The Great Lie Of Money

Your money in the bank is worth little to nothing

Photo by Daniel Lincoln on Unsplash

We have already mentioned that there are two types of people in the world: Consumers and Producers. Every minute that passes, you have been destined to one of the two groups, and sometimes to both at the same time.

You’ve been eating pizzas while watching a series, so you’ve been a consumer. You’ve been reading a book to improve your company’s SEO. You’re a producer.

It is essential to distinguish what percent we are devoting to each group, and if the consuming part outweighs the producing region, we must be alert.

An example might be a $2k course on how to invest better. Call me crazy, but in this subscription, you will learn everything you need to know for 1% of what my subscription might cost you. In that case, you would be more on the consumer side.

When we are consumers, we give our most precious commodity, time for another good that is not so precious, money.

And why do I say it is not so valuable?

First, because money is infinite, and second, we have a wrong conception of money.

And now I am going to explain why. Fiat money has no value. For money to be socially accepted, it must meet specific requirements to have value in itself. That is why gold became widespread as a means of payment (and a haven).

If you analyze it, paper money is nothing more than security that guarantees its bearer an effective exchange in the market. But for this, it must fulfill a series of properties. The “Bitcoin Pattern” book relates them in more detail, but today I will make you a spoiler. The properties would be:

• Scarce. Law of supply and demand. The lower property is, the more value it will have. If money grew on trees, it would lose its weight.
• Divisible. Take the euro as an example. Paper money has different denominations: $1, $5, etc.
• Fungible. A unit should always have the same value, regardless of the owner. One gram of gold costs the same as another.
• Durable. That is, it must remain intact for an extended period of time. That is why tomatoes could not be money (they decompose).
• Intrinsic, which means that it has value in its own right. Outside of its market price, gold is a precious metal with a specific utility.

No, no, and no. But money fulfills these characteristics. And the saddest thing is that it is not even close to fulfilling them.

• Paper money is far from being scarce. In the face of any crisis, central banks or the Fed print more bills and inject them into the market. Or else it has been done after major economic concerns.
• Paper money has no intrinsic value. When it was backed by central bank gold, it used to, but this is no longer the case. Central banks hold only 30–50% of the world’s gold, which means that they have lost this backing.

We still have to go back to swapping pigs for cows. It is just at this point that someone would say. Unless we have something that allows us to fulfill all the properties we have described above, and that is where cryptocurrencies could have their niche — specifically the Bitcoin.

Disclaimer. If you are one of those, who are against cryptocurrencies and believe that their value is 0. Please wait until the end of the subscription. I’ll show you how to make passive income (up to 40%) with them.

Bitcoin is a scarce commodity. Only 21 million units will be issued.

• It maintains its value over time and even exceeds it. (That is why it is a haven asset, like gold).
• It can be divided and counted. Each unit is subdivided into Satoshis (0.00000001 BTC).
• It has a real value based on supply and demand and the number of completed transactions.
• It is fungible and durable. Because it is digital, it will not be lost, perish, and not be damaged.
• It can be used as a means of payment and is a store of value.
• It is secure, anonymous, and immutable. No one can create more Bitcoins, all data is encrypted, and the human factor does not exist.
• It is decentralized. No bank, government, or third party “plays” with cryptos. In other words, you can’t change their value, issue them or control them.

It is a fascinating world, admittedly scary, but with immense capabilities.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.