Leveraging the Enormous Potential of Blockchain for Wealth and Equality
The first time it happened, they called it a passing fad. But then, the first cryptocurrency, Bitcoin, rise from less than a cent to $19,783.21. They shrug it off as nothing but beginner’s luck. Surely, we can dismiss the fact that Bitcoin is now worth 4 billion. Then Litecoin appeared and they called it a “coincidence.” Then Ethereum come, and skeptics started to scratch their heads in equal wonder and disbelief. But still, they aren’t catching up. After the fourth, fifth and now the 1910th cryptocurrency, the enormous wealth-generating potential of what was once called “fake money” becomes more and more of a reality.
Previously, they say cryptocurrency are just bubbles. But what if the bubbles are the financial world’s crystal ball? In fact, this crypto market that started as nothing but strings of code is now worth $200 billion in market cap. And it’s just the beginning as the blockchain network will potentially be worth at least USD $1 trillion. Yup, we are no longer talking about billions here but trillions with a capital “T.”
Throughout history, innovators and disruptors are initially labeled as lunatics and fanatics. During the 18th century and earlier, people even burn, decapitate and hang these pioneers. Nowadays we are less barbaric; we just laugh it off — because we can’t get that blockchain isn’t a joke. Too bad the critics didn’t invest enough while cracking up, because if they do, their $1 could now be worth a thousand dollars or more.
To say that we are onto something huge is an understatement. As we mentioned in our previous article, we are at the dawn of a new epoch. Coal and fossil fuels are on its way out as sustainable clean energy becomes cheaper and cheaper every day. Machines are getting smarter and smarter, slowly taking over our jobs. Even major banks are now leaning into the blockchain to replace their antiquated system.
The cryptocurrency market disrupts our money and business system right now as we speak. Yet it’s too confusing with too many technical jargons. It barely fits the mold of equities and assets. It’s the new kid on the block who gets to be bullied and mocked — because it’s different. And as with anything new, we’ll go into various stages of denial. We can’t help it because just like our caveman ancestors, our brains are still hard-wired to fear change. And in between our skepticism and confusion, the cryptocurrency market is steadily growing. We may deny it today, but regardless, this technology is disrupting businesses right at this minute.
All these may be promising but for most people, learning how cryptocurrency works is like studying rocket science. So how can we invest in something we can hardly understand? Studying the market is one thing, but watching it over day in and day out it like a hawk is another. Sure we want to invest. But what’s to choose out of potentially thousands of cryptocurrencies out there?
Good thing there’s a more straightforward way to invest, and an easier way to earn as the crypto market rises. Why put your bet on a single crypto when you can invest on the entire asset class using index funds? Investing in any single crypto is risky unless you are a daredevil who wants to bet a ton of time and money. Yet index funds have been proven to yield long-term profits in a stable manner. Unlike funds run by active managers, the annual management cost for a passive index fund can be as low as on average 0.11% (compared to the 0.84% average fee for active funds). Investing in crypto with an index fund approach makes it easy for early adopters to enjoy the upward trend of the crypto market.
We must understand that now is the best time to invest, while the market is yet to mature. That’s because like an infant, blockchain market is yet to experience its growth spurt. And index fund is for people who understand the long-term wealth potential for an asset class but are too busy to watch the market 24/7. No need to spend thousands of hours to research a thousand coins.
Even Warren Buffett, one of the richest men in the world, said that should he die, his wife should invest 90% on index fund. Why put all your eggs in one basket when you can own the hens? Index funds reduce the shockwaves brought about by the ups and downs of the market. It’s a passive approach to earn consistently. And due to the long-term nature and consistent returns of this investment, this could be the basis for universal basic income for the coming decades.
Ultimately, as machines start to take over jobs, societies might set out the goal to get a consistent source of living via a universal basic income. It could be through regular dividends or through government dole outs. Are we to wait until our governments realize this need? How about we start this revolution now with the blockchain tools that we have?
If you’d like to learn more, please visit us at Joint Commonwealth Fund (JCF)!
