Why You Should Own Bitcoin Now
The world is on the precipice of something big. You can probably sense it. Something gnaws at our sense of complacency. It started in 2020 with Covid, escalated with the Russia Ukraine War, and now is escalating again with possible armed conflict in the Middle East. What’s worrying is that there are likely more rungs on the ladder to go. One of them is the national debt. Though the figure has been bemoaned by fringe economists and gold shills like Peter Schiff for decades, it truly seems like the can can’t be kicked down the road much more. That can is the debt bubble.
The National Debt, How the Government Will (Not) Service It, and Inflation
At the time of this writing (October 17, 2024 2:51PM—and yes, marking down to the minute is relevant because that’s how quickly the debt increases), the national debt sits at $35,711,363,000ish. I literally could not type the last FIVE figures fast enough to catch the clock in time. That’s how fast the debt increases. Every ninety days or so, the debt increases another one trillion dollars. With compound interest, that window will continue to shrink.
If you’re like how I used to be, relatively unfamiliar with economics and finance, this may not seem like a big deal. It’s the government’s problem or, at the very least, someone else’s, right? Wrong. I’m here to inform you it is most certainly not. In fact you are in the bucket of the types of people that will suffer most. That is, you are not positioned to make it through the coming reckoning.
See, there are two ways of dealing with debt when you have control of the money printer: you either cut costs and aim to pay it off/down, or you print a ton of your currency to make the debt cheaper. Let’s exemplify the first scenario. Imagine you got a little too crazy last month on a vacation. You should’ve only spent $1,000 on your vacation, but instead you spent $10,000. Let’s say you earn $5,000/month. You probably have expenses: rent, car payment, food, gym membership, etc., so at the end of the month you have $2,000 left over. Welp, you blew past your budget and now you’re in debt to your credit card company. Now you’re in the hole ten grand and you’re thinking you need to cut costs to start paying down that balance, so you cut your gym membership, you stop shopping at Whole Foods and instead go to the regional chain store, and you opt to dine in instead of going out with friends. This is the responsible thing to do because you learn that you can’t outspend what you earn because there are repercussions. If you were like the government, however, you would have the ability to just print more money. That’d be great, right? Wouldn’t it be nice to go into your Capital One app and tap a button that says “Create $10,000” and then pay off the debt? Well, that’s what the government almost always does. They for many reasons I won’t get into, but will focus on the obvious one: it would not be popular with voters to cut the programs they’ve come to rely on. Imagine being a beneficiary of Medicare, welfare, or social security and have your congresswoman say: “Sorry! We needed to cut costs this month and decided to trim your benefits significantly to make a payment on the skyrocketing debt that our organization created.” You can see how that would not go over well.
Additionally, there is the very real consideration of lobbyists and the mega-wealthy elites that have their wealth in investments. When you hear Elon Musk’s net worth is $246,000,000,000, that does not mean he has that in a safe somewhere. It means that across all of his investments (including a safe full of money) his wealth totals to that sum. In fact, most of his wealth is concentrated there. And you bet your ass he wants to preserve it. Anyone would. Even you or I with our 401ks, IRAs, etc. want the equities we hold to remain high in value. That’s why we invest in them. Should the government go into austerity mode and start cutting costs, it would be a deflationary event. That simply means that the price of things goes down. It’s the opposite of inflation where the price of things goes up. This would mean that the price (and value, at times) of investments would also decline. This would not be good for the ultrawealthy, nor the companies that generate their wealth.
With the dual pressure of public and corporate opinion, it’s much more likely the government will just create more dollars which will result in:
- Inflated money supply
- Cheaper dollars (the value of what a single dollar can buy will decrease)
- Debt becomes cheaper
- Asset prices go up (money will flow into assets to preserve value, driving up the price of all assets, but not evenly)
I’m calling it now that the government will do this under the auspices of “Building a New America” or “Making America Great Again” to make it appear that what they’re doing is beneficial to the longevity of the country. They will essentially be promising a last bit of sugar before the crash hits. When it does, it won’t be immediate. Inflation will take time to build as it did during Trump’s stimulus in 2020 and then Biden’s in 2022. However, with the compounding interest discussed earlier, we get closer to runaway inflation or hyperinflation. This is a very scary place to be. Hyperinflation (all inflation, really) erodes your wealth away. Inflation takes in the future what you earn today by making your hard-earned dollars less valuable, keeping you on the treadmill as the speed picks up.
In Weimar Germany, just after the conclusion of World War 1, the struggling republic underwent massive hyperinflation. In April of 1919, the German Mark was valued at twelve marks to a single United States dollar. In just over four years, that ratio became 4.2 trillion marks to a single United States dollar. You can imagine that if in 1919, you were eyeing retirement in a few years, by 1923 you were dirt poor. While this level of hyperinflation is unlikely to happen, even a small percentage of it would be devastating to those unprepared. While the percentage rate of inflation in Weimar Germany was in the thousands, we’ve begun taking the steps towards significant inflation. According to the CPI (Consumer Price Index, which is an incredibly flawed metric), which is the government-approved inflation figure, inflation never got above 9% during the height of inflation panic in 2023 and 2024. However, the truth is that the figure is likely higher, even up to two times. This is because of the untruthfulness in how the CPI figure is ascertained. Regardless, you can imagine the government is clearly incentivized not to show us the real number as it would drum up fear and resentment in both markets and populace, leading to a likely ousting of the reigning party and politicians at the time. But at the same time, they are also incentivized to not cut spending on the things they promised us.
