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Editor’s Note: For months, a clandestine group of developers has been working on a new digital currency for Facebook. According to media reports, the company siloes off its secretive team in an office requiring completely different key-card access so other employees can’t even enter it.

Obviously, the country’s largest social media platform launching a digital coin is big news for the entire space. So I reached out to world-renowned cryptocurrency expert Teeka Tiwari to see what it all means.

Teeka was in between conferences in Hong Kong and Singapore—looking for new profitable opportunities—when I reached out to him. But he took the time to talk about Facebook Coin and answer a few other questions…

Editor: Thanks for joining us today, Teeka. We have a lot to get to.

But before we talk about Facebook’s new coin, we’re still getting a lot of questions from readers about the recent hack of your crypto accounts. Can you take a few of them?

Teeka: Sure… And I want to thank everyone for their well wishes and kind support. It’s been very helpful. I’ve cleaned up a lot of the hack’s mess so far, which is great.

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Editor: Glad to hear that.

So one reader asked how he can create a secure recovery email address without tying it to his primary phone number…

Teeka: Well, most banks and crypto exchanges will want you to provide a phone number for you to authenticate your account. It’s called two-factor authentication, or 2FA.

And if you want your 2FA to be really secure, you need a second phone number that’s not attached to you in any way, shape, or form.

That means your name won’t be linked to that number. Essentially, it’s an anonymous number. So you can link your recovery email to this secondary number for authenticating your accounts.

This way, if you lose your primary phone—or if it gets hacked the way mine did—no one can reset your passwords using your primary number.

It’s cumbersome, ponderous, and… to be frank… just a big, old pain in the rear. But unfortunately—and certainly for somebody in my position—it’s just something I have to do for my own security.

I can’t tell you what a hassle it’s been having to change everything: my phone number, plus all my accounts, emails, and passwords… I even had to put a freeze on all my credit reports.

So it’s a lot of work and very inconvenient. But it’s really the best solution I’ve found. If I’m going to use 2FA, it has to be on a completely separate phone with a number that nobody knows belongs to me.

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Editor: That’s great advice, Teeka.

Okay, here’s a question about exchanges: You recommend that people keep their cryptocurrencies off exchanges. But what about the times when they have no choice but to keep their crypto on an exchange?

Teeka: That’s a good question. The majority of the time, we recommend you store your crypto in a secure wallet in which you control your private keys. That’s the safest way to protect your crypto funds.

But sometimes, you’ll need to keep your crypto on an exchange. For instance, there may be a swap or a fork requiring you to convert or receive new tokens. In those cases, you may need to let the exchange handle the conversions for you.

And on some rare occasions, a token may not have a wallet available yet. So in that case, you’d have to keep the coin on an exchange until a wallet is available. But that doesn’t happen very often.

However, if those situations do arise, you need to make sure you have 2FA for your account. And again, make sure the phone number and email address for that account are not linked to your primary phone.

I also suggest that you only put as much on the exchange that will allow you to sleep well at night. If you can’t sleep well, then you have too much on the exchange.

And please don’t store your passwords on the internet. If somebody gets ahold of your email accounts, they can then access your crypto accounts.

The first thing the person who hacked my phone did was break into my Evernote and other cloud accounts to hunt for stored passwords.

Editor: Thanks for answering those readers’ questions, Teeka. I’m sure they’ll appreciate it.

Now, let’s move on to the big news… Last month, rumors began circulating again that Facebook would launch its own crypto called Facebook Coin.

What does this mean for the crypto space?

Teeka: Facebook isn’t the only big institution launching its own coin. JPMorgan Chase is coming out with its “JPM Coin,” too.

But let me be clear: These coins aren’t cryptocurrencies. They’re derivatives—ways of moving money across networks. So they’re really not much different from PayPal, Venmo, or Cash App.

But what’s very interesting is that, for much of last year, these two big companies claimed to completely hate crypto.

For a while, Facebook banned crypto ads. But it reversed the ban just before it started working on its own coin. And JPMorgan CEO Jamie Dimon infamously called bitcoin a “fraud.” Yet, his company is now using cryptographic tokens to move money around.

The fact that this technology is getting co-opted by some of the biggest players on Wall Street and in Silicon Valley is very positive for crypto.

