If you’re one of the 22,000 Legacy readers who tuned in to colleague Tom Dyson’s gold briefing last night, thank you for taking the time to attend.
Tom put months of research into last night’s event.
As Tom told folks last night, we’re on the verge of a massive financial shift that will send the price of gold soaring at least 10x higher.
And if history repeats, dozens of tiny mining stocks could leap 20x… 50x… even 100x or more.
So if you couldn’t make it… or you missed the invitation… make sure to catch the replay here.
As you’ll see in today’s insight from the Legacy Research team, gold isn’t the only form of money about to go through some dramatic changes.
As longtime readers know, governments are waging a War on Cash.
They want to get rid of banknotes and coins. And they want to replace them with a new type of cash: a digital version. A central bank will still issue it. But it will be based loosely on cryptocurrencies such as bitcoin.
It all sounds so convenient…
No more need for ATMs. Tip jars are a thing of the past. Even vending machines are digital. Every time you spend or receive cash, it’s via an app on your smartphone.
But as we’ve been warning you, the cashless society is a disaster for your financial privacy.
Each digital transaction will leave a permanent digital record in a government database somewhere. The feds will collect, store, and parse the details of every transaction you make. They’ll also know exactly where you are in the world every time you buy something.
I’m talking about round-the-clock digital surveillance of your location, your movements, and your financial life.
As we showed you here, China has a pilot project of a new centralized digital version of its currency, the renminbi, in four cities.
There’s even talk of a digital dollar in the U.S. Congress.
It appears in the Take Responsibility for Workers and Families Act introduced by House Speaker Nancy Pelosi. It’s also in an act House Financial Services Committee Chair Maxine Waters introduced.
As regular readers know, Facebook wants to launch a digital currency called Libra.
And existing payments companies see the writing on the wall. Consider the patent application Visa has filed.
Visa runs the largest payment network in the world. It’s made up of 336 million cardholders and 40 million merchants.
And the U.S. Patent and Trademark Office just announced that the company has applied for a patent for a “digital fiat currency.” (“Fiat” is the Latin word for a decree. A fiat currency is a currency a government issues that isn’t backed by gold or another commodity.)
This digital fiat currency will use some aspects of “blockchain” technology… the distributed ledger technology that underpins bitcoin and other cryptocurrencies.
Our tech expert, Jeff Brown, has been tracking this story for readers of our daily tech-investing newsletter, The Bleeding Edge. As he explained it…
The patent outlines the details of a digital currency system – a replacement of paper money. Physical currency would no longer be in circulation.
Instead, we’d have digital fiat currencies. These are digital representations of the U.S. dollar, the British pound, the Japanese yen, the euro, and so on.
And Visa’s patent details a central computer that manages the money supply and digital transactions of the new digital currencies.
But don’t make the mistake of thinking that Visa is making a bitcoin clone. Visa’s digital currency is the exact opposite of bitcoin. Jeff again…
Blockchain technology was designed to be used as a “permissioned,” decentralized network where no one party has control. And a set of mathematical rules determine a digital asset’s monetary policy, not a central bank.
In contrast, Visa’s patent outlines a centralized system that will keep the powers that be in full control of money.
That should ring alarm bells. These centralized digital currencies will be just as open to manipulation as the dollar, the euro, and the yen are already.
But they’ll make it even easier for governments and corporations to track and monitor everything you do.
That’s according to colleague Teeka Tiwari.
Teeka was the first guy in our industry to focus a major newsletter (Palm Beach Confidential) exclusively on cryptos.
And he believes centralized digital currencies are destined to happen. Teeka…
Unfortunately, governments have a tendency to think wealth doesn’t really belong to their citizens. They see it as belonging to themselves instead.
With these new currencies, each transaction made in the economy will leave a digital record the government will be able to see. This is why fiat money is headed to a blockchain. Governments like to look at where all the money is. A blockchain they control is a way for them to do that.
Governments around the world are chomping at the bit to launch their own versions of centralized digital currencies. Countries including China, South Korea, Uruguay, Sweden, Thailand, and Cambodia are currently testing pilot programs.
First, governments can claim that physical cash is a vector for the spread of the virus.
We don’t know if that’s true or not. And it doesn’t matter either way. It’s plausible enough for most folks to buy the idea.
In the age of COVID-19, nobody wants to touch cash. Figures from Mastercard show that more than half of Americans are now using some form of contactless payment instead of physical cash.
Second, governments can claim a digital currency system would make it easier to administer COVID-19 relief checks.
Governments could just zap cash into everyone’s digital wallet with a few strokes on a computer keyboard. Back to Jeff for more on that…
Policymakers are already aware of this idea. The original version of the economic stimulus package that Congress put forward in late March outlined a “digital dollar” and “digital dollar wallets.”
That proposal was ultimately removed. But there is no doubt that digital currency is the future. That’s setting us up for a major competition between decentralized cryptocurrencies such as bitcoin and centralized digital fiat. This will be a historic battle to watch.
You might expect this to be the end of bitcoin and other private, decentralized cryptocurrencies.
After all, in the cashless society that’s coming, you’ll be able to have the convenience of digital transactions with the new e-dollar… e-euro… or e-yen.
Centralized digital currencies will get everyone used to transacting using a digital wallet on their phone.
That will mean transacting with bitcoin won’t feel strange or unusual. It will be absolutely normal.
Also, decentralized cryptocurrencies will offer a higher degree of anonymity – or even full anonymity – to preserve your privacy.
Private cryptocurrencies will offer more stable policies around issuance. That will protect you from the ravages of inflation.
Bitcoin, for instance, has a hard cap of 21 million coins. That’s baked into the protocol that governs the bitcoin network.
These features give bitcoin a hefty leg up against government-issued digital currencies.
They can still meddle with interest rates… and even drop rates into negative territory.
And they can still issue new currency at will. This risks further ballooning the money supply and triggering inflation.
So the choice between centralized and decentralized digital currencies should be clear…
For more on buying your first bitcoin, check out our free report here.
Just remember that bitcoin and other cryptocurrencies are highly volatile. So, for now at least, they should make up only a small portion of your overall wealth.
Teeka recommends initial stakes of $200 to $400 for smaller investors and $500 to $1,000 for larger investors.
May 21, 2020
County Wicklow, Ireland
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