Your Survival Guy

Preparing your investments and family for when disaster strikes.

Compensation was paid to utilize rankings. Click here to read full disclosure.

Trust in Money, Store of Value, Part II: Bitcoin, Dollars and You

By

Mt. Washington Hotel

On a recent outing to the Mt. Washington Hotel, I was concerned my car wouldn’t get us home. You can read that story here.

Life Comes at You Fast. Slow It Down with My Friday Email. It’s Free.

But I also had a chance to think about the Bretton Woods Agreement which was signed there in 1944 and another historic event, bitcoin, and what they mean to all of us.

The Bretton Woods Agreement, by pegging the U.S. dollar to gold, created a store of value. The system worked well until the 1960s where high demand for reserve currency dollars dwindled the gold supply. The gold window was closed in 1971. The dollar and other fiat currency values have been floating ever since in a system where government controls the supply. Anyone see a problem of trust here?

The government bailouts of 2008, where money was created out of thin air, could be the Bretton Woods Agreement for fiat currencies. It was the catalyst that gave Satoshi Nakamoto the platform to release the cryptocurrency, bitcoin.

The beauty of cryptos, such as bitcoin, is they eliminate the need for trust. Bretton Woods depended on the government, i.e., trust in a third party. Cryptos do not require a third party. In the case of bitcoin, supply is fixed at a maximum of 21 million coins. As of this morning 16.72 million bitcoins exist.

But, just like the Bretton Woods Agreement pegged the dollar to gold, one group of bitcoin users may have a different take than another group on how the future of bitcoin operates.

Will some users want to change the rules for bitcoin transaction costs? While others pine for larger blocks? I’m not a bitcoin user, but, still, I don’t see the store of value. I also don’t see the transactional acceptance scaling anytime soon. Sure bitcoin may go to $25,000 or higher. But that doesn’t mean much to me. We’re still in the wild, wild, west of cryptos. But the blockchain technology interests me.

Blockchain, or open ledger, will create value where trust is a most valuable commodity. Think about keeping track of real estate ownership for example. Do you know the family that owned your property 100-years ago? Not without a lot of digging through City Hall docs. But with blockchain, all records are set in stone and confirmed by a peer-to-peer network or open ledger. With the right user-friendly software, all you will need to do is look it up on your phone what your exact property lines are for example. That’s the future to me for blockchain, not necessarily currencies. At least not yet.

Michael Casey, a former writer for the WSJ, and expert on all things bitcoin/blockchain tells us to remember the early days of the internet where it was a military tool to pass nuclear codes. Then, years later, this thing called email was created and the internet was an invaluable tool. Soon, you could go to a website and have books delivered to your doorstep, and now your groceries. Today, with cryptocurrencies and blockchain we are either in the nuclear code age or the Bretton Woods Agreement—stay tuned.

Read Part I here.

The following two tabs change content below.
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 (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

Recent Posts from YourSurvivalGuy.com

“Then One Day the Grandfather was Gone”

Your Survival Guy has a client whose grandfather left him some money. That was nice. But the real gift was how his grandfather would teach him about money when they were together. How to roll pennies, nickels, dimes, and quarters sitting on the floor and talking. Adding up the pile and feeling the weight in […]

How Joe Biden Raised Oil Prices

You saw Joe Biden demonize fracking and the oil industry throughout his campaign until the debates when Donald Trump cornered him on it, at which point he denied it all. Then, once he moved into the White House, Biden began his war on oil and helped to drive up prices on everything Americans need. At […]

Is the Philadelphia Looting Spree the Wake-up Call America Needs?

Crime has ravaged businesses across America since 2020, when radical politicians gave looters the green light to turn America into a warzone. Since then, the nation has watched with horror as roving gangs have cleaned out popular locations like Nordstroms and Apple Stores and even little gas stations. For two days now, America has watched […]

“No Way I’m Spending That Much on Those”

Your Survival Guy and Gal were in Boston this weekend, visiting our daughter and son. If you want to know what stagflation feels like, have two kids in college at the same time. Many of you know exactly what I’m talking about. Take, for instance, after breakfast, strolling down Newbury Street window shopping. The next […]

What Trade Policy Serves America’s National Interest Best?

