We’re witnessing the creative destruction of financial services, rearranging itself around the consumer. Who does this in the most relevant, exciting way using data and digital, wins! – Arvind Sankaran
Last month we celebrated the 15th anniversary of the iPhone. The iPhone was just one of many advances in technology that began years ago. The iPhone along with other similar handheld devices have begun to empower individuals and organizations as never seen before. In fact, they say that an iPhone today has more technological power than when NASA put the man on the moon.
Creative disruption, the impact of emerging technologies in recent years has entered yet another area. This new technology has the similar disruptive power to change the world perhaps even on a larger scale. What could be larger than communication?
Money!
The emergence of cryptocurrency, specifically Bitcoin once subtly entered our world, is now exploding globally due to both technology and timing.
What is Bitcoin and why is it important? As stated in bestselling author Chris Brady’s book Bitcoin Bride “One of bitcoins most important and perhaps biggest uses is as a store of value. Bitcoins like a digital version of gold, but with some advantages over gold. Some people call it ‘Gold 2.0’ meaning an improved version of gold.”
Why is this so important? All you have to do is watch how the value of the dollar has diminished. The value of a currency is also referred to as purchasing power. The more a currency is devalued, the less you can buy with it because the purchasing power decreases.
It is well known that the dollar has lost over 96% of its value, i.e., today’s dollar is worth less than 4 cents compared to its value back in 1913. What happened in 1913 that helped cause this devaluation? 1913 is when the Federal Reserve took over the US banking system a centralized system of control.
How is the value of currency devalued? By printing more money. Think about the trillions of dollars that were recently put into the economy due to the pandemic. The Federal Reserve literally printed money.
On the other hand, Bitcoin retains its value because its total supply is fixed. Like having a minimum supply of baseball cards, the value of each card becomes greater over time. This is unlike not only the US currency but that of Canada and Europe as well. Bitcoin also has the ability to be a global currency. Due to the fact that it’s digital and controlled by you and me, it can transfer from country to country faster than paper currency or even banks can transfer across town.
Another huge factor is Bitcoin currency is decentralized. This means that it would be significantly more difficult to manipulate the value of the currency than it would our current currency which is centralized in the hands of the government. This fact about Bitcoin is pretty well known and the reason Professor Saifedean Ammous, author the Bitcoin Standard, calls it “The Decentralized Alternative to Central Banking”.
Another appeal is the personal control and flexibility it provides people. According to Bitcoin Letter, “Digital Bitcoin wallets are free, have minimal transaction costs, have no minimum balance requirements, and are able to operate 24/7/365.” With smartphone adoption globally this makes Bitcoin transactions simple as banks are unnecessary to transfer money. Western Union for example charges an average of 10% just to send money home the next business day.
Let’s consider inflation. The annual inflation rate for the United States is over 7.0% for the 12 months ended December 2021 – the highest since June 1982. People seek alternatives to fiat currencies during inflation crises.
Lawrence Summers, a Harvard economist and former Secretary of the Treasury under President Bill Clinton and a top economic advisor to President Barack Obama, recently stated that the United States has a “serious inflation problem”.
We believe Bitcoin will provide more fund-raising opportunities not only locally but globally. More to come…
Article written for KronstadtConsult.com/blog by
Greg Johnson, Owner, Johnson Enterprises International, LLC
Douglas M. (Doug) DeWitt, Ph.D. (Chair: Dept of Education Leadership; Salisbury University.)
Elizabeth P. Fitzgerald, CFRE, IOM, Owner, Kronstadt Consulting
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