This is the heart of the problem. Politicians are motivated by power and control even if they are largely altruistic and benevolent. This is because without power and control, they can’t affect the change they want, so they have to grab as much power and control as power. Losing it is like losing revenue if you’re a corporation. Politicians want power and control as much as corporations want market share and revenue. Imagine if one of these corporations had promised, for years, services to their customers that were now becoming too expensive to provide. The corporation has dominated their market due to this offering, historically. If they had to choose between discontinuing that offering (at risk of losing their customers) or creating—out of thin air—more money to keep providing it indefinitely, what do you think they would do? They’re going to smash the print button every time.
And this is where Bitcoin comes in.
Bitcoin and How It Will Protect You From The Fall (of value)
Without getting too deep into the mechanics and history of Bitcoin, you should first know that, since its inception in 2008, it’s been the best performing asset. Putting aside any speculation you may have, first take that in.
It’s the best performing asset for roughly 16 years. And—to clarify—not by a little, but by a lot. Why is that? Why would some dubious internet money outperform gold, real estate, the S&P 500, etc.?
It’s simply because it’s the hardest asset ever created. Why? Because of the simple fact that you can’t make more of it. It’s also incredibly decentralized, which makes it both highly secure and non-tamperable. There is no central entity that can throttle its supply. Its max supply is fixed, unable to be changed by anyone. Again, not to get into too much detail, but the way Bitcoin works makes it such. It's inherent to its nature.
This chart below shows the performance of the S&P 500 since 1975. Notice the two most recent inflationary events: the 2008 Great Financial Crisis and the Covid 19 lockdowns.
What do you see? Following both 2008 and 2020 were increases in the index’s price after a short-lived slump. Also compare the rate of increase between the two. Notice how much more drastic the increase is in price. At its highest point in 2020, the S&P 500 reached around $3,330. Look how today it’s not too far away from a 200% increase. Compare that to the 11 years between 1986 and 1987 where it much more gradually ticked up.
Now look at this chart of the M2 Money Supply which measures (to the best it can) all circulating United States dollars on the planet below.
Notice that there’s a modest uptick after the GFC (Great Financial Crisis) and huge increase in 2020. This is because the government printed an obscene amount of money within the last few years. Now imagine you overlay this chart and the S&P 500 chart on top of one another. You would notice a correlation that when the government prints money, the S&P 500 goes up. This also applies to not only to other indices, but also other assets. Take gold for instance:
What about Bitcoin? Yes. Of course, it impacted Bitcoin.
Though the correlation is much less clear, the increase in the money supply did in fact affect Bitcoin. Remember that Bitcoin is just now, after 16 years, really getting regulatory clarity as well as mainstream adoption. Blackrock, one of the world’s largest asset management firms that has stakes in many massive companies, introduced its own Bitcoin ETF that’s publicly available to invest into. The point is that Bitcoin is now being perceived as a legitimate investment vehicle by people around the world. That perception isn’t unwarranted. It is the best money and store of wealth ever created. This reminds me I should probably post about the evolution of money as a technology at some point.
Remember a key thing discussed in this post: there is a massive debt bubble that our government is likely going to do nothing about except to make it worse by printing more dollars for short term benefits while massively negatively impacting the long term. From the above charts, what can we tell from inflationary events? That when more dollars enter the system, asset prices go up. Is it because they’re more valuable? Not at all. It’s because the smart money knows that with every new dollar that’s injected to the market, the less valuable that dollar becomes, so they opt to put their money in assets that go up—protecting their value.
It’s completely fine to put your money into stocks, real estate, gold, etc. Those assets will certainly keep going up in price and will (hopefully) outpace inflation, protecting the energy you put in to gain the ability to buy into them, and transfer that energy later on at the same or increased amount. However, due to these assets’ natures, they’re inherently flawed against Bitcoin. Nvidia can create more shares any time it wants, lowering the value of each individual share. There is more gold on the planet to mine. More houses can be built. There will never be more Bitcion.
Because of this simple fact, this makes Bitcoin the hardest monetary asset ever created. Does it have its flaws? Absolutely. Can you buy a latte with Bitcoin? Sure, but it doesn’t make sense to. It’s not ideal for that (yet). But you wouldn’t buy a latte with your house, trading some miniscule corner of it in exchange for a latte. You also wouldn’t shave off a flake of gold for a latte either. That’s because each of these assets have different purposes. Bitcoin’s is simple: to make a peer-to-peer currency that will never be affected by a centralized authority, which is exactly what’s causing inflation and risks hyperinflation.
