On March 9th, it was announced that President Joe Biden signed an executive order on cryptocurrency use:
The measures focus on six key areas: consumer protection, financial stability, illicit activity, U.S. competitiveness, financial inclusion and responsible innovation. The Biden administration also wants to explore a digital version of the dollar.Read more HERE.
Many believe another reason for this move is because of Russia: they have believed to increase the use cryptocurrencies following the sanctions placed by the United States and other countries. To evade sanctions, it is believed Russia might be using cryptocurrencies to continue their business transactions.
Trouble On The Horizon?
As bitcoin and other cryptocurrencies becomes more mainstream, some are starting to wonder: could they really be shut down? Since I originally wrote this article, Treasury Secretary Janet Yellen has made several interesting comments about bitcoin. On one hand, she says it’s highly speculative, and suggested curtailing it and other cryptocurrencies because “they are mainly used for illegal financing.”
She also made the following quote on February 19,2021:
I think it’s important to make sure that it is not used as a vehicle for illicit transactions and that there’s investor protection. And so regulating institutions that deal in bitcoin, making sure that they adhere to their regulatory responsibilities, I think is certainly important.Read the article HERE
Reasons to Stop Cryptocurrencies?
It’s important to note one thing about cryptocurrencies: They are not controlled by anyone.
This includes central banks such as the FED and governments around the world. This a problem for those accustomed to controlling the money supply. One of the best ways to control people and entire countries is by controlling the money.
An example of this is the use of economic sanctions. Countries that do things that are not accepted by other countries tend to have economic sanctions placed on them. Russia, China, Iran, Iraq, North Korea and Venezuela have had sanctions placed on them.
In addition, individual citizens have their accounts frozen if they do something the powers that be don’t like. An example of this is the Canadian truckers and their recent protest against vaccinations:
The Canadian government has warned that it will freeze the bank accounts and suspend the vehicle insurance of truckers who continue to form blockades in protest of vaccine mandates, as the country declares a national emergency to quell the resulting gridlock.
“This is about following the money. This is about stopping the financing of these illegal blockades,” said Canadian Deputy Prime Minister Chrystia Freeland at a press conference on Monday.Read the full story HERE.
(Money is power). Will central banks willingly give up their control of monetary policy? Will Congress give up its control of fiscal spending? If more people shift to cryptocurrencies, they will lose the ability to place sanction on both individuals and countries alike.
The Rise of Central Bank Digital Currencies
One potential way a country can decrease the use (and/or popularity) of bitcoin is by creating their own central bank digital currency. Also known as a CBDC, it uses a blockchain-based token to represent the digital form of a fiat currency of a particular nation (or region). While bitcoin is decentralized, a CBDC is centralized. It is issued and regulated by the competent monetary authority of the country.
Currently, more than 80 countries are working on a CBDC include the following:
“The main reasons to consider CBDC are lowering costs, increasing efficiency of monetary policy implementation, countering competition from cryptocurrencies, ensuring contestability of the payment market, and offering a risk-free payment instrument to the public.”
Notice the quote says “countering the competition from cryptocurrencies.”
Also, the quote at the start of this article says the executive order by Biden is to look at “U.S. competitiveness.”
In other words, cryptocurrencies are a direct competitor to government-controlled Fiat currency.
Eliminating the Competition?
To eliminate competition from CBDCs, governments can simply increase government regulation of bitcoin and other decentralized cryptocurrencies.
One of the benefits of bitcoin is its ease of use. Governments can make it harder to own bitcoin, make it harder to sell, or not cost effective to buy or sell. This can be accomplished by simply changing the laws.
Then there’s this video from the World Economic Forum:
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.
They claim people will own nothing by the year 2030. How does that coincide with the rise of bitcoin?
Bitcoin is gaining popularity by the day. Not only are average investors buying it, large institutions like Tesla, PayPal and CashApp are as well. This is getting the attention of central banks and governments around the world. Bitcoin owners everywhere should watch news on cryptocurrencies with keen interest in the weeks and months ahead.
As a bitcoin investor, it’s critical you devise an exit strategy:
- What will you do if it bitcoin goes up to $100,000? $200,000? $1,000,000 per bitcoin?
- What is your plan of action if bitcoin gets heavily regulated?
- How will you react if bitcoin crashes?
Any of these situations could happen. What will you do if they occur?
It’s important to remember why people are investing in bitcoin. The cryptocurrency is a form of money held outside the current monetary system. If this describes why you own it, why would you sell and put back into cash? Instead, a more viable option is to convert a portion of your bitcoin into other physical assets.
Physical assets can include any of the following:
- Precious metals (gold, silver, copper, uranium, etc.)
- Real estate (commercial or residential rental property)
- Small business (franchises, laundromats, etc.)
Could you use your cryptocurrency proceeds to purchase rental property?
By converting your bitcoin profits into a tangible asset, such as real estate, you now own that asset. It could also generate revenue for you. This strategy protects you from crashes in bitcoin or fiat currencies. In other words, you want to buy assets before they become so expensive you are unable to purchase them.
Another example of this is gold. Currently, gold is trading near $2000/ounce. If it goes up to $10,000/ounce, it will be too expensive for many investors to purchase.
What will happen with bitcoin? Will it be the next reserve currency or just a flash in the pan? No one knows for sure, but it will be interesting to see.
Bitcoin is not the only asset to choose from. Having a well-diversified portfolio is key to financial protection and success. Pick up a copy of my book Invest For Success: Millionaire Wealth Strategies Not Taught in School.
It’s critical we teach our children business topics as well. My book Planting Seeds: The Children’s Guide to Entrepreneurship introduces young people to the world of business and entrepreneurship. Pick up your copies today on Amazon.
Want more? Register for one of our online classes on Udemy on business, finance and peak performance.