Fiat Money vs. Cryptocurrency

We are definitely living in a very interesting time in history on many levels. While the world is itself in a period of turmoil and change throughout the Middle East and Europe, the financial industry is also undergoing significant change. Unlike what is happening overseas, which is somewhat visible to the American public, what is happening in the financial world is much less visible to Americans. I’m talking about cryptocurrencies including Bitcoin, Ethereum, Litecoin and the other 1,500 altcoins (an altcoin is an alternative cryptocurrency to Bitcoin).

While I’ve known about cryptocurrency as far back as 2010, I didn’t take the time to learn about it. As I’ve learned more about the cryptocurrency industry over the past year, I’ve become more fascinated with it and the potential it represents to the financial and commerce world. However, whenever speaking with the vast majority of my associates, I’m reminded how little most people know about cryptocurrency.

When something new like cryptocurrency is introduced, there is a period of denial and ignorance for most individuals. Cryptocurrency is very different from what we already know about silver, gold and fiat currencies like the United States dollar. Because of this “new idea”, it will take time for the majority of people to accept that a different form of currency is not just coming, it has arrived.

The creation of cryptocurrency is not very different from the creation of any other currency in ancient history. The only difference is that it is digital instead of tangible. Once you learn more about the different types of monies used throughout history including beads, coins, silver, gold, paper, and more, it is not as difficult to realize that we’re seeing yet another evolution of the monetary system. One that eliminates a primary problems with fiat currencies, counterfeiting. If you’d like to read up on the history of money, head over to Wikipedia or for a lesson.

Now, what about Fiat vs. Cryptocurrency? Since the creation of Bitcoin in 2008/2009, cryptocurrencies have been under attack by established monetary, investing and business leaders. Every year since its inception, “experts” have predicted the demise of Bitcoin and cryptocurrencies roughly 10+ times per year. You might say in the words of Mark Twain, “The rumors of my death have been greatly exaggerated.” Cryptocurrencies have survived repeated assaults against their viability and legitimacy. This isn’t going to stop any time soon, but in the end, a lot of people will be eating crow when it comes to cryptocurrency as a viable financial tool.

While the US dollar is the dominant form of currency in the world today, I think we can all get distracted from the reality that worldwide, government currencies come and go over time. The US dollar will not remain dominant forever. Currencies also go up and down in value based on the current economic situations. For you money nerds out there, you might enjoy looking at the changing value of the dollar historically or versus other currencies. Inflation eats away at the value of fiat currencies like the US dollar.

While some may say that the argument is fiat currency vs. cryptocurrency as the title of this article suggests, the real question is “will cryptocurrencies like bitcoin and others play a role in the financial markets long term?” Don’t be suckered into the argument of fiat currency vs. cryptocurrency. That’s not the real question on whether or not cryptocurrencies will survive long term or make a viable investment asset. Very smart people fall into varying degrees of beliefs on both sides of the question.Only time will prove who is right.

With the emergence of ecommerce, did we see retail stores disappear completely? No. After 20 years, ecommerce finally surpassed the $300 billion mark in 2015. By comparsion, the entire retail segment for the United States stands around $4.7 trillion for 2015. Ecommerce has it’s place in the market, but it hasn’t come close to replacing the entire retail chain. Cryptocurrencies will likely serve a similar role in the financial space for the near future. They won’t replace money entirely anytime soon, but they will fill a very needed role.

Those who believe “cryptocurrencies are here to stay” are investing and making a lot of money. Those who believe “cryptocurrencies are going to fade away” may well find themselves using cryptocurrency to make purchases in the future and like all the other previously missed investing opportunities, they’ll regret missing this one.


Cryptocurrency Headed Up. Are You In?

Confession. I’m a tech guy and financial guy. I started my career as a manufacturing/mechanical engineer, then in 2001 switched careers to a internet-website-tech-business entrepreneurial role eventually becoming CIO then COO of a $100+ million business. Cryptocurrencies starting spinning up in 2009 with Bitcoin, and I missed it. Fortunately, it’s not quite done yet.

