The Future of Money - (First Draft: January 2018) by Kabir Ali CTA ATT (London, UK)

The Future of Money - January 2018 by Kabir Ali CTA ATT (London, UK) (https://twitter.com/kabir_LDN)

This is a first draft only - I will update it once I get feedback, but I really wanted to share the concepts that I think more people need to know about

Copyright - No organisation is to have fiat currency gain from the distribution of this article. Please do not post to sights that contain advertising. This is not Financial Advice - it is simply my opinion on the past and future of Money. What you do after reading this is done at your own risk.

I will probably be a millionaire in dollar terms by the time most people read this. If you’re smart you should copy me. Here’s why - I can’t connect the dots for you, but I can show you where to start. Each actor in this story has their own angle and in some ways they are all right: from the techies who created Bitcoin (https://en.wikipedia.org/wiki/Cypherpunk), to the Banks who took over the production of money and now trying to stay relevant, to the socialists movements saying inequality doesn’t have to be the norm anymore: let’s spread the world’s resources in a fair way. There will still be rich and poor, but the rich won’t be that rich and the poor won’t be that poor. There will still be crooks, so don’t go running into buying ICO’s if you don’t understand what you’re doing! You’ve been warned.

So who am I and how did I end up chasing cryptocurrency down this rabbit hole.

About three weeks ago, my nephew who is in his 20s called me (I am 34). He said he needed some tax advice. Now, if you don’t know who I am, I am a Chartered Tax Advisor and Accountant and have had my own practice in Highgate, London, for about 5 years (http://www.kbraccountancy.co.uk). I qualified while working at KPMG and Deloitte and have helped set up other small businesses. I am a university (or college if you're American) drop out - if that helps? A lot of trend spotters seem to be (https://www.cnbc.com/2017/05/10/10-ultra-successful-millionaire-and-billionaire-college-dropouts.html)

Back to my story, this little kid who I watched grow up, now asking me for tax advice - I was curious. He said he wanted to know the best way to manage his cryptocurrency as he is now worth over £300,000. Thays more thank I have and I did the “good capitalist” thing and worked hard for 10 years and have piled on debt trying to get my business growing. Now, this is not the first time I have had my interest drawn by cryptocurrency, I have heard about Bitcoin before. It even hit the mainstream in an episode of The Good Wife in 2012 (http://www.imdb.com/title/tt2148561/releaseinfo?ref_=tt_ov_inf).
If you had bought Bitcoin as soon as you saw that episode.. Well, you could have turned $100 into $3,750,296 today (2018)
(https://www.investopedia.com/articles/investing/123015/if-you-had-purchased-100-bitcoins-2011.asp)

So for the last few weeks, I’ve been doing a lot of reading and watching Charles Hoskinson on YouTube. That man is a genius. Just for disclosure, before that phone call, I had NO MONEY IN BITCOIN OR ANY OTHER CRYPTOCURRENCY, MINING OPERATION OR ANY FINANCIAL INTEREST IN THIS SECTOR

First Question

Is it a bubble? Well not exactly. I see this as a Monetary Mega Cycle.

Our money supply is a mystery, most people have no idea how money is created. Once you read about it, you will be wondering why we let this happen for so long.

In summary, since the 1970’s your money is nothing more than paper or a few digits in a bank’s central computer. Past generations weren’t so easily duped, they demanded gold which could not be forged (well the alchemists tried). But the Banks' promised us that the printed money, backed by nothing, was worth something and we accepted it, it was convenient and they rode the gravy train as we put our trust in them. Well, so it was until 2008, when the banking crisis hit, I was there to see Lehman Brothers collapse across the road from my office in Canary Wharf: https://www.standard.co.uk/news/what-happened-to-bankers-who-crashed-with-lehman-6735327.html)

So since 1971 with the power to create money, the banks printed away, each time making more and more form the interest and fees they charged on the newly created money. Now you understand why JPMorgan’s share price has gone from $5.82 in 1978 to $116.32, that’s what I call a bubble, almost 2,000% growth. Before you start thinking that’s impressive, it was even better than you think, remember, the bankers have been extracting “cash” over those 40 years from the banks and still the share price went up (yes it finally collapsed in 2008), but they protected their own. Could this extraction of value from the real economy by the banks and then the reinvestment into property have been the cause of the housing bubble.

