I started buying crypto about six weeks ago. I'd been pondering this for years, but finally got off my ass. Does it feel late? I think it's still very, very early. How many people do you know that own Bitcoin? One, two? The total value of all Bitcoin is about the market cap of JP Morgan, a single company If you think this is going to become an asset class, it has to be 100x a single company like JP Morgan.
But making an investment argument is not the point here. There's plenty of that elsewhere. I want to make a philosophical one.
First, Bitcoin. Bitcoin is a currency without a nation state attached to it. Nothing specifically backs it, but nothing backs the dollar, either. Unlike the dollar, though, Bitcoin has no controlling authority other than code. This has one key advantage: it can't be inflated (which is to say, devalued) by irresponsible governance.
Politicians ultimately are the ones who destroy currencies. It's a pattern repeated throughout history. They spend more than they have, borrowing to make up the difference. Then they print money to pay lenders back. The more they print, the more the currency is devalued. It happens most everywhere. How many times has the Argentine peso crashed in the last century?
The U.S. is not immune to this. Here's a graph of our money supply:
Seventy percent of outstanding dollars have been printed in the last decade. That's an amazing fact. You've heard of "quantitative easing?" That's government-speak for printing money.
Our status as the world's reserve currency has shielded us, for a time, from an erosion of value, as has the fact that many other fiat currencies are backed equally irresponsible policy.
But what if there was a currency that actually practiced quantitative hardening?
There is, and it's called Bitcoin.
There are currently 18.6 million bitcoins in the world. Of these, it is estimated that 3-4 million are lost forever (people lose their passwords or die without giving anyone access). The pace at which new bitcoins can be created ("mined") is halved every four years. Once it reaches 21 million, there will never be another.
This is a very powerful fact, and it will ultimately serve as a means to keep profligate governments in check. In my view, Bitcoin will increasingly be viewed as a reserve-currency alternative. When this happens, fiat currencies will have to compete not just with each other, but with Bitcoin. They will have to operate with unaccustomed restraint or watch their currencies, and the power that comes with them, evaporate.
The other crypto conservatives should love is Ethereum. Ethereum is completely different from Bitcoin, and it's worth understanding how. It is actually a platform that rests on a vast global network of computers. It is decentralized with no controlling parties.
Using the Ethereum platform, developers can create applications (called "Dapps," for "decentralized applications") that let users make agreements and buy, sell, and trade without a middle man. To put a Daap on the platform, developers need to spend "Ethers," which is the cryptocurrency associated with Ethereum. Ethers have the second largest crypto market cap behind Bitcoin.
Think of Ethereum as the world's computer, but instead of being one big computer, it's thousands (millions?) of separate ones.
This is not good news for much of today's Big Tech. Even though the internet seems decentralized, it's not. The vast majority of it runs through the mega-platforms like Amazon, Facebook, Google, etc. These companies have begun actively stifling speech, almost exclusively from the right. (The decision by several not to support Twitter-alternative Parler has been chilling.)
Simply, these companies have become way too powerful, and they have social agendas beyond simply making a profit for their shareholders.
Ethereum is the ultimate middle-man crusher.
Why go to Amazon Web Services or Dropbox if there was a simple way to utilize private servers?
Why buy a book through Amazon when you could buy it directly from the seller? Someone will create something that looks like Amazon, but in reality has no centralized corporation overseeing it.
Why pay Uber a fee if you can hire a driver directly? Why pay Netflix if you can get what you want directly from the creators?
Check our Presearch. It is a decentralized search engine that doesn't have Google's privacy issues or anti-competitive practices. The coolest part? Every time you search, you get some tokens (their own crypto). These tokens are the currency with which advertisers pay to get on the platform. You may not need them for that, but if the platform grows, you can sell your crypto at a profit.
I'm sure I'm only scratching the surface, and honestly, I'm still learning. Like I said, early days.
Last thought: I don't have the data to support this, but I think it's safe to say that crypto's biggest fanbase leans young and left. I wonder if they understand the basic contradiction in their views. They vote for an ever-expanding centralized planning (e.g. "Medicare for all") while at the same time supporting libertarian mega-trends like crypto.
I would be the last one to suggest there's much self-analysis going on.