With every new industry innovation there is the cutting edge (bleeding edge as some call it), then come the early adopters, then come the late adopters, then come the laggards. So where are we with cryptocurrency? We’re moving from the cutting edge into the early adopters phase. How do I know that? Simple. More press. More adoption. More use cases. More money. For example:

  1. Banks have started testing. The banks are late to the game, but they will catch up fast. If they don’t, they will be obsolete, and they will be gone…or at least lose a huge chunk of business.
  2. Corporate CEOs are beginning to back it.
  3. Use cases are expanding

I could go on like this for pages and pages, but you need to look it up yourself. Crypto Coin News is a great source.

So back to ARE YOU IN? Yes, we missed the big money and opportunity during the cutting edge, but we also avoided the risk that any new industry innovation brings. I’m okay with that. Now however, we are in early adoption phase. Returns will probably be less, but still good. Risk is lower…the proof of concepts are done, the use cases are growing, and adoption is growing. A great opportunity, with less risk…but still risk.

The question you face now is will you be an early adopter and make money, or will you be a late adopter and laggard who just uses cryptocurrency to purchase things?

People Say Bad Things About Crypto

Smart people have been saying bad things about crypto since 2009. It’s going away. It’s going to fail. It’s a ponzi scheme. It’s not backed by anything. Let me answer these things for you in sequence.

  1. It’s going away. It’s going to fail. It’s a going away. It’s a bubble.
    People who don’t get it, say it. So far, many of the naysayers have changed their tunes. A few examples of people who have changed their tunes.

  2. It’s a ponzi scheme. It isn’t backed by anything.
    • This one makes me laugh a bit. Pull a dollar out of your pocket. Now look at it and ask yourself, what gives that value? You’re answer should be “you.” You believe that dollar has value so it does. Along with you billions of other people believe that dollar has value, which is what makes it valuable.
    • Let’s dive a little deeper into economics. In the 1970s, the United States abandoned the gold standard. That’s right, your dollar’s value is not tied to gold. While you can buy gold with your dollar, as long as someone will give it to you, you can’t get gold from the government.

      Also in 1970s, the United States struck a deal with the middle east to price oil in dollars. All oil in the world from 1970s until this year, 2018 was bought and sold in US dollars. This made the dollar the global currency. Countries bought and sold goods in US dollars because it was tied to gold. However, that is about to change.

      What most people don’t know is that China, Russia and a few other countries are tired of the Western elite bankers “BS” and strong arm economic tactics (i.e. sanctions). China, Russia and others have been accumulating gold with the intent of breaking the Petro-dollar. Beginning in 2018, China will open their own oil trading exchanges based on the Chinese Yuan. The Yuan will be tied to gold. Russia and China are the first two countries to begin international trade on this new financial system. Gone are the days of the US sanctioning Russia because Russia isn’t following the Western “agenda”. I think this is a good thing since the west has essentially been starting wars for its own economic benefit. I.e. Iraq war, Libyan war, Syrian war, and the recent Turkish coup attempt. Note that Russia stepped in to stop the Western agenda in Syria.

      Now that you know, China and Russia are valuing their countries money against gold. Why does this matter?

    • The United States and Western Central Banks (run by the central bankers, Rothchilds, etc.), have been printing money and the people and government of America have been accruing massive amounts of debt. As the new Yuan financial standard comes online, the western fiat monies (tied to nothing), will begin to fail. This is much sooner than you might think. Yes, a financial collapse is coming. When? Sooner than you think.
    • Our government is roughly $20 trillion in debt, depending on who you talk to. However, when the numbers get that large, can anyone truly be right? So I ask you again. People believe our money has value because it is backed by our government. However, our government is bankrupt. The pin just hasn’t popped the balloon yet. It’s coming. Once that happens, all perceived value of the US dollar will disappear. The system will be dead and then we will have to rebuild.
    • I said all of that for this purpose. What is the value of the dollar? Perception. What is the value of cryptocurrency? Perception? What is the value of gold and silver? Perception. We as a people ascribe value to things. We determine the value. When enough people perceive something has value, it becomes value. When enough people want something, it has value.

      Cryptocurrency is growing in value right now because people perceive it has value. In truth, cryptocurrency is as valuable as gold because the people believe it to have value. For example, 1 bitcoin is priced around $10,000. 1 ounce of gold is priced around $1,300. Essentially, 1 bitcoin is worth 8 ounces of gold.

