06/14/2021
Crypto: The Good, the Bad and the Ugly
“If you work for a living, why do you kill yourself working?” Tuco the Ugly
If there was an apt summation of the get rich quick mentality and how crypto seems to bring out the worst and best in us as investors, Tuco, (from Clint Eastwood’s 1967 ‘spaghetti western’), nailed it. He wanted the easy way out, but also reminds us that working SMART, rather than hard is also a decent way to go!
In this month’s article, we want to relay what we have been learning about crypto currency (and “the Blockchain”) during the last couple of years, what I have found to be the Good and the Ugly, and what I have concluded.
The Good
There are many very smart, well-informed and well-intentioned professionals working in the Bitcoin sector. I have run across many of them at industry conferences and in also, as I have embarked on a enhancing my knowledge through a digital assets certificate program given by the NY Institute of Finance and RIA DAC (RIA Digital Assets Council – https://riadac.com/), it is clear that there are many thought leaders involved in the space.
Bitcoin, at its root, offers those in the developing world and on the low-end of the economic spectrum a way to store and transfer value without fear of theft, confiscation, or high fees from third parties.
In addition, there are those, some quite well-informed who feel that Bitcoin (For our purposes, and because it is familiar, we will refer to all crypto as Bitcoin.) is a way for people living under authoritarian rule to be empowered with some degree of individual freedoms.
There are constant reports of Bitcoin’s ubiquity. For instance, on June 9, El Salvador became the first country to approved Bitcoin as legal tender on June 9. Full Story Here
There is also the cultural benefits as people involved with Bitcoin are part of their own community. I have random and numerous conversations with clients, friends, family and even strangers pleasant, where most are interesting, and have unique stories about what that attracted them to Bitcoin.
Finally, the “footprint” of Bitcoin is expanding from teenagers and Millennials to Wall Street, and it is clear that the so-called “smart money” and large institutions are now headed into (Holding their noses!). For instance, Morgan Stanley recently sent thousands of their advisors for crypto-currency training.
The Ugly
First, there’s a toxic element to Bitcoin culture that puts me off. For instance, there are those rabid supporters, called maximalists. Bitcoin maximalists believe that Bitcoin, which is the world’s most popular cryptocurrency, is the only digital asset that will be needed in the future. Maximalists believe that all other digital currencies are inferior to Bitcoin.
These maximalists point out that, “If you’re against toxic maximalism, you are against Bitcoin and therefore, you are against freedom.” By definition the blockchain technology behind Bitcoin is immutable, which is what the maximalists love…It is pure and cannot be corrupted. But really, having a contrary opinion makes me anti-freedom?
Second, if we reach “hyperbitcoinization,” there’s no telling what the world will look like and what we had to go through to get there. Hyperbitcoinization is the point where Bitcoin is the dominant global currency. The Bitcoin faithful see that as the goal. If that happened, it would be a completely different world than we know today and would likely involve hyperinflation, the destruction of institutions, and a complete rearrangement of the world map. That would be UGLY.
Conclusion/Advice
Bitcoin (‘crypto”) is here to stay. However, most likely, the means of exchange that will supplant fiat currencies is not yet here, as the technical, economic and political considerations evolve.
Whether we accept it or not, it will in fact become ubiquitous and a fact of life. Open your mind and keep learning about it. It will make it easier for you later, when you ultimately have to capitulate.
