Taking control over your own wealth with crypto
The idea that you have the power to control your own wealth may seem like the most logical prospect. But it’s not that straightforward.
First of all, historically, the distribution of that power has been skewed with kings, emperors and high-born families at the top, and ordinary folks toiling at the bottom, tying loose ends to secure their sustenance.
Such inequalities still exist today, but there are other ways in which that power is compromised. Paying taxes, inflation, confiscation, sanctions, theft, loss, recessions, monetary policies: there are plenty of things that limit our grasp on the fruits of our labour and investments. And while to some degree this is acceptable for the common good of society, we do need to remain critical.
Do we really own our wealth?
Even in recent years, we’ve seen assaults on personal prosperity take place with grave consequences. In Venezuela, people have seen their life savings turn to pocket change as a result of hyperinflation. In India, just a few months ago, the government withdrew 86% of banknotes in circulation - to tackle tax evasion - which turned out to be nightmare for the poorest in society who rely on cash.
Part of this is simply the result of how we’ve organised our societies and economies, but it is also related to the types of assets we hold. For example, holding our money in the form of bank deposits automatically exposes us more directly to governmental scrutiny, and relinquishes a chunk of our power to the bank in its role as custodian.
Storing gold at home makes us vulnerable to theft and above a certain value, it’s difficult to transport this form of wealth, especially across borders.
Similarly, holding all our wealth in one fiat currency - say, the Philippine Peso - leaves us overly exposed to market forces, and when inflation hits, tight capital controls can render us helpless.
What’s the solution?
One of the solutions to this problem is, of course, portfolio diversification. It is not surprising that wealthy individuals park their money across different currencies, invest in real estate, hold off-shore accounts, and so forth. But this is not something only wealthy individuals should be doing: everyone should insist on diversification.
Digital assets, or more specifically, cryptocurrency, can be instrumental here. The beauty of Bitcoin, for example, lies in the fact that ownership - or the power to control - is clearly established in a public manner and beyond dispute.
Furthermore, as cryptocurrency exists on the Internet and can be transferred on a peer-to-peer basis, irrespective of geography, it lowers our dependency on banks and enables us to operate outside the bounds of monetary policy and government oversight.
Crypto as a way to take control
Apart from the inherent qualities of cryptocurrency that facilitate control and make crypto a suitable candidate for diversification, it’s also good to remember that you can further diversify within the crypto asset class itself.
This can be as simple as splitting funds between Bitcoin and your most favoured altcoins, but if you want to go further, it's also worth looking into stablecoins.
Stablecoins, as they are pegged to other assets such as local currencies or commodities, effectively enable investors to diversify their wealth across different assets without actually touching those assets.
For example, you may hold Japanese Yen and gold to hedge against a financial downturn, but because you hold these assets in the form of stablecoins, they come with all the benefits of crypto:
- You can easily transfer them across borders to friends and relatives
- You can exchange them for other assets with the click of a button
- You can hold them somewhat anonymously and they cannot be so easily confiscated.
Furthermore, if you tap into Bitspark’s network of Cash Points spread across different countries, you can also move seamlessly between crypto and cash.
This is part of the reason why we set up Bitspark: to give everyone access to the benefits of cryptocurrency in the digital age.