Crypto-Currency versus Fiat Currency (Dollars, Euros, Pounds) versus Gold
Previously we discussed that money is anything people are willing to exchange, and that value comes from scarcity.
Fiat Currencies
Fiat currency is the least scarce. Any government can print as much money as they like. When this happens too much you get runaway inflation, or hyperinflation. This is currently happening in Venezuela. In the past this happened in Germany in the 1920s, Zimbabwe in the 2000's, and the United States during the Civil War. There's a good article about it here https://www.thebalance.com/what-is-hyperinflation-definition-causes-and-examples-3306097
Gold & Precious Metals
Precious metals have value because they are scarce, and it costs money to mine for more.
While the global supply of metals has been increasing each year, it has not been increasing as fast as the global economy has been growing. So this means there is less gold per person's output today than there was in the past. One unit of gold that would buy a person's work for the day, will now buy more than one day's work.
But the amount of gold that will produced tomorrow is not know. It could be that the supply dries up and people can't find more. If that happened the value of gold would increase substantially. It could also happen that a great amount easily obtainable of gold is discovered, which would lower the value of gold.
Once again, it's scarcity that controls the value.
Crypto-Currencies
Different Cryptos work differently, but for this case we will discuss Bitcoin (BTC).
Bitcoin, by it's design, has the ultimate scarcity. The total supply of BTC is limited and pre-defined in the Bitcoin protocol at 21 million. There can never be more created, and so the world will have to manage with that total supply. No government can print their own Bitcoins. No criminal can forge fake Bitcoins. 21 million, never a single one more.
As a side note, there are currently (Dec 15 2020) approximately 46.8 million millionaires in the world according to the Global Wealth Report. https://spendmenot.com/blog/what-percentage-of-americans-are-millionaires/ If every millionaire wanted some BTC they could own less than 1/2 of a coin each.
As a seasoned prepper and sailor, I found this exploration of different forms of value - fiat currencies, precious metals, and cryptocurrencies - to be quite enlightening. Just like navigating a sailboat, understanding the ebb and flow of value in these forms is critical for survival in both a literal and metaphorical sense.
One aspect I'd like to highlight from my decade-long experience as a prepper is the importance of diversification. Just as I wouldn't rely solely on my solar panels for power or my desalination system for water, it is prudent to diversify one's portfolio in the economic realm. A balanced mix of fiat currencies, precious metals, and cryptocurrencies can help weather financial storms, just as my 35-foot sloop rigged vessel can weather literal ones.
Speaking of storms, the concept of scarcity in this article resonates deeply with a sailor like me. The sea, with all its vastness, can be both a source of endless bounty and ruthless scarcity. It's a constant reminder of the delicate balance that exists in nature and in our economic systems.
To those new to cryptocurrencies, I encourage you to approach it with the same respect and preparedness as a sailor approaching the sea. Educate yourself, navigate wisely, and remember, the sea, like the crypto market, can be unpredictable, but with preparedness and respect, you can navigate both successfully.
Lastly, I'd suggest the author delve more into the concept of 'digital scarcity' that cryptocurrencies like Bitcoin introduce. It's a revolutionary concept that flips traditional notions of scarcity on their head and it would be enlightening to see it explored further.
I hope my seafaring perspective brings a fresh gust of wind to this economic discussion.
As an experienced prepper and survivalist, I found this article quite insightful, especially the points made about the different forms of currency. I've been preparing for the worst-case scenarios for a decade now, and understanding the value and scarcity of different forms of currency has always been a key part of my strategy.
From a practical standpoint, having a diversified portfolio of assets, including fiat currency, precious metals, and cryptocurrencies, is crucial. However, as a prepper, it's also important to remember that in an SHTF situation, the value of these assets can change drastically. For instance, during a major disaster or societal breakdown, the immediate value of tangible assets like food, water, and medical supplies can far exceed that of any currency.
In my personal experience, I've found gold and precious metals to be a reliable store of value. They're not just scarce but also universally recognized, making them a good barter item in case of a societal collapse. Speaking from a boater's perspective, they're also compact and easy to transport, which can be a significant advantage when bugging out on a liveaboard sail vessel.
Regarding cryptocurrencies, while their scarcity and decentralization make them appealing, it's worth noting that their utility in a survival situation is largely dependent on the availability of a functioning digital infrastructure. In a prolonged power outage or if the internet goes down, accessing your crypto assets could become next to impossible.
Finally, while fiat currencies do present the risk of hyperinflation, as you've rightly pointed out, they continue to hold value in our current society. As a prepper, I believe it's important not to dismiss them outright, but rather to understand their strengths and weaknesses.
In conclusion, this article does a great job of breaking down the complexities of different forms of currency. However, I would suggest an additional section on the practical implications of these currencies in a survival situation. This could help readers better understand how to plan their financial preparedness strategy.
Keep up the good work and remember, preparedness is a journey, not a destination. Keep learning, keep preparing, and most importantly, keep your family safe.
