GROWING UP, I remember my mother telling me to save because “you never know what can happen.”
Like a pandemic?
I reference my mother because she was ahead of her time in preparedness and quite savvy about money. She bought gold when it wasn’t popular—and I think she would have bought bitcoin. Why? For the same reasons that my husband and I decided to take the plunge.
To be sure, bitcoin itself has plunged in recent weeks, and it’s now down roughly 40% from its all-time high. But if anything, that should make potential buyers more enthusiastic, not less so. Yes, it’s entirely possible the price will drop further. But there’s one thing I’m confident about: While cryptocurrencies may continue to give owners a rollercoaster ride, they aren’t going to disappear entirely.
Why not? Our society is becoming cashless. If there’s one thing that the pandemic has shown us, it’s that we don’t need cash. Between credit cards and Venmo, I’m hard pressed to remember the last time I used cash.
Like me, my mother would have been horrified at the amount of debt countries are accumulating and would have shared my deep-seated fear that this will result in inflation. Neither of us would have been able to explain the money supply in textbook economic terms. But inflation has impacted my life very noticeably. A cruise, which was scheduled for 2020 and didn’t happen, just went up 7% in price, even though the company has been holding our deposit for more than a year. And just look where the price of gas has gone.
If you’re a retiree, you’ve had to be more aggressive. Savings accounts and certificates of deposit provide the most meager of returns, so you’d better have funds in the stock market. While you’re at it, you might dip your toes into alternative assets, including cryptocurrencies.
Look at what has happened in just the past few years, and you can’t help but think this new commodity is for real. Fidelity Investments has a head of digital assets and a bitcoin division, and it’s looking to offer an exchange-traded bitcoin fund. There are now thousands of bitcoin ATMs available. Major companies, such as Morgan Stanley and Goldman Sachs, are offering access to bitcoin and other cryptocurrencies. IBM, often seen as old and stodgy, has said it’s focused on blockchain and the industrial internet.
Wall Street has acknowledged the viability of cryptocurrencies with the listing of Coinbase on the exchange. Gary Gensler, the just confirmed chair of the Securities and Exchange Commission and a lecturer at MIT, taught a course on blockchain and money. You can watch his lecture on YouTube.
In looking at all of these developments in just a matter of a few years, it strikes me that a very small portion of our assets should be in cryptocurrency. We can buy in amounts as little as $100, because cryptocurrencies are available in fractional shares. Finally, can you get more legitimate than the IRS asking if you own cryptocurrencies on the front of the 1040 tax return?