Unless you have been unplugged for the last year, you can’t miss all the headlines and hype around Cyrptocurrency. Until recently, it’s almost like cyrpto is the superman of the investment world that just can’t be stopped. But, did superman-crypto just meet its Kryptonite?
Governments across the globe are racing to keep up with cyrpto and are in a battle to maintain control of commerce and power. While crypto isn’t rushing into a phonebooth, emerging just in time to save the next damsel in distress, it seems to be flying full speed into the financial universe frustrating governments in the process. Since crypto is decentralized, governments have little to no control over transactions, or do they? China has recently stepped in and banned businesses from accepting crypto as payment for transactions. Since the government does not have full control over the currency and therefore cannot monitor these transactions, they are controlling the currency by controlling the businesses. This caused as devasting blow to the cyrpto markets as investors waited to see if superman cyrpto would get back up and fight another day.
Is regulation crypto’s kryptonite? While I like to believe the United States is beyond this type of overreach, it’s not unprecedented. In 1933, Franklin D. Roosevelt seized gold from U.S. citizens and made it a crime to own or trade gold, executive order 6102. After essentially robbing citizens by paying less than market value for the confiscated gold, they issued the gold reserve act 1934 setting the price of gold significantly higher than the price paid when confiscating from citizens. This forced citizens to use the U.S. dollar as currency and led overtime to a dollar backed by the “full faith in the government” to keep its value. Is cyrpto poised to meet the same ill-fate as gold through some sort of regulation? Only time will tell.
In the meantime, you might be wondering if you’re missing out on investing in crypto. We don’t know if cyrpto is here to stay, but it has certainly drawn attention from some very big players in the financial industry, businesses and government. Robert Kiyosaki, author of ‘Rich Dad Poor Dad’ has made recent headlines for his support of cyrpto and Elon Musk, CEO of SpaceX and Tesla, has made waves throughout the crypto markets with his comments for and against the currency.
Will crypto continue to wear the superhero cape and fly around the financial markets? Or, has it met its kryptonite and will be regulated into surrendering its superhero-like dominance and retreating to the phonebooth to be archived in history like its new roommate the payphone? In either case, it has certainly upended the status quo of traditional finance. The biggest appeal for investors and therefore biggest concern for governments is how the currency is decentralized. Who will win the battle for control? Will investors continue to give their full faith in the government backing the dollar or are we seeing a shift towards a decentralized cyrpto?
Whether you have invested in cyrpto or not, never forget the three D’s of investing: Diversification, Discipline and Dollar-Cost Averaging. While the products or strategies may develop over time, the basics and fundamentals of investing will remain. It’s important to follow a plan and not the headlines. Don’t get caught with a case of FOMO (fear of missing out) and make ill-informed and emotion-driven decisions. Make a plan, follow the three D’s, and stay focused on your path to financial freedom.