Once upon a time, a fox strolling through a vineyard on a hot summer’s day came upon a trellis fat with ripe grapes dangling above.
“Just the thing to quench my thirst,” the fox thought to himself. So, he stepped back several paces and raced toward the grapes, leaping into the air with all his foxly might. Yet, the grapes remained just out of reach. So, he tried again. And a third time. Each effort failed to dislodge a single grape.
Annoyed, the fox called it quits and, with his nose in the air, trotted away, telling himself, “I am sure they are sour anyway.”
Which brings me to Janet Yellen and a few of my own, unnamed acquaintances.
I too often hear comments about bitcoin never serving as a currency, or comments about crypto assets in general having no intrinsic value and no meaningful utility beyond mindless speculation. And my go-to thought in that moment is Aesop’s fable about that little fox despising those grapes he cannot reach. He wants those grapes so bad, but the fact that he can’t have them surely means they’re probably sour anyway.
It’s the same with crypto naysayers I hear or talk to: They don’t get it—some are clearly angry about it—so their inclination is to pan the asset class as useless, risky, stupid, a scam, and not something anyone will ever use as real money. Oh, and it’s probably the playground of shady criminals and money launderers. That’s what new Treasury Secretary Janet Yellen would have us believe. She said this last week:
“I don’t think that bitcoin…is widely used as a transaction mechanism. And to the extent it is used, I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions…”
Ah, the wrongness of such verbiage.
First…
I write to you a lot about crypto these days, and I do so for an important reason: Wealth preservation and the opportunity to build financial freedom into your many tomorrows. Crypto is here to stay and, like Dr. Strangelove, the sooner you stop worrying, the sooner you’ll learn to love the bomb. And crypto is definitely going to bomb your landscape.
But crypto is more than bitcoin. It’s more than Ethereum (the No. 2 cryptocurrency). It’s more than a replacement for physical dollars. And that’s the modus behind the operandi of today’s dispatch.
I really want folks to understand what’s at play and not be frustrated by, or dismissive of, crypto just because it seems too hard to grasp, or because bitcoin hits $58,000, then dumps to $45,000, before rising back to $50,000 again—all in a few days.
While crypto is an investment opportunity (albeit a risky one, depending on what you own), there is so much more at stake: The future of, well, just about everything.
The reason for this is the technology underpinning bitcoin, and all other cryptocurrencies—blockchain. This is an entirely new way of recording and sharing information. It works like this: A block is a digital record of a transaction. That could be someone buying or selling something, like say $100 worth of bitcoin (and yes, you can buy part of a bitcoin). But it could also be any kind of digital data, such as a health record or a new item rolling off a factory production line. When a new block is created, it is added to the end of the blockchain—the complete record of all previous transactions.
The crucial thing to know about blockchain is that the overall record of generic transaction data is shared among the blockchain network. This means the information is decentralized, so there’s no single point for hackers to attack. And because the data is shared, it is virtually impossible to change, erase, or cheat. (You can’t cook the books when everyone has a copy of the real ones. You’d just get found out immediately.) It is the most secure form of mass recordkeeping yet invented and it’s going to change our world.
Pharmaceutical safety—that’s a blockchain thing. Product authenticity and food security—blockchain, too. Airline, concert, and sporting event tickets—yes, yes, and yes; all blockchain assets, soon. Art—a blockchain thing. Eradicate banking fees and actually earn real interest on your savings—the blockchain already has you covered. Messaging app security and anonymity—blockchain. Buying stocks on Wall Street—all stocks will soon be on the blockchain. Voting—blockchain will ensure 2020 never happens again. Buying and selling real estate—if you know an agent, tell them to start looking for a new career, because houses will be immutable blockchain assets and no one will need a Realtor ever again to buy or sell one.
That’s the proverbial tip of the clichéd iceberg. And none of that is particularly a bitcoin thing.
But even if we were to focus on bitcoin, then with all due respect to Ms. Yellen, she’s wrong. Conducting illicit finance is far easier in physical cash than in bitcoin. Every single bitcoin transaction is on the blockchain, visible to anyone who looks.
The denizens of the interwebs scoured the blockchain recently and determined exactly what coins billionaire Mark Cuban owns. I trust those same denizens could—should they have any interest in doing so—quite easily track down ne’er-do-wells trafficking in illicit goods by way of the blockchain.
The treasury secretary is, however, right that bitcoin isn’t widely used as a transaction mechanism—but she ironically sails past the point. Few people seriously look to bitcoin to serve as a medium for buying gas and groceries. A digital dollar (it will arrive soon) and scads of other cryptocurrencies such as Litecoin, Nimiq, and Dash will fill that role. Bitcoin is purely a store of value increasingly seen as a hedge against the falling dollar, America’s monolithic debts, and the probability we see real inflation very soon. Crazy volatility will certainly remain in bitcoin for some time, but that’s just opportunity presenting itself.
Consider this: In the huge bitcoin sell-off last week, blockchain data (again, easy to see) showed that institutional investors were eagerly snapping up oodles of bitcoin, about $650 million worth through Coinbase alone (Coinbase is one of the largest crypto exchanges).
There is a message in that: The smart money is playing retail investors for fools. Mom and pop sprint for the fire escape when bitcoin (temporarily) plunges, and the whales happily stand there at the exit, gobbling up on the cheap everything the retail investor is throwing away.
That’s what I was doing. I was putting money into one crypto that promises to be an absolute monster, meaning it could add another 1,000% to its gains this year—and grow from there. And I was snapping up other crypto I’ve been waiting to grab at cheaper prices. To steal from Warren Buffett: Be fearful when others are greedy, and greedy when others are fearful.
I was being greedy. But I’m not looking for short-term profits. Rather, here in the midst of what I see as a once-in-a-species opportunity, I’m looking for generational wealth. It’s crazy to think that’s possible, I know, but think about this: There was a months-long stretch of time in early 2019 when you could have grabbed $1,000 worth of the crypto Synthetix for between $0.035 and $0.04. Let’s split the difference and say you bought 27,000 Synthetix tokens at $0.0375 each. Just recently, Synthetix hit $28…meaning your $1,000 initial outlay would have topped $750,000 in two years.
Imagine owning two or three or 10 such coins. Many, many more examples of Synthetix are in the offing as non-bitcoin crypto invade just about every corner of our business and personal lives.
So, I urge you: Don’t be a fox deriding the grapes as sour just because they’re out of reach.
