“I do think Bitcoin is the first [encrypted money] that has potential to do something like change the world” — Peter Thiel
This is my dashboard confessional:
I was wrong about crypto.
I even did a video that crypto is in a bubble and will crash.
I’m known in my circles as somebody who is a crypto hater.
But I’ve really turned a full circle.
I am now a proud owner of Bitcoin.
There are a few reasons that caused me to switch up my opinion.
If you’re a real asset investor like myself, you might be thinking:
How could I ever own anything that is not a physical asset?
Why would I ever want to get into crypto?
This is the post for you!
There are a few reasons I didn’t like crypto.
Crypto is not a tangible asset.
I like physical, real things.
There’s too much tech fraud out there.
We don’t know who the creator of Bitcoin is.
I don’t understand exactly HOW the technology works.
How is one crypto different from another crypto?
These are all concerns I had.
We’re going to go over why I overcame those concerns in three easy steps.
1. Your Dollars Are Not Your Dollars
I had the recent revelation that my dollars are not my dollars.
This was a revelation that I had when the Ukraine crisis began.
In response to the conflict, $600 billion of Russian money was basically frozen in the US.
You can say that’s a really good thing.
I’m not supportive of Russia’s policies or what they’re doing in Ukraine.
One sovereign country freezing another country’s assets for any reason is unprecedented.
Freezing assets has been done in the past, but it’s becoming more and more common.
Assets are being frozen by Western governments whenever they feel like.
You also see this from more of a personal liberty standpoint.
If you remember the Canadian trucker protests, they were making a stand for freedom and doing what they felt was right.
The government shut down their GoFundMe.
They were shutting down people who were giving money.
That’s kinda crazy, right?
You give money to a political or social cause, and now your assets are being frozen.
This happened to quite a few people.
I can’t really think of a time where that’s happened in recent history.
These events helped me realize that my money is not my money if I can’t access it.
A lot of wealth is not accessible if it’s shut down.
There could come a situation in the future where people’s assets are frozen for whatever reason.
It’s something to think about before it actually happens.
Partially because of this, I’m a gold guy.
I own a fair amount of gold.
There are some challenges with gold.
Obviously, it’s kinda big and clunky.
It’s hard to move.
I like gold because it stores value.
It is kind of clunky and hard to liquid.
There are ways you can borrow against it.
Bitcoin solves this problem.
Especially if you have it off an exchange.
You can access it anywhere in the world and it can be outside the financial system.
But be aware: If you have your crypto on an exchange, it can still be frozen.
With the Canadian truckers, some of their assets were frozen on exchanges.
Now cryptocurrency exchanges are much more selective on how much data they pick from you.
The government wants to shut down crypto if it’s someone they don’t think should be doing certain things with that crypto.
If you have a Bitcoin wallet, you can pull it off an exchange.
I have a good friend who lost over seven figures on an exchange.
An internal employee at his phone company hacked the exchange and got his information.
He’s in a lawsuit right now trying to get his assets back.
Just because your crypto is on an exchange, that doesn’t mean it’s secure.
If you get it off the exchange, there’s also a risk that you could lose the password.
You could lose the wallet.
But again, the upside is you have some money outside of a financial system.
Crypto is also accessible worldwide.
There will probably be a push from central bankers against crypto, especially as they create more of their own central bank digital currencies.
But I don’t think they’ll be able to stop it.
You would need to shut down the entire internet to stop crypto.
Now let’s jump into inflation hedge strategies and why crypto can help with that.
2. Explore Your Inflation Hedge Options
There are different ways to hedge inflation.
We often talk about printing money.
We talk about money devaluing over time.
I have a good friend who owns a lot of multifamily real estate.
They’ve got cashflow to cover expenses.
Why would they need to own anything else?
Why do they need to own gold?
Why do they need to own crypto?
The answer is: Because it gives you liquidity.
You don’t have liquidity if you have an asset that’s paying you to hold it.
But let’s say you do need more money.
Some people would say having 10% of your investable capital in a combination of gold and crypto is an insurance against more inflation.
You have liquidity if you need it.
There are always times where having liquidity is very important.
So that’s what I’ve done.
I’ve bought a lot of gold and a lot of silver.
I think crypto is also an option.
The reason I like Bitcoin is because it was the first crypto to be created and gain traction. It’s also limited in quantity.
There’s only 21 million BTC that will ever be mined and the mining will stop in 2140.
It’s a way to store value and is very fixed in supply.
Anytime you have a limited supply of anything, it really can hedge the inflation.
This gets us to the next point, which is why Bitcoin is different.
3. Why Bitcoin is Different
One of my points in a prior video was the idea of MySpace and Facebook.
When I was in college, I used MySpace.
Then people switched suddenly to Facebook and no one used MySpace anymore.
One crypto could perhaps be ditched for another.
There are two books that really help me understand this.
The first is called Layered Money by Nik Bhatia.
This is a great book that talks about the history of the monetary system.
Bhatia talks about how we used to be tethered to gold.
Gold was the base money that tethered everything.
Now everything is tethered to the dollar.
The world is looking for a reset.
They’re looking for another type of currency.
We really misuse the dollar.
The dollar has been devalued.
As Americans, we have this incredible advantage where we can buy things super cheap overseas or on Amazon.
There’s a huge favor to hold dollars.
I was in El Salvador a few weeks ago and they use Bitcoin as their official currency alongside the US dollar.
They’re trying to use it more and more.
But currently, not everybody is using Bitcoin.
A lot of the poor people are not using it.
For the people who do use it, Bitcoin provides that base layer of money.
The second book that changed my opinion is one that my good friend Mark Moss recommended:
Thank God for Bitcoin.
It comes from a faith-based background and talks about the nature of money as an idea.
The authors ask the question: What really is money?
They claim the dollar system is a corrupt system.
It’s not just that dollars are bad.
But if I hold dollars in my hand and they print a lot more dollars, that steals the value of my own dollars.
There’s corruption built in and that encourages more theft.
The conclusion of all this is that now I’m buying Bitcoin.
I’m buying Bitcoin on top of my real estate deals.
We have over $200 million in multifamily real estate assets.
I think that’s a great place to put a lot of my wealth.
Buying Bitcoin is great if it’s off of an exchange.
Being able to have access outside the financial system can be really helpful.
It’s a hedge against inflation.
It’s another form of liquidity.
If you need to move money around, Bitcoin is a great resource.
Other than Bitcoin, what are the best choices in terms of investment?
I talked about it with my friends Rick Rule and George Gammon on a panel that you can check out here.
Now I want to hear from you!
Do you think people should buy crypto?
Why or why not?
Let us know in the comments down below.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.