The War to End All Wars
Editor's note: When you understand what makes cryptocurrencies – and the blockchain technology that powers them – so unique, you can take advantage of the opportunity in this emerging space... before the rest of the investing world catches on. And it will...
As a matter of fact, Crypto Capital editor Eric Wade believes crypto is already gearing up to go mainstream. And with more and more people seeing the appeal of a monetary system that isn't controlled by the government, he and analyst Fred Marion predict bitcoin is on track to replace the U.S. dollar as the world's next reserve currency.
In today's Masters Series, adapted from the November 13, 2019 Digest, Fred shares his thoughts on why "decentralized" cryptos will ultimately gain dominance... and details the quiet conflict mounting over bitcoin...
The War to End All Wars
It's the "war to end all wars"...
Bitcoin has the operators of our monetary printing presses running scared...
People think I'm crazy. A little more than a decade old, the cryptocurrency has only captured a minuscule percentage of global financial transactions. Most "serious" investors won't touch it. It's hard to use... and even harder to understand.
But I believe the world's central bankers see the threat bitcoin represents to the current system of paper money. They're preparing to wage a war to protect the power they hold over money.
Like I said, you can call me crazy... but I'm not the only one who sees this.
"The central bank is like Hitler in the bunker!" broadcaster Max Keiser growled into a microphone at a Cleveland bar a couple of years ago.
Keiser was firing up the crowd at the 2019 Cleveland Bitcoin Bash – a free educational event hosted by bitcoin wallet company DropBit. The event also served as the launch party for DropBit's Lightning Network integration. Here's a picture of Keiser speaking at the event...
"They're surrounded... and they're trying to fight this awesome power called bitcoin!"
The longer he talked, the louder he shouted. When everyone in the crowd was worked up, he reached into his wallet.
"Take out your paper money right now," he yelled, "and enjoy the catharsis of ripping this s**t up! Understand this is slave money! Just rip it up!"
The crowd slammed down their drinks. They reached into their wallets and purses. They ripped up their fiat currency until the bar floor was littered with it.
Everyone who tore up money in that bar has a similar conviction... that tomorrow's monetary system will look a lot different from today's. They believe – as I do – that bitcoin could one day overtake the U.S. dollar as the world's most important currency.
Before we go any further, let's dive into a lesson from history...
The U.S. dollar is, of course, the world's reserve currency. Central banks around the world hold nearly $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, U.S. national debt is unprecedented... It's at $27 trillion and counting.
Even when it's measured as a percentage of U.S. gross domestic product ("GDP"), our debt hasn't been this high since World War II... when we were fighting a massive war on two fronts that were oceans apart.
Governments around the world were already addicted to cheap money... Now, the COVID-19 pandemic has forced their hands. It's no longer a question of whether or not they should print more money... It's now about how many trillions more they will print.
The inevitable result of having so much paper money flooding the global economy is runaway inflation. It's what brought down every other experiment with paper money... and it will be the dollar's undoing as well.
But for the first time in history, we won't have to start the whole paper-money regime over again with some other government's currency. Because today, we have a form of digital money that's provably scarce.
It doesn't require us to trust a government, bank, or corporation. It just requires us to trust math and cryptography.
Bitcoin... with its fixed supply of 21 million coins... could free us from the 570-year cycle of collapsing currencies.
You see, there's a secret war underway...
No guns have been fired. No drones have left their hangars. But the stakes are just as high.
What we're witnessing is an arms race for the future of money... It's a war for control of the world's next reserve currency. But to understand how the sides line up in this war, you first need to understand one thing...
Not all digital currencies are "decentralized"... meaning no single organization can control or manipulate them.
In fact, most aren't.
Digital currencies are every bureaucrat's dream... at least as long as the government controls the currency. Thanks to blockchain, digital currencies are faster, impossible to counterfeit, and cheaper to issue.
But they also give governments unprecedented control...
They're the gateway to the dystopian future that science-fiction writers have warned us about for decades. Governments could use digital currencies to monitor our every financial transaction... or worse, lock us out of the system altogether.
Political dissidents, tax cheats, or even someone who forgot to settle a parking fine could find themselves unable to pay the rent or buy a carton of milk at the corner store.
Predictably, governments around the world are experimenting with how they can use digital currencies to maintain their positions of power.
Sweden, for example, is working on a proof of concept for a digital currency... And France is actively testing a digital currency. These countries aren't likely to move the global economy, of course. But China is another story...
In 2019, 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 dramatically increased its investments and research in the sector.
Now, it's running pilot tests in several Chinese cities with actual digital yuan. The Bank of International Settlements ("BIS") sees the writing on the wall... Recently, BIS said it expects as much as one-fifth of the global population to live in countries with active central bank digital currencies within three years.
Bureaucrats may spout words like "blockchain" and "digital currency." But what they're really after is control.
On the other side of this battle are truly decentralized cryptocurrencies, notably bitcoin...
Remember, bitcoin is a digital asset that isn't controlled by governments and operates outside of the traditional banking system.
The beauty of bitcoin is how the number in existence is limited and kept track of by blockchain technology. You can think of blockchain as a virtual ledger book... essentially a database secured by cryptography and maintained by a network of computers.
The key to bitcoin's future is that it strips control away from governments and central banks...
It's the "money of the people"... money that exists beyond the control of any one person, corporation, or government. It operates under the laws of mathematics. It's "permission-less"... meaning anyone, anywhere can use it... and it will eventually have zero inflation.
We forget that cash – the actual paper bills in your wallet or purse – is the ultimate form of financial freedom. You can walk into any store in the country and buy just about anything you want with it. The merchant won't ask for your name or ID. The transaction is entirely anonymous.
Bitcoin represents a way to maintain that anonymity. And as humankind rushes toward a digital future, that anonymity is at the very heart of this currency war.
Despite the world's governments' efforts to hang on to control of our money, the launch of their digital currencies will ironically pave the way for the dominance of truly decentralized cryptos...
Their digital currencies will help the world grow more comfortable with digital money. And over time, they'll come to see bitcoin's benefits.
My colleague and Crypto Capital editor Eric Wade has gone on record saying he believes bitcoin will hit $1 million per coin in our lifetimes...
That's because bitcoin is already on a path to becoming the global reserve currency. We'll soon see governments, central banks, corporations, and individuals buy it, trade it, and hold it much like they do with gold, bonds, and stocks today.
In countries suffering from hyperinflation, bitcoin could render the local currencies worthless. That may happen country-by-country as entire economies shift from fiat currencies to bitcoin. And even if that doesn't happen in countries with relatively stable currencies, we still believe bitcoin will capture a quarter of the world's wealth.
That would be roughly $21 trillion (or about 25% of the world's more than $80 trillion "broad money" supply). If that happens, each bitcoin will hit $1 million. Everyone will want a piece of it, and there won't be enough to go around.
It's hard to fathom. But no matter how this war plays out... Eric and I believe truly decentralized cryptos like bitcoin will eventually win in the end.
Good investing,
Fred Marion
Editor's note: If you had invested just $100 in bitcoin in 2010, you would've made more than $40 million through today. Hearing that, you might feel like you've missed the boat. But the good news is, you still have the opportunity to make potentially life-changing gains in cryptos...
Eric Wade recently sat down (virtually) with our Director of Research Austin Root to share the details of the shocking story that led to his investing secret... It's a strategy that has helped a small group of subscribers achieve gains as high as 1,000% or more. And for a limited time, he's explaining it in a free, easy-to-understand demonstration right here.