If you have been paying attention to financial news over the past few years, you have undoubtedly noticed the meteoric rise of cryptocurrencies such as bitcoin. For a time, cryptocurrencies seemed to represent a change in financial markets, with some analysts predicting that they would overtake traditional currencies as the modern default store of market value. But 2018 has been a devastating year for these types of currencies, as all have seen precipitous drops in market value. Bitcoin itself is down 70 percent since its December high, and other heavy hitters, such as Ethereum and Ripple, have seen similar drops. In contrast, purveyors of traditional stores of physical assets, like U.S. Money Reserve, an industry leader in precious metals, have seen their offerings continue to perform well. Read on for a deeper dive into the turbulent waters of cryptocurrencies and the solution to this challenge that precious metals present.
One thing that stands out when examining a company like U.S. Money Reserve is its stability, a trait that is sorely lacking in cryptocurrency markets. The company benefits from a solid foundation of leadership as the only gold company headed by a former director of the U.S. Mint, Philip N. Diehl.
Diehl has made a career out of his understanding of the intersection of public policy and financial freedom. This unique set of insights has a top-down effect at U.S. Money Reserve, with account executives and other staff deeply focused on knowledge accumulation and customer service. Such a high degree of / has earned the company numerous third-party accolades, including a coveted AAA rating from the Business Consumer Alliance.
In contrast to the stability and customer service U.S. Money Reserve offers, cryptocurrencies have been plagued by a number of untrustworthy players. An initial coin offering (ICO) has been the typical method by which a new coin gains funding to develop business endeavors. However, far too many ICOs turned out to be fraudulent as the hunger for the “next bitcoin” overtook the rational analysis that often accompanies buying decisions.
Ponzi schemes, account hacks, and other scams have become common occurrences in cryptocurrency markets across the globe. According to cryptocurrency news site BitcoinNews.com, experts estimate that about $9 million per day is lost to scams in cryptocurrency markets. That number, which amounts to about $3.25 billion per year, underscores the inherent difficulty regulators face as they attempt to ensure the fairness and openness of cryptocurrency trading.
Usage and Rise
The surge in cryptocurrency mania over the past year or two has seemed like a runaway train at times. However, this enthusiasm came about because of some interesting aspects and redeeming factors of the technology. This steady increase in interest is evident in the year-over-year rise in ICOs. In 2017, industry analysts pegged the total market value of ICOs at around $4 billion. In 2018, that number has already tripled. With this level of interest in the technology and the markets in general, curiosity about the actual use of such cryptocurrencies is certainly justified.
In general, cryptocurrencies are based on something called blockchain technology, which uses a public digital record to keep track of transactions related to the blockchain, such as the trade of currency. This technology is also a useful way to handle recordkeeping, supply chain management, and anything else that might benefit from a higher degree of decentralization.
Many notable business and finance personalities have praised blockchain technology and cryptocurrencies. Chinese President Xi Jinping, for example, called the technology a “breakthrough,” although he has cracked down on bitcoin trading and cryptocurrency websites. Many have even incorporated the technology into their businesses, as is the case with British billionaire Richard Branson. As an early adopter, Branson contributed around $30 million to help fund BitPay, a bitcoin payment processor. Virgin Galactic, the space-faring arm of his vast empire, has also begun accepting bitcoin as payment for travel outside Planet Earth.
Another staunch supporter of cryptocurrencies is the noted venture capitalist Chamath Palihapitiya, who served as an early executive at Facebook. Palihapitiya bought into the currency when it was valued at a mere $100 per coin. He has since predicted that the currency will eventually reach $1 million in valuation.
Critics of the Technology
Along with the proponents of cryptocurrencies, the technology also has many critics. One outspoken critic of the technology is Microsoft founder Bill Gates. When questioned on ICOs, Gates reportedly singled them out as an example of “a greater fool theory.” So deep is his dislike for cryptocurrencies that when he received a bitcoin as a birthday present, he immediately sold it.
Another noted financial mind who has expressed his negative feelings toward cryptocurrencies is billionaire buyer Warren Buffett. His commentary on the trend has at times been downright insulting of those who have bought into the craze, stating that those who buy cryptocurrencies are succumbing to bewilderment rather than sound judgment. His characterization of bitcoin as “rat poison squared” made waves at the Berkshire Hathaway 2018 annual shareholder meeting.
Traditional Stores of Physical Assets
In the face of the devaluation, rampant scams, and outspoken criticism of modern cryptocurrencies, it is unsurprising that many are ditching the technology in favor of more traditional currencies, such as gold and silver coins. U.S. Money Reserve, which has long served its customers by providing high-quality precious metals and coins from the U.S. Mint, has become known for its ability to help customers navigate these buying decisions. Offerings of precious metals—which have a variety of uses beyond currency, such as in electronics, printing, medicine, manufacturing, and photography—have remained stable or accumulated in market value.
Part of the stability of gold and silver coins is because of their storied uses in human culture. Even ancient civilizations used the metals to trade and store wealth. Ancient peoples even used them for adornment, tableware, and food storage. This stability has continued into modern times and has benefited from people’s faith in government. Buyers can purchase government-issued coins with an understanding that a larger entity is actively working to maintain the coins’ market value.
While cryptocurrencies have made waves in recent years due to a mix of technological possibility, rapid increases in valuation, and buzz from industry insiders, they still represent a fledgling and largely untested market. Recent coin crashes have shone a light on just how precarious the market value of these coins can be. With these vulnerabilities now laid bare, many buyers are shying from investing their hard-earned money in cryptocurrencies. Instead, they are opting for more traditional stores of market value, such as precious metals and government-issued coins.
U.S. Money Reserve has long provided customers with the ability to purchase these assets from a team that is fully equipped to answer whatever questions they may have. For those wary of the current volatility of the cryptocurrency market, assets in gold or silver coins can provide a welcome alternative.