In fact, I’ve been saying that 2019 would be the year of Wall Street greed. And my thesis is playing out with these big institutions entering the space…

As more people get exposed to crypto-like assets and functionality, they’ll understand how much more powerful bitcoin and ether are compared to JPM Coin and Facebook Coin.

Now, I know a lot of people are wondering whether JPM Coin or Facebook Coin will kill the rest of the crypto space. But the answer is, of course not… They’re just internal coins. They’ll only make the rest of the crypto space much bigger.

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Editor: How will they do that?

Teeka: The best parallel I can draw is with the internet.

During the internet’s early days, you saw major corporations create their own internal internets, called “intranets.” These were private networks used to disseminate information to employees about projects and customers, for instance.

Well, here we are 20 years later… and nobody uses intranets anymore. They were a complete flop. And the same may happen with these private coins.

At the end of the day, I believe—and my team also believes—that in terms of remittances and distributed applications, public blockchains like bitcoin and Ethereum will be the leaders in the crypto space. That’s where most of the development will take place.

But again, the big players will expose people to crypto…

Facebook has 2.3 billion users it’ll need to educate about crypto coins… how to use them… and how to store them in wallets. And that’ll essentially grow the entire market for—and enable widespread adoption of—true crypto assets like bitcoin and ether.

So Facebook and JPMorgan will expose people to the crypto space, just like intranets exposed people to the public internet.

Editor: And before I let you go, I know you’ve been attending conferences in Hong Kong and Singapore. Have there been any big developments there?

Teeka: Yes… and the key takeaway is that Asia is booming.

The stores in Hong Kong and Singapore are bursting with consumers. I haven’t seen conspicuous consumption like this since New York City in the 1980s.

The other key insight I had is that Southeast Asia—a region of over 600 million consumers—is growing at a breakneck pace.

If I were a young tech entrepreneur, I’d target Southeast Asia. There’s a full-scale tech war going on in the region. The big players are going all-out to capture as much of the market share as they can.

It’s definitely a place we want to get some exposure to. So I’m looking forward to unearthing some ideas we can invest in.

Editor: Can’t wait to hear about them. Thanks again, Teeka.

Teeka: You’re welcome.

By Jeff Clark – the editor of the Delta Report Newsletter

Just about nobody is talking about the rally in bitcoin.

When we looked at the king of the cryptocurrencies last month, we noted the technical pattern of bitcoin looked bullish. The chart was breaking out to the upside of a consolidating triangle pattern. And, we figured bitcoin could be trading back near its December high of about $4,200 within just a few weeks.

Well, here we are, just four weeks later, and bitcoin is trading above $4,000. It’s up 12% over the past month. That’s far better than the 2% gain in the S&P 500 over the same time frame.

But, while everybody is talking about the bullish action in the stock market, the move in bitcoin is being overlooked.

That makes me think there’s a lot more room for bitcoin to rally. And the technical picture backs up that thought.

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Here’s an updated look at the NYSE Bitcoin Index ($NYXBT) – which tracks the action in the cryptocurrency…

Notice how bitcoin is now trading above all of its various moving averages (the squiggly red, green, and blue lines on the chart). That’s the first sign of bullish price action we’ve seen since last July.

But, unlike last July, when the rally quickly reversed, and bitcoin headed lower, the technical indicators at the bottom of the chart are nowhere near overbought conditions. In fact, they’re all in neutral territory. This tells us there’s still plenty of energy available to fuel higher prices.

Given this setup, bitcoin shouldn’t have any trouble rallying above the first red resistance line at about $4,200. The November high of $4,400 is the next logical resistance level.

But, if bitcoin can get above $4,400, then there’s not any resistance until way up near $5,500.

That’s the sort of move that will get folks talking about bitcoin again.

By Nick Rokke, analyst, The Palm Beach Daily

Twitter CEO Jack Dorsey is one of the world’s biggest bitcoin bulls. And he’s putting his money where his mouth is…

Last week, he appeared on the podcast, Tales from the Crypt. In the interview, he said he’s purchasing $10,000 worth of bitcoin every week.

Now, Dorsey’s a billionaire, so $10,000 per week isn’t much for him. But it’s significant because he’s part of a bigger social media movement called “#StackingSats.” (“Sat” is an abbreviation of Satoshi, the smallest unit of bitcoin.)

