It’s no secret that the rich are getting richer and the poor are getting poorer.
In recent years, we’ve seen a rise in income inequality and a decline in social mobility.
More and more people are finding it hard to get ahead, while those at the top just keep pulling further and further away.
Is it any wonder, then, that an increasing number of people are turning to bitcoin as a way of protesting this system?
Central Banks’ Currency Manipulation Has Gone too Far
Our parents taught us to save money, but in today’s reality, savers are being punished the most. Why? Because central banks manipulate the currency, making it worth less and less each year.
When you have a lot of money, you can easily afford to lose a little bit of value each year. But when you’re struggling to make ends meet, every penny counts.
The purchasing power of your savings is being eroded away, and it’s only going to get worse.
Thanks to central banks, your money is worth less and less each year, and they’ve been manipulating the currency for years – and they’re not about to stop anytime soon.
Quantitative easing, near-zero rates, negative interest rates, and currency wars are all ways that central banks have tried to prop up the global economy in the wake of the 2008 financial crisis.
And while they may have succeeded in preventing another Great Depression, they’ve also created a whole host of new problems.
In particular, they’ve made it very difficult for savers to get ahead in life.
How is Bitcoin Different?
So if you’re thinking of investing in bitcoin as a way of protesting, you should at least understand its fundamentals.
First, Bitcoin is a peer-to-peer, decentralized currency, meaning it can’t be stopped. No government can shut it down; no institution can control it.
Second, Bitcoin is not a company. It doesn’t have a CEO; no customer support to turn to, and no one to bail you out if things go wrong. Unlike private or publically-traded companies, Bitcoin can’t go out of business.
Third, many Bitcoin hodlers believe there are many use cases for Bitcoin, and as long as it is going to benefit humanity in some way, there is no stopping it.
Fourth, when you invest in bitcoin you’re investing in an asset. And like any other asset, its price is determined by supply and demand.
If more people want to buy it than there are willing to sell, the price goes up. If more people want to sell than there are willing to buy, the price goes down.
It’s that simple.
Holders of Last Resort Form Bitcoin’s Higher Lows
Bitcoin is different than other assets like government-issued money and equities because many of its holders don’t merely see it as a way of becoming wealthy but as a form of protest.
For many bitcoin holders, their investment is a way of sticking it to the traditional financial system and everything that it represents.
Because bitcoin is decentralized and not controlled by any government or institution, it’s also seen as a way of taking power back from the elite.
That’s why, I believe, bitcoin keeps forming higher lows – an incredibly bullish sign for any asset.
Every time the price falls, those who believe in the power of bitcoin to take on the establishment buy more, confident that eventually, their investment will pay off.
The Dangers of Ideological Investing
Ideological investing is nothing new; there have always been those who’ve been willing to risk everything for a cause they believe in.
The latest Reddit craze, where investors threw money at zombie companies like AMC and Game Stop in an attempt to stick it to the establishment, is just one example.
And like all previous instances of ideological investing, it’s likely to end in tears for those involved.
Why? Because many people that invest for ideological reasons are not looking at the fundamentals of the asset they’re buying.
They’re only looking at the symbolism, and sooner or later, the market always corrects itself.
That’s why you should understand the fundamentals of any asset you’re thinking of investing in, whether it’s bitcoin or any other asset.
Only then will you be able to make a rational decision about whether or not it’s worth your time and money.
What Next?
As more and more people are starting to lose faith in central banks’ ability to manage the economy.
And as the problems with our current system become more and more apparent, alternatives are beginning to look more and more attractive.
Bitcoin is one of those alternatives. It’s not perfect, but it is a way of opting out of the current system. And as more and more people lose faith in central banks, that’s likely to continue.
So while there’s always a risk that the price of bitcoin could go to zero, I believe the chances of that happening are slim – especially given its decentralized nature and a 14-year history of existence.
In my opinion, investing in bitcoin is no riskier than investing in any other asset; the key is to understand what you’re buying and why you’re buying it.
And if you’re buying it for ideological reasons, be prepared for a bumpy ride.