The word crypto comes from the Greek word kruptos meaning “hidden.” When used to describe cryptocurrency the term is somewhat inaccurate, because for something to be hidden it must first exist.

In many ways, cryptocurrencies, or as I prefer to call them “cyber-cryptos,” are similar to the legal tender fiat currency they claim to remedy, in that they only exist as a blip on a computer generated ledger. It matters little if it’s the US dollar, the AU dollar or the Yen, only a fraction of the “money” we are told is in circulation, actually exists in tangible paper or coin, therefore the majority of circulating fiat legal tender currency is totally non-existent, just like crypto currency.

To be clear, the Bitcoin is a non-existent coin. You can’t put an Ethereum in your pocket, nor will you ever find a Factom in your leather wallet and you can’t save MaidSafe or Ripple in a jar, because these currencies are not tangible, are void of intrinsic value, and don't physically exist in the real world.

They only exist in cyberspace and in your imagination, similar to the issuance of credit via legal tender fiat currency.

History has shown how legal tender currencies collapse due to loss of confidence in the issuing authority or via hyperinflation, and in more modern times how they can intermittently “vanish” due to computer malfunctions or power blackouts. The same is the lot of all crypto currencies. No computer - no crypto currency. No electricity - no crypto currency. In contrast, tangible currency needs no computer or electricity supply to sustain its life.

There are 162 different legal tender fiat currencies in the world today, and the majority of those units exists only as a “blip” on a screen. In comparison, CoinMarketCap lists 22,932 active crypto currencies on the market and ¹ similarly, their existence is no more than a blip on a screen. Any crypto or fiatfiat currencies will come and go. Many have already. Not so with tangible gold and silver as currency. These have offered function and stability for 6,000 years. The difference is that these metals have intrinsic value as well as utility value and existed before the invention of crypto currency in the 80’s, served as “money” before the birth of legal tender coinage in 600BCE, and will continue to exist and function well after the demise of the last standing crypto.

We know how much gold and silver exists above the ground worldwide today and at what parts per million it is found in the earth’s crust. Nothing hidden there, so unless we discover that Mars has huge gold reserves or that Atlantis has been found beneath the Mediterranean Sea and is made of solid silver, there will not be any radical shifts in global bullion volume. Neither can we expect to see “22,000 inventors” making new test tube gold in a lab to flood the market like we are seeing with cryptos; just the same old mining of tangible metal that has taken place for millennia. Interestingly, this is the ultimate check on inflation, as governments can’t print gold into existence as they do with “credit”, which ultimately diminishes the value of the “money” we have in our possession.

So, as a currency and medium of exchange, with no intrinsic value or tangibility, in my estimation cryptos fail to impress, but as a speculative investment? That’s a different story. So now our focus shifts to the real reason why a significant section of the public scramble for cryptos, and that is: the hope that it’s the “get rich quick” saviour many have been waiting for.

For the majority who buy cryptos, its clearly an optimistic gamble rather than a strategic investment, in the same vein as the frenzied buying of the tech bubble stocks, pyramid schemes, and the ever recurring Ponzi investments, and yes, some will make a fortune, and some will even lose their house! In June 2023 it was estimated that as many as 2,500 cryptos have failed so far² and yet no doubt many who held those cryptos were convinced they had done their research and were backing a winner.

When a crypto collapses and vanishes into the cyberspace abyss, it leaves no trace. Well, that’s not quite true. You can always find the misery stories, because when the value of the crypto goes to 0%, holders of the crypto not only lose any money they spent buying their preferred non- existent crypto, but because cryptos possess no intrinsic value, the accumulated “capital growth” they thought was their asset, also vanishes. Everyone knows before they get involved in their favourite crypto that the “currency” is non-existent, yet they “cash up and step up” to take their share of the invisible vapour. It’s a bit silly when you think about it.

With so many new crypto’s on the market, and no doubt thousands more to come, from a speculative investment point of view, people can only hope that they are backing the right horse in the crypto race because when the race is over, for many, there won’t be a horse in their stable, or even a stable, or a jockey, nor a pile of manure for the garden. Just a bookie with the latest crypto looking for fresh punters wanting to switch their fiat currency into one of the latest hidden crypto alternatives.

To disparage a concept in the absence of replacement remedy is somewhat frustrating, so I find comfort in a principle for such remedy that can be found in Australia’s history. The Commonwealth Bank of Australia printed its first one pound note in 1913 with the promise of exchange for gold coin written on the note . That coin was the gold sovereign . 1917 was the last year the ^{3 4} promise to exchange gold coin appeared on this Australian one pound note and even though Australia ceased production of the gold Sovereign in 1931, this tangible coin didn't vanish or go to zero value. To the contrary, it gained in value. That’s because it was minted from the intrinsic asset of gold which needs no fiat endorsement or statutory backing. A Sovereign at that time was valued at One Pound, or AUD2.00. Today the gold content of that Sovereign is worth AUD677. That’s 33,000% growth in purchasing power so far, so ⁵ maybe there is a lesson here as to where real value is to be found.

Well… if you hold a crypto currency and are now reconsidering your position, maybe you could go out and buy an American Silver Dollar coin with your ⁶ Cyberbucks issued by DigiCash ….Oh thats right, that crypto closed its ^{7 8} doors in 1998, 10 years before Bitcoin opened theirs, and the silver content in the American Silver Dollar has now increased by 1,755% since the US Silver ⁹ dollar ceased minting!

As a speculative investment, crypto’s are up there with the best of them, but in the current economy and with the political, military and social uncertainties on the world stage, I’m not convinced that now is the time for anything but asset protection and prudent investment strategy.

After you have done your research, acquiring the correct form of gold and silver is something that might be worth considering, as these unique privately held assets have not only been faithful in antiquity, but continue to be trusted in our modern world.

Graham Daniels
graham@danel.ch
www.danel.ch
June, 2023