Cryptocurrencies Are Not Currency & Inflation Explained... Power, & Why Blockchain Technology is as Revolutionary as the Internet Itself
If you are reading this remember...you are an early adopter of cryptocurrency!
Congratulations, and chances are you know quite a bit about it, more than at least one of the earlier adopters...
The U.S. Marshals will auction off more than 3,800 bitcoins seized with criminal...Other bitcoins on auction were once owned by David Summerfield, who pleaded guilty in September to drug conspiracy charges. He was busted during a federal crackdown on now-shuttered dark web sites like Silk Road and AlphaBay.
Summerfield told the agents he preferred bitcoin to traditional banks because it "keeps the government off your back." Yeah, I Know what a thing to tell the dude stinging you
Breaking News: Bitcoin isn't actually a currency.
And the reason why this is important is because by understanding what the differences are, you will be able to empower yourself to financial freedom. Yes, it is that important.
Here's the problem:
So, When are you going to cash out?
That is a question asked by someone who does not understand that Bitcoin, Litecoin, Ethereum, and most cryptos are not currency! They are assets and still thinks in the binary world of :
- You're in some Coin
- You're in USD
The concept of cashing out, to fully divest from one asset and turning it into a liquid asset usually USD, is not a long term plan for any investment strategy. The purpose of currency is to use it as a short term store of value for the transfer of assets.
Assets hold value because they represent a share of the economy's labor, Currency by contrast is controlled by Supply and Demand forces with no limit on supply.
| Currency | Asset | |
|---|---|---|
| Depreciates | Value-Pegged to underlying & Fluctuates | |
| Is widely accepted | Not widely accepted | |
| Supply Controlled by Fiat | Supply controlled by promise of future labor |
Economics Concept: Assets vs Currencies
In an Economy there are Three people:
- Alice
- Bob
- Cat
- Alice is really great at Entertainment,
- Bob at Shoemaking,
- Cat at Cooking
They live their little Communist life where each provide 1 Unit of their services valued at $100 each per day to each person. A->B,C... B-> C, A...C->A, B. & of course one for themselves.
The value of their economy is: (Services Performed) x (Value of Services) = $900 per day.
Alice could charge Bob, $100 for her services, but Alice prefers if Bob would make her a pair of shoes. The $100 is meaningless, IT IS SIMPLY AN AGREED UPON EXCHANGE FOR THE PROMISE OF SOME FUTURE LABOR.
(More on the future labor part below)
When Alice goes to the bank to borrow $1,000 and the bank requires a total of $1,100 to be repaid? Where does that extra money come from?
It comes from Bob when he goes to the bank to borrow $1,100 to buy the tickets to Alice's new show.
Then Bob charges $1,200 for the next pair of shoes.
This is the economy we live in today. Why currency depreciates like clockwork.
Assets by contrast at tied to labor.
The labor required to build a home, the labor required to power a network of computers confirming digital ledgers.
What does the friend, who understands the difference between Currency and Assets, Say?
So, How are you going to allocate your portfolio into assets which are going to accumulate value for you, while protecting your wealth.
Which Brings me to Power:
Power
- The ability to make people ( OR Anything) do things they would not ordinarily do...
- Power is a finite resource.
Power can be manifested in a number of different ways, However understand:
Some have power, and some do not. Power is the ability to have someone forcibly locked in a jail cell for an amount of time, note in the use of power, power is being used against something.
- Power is walking into a store and having that store purchase the item days before and keep it for you on their shelf until the very moment you wanted to buy it.
Why do you think there are shortages when natural disasters occur and the price rises through the roof? Because the currency price is just a current asset value. OMG who knew.
Until Now Organization was Centralization: distributed ledger blockchain technology has created the ability to reorganize the way everything Centralized is done through Decentralization.
- Decentralization is to Democracy where Centralization is to Authoritarianism.
#Just as the internet connected the world, blockchain technology is going to democratize it.
And that is something worth celebrating. That is why I am invested in STEEM, ETH, AUGUR.
Thanks for helping me on this journey Steem. I found you last week and it's been a week to remember. I think I'm going to stay!
If anyone has any questions on Economics or anything mentioned above please feel free to ask.
- University of California, Bachelors in Economics, Class 2015