In my opinion, it is we the people that give value to anything whether it be gold, silver, fiat currency like dollars, or cryptocurrency. However there is one very big difference between crypto currency and the dollar. Central Banks and the government control the value of the dollar. The people control the value of cryptocurrency. Personally, I’m much more comfortable with people controlling the value of their currency. However, Governments and the Central Bankers will not give up that power easily.

Volatility of cryptocurrency will eventually settle down as we move out of the early adopters phase and into mass adoption. Stay tuned. It’s guaranteed to be an interesting ride.


Cryptocurrency 101. Real Deal or Not.

I’ve been interested in personal finance and building wealth since I was 25. It’s now 2018, and I’m 47. My fascination with learning about money started when I realized I made $39,000 in 1995, but somehow ended up $16,000 in debt. WTH? For 22 years, I’ve been learning about money. How to make it. How to save it. How to multiply it.

Now, we have a new development in the financial world, and depending on who you talk to, the jury is still out on if cryptocurrency will be a total bust or the biggest thing to hit the financial world since gold. I’ve been studying cryptocurrency more lately. While some form of digital currency has been around in various forms for over 20 years, the latest iteration came into being with Bitcoin in 2008/2009.

As I’ve gotten deeper into bitcoin and cryptocurrencies, I’ve realized that the resources are very scattered and it can be very difficult to make sense of it all. It shouldn’t have surprised since the industry is still so new. As with any new industry, it takes years, even decades for the industry and knowledge to mature. Cryptocurrency is still very much in its infancy and early stage development.

During my learning process, I came across a group of individuals who are launching a cryptocurrency hedge fund. As a financial guy and business entrepreneur/executive, I decided to help them pull some of the details together for their business, which should be launching in the next 90 days. As a result of my efforts, we’re putting together some resources to help explain and simplify cryptocurrency. We’ve coined this explanation and getting started steps “Cryptocurrency 101.”

Cryptocurrency 101

Cryptocurrency History and Foundation

The current iteration of cryptocurrency began in 2009 following the financial upheaval brought about by the banking industry and traditional monetary practices. While modern cryptocurrencies are a more recent innovation in the financial sector, it is important to recognize that historically, the digital and cryptocurrency concept began much earlier in the mid-1990s.

In the mid-1990s, DigiCash was founded by David Chaum. Since that time, multiple other iterations of digital currency models have had their run including egold, prepaid cash cards, and PayPal. All of these prior contributions helped in the development of digital payment systems and commerce finally bringing the latest innovation to market.

In 2008, the Bitcoin paper was released by Satoshi Nakamoto. With the release of the bitcoin, the idea of a decentralized currency was launched. While Bitcoin was the first in this generation hence the reason it is called a “1st generation cryptocurrency”, many others have followed it. They are referred to as “alt coins” or “alternative coins.” With bitcoin being the “1st generation coin”, these alt coins are classified as “2nd generation” and “3rd generation” cryptocurrencies. Currently, there are over 1,500 cryptocurrencies.

More on the foundation of crypto currencies…

The Market Problem and Innovation

Technologists and entrepreneurs have attempted to bring digital currency to market since the 1990s. The financial problems of 2009, pushed one individual, a.k.a. Satoshi Nakamoto, to publish the Bitcoin papers.

Problem #1 Centralized Banking

The centralized banking and currency system which governs the finances of most countries had nearly collapsed. Engineered inflation and debt by the financial powers in the global economy had nearly brought the world to a devastating financial impasse. In the end, it was the people’s tax money that bailed out the banking and financial sector from their failures.

Problem #2 Trust Based Slow Transactions

In addition to widespread financial mis-management by the banking sector, the financial industry had yet to undergo any of the major innovation that other industries had experienced from technology. This is best seen in the clearing process for transactions.

Payment processing for small transactions could take days to clear while larger business or international transactions could take weeks. It is time for innovation in the financial sector. Discrepancies among the transactions required manual processing to clear up, and a certain amount of loss is acceptable as part of the process. The result is a banking industry charges $1.7 Trillion per year in transaction fees just to move money around the world while collecting interest on the money during the hold and transition times.

Both of these market problems are addressed with the cryptocurrency innovation. First, a decentralized network of computers handles the management of the currency, who owns it and which transactions are taking place. This removes the need to use the banking industry as a “clearing house” to track ownership of funds. Peer to peer transactions without the need of a “middle man.”

