Decentralization is the New Mega-Trend

OWNx Team Money & Financial Technology, News & Current Events

One word you’ll hear a lot in the financial world is “decentralization.” We use it frequently and doubtless you’ve encountered it in other blog posts, podcasts, and books discussing the subject of money. But today, let’s dig a little deeper into what decentralization means, and look at some practical ways it is being implemented in our society.

DECENTRALIZATION AS A CONCEPT

To summarize, the concept of decentralization is the tendency and desire to gravitate away from larger, highly regulated entities toward smaller entities that allow for more individual freedom. Merriam Webster defines it as: “the dispersion or distribution of functions and powers.”

Certainly this concept applies to the financial system, but it is also interesting to note the trend of decentralization across other areas of our lives, and the practical steps that have been taken to implement it.

DECENTRALIZATION TODAY

Centralized entities are prevalent throughout our society, from social media platforms, to large businesses, to educational insitutitions, news media, and beyond. Until recently, these entities were growing at an incredible pace. So what has caused their growth to slow?

Let’s look at Facebook, for example. The largest social media platform in the world has recently undergone a rather steep decline in use and growth. There are several reasons for this, including:

  • Ads – Users are tired of having their Facebook feeds spammed with ads they did not opt in to see. This has resulted in lower engagement for businesses on the platform, and even paid ads aren’t getting the reach they used to due to changes in the FB algorithm.
  • The Algorithm – Many users don’t like the fact that the Facebook algorithm changes constantly and heavily filters which posts they see in their feed, limiting their connection with family, friends, and news sources they actually want to hear from.

These are aspects of centralization and high concentration of power (to say nothing of the recent privacy debacle), and people are gravitating away from the platform toward others that allow for more individual freedom, such as Instagram and MeWe.

Another example of decentralization in action is found in the dramatic increase in the small business survival rate. Increasingly, consumers are moving away from larger entities, and channeling that support toward smaller local companies whom they have a stronger relational connection with. In this digital age, personal touch matters more than ever.

Similar shifts are occurring in the spheres of media, education, and government. There is no question, decentralization is on the rise, with people taking action to implement it in their own daily lives.

MONEY AND DECENTRALIZATION

This brings us back to the issue of money and the financial system. Unlike many other spheres, financial institutions have been steeped in the centralization of big banks for longer than anyone can remember, making solutions to the problem much more hazy and uncertain.

Without a doubt, the monetary system is also moving towards decentralization, as we have seen with the crypto craze. However, at this time no one is quite sure what a decentralized monetary eco-system will look like.

In some cases, the surrounding confusion can lead to paralysis, as people are uncertain of how to proceed and whom to trust. Some were burned by volatility in the crypto market. Others simply aren’t sure where to start when it comes to protecting their wealth and savings as the investment landscape begins to shift.

GOLD AND SILVER OFFER PROTECTION

In times of uncertainty, the stability of gold and silver provides a way to apply the concept of decentralization to your investments. Owning them allows you to:

  • Protect your wealth
  • Build your savings
  • Secure your investments in proven, tangible assets

Our platform puts control in your hands. You have the power to choose when and how you want to save and invest, and where you want your assets stored. This flexibility allows you to operate outside of larger entities without depending on them for your financial security.

Despite the foggy horizon regarding the future of the monetary system, you can rest assured knowing you own assets that have been proven throughout history to protect against times exactly like these.

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Centralization vs. Decentralization: The Battle is Underway

OWNx Team News & Current Events

Right now we are witnessing an epic battle between two competing principles – centralization and decentralization of systems that influence our culture. Let’s look at two examples and how they are creating major cross currents in the world today.

The Global Monetary System

For several hundred years, the world’s monetary system has trended toward increased centralization. So much so that today, money creation and management around the world is concentrated in the hands of national governments or privileged, monolithic entities that have central government approval. Within the last fifty years, further consolidation has occured as the Euro currency displaced the currencies of previously sovereign nation states.

