What if I told you a story about a currency that has declined in value by 86% in the last half century, is highly subject to the whims of a centralized government, and has been used for decades to fund atrocity after atrocity – from human trafficking to genocide? It probably won’t take you long to figure out which currency I’m talking about, and it’s not something newfangled. It’s the good old dollar, and despite what Zeke Faux might think, it has some serious drawbacks.
Faux, the author of Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall, clearly favors what the dollar is offering over cryptocurrency’s benefits. His bias comes through right out of the gate in his recent article (“What good is crypto if prices don’t go up”) when he references how cryptocurrency has been used for human trafficking (as if other currencies were somehow not involved in such activities).
Briefly describing his trips “criss-crossing the world” during the course of researching the book, Faux references two specific countries – the aforementioned human trafficking in Cambodia, and Switzerland, “where I went searching for Tether’s boss”. He doesn’t mention Rome, Prague, or Ljubljana, among the most popular crypto destinations in the world for the high number of merchants who deal in crypto. He doesn’t get into how Europe’s regulations are enabling a marketplace of crypto vendors to grow and thrive. It’s almost like he’s purposely ignoring the many wins cryptocurrency has already had in its short time in existence. The dollar has been around seemingly forever and is ripe with all the same problems he decries about crypto, and yet Bitcoin has only existed since 2009 and has plenty in its ‘pros’ column, not to mention a price of around $26,000 today in what is considered a bear market compared to a price around $750 only ten years ago.
To Faux’s credit, it is true that conducting transactions using the dominant financial currency of the world – the U.S. dollar, converted on the spot by Visa – is, in many cases, easier than using cryptocurrency.
But take a moment to consider how people felt when charge cards were first coming on to the scene. For all their lives, only paper money and checks had value at the store. All of the sudden, in 1918, a metal card offering access to their wealth could be used to make payments.
It took a long time for the adoption of credit and debit cards to spread. The original metal cards were highly limited in clientele. 30 years after the metal cards were introduced, “Charg-It” cards came out; 5 years later the Diners Club card gained the first real momentum in the country, growing to 42,000 users.
Bring it back to the present day. We’re talking about a financial system – charge cards – that took about 35 years to get off the ground. Of course it’s going to take a while for cryptocurrency to catch on. That doesn’t mean it has no value.
Unlike simply changing to a new kind of payment system (as happened with the onset of charge cards), cryptocurrency represents a shift away from centralized banking entirely. Rather than having their assets directly tied to the choices and behavior of an entity they have no control over, cryptocurrency owners have the financial freedom that comes with knowing that the value of their currency is not printed by a government.
And then there’s privacy. Yes, you can use Visa cards anywhere in the world, and, yes, there will be a record of it (probably multiple records). Transactions in cryptocurrency, on the other hand, can be completely anonymous and untraceable, which is appealing for those looking to further remove government’s hand from their pie.
Faux also mentions Mark Cuban falling prey to a crypto scam to the tune of $870,000 after he likely clicked on a bogus download link for MetaMask. He doesn’t mention how the U.S. alone suffered more than $10 billion in losses to online scams last year – and none of that was in cryptocurrency. While the FBI was able to recover most of the stolen funds, $2.7 billion was lost (meaning the protections of “TradFi” are limited).
The crux of Faux’s argument is that people are losing interest in cryptocurrency because it isn’t going up in value as rapidly as it did during past bull runs. That may be true for investors who are looking for a quick turnaround – in other words, speculators looking for entertainment and hoping to strike it lucky.
It’s not true, however, for people who understand the need for diversification in their portfolios and that cryptocurrency is best used as a long term investment. Long term is not 10 days, 30 days, or even 6 months. Long-term investments, according to Forbes, should be kept for 10 or more years before they are fully realized.
Of course we’re strong believers in the long-term value and viability of cryptocurrency. Imagine snubbing the credit card as a fad when it first came out all those years ago. New technology always takes time to develop and to gain adoption, and of course crypto regulation is still a pressing issue many nations need to figure out. Cryptocurrency appears on the right trajectory, still growing in use, adoption and even innovation. We don’t see people “losing interest”, as Faux claims.
In fact, what some might see as stagnation looks a lot more like thoughtful consideration and planning for a strong future. Cryptocurrency has clearly proved its viability over the last 10 years or so, but now it’s looking for how best to make the next leap: not to just be a viable alternative to cash or plastic, but to be the preferred option. That doesn’t happen overnight, and it takes getting governments and institutions on board. No wonder cryptocurrency was a big topic at this year’s G20 summit. Cryptocurrency may be in a bit of a holding pattern right now, but that’s only because the world is busy deciding what a future of global crypto adoption should look like. That’s never fertile ground for speculators, and the “number go up” crowd, but it’s a good sign for long-term planners.
If your goal is to protect your future assets by diversifying your investments (always a good goal to have), getting into a cryptocurrency funded IRA is a solid choice for long term stability.