While contemplating how to measure our progress in crypto, it was exciting to realize how much value we have accumulated. Our holdings are on different blockchains. Together, they add up to an amount we have never had in savings in our lifetimes. What is particularly exciting is that the upcoming bull run might very well double our holdings.
But, then the sad realization hit like cold water. At the moment, our crypto holdings amount to less than one year of income. We barely have maybe 6 months of income.
While this is a good amount of savings which is producing some income, it is far from what we could rely on for our livelihood. Mrs. TWM and I are squarely in the middle of middle income for the United States.
Fortunately, the coming bull run, and then the next bull cycle in four years, might see our savings double a couple more times. At that point, we may have two or more years of income saved, not accounting additional contributions and earnings such as Hive.
The Danger of Inflation
Most of us understand that inflation is the silent thief that takes away your wealth. Some of us know inflation from theory. Others know inflation thanks to the actions of government.
The risk that we face from inflation, in regards to crypto, is not the devaluation of crypto. Rather, it is the hypervaluation of crypto. As money devalues, the price of crypto goes up. But, it only goes up in number, not in actual value.
This is the danger, that it makes planning difficult because today's money will be worth more than tomorrow's money. Therefore, if our crypto doubles in fiat value, it doesn't necessarily mean that we have twice the savings.
This makes measuring milestones difficult. The numbers will not reflect the same value. It's like the number 1 meaning a single unit today, 5 units tomorrow, and then 3 units another day. It makes much of the math meaningless.
For now, we benefit from earning in USD, which is a strong currency relative to other global currencies. There is no telling how long this will last as Bitcoin slowly usurps the status of reserve currency.
Two things would threaten the USD hegemony on global markets. The first is the petro dollar. If oil starts to be priced in Bitcoin rather than dollars, that would be the start of the end. We won't see that for some time as there isn't enough liquidity in BTC. Saudi Aramco alone has a market cap of about $2 Trillion with revenues of about $230 Billion. This doesn't include Russian oil, US oil, Venezuelan oil, Mexican oil, and any other producer. Bitcoin is still too small to absorb that much commerce. Never mind the other cryptos that are better suited to work as currencies, such as XLM or XRP. The market caps are still too small for a beast like the oil market.
The other thing that would kill the dollar is if contracts start to become denominated in crypto rather than currency. Much of the global trouble is the result of contracts being denominated in dollars despite a lack of dollars. Stablecoins seem to be filling this void nicely, which is why governments are nervous about them. If you can collateralize a stablecoin with anything other than real dollars, then you don't need real dollars. Thus, there is no more control of SWIFT, no sanctions, no banks reporting on your transactions, and no dependence on the United States to issue dollars.
If you think of it, stablecoins are a better dollar than the USD. The reason is that the Federal Reserve issues dollars, which are backed by debt or nothing at all. Stablecoins, on the other hand, issue dollars backed by collateral that can be liquidated. Stablecoins are also easily converted without a financial institution as an intermediary.
But, what happens when the dollar peg forces stablecoins to be worth less and less?
I don't have an answer for that.
Sense of Urgency
Crypto still has a short while to go before becoming mainstream. We have a slight sense of urgency to accumulate as much crypto as possible before the masses come in. We should like to save up to the major milestone of 1 year of our income. From then on, our progress can use that as a baseline. We should like to measure our wealth in terms of how many years of income we have saved. Hopefully the numbers will still be meaningful in the coming years.
This also brings to light how uncommitted we are to Hive. In terms of milestones, having 10K HIVE has been the goal. But, it appears that in terms of real savings, 10K HIVE is not significant. At today's price, that's a little over $8,000. That's barely 10% of our annual income.
If we are serious about Hive forming a meaningful source of income for retirement, we need many times more Hive Power than the 10K Hive milestone. We have been underinvesting this whole time. We have been too timid. Realizations like this are good reason for setting milestones by which to measure your progress.
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