To a new generation Bitcoin may seem like a good alternative to gold as a hedge for the same economic and political conditions. Both appear limited. Both appear to have no counterparty risk
But whereas Bitcoin may be limited - an unlimited amount of Crypto currency can be wished into existence.
Whereas Bitcoin appears to have no counterparty risk - if the electrcity goes off it ceases to exist. If you try to trade it through an exchange - the exchange could confiscate it. SAM BANKMAN FRIED. If you simply forget your code - it ceases to exist.
And lastly, and most important, when governments issue their own Central Bank Crypto Currency all other cryptos will be outlawed and thus cease to exist.
That doesn't mean you can't make money in Bitcoin - but it's a pure gambling play. It hedges nothing. It safeguards against nothing. It is a way to make money through gambling.
After all it's been around now almost 20 years and the only application for it has been to circumvent drug and terrorism laws. Hardly the Fintech Revolution that was predicted.
In fact if you go back through the Tech revolutions of the last 20 years your arrive at the same place: Nowhere.
First there was the 3D printer that would revolutionize industry. You could print everything from weapons to cars and aiplanes. Turns out all you can make are little plastic parts. Anf fake plastic bouquets. Wow.
Then there was the Drone revolution. Remember when all packages would be delivered by Drones and people would even be able to fly their drones down the street to visit their friends? Turns out the only real application has been in dropping bombs. Great if your jobs is killing people.
Then The Driverless Car was going to change everything about city life. Turns out the only place to try it was Arizona where half the population is to old to drive anyway and even there it's constantly running over old people. Maybe they'd do well to just take an Uber.
Now it's AI. I ran a few paragraphs I'd written through AI. It obfuscated the meaning enough to turn it into meaningless word soup. Great. That will be very useful for anyone who wants to write something with no meaning at all. So I guess political speeches. And Corporate conference calls. Oh, and textbooks for the Florida public school system. Apart from that it's a dud. But I'm sure it will kill a tremendous amount of dead end capital.
Right now we only understand what about 10 percent of what the human brain does. I'm sure when we get that figure up closer to 90 percent we'll invent some type of AI that's useful. We're a few centuries away.
Maybe not centuries. But face it, we're still in the age of the engine and the computer. We're in the electrical/mechanical age. Engines run by fossil fuels will power machines for the foreseeable future. And computers are just machines that crunch data faster than most humans. Advances wil be slow and grinding not spectacular and world changing. Nobody's going to live on Mars. And our air and water will get fouler and fouler until we curb our appetites. And the most significant change, Social Media, has been a giant step backwards, enabling middle aged adults to act like bitchy little middle schoolers at best, and at worst, prividing cover for hatred and murderous intentions that used to need to hide in the dark.
Eventually humans will figure out magnetism and real advances will be made. But we are far off from that.
So right now if you want a good old fashioned hedge against the insanity of Fintech, and all the rest of Financial Engineering that exsists only to suck money out of the pockets of everyone and into the pockets of a few Private Equity executives...
Stick with gold
Gold exists. It is inert so it will never tarnish. You can melt it but it still exists. You don't need an exchange to trade it. You can take it physically to any dealer in any country and they will give you whatever currency you want for it. If the electricity goes out, gold doesn't care. You only need to remember where you put it. If you can't do that, not much will help you anyway.
Finally the central banks of the world all buy gold, store gold and use the gold as part of their reserves. It has had that particular USE for 5000 years now,
They could outlaw private ownership, but most of the central banks are actually encouraging their citizens to own gold so if some central banks try to outlaw it they will be global outliers.
There is really very little similarity between bitcoin, fintech and gold. Right now they do tend to rise and fall together, as liquidity rises and falls. In the very short term that may continue.
But when the central banks inevitably shift to central crypto so that every transaction can be monitored and taxed, all private cryptpo will be history.
And gold will remain, as it has for the last 5000 years as the true store of value.
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