Bitcoin
Investments have always been considered the best use of money. They show a low time preference. With investments, a person shows they are willing to take risks and delay satisfaction for a better future. Gold was the original savings vehicle. Gold has retained its value for thousands of years worldwide. It does not decay and is divisible. When governments replaced Gold with fiat to finance warfare and welfare, and banks paid interest on savings deposits that exceeded inflation, cash savings became the primary form of savings. Then came government and corporate bonds, money markets, and so on. Buying property and other tangible items, such as precious metals and stones, has also been an effective way to store value.
Of course, fiat removed lots of barriers to government spending. Also, fiat is a debt-based currency. So the government spending kept rising along with the government debt and deficits. To be able to print more money, central banks had to keep lowering the interest rates, all the way down to negative rates in many instances. Lower interest rates adversely affected the interest banks paid on savings deposits. Savings account Interest rates fell to near zero while inflation was rising. So, savings accounts became less and less of a choice. Government bond yields also kept falling as central banks pushed interest rates lower to satisfy the never-ending government appetite for money. Not everyone is business savvy, and not everyone knows how to make money in the stock market. Also, most people do not have enough money to invest in corporate bonds. Government regulations have also made it extremely difficult for ordinary people to invest in IPOs, startups, and growing businesses.
So, the average person has almost no viable investment choices.
Lower interest rates provide false signals to the business owners. Since money becomes cheap, more and more businesses take on loans and invest in long-term, unsustainable projects. Consumer debt also skyrockets. Many would have the illusion that money will always remain this cheap. That is never the case, though. As the cheap money supply remains abundant, price inflation starts hitting. Now, central banks have only two choices: either let price inflation rise to hyperinflation levels or start raising interest rates, thereby decreasing the money supply by making it more expensive. With monetary policy tightening making loans more expensive, unrealistic long-term projects start failing due to a shortage of available funds and other economic reasons.
Lower interest rates also decrease the incentive for savings, as the return on savings falls. Price inflation initially decreases consumption. Failing long-term projects and decreased demand cause unemployment, which further complicates the situation by reducing the demand even more. Hence, the economy gets stuck in a downward spiral leading up to a recession and even a depression. Recessions and depressions correct the errors made during the initial boom. Out of the uncertainty, people start saving, and the money supply for loans and investments regrows. Businesses start expanding again, and unemployment falls, boosting demand. People start taking an interest in innovative products emerging from recovery.
The strongest tool central banks use to increase the money supply during the initial boom is fractional reserve banking, and even no-reserves banking. With this tool, banks can rapidly and significantly increase the money supply. For example, assume the fractional reserve requirement is 10%. It means that banks have to keep only 10% of potential claims on deposits. So, if a depositor makes a $100 deposit, the bank can loan out $90 and keep only $10 in reserves. These $90 are then deposited in another bank, which can, in turn, loan out $81, and so on. So, the banks have ultimately multiplied $100 by a factor of 100, literally out of thin air. Low reserves obviously lead to bank runs like those at Silicon Valley Bank as soon as depositors smell the danger of losing their deposits.
Bitcoin is the ultimate solution to the never-ending problems that have plagued the world forever. It is a token on a blockchain that no one controls. It has a fixed maximum supply. Transactions are instant and global. It cannot be inflated or deflated. There is no intermediary between the transacting parties. No other crypto, fiat money, or even Gold has these properties. So, with increasing demand, the long-term trend is always upward. It is a better investment and a reserve of value with the potential to become the de facto money in the future. There could be no cronyism or abuse of authority with Bitcoin, as there is no authority in the entire system, to begin with.
One who controls the money controls the world. That is why governments controlling the money supply through central banks are becoming increasingly authoritarian. Their unending, baseless, and useless wars are getting more common because governments can fund the wars almost infinitely just by expanding the money supply. Welfare spending is also rising, which punishes productivity and work by chipping away at the value of earned wages and profits through taxation and expansion of the money supply. It also rewards laziness and dependence by providing people with financial benefits for free. Governments are getting bigger than ever, leading to ever-increasing regulations. More regulations, of course, mean more tyranny and control.
Bitcoin is very likely to take away this most powerful tool from the government. Bitcoin will become the most stable money ever, the best reserve of value, and the outstanding investment. These three incredibly valuable properties combined will make it the most potent weapon against the rapidly growing government authority. It will restore the certainty eroded by fiat and encourage savings and investment. Stability and trust will be the hallmarks of economies run on Bitcoin, as Bitcoin’s growing share of finance will stabilize its price and value.
Technology is becoming the ultimate solution to the ages-old worldwide government tyranny and offering a promise to finally make this most expensive, violent, stealing, corrupt, and fraudulent monster outdated. Bitcoin, self-driving cars, automated security, and interplanetary civilization together will finally be our salvation. We will take back control of our lives, and individual sovereignty will be restored. Future generations will look back and be puzzled by the stupidity of the existence of such a tyrannical institution for so long.