With inflation rising and the cost of capital increasing, the pursuit of sound money and wealth preservation is becoming more important. As fiat money is manipulated to control inflation, economy and government spending, there are few assets that meet the criteria of being sound money and a reliable store of wealth. Historically, gold and silver have been the bedrock of such assets, with land serving as another alternative. However, these traditional forms of wealth come with their own limitations.
For sound money to truly live up to its name, it must possess several essential qualities. It should be easily divisible into smaller units and recombined into larger sums without altering its fundamental value. The ease of transferring wealth from one person to another, with minimal cost, is another critical factor. Ability to secure and protect against theft is also important. Furthermore, the asset should be both abundant enough for universal use and yet scarce enough to maintain its value, ultimately featuring a limited supply.
Gold, silver, and land, while historically (and rightfully) are valuable, they each have their own set of disadvantages. To transfer gold and silver, one must either be physically present or entrust a secure courier. Land ownership transfer can require legal process, governmental approvals, and ongoing property tax obligations for the new owner. Furthermore, the history of political confiscation, even across national borders, looms large over land ownership. Over time, land often also necessitates development to increase its value, but this comes with its own set of maintenance challenges and recurring tax burdens. Additionally, land values can be subject to significant fluctuations as people move from one area to another for economic reasons.
In the search for a more versatile, secure, and accessible form of sound money, there are currently only two dominant digital options: Bitcoin and Litecoin. Bitcoin, as the first cryptocurrency, as it introduced a revolutionary technology that checked all the boxes of sound money. It boasts a limited supply of 21 million, decentralization and immutable transactions, and perfect divisibility into 100,000,000 units known as satoshis. Like gold and silver, Bitcoin's value is intrinsically tied to its production costs plus its network usage. Also a unique feature of Bitcoin is its regular "halving" event, reducing its supply every four years and steadily increasing its scarcity. This ensures a balanced supply and demand equilibrium, aligning with the principles of sound money.
Litecoin, is a source-code fork of Bitcoin, and builds upon the same technological foundation, offering improvements in speed and transactional cost-effectiveness while still maintaining a fixed total supply and 4-year halvings like Bitcoin. The proof of work aspect of both Bitcoin and Litecoin requires hardware, infrastructure and energy, which parallels the labor-backed mining of gold and silver giving them a minimum cost to production value.
In addition, the security of their networks sets Bitcoin and Litecoin apart, as both are dominant in their respective mining algorithms, which is important for decentralized digital money. Also, with both of these coins being among the first in the cryptocurrency space, the odds of an attack on the network at these currently all-time-high hashrates is highly improbable for both Bitcoin and Litecoin, with no other currency even coming close to their security. As a result, it's highly unlikely any other currency can. While other proof of work coins, (many minorities in their mining algorithm), have the disadvantage of "newness" to the market, leaving them vulnerable to 51% security risks, manipulation and centralization. This puts Bitcoin and Litecoin in a league of their own when it comes to being reliable and secure forms of sound money. In the realm of decentralized digital money, where security is paramount, Bitcoin and Litecoin are at the forefront.
One striking feature of both Bitcoin and Litecoin is the rigidity of their supply. With only 21 million Bitcoin, and 84 million Litecoin ever to be available, they are set to become increasingly rare. It's projected that in two decades, owning even a single Litecoin may be a symbol of immense wealth. Today, those who possess an entire Bitcoin are referred to as "Wholecoiners," and the same status will surely apply to Litecoin in the future. In a world where there are 105 million of these combined “true money” coins to be shared among 8 billion people, it's evident that the vast majority will never own a whole Litecoin, let alone a whole Bitcoin. A Bitcoin Wholecoiner will likely be the top 1% of 1% of the wealthy, and a Litecoin Wholecoiner will similarly be a sign of the top 1%. If you’re a believer in Bitcoin, you must, by necessity, be equally bullish on Litecoin.
As more people securely store Litecoin and Bitcoin in cold wallets, the scarcity factor will only grow stronger. The window of opportunity to acquire these assets may be closing, making the accumulation of Bitcoin and Litecoin a likely source of generational wealth-building opportunity. Much like how Bitcoin grew millions of percent in price without any large institutional or governmental help, Litecoin won't be far behind, especially as the rest of the world realizes what sound money these two assets really are, and begins pouring the world's assets into these two beacons of lite (see what I did there?).
Bitcoin and Litecoin exemplify the true characteristics of sound money, and they have set the gold & silver standard. Their peer-to-peer transactions, cost-effectiveness, divisibility, and steadily increasing scarcity make them exceptional choices for wealth preservation. While Bitcoin remains the dominant player, Litecoin's distinct advantages in terms of speed and cost-effectiveness make it a compelling option. As the cryptocurrency market continues to evolve, many altcoins may come and go, but the solid foundations of Bitcoin and Litecoin as sound money will likely stand the test of time. The journey towards generational wealth begins now, with Bitcoin and Litecoin leading the way. We're still so, so early.