The movement is encouraging members to build up their crypto holdings during the bear market—which sounds a lot like what we’ve been saying here at PBRG…

As Crypto Income Quarterly chief analyst Greg Wilson wrote in January 2019, “use the current crypto bear market to start a stake today. I’d start with bitcoin.”

And the fact that Dorsey continues to buy bitcoin at this rate during “Crypto Winter” is a strong endorsement of its staying power. But what really piqued our interest is Dorsey’s prescience: He thinks bitcoin will become the “native” currency of the internet.

Here’s why that’s big for crypto investors…

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Born on the Internet

Dorsey is a pioneer in the tech space. He co-founded Twitter in 2006, growing it from an obscure messaging app into one of the world’s largest social media platforms, with over 300 million users (including President Trump).

He’s also the founder and CEO of Square, a financial services and mobile payments company based in San Francisco. Square allows individuals and merchants to accept offline debit and credit cards on their smart devices. It also supports bitcoin trading.

Dorsey helped turn both companies into multibillion-dollar enterprises. So he knows a thing or two about internet technology…

That’s why we’re intrigued by his views on the future of bitcoin:

When you think about the internet as a country, as a market, as a nation… it’s going to have its own currency. And what’s interesting about the internet as a nation—it’s the whole world. So the whole world gets one currency. It gets one thing to communicate in. And that to me is just so freeing, and so exciting.

Dorsey says bitcoin will likely become the currency of choice for internet commerce because it’s the largest, most liquid crypto. Plus, it has first-mover advantage. And it has something that other cryptos don’t—brand recognition…

The brand strength, the brand of bitcoin is really spectacular. It enables more of that resilience. It’s a mainstream, well-known “household” concept. Not everyone really knows what it might be for and may have different perspectives on what it does… but everyone knows that it’s digital currency, digital money, a digital asset.

Admittedly, Dorsey says the adoption of a global internet currency is down the road. But that’s why you want to get in now…

If bitcoin does become the native currency of the internet—as we believe it will—mass adoption will drive its price to new highs.

And as exciting as bitcoin becoming the internet’s native currency sounds, that’s not the major reason we’re all-in on crypto in 2019.

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The Year of Wall Street Greed

When a guy like Dorsey is betting big on crypto, he’s probably onto something. And we think we know what it is: Wall Street’s greed.

Regular readers know that world-renowned cryptocurrency expert Teeka Tiwari believes 2019 will be the year when institutions begin flooding into the crypto market…

The New York Stock Exchange (NYSE) and Nasdaq both plan to launch crypto trading platforms this year. And financial services giant Fidelity had its crypto custody service quietly go live this quarter…

Fidelity Digital Asset Services president Tom Jessop told CNBC last week that there’s long-term interest from institutional investors in adding some form of cryptocurrency to their portfolios.

The firm also interviewed nearly 450 institutions—from wealthy families and hedge funds to pensions and endowments—and about 22% already own crypto. And those that do expect to double their allocations over five years… which will only expand the crypto market further.

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Here’s what Teeka told me in January:

The NYSE and Nasdaq are the two largest stock exchanges in the world, so they bring a wealth of experience and a ton of reputation to the crypto market. They’ll also help expand the pool of available buyers this year by about 15 times.

Compared to about 35 million crypto holders, there are nearly 500 million stock buyers in the world who have never owned crypto. […]

Whenever a tiny market becomes a massive market, prices rise—especially when it comes to a finite instrument like bitcoin.

So we think Dorsey is trying to get ahead of this tidal wave of institutional capital headed into the crypto space. And crypto investors should follow the smart money…

You can do so by buying a small amount of bitcoin. Remember, crypto is volatile, so don’t bet the farm. You just need small stake to make life-changing gains.

Editor’s Note: Last Wednesday, Teeka said “Another bull market will come again [regarding cryptos]. Just like every other crypto bull market in the past, the next move up will make the previous one look like a pimple on an elephant’s behind.”

As you’ll see in today’s article, Teeka isn’t the only analyst who thinks the next crypto bull market will be bigger than the last (where we saw Bitcoin go past $19,000).

Today, you will be hearing from Marco Wutzer, Senior Analyst, Disruptive Profits.

Marco is also an expert when it comes to cryptocurrencies. He first started investing in Bitcoin in 2010 and made his first six-figure profit trade in 2013.

In other words, he’s been doing this for a while.