Secondly depending on the currency, transactions take place in a matter of seconds rather than hours, days or weeks with the current banking system. Near instantaneous transactions is the goal. It should be recognized that the crypto currency technology is still in its infancy and developing. As more users and transaction load are applied to specific cryptocurrencies, like Bitcoin, the limitations of the technology are shown. Hence the need for more advanced “alt coins” technology. Bitcoin is a 1st generation cryptocurrency. Ethereum, Litecoin and others are second generation currencies, and as a result, address some of the design flaws of bitcoin including transaction speed.

Virtually every industry has seen innovation changes from the technology age.

Communications innovations like email, text, and video conferencing.
Retail with ecommerce and Amazon.
Marketing industry with the advent of search engines, Google and Facebook.
Music with Napster followed by Pandora, Spotify, and iTunes.
Entertainment and video with online streaming.
Travel industry with Expedia, Travelocity, Priceline, etc.
Hotel and Vacation lodging with, AirBNB, VRBO, and
Transportation with Uber and Lyft.

Each of these industries underwent extreme innovation makeovers. It is now the banking and financial industries time to undergo the same type and level of innovation. While we have not seen the final developments in the cryptocurrency space, there is one thing that most experts agree on…cryptocurrency is here to stay.

The Cryptocurrency Market

As of late, Bitcoin has dominated the industry and news, but other coins are now rising up to fill their place in the cryptocurrency space. Since Bitcoin, over 1,500 crypto currencies have been created and are in different stages of maturity.

Bitcoin has seen substantial growth in value since it’s inception in 2009. The last several years have seen it increase in value causing many to classify it as a new asset class. With its increase in value and growing adoption as a medium of exchange, Bitcoin has paved the way for the new wave of alt coins and their growing valuations.

Bitcoin Annual Valuations per Coin
December 31, 2017 – $12,622
December 31, 2016 – $967
December 31, 2015 – $429
December 31, 2014 – $317

2017 was a monster year for crypto currency growth and valuations. Bitcoin’s value grew over 1,000%, while Ethereum experienced nearly 10,000% growth and Litecoin saw almost 5,000% growth. Other cryptocurrencies experienced significant growth as well.

Bitcoin has come to be called “digital gold” by many people as it has become the primary medium of value and exchange in the cryptocurrency space. Much like gold was a primary medium of exchange for transactions over the last 3,000 years. Ethereum has taken on the title of “digital silver” as it has been the second most valuable cryptocurrency for an extended period of time. Both of these currencies are considered “trusted” and as such are the primary methods for obtaining other cryptocurrencies for speculative investors.

Many investors are familiar with “IPOs” or “Initial Public Offerings.” However, investors are not as familiar with “ICOs” or “Initial Coin Offerings.” Initial Coin Offerings companies to raise funds for their projects without all the regulation of an IPO. It also allows investors to get in early on a new development project. The speed and fervor surrounding these ICOs is very reminiscent of the .com days from 1998 to 2002. This comparison has caused many financial minds to call Bitcoin and the cryptocurrency space a “bubble”, while other entrepreneurs disagree with the comparison instead saying that we are witnessing the birth of something new in the financial sector the potential of which we do not yet fully understand. In any case, there will continue to be development in the cryptocurrency space and its full effects on the financial and commerce markets are yet to be fully seen or understood.

Many exchanges have been created as the space has expanded including,,,,,,, and more.

For a list of exchanges, visit

Getting Started with Cryptocurrency

To get started with cryptocurrency you have to decide which type of user you are: 1) Investor, 2) Miner, or 3) User. Let’s review.

Investors – want to benefit from the newly developing cryptocurrency space by making money through investing in the projects. This can be done through the ICO, trading for coins on one of the exchanges or investing through a cryptocurrency fund and letting someone else do the investing for you. The investing types could be classified as “Do It Yourself” or “Someone Do It for You.”

Miners – many of the cryptocurrencies allow “mining.” Mining is when people use their computers to expand the cryptocurrencies network. The specific cryptocurrency mined rewards the miner with coins for helping the network expand to serve the users.

