Bridging the Wealth Gap with Bitcoin
Inflation is a powerful beast. Its temperament is quite dangerous when uncontrolled or controlled by the wrong hands. Inflation can quickly go from being nowhere in sight to becoming your money’s worst enemy.
In order to fight inflation, one must be adequately prepared. Like any competition, using the wrong equipment, such as wearing oven mitts to a boxing match, decreases the probability of winning. When inflation strikes, there is an increase in the price of essential goods such as housing, healthcare, and education. Those with strong armor can offset inflation. Those without a shield struggle to survive. Unfortunately, inflation-fighting tools are not available to everyone.
An uneven distribution of financial resources leads to greater economic inequality. In order to stop this vicious cycle, an inflation-fighting tool needs to be easy to use and available to anyone, anywhere. However, this is not possible with the current financial system. Let’s explore why.
The most common strategy used to fight inflation is the stock market. However, the stock market is also a beast. Sometimes it’s a bull, other times a bear. The barriers to entry, both figuratively and literally, are no surprise given its complex nature.
Starting at the surface level, the stock market poses a psychological barrier. Even though investing doesn’t need to be difficult, Wall Street is not welcoming to newcomers. The market is composed of 60 different stock exchanges worldwide, approximately 630,000 publicly traded companies, and countless mutual funds, exchange-traded funds (ETFs), and bonds. It’s easy to drown in a pool of numbers, even dipping your toes in takes confidence. Most people never build up the courage and end up keeping significant amounts, if not all, of their assets in cash. In fact, only ~50% of Americans own stock.
To make matters worse, the stock market doesn’t promote an equal playing field. High-net-worth individuals have private access to equity firms and hedge funds. These unique investment opportunities typically perform better than the stock market.
Let’s not forget the regulatory barriers to entering the stock market. In order to open a brokerage account, you need a bank account. Nearly two billion people worldwide are “unbanked.” Forget the stock market — two billion people can’t even open a bank account.
In an ideal world, real estate is a great way to fight inflation. Homeownership serves as an investment while also providing a valuable utility. However, owning property is risky and expensive. What if a natural disaster hits or you can’t keep up with maintenance? Many families have a majority of their net worth tied up in their homes. This leaves them little access to cash and next to no equity to borrow against, turning small setbacks into financial nightmares.
Loans are the tool of choice for most homeowners since it’s rarely feasible nor advisable to pay outright with cash. However, those with low credit scores have a difficult time securing a loan and pay very high interest rates. More than 30% of Americans have subprime credit scores, and roughly 1 in 10 Americans have no credit history. Thus, real estate as a means to outpace inflation is not always possible.
A third inflation-fighting method is purchasing rare commodities such as precious metals or art. Gold typically recovers quickly after economic downturns. However, buying and owning commodities involves a lot of unexpected costs and considerations. It’s crucial to find a reputable dealer, a safe storage option, and insurance. Broker, bank, and firm fees can quickly get expensive. Once again, these options best suit the wealthy.
So, how do those who are locked out of the current financial system fight inflation? Well, thanks to bitcoin, there is a solution. Bitcoin is for everyone and built by anyone who wants to contribute to its network.
Bitcoin is the world’s first digital money to work independently of a central authority. It has similar features to traditional inflation-fighting tools, without the qualifications. Bitcoin is rare like gold, easily tradable online like stocks, and can yield massive return on investment like real estate.
Bitcoin is accessible to everyone. It does not require a bank account, proof of identity, credit history, or an investment minimum to get started. When transacting with bitcoin, your identity is hidden. No one knows how much money you have or what you look like, so there’s no space for discrimination or preferential treatment. The bitcoin market is open 24/7, so you can buy, sell, or send bitcoin at any time. Bitcoin’s technology keeps the system secure, counterfeit-proof, and fair.
Bitcoin is opening up opportunities for more diverse investors. A recent study shows that the average crypto user in America is under 40 and does not have a college degree. In addition, 44% of users are non white, compared to 35% non white stock investors.
While bitcoin’s development is still in the early stages, it’s proving to be a strong investment. As of today, bitcoin is up 70% YTD, the S&P 500 is up 23% YTD, and the dollar is losing value at a rate of 5.37%. Many believe that at some point bitcoin could even overtake the dollar.
Inflation affects people differently depending on factors such as location, income, age, and education. However, the wealth gap is bad for everyone in society. Economic inequality hurts economic growth, undermines education opportunities for children (i.e., the future), increases criminal behavior, and exacerbates environmental changes.
In the current system, access to inflation-fighting tools is a privilege. With bitcoin, anyone can build and protect their wealth. Even if you are in a position to battle inflation with traditional means, consider those who aren’t as fortunate. Learn about bitcoin, buy bitcoin, and advocate for bitcoin. We can conquer the inflation beast together.
