Crypto Currencies Are A Precursor To Gold Currency

By: Curtis Wayne 0 Comments   8/15/2017

Gold is moving up and about to cross $1300.  The dollar is weak and the stock market has just about run out of gas.   

Investors are looking for new places to find yield, which is why crypto currencies are exploding. 

The reason behind the rise in prices of crypto currencies is primarily because people are tired of central banks stealing their wealth through inflation, debts and taxes.   

The only problem is crypto currencies can only give them part of the solutions.  Crypto currencies have created a software platform called a blockchain that gives them security and validation of each transaction.  This breakthrough technology will be a major disruptor of the global banking system.  This is what the craze is all about.   

But because of this massive potential to change the entire banking system, crypto currencies are being promoted to be much more than they are.  They are being promoted as a new more powerful store-of-value for previously accumulated wealth – the new Gold, and as a new source of wealth creation.   

The current perception, which appears to be the short-term reality, is that crypto currencies can be both a store-of-value and a source of new wealth creation.  But in the long-run, I don’t think they will be able to measure up to either.   

As great as cryptos’ are, they cannot really support either of these.  Here are some reasons why they will not be able to be a store-of-value as well as traditional collateral such as; land, gold, silver, real-estate, etc.   

Store-of-value limitations:

  1. They are not limited in supply, many are being created each day, which will act like central banks that print money and delude the value of their fiat currencies.  Therefore they are not immune to inflationary pressures and cannot hold value long-term.
  2. They are basically software, and software can be hacked, which makes them a risky asset unlike land or gold.
  3. Wealth cannot be printed or created out of thin air.  Wealth can only be produced or earned and then stored in something that has also been acquired by production or earnings.  Crypto currencies are being created out of thin air, just like expanding fiat currencies or bank credit.  

Wealth is created by combining labor with materials to produce something that helps other people improve their lives or increase their business wealth creation process.   

Wealth creation limitations:

  1. Crypto currencies have some characteristics of wealth creation, because they produce something that helps people exchange value for goods.  They provide a service, a new currency service like PayPal that helps people exchange value.  The new service they provide does not create new products, rather they help people preserve the wealth they have already created from previous production.  These new services do create a small amount of wealth.
  2. The world is running out of wealth producing businesses and is desperately looking for services to preserve the wealth that has been created from previous generations.  But they are limited by a decreasing supply of wealth being created in the global economy. 
  3. Global debts are unpayable without stealing peoples wealth through inflation and taxes.  Therefore no nations' central bank can allow people to preserve their wealth.  Central banks have no choice but to take control of these new digital currency services.  And when they do the wealth created by them will be consumed by the central banks.

The demand for crypto currencies is really a demand for true money, honest money that can be a store-of-wealth for the wealth that has been produced from previous work.  

Gold is the only asset class that has enough history and value to store the wealth of all the nations.  The rise in crypto currencies will lead the world back to the gold backed currency. 

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