The rules by which currency exchange is conducted are written by those who control the flow of funds. This exposes a little known reality – money at its core is not an item, such as a Euro, dollar, gold, or silver. Rather, it is an agreement between the people in a community (in this case, nation states) to use various items as a medium of exchange and store of value. Today, the contract is negotiated between nation states, and the system they have designed requires moving every person’s assets through a highly controlled and efficient system.

Communication

In the last decade, there has been an explosion of avenues for people all over the world to directly share their views with one another. A person in Africa has immediate access to the “feed” of people they are connected with in the Americas and vice versa. Ideas about how the world should be ordered are exchanged at the speed of light. Decentralization of how ideas and concepts are birthed lies in direct contrast to the system of money that gives resources to the world economy, which can bring those ideas and concepts into reality.

Decentralization is Winning

This tension between principles is playing out in the marketplace today. Not satisfied with the existing system of control over resources, those who are collaborating in cyberspace about how the world should be governed are turning to another source – cryptocurrencies and decentralized trade of the ownership of assets.

The marketplace of ideas is making a statement. Decentralization is favored over centralization. The decades-long domination of mainstream media is dying as social media continues to grow. Now, the centuries-long domination by the global monetary system is being challenged by cryptocurrencies and micro-loans.

The trend toward global decentralization reaches far beyond economics. It is producing a massive global culture shift with implications that have yet to be fully understood, and are not likely to be entirely manifest for another decade or more. While not in the prediction business, we can offer an observation. In the future, real, tangible items such as gold and silver will become more important to a wider group of people. Not just because of the likely volatility that will accompany the transition to a decentralized, technology-based world. But also because, like a cold drink of water on a hot day, they remind us that we are still real, physical beings in need connection to a physical world.

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What Does the End of Cryptomania Mean for Gold and Silver?

OWNx Team Cryptocurrencies, Gold & Silver Market

Now that the cryptocurrency world is well established on a glide path into the trough of disillusionment, it’s time to reflect on what that means. First of all, it means the hype that “Bitcoin will replace ___________” (fill in the blank with your favorite entity/item that Bitcoin was supposed to bring an end to) has died down. It also means that the hype surrounding the blockchain (again, fill in the blank for what it might replace) is also coming to grips with real world applications and limitations.

In the ashes of the trough of disillusionment, hundreds, if not thousands of start-up projects will fail. Scammers will be sent packing. These are necessary and good things which will give birth to an environment that will produce solutions based on reality instead of hype.

Fresh innovation will spring from the newly discovered zone of reality. Limitations will be solved, or new iterations of distributed ledger technology and cryptocurrencies will move the sector onto a new plane. The mad scramble of cool ideas backed by easy money will settle into a rhythm of building systems that are not just viable to launch (most ICOs), but are sustainable over the long-term.

That means a whole lot of people who were in their venture capital/ICO funded silos will have to emerge and form partnerships to, as we wrote about in February, begin the real work. We won’t see the full fruit of these partnerships for months, if not years. Google, Netflix, and Apple did not arise from the 2001 tech bust in 2002. Or 2003. Or 2004.

Furthermore, the world at the time was ready for tech giants to emerge. We’re not so sure that is the case in 2018. When it comes to something as important as money and monetary systems, it appears that the people of the world are not going to be satisfied with the big banks absorbing and monopolizing financial technology.

More likely is that over the coming years, we will witness the birth and baby steps of a new monetary eco-system. It will begin as an awkward dance with the existing national currency systems. Friction will grow between those feeding this new system and those interested in maintaining their monopolies. However, like the internet in 2000, new and exciting ways to imagine the future of money have been unleashed.

That genie is not going back in the bottle.

2017 was a quiet year for the price of silver and gold. As the new monetary eco-system begins to take shape, we anticipate the price of gold and silver to become more volatile, albeit with an upward bias. As much as some of the crypto die-hards want to believe, the emerging monetary eco-system is not yet ready to be dominated by electronic digits as a store of value. We say “yet” because it still could happen someday… After the wild west is tamed by a period of harsh reality and new concepts of what money can be are more widely adopted.

Silver and gold bullion will continue to play a vital role in whatever emerges. That could take the form of crypto backing. Or, it could take the form of precious metals taking on more of a role as a store of value, and less as a medium of exchange. Financial technology does enable the mind-bending concept of separating those monetary functions into distinct monetary items. But that is a subject for another post.

