Bitcoin And Inflation
I’m completely puzzled on what to do.
Market valuations are out of control. Commodity prices reach new highs everyday. Real inflation is over 10%.
Cash is a liability.
Going into 2022 I was fully invested. Very little cash in my accounts. Loaded up across fifteen different names and pockets full of physical gold.
With real inflation over 10%, its tough to have a large cash position. A 10% loss in real purchasing power is a real liability.
I spent the past weekend thinking about the fiat dollar and what hyperinflation could mean to the economy.
We are purely a digital economy now. No one carries around cash. Benjamin’s are dead.
As cashless society had me thinking. If we hyperinflate, no one is going to pay for goods using physical gold or junk silver. It would be too inconvenient.
Imagine walking to the store with a pocket full of gold wanting to buy groceries. The chance of that happening is slim to nil.
The more likely case in a hyperinflationary environment is the use of a digital currency with a fixed supply. Namely bitcoin.
The transition to a digital currency already seems to be happening. Fly to Miami and see for yourself how many merchants accept bitcoin as tender.
Even me, an old school value investor, has started to pay individuals in bitcoin and accept it as legal tender for my online side hustles. It is quite remarkable.
I’m not at the point where I am buying bitcoin as an investment. In the end, its just a currency. A way to pay for goods and services.
Over the course of the coming weeks I plan to try and understand the use for bitcoin.
I have avoided the crypto space as currency investing is difficult. There are no cash flows. The present and future value is unknown to forecasters.
What makes bitcoin particularly interesting is the fact that it is a digital payment method with a fixed supply. The world will continue to go digital. Goods will be transacted through computer code. Physical currency will die.
The world has not used a fixed currency standard for almost one hundred years.
Britain stopped using the gold standard in 1931, and the U.S. followed suit in 1933.
We won’t go back to transacting for goods and services in any form of physical currency. Digital transactions are just too seamless.
Digital gold? Unlikely when there are alternatives in the crypto world that already work.
Bitcoin is slowly taking market share and will be a great case study in business schools.
From my understanding there has never been anything like this. An independent currency developed out of nowhere that competes head-on with government controlled fiat currencies.
If bitcoin makes real ground and begins taking share from ancient fiat currencies, politicians across the world will implement massive regulations.
Using bitcoin could be declared an act of treason. For terrorist organizations and anarchists.
At the same time, I wouldn’t be surprised if Satoshi Nakamoto is an alias created by the CIA with help from the Federal Reserve.
Regulators, bankers and money makers have seen the writing on the wall. Overspending and running a money printer non-stop will eventually lead to massive hyperinflation.
Bitcoin could be a government created currency. Build it and pump it to the masses.
When the day of reckoning comes, the world has a one unit currency for all to use. A currency for The New World Order.
My thoughts on bitcoin are just preliminary at this point. 99% of cryptos will likely go bust or turn out to be the roach infested scams that they are.
Bitcoin on the other hand is a decentralized digital currency that may have legs as a contender for business transactions.
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