Don’t Make This Bitcoin Mistake

Dear Reader,

We’re in a war for the future of finance

On one side, we have the “old” guys who won’t even consider Bitcoin and cryptocurrencies, on the other side we have the younger guys, who don’t trust the system and the Federal Reserve and they will only invest and buy crypto. 

If you’re down in the trenches on one side of this war, you’re setting yourself up for disappointment. 

As my rich dad taught men, there are three sides to every coin: the head, tail, and edge. 

Wisdom is found on the edge. 

My job is to stay on the edge, philosophically, and gain the knowledge both sides possess so I can strike and profit when the time is right.

On the edge, we just keep an open mind.

The blockchain technology-based cryptocurrencies make up a system known as “decentralized finance,” cleverly referred to as DeFi. 

Before we get into the pros and cons of this brave new financial world, let’s talk about what it’s up against… 

Centralized Finance

A central bank can create money out of nothing and then charge us interest on money it did not earn. That interest is paid via taxes, inflation, and, today, deflation, which results in the loss of jobs and value in our homes. 

The policies of the Fed aren’t abstract. They are powerful actions that determine your financial well-being in both open and hidden ways.

The Founding Fathers opposed central banks like the Federal Reserve. President George Washington experienced the pain of government-made money when he had to pay his troops with the continental, a currency that eventually went to its true value — zero.

When the Federal Reserve was created in 1913, a deal was cut between the bank and the U.S. Treasury — a government-sponsored cash heist. Without a solid understanding of history and how money is created, true financial education is not possible. To simply say to a child, “Get a job, save money, buy a house, and invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds” is a script right out of the central banker’s operating manual. 

It is a success myth propagated by the super-rich.

Thomas Jefferson adamantly opposed the creation of a central bank. Yet today central banks control the financial world, and we’ve granted them the power to solve our financial crisis for us, the very crisis they helped create.

Decentralized Finance

The opposite of a central bank is the emergence of DeFi. The ecosystem is built upon blockchain technology, a ledger system that is transparent with checks and balances that are verifiable. 

Investopedia defines DeFi as “a system by which software written on blockchains makes it possible for buyers, sellers, lenders, and borrowers to interact peer to peer or with a strictly software-based middleman rather than a company or institution facilitating a transaction.”

So what to make of this new system?

Pros and Cons of DeFi

Dr. Buckminster Fuller once said that when change went invisible, the speed of that change would increase exponentially — a concept he termed in an article accelerating acceleration. An example he used was the rapid advance of aviation technology.

Think about how amazingly fast flight technology has expanded in the past century. In 1903, the Wright Brothers flew the very first sustained airplane flight. In 1969, we put the first man on the moon. And now today, we have space shuttles that travel 17,320 miles per hour and that will soon be capable of flying to Mars. 

That is an example of accelerating acceleration. 

DeFi is a reboot of the entire financial system and the speed of that change is increasing exponentially.

Below are some of the pros and cons of DeFi. I’m not identifying which ones I believe are some pros or cons because each person has their own opinion. 

  • Financial institutions eliminated.
  • End of the fractional reserve system.
  • Peer-to-peer transactions.
  • Privacy of transaction.
  • Deflationary technology.
  • No centralized control.
  • Transactional transparency.
  • Limit corruption.

We’ve moved from the information age to the Decentralization Age. If you don’t want to become obsolete, you will have to be smarter. 

Some of these potential outcomes might sound scary. Some might sound great. 

That’s why we need to get smarter. 

The Importance of Learning

Success often depends upon the relative age of your ideas. Today, people of all ages are in trouble because their ideas aren’t just old, they’re obsolete.

Humans cannot find freedom until they let go of old, obsolete ideas. Today, people are being run over and made obsolete by technological innovations they cannot see and that they do not understand. Millions of people are unemployed because their skill set is no longer needed. They are obsolete.

As the old saying goes: The definition of insanity is doing the same thing over and over and expecting a different result. 

Yet that’s what people are doing today. They listen to obsolete experts dishing out obsolete financial advice, advice that has not worked. Yet, they continue to cling to those obsolete ideas.

My point is this: In a rapidly changing world, nothing is more dangerous than an idea whose time has come and gone. Just look at how Amazon.com has changed the world of brick-and-mortar booksellers such as Borders and Barnes & Noble, or how Zoom is tearing down how monster corporations run their businesses.

Where do you think the people who work for those Industrial Age employers will be in 10 years?

As I said, people aren’t just losing their jobs, jobs and companies are disappearing. 

I’m glad I listened to my rich dad and became an entrepreneur rather than the employee my poor dad wanted me to be. Most people today realize that knowledge is doubling every 18 months. Does that mean that we now become obsolete every 18 months? 

Maybe so. Personally, it makes me feel like I need to assign an expiration date to my ideas and update them regularly.

Much of my company’s revenue comes from the web, even though I remain a technophobe. My company survives because I’ve learned to respect the ideas of people younger than me and recognize when my wisdom is obsolete.

While people my age thinks of investing as an action done in the stock market, or real estate, or gold, the reality is blockchain may be where we need to get educated and start understanding.

I know it is hard to change old ideas. As they say: You can’t teach an old dog new tricks. With humans, it is difficult to change a person who clings tightly to old ideas.

Play it smart,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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