The Future Of Crypto
My greatest teachers and mentors are successful for one reason: they’re willing to put in the effort required to always keep learning.
These people understand that financial success is not a sprint, but a marathon. They get out there and put their feet to the pavement day in and day out. They stay humble. And they have an insatiable curiosity.
When it comes to investing, these mentors have taught me that there are three options:
- Keep up with the change
- Keep ahead of change
- Get passed up by change
Why only these three?
Because in the financial markets, nothing stays the same. The rules are always changing. To be a winning investor, you’ve got to change as the markets change.
And that means always learning.
One of the areas I find most important today, and most challenging, is the area of cryptocurrencies. They are so new, so volatile, and mutating so fast, that the learning is at the speed of light.
At Rich Dad, we believe you should always be learning. The world is always changing. New technology, new terminology, and changes in the political and economic arenas are always happening.
In order to keep up, you have to put in the effort. It doesn’t matter what you’re learning, as long as you are continually educating yourself and acquiring new financial knowledge and skills.
Boomers vs. Millennials
Gold became money as determined by the free market because of its properties—scarcity.
But with the invention of Bitcoin, we are now seeing a historical event that will never be repeated. What makes Bitcoin so special is that prior to Bitcoin there was no other form of money with its absolute limited supply.
Bitcoin’s characteristics make it a direct competitor to the central banks because of its absolute scarcity, resistance to theft and confiscation, and the system that it’s built upon prevents it from being shut down.
Why am I so interested in Bitcoin and cryptocurrencies? The same reason I love gold and silver. Both are outside of the Federal Reserve Bank’s control.
I’ve heard so many opinions on the subject of cryptocurrency.
For example, I’ve heard that Warren Buffet won’t touch Bitcoin.
But…Buffet doesn’t touch gold either.
And then there are guys like Ray Dalio and my good friend, Jim Rickards, who do not support Bitcoin and cryptocurrencies.
But, I noticed one thing – they’re all old guys.
I know there are three sides to every coin- the head, tail, and the edge. Wisdom is found on the edge.
On one side of the coin, we have the “old” guys who won’t even consider Bitcoin and cryptocurrencies. On the other side of the same coin we have the younger guys, who don’t trust the system and the Federal Reserve and choose to only invest in crypto.
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.
And when you’re on the edge, you just keep an open mind.
The Future Of Finance
Traditionally, people who need money go to their neighborhood banker and ask for a loan.
With a traditional loan, you’d pledge a personal asset—your personal residence, small business, etc. If you can’t repay the loan, the lender has the right to repossess the pledged asset.
Today, very few places accept Bitcoin or other cryptocurrencies as currency. But one company is allowing users to put up their Bitcoin as collateral for crypto-backed loans. I recently spoke with Zac Prince, the founder of Blockfi, which is an asset-backed lending platform for Bitcoin that makes Bitcoin usable.
He explained how you can use your Bitcoin to receive a loan through his platform,
“One example would be let’s say you bought Bitcoin at $100, and now Bitcoin is $10,000, almost $11,000 today. If you sell your Bitcoin, then you have to pay taxes on the difference between $11,000 and $100, the price that you bought it for. If you get a loan secured by your Bitcoin, you get cash, and you don’t have to pay taxes. And if you use the proceeds of the loan to make another investment, you can deduct the interest that you’re paying on that loan from your taxes in the current year.”
His website explains, “with a crypto-backed loan, you pledge your crypto holdings as collateral for the money. By obtaining a crypto-backed loan, you don’t have to liquidate your crypto assets. Instead, your investment can remain intact and you’ll benefit from potential appreciation.”
Bitcoin came on the scene in 2009 just as the banking system was on the verge of collapsing. One giant advantage of cryptocurrencies and blockchain technologies is trust and security outside of the banking system.
As cryptocurrencies—people’s money—evolve, the power of the banking system will lose its grip on the ﬁnancial freedom of the world.
Think about this: In 1971, the year Nixon took the dollar off the gold standard, the dollar became fake money. Imagine billions of people borrowing and depositing billions of fake dollars in banks all over the world.
Central banks are run by the “controlling elite”. These elites do not like gold because central banks cannot print gold.
Central banks do not like Bitcoin and blockchain because people’s money does not need central banks.
That is why cyber money, people’s money, is such a threat. Many cryptocurrency miners and developers are driven by an intense desire, a passion (and in some cases a hatred) to bring down the invisible leaders or “controlling elite”.
Today we live in times of greater and faster change and I suspect there will be many booms and busts in the coming years.
I am concerned that too many people are too focused on money and not on their greatest wealth: their education.
If people are prepared to be flexible, keep an open mind, and learn, they will grow richer and richer despite tough changes. If they think money will solve problems, they will have a rough ride. Intelligence solves problems and produces money.
As Benjamin Franklin once said, “An investment in knowledge pays the best interest.”
As with any investment, do your research and make sure you’re educated before you make a move.
Editor, Rich Dad Poor Dad Daily