In this post I start by painting a brief picture of our current situation. I then go on and briefly outline what traditional fiat currency is. Finally, I will outline key reasons why I think 2021 will be dominated by Crypto.
These reasons will then be covered more in depth in subsequent posts. So subscribe to this newsletter if you haven’t yet, because much more is coming your way.
The Catalyst
2020 was a terrible year in many regards. In one way it proved to be a catalyst for change. Let’s face it, the old system was failing us on so many levels. Bitcoin was born out of a frustration for the old regime post financial crisis of 2008-2009. It was built as a hedge against another potential failure. It was built on mistrust and hope. Hope for a better world, a decentralized system where one does not depend on a single entity to bail us out. Though COVID was not a financial crisis, it was a tornado sweeping thru a house of cards that was already on the brink of collapse.
The current world we are living in today is tainted more than ever with uncertainty. Many have lost their lives, livelihood, and a sense of hope. But I believe that on the other side lies a better world. We’ve been catapulted years ahead, thrown in the fire to burn. Many might be skeptical that we will we learn from our mistakes or continue in this endless cycle of greed and selfishness. Crypto is one alternative aligned with numerous visions for a better future. But how can a digital currency fix a problem?
Trust is the name of this game. “Money” is a fictitious concept based on trust. If you believe a $1 is worth a $1 then you are willing to hold it in your wallet in exchange for goods and services. A dollar bill is essentially just an IOU. But what happens when the printing press starts printing to bail out corporations, and your dollar loses value? What happens when prices start rising at the grocery store? You’ve probably come to realize that little by little this dollar isn’t worth nearly as much. This is called inflation. As an increasing number of members of a society start struggling to keep up with their lifestyles, social unrest, crime, and mental health issues start rising. Sounds familiar?
Only those that have strategically hedged against this phenomenon will succeed in riding the storm by retaining their purchasing power. Similar to the dollar, cryptocurrencies are alternative assets that are also based on a system of trust. It is the first time in history that we have a choice. A choice to adopt an alternative narrative which gives us the capacity to build a more capable society. One that is equipped to fight not only the current challenges we’ve brought upon ourselves but one that is also suited to tackle the issues we will face in the future.
Top Reasons why 2021 will be the year of Crypto
Loss of trust in the system: goes without saying, read the above
Low interest rates: traditional savings account yields are close to 0%, bonds are no longer safe havens, the stock market is in a clear frenzy of a bubble, and commodities/real estate are more complex than ever
Chasing gains in alternative asset classes: this can be seen by the recent boom in prices of collectibles such as trading cards, with the disappearance of the entertainment industry due to COVID; investors are craving highs paired with additional income they used to spend in entertainment
Young inexperienced investors who are more risk averse: influx of new traders fueled by stimulus checks/boredom are flocking to platforms like Robinhood where they are easily enabled to gamble (see rise of wall street bet like forums)
Rich getting richer/FOMO: tied to the above, the stock market has been in a 10 yr bullish run but Crypto is by far the best performing asset class.
Mass adoption: the floodgates have been opened in 2020. Major investment firms have normalized Crypto as an asset class to hold in any portfolio
Increase coverage in the news: mostly around Bitcoin, but soon Ethereum will follow as it breaks $1000 on January 3rd, 2021 and Eth 2.0 is successfully rolled out
The advent of new tools: primarily built by the smartest engineers who flocked to the industry seeing potential for real change. With these tools, entrepreneurs are empowered to build products on top of the blockchain potentially raising the possibility of a groundbreaking app that reaches the masses
Let me know what you think and which ones of these reasons you are the most curious about so I can expand on future posts. Subscribe and share <3