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Gold IRA and Retirement Planning in the Age of Digital Everything

OWNx Team Money & Financial Technology, Retirement Planning

Technology is invading every aspect of our lives–including our finances. In a world where it seems like everything financial is being digitized, people are looking for a trusted link to physical reality. Opening a gold IRA as part of your retirement planning is one way to create that link.

Some of the primary principles of investing are: stability, sustainability, and longevity. Each of these requires time to develop a track record of results. Gold and silver have been part of the monetary system for 5,000 years of recorded history. They’ve existed since the planet was formed, and they will be here as long as it remains. They have a proven track record.

Meanwhile, digital assets such as cryptocurrencies have been in existence for just over a decade. As we now see, the present reality is that cryptos as a group are not a trusted asset class. Individual projects are promising, but even those lack the crucial ingredient that forms trust – long-term proven results based on measurable reality.

5,000 years vs. 10

Our position is clear. There is a place for the new digital financial world. It is important, however, to embrace it in a way that does not introduce unneeded complexity or risk. Our commitment therefore is to provide our clients with smart, simple tools that enable them to manage gold and silver as retirement investments.

When you buy gold and silver online within your IRA, you connect to both the past and the future like no other investment can. This connection can bring stability to your retirement portfolio as technology continues its relentless march through the financial world.

Curious about how easy this is? Click here to see the details, or call us at 800-701-3546 and ask for our IRA team. It really is smart and SIMPLE.

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boxes-not-delivered

Financial Technology – Delivery Delayed

OWNx Team Money & Financial Technology

The pace of change in the world of money and banking is crazy fast right now. Today, we want to focus on the word “crazy.”

Inevitably, when something new and exciting comes along that you want to be a part of, it is very, very (did I say very) tempting to jump in and be on that cutting edge of innovation. And to be sure, there are times when that is the appropriate strategy. Particularly if the innovation is a major shift within an existing industry.

However, when a completely new industry that has no proven, results-based track record of acceptance and sustainability, caution is warranted.

Such is the case with the dizzying innovation that is the current financial technology/cryptocurrency/blockchain/smart-contract/DLT revolution. We read daily that “this new technology” (a very broad and abstract description) is going to change the world.

Conceptually, it looks great. However, the innovation which is arguably ground zero in this fledgling industry – Bitcoin and the blockchain – is showing signs that it isn’t going to perform the function it was originally intended to perform. That is, to be another form of money.

It’s an Awesome Idea – But is it Sustainable?

Serious questions are being raised about the sustainability of Bitcoin–and even the underlying blockchain technology. It’s miners require enormous power consumption, and there are serious limits on the number of transactions per second the blockchain can reach in its present state. Furthermore, the cost per Bitcoin transaction has ballooned from just pennies to up to twenty dollars.

Apologists claim these problems can be overcome. We’ll see. However, one thing is becoming clear. We are still in the phase where the true, long-term capabilities and limitations of the blockchain are being discovered. The implications of those reality-based capabilities and limits will impact millions of people and thousands of businesses who have already invested heavily in both the technology and infrastructure.

Leave out startups who are developing new apps on the Bitcoin blockchain, many of which are expected to fail (that’s the nature of VC funded startups). The list of companies–large and small–that invested in infrastructure to accept Bitcoin as payment is significant. And they are finding that their investment was premature.

In the last few months, payment processor Stripe, gaming company Steam, and software giant Microsoft have announced they are no longer accepting Bitcoin as payment. Ironically, the Miami Bitcoin Conference will no longer accept payment in Bitcoin.

“Organizers of the North American Bitcoin Conference said Thursday that they’ll no longer take bitcoin as payment for the $1,000 tickets they’re selling. Turns out, the transaction fees and processing times associated with the volatile cryptocurrency are just too much of a burden.”

The Bottom Line

The Financial Technology revolution promised smart, simple solutions to the secure and private exchange of value between individuals. It hasn’t delivered. But that doesn’t mean it won’t.

