for us to chat.