And just like Teeka, Marco also believes the upcoming crypto bull market will be BIG. Below is his take on why the next crypto bull market will be bigger than the last…

Eight seconds.

That’s how long you have to grab someone’s attention before they mentally drift off to the next thing. That’s one second less than a goldfish.

Thanks to constant interruptions by smartphones and multitasking, our attention spans are getting shorter all the time.

This is also reflected in absurd investor behavior…

Over the last five decades, the average holding period for a stock has steadily declined. It’s fallen from eight years to a mere four months since the 1960s. You can see this in the chart below:

I wouldn’t be surprised if that average is even shorter in the fast-paced, 24/7 crypto market.

Why am I telling you this?

Put simply, if you want to be a successful crypto speculator, you need to take a long-term view.

The Future Takes Time to Build

The internet took 30 years to become mainstream. Blockchain technology is barely 10 years old and has only received serious attention for the last three years or so.

Rewiring the global financial system and the larger economy takes a long time. Still, the Blockchain Ecosystem is developing fast. And it’s spreading like a virus.

Eventually, it will take over all the aspects of our daily lives in which it makes sense to use a trust-minimized system.

You see, nature is trending towards higher orders of complexity.

In short, blockchain technology is peer-to-peer, immutable, and censorship-resistant. This enables us to build a freer, more complex society outside the limitations of nation-states.

Building the future takes time. It’ll be another three to five years or so until cryptocurrencies reach mass adoption.

But luckily, we don’t have to wait for this to fully play out to profit as speculators.

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That’s because markets move in cycles. Each cycle brings in a new wave of cryptocurrency adopters.

I deal with the Blockchain Ecosystem on a daily basis. So it’s easy for me to forget that there are billions of people on this planet that have never even heard of blockchain technology.

I was reminded of this recently at Doug Casey’s estancia in Uruguay. We were having dinner with a cosmopolitan, affluent Uruguayan couple.

She is a lawyer and real estate broker, and he is retired with a background in many business ventures, including being a stockbroker at one time.

In other words, they’re wealthy, educated people who travel the world… not local, isolated farmers.

When Doug asked them what they think about cryptocurrencies, it turned out they had never even heard about Bitcoin.

This goes to show that we still have a very long way to go. Most of the growth is still ahead of us.

Superior Solutions, Growing Awareness

A crypto seed was planted in the Uruguayan couple’s heads that evening.

They might not investigate the topic much further right away… But two more people on the planet are now aware that cryptocurrencies exist and offer superior solutions to many problems.

Think about that for a moment. Variations of this conversation play out thousands of times a day across the globe.

That’s why from 2015 to the end of last year, the number of people who use blockchain wallets grew over 900%.

That means almost 29 million more people use blockchain wallets today than just four years ago.

No matter if we are in a bull or bear market, the crypto meme is spreading and reaching more people.

Even during the current bear market, more people learn about blockchain technology every day. The couple Doug and I talked to in Uruguay is a case in point.

When the market eventually turns bullish again, this recently growing pool of new adopters will be ready to participate in the new world of the Blockchain Ecosystem for the very first time.

That means when the next bull market starts, the network effects will be even stronger than the last time.

Buckle up.

Editor’s note: You have also seen me say that the time to start getting into cryptos is now.

If you haven’t yet, make sure to click here to learn how you can start earning crypto income and learn the right way to buy Bitcoin.

Editor’s Note: Last week, a hacker broke into the accounts of world-renowned cryptocurrency expert Teeka Tiwari. And although Teeka had defenses in place, the hacker was still able to get around them.

In today’s interview, Teeka tells me how he kept his crypto funds safe, despite the hacker’s sophisticated attempts to steal them…

Editor: Teeka, last week, a hacker tried to break into your crypto accounts and steal your funds. Can you tell us what happened?

Teeka Tiwari – Palm Beach Confidential

Teeka: Yes, I was the victim of a hack—and it was a fairly sophisticated one.

Now, this type of hack has happened to friends of mine before… Somebody calls your phone company pretending to be you. Then, they port your phone number to another phone…

Once they do that, they can use the new phone to reset the passwords on any email accounts you have on the old phone. And when they have access to your email accounts, they can reset your crypto account passwords and attack your crypto funds.

With my cell phone service, I have a special code that you must use if you want to make any changes to my phone. But apparently what happened—and this is what my phone company told me—is that somebody called them and impersonated me.