In fact, we are confident that ten years from now, the world of money will be vastly different than it is today. However, gold and silver will always be a part of the monetary system. Building a way for you to interface with those solutions through the OWNx platform is our goal. Smart, simple access to gold and silver is just the beginning.

It’s going to take time to get it right. OWNx has provided clients with the ability to buy gold and silver online as titled, fractional ownership of physical bullion for nearly ten years now. We’re deliberate in our actions and patient in our strategy. Taking that to the next level and serving you over the next ten years is what we’re working on now. That’s what we owe you, and we intend to deliver.

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trough of disillusionment

Cryptos Enter The Trough of Disillusionment – Now the Work Begins

OWNx Team Cryptocurrencies

Our first post of this new year was just thirty days ago. Entitled “2018: The Year of the Crypto Hangover?” we introduced you to the hype cycle that impacts nearly every technological breakthrough–including cryptos and the blockchain.

What we are now witnessing is the beginning of the crypto market’s slide into “the trough of disillusionment.” It follows the peak of inflated expectations, which is when new technology is held out as the answer to all of mankind’s problems (hyperbole admitted).

But then reality rears its ugly head, and the markets react. Negative press begins in earnest. Doubts are cast on the viability of the technology and its promises. Yet that is when the real work begins.

The early pioneers in technology serve a useful purpose. They bring forth new ideas that humans have never before thought possible. It is rare, however, that implementation of the initial ideas end up being the “gold standard” – the ones that produce applications that truly transform society.

It’s in the trough of disillusionment that the hard questions are asked:

  • Is the original technology viable?
  • Are there limitations that everyone has overlooked (blockchain transaction scalability)?
  • Can those limitations be overcome?
  • Is it going to require a new iteration or evolution of the initial technology?
  • Is there a newer application of technology better suited to solve the problem?

Now we get to watch innovative companies ask and answer these questions. This is the time to take a deep breath and be patient. Terminology that has been loosely thrown around will now be cleaned up. Clarity will emerge, and the cream will rise to the top.

And that is what we are excited about.

Digital assets are here to stay. So are cryptocurrencies. So is digitized ownership of real assets such as silver and gold bullion (which we’ve been providing our clients for years). Those are all three very different things, yet over the last 12 months, they were a conflated mess. That’s about to change.

The slide into the trough of disillusionment began a bit earlier than we expected. It’s no fun for those who were on the front of the hype cycle curve. Yet 2018 and beyond will be an exciting time for those who have waited to build their solutions based on the answers to these hard questions. We’re on task. We’ve been asking those questions for months.

The answers are forthcoming. Now the work begins.

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Gold, Silver, Fiat, and Cryptocurrencies – Welcome to the Dance

OWNx Team Cryptocurrencies, Global Finance and Economics, Money & Financial Technology

A new monetary ecosystem is emerging. But you probably already knew that. What has yet to be determined is just how the historical forms of money are going to play together with the new kids in town.

Imagine if you were the owner of a dance studio that for decades had been churning out the most widely-acclaimed dance production in the city. It was made up mainly of traditional waltzes with an occasional polka number thrown in. While predictable, the audience was comfortable with the consistency of the experience.

Then one day, you’re told that you have to open your production to a new and more energetic form of dance. It is a combination of jazz and hip hop. Not only that, but few if any of your performing crew fully understand it, and nobody is very good at it. Oh – and the company owners are under pressure to choreograph a new production to be released in the not-too-distant future.

Welcome to the world monetary system.

National fiat currencies, along with traditional stalwarts of gold and silver (waltz and polka), are being asked to put on a world-class production that now must include a bevy of cryptocurrencies (jazz and hip-hop). Seasoned professionals must work alongside a mix of newcomers (solid projects) and some who have no business even being on the dance floor (ICO scams).

Meanwhile, the instructors (regulators) either are throwing their hands up and walking away, or are trying to control the newbies with rules they don’t understand or agree to. Some of the seasoned veterans on the team have abandoned the waltz, and are joining this exciting new dance that has yet to be defined.

I say again – Welcome to the world monetary system.

Related: Are Cryptos Money? Not Yet.

How Will This End?

