In a world of renter encouragement, ownership has never been more important - but is ownership enough? I think this is dependent on what is owned as while there are many types of investments, they all have various pros and cons.
For instance, crypto is often seen as a scam because it "isn't real", meaning it isn't tangible, it can't be held. While people overlook that most money is identical in this, the nature of crypto being in the ether is actually one of its superpowers, and one that is often forgotten, at least in some respects.
Hold your own
I was talking to one of my brothers today who is crypto aware and even held for awhile, but has gone back to other things, like property and precious metals instead. I know why he has done this, but one of the reasons is there is the sense of "real" to it, that it is actually something you can own, build on, stand upon. Owning land is a very good investment, but is it safe?
Yeah, most of the time for sure, but under certain conditions, it is also quite insecure. A lot of people talk about the legislation that is going to "kill crypto" but they often fail to recognize that everything they own is legislated too and something like land comes with a whole range of conditions, such as what can be built on it, how it can be used, which trees can be cut down and of course, land taxes. If it is yours, why are you paying rent on it? But there is more to it than that too and while rare, things like a new highway can mean your property is literally taken from you by the government.
Allowed to be free
But, there is another aspect to it also, because land is "permanent" meaning, it is immobile and can't move. This means that while you own it, you are also "stuck with it" where it is. That means if for example your government does decide to act in ways that are far from your liking, you are likely going to have to take a loss on it. This means voting with your feet comes at a very high cost.
For example, my brother mentioned Peter Schiff, someone who is critical of crypto and thinks it is going to fail. However:
Schiff lives in a gorgeous luxury beachfront home in Puerto Rico. He moved to Puerto Rico full time in 2017 because of the tax benefits and the beautiful weather. He encourages Americans to move to Puerto Rico and use it as a tax haven. Euro Pacific Asset Management and Euro Pacific Bank are now both based in Puerto Rico.
In summary, by moving to Puerto Rico, Peter can keep most of what he earns. He doesn't pay taxes on his earnings to the US government. He pays only 4% to the Puerto Rican government and pays 0% on capital gains.
You see?
Good old Peter voted with his feet. But what people miss is that while he decided to do so, he was allowed to do so also. He didn't "flee" the US, he didn't "escape" - he got on a plane and left because he was allowed to leave. He was also allowed to move his companies there. The only reason he could do so, was because the legislation provided him the opportunity to do so - he is a slave, just like the rest of us and if he was from another country or time in history, he wouldn't have had the possibility to do what he has done. Well, he may have been able to leave, but would ha be allowed to leave with all of his assets? Highly unlikely.
I'd leave, if I could
As I have posited before, if the wealth of German Jews was in Bitcoin that could travel and be accessed from anywhere in the world and bricked away if chosen, would Hitler have been able to do what he did? I think it unlikely, as that wealth would have escaped the Nazi government of the time, rendering what they were doing largely useless. However, the assets they held were not mobile, they were in the form of land, businesses, paintings, gold, pianos and all of the other tangible assets of the time.
So, you can own what you want, but if it is not transportable, it has to remain within the reach of whoever is in power, now and in the future. Even gold is not very mobile as while you might be able to hide it away, using it is impractical and moving it across borders near impossible for the average person. This means that the average person with physical assets doesn't actually have much ability to "vote with their feet" unless they are willing to leave all of their wealth behind. Losing a person is costly, but keeping all of their assets mitigates much of the cost.
So, what to do?
Well, as I was explaining to my brother today, I see that crypto is a bit of a hedge in this and actually provides* more value to physical assets* because it gives the owner the power of partial mobility. For example, a person who owns a property worth a million dollars, traditional investment assets worth a million and crypto worth a million, is in a far better "bargaining position" than a person who owns a million dollar house and two million in traditional assets.
The reason is that while the wealth model is the same 3 million, at least a third of the wealth has the ability to travel. This means that there is a higher cost of acquisition for a government (for example) as while they can claim the land (in various ways) and parts of the traditional investment assets, the crypto could be well out of their reach. The effort will only get them two-thirds of the return.
No more from scratch
But, there is more to it than this also, because that other one-third in crypto allows the owner the ability to be accepted elsewhere more easily and, not have to start from scratch. There are many sides to consider in this, but it has happened many times in the past that when countries become too authoritative, those with the means and the brains are the first to leave, seeing an exodus of the best and brightest and those who generate the much of the value.
An example of this could be from Uganda, where Idi Amin expelled all "Asians" (no matter how long they had lived in the country) and taken their businesses an assets. This group was seen as the wealthy group of businesses owners, so taking their businesses and giving it to "real Ugandans" (often military officials) would lead to a stronger Ugandan economy. The problem was, the skills to run these businesses didn't exist at the time, so they were run into the ground, creating a lot of economic hardship.
After years of building their businesses, these people found themselves as refugees and having to start from scratch in new countries. The thing is, the only thing stopping the same thing happening to any of us, is the current government contract - but that can change in an instant under a whole range of rules, including new pandemic laws.
Crypto or the stick?
Crypto allows for a risk mitigation on two fronts however, as while it does mean that the "starting from scratch" doesn't need to be of that much of a concern, it also acts as a potential "stick" - a deterrent to force being applied. If more people started to hold crypto and had the ability to withhold it forever from authorities, this acts as a temper for authoritarianism. There is a very good reason that China is clamping down o crypto and the wealthy lately - control of the population.
But, there are other things to consider that can amplify this, where for example as people move more of their wealth into "assets with global and instant mobility", there is less that the governments have access to. This means that in order to keep things running, they are going to have to convince the people to spend their assets locally, rather than just take it by force through taxes and spend as they like now, racking up mammoth debts that will impact our children and grandchildren. This means governments are going to have to be convincing and, held accountable for poor performance - nd, because crypto people hold significant wealth, they will also have to become transparent. Governments hate accountability and transparency - which is why they have avoided it up until now.
But, what this boils down to is, the more people move some of their wealth into crypto, the more power they will have due to the ability to vote with their feet. Mobility is a mammoth skill and as we can see through history, in general, the people who choose to move tend to do relatively well over the space of generations in their new countries. There are reasons for it, and it isn't because they rely on government handouts. To be able to relocate to a new country take a whole range of conditions to be met and when doing it completely by choice, it is more likely that the person is educated and confident they can make a better life for themselves. These are the people a country doesn't want to lose for the most part.
Looking Buff mate
So, my hypothesis in all of this is that while it is smart to diversify and hold multiple asset classes, the "mobility buff" that crypto has increases the value of traditional and physical assets, by acting as leverage. Try to take too much from these assets and, I will dump them all and move to somewhere that values me. This is happening in employment circles already, where people are far more mobile due to the ability to work from home so, employers have to "pay the cost" of attraction and retention of the best of them.
For far too long, countries have been relying on "national pride" and the like in order to keep people engaged, but one of the interesting things that has come through our ability to homogenize is, there isn't nearly as much difference between cultures as there once was. This means, I can live in Finland in a similar way to I can live in the UK, Portugal or Australia - so, who is offering the best deal, who is willing to value me, where can the quality of life for my family be the highest? I am willing to pay for better conditions, but not through force.
The core power of crypto in the fight for freedom, economic empowerment and improved governance is, that it has the ability to be anywhere on earth. This means that the more people move into it, the more attractive the places will have to be in order to have access to the mobile wealth. As they say;
Location, location, location
If you can't move it, you have to leave it. If you are forced to leave it, you don't own it. Crypto is located and secured on the blockchain, but the people who access it, can be anywhere.
Taraz
[ Gen1: Hive ]