They didn’t have the code, but they had my Social Security number. And I’ve told my company, “Don’t let anybody make any changes unless they have that code.”

But they ignored my request. And since this person had the last four digits of my Social Security number, they were able to port my number.

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Editor: How did they get your Social Security number?

Teeka: Look, there’s no such thing as digital privacy. It’s just a fact of the world we live in today. If someone has $20 worth of Monero [an anonymous digital currency] and a Tor web browser, they can access the dark web and get just about anybody’s Social Security number.

Social Security numbers aren’t safe. They’re not secure. You have to assume your Social Security number is known. And clearly, this person knew mine.

And my phone company didn’t do what I told them to do, so the hacker was able to port my phone number.

Editor: Did they get into any of your crypto accounts?

Teeka: They managed to get into a few of my crypto accounts—but weren’t able to pierce some of the others.

I have two-factor authentication on all my accounts that aren’t directly tied to my phone. And I don’t know yet how they were able to overcome that security feature with some of my accounts. I’m still trying to figure that out.

But the thing is—regardless of how good you think your security is—there will always be somebody who can get around it. So if they do get around your defenses, you want to make sure there’s nothing there for them to take.

Had I kept my coins on exchanges, this would be a very different interview…

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Editor: How so?

Teeka: Even though the hacker was able to get into a few of my crypto accounts, there was nothing there for them to take because I don’t keep my crypto funds on exchanges.

Just recently, some wonderful, hard-working folks—including some subscribers of mine—lost millions of dollars by keeping their crypto funds on the now-defunct Canadian exchange, QuadrigaCX.

When you keep your crypto funds on an exchange, you don’t have full control over them. And you can lose access to them, too.

That’s why you should always self-custody your crypto funds when possible.

Editor: Can you tell readers what you mean by self-custody?

Teeka: The beauty about cryptocurrency is that you can control your digital assets.

Each crypto account comes with a “private key.” Private keys allow you to send and access your crypto holdings. So it’s important you maintain possession of them.

As long as you have custody of your private keys, no one can access your digital assets. So you have to protect them.

Editor: What steps can people take to secure their crypto funds?

Teeka: It bears repeating: Don’t keep your crypto funds on exchanges. Move them to a digital or hardware wallet in which you have control of the private keys.

Also, don’t store your private keys on the internet. Don’t store them in your iCloud, your Evernote, or your Microsoft OneDrive accounts. Those were the first places where this hacker went hunting for my crypto keys.

You can write your passwords and private keys in a physical form and then store the documents in a bank, safety deposit box, or safe in your house. And you can keep another digital copy on an encrypted flash drive.

If you store physical and digital copies offline, then they’re unhackable.

Sure, anybody can go rob a bank and rip open your safety deposit box to get at your documents. But what do you think is more likely to happen? Someone breaking into a bank to get your private keys… or someone hacking into your computer to get them?

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Editor: Are there any other steps we can take?

Teeka: When you set up on online accounts, use an email address that’s not tied to your phone in any way. If you can’t do that, then use a recovery email not tied to your phone.

And if your financial institution or cryptocurrency exchange wants a phone number, then it might be worth getting a second phone—like a prepaid one that isn’t tied to your name. The phone number shouldn’t be listed anywhere. It shouldn’t be linked to you in any way, shape, or form.

This way, you’ll be able to use that phone for your two-factor authentication if you want to. Or if you want to use Google authenticator on that phone, you can use that as a contact number. It should be a phone that’s completely separate from your identity.

Editor: That seems like a lot of work.

Teeka: Yes, it’s a bit of a pain in the neck to custody your own coins. But while it’s not super easy, it’s not rocket science, either.

The alternative to spending just a few extra minutes to make some backup copies of your passwords and keys—and to move your coins off exchanges into your wallet—is getting hacked, having an exchange go out of business, or having somebody in an exchange steal your money.

There’s no FDIC in the crypto game, so your funds aren’t insured like the money in your bank account is. There might be crypto insurance at some point, but not yet—which means you’re on your own. So please take that to heart.

Moving forward, I’m going to be honest with myself and examine the weakness that got exploited. For me, it was having recovery email addresses and recovery phone numbers linked to the phone that I use all the time.

It’s the same phone number I’ve had for 20 years. Almost everybody knows what my phone number is. It’s not hard to find. Clearly, I’m not using that phone number anymore, which is a bummer since I’ve had it for a long time.