In short: the one device that was literally designed in the wake of the greatest financial crisis since the Great Depression, that has outperformed every asset since 2008, and can be stored in your brain with 24 words, and you can take anywhere on the planet is the best way out of this almost guaranteed downward spiral.
Acquiring And Securing Your Bitcoin
If you’ve read this far, you’re likely ready to take the leap, to throw a few—or a lot—of bucks towards protecting your wealth before the inflationary hurricane makes landfall. But don’t just rush in. There are very important things to know about storing your Bitcoin securely (probably another post I should do a deeper dive into).
First is that the beauty of Bitcoin is that you can be your own bank. All a bank is, is a custodial service that watches over your money. When you deposit money into a bank account (e.g. Chase, Bank of America, Frost, etc.) you are actually giving away full autonomy over your dollars. The bank is well within its rights to lend that money away; up to 90% of it, in fact. The bank also owns those funds and is effectively showing you an I.O.U. when you go to see what your checking account has in it. With Bitcoin, you can circumvent this completely by keeping all your Bitcoin with you. This is because you can interact directly with the protocol much like anyone can interact with the hypertext transfer protocol (or HTTP) on the internet.
To do so, you want to get a cold storage wallet. This simply means a wallet that stores your Bitcoin offline and can access your Bitcoin when you want the protocol to. Hot wallets are OK, but still at risk. These are wallets that are stored on a company’s server. They’re encrypted and protected, but know anything on the internet is at risk. I use a Ledger cold storage wallet, but have heard great things about Jade and Tangem. There are more, but make sure you do your research before settling on one. It’s probably smart to have a few wallets to spread out your Bitcoin on should you have enough to make you leary of keeping all of it on one. This is something I’m looking to do. I recently purchased a Jade wallet and intend to start storing Bitcoin there.
Only ever buy wallets from the manufacturer. Never buy them off Amazon or anywhere else but the manufacturer. When you get your wallet, double check it for evidence of tampering. If there appears to have been tampered with, contact the company and see if you can request a new one.
Storing Your Seed Phrase
Your seed phrase is a 24-word phrase that, when correct, can unlock the contents of your wallet and expose them. This is great, of course, to send and receive Bitcoin, but bad if it’s not you doing the sending and receiving. Thus, this seed phrase is incredibly important to not only secure, but to keep secret. I highly recommend getting engraveable seed phrase storage plates (like these, but these are safe to get wherever). I would get a few so that you have redundancy in case you ever lose one. These are great because, in the event of a fire, storm, whatever, these things will survive and help you never lose your seed phrase. If you lose you’re seed phrase, you’re pretty fucked. Sorry, but that’s the truth. Unless you can remember the 24-word phrase in full and in order, then losing your seed phrase is tantamount to losing your Bitcoin. The coins themselves will remain in your wallet, but will be inaccessible. Once you engrave your seed phrase, hide the plates somewhere only you know of. Don’t hide them in things that move like a backpack, a car, or anything like that. Find a safe, secure place that, if you needed to, could retrieve quickly and bail with.
Getting Bitcoin
There are tons of ways to acquire Bitcoin. You can get it on Cash App, through Robinhood, and many other well-known apps. For me, I’m a basic bitch and get mine from Coinbase. I have a weekly buy that automatically purchases Bitcoin for me. However, once it’s purchased on Coinbase, it is not secure. Thus, I wait till I accumulate enough to feel (personally) uncomfortable having on Coinbase and then send to my cold storage wallet. Could I save money by buying my Bitcoin elsewhere? Yes, absolutely. However, I prefer having the peace of mind and don’t mind paying a small fee to have that.
Sending To Your Wallet
It’s critical to know that sending Bitcoin wallet is not like sending money on Venmo or Zelle. If you screw up the wallet address and hit send, the Bitcoin can’t be recovered. It is gone. So if you send $100,000 worth of Bitcoin to an address that’s not yours, it is gone and you will never get it back. It’s scary, I know. I get nervous every time I send Bitcoin, but there are ways to mitigate the risk.
A good strategy I’ve employed is sending a little bit to my wallet before sending more. It’s like testing the ice before stepping fully out onto it. Both Ledger and Coinbase make it assuring to transfer Bitcoin because I can very easily copy/paste my wallet address into Coinbase and know that it’s the exact right wallet key. It can never hurt, however, to meticulously review the wallet address in both your destination and origin to make sure they are exactly the same.
Wallet addresses can look like this: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
They are not human-friendly. They aren’t meant to be, which is why it can never hurt to double check their accuracy when sending/receiving Bitcoin.
Conclusion
Look, I know this was a bit of a rambling journey. Thank you for bearing with me. Yes, I’m just some dude who moves pixels around on the internet and am likely little different than you, but I am throwing this flare into the dark hoping you can see the beast it illuminates. Am I a financial genius? No. Am I providing financial advice? No (for legality’s sake, obvi). What I’m doing is trying to grab you by the head and show you that glowing orange flare in the dark.
You work too fucking hard to have your wealth eroded away by inflation, by politicians that will step on your corpse so that they can stand higher. The American dream was never meant to include paying off the government’s debt because a few greedy people put their preservation over the millions of citizens they’re supposed to serve.