Major Financial Change Is Coming…Here’s How to Prepare and Prosper
The first time I traded a share of stock was 1984. My mom thought I was an idiot. Not because I was investing—but because I was using a newfangled discount broker.
When I told her about the low-cost commissions and the ability to use a touch-tone phone keypad to buy and sell stocks without human intervention (eons before the internet), her only comment was, “Be careful. That’s not how real brokerage firms work. You’ll probably lose your money.”
Every generation stands on the shoulders of the last to push technology further. As it does, the previous generation often shakes its head in bemused condescension, assuming that the technology in place is already pretty good and that whatever aims to replace it is probably much too risky.
I mention this because we are at a similar inflection point.
I write a lot about the paradigm shift reshaping work—the vast freelance opportunities that exist today. I call that the “earn more” component of our Savvy Retiree mantra. As well, I write a lot about what I see as a paradigm shift in lifestyle, particularly as it relates to putting lifestyle ahead of money and allowing us to find our own happy place in life. That’s the “live a richer life” component. But we have a third component—save more—and the paradigm shift underway there could very well protect your accumulated wealth as we enter a decidedly uncertain phase in economic and monetary history.
What I’m talking about here are cryptocurrencies. And while I know a lot of people pan bitcoin and other crypto coins, I hope you will stick with me for a moment, because what’s happening here really is the future.
The millennials and Gen Z (history’s largest generation) are driving this future. Financial chaos has filled their lives to this point. The internet implosion. The housing crash and the Great Recession. And now what is shaping up as, potentially, the Greater Depression. They, rightfully, cast a distrusting eye toward the traditional financial system. And, as we are now witnessing in the fight for black lives, they are educated, they are politically active, and they countenance no guff from the government.
My bet is that they will easily cast aside the anchor that is the modern, debt-addled U.S. dollar, and they are going to drive a crypto revolution because they grew up online, they’re comfortable with ethereal transactions, and they reflexively understand that they have to protect themselves.
I know how easy it is to discount those generations because of their youth. I did that in 2012 when my son, then 16, was begging me to trade bitcoin with him.
“Dad, I promise this is the future. This is where money is going,” he told me over my smirks. He was 16 years old. What did he know?
Turns out, a lot. He funded his own account and was trading bitcoin online at night, turning $100 or so into several thousand. Even then, I thought it was a scam and he’d just stumbled into a lucky streak. If only I’d listened to him and snapped up $1,000 worth of bitcoin when it was $20, as he begged me to do, I’d have been close to $1 million at the coin’s peak a few years later.
To be sure, that was a Wild West time for an unproven asset, so it was easy for me—a wiser Gen X to his unknowing millennial self—to disregard his assertion that “it’s the future of money.”
Today, we’re in a different place. Crypto has proved its resilience and its relevance, though it can still be very Wild West. Still, even the Federal Reserve and Congress are now talking about a move to digital dollars.
I’ve spent a great deal of time since 2018 researching an inordinate number of cryptocurrencies. I’ve read the “white papers” published by scores of crypto projects to understand their real-world “use case.” And I realize that many of these currencies are going to change many aspects of life.
The typical view that these currencies are just digital analogs of the dollars we spend for consumer needs is largely wrong. Many cryptocurrencies are purpose-built to unique needs, and in that are vast opportunities to generate and preserve wealth.
Let me give you just one example: counterfeit consumer goods.
It’s the bane of so many consumer companies. But imagine an electronic “currency” that can track goods from the earliest production stage all the way to the consumer to ensure authenticity at each step. Imagine the ability to track food to ensure that it’s never exposed to excessive temperatures that can cause bacterial growth and illness. That’s a cryptocurrency that exists today—VeChain. The potential market it’s addressing is multiple hundreds of billions of dollars annually, and as companies the world over begin to tap into this technology, they will be consuming VeChain and driving up the value.
I could go on for pages and pages about all the crypto projects I’ve researched and how they will change our everyday world. Imagine never again needing an escrow agent when buying real estate because a crypto token has independently authenticated the title, the deed, and each party’s signature. Imagine borrowing money against collateral—in seconds—without ever approaching a bank or having to jump through approval hoops. That—and much, much more—is coming to our world by way of numerous cryptocurrencies.
I might not be Gen Z or millennial, but neither am I a Gen Xer who scoffs at this “crazy bitcoin fad.” I’ve done my research and I see the paradigm shifting even as I write these words. I’m not saying crypto isn’t risky; it certainly can be. Some projects with great vision might ultimately fail. And prices will whipsaw as the tectonics of this emerging landscape shift and rearrange.
But at the end of the day we will have a new landscape.
Thus, we need some of our wealth there (not a lot) because of this paradigm shift. To that end, I will be writing more, soon, about crypto in the August issue of The Savvy Retiree, a primer on understanding what it’s really all about and how we can use it to, ultimately, live a richer life.
By Jeff D. Opdyke