There never has been anything quite like Bitcoin. Bitcoin is literally the beginning of a new era of decentralized finance. The dollar, by contrast, is a currency that is backed by the US government, but in recent years, the US Federal Reserve has had a policy of debasing the currency by around 2% per year — or more!
I remember when someone first asked me about Bitcoin. A woman I was dating at the time randomly asked me what I thought about Bitcoin. I didn’t believe that there was any basis for this technology at all. I just thought it was a scam, and I wasn’t interested in it. The major reason why I turned this down is because I hear about countless penny stocks that aren’t worth a dime but are pumped by aggressive salespeople all the time. I did not understand the technology, its potential, or how much demand there would ultimately be for Bitcoin.
At the time, I believe that Bitcoin was probably trading around $300 a coin. Sure, one might say I was foolish not to buy Bitcoin back then, but I also avoided buying a lot of penny stocks in that era as well.
Our hesitation to consider new, revolutionary, breakthrough technologies can sometimes be costly.
In the initial stage of any technology, people are rightly skeptical because it is oftentimes difficult to imagine a world that does not presently exist at the moment. That is because most people imagine the future being very similar to how our present era looks. It takes a truly innovative person to imagine a future that does not exist at the moment but will be built with the building blocks that are starting to take place today. As an example, when Bitcoin was trading at almost nothing before March 2010. One could buy a Bitcoin for around $0.08 around July 2010!
Corporate America and large institutions have record amounts of cash and want to diversify away from the dollar.
Many corporations in America are holding record amounts of cash. Many of them are rightfully worried about a dollar that is in decline. The problem for many of these companies is that there is no alternative currency to the dollar — except — Bitcoin. While the past Bitcoin boom was fueled by retail investors, the newest Bitcoin boom is fueled by institutional investors, who wish to invest in an alternative currency, to diversify away from the dollar, and to also take advantage of the early adopter status of Bitcoin, too. A lot of people tend to believe that investment decisions made by large institutions reflect the “smart money,” whereas investment decisions made by retail investors on sites like Robinhood reflect the “dumb money.” Perhaps one of the major reasons for this is because retail investors are not able to cause stock prices to rise dramatically, whereas large institutions definitely are able to impact prices quite dramatically. https://www.cnbc.com/2021/01/04/bitcoin-btc-rally-partly-driven-by-more-institutional-investors-pwc-says.html
Bitcoin is still relatively cheap
Bitcoin’s market cap is around $651 billion. The gold market, by contrast, is about $7.3 trillion. Considering that the purpose of Bitcoin is to preserve purchasing power and to avoid the issues that arise from fiat currency, this indicates that Bitcoin still can rise pretty dramatically before it reaches fair market value. Further, gold, in contrast to Bitcoin, is very difficult and expensive to store, and technology may indeed allow for the exploration of more gold, resulting in skyrocketing supply compared to where things are at the moment.
Federal budget deficits have never been greater.
There was a time period in our nation’s history when politicians at least pretended to care about the national debt. Today, the United States government owes $27 trillion dollars! Politicians do not even make a pretense about having a balanced budget, paying back the national debt, or cutting federal spending — on anything! All of this new fiat currency decreases the value of the US dollar. All of the money printing has encouraged people to find alternative places to put their money. Bitcoin is an excellent option, especially since it is much earlier in its long-term growth cycle, whereas many stocks are trading at some of the highest prices to earnings ratios ever.
Which currency looks good today?
Governments around the world have record levels of debt. Democracy has created conditions where politicians have promised their constituents more and more “free goodies,” to be paid for at a later date. We have reached that date. We can no longer afford to even pay for the government that we presently have. Many currencies around the world are offering negative interest rates or adjusted negative interest rates when one factor in taxes and inflation.
What should you do? You need to protect yourself from inflation. You can’t afford to hold all of your assets in a currency that is not backed by anything other than smiles, promises, and the “full faith and credit” of the United States government (which doesn’t exactly inspire much confidence in our era). Even if you put in a small amount of your portfolio into crypto, it offers you a chance to diversify away from a currency that is not working to one that potentially provides you with more opportunities down the line.
Mainstream media is clueless.
If you spend any time paying attention to the mainstream media, you will see that they are negative on Bitcoin and cryptocurrencies in general. How many mainstream media journalists are successful investors? How many of them actually invest in Bitcoin or understand it? In general, people who work in journalism have a very narrow view of life and do not have a good understanding of Bitcoin. Show me a single journalist who is wealthy, successful, and is an expert in anything.
A true currency for people in places like Africa
In many countries, the local currency is quite unstable because dictators like printing money in order to pay off old debts. For citizens in these countries, it means that they are not able to save for tomorrow, earn a positive return on their savings, or hope to move out of poverty. However, if people in Africa can be paid in Bitcoin, or to convert their worthless currency to Bitcoin, it will offer an opportunity for people to get out of poverty and have more stability in their life. If millions and millions of people in Africa start buying Bitcoin, this will be a tailwind that will serve as great demand for a long time. Bitcoin will definitely rise.
The world is an unstable place, and we have reached the peak of our debt bubble. Governments will ultimately default on the debt in one way or another. We need to move towards a new currency that does not have the same problems as the past ones. Bitcoin is the way to go to avoid giving too much power to the government over our economy and to ensure people have more stability in their life long-term.