By Doug Casey, founder, Casey Research
Many cryptos have great utility outside the monetary sphere. In the near future they’ll be used to record real estate and stock transactions, transmit and store data privately, and hundreds of other things. Only perhaps 25 million out of the 7 billion people in the world currently use them. I promise you that five years from now that number will be more like three billion. They’re going to get much bigger in the developed world, but vastly bigger in the Third World. Bitcoin will be the “on ramp” to the crypto world everywhere.
In all of Africa, most of South America, and a great part of Asia, fiat currencies issued by governments are a joke. They’re extremely unreliable within those countries. And they’re totally worthless outside the physical borders of the country. That’s why those people now want dollars. But those are physical paper dollars. And governments everywhere are trying to eliminate physical currency.
Everybody in the Third World now has a smartphone, and they will adopt Bitcoin in a huge way.
That’s not just because people who own cryptocurrencies are currently making money. They’re saving an appreciating asset rather than a depreciating asset. You’re on a Sisyphean treadmill if you try to save a Third World currency – but three-fourths of humanity has no alternative. Nobody in these backward places wants to save the worthless local currency – but, by law, that’s typically their only option. Billions will try to get into Bitcoin.
These coins are also private. They can transfer wealth outside of the country, which is very helpful. Kwachas, pulas, pesos, and such are worthless outside of the countries that issue them. Of course, governments hate that, and this will present a big problem down the road. Governments hate Bitcoin. It gives their subjects a huge measure of extra freedom.
The whole Third World is going to go to these cryptocurrencies. They all have smartphones in these countries. A phone is the first thing they buy after food, shelter, and clothing. Bitcoin will become their savings vehicle.
But like I said, cryptocurrencies are just the first application of blockchain technology. They’re not going away.
Remember, Central Banks all over the world are printing up fiat currencies by the trillions, desperately trying to put off a collapse of the world economy. Many will issue their own cryptos – they’re trying to totally abolish paper cash as we speak. Even Facebook will soon have its own crypto, called the Libra. Personally, I wouldn’t touch it – it offers zero upside and zero privacy. But it will familiarize millions with the concept of cryptos.
Governments are going to get into these currencies in a big way. But only their own versions, perhaps making private cryptos like Bitcoin illegal. With paper cash no longer available, they’ll then be able to track absolutely everything that’s bought and sold.
At that stage – which is in the near future – the blockchain tech will have gone from one of the biggest pro-freedom innovations to one of the most repressive. Like gunpowder – first a liberator for the average man, then a means to suppress him. That said, technology, in the long run, is eventually always a liberating force.
And there’s one more factor that few are considering in the crypto revolution. They’re very good for gold. That’s because they’re drawing attention to the nature of the monetary system. Something few people think about. At all.
When people buy these cryptocurrencies, even if they know nothing about hard money, economics, or monetary theory, they implicitly ask themselves, “Hmm, Bitcoin or the dollar?” They’re both currencies. Then they naturally start asking questions about the nature of the dollar… the nature of inflation… and whether the dollar has any real value, what’s going to happen to it, and why. Figuring out the differences between currencies – as opposed to just accepting the dollar and central banking as if they were constants in the firmament, which almost everyone does now – is part of a monetary revolution.
People are going to start asking themselves these questions – which might not have otherwise occurred to them before Bitcoin. They’re going to see that only a certain number of Bitcoin will ever be issued, while dollars can be created by the trillions, by the hundreds of trillions.
That’s going to make them very suspicious of the dollar. It’s going to get a lot of people thinking about money and economics in a way that they never thought about it before. And this is inevitably going to lead them to gold.
So, among other things, the Bitcoin and cryptocurrency revolution will prove extremely positive for gold. It’s going to draw the attention of millions, or hundreds of millions of people, to gold as the real alternative to the dollar and other currencies, after Bitcoin.
Founder, Casey Research
Editor’s note: Our resident crypto expert, Marco Wutzer, has been following digital currencies for decades. He was an early investor in bitcoin. And like Doug, he’s truly an “international man.” He made so much money from cryptos, he dropped everything and traveled the world for five years.