Editor's note: As we prepare to hit the ground running in 2021 with a return to our normal Digest fare tomorrow, it's only fitting that we end our "2020 in review" series with a look at one of our most popular topics of the past year...

We're talking about bitcoin.

Institutional investors are adding bitcoin to their portfolios seemingly every day. And our founder Porter Stansberry made a big bullish call about cryptocurrencies over the summer that proved prescient...

Bitcoin's price soared to an all-time high last month for a lot of the reasons we detailed in our August 6 Digest. So with that said, let's return to that essay to conclude our 2020 recap...

The Battle for the 'Soul of Money'

By Corey McLaughlin, editor, Stansberry Digest

One of the most beautiful, iconic skyscrapers in New York City is the Chrysler Building...

You would probably recognize its image if it was put in front of you. It stands above most of the rest of the skyscrapers in Midtown Manhattan, its top showing off rounded Art Deco features and a shiny spire.

Completed in 1930, the building was the tallest in the world for a brief period before workers finished the Empire State Building 11 months later.

What most people don't realize or remember, though, is that the Chrysler Building is capped in aluminum. You don't see that in grand new buildings erected today.

Our founder Porter Stansberry told this story during his recent "Capitalism in Crisis" presentation to make an important "big picture" point...

Aluminum was once the most valuable metal in the world...

It was worthy of being used to make a show, like adorning the tallest building in the world – and before that, capping the Washington Monument in our nation's capital.

And it was expensive. In the 19th century, aluminum was more expensive than gold. In 1880, it went for $12 a pound. But the price dropped dramatically after scientific discoveries about how to refine it better.

Today, it's likely that you have a roll of aluminum foil in your kitchen. About 450 square feet of it will cost you $11.99 at Costco.

Porter brought up this example to show "why it's dangerous to have your economy rooted in a single commodity, whether it's gold or oil or anything else." As he said...

We know what happened [to aluminum]. We had an enormous increase in the amount of electricity we could produce and the price of making aluminum fell to the point where we now wrap food in it in our fridge...

If you had all your long-term contracts, if you had all your long-term pricing agreements, if you had a 30-year mortgage that was based on aluminum, imagine how bad that would've been for your bank.

Your bank would've paid you the most expensive thing in the world, and you would've paid it back in aluminum foil and savers would've been destroyed.

The point is – a functioning economy needs stable 'stores of value'...

Gold, not aluminum, has been that for the industrial age... The "value" of an ounce of gold hasn't changed in more than 2,000 years despite immense increases to productivity.

The price of an ounce of gold has roughly tracked the price of a fine men's suit, Porter said during his presentation. Why? The scarcity of gold has been maintained...

Sure, we got a lot better at digging gold out of the ground. Sure, we got a lot better at finding it, but as we did, it became more and more scarce – and it became more and more scarce because of the increased productivity.

Today, you can make a similar argument for bitcoin...

"The same exact thing is true with bitcoin," Porter said during his presentation...

Bitcoin is getting more scarce because of a computer code that is designed to match the gains and productivity in computing. As a result, a bitcoin, even though it's had a soaring price, actually represents a stable amount of computing power.

Let's not forget bitcoin also represents a reaction to government mismanaging monetary policy. It was born out of the depths of the financial crisis more than a decade ago. It is a form of currency that could circumvent government intervention.

That idea is baked into its computer code – down to how bitcoin is actually created by "miners" (humans using computers)... the maximum number of bitcoin that can be created (21 million)... and the underlying blockchain technology that powers bitcoin.

And as the Federal Reserve and central banks around the world keep interest rates near zero and continue to create trillions more dollars in debt with a few computer keystrokes, more and more folks are starting to realize the potential that bitcoin and cryptocurrencies have for everyday people.

We're talking about world reserve currency status. Imagine a world where the dollar still exists, but its real value is pegged to a currency that won't be artificially inflated.

We've written before about betting on 'the things that don't change'...

In this case, the thing that hasn't changed is the need for currency and a stable store of value... But the most effective and widely accepted types of money have changed relative to that constant over time.

