Ever since the rise, heady height, and fall of bitcoin, headlines that back up cryptocurrency are few and far between in mainstream media outlets. Regardless, in early February, one hedge fund manager asserted that cryptocurrency would ensure against irresponsible authorities. There’s a lot to unpack in that statement, but the message is clear: cryptocurrency offers an independent and reliable way in which to develop and grow assets away from the grasp of political macroeconomics.
There may be some immediate truth to be found in this statement by assessing the attitude of developed countries towards Bitcoin. Many have enacted expressly anti-crypto measures, while still attempting to get a handle on the promise that blockchain tech offers. Despite this, cryptocurrency continues to offer a way to grow wealth and reduce debt for many people and may well be the perfect antidote to the impacts of governmental economic policy.
Personal debt problems
Up to 80% of Americans are currently in significant debt, according to money management website The Motley Fool. For one reason or another, this has created a huge household debt within the country. Government policy only exacerbates this. The Trump Tax, for example, promised to give tax rebates to thousands of households and improve the quality of life for the average citizen – however, according to an analysis reported by Time, the opposite has occurred, with $5.5tn being added to the national debt. For those in debt, it’s often an inescapable pit as rising interest rates, inflation and static earnings, all within the same system, prevent any progress.
Cryptocurrency provides a good out for this problem. Except for currency-pegged coins, cryptocurrencies offer a truly independent investment vehicle through which consumers can look to clear debt, remediate issues with their credit history, and ultimately gain financial independence. Cryptocurrency can even be used in the reverse, according to US News, being used to pay for college. Essentially, the prospect for debt management through cryptocurrency is real and relatively insulated from government policy.
The governmental debt problem
It’s a well-known fact the US public debt outstrips its GDP. At what US Debt Clock finds to be a $21tn total debt pile, that means there’s a 4.157% deficit to the actual revenue the country pulls in. This is not necessarily a bad thing, and many companies and businesses regularly run at a loss – the fluidity of money and the various tax and fiscal policy loopholes mean the number isn’t as terrifying as it could be. However, the number is still higher than at any point since 2008, and far higher than it was in the 70s-90s. What does this mean for the average citizen trying to protect their wealth?
Firstly, investors in the classic stock markets will be impacted. As one explainer by US News outlined, higher debt means higher interest rates and lower returns. This also impacts on property rates, with mortgages rising at higher levels and directly impacting homeowners. Secondly, long-term economic growth is stunted, causing slower gains in the stock market and all-around uncertainty. Once again, cryptocurrency is part of a global network unconstrained by the fiscal policy of governments like the USA’s. These factors simply aren’t as important.
Securing your future
Even for those not looking to make a huge buck today, cryptocurrency is starting to offer a mature pension option, according to The Balance. Currently, pensions in developed countries are imperiled; respected economist John Mauldin found that US-backed pensions would not be able to keep their benefit promises to US workers, instead likely serving up a huge amount of disappointment as workers move into their senior years and retire. Likewise, Europe is, according to Forbes, likely to face its own pensions storm in the coming years. Conversely, as the Balance have noted, any bitcoin purchased, bar one 11-day streak in 2013, will now be turning a profit. With the intense interest in blockchain continuing, it’s almost certain that digital coins will continue to be relevant and continue as a viable investment option well past the 2020s. This creates an entirely viable, and very reliable, pension option for those looking for diversification.
Cryptocurrencies remain volatile, but there is a level of security coming into the market that would shock even the most hardened investors. By no means should people start to plunge their entire savings into digital coins, but serious pause for thought should be given. The evidence is stacking up to show that investing in digital coins will provide an extra layer of security against the problems of modern governments. Between escalating debt, non honored pension agreements, and political turmoil, the normal stock markets are becoming more and more reliant on fiscal policy rather than simply market forces. Consider diversification – it might provide the perfect antidote to political uncertainty.