Blog | Cryptocurrency

Bitcoin Marries Tesla: The World Just Changed

How often do you ask yourself: What is money?

Throughout the ages, money has been different things to different people… at different times. At one time or another, shells, colored beads, feathers, stones, and cattle have all been used as currency, as mediums of exchange.

Today, the modern forms of money are gold, paper, and the hot new kid on the block…Bitcoin. I have always found money — in all of its forms and functions — fascinating, and today with the invisible it is more fascinating that ever before.

Bitcoin

Bitcoin is cyber money. Bitcoin was created in 2009 and when it first broke onto the monetary landscape it sounded like science fiction. Something created by an anonymous person known as Satoshi Nakamoto operating outside the traditional banking system.

As the story goes, one of the first Bitcoin transactions was for two Papa John’s pizzas, negotiated for the price of 10,000 Bitcoins. Today, as I write this, Bitcoins are selling for record highs, and the value of a single Bitcoin is around $60,000. You can buy a lot of pizza for $600 Million. Some people are predicting a single Bitcoin to be soon worth over $100,000. Others are calling for it to be $2 Million. No one really knows how the story of Bitcoin will play out, which brings us to the 600-Million-dollar question.

So, when I am asked if I recommend buying Bitcoin, my reply is always the same: “Yes. I recommend it daily, but… as with anything, if you are going to invest, first study the subject and then find someone who is investing in the asset you are interested in and ask them questions.”

That is why we talk to Jeff Wang about not only Bitcoin but other crypto coins as well. That is why I’ve asked Jeff to help me create the Rich Dad Cryptocurrency Newsletter. You can’t avoid cryptocurrencies any longer, so you better get educated real quickly.

The other quality Jeff has is that he does not look at cryptocurrency of a bubble. He looks at the macro view of finance, economy and money. To think they do not affect one another is to be completely uneducated.

Jeff Wang

With vaccine rollouts happening across the world and cases trending downwards, the belief around the world is that the pandemic’s end is in sight. We have major tech companies coming back to offices, we have flight and hotel prices going back up, retail and dining is opening back up as if nothing has happened. In fact, some of the surviving restaurants may come out ahead because they will have expanded real estate (with outdoor dining) and have less competition with other restaurants closing down over the last year. Look for some brand-new shops and restaurants to open up in the coming months.

So, life comes back to normal, what does this mean for everything else? On one hand, spending will increase again into the distressed areas. Things that fell lower in value before (like oil, rent, even the dollar) may start coming back sooner than we realize.

On the other hand, this could also mean less money will be spent on investments, and it could also be bad for Bitcoin’s thesis as a hedge against the dollar.

While Robert and I both believe in Bitcoin as a hedge against the dollar, many investors’ belief in this is starting to fade. Instead, Bitcoin’s thesis will transform to “world reserve asset” in the coming months, since all these investments have been put into place by investment funds and corporate treasuries. This thesis is nearly identical to physical gold’s.

It also means that the case for picking up more Bitcoin versus assets like value stocks and bonds is also going to falter a bit. In the coming months, cryptocurrencies will need to rely less on the weakness of fiat currency (due to the unending printing by the Federal Reserve) and more on the innovation and adoption of blockchain technology.

Market fights growth versus value

March was a pretty shaky month with bond yields rising above 1.75% (more than 3x the lows last year). The bond market is often considered the safest investment that exists, despite it’s very low return. As the bond market becomes more favorable, investors are pulling out ‘growth stocks’ momentum and keeping the stock market volatile and net neutral despite all the good news of a return to normalcy.

Overall, the market is still moving up with projections that we will surpass pre-pandemic levels of GDP growth and with even more stimulus on the way in the form of a $3 Trillion Infrastructure and Renewable energy projects.

‘But Jeff, you are a crypto guy.’ As Robert says, always look at the biggest, macro picture first. So, with bond yields rising, dollar strength coming back, and a choppy stock market, Bitcoin and crypto have not been immune to the macroeconomic environment, but the over trend looks healthy.

Now let’s talk crypto.

All time high… again…

Last month we predicted that a third stimulus would send crypto markets back to all-time highs, and it did for Bitcoin. Ethereum was just as lucky.

While not hitting new highs, Ethereum’s number of deals and crowd sales happening just shows the demand for it is growing even more.

Futures drive prices (or do they?)

The past few months have shown an interesting pattern with sell offs into the end of the month and buying up until the middle of the month. This has inextricably been linked to Bitcoin futures expiration on the last Friday of every month. Then, shortly after, the prices reverse back to a bullish trend.

What are futures? Futures are contracts that you can purchase or sell to bet on assets to be a certain price in the future. It is very similar to gambling. The moment the week before expiration starts, we see a 20% correction, with internet posts of “Futures expiration!!!” and panic selling.

So, what’s going on here? There are numerous factors which I cover in our Rich Dad Cryptocurrency Newsletter, but do not belong in a blog. For our blog purposes, remember that crypto has been slightly correlated with macro news as well. These ends of the month sell offs could be bigger picture items. The main action item is though, that whenever we see a surge in pricing to mid-month, “expect” some sort of volatility going into the end of each month.

Robert often speaks of volatility being a tool for the transfer of wealth from the middle-class to the rich. I agree and it is one of the realities we exploit in our newsletter.

Let’s talk about some REAL exciting news

Visa accepts USDC as settlement layer

The huge news was Visa taking the stablecoin USDC as an acceptable settlement. This brings massive crypto to credit card users. Imagine buying content or even purchases through blockchain apps with a credit card instead of a “crypto-wallet”. And then imaging being able to pay off the credit card with USDC crypto coins in your wallet. This is a big deal with many ways to exploit into profits.

Let’s keep going…

Tesla accepts Bitcoin

For the first time ever, a retailer is accepting large Bitcoin transactions and keeping it as Bitcoin. While other retailers are converting to cash, Tesla is taking Bitcoin directly and keeping it in its treasury.

Remember Tesla also spent $1.5 Billion earlier this year buying up Bitcoin. Tesla also said it would accept it in the future as payment. This is really taking crypto mainstream. We will likely see other companies following this trend if Bitcoin can sustain its trajectory.

PayPal accepts cryptocurrencies at retail

Another massive news story was PayPal is allowing users to checkout their online payments with crypto. This was previously not easy, and required specialized services to accomplish, but PayPal has just unlocked a massive market opportunity for making cryptocurrencies spendable at any shop that has a PayPal checkout.

This also coincides with their crypto strategy of having people buy crypto on the PayPal app, creating a new ecosystem of trading, spending, and a new target group of users.

Imagine users making money on crypto and wanting to spend it shopping. PayPal has the opportunity to create a retail experience directly through their app from a cryptocurrency wallet. Absolutely brilliant and extremely positive for crypto.

Robert Kiyosaki

While I agree with Jeff’s crypto knowledge – the parts I understand – I do not think the world will ever go back to “normal”. We’ve learned that we can work from home just fine. We’ve grown even more comfortable with technology and services like Zoom. Masks – love them or hate them – won’t be going away. Acceptance in government medicine has gone through the roof. The dependence on the government to supply money to us whenever things get tough rather than plan for our future, is not going to disappear.

Our life changed dramatically in 2020. If we don’t learn to invest and buy assets, then we will be dependent on the government forever. Look at other countries and past governments. When did living off the government for a long period of time ever create wealth, over even comfort?

No more than ever it is time to get financially educated and learn to think for yourself and outside the ‘system’, just like cryptocurrencies have done.