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In America, this means that companies like Venmo, Apple Pay,
and Cash app are gaining a lot of ground. As these companies
process our needs and wants, they track the transactions and
the person.
Companies are aware of what you buy when you buy it, and how
often you get it. This information is gold to any company
looking to sell their wares. Your age, sex, spending habits
help companies figure out how to sell you more and more new
things. One of the main benefits of cryptocurrency as a
money system is its secrecy.
Digital money in a crypto form is hidden from prying eyes.
The transactions are done in a blockchain, and that block is
private. We will discuss blockchain in the future but know
that it is the real long-term investment play.
As of now, no global governments or borders control or tax
cryptocurrencies. Of course, missing out on collecting taxes
is an issue, given that taxation is how governments work.
The cryptocurrency secrecy prevents taxation as well as
unifying pricing and value across regular currency
exchanges.
Because of the secrecy, users began to use cryptocurrencies
like Bitcoin to make illegal purchases such as paying for
drugs or sex online. These activities, of course, mostly
take place on the dark web. When doing business in the dark
behind closed doors, bad things will likely happen because
of private means.
Once people began to make more transactions in the dark,
they began to use more Bitcoin, and the more they made in
profits, the more Bitcoin they could get. The dark web
transactions are one factor as to how prices were able to
remain low but stable. Once a currency or investment is
durable, it can begin to gain ground and become more
mainstream.
Bitcoin, the first cryptocurrency, was created in 2009. By
2011 a single coin was worth $1 and rose to $32 by June.
What glitters is not always gold, and it crashed back down
to $2 by November 2011. As of 2021, there are over 4000
different cryptocurrencies, and the three most popular are
Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH).
I first wrote about Bitcoin and the new monetary frontier
over four years ago. Since that time, a single coin's price
has increased from $15,000 (2017) to $45,000 (Feb 2021).
That is a 200 percent return and an average of 50 percent
return per year.
The demand for Bitcoin and crypto has turned what was meant
to exchange goods and services into a speculative
investment. There is no real intrinsic value backing up the
currency like a precious metal or physical commodities such
as grains, water, or pork bellies. For this reason, it is
more like a Fiat currency. While Fiat currencies are
unlimited to how much a government / central bank wants to
print, Bitcoin is limited to 21 million coins everywhere.
For now, Bitcoin is not a currency efficient for trading
goods and services. What if you used $1,000 of equivalent
bitcoin to purchase a new iPhone this past December? The
$1,000 of Bitcoin you spent in December is worth $1,400
today, but your phone, even if unused, is only worth
$1,000.00. You lost or gave away $400.00.
The idea of crypto as a currency is incredible and has a
solid base of followers. The future is open to
interpretation on the use of cryptocurrencies. Like I
recommended in 2017, review your assets and determine if you
have enough room to add crypto to your investment portfolio.
If you do have disposable funds, use a small introductory
amount as a learning course to attain the information and
experience. Once you are more confident, make larger
potential investments, or maybe you walk away for a more
traditional asset.
Derick Gant is an American author, speaker, financial
advisor, and money coach with over 25 years of
entrepreneurial experience. In 2019, Derick published The
24K Life Code: The Only Difference Between Mediocrity and
Greatness. This book guides people step-by-step to achieve
their best and get the results they so desperately desire.
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