Look at the history of the world's "reserve currencies" since the 15th century. (Not coincidentally, we used this same time frame in the July 29, 2020 Digest when describing the repeated 80- to 90-year "saeculums" of history.)

Fred Marion, the lead researcher of our Crypto Capital newsletter, wrote on this topic back in the November 13, 2019 Digest...

The U.S. dollar is, of course, the world's reserve currency. Central banks around the world hold more than $7 trillion in reserves, and it serves as the basis for almost all international trade.

But nowhere is it set in stone that the dollar must play that role. If the past 570 years of history are any indication, the dollar's days as the global standard may be numbered...

Since the world stopped using ancient Roman currencies around 1450, every subsequent shake-up in the global economic order has been caused by excessive debt. And by any possible metric, our debt in the U.S. is unprecedented...

Are we to believe that the above pattern will never change again? Or that this time is different?

Today, the case for an alternative 'reserve currency' to the U.S. dollar is strong...

The country's collective debt has never been greater, and the Fed's balance sheet has never grown at a greater scale than it has this year... Inflation concerns are real.

At the same time, an emotionless system of code designed specifically to limit inflation and avoid political or any other motivations is becoming more and more widely in demand.

As we write in early August, the price of bitcoin has jumped 30% in just the last month to nearly $12,000 today.

"Hard assets" like gold and silver have also been hitting new highs, as many of our editors have expected.

Gold Stock Analyst editor John Doody, for example, says he thinks the price of gold will rise to more than $3,000 per ounce. And importantly, the gold companies he recommends stand to profit exponentially, as they make more money as the price of an ounce of gold ticks higher.

And the same goes for silver. We wrote about that most recently in the July 23 Digest. In that issue, Silver Stock Analyst editor Garrett Goggin said silver could reach a new high near $100 per ounce.

We've beaten the drum for owning assets like gold and silver as the Fed turned up the speed on its money-printer this spring... And that has been a good trade so far.

At the same time, a lot of investors (including ones in our office) have been debating whether gold or bitcoin is a better "store of value." But based on the price action of the most popular precious metals and bitcoin lately, there's room for both.

And if you're worried about bitcoin's 80% crash back from its 2017 highs, or that it's too late to buy your first bitcoin (or part of one), consider that this is a long-term bet... against all the forces manipulating our markets today.

Our Director of Research Austin Root told subscribers as much in the August issue of our Stansberry Portfolio Solutions products...

It's true that bitcoin's price has been extremely volatile in the short term. And that restricts its use as a store of value for those funds you'd need to access sooner rather than later.

But time and again, it has proven itself as an excellent store of value over the longer run.

(Alliance members and Portfolio Solutions subscribers can read the full issue here. We suggest that you take a look for Austin's insightful perspective.)

Many of our editors, like Porter and our colleague Dan Ferris, suggest owning at least some bitcoin in your portfolio in addition to gold.

For a long time, Porter has thought the U.S. dollar would lose its place as the world's reserve currency...

... primarily because of our "bankrupt" government. He just thought it would happen a different way, via gold. Porter said in his latest presentation...

I believe the way that would happen is when another nation, most likely China, suddenly announced that they had pegged their currency to gold. That would create a much more attractive large national currency.

But my mistake, of course, was thinking that the solution to the problems was something that we had used to solve them in the past, and of course gold has long been the last bastion of sound money.

But instead, what's happening is that people have discovered bitcoin and they are moving towards it in place of gold.

Now, even if you are on board with these big ideas and you see the case for bitcoin in our world today and in the future, you probably still have a lot of questions...

Most notably, why won't the government just ban bitcoin?...

Or confiscate it, similar to gold in the past?

Crypto Capital editor Eric Wade has addressed this question before – most recently in our May 21 Digest mailbag. The topic is worth revisiting today...

In short, Eric says the idea of government intervention is the "single largest existential threat to bitcoin," but one that raises a lot of other practical questions...

How far would the governments be willing to go to enforce the illegality of bitcoin? Would they pass laws? Would they conduct house-to-house searches? Would they scour all Internet traffic looking for signs of cryptocurrency usage?

