Meet Bob and Cindy

In my last post I talked about money. TL;DR = money is just a ledger. At the present moment and for about 100 years prior, the ledger becomes longer and bigger when entries are created out of thin air when bankers make loans.

The problem here is that the money "supply" has to increase constantly. When the supply of something goes up, its value goes down. Of course, demand also plays a part and there is a near infinite demand for money. So actually the current system works mathematically as long as the demand approaches infinity.

But do you really want the demand for money to increase to infinity or damn near it? Is that the world we want to live in? Is this a natural, desirable, or sustainable state of affairs? (Of course that's rhetorical, and the answers are obviously no, no, no, no and no.)

Demand is actually the easier side of the equation in terms of our control over it. And if the desired commodity is simply an entry in a ledger, as is money, what good does that do? What wealth is created? When you think about it -- I mean, when you really go balls deep into that line of thought and hammer at it for a while -- the demand is not for money; the demand is for whatever money will buy.

For some people the demand is security.

For others it is comfort.

For others it is "luxury," whatever the hell that is. I'm perfectly cool with a finely crafted thing, whether made by some worker in a factory owned by Gucci or by my grandmother. But I digress...

For others it is respect, power, love...

For others it is travel, entertainment, adventure...

Etc.

We all want various measures of the above and more. Those are the things we want. The only reason we think we want money is that money supposedly verifies that we are entitled to those things.

That having been made clear, let me explain why cryptocurrencies are better than the insane Monopoly bank money system of the past 100 years.

Meet Bob and Cindy

Bob

somewhat established, mid-30s
owns a business
makes a "respectable" amount of money
lives a semi-extravagant lifestyle

Cindy

recently graduated, mid-20s, paying back student loans
works in a service job
makes jack shit
lives simply, frugal, tries to save

Bob

runs Bob's Whacky Widget Co. He sells the wildest, most wonderful wacky widgets in the world. He sells them mainly at WalMart or wherever. Bob has an overseas business partner, Mr. Wu who manufactures the wacky widgets.

When Bob pays Mr. Wu, he has a few options:

Initiate a wire transfer at his bank, incurring charges of 1.5-2 percent and waiting several days for the transaction to clear on both sides
Whip out his Amex Black card, incurring a charge of 2 percent+ on Mr. Wu's side but clearing the money to Mr. Wu's account within a matter of hours.
Send Bitcoin, Litecoin, Dash, Ether or some other crypto, incurring a charge of .1 percent or less and clearing the money to Mr. Wu in a matter of minutes or hours at most for a very large transaction.

If Bob chooses Option 1., he's an idiot. Who does things that way? Why write a check for $25,000 to Jamie Dimon for the privilege of transferring your own money?

Ditto Option 2.

But with Option 3., both Bob and Mr. Wu come out ahead for reasons beyond the transaction cost.

You see, Bob bought those 100 Bitcoins for only $200,000 six months ago, but they're worth $750,000 today so he's getting a discount. And Mr. Wu is getting an asset that, due to its limited supply, will only appreciate.

At this point, economists will protest, "But that's the problem! Bob will never spend those Bitcoins because they'll be worth more next week!"

To which I can only say, "Why not?" He's getting a discount. Besides, he doesn't know beyond the shadow of a doubt that they'll be worth more next week. He needs the wacky widgets either way, and Mr. Wu can produce them. Why not get them at a discount? WalMart is going to pay him in Bitcoin or something like it anyway.

Economists are such dumbshits. Don't listen to them, like, ever. They apply linear equations to the highly fractal world of human behavior.

Anyway, for that and other reasons, the Bobs and Mr. Wus of the world will naturally migrate away from Monopoly bank money and toward crypto. It's just a better medium for the type of transaction they need to perform.

Now let me tell you about Cindy

Cindy's making $10/hr at Starcucks. It's the lot of her generation. They kind of lost the ROI lottery when it comes to education/earnings.

She's a smart cookie though. She's going to make a fine wife to some lucky man. She has squirreled away $800. A savings account won't do her much good, and she knows it. A broker will laugh her out of the office. A Bitcoin wallet will say, "Sure, honey, I'll watch over your hard-earned wealth and won't charge you for the privilege." If, Goddess forbid, Cindy ever needs that money, a banker will charge her for withdrawing it. A broker will make her wait and charge her. A Bitcoin wallet will say, "Sure, darling, take all you need. I'll be here when you want to replenish me again."

For this reason, Cindy will naturally come to adopt crypto. It's just a better form of money for her needs.

Epilogue

I have not mentioned my good friend Towada in Nigeria who lives in a remote village far from the nearest bank or my lawn guy, Raul, whose mother in Nicaragua just got a smartphone. They too will benefit from crypto, as will Jamie Dimon once his advisors manage to extract his inflated head from his constricted rectum. Suffice to say, this technology will supplant Monopoly bank money just as surely as the telegraph replaced the carrier pigeon and email replaced the fax machine.

Bob's and Cindy's grandchildren may live in a Star Trek-type of world where money is a quaint anachronism, but Bob and Cindy will be forging the path toward that potentiality as they naturally adopt the superior form of money that is cryptocurrency.

Next up: What the f&#* is the blockchain, anyway?