If you’re a gold bug, stick with this article. It’s easy to dismiss cryptocurrencies because they don’t have the track record that gold and silver does. But what we’re going to focus on here are the properties of money which is the most important aspect of financial assets. Same goes for you if you’re a crypto-maximalist.
At Aquarian Metals, we’re money maximalists. That means we care more about the properties of money more than the thing that has them. It’s the equivalent of choosing a name brand product versus a quality product.
This is why we can appreciate all forms of money.
If you’re new here you’ll want a refresher course on what money is. You can check that out here A Beginners Guide: Is it Money or is it Currency?.
The New Money Debate. Same as the Old Money Debate.
Since the inception of bitcoin, a new and exciting debate has raged on the nature of money in the hallowed halls of social media, the swamps of academia, and in the vile pits of congress.
It seems as though, average people are not only rediscovering money and its properties, but are now debating the veracity of its long established properties. While this might irk economists or other money “maximalists” in the sense that it retreads long held truths, I see it differently.
See, the properties of money were not etched in stone by great thinkers. Instead, they were discovered through the collective actions of countless transactions and interactions which ultimately shaped our understanding of its essential characteristics.
One anecdote that exemplifies this discovery is the historical emergence of currency. In early societies, individuals engaged in barter systems, directly exchanging goods and services. However, as these systems became increasingly cumbersome and the need for a more efficient medium of exchange became evident.
Through numerous transactions and interactions, various items were tested and evaluated as potential forms of currency. For instance, shells, beads, livestock, and even rare metals were used, but their suitability was ultimately determined by the participants in these transactions.
Over time, the properties of durability, divisibility, portability, fungibility, and relative scarcity emerged as crucial qualities for an effective form of money. Through trial and error, facilitated by countless transactions, societies collectively discovered the properties that make a currency functional and widely accepted today.
Here’s the point: The properties of money were discovered through real interaction. They weren’t invented by academics, economists, or politicians. They were discovered by people like you and me who needed to find ways to first, transact and second, preserve their wealth.
And those properties of money were hard earned through billions of individual transactions spanning over a millennia or more.
The New Kid in Town
In an incredibly brief period, cryptocurrencies swept across the globe, emerging as a phenomenon. It burgeoned into an astonishing array of over 22,000 coins (and climbing). Although the majority of them are probably valueless in the long term, they have empowered individuals in the market to delve into and even create their own digital currencies. For the first time, the average Joe could mint their own money (via smart contracts) or new blockchains and test it out on the market- something that, only until recently, was reserved for governments or powerful institutions.
This means we have a new free market in which to rediscover the properties of money again!
To us, this is extremely exciting.
The crypto space is a free market of all the best and worst properties of currency and money and we’re just now beginning to see a consolidation around the ones we find the most.
Money is King
When we talk about crypto or precious metals, what we’re really talking about are the those assets with the properties of money. And we’re discovering the properties we value the most on and off line. Every single transaction we make with cryptocurrencies is an experience telling us about our how well it functions.
For those of us that love gold and silver, unless we use cryptocurrencies, we’ll never understand why they’re useful. Experience is the only way to understand them. And limiting yourself to using just one or two isn’t the way to experience them.
To that end, it’s a safe bet that most people younger than 50 have no idea what it’s like to transact with gold and silver. To them, the debased paper and coins in their pocket are the only experience they have of transacting. And to those born after the year 2000, it’s possible most have only experienced digital transactions through debit and credit cards, and now cryptocurrencies.
This means there’s an experiential disparity between generations about what makes money (Even more, it’s sad that most people young and old don’t know the difference between money and currency but that’s a different discussion).
Where does this leave us?
Monetary rediscovery. Plain and simple.
I’d argue this a great thing for the awareness of the properties of money because older generations will look through the lens of monetary wisdom and younger generations will rediscover them through new and traditional assets.
The old properties aren’t going to change yet with the added digital component, people may discover new properties specific to the digital realm. This means the definition of money might get a cybernetic upgrade!
We’re at a very unique crossroads where the planet is connected through a virtual network and physical assets are increasingly being purchased to hedge against governmental and central banking monetary insanity… I mean debasement. Central banks and governments are hell bent on tying everyone to a digital surveillance system where everything is tracked and traced to your identity and different generations are debating the merits of different assets as a tool against it in a bid to preserve our wealth in the face of it.
Liberty requires free (as in freedom) money. Gold and silver have been the save haven for thousands of years. It’s possible cryptocurrency could be a digital safe haven asset but only time will tell. It requires the collective actions of all generations to make that determination.
The Future
Where’s the crypto money?
Are there any cryptocurrencies that make the cut?
At the moment, we believe Monero makes the cut based on the fact that it shares almost all monetary properties of gold. There are others in consideration, but they don’t have widespread adoption, so we won’t be considering them until the market takes the time to use them.
Like gold and silver, cryptocurrency has a bright future but until they reach the saturation, monetary esteem, and are used as money like gold and silver are, they should just be considered speculative.
