Your Survival Guy

Preparing your investments and family for when disaster strikes.

Disclosure

  • Home
  • Your Survival
    • Special Report: FOOD SHORTAGE: Crazed Hoarding Is Not Preparing
    • Your Survival Guy’s Super States
    • Constitutional Carry
    • EMP Threat
    • Tucker Explains
    • Newport Gas Outage
    • Water
      • Emergency Water Storage
      • Let There Be Water
    • Get Your Gun and Your Training Now
    • Satellite Phones
    • Navy SEAL Survival Kit
  • Your Money
    • Coronavirus Infects Stock Market
    • Looking for a Better America
    • You Invest, They Win
    • Where to Keep Your Cash
    • Paris
    • How to Buy a Boat
    • Dead or Alive? The Future of Long-Term Investing
    • Is Vanguard too Big?
    • Cryptocosm and Life After Google
    • The Last Intelligence Report
    • The Truth Behind the S&P 500
    • RAGE Gauge
    • How Many “Retirees” Will Keep Working?
    • Your Retirement Life
    • You’ll Love This if You’re Dreaming of an Active Retirement Life
  • Weapons
    • Self Defense
    • Every Family Should Own at Least One Shotgun: Here Are Three
  • About Me
    • Your Survival Guy: “Life on Main Street Hasn’t Been This Hard in a While”
    • Preparing for Times Like These
    • My Videos/Pics
    • Music
      • RIP Neil Peart: You Will Always Be Remembered as a “Modern-Day Warrior”
    • Your Survival Guy: Make Your Bed and The Hero Code
  • You
    • Our Cabin on Kodiak, Alaska
    • If You Are in Pain, this May Help. It Helped Me.
    • How to Save for a Grandchild
    • FIRE! Financial Independence, Retire Early
    • Compound Interest
    • Arithmetic of Portfolio Losses
    • Maximum Portfolio Withdrawal Rate
    • An Efficient Frontier
    • Retirement Compounders
    • Counterbalanced Total Returns
  • Survive & Thrive
    • August 2022
    • July 2022
    • June 2022
    • May 2022
    • April 2022
    • March 2022
    • February 2022
    • January 2022
    • December 2021
    • November 2021
    • October 2021
    • September 2021
    • August 2021
    • July 2021
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • Welcome

Boom! Bitcoin, Cryptos, Value, You, & Big Money

May 27, 2021 By E.J. Smith - Your Survival Guy

By Momentum Fotograh @ Shutterstock.com

You’re asking me what I think of bitcoin and cryptocurrencies. I’m telling you, I love the idea of blockchain. But what about value? That’s more a function of what someone’s willing to pay. Not me, of course, but it’s somewhat irrelevant.

How big can cryptocurrencies get? I don’t know. Big, I guess. But I don’t need to be the first one at the party. I certainly won’t be the last, or the last one to leave. Let this play out. Remember the Gold Rush? A lot of money was made investing in the rush itself and not just the yellow metal. I like the idea of utilizing the benefits of the new. In other words, I have no problem seeing “other people’s money” take the risk.

Imagine for a second all the areas in your life where keeping track of records with blockchain or open ledger, might be useful (or not). Medical records, business contracts, mortgages, trusts, wills, estate plans, charitable giving, investment holdings, black market, vaccine passports, government control, currency replacement. ”Privacy” may not be up to you and me.

Will Bitcoin be the superhighway for blockchain, or will Ethereum? Mark Cuban believes in Ethereum. Below he explains his thoughts to Andy Kessler in the WSJ:

He’s right. I noted, “I’ve seen some are using blockchain for mortgages. I assume they or others will do titles too. So what is that end game?” “Smart contracts on blockchains, particularly Ethereum, is an enormous game changer that every company will use,” he replied.

“Weather insurance (Arbol is a great example). With a smart contract I’m soon going to be able to have the Mavs buy weather insurance where using a smart contract I pick the temperature and precipitation thresholds and the smart contract checks the National Weather Service for my ZIP Code or another chosen data source and on that day or period if the threshold is met, I get Ethereum deposited into my account automatically.

“No different than the internet of the 1995 where people weren’t quite sure but eventually they saw the network effect and value. Smart contracts are going to eat a lot of the software-as-a-service world.”

I kept pushing: “I’ve seen complaints about the costs of transactions. Even with Ethereum. Isn’t it still too high, for textbooks certainly, but even for other higher valued items?” Mr. Cuban answered, “It is too expensive. But that’s specific to original Ethereum. There are changes coming with Ethereum 2.0 and immediate options with Layer 2 enhancements from a bunch of companies.”

I noted that Coinbase, now a public company, “is very profitable because their fees are so high but it’s speculators who pay. Won’t lower fees drive usage long term?” “Coinbase is the Netscape of now,” answered Mr. Cuban. “There will be cheaper options.”

I just had to ask. “Does it matter if Ethereum is $3,900 or $39,000 or $390 for that matter for the future you lay out to unfold? There seems a disconnect between how crypto is used for smart contracts and its value.” Mr. Cuban quickly responded, “Doesn’t matter at all.” And that is the bull case for blockchain. Crypto prices? Not so much.

Action Line: Big money will be won and lost on the new frontier; the Gold Rush, television, the Internet, and Bitcoin are old stories. The exciting part to me is how they improve people’s lives, and that’s the discovery worth your attention.