But as Eric argues, let's say governments crack down on cryptocurrencies anyway. What happens next? Well, prices would become extremely volatile in countries where that happened. However, bitcoin has a few things going for it that make him optimistic...

First, governments have had more than a decade to ban bitcoin. And yet, most haven't.

Second, a government can ban the ownership of bitcoin, but there's simply no way for them to shut down the network. That would require coordination with every government on the planet. Attempting to seize your bitcoin or force you to "turn it in" would take an army.

The simple move of making bitcoin illegal would certainly be enough to discourage a lot of people and companies from owning it... but not everyone. Banning bitcoin would simply push it into the shadows similar to the bootleggers running bottles of booze during Prohibition.

Third, the countries that didn't ban bitcoin would attract all of the industry's entrepreneurs, businesses, and tax revenue. They would also accumulate the vast majority of what could become the world's largest and most valuable asset.

If anything, China's stance toward bitcoin and cryptocurrency today seems to indicate the opposite of "banning" in a way. The Chinese see the value and want to control it...

As Fred wrote in that Digest back in November 2019...

Three weeks ago, Chinese President Xi Jinping announced the country's intention to dominate the blockchain – the technology underlying bitcoin and other crypto assets. The country must "gain an edge in the... emerging field," he said. To that end, China plans to dramatically increase its investments and research in the sector.

A few days later, China even banned any online comments calling blockchain technology a scam.

That's right, the Chinese government banned speaking against bitcoin's technology.

Plus, if bitcoin (and blockchain) does reach global adoption, a ban would stifle innovation in the U.S., or anywhere that doesn't accept it, and ultimately put that country at a competitive disadvantage.

The battle for the 'soul of money'...

Beyond the practical concerns, Eric and Fred have a philosophical argument for bitcoin's staying power, too...

We believe bitcoin is fighting for the soul of money. Just like people fought for centuries to separate church and state, there is now a battle to separate money and state. The impacts will be just as far-reaching and will impact humanity for generations to come.

Central banks have done a fabulous PR job convincing the world that inflation is "good" for society. In reality, the fiat banking system is corrupt. The burden of inflation falls squarely on the shoulders of the poorest and most vulnerable (the ones making minimum wage who don't get annual pay increases).

Inflation is perhaps the single biggest contributor to the growing wealth gap in the U.S. We've given the state free reign over the printing presses for too long. Bitcoin is simply a fairer and more equitable form of money.

Still, Eric and Fred aren't calling bitcoin a "surefire bet." Rather, they say...

It's a radical technological innovation and a hedge against the collapse of a creaking, rickety fiat system. It will either become a historical footnote in manias and crashes, or it will be the greatest evolution in money since the birth of paper money.

This is precisely why Porter calls bitcoin the "ultimate asymmetric bet." Eric, Fred, and Porter aren't saying you should go "all in" on bitcoin today, far from it... Don't put any more money in bitcoin than you can afford to lose.

But the long-term upside you may enjoy from owning at least some bitcoin or cryptocurrency is so big that it dwarfs the risks, according to Porter.

He talks all about why in this special "Capitalism in Crisis" presentation we first shared over the summer, and have updated with new comments from our founder.

If you're not convinced yet about bitcoin's and crypto's potential and want to hear more, be sure to check it out.

Eric joins Porter about halfway through the broadcast, and they make a compelling case for bitcoin's place in the global economy and explain everything you need to know about bitcoin and cryptocurrencies. Click here to watch the video right now.

All the best,

Corey McLaughlin

Editor's note: Porter's "Capitalism in Crisis" presentation was one of our most-watched events of 2020 for good reason... And it's still as compelling today as it was when it debuted last July. If you missed the event, be sure to catch it right here.

On the eve of the first trading day of 2021, that does it for our special "2020 in review" series. We hope you enjoyed it... Let us know what you think of today's essay, or any of the others we shared over the past week, with an e-mail to feedback@stansberryresearch.com.

We'll be back with our usual Digest fare at our normal time tomorrow evening... And of course, we look forward to guiding you through everything that occurs in the year to