The devaluation of money has become a grave concern, with the majority of individuals expected to witness a continuous erosion of their wealth. Arthur Hayes, co-founder and former CEO of crypto derivatives exchange BitMEX, holds governments responsible. He believes that due to the immense public debt accumulated by the world’s largest economies, governments are left with no choice but to resort to money printing in an effort to “inflate it away.”
Hayes asserts that the only way to avoid the gradual fiat wealth destruction is by acquiring assets beyond the conventional financial system. According to him, cryptocurrencies, whose purchasing power remains unaffected when compared to the energy market costs, serve as the most viable alternative. He explains, “My whole goal with all of my investing is to preserve capital so that I can consume the same amount of energy or whatever energy amount that I would like from now and into the future.”
However, Hayes also admits that the total amount of crypto assets available remains relatively small compared to the overall economic debt. This disparity indicates that only a select few will be able to protect their capital, while the majority faces wealth destruction. The ongoing crackdown on cryptocurrencies in the U.S. appears to be a tactical move by the government to safeguard the masses by keeping them within the traditional financial ecosystem and preventing them from seeking refuge in the more volatile world of cryptocurrencies. Hayes posits that those held within the conventional system will gradually lose a significant portion of their purchasing power, unknowingly assisting in lowering the debt load and improving their nation’s financial health.
While his investment thesis cements the idea of cryptocurrencies being a safe haven amidst global economic turmoil, it’s crucial to recognize the risks and uncertainties associated with this relatively nascent market. The lack of regulation and untraceable nature of the transactions pose questions regarding the security and legitimacy of cryptocurrencies, factors that Hayes did not elaborate on.
In conclusion, while cryptocurrencies might offer an escape from the progressive destruction of fiat wealth, their limited availability implies that only a fortunate few may benefit from this alternative. Additionally, it is essential to acknowledge the potential risks and drawbacks associated with investing in cryptocurrencies and to approach this investment avenue with caution.