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 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.
