Yesterday we looked at the impending spectre of the central bank digital currency (CBDC).
Before you read one more word here, please ensure you’ve read that as it sets up what I’m going to talk to you about today. Check it out here.
The idea of a CBDC isn’t new. The implantation of them isn’t a recent surprise. It is an evolution of money and control that is reaching into the realms of pure science fiction (and not the happy kind – as Nigel warns here).
As dystopian as this may be to some folks, there’s some light at the end of the tunnel. And that’s the “opt-out” strategy from a financial system that’s all about control and power. A way to hedge the uncertainty of the banking system, the actions of centralised authority (like the government and central bank) and those that want to penalise you for wealth and success.
It will probably come as no great surprise that I’m talking about crypto, or cryptocurrency, as an alternative way in which you can build and protect wealth.
I know that for some people the mere mention of crypto is enough to get your “red flag radar” pumping, your blood boiling and the expletives flying.
If that’s the case, I ask for a moment of your time to consider what I have to say.
Considerations when getting into crypto
First things first. I’m not naïve to the fact that we are all inextricably tied to the traditional financial system. Our entire lives have been a part of this system and the controls that come with that from centralised authority.
We know no different, thereby it is common and understandable to most.
Except for a few things…
- As common as traditional finance is, it’s not as understandable as people think. In fact, most people have no idea how the global banking system works – such as fractional banking, correspondent banking, the communication and payments rails that exist around the world and the complexities of money supply and control.
- There is something different, an alternative, that is not such an unknown anymore, but a tool for financial liberation. In the past, that’s been hard commodities like silver and gold. But in today’s digital, mobile, “tech-everywhere” world, there’s what I’d consider a more relevant and powerful alternative – crypto.
When it comes to crypto and what it can achieve. There are a few things to consider as well.
- This is not something I’d suggest is an “all-in” strategy. While there are increasingly more developments and innovations in crypto, it’s still early stage and has some catching up to do compared with the global financial system.
- If you’re looking at this from an investment perspective, that’s fine, but in fiat-currency-converted prices, it is wildly volatile, so you need to pick your moments and make sure to be smart about asset allocation in this space.
- If you’re getting into the crypto market, which I believe everyone with a little risk capital should have some exposure to, then you need to know the things that drive this market are not what you might be used to. In fact, they can be so ridiculous it turns a lot of people away, but in turn, also away from a lot of potential upside. So…
- You must have an open mind, proclivity for risk and the ability to be a little “stupid”.
What do I mean by “stupid”?
In an interview last week, Elon Musk admitted that he’d stepped down as CEO of Twitter. In his place, he’d appointed his Shiba Inu dog, “Floki”, as Twitter’s new CEO.
Sometime before this interview, Elon had even posted a picture of Floki at the helm. You can see that here.
If you’ve been in crypto longer than a minute, you’ll know that the Shiba Inu dog is popular in crypto circles due to its representation in the “Much Wow” meme.
Subsequently, Doge (as a popular meme) became the inspiration for the Dogecoin cryptocurrency when it launched in 2013. Dogecoin was originally launched as a joke. But as of its market peak in 2021, Dogecoin had a circulating “market cap” of US$85 billion.
A big part of this has been due to Elon’s love of a meme, silliness and subsequently Dogecoin. This has more recently culminated in the series of tweets about his dog, Floki, and even saw the Twitter logo online changed for a period to the Doge…
Here’s where it sometimes pays to embrace the silliness and be a little stupid. In the 2021 crypto boom and bust cycle, not only did Dogecoin hit all-time highs, but a spate of other “dog coin”-related crypto also hit the market.
One was the Shiba Inu crypto, another the Floki crypto and more recently a whole host of “CEO” Doge-related crypto.
Do I sound bonkers? Good.
Right now, you may be thinking, “Holy Moses, this guy is flat-out bonkers.” And maybe so. But at the same time, massive money was and has been made in these “Doge crypto” for those who did embrace the craziness and took a punt that Elon would continue his love affair with the Doge world.
Therein lies the point about the crypto market being like no other. Elon’s love of his dog, Doge and just being silly can put a crypto portfolio into a healthy profit position.
Considering Elon’s grand plans to make an “everything app” he’s referred to as “X” that could integrate Twitter, payments and crypto, there’s a pretty good argument for some Doge-related crypto in the mix.
That does not mean you lump a whole heap of cash into this stuff. The reality is that the risk of a bust lower is just as real as a boom higher. But the asymmetric risk you take on means that maybe it’s not the worst idea.
But if you’re serious about your crypto investing and building a portfolio, the truth is that anything like this makes up a very small fraction of the overall position. Building a crypto portfolio around things like bitcoin and Ethereum is a shrewder approach to take.
Of your overall wealth portfolio, crypto should be a portion of that. The part reserved for capital that you are happy to have in high-risk investments. That’s money you don’t rely on for anything else and can afford to lose. But in my view, you absolutely must consider having some exposure to this asset class, for all the potential of a hedge against uncertainty in global finance. That includes bitcoin, all the way through to embracing the silly and looking at adding some “dog coins” to the mix.
This may very well be the most unbelievable thing you’ll read in Fortune & Freedom so far this year. But it weirdly may also be one of the most exciting and thrilling too.
And before you go, don’t forget to watch this urgent message from Nigel. CBDCs could be a threat to your financial liberty – but Nigel and Nick have some thoughts to share on how you can prepare.
Regards,
Sam Volkering
Editor, Fortune & Freedom