How long is a megacycle - about 40 years

1944: Even before the second world war ended, the global elite wanted to secure the future of money. This lead to the Bretton Woods System (https://en.wikipedia.org/wiki/Bretton_Woods_system),
in summary, every dollar bank note had an equivalent amount of Gold held in reserve. If there was $100bn in dollars, then the central bank would have to hold $100bn of Gold as security. You can find more information here: https://en.m.wikipedia.org/wiki/Gold_standard

1971: End of Gold standard and the rise of the banks
"Starting in the 1959–1969 administration of President Charles de Gaulle and continuing until 1970, France reduced its dollar reserves, exchanging them for gold at the official exchange rate, reducing US economic influence. This, along with the fiscal strain of federal expenditures for the Vietnam War and persistent balance of payments deficits, led U.S. President Richard Nixon to end international convertibility of the U.S. dollar to gold on August 15, 1971 (the "Nixon Shock")."

1987 New money creates Stock Market Bubble and Bust
1990 New money creates First Property Bubble (private investors)
2001 New money creates dotcom bubble
2009 Bitcoin released ("BTC")(https://en.wikipedia.org/wiki/Bitcoin)
2018 End of Property Bubble (Buy to let)?

Remember, each time the banks create more money it has to go somewhere and it normally ends up in assets - Property, Stocks, Bonds.

Each mega cycle,
1944 - 1971 ~27 Years
1978 - 2009 ~38 Years
2009 - 2059 ~ 50 years (well, I can’t see that far ahead!)

How long will it last?

So I think the Bitcoin “Bubble” will last about 50 years before something new is created and who knows what humanity will come up with. Who could have imagined cryptocurrency 1971?

What if they are like Tulips you ask?

Tulips are perishable and could be grown, the “bubble” couldn’t last. Bitcoin can’t be destroyed (unless you can get every single person in the universe to delete every single copy of the bitcoin programme - which is near impossible) and only 21,000,000 bitcoins will ever be created. Sounds a lot more secure than money to me, which is continually being printed by the banks whenever a loan is issued.

What is Bitcoin?

Read this first - https://en.wikipedia.org/wiki/Bitcoin
It’s like digital gold - it cannot be destroyed and no one can steal it from you, no one knows you have it, including the tax man! (I will do more detailed study on this later, don’t worry, we will still have tax, it will just run on the Blockchain system)

So what am going to do?

Invest in the new economy, but I don’t expect it to happen in a few weeks like the ICO crazed people. Think of it as a 30-50 year cycle. Think of it like buying JPMorgan Shares in 1971.

Don’t invest more than you can afford to lose, but you can slowly move your assets over to Bitcoin and other blockchains over the decades to come.

FOMO means "fear of missing out!". This is not a good reason to buy Bitcoin, only do it if you believe in it. Future digital currencies are likely to have systems to stop a few people accumulating all the money, so you can always invest in those when they come out, you will just be a bit behind the curve, but you won't totally miss out. Look at cryptocurrency like IOTA which allowed every coin holders to vote on its rules.

So what currency would I buy?

I don’t like Ripple (XRP), why? It’s the equivalent of buying IBM shares rather than Microsoft's when the computer became mainstream. Legacy players don’t do that well, Ripple will do okay, but not as well as Bitcoin. Ripple is too tied to the old legacy banking system, which won’t totally collapse, they will just be like salt traders or silk merchants, they will still serve a function, but it won’t be the golden goose that it once was.

This is how I would allocate my total holdings:

Bitcoin (50%)
Ethereum (20%)
Cardano (20%)
Others (10%)

Where do I see this going?

If you agree with my analysis here is some examples of what you can invest in with the least risky at the top:

Resources - when Fiat currency falls, miners and owners of physical assets will do well

Look at Tesla - This company is the Apple of the millenials
Best Crypto to hold - Bitcoin
More risky but faster growth - Ethereum
Even more risk but has the most potential - Cardano

That’s all for now, I have a lot more material - so please stay tuned for more and do up vote if you found this interesting. This is the summary of a lot of research.

Steemit: @kabir88
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Twitter:@ kabir_LDN
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