But what I can tell you is that it’s a huge pain in the neck once your identity’s been compromised. You have to make a lot of changes, and it’s not fun.

Unfortunately, we’re in the crypto world… and in a crypto world, it can be a little lawless.

Again, the good news of the story is that I didn’t keep any coins on exchanges. My coins are safe. So I would strongly urge you to do the same and keep your coins safe. Self-custody them and think about the idea of having a phone that’s separate from your name and your identity.

Editor: It’s unfortunate you had to go through this ordeal, T. But I’m glad you didn’t lose any of your crypto funds. As always, thanks for the advice.

Teeka: You’re welcome.

Eric Wade – Lead Crypto Analyst,
Stansberry Pacific Research

It sounds like a legend…

On May 22, 2010, a programmer named Laszlo Hanyecz bought two large Papa John’s pizzas for 10,000 bitcoin.

At the time, it probably felt like a good deal. Hanyecz didn’t have a lot of choices when it came to vendors accepting bitcoin, and back then, 10,000 bitcoin were worth around US$30.

What is widely believed to be the first purchase of a physical product with bitcoin is celebrated every year on “Bitcoin Pizza Day”. But for Hanyecz, it’s probably a reminder of what could have been.

You see, if Hanyecz had held on to those bitcoin, they’d be worth over US$35 million today.

Many crypto investors consider Hanyecz to be a cautionary tale. If you spend all your crypto, you could miss out on big gains.

But if we’re ever going to see cryptocurrencies go mainstream – and really soar – people have to start spending them.

So what should crypto investors do – spend, or hold? The answer is somewhere in the middle…

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It’s still hard to spend bitcoin 

Nine years since Hanyecz’s revolutionary purchase, it’s still difficult to spend your cryptocurrency.

Sure, we’re seeing more and more news stories celebrating new retail outlets accepting crypto. But there’s a reason why this kind of thing is still news – because it’s still pretty rare.

You may be lucky enough to find a local café that will let you to buy a coffee with bitcoin, or even a store that has a bitcoin ATM. But would you feel confident leaving your cash and cards at home for a whole day, or even just for an evening out, and rely on your cryptos? Probably not.

And some outlets that had been quietly accepting bitcoin – like travel site Expedia – have removed the option due to customer complaints over transaction times, the anxious wait for whether the funds actually made it to their intended party and complicated refund processes.

The thing is, it won’t get easier to use crypto until more people start spending crypto.

The network effect

By spending your crypto at every available opportunity, you can help achieve a “network effect” that will unlock mass adoption. Your friends will see you paying with cryptos, and they’ll become intrigued. Businesses will take note when you’re the fifth person in their store that day that asks whether they accept crypto payments.

The network effect can be pretty powerful. Imagine if only one person had a phone. The usefulness, or, what economists call “utility” of that phone will actually rise as more people get their own phones. Literally, as the network of people with phones grows, so will the utility of having a phone.

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The same network effect is in play with cryptos. Its pretty obvious that if no one uses cryptos, no companies will feel a need to accept them. Conversely, if a lot of people use cryptos, a lot of businesses will feel that need to accept them.

And once your local café realizes that they don’t have to pay extortionate Mastercard or Visa fees if they start accepting bitcoin, they will become more profitable. Their competition will wonder how, and then change will happen. Wall Street companies are already working on making it easier for people to start using crypto.

And it isn’t just Wall Street. I just got back from Singapore where I spent nearly a week talking to businesses that are focused on using crypto to do everything from safely storing your wealth to passing time with games.

In one of my meetings, we sat down for a nice cup of tea and dim sum at a very classy tea house.

Tea pots and tea cups at a Singapore tea house

Source: Yixing Xuan Teahouse

The tea house accepted bitcoin and a handful of other cryptos as payment. And paying was easy and fast. The transaction was less than five sections. That’s extremely encouraging.

And the same system they are using at the tea house to accept cryptos makes it just as easy to “top up” my crypto supply to spend. I handed the cashier SGD$100 and in less than five seconds she had added it to my phone’s bitcoin wallet.

Someday we might all buy pizza with bitcoin

So while it might seem counterintuitive, if you want your crypto investments to go up in price – you have to start spending. The more people that use and spend cryptocurrencies in the real world, the higher they’ll go.