P.S. Other than what someone’s willing to pay you, where does a cryptocurrency’s value come from? Because when it comes to sources of value, with dividends from stocks and interest from bonds, you know where you stand. With cryptos, you hope someone doesn’t jump the line.

When a company pays you a dividend (or a bond pays you interest), it worries about meeting its obligations to you. It sees you, unlike the anonymity of cryptos, banging your tin cup on the boardroom table saying: “Show me the money.”

When a company issues stock, it’s giving up ownership, and with a bond, it’s taking on debt. The company doesn’t care who owns the stocks or bonds—they just want to know where to send the checks.

Your Survival Guy’s noticed how stock and bond prices have been uncharacteristically out of synch for the first time in fifteen years (also pointed out in the WSJ). Investors are worried about inflation. And based on the hubris from the Fed, not everyone’s sure this ship will be docked without a scratch. Make sure your boat isn’t in the way. James Mackintosh reports on those worries in the WSJ, writing:

We saw this last week, with stock prices and bond yields moving in opposite directions every day. The link between the two, measured as the correlation of their daily changes over the past 100 days, is the lowest in more than 15 years. Instead of more inflation being good news for stocks, it is now bad news—while still being bad for bonds, meaning higher yields. Less concern about inflation now means lower Treasury yields, and higher stock prices.

Remember, capital structure is like a channel marker, guiding a company’s financial obligations. As a bondholder, you’re a bosun, senior to the average, stock, deckhand. The capital structure of a crypto? Who owes you anything if the system breaks down? No one.

Take a look at the market cap of cryptos, stocks, and bonds, and see why there’s plenty of smart money in bonds. Because at the end of the day, your return to port, like the return of capital, matters more than the return on it.

The Wall Street Journal explains the current situation with cryptocurrencies, writing:

Crypto in Context

Thanks to the prolific rise of bitcoin, ether and dogecoin, the value of the total cryptocurrency market has swelled to more than $2 trillion, up from $260 billion a year ago. Dogecoin alone—with a market value of about $67 billion—is worth more than 75% of the companies listed in the S&P 500. Although the digital currencies have surged in recent months, as an asset class, they remain a fraction of global markets for stocks, bonds and gold.

Total value of all cryptos in circulation

TOTAL: $2.2 TRILLION

P.S. And remember, we’ve seen some troubling times thrice already this young century.

Click to enlarge.

 

The following two tabs change content below.
  • Bio
  • Latest Posts
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

  • Buying A Boat: Who’s Looking Out for You? - August 12, 2022
  • Corporate Borrowers Giving Up on the ESG Market - August 12, 2022
  • Even the ACLU Hates Gavin Newsom’s New Gun Control Law - August 12, 2022
  • Your Survival Guy’s Favorite Number is 72: Here’s Why - August 11, 2022
  • WHOLE FOODS CEO: “Socialists Are Taking Over” - August 11, 2022

If you enjoyed this post, email it to a friend:

  • Email
  • Print
  • Facebook
  • LinkedIn
  • Twitter
  • WhatsApp

Related Posts

Money 101

Trending

  • Survive and Thrive August 2022: “Watch This Boat off Our Stern,” My Dad Said “He’s Coming in HOT”
  • 80 Year Old California Shop Owner Shoots Rifle-Wielding Intruder's Arm Off
  • WATCH OUT: The IRS Made New Changes to Your IRA
  • DESANTIS RESISTS: Suspends Soros-Funded Destruction of America
  • HUGE CONGRATULATIONS: Joe Kent BEATS Trump-Impeaching Jaime Herrera Beutler in Washington Congressional Primary
  • PRIMARY RESULTS: Pro-Trump Candidates Clean Up
  • New Secret Weapon is Like Dropping Anvils on Terrorists Heads
  • MAJOR WARNING ON FOOD SHORTAGES: Businesses Prepare for Violence
  • Do You Have $500,000 in Savings? Avoid This Nightmare
  • Record Breaking Slowdown in Housing Price Growth

Must Reads

  • Why You Can’t Afford to Miss the Boat
  • Your Survival Guy: Simple Prepping for Winter Storms
  • Parents Are the New Tea Party. Bad Schools Are the New High Taxes.
  • BLACKROCK’S BITCOIN-ESG PARADOX: You Can’t Have It All
  • GAME ON! Lessons from Street Hockey on Baker Lane
  • FIRE AND ICE: Defeat the Cold by Stocking Firewood
  • Your Survival Guy: Emerging Food and Energy Crisis
  • Bad Guy with a Gun STOPPED by Good Woman with a Gun
  • PREPPING: You Don’t Have to Save the World in a Weekend
  • The Masters of the Universe Align Themselves with CHINA Using YOUR Money?
Only if You’re Serious
Crazed Hoarding Is not Preparing
How to Save Rainwater Effectively
Your Survival Guy in Paris
Your Survival Guy's Fishing Stories
Financial Independence, Retire Early
Money 101
Pandemic Creates Virtual Panopticon
Emergency Water Storage
Find Freedom in America
Second Amendment
How Can You Save Money for Your Grandchild
Great Reset
See Who's Missing the Boat
Richard  Young Reports
How You Can Save Money for Your Grandchild
Why Fidelity is Number One
The Best States for Survival
You Invest, They Win
Escape the City
Why Vanguard is Too Big for YOU
Island Life

Copyright © 2022 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.