Is the financial future of my family secure? This is a general question that haunts the globe at large.
Whatever we do today lays the groundwork for what will occur tomorrow. We spend years chasing money and amassing fortune only for the sake of ensuring a secure future for ourselves and our families. However, only a handful are able to preserve or build their wealth over time.
Why is the situation so? It has nothing to do with the lack of savings on the part of individuals. This is due to the ineffectiveness of people’s methodologies to preserve their riches. As economics advanced, we encountered the beast known as unrestrained inflation. It is what I refer to as the ‘wealth killer,’ and the reason why our savings depreciate. This is one cost that we all must endure as a consequence of the existing economic framework.
To realize the grave situation that we are in better, take a look at this image below. It compares what ₹ 1 Lakh in 1984 values in 2016, a span of just three decades, or an average person’s professional life.
Source: Economic Times
The results are downright shocking. Someone who was a lakhpati in 1984 would probably be worth less than the smartphone you are holding now.
The Rise of the Safe Haven Assets
We popularised investments and created a market out of them when we encountered the inflation problem. Instead of merely keeping cash, we thought, why not invest in assets that appreciate in value over time. This is what prompted the creation of the safe-haven assets class, such as gold and silver. The underlying premise was that because these assets were deemed finite in nature. We would ultimately deplete them, implying that their worth would rise over time as supply drops.
See how gold and silver prices grew over the last century.
Gold Prices Past 100 years. Source: macrotrends
Silver Prices Past 100 years. Source: macrotrends
What’s the problem with Metals?
By now, you’re probably thinking why to bother mending something that isn’t broken yet, given how well gold and other precious metals have performed in the past and will continue to perform in the future.
To be honest, you may be mistaken here. We frequently overlook the most fundamental reality that things change when better alternatives become available. Once upon a time, a wise man stated that the stone age ended not because we ran out of stone but because we discovered metals that were considerably more effective in every aspect. The value of precious metals as an investment is not eroding; rather, we are transiting to something better.
There are two things that our history demonstrates unequivocally. One, nothing is permanent, and two, innovation never stops. With the advancement of technology, a wide range of new variables were brought into play, including the environmental effects of reliance on non-renewable resources.
And, similar to how the world progressed from horses to vehicles, the investing sector began to go digital. An increased need for efficient economic and investment tools sparked the emergence of cryptocurrency in response to this.
The Future of Money
In the transition to a digital world, people have recognized that fiat currency is no longer an effective means of wealth exchange and that precious metals are not sustainable assets. Cryptocurrencies have a unique position in the market because they provide answers for both – the investing and the wealth exchange aspects of the problem.
Cryptocurrencies are growing in popularity every day as more and more people and organizations are beginning to accept them. Consider the figure below, which illustrates how the value of gold has declined in contrast to Bitcoin, the leading cryptocurrency, often referred to as digital gold.
The ratio in the graphic above divides the price of Bitcoin by the price of gold and indicates how many ounces of gold are required to purchase one Bitcoin. When the ratio increases, Bitcoin outperforms Gold; when the ratio decreases, Gold outperforms Bitcoin. The flagship cryptocurrency has outperformed gold and virtually all publicly traded conventional assets ever created.
This is only the largest cryptocurrency; there are many others, each with a unique function. The ability to program even the most fundamental features of a cryptocurrency and fine-tune them to our specifications is one of the primary selling factors that facilitated the shift from inefficient conventional assets.
Using cryptocurrencies, you can monitor the inflation rate, the total supply, the total circulating supply, and much more. So at this point, you should be questioning if your financial future is safe with the existing system. Can you rely on it? – A system that has failed numerous times before?
Time for a change
From the perspective of the average investor, the influx of institutional capital, which is typically much more informed than retail investors, seizing the opportunity to purchase cryptocurrencies such as bitcoin and ethereum at rock-bottom prices over the last few years should be more than enough of a reason to switch to cryptocurrencies.
Additionally, the industry is continually evolving, with new areas emerging regularly. The cryptocurrency business is only a little more than a decade old and is still in its infancy. However, within this brief period, the crypto industry has succeeded in establishing new markets, such as the decentralized finance and NFT markets.
Within this short period, the industry has already developed solutions that do not rely on energy-intensive technologies. The sector has found out how to automate entire economic systems and make transactions feeless. Santander estimates that the use of cryptocurrencies and the underlying blockchain technology may result in annual cost savings of up to $20 billion by 2022.
Banks, too, have begun to use cryptocurrencies. This would be unthinkable only a few years ago. Major financial institutions such as JPMorgan and CITI have all jumped on board in the cryptocurrency bandwagon.
One thing is certain: cryptocurrencies and blockchain technology will eventually supplant the conventional system, just as the internal combustion engine is already being replaced by the more affordable and efficient integrated circuit.
What better way to commemorate the occasion of Raksha Bandhan, which symbolizes the protective bond between a brother and a sister, than to help secure our siblings’ futures by gifting them some cryptocurrency?