Users – As adoption continues to grow in the merchant community, users continue to shop and buy things at a greater rate with bitcoin. In fact, there are some things online now that you can only buy with bitcoin. ATMs are also being put in across the world. They are more common today in Europe than America. In 2018, we expect to see larger online merchants and communities being to work cryptocurrency into their systems.

Cryptocurrency Investment Funds

For the average investor, a cryptocurrency investment fund is the way to go. In a speculative and volatile investment like cryptocurrencies, it is important to lower your risk through a good investment strategy. A cryptocurrency investment fund allows you to benefit from a “diversification strategy” by investing in multiple cryptocurrencies.

The fund managers are responsible for staying ahead of the development and growth curve by staying on top of the latest developments in the cryptocurrency markets. With an investment team working full time to analyze the market for the best opportunities, the probabilities of achieving a positive return are increased. However, there are no guaranteed returns on cryptocurrency investing.

Cryptocurrency funds will charge you a “management and growth” fee for their services and responsibilities to grow your funds.

Solo Investing

As cryptocurrency is a newly developing industry, cryptocurrency fund investment options are limited. It has only been in the last 2 years that a more significant number of funds have been created. The majority of investing in cryptocurrency has been done through individual investing. Solo investing can carry more risk especially for the inexperienced investor. Even a seasoned stock market investor can have problems with the highly volatile cryptocurrency space.

To get started solo investing, you will enter the market by purchasing one of the top 2 crypto currencies, BitCoin or Ethereum, through or You will then need to transfer your Bitcoin or Ethereum to one of the exchanges. On the exchange you will trade your cryptocurrency for another cryptocurrency of choice.

The transfer and trading process is a delicate and somewhat “dangerous” in that a typo can cause several irreversible problems.

During the transfer process you could lose your crypto currency if you mistype the deposit address. Cryptocurrency is a “digital asset.” If you lose it, it’s gone. Cryptocurrency is stored in “wallets” or “holding accounts.” As you move your currency to the exchange you are moving your funds from one wallet to another. A typo at this stage means that you sent your funds somewhere else. At that point, your funds will be irretrievable.

Once inside the exchange you will begin the trading process, trading your coins for other coins that you believe will generate growth and a return for you. During the trading process, it is possible to enter a purchase amount that exceeds the current value of the coin you are purchasing. It is like buying something at a premium; you could “overpay.” This possible error is not unique to cryptocurrency, but it is inherent issue with the currency trading systems in general. Be especially careful when doing your own currency trading.

Crypto Mining

Cryptocurrency mining is the backbone of many of the cryptocurrencies. It is viable way for the newly launched coin based businesses and projects to get access to the infrastructure they need to expand without spending their precious capital. It is also a great way for the community and supporters to get involved with the project.

Crypto mining began on a smaller scale with bitcoin and hobbyists, but has now grown to include major enterprise operations. “Mining Rigs” as they are called, range from relatively low cost home computers to computers design specifically for mining costing $2,500 to $15,000. Mining operations are generally located in homes, offices, basements, or warehouses filled with tens to thousands of these specifically designed computers. Miners are paid “rewards” for their mining services which are either Bitcoin payments or payment in the coin they are mining.

Solo mining vs. Pool Mining

As mining has grown it has been more difficult for entry level miners to keep up. In the earlier days of Bitcoin, Ethereum, and other coins, solo mining was possible. As the difficulty of the mining as increased with the size of the network, pool mining surfaced. Pool mining allows an individual to join a group of miners where they can work as one group to continue solving the mining algorithms. Each new miner increase the power of the mining pool. Pooled miners share in the rewards by being issued “shares” of the mining reward. For the more difficult mining operations, this is the only way to get in.

For newer coins, it is still possible to do solo mining and obtain rewards in the coin you are mining. However, the risk is that the coin mined may not be successful long term which means it has little or no value during the time of the mining. However, if it does turn out to be successful, the miner would be able to sell his coins for a nice profit since he obtained a significant amount of them at a relatively low cost.

Cryptocurrency mining resources are available online.

Last Thoughts

Now back to the title of this post, “Cryptocurrency. Real Deal or Not.” Personally, I believe cryptocurrency is here to stay. In 10 years, cryptocurrency may not look like it does today, but we will likely look back in hindsight and say it was the biggest innovation in the financial world of the last 100 years (or longer).


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