If you've been following the newsletters so far, you'll know I've been questioning the US financial environment a lot lately.
Like a teenager vaping their first Juul, the Fed has started a habit of printing money and lowering interest rates. It looks like this will be the answer to future disasters. So what happens if the US dollar is no longer the world's Reserve Currency?
After giving it some thought, I came across the easy answer. Bitcoin.
My understanding of crypto is limited. But I've distilled the idea of bitcoin to this:
It's a replacement for the banking system. The macro-economic control that comes with regular currency is made obsolete by bitcoin. You can now build your own bank using crypto.
So that's the high-level overview. The way it works, I have no clue (aside from the gif above). What I do know is that the demand for bitcoin has gone up:
Bitcoin is up above 50% year to date:
Traditional investment funds are starting to include bitcoin in their portfolios:
- Stone Ridge now owns $115 million in bitcoin
- Billionaire hedge fund manager Paul Tudor Jones revealed 2% of his assets are in bitcoin
- Financial tech company Square announced that it had purchased about $50M of Bitcoin. 1% of assets.
Bitcoin is limited to a supply of 21 million coins. There's around 18.5 million currently in rotation.
The supply of bitcoin is going down. There's 900 Bitcoin produced per day, compared to the 7,200 from 2009.
I'm no economist, but the high demand and low supply is an easy answer for where bitcoin's price is headed.
While I don't know much, I've decided to dedicate the Innovation section to crypto. Forcing myself to write about it will help me learn better.
Bitcoin is also potentially the most innovative thing created, so it's only fitting.
I've also decided to set portions of my money to set up a crypto wallet. In case shit hits the fan. It'd be interesting to share what I learn here.