Welcome to the first work day of 2020. This should be a great year for each of you, along with various companies in the crypto industry.
One of the trends that should gain a lot of steam this year is “earning Bitcoin.” The general premise is that an individual can obtain Bitcoin by either purchasing it or earning it. The last few years have been focused on empowering people to purchase the digital currency, which can be seen in the build out of various forms of infrastructure, including exchanges (regulated, unregulated, centralized, or decentralized), OTC desks, and other liquidity providers.
The increased ability for people to purchase Bitcoin is important, but it creates a selection bias for the types of individuals who are willing to move a percentage of their wealth into the new asset. It requires someone to take fiat currency and trade it in for the digital currency. These individuals tend to be more finance focused — they have a basic understanding of money, markets, portfolios, investments, and/or assets. This understanding is what drove them to look at Bitcoin and ultimately take the plunge.
While the finance focused population is large, the population of individuals who would adopt Bitcoin if they simply earned it is much larger. These are people who are less likely to exchange their fiat currency into digital currency, either because they don’t have a lot of fiat currency to risk or they don’t have the basic understandings (or interest) in the nuances of finance related topics. The “earn Bitcoin” crowd is likely to become interested in the digital currency because it is additive income for them, rather than a requirement to lose fiat liquidity in order to gain Bitcoin.
Here are some of my favorite examples of how people will begin earning Bitcoin in 2020:
Commerce Rewards — Most people purchase goods and services on the internet. By using services like Fold App or Lolli, you can earn “Bitcoin back” on each purchase. This mechanism works identical to the cash back services that you are used to, except you are receiving Bitcoin rather than fiat currency.
Cash Back Credit Cards — Speaking of cash back, companies like BlockFi (I’m an investor) have announced their intentions to launch a credit card that pays the loyalty points / cash back rewards in Bitcoin, rather than dollars, points, or airline miles.
Mining — The ability for someone to turn their electricity into Bitcoin has become more and more popular recently. Companies like Coinmine (I’m an investor) have made it dead simple to plug in a piece of hardware in five minutes or less and begin mining. This “passive” income stream is not going to change most people’s lives today, but over time the hardware and software systems will improve to the point that it will become a no-brainer for everyone to have a mining device in their home.
Interest Accounts — One of the big knocks against Bitcoin or other digital currencies is that they provide no cash flow. Numerous companies have built interest accounts that allow an individual to deposit their Bitcoin and then earn monthly interest payments on that deposit. There is a trade-off between keeping custody of your private keys and earning the interest, so there is obviously risk introduced, but the interest rates can be quite attractive (BlockFi offers 6.2% APY as of this writing) so many people are electing to participate.
Bitcoin salaries — Most people get paid by their employers in the national currency that is created by the country that they live in. This is unlikely to change any time soon, but there is an increasing amount of people that work for crypto companies that are choosing to take their salaries (or part of their salaries) in Bitcoin or other digital asset. I am anticipating that people will start companies focused on helping organizations run their payroll with Bitcoin as the currency of choice, but that may take some time to gain adoption with non-crypto companies.
This list is not meant to be exhaustive, but it should give you a good idea about the various ways that people can earn Bitcoin today. This idea should become more prevalent throughout 2020. One reason is that people want to acquire more Bitcoin and don’t want to exchange fiat currency to do it. Another reason is that earning Bitcoin can reduce the KYC/AML requirements attached to that Bitcoin — this will become a very popular reason among the privacy-focused crowd.
Regardless of the reason for earning Bitcoin, there has been a lot of work over the last two years to build out companies that can help facilitate the earning of Bitcoin for those without a technical background. Any time you can empower people to earn additional income, especially if they are anywhere in the world, you are likely to gain traction as word spreads and people become more educated on how it works.
At various points throughout this year, I will have people from around the world write guests posts in this letter so we can see how people are earning (and spending) Bitcoin in real world scenarios. There is a lot of work that is underway across the industry, but the idea of pushing Bitcoin adoption via methods of earning is one of the most exciting trends in my opinion.
I hope 2020 is off to a fast start for each of you. It is great to be back writing, so please respond to this email if there is ever anything I can do to help you.
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Peter Schiff is the Chief Economist and Global Strategist at Euro Pacific Capital. He has been a large detractor of Bitcoin and a big proponent of gold over the years. I wanted to record this conversation because it gave me a chance to hear Peter’s point of view, while sharing some additional context that I thought could sway his opinion. I had a lot of fun recording this one, so hope you take a listen.
In this conversation, Peter and I discuss:
The history of money
The macro economy
The current signs of an impending crisis
Why he's so bullish on gold
What his concerns around Bitcoin are
Peter confirms that Bitcoin is scarce, and that it can't be censored or seized
I really enjoyed this conversation with Peter. Hopefully you enjoy it too.
Interested in crypto research? Look no further. The premier research firm in the space, Delphi Digital, has two subscription offerings for individuals and institutions alike. Take a look at their Bitcoin and Ethereum reports to get a taste of their analysis. [Click here]
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Nothing in this email is intended to serve as financial advice. Do your own research.