Think of crypto as you do your local currency – some you spend, some you set aside for savings.

That way, you’re helping grow the crypto ecosystem, but you’re still set up to profit when crypto prices soar.

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In 1984, 10-year-old Wences Casares was in school when his mother showed up unannounced. She was carrying two grocery bags full of cash – the wages from her latest paycheck.

She took Wences and his two sisters out of school. Then she led the children to a grocery store and ordered them to grab all the food they could carry.

Wences and his family lived in Argentina during one of the many waves of hyperinflation that hit the country. Hyperinflation is like inflation on steroids – it’s when the prices of goods and services rise extremely quickly, typically over 50 percent a month. (By comparison, inflation in the U.S. right now is around 1.6 percent – per year.)

Wences remembers rushing to pay for the groceries before the shop attendant could raise the prices of the food he had in his arms.

At the cash register, Wences’ mother gave them any leftover money and instructed them to buy more food. With inflation running out of control, holding onto to even a single peso was as good as burning it.

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Not all cash is equal

Hyperinflation happens because governments can print currencies – like pesos, dollars or yuan – at will. And when they print too much, it almost always leads to rising prices (what we call inflation).

Most of the developed world has enjoyed relatively moderate inflation (around 2 percent or less) for several decades.

But other countries haven’t been so lucky. As you can see in the table below, hundreds of millions of people live in markets suffering from sky-high inflation rates.

A recent example of hyperinflation is Venezuela. As you can see in the table above, the inflation rate is 1.7 million percent. Much like Argentina in the early ’80s, food and fuel shortages are common. Poverty and hunger is so pervasive, the average Venezuelan lost 24 pounds in body weight, according to a 2018 survey.

But unlike Argentina in the ’80s, Venezuelans are able to turn to cryptocurrencies to protect their wealth.

Radical bitcoin adoption in Venezuela

Bitcoin has a finite supply of 21 million coins. Without a fundamental change to the network software, no one can create more of it out of thin air. In that way, bitcoin’s like digital gold – a currency that’s immune from government manipulation. It’s a way to protect yourself from inflation.

And as Casares – our sack-of-cash shopper – learned a few years ago when he gave two high-level European hackers US$250,000 to try to hack the bitcoin network, the cryptocurrency is unhackable.

(Casares was so impressed with bitcoin, he went on to start a bitcoin wallet and vault company called Xapo. By some estimates, Xapo now stores US$10 billion of bitcoin for its customers in underground vaults across five different continents.)

Venezuelans see the value of bitcoin to protect them from government mismanagement.

Even with bitcoin’s volatility, it’s a huge improvement over the bolivar (Venezuela’s fiat currency). And on some days, bitcoin trading now exceeds trading on Venezuela’s largest stock exchange.

The chart below shows the massive spike in bitcoin trading volume in Venezuela. As you can see, bitcoin trading volume against the bolivar has more than doubled over the past four weeks.

And what we’re seeing in Venezuela is just a glimpse of what’s to come.

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Hyperbitcoinization

Soon, I believe we’ll see rapid bitcoin adoption (called “hyperbitcoinization”) around the globe – even in countries that don’t have hyperinflation. Hyperbitcoinization is similar to hyperinflation. Under both scenarios, prices rise rapidly in the local currency. With hyperinflation, the price rise is caused by government money printing.

With hyperbitcoinization, the price rise is caused by everyone simply abandoning the local currency for bitcoin. For this to happen, bitcoin has to have advantages over the local currency… It would need to be faster, for example, easier, more secure or more trustworthy.

Right now, there are over 10,000 bitcoin nodes located in over 100 countries. These nodes are computers that run a program that processes bitcoin transactions. This is the payment infrastructure of the bitcoin network and regular people are building it themselves.

And as more people in more countries accept bitcoin, so will the companies they do business with. When that happens, local currencies could collapse as people move quickly into bitcoin. As they switch over, they’ll sell the local currency to do it. That would trigger the rise in prices that would make it even more tempting for people to switch to bitcoin.

It’s a domino-like scenario that’s unthinkable to a lot of investors. But for anyone who has lived through currency collapses, it’s easy to understand… people are simply moving from an inferior form of money to a better one.

In short, bitcoin’s payment infrastructure is still developing, but I believe it will soon reach the point where hyperbitcoinization’s not just possible… but inevitable. And that could happen far faster than anyone expects.