Why It's Even More Important To Own Bitcoin Now

Bitcoin, Crypto-Currency, Currency, Money, Hand, Keep

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We've discussed in other texts about using real estate to smooth out some of the volatility we've seen in stocks lately. And it should come as no surprise, if you've been with me for a while, that I own Bitcoin (BITCOMP) and other large and small digital currencies, not just because they're useful, but because they're not stocks, and they don't really correlate with them, either.

Unless you've been on a mountaintop camping trip for the past month or so, you'll know that a lot of stocks got knocked way down because the market was worried sick about inflation -- due to the expansion of money supply and the economic recovery getting underway. Inflation eats into the dollar. Bitcoin is the ultimate protection against all that – and I'll tell you why.

Bitcoin Is Like the New Gold

Fed Chair Jerome Powell can pick up the phone to tell the Treasury folks working the printing presses to kick it into overdrive – and that's just what the Fed has done. Around 18% of all dollars in existence right now were "printed" in 2020 to help keep the economy from going over the cliff.

But with Bitcoin and a lot of other cryptocurrencies, that can't happen. Not only is there no big boss telling people to make more Bitcoin, there's a fixed supply of it; the Bitcoin supply can't expand like that.

Twenty-one million Bitcoins – that's all there will ever be. At the end of February, around 18.63 million Bitcoins had been mined, which leaves a little more than 2.36 million that have yet to enter circulation. (In reality, the final number will be less than 21 million, because it's likely as many as a few million Bitcoins are "lost" or "locked up" forever by those who've died without sharing their private keys or those who are still alive but have lost their keys.)

Inflation is one of the reasons Elon Musk put 5% of Tesla Inc.'s (TSLA) available cash into Bitcoin. He tweeted, "When fiat currency has negative real interest, only a fool wouldn't look elsewhere." It's tough to argue with him; a 10-year Treasury bond that yields 1.4% won't even keep up with expected inflation in the long run.

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