In The American Conservative, Micah Meadowcroft examines the words of one of Your Survival Guy’s favorite presidents, “Silent Cal” Coolidge, who is known for saying, “The business of America is business,” but who actually said, “After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing […]

California Wants to Make the 2nd Amendment Unaffordable

California, led by Gov. Gavin Newsom, is doubling the tax it demands from law-abiding gun owners on sales of ammunition and guns. It appears Newsom and the California legislature have settled on a strategy of simply pricing the poor out of their Constitutional rights as enumerated in the Second Amendment. Adam Beam reports for the […]

“You Didn’t Eat That Again, Did You?”

As Your Survival Guy, I understand the immense pressure you’re under to “do something.” Everyone’s got a plan of what to do with your money. I know this not because you tell me what they’re telling you, but just from experience. I know, for example, when you’re asking me, “Why are we holding this position?” […]

Is McCarthy Up to the Task?

What’s wrong with a line-by-line approach to the budget? Here, Congressman Matt Gaetz (R-FL) explains to Fox News host Maria Bartiromo why he can’t support McCarthy’s approach to running the House of Representatives. The way to fund the government is not by doing it the same way Congress has since the mid-90s, where it’s one […]

Rising Costs Are Hammering Commercial Real Estate

The commercial real estate market is getting hammered by rising costs. Not only are higher interest rates scaring away potential buyers, but high insurance costs are also killing demand. Konrad Putzier reports in The Wall Street Journal: Commercial property owners, already struggling with high interest rates and rising vacancies, face exploding insurance costs that keep […]

Your Survival Guy Fishing with Dolphins

Your Survival Guy was fishing this summer and came into these pods of bottlenose dolphins. You can see some of the famed Newport mansions in the background. Best viewed on a mobile device. Life Comes at You Fast. Slow It Down with My Friday Email. It’s Free. 

Judge Shatters California High Capacity Magazine Ban

U.S. District Judge Roger Benitez shattered the state’s ban on high-capacity magazines, calling it unconstitutional. The ruling could set up a Supreme Court decision on the matter, potentially affecting similar bans throughout the country. Jonathan Stempel reports for Reuters: A federal judge in California on Friday declared that state’s ban on magazines that hold more […]

Is Your Water Safe to Drink? NOLA Residents Aren’t Sure

Residents of New Orleans are wondering whether or not they’ll have safe water to drink as forecasts for the Mississippi River levels decline, and the threat of a saltwater intrusion from the Gulf of Mexico becomes a reality. Nadine El-Bawab reports for ABC7, writing: New Orleans Mayor LaToya Cantrell has signed an emergency declaration over […]

Wellington and Wellesley Funds Not Managed by Vanguard

In my conversations with you, we talk about the virtues of being a balanced investor. You can achieve this through a mix of blue-chip dividend payers and laddered bonds. To illustrate, I’ll use as a proxy Fidelity Balanced, Vanguard Wellington, and Vanguard Wellesley funds. In that order, they have roughly the following stock/bond allocation mix: […]

Remembering Jimmy Buffett: The Oldest Surfer on the Beach

I was driving past First Beach in Newport, RI, this past weekend, watching the waves from Hurricane Lee forming an offshore break from a northerly wind. It was peaceful. And it reminded me of the song “Oldest Surfer on the Beach” by Jimmy Buffett. Appearing on the 2013 album Songs from St. Somewhere, it was […]

The Folly of Windmills from Nowhere USA

Your Survival Guy and fellow boaters were astonished at the city-like size of a massive ship parked outside of Newport Harbor for weeks this season. Turns out it’s used to put up windmills not made in the USA. And, cue the music, they’re running out of taxpayer money. The Wall Street Journal’s editorial board reports: […]