It’s time to have a difficult discussion about debt. Perhaps the most common, absolutely moronic piece of information crypto evangelists love to rattle off is the US$20 trillion national debt of the good ol’ U S of A- of course, followed with an anecdote about how next economic depression the world will collectively snap their fingers and wake up from deep sleep and reject the notion that the US is allowed so much debt and then Bitcoin will be king and we will all be rich and we will all stand up and clap.
Here’s the problem with this /perfectly sound/ philosophy: The US debt really isn’t that big of a problem.
To begin, I’ve prepared a basic high school economics lesson on national debt and bond markets:
1: The United States(and other nations, too) distributes debt in the form of bonds, treasury notes, etc. to the good American citizens. In other words, if US needs money it doesn’t have, ie. they are operating at a budget deficit, they create and sell bonds. People hop on the bond market and buy these, always. Additionally, they can buy and sell bonds that are partially matured. The government also buys back bonds, thus eliminating debt.
2: It’s important to understand the basics of the bond market because it highlights a “shocking” truth that everyone seems to ignore: THE US PUBLIC OWNS US DEBT. We do not owe China $20 trillion. We do not owe Great Britain, Japan, Mexico, or whoever $20 trillion. The majority of this debt is held by American citizens.
3: US Bonds are literally the most stable and secure investment available in the world. They have never faulted and carry more trust than anything else (even more than Bitcoin *gasp*).
Okay, now let’s put things in perspective. It’s the end of 2020 and the fabled recession has hit. The US public who carries US debt in the form of bonds is suddenly in a pinch because they need $$ to feed their kids and whatnot. So they put their bonds up for sale. Here’s another basic economics lesson: When more people sell the price goes down. Now the US government buys their bonds back and eliminates debt at a lower price than they issued it out for. How do they do this? They up the inflation rate from 2% to 3%, like they’ve done in recessions past.
Hoorah! We are saved. Except, this is doomsday because if the world economy doesn’t collapse how will I ever be rich with my 0.1 BTC life savings? Hint: You won’t.
Cryptocurrency as a currency can maintain value and appreciate as sound money that is a superior alternative to the Venezuelan Bolivar and that of other shithole countries. But, are we going to see a replacement of USD anytime soon? Unlikely. More likely is a government coin that carries the superiorities of crypto while maintaining control of the money supply.
So how can you get rich? U T I L I T Y T O K E N S
For the latter half of the lifespan of cryptocurrency, we’ve seen more and more coins who provide real usecases. A lot of these are fucking stupid (we don’t need a dentist coin), but there are a few gems. There are a number of projects that are going to inevitably shift the paradigm of current industries and create new ones through their utility components, and these projects are where the real money is at. Let me give you a hint of where you need to be looking:
Healthcare, Logistics, Cloud Computing, Predictive Analytics, Video Games and Virtual Reality, Lending/Mobile Money/Banking, E-Governance, Internet-of-Things, Autonomous Organizations, E-Commerce, Trading and Derivatives, Social Media, Digital Advertising… the list goes on.
Pick your poison, and allow me to shill for a couple of my favorites that reach big milestones soon:
Endor Protocol (EDR): Mass market predictive analytics 10x more accurate and 90% cheaper than industry standards public launch EoY (US$0.067 // $46mm mcap).
XAYA: First Gen 3 blockchain for blockchain gaming that applies state channels to online gaming servers. Soccer Manager Crypto (from 25mm download gaming franchise) Beta starts EoY ($0.052 // $2mm mcap).
Don’t be one of the (likely many) morons that miss the moon because you put all your eggs into the “muh government collapse” basket.
Many thanks for the nice post, it was very interesting and informative.