There are several possible outcomes to such a situation:

The cast fights among each other and the instructors blow up the whole thing by getting heavy handed. Nobody comes to the show and the dance company folds. It is a decade before another company comes to town.

The new style completely confuses the traditional cast and they all quit, leaving the town to adjust to a completely new production – one that they aren’t sure if they like, and can’t see themselves getting comfortable with.

Or, the traditional cast, along with the instructors, take a deep breath and begin to speak some wisdom into the newbies. They shape a new production based on the experience and values and elegance of traditional waltzes, which brings a bit of order and sanity to what otherwise looks like chaos.

Frankly, the latter outcome seems most likely. Gold, silver, and national currencies will always have a place in the emerging monetary eco-system. The 5000 year history of gold and silver will anchor the new system to reality – both literally and figuratively. Governments will not give up their national currencies. It is unrealistic to expect them to. And the crypto world still has to figure out who can dance and who the pretenders are.

Just how much influence each style of dance has on the final production will depend a great deal on two primary factors:

1) How quickly (if at all) will the newbies kick the pretenders off the stage by themselves?

2)  If the instructors are called in to bring order, will it be the traditionalists, or open-minded realists who decide how to run the final production?

Definitely interesting dynamics in the world of money. Welcome to the dance.

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cryptos are not money

Are Cryptos Money? Not Yet.

OWNx Team Cryptocurrencies, Money & Financial Technology

The wild swings in the price of Bitcoin and other cryptos over the last week should have you convinced that they are not yet ready for prime time. After rising to just over $20,000 on December 17, 2017, Bitcoin dropped nearly 40% within a week.

That was just openers. After trading between $13,000 and $17,500, on January 16th, Bitcoin dropped 33% and Ethereum plunged 40% in 36 hours. What happened next? The crypto complex rose 20% over three days and is now falling again – nearly 10% on January 22, the day this post was written.

Are these investments? No. Is this money? Absolutely not!

What are they then? They are speculations at best. Gambling chips at worst.

Back in November, Arthur Brock, a respected crypto news analyst said, “…let’s tell the truth — cryptocurrencies just aren’t safe for everyday use by normal people and businesses yet.”

This week proved his words 100% correct.

The cryptocurrency trading market has a lot of growing to do. And unfortunately, “growth” means figuring out who the winners and losers will be in an unregulated wild west market. If there is any good news in the volatility of the last week, it is that it will force people to look more closely at the technologies behind the various cryptos and begin to shun the scams.

Gold and Silver Still Shine

In the midst of all the chaos about which cryptos to buy, the price of gold and silver has been steadily rising. Some of the “hot” money in the crypto sector and some folks who got burned by it may be returning to something a bit more stable. While the price of gold and silver can rise and fall substantially, it does not happen in days – or hours as we’ve witnessed in the crypto markets.

If gold and silver were ever to become this volatile, it would not mean they were in trouble. It would mean that the entire global monetary system was in trouble. Serious trouble. And if that were the case, you’d be happy to own some. It would mean you would have some level of protection over the instability of the uncertainty of electronic “money” that has yet to find its place in the world.

While cryptos will find their place in the future monetary system, we’re not sure when that day will come. But it seems like it’s further in the future than many believe.

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2018: The Year of the Crypto Hangover?

OWNx Team Cryptocurrencies, Global Finance and Economics, Money & Financial Technology

Last year was crazy for financial technology. For several years, FinTech innovation had been bubbling under the surface, until last year when it exploded into the mainstream in the form of the emerging crypto-mania.

2017 was the inaugural ball – the big party where all the possibilities of financial technology were introduced to the public. Cryptocurrencies. Tokenized asset ownership. Peer-to-peer payment systems. Robo investing. It’s a whole new world out there. However, after the party comes the hangover. This could begin to take shape in the second half of the year.

The excitement around crypto currencies and ICOs is likely to reach some kind of temporary peak this year. While FinTech may have had its coming-out party in 2017, there are still few people who understand what is actually happening. That is – the entire global monetary eco-system is being transformed before our eyes.

It is still in the early stages. The final form of what emerges is still several years down the road. Like most new, bright and shiny technologies that gain the public’s attention, it will proceed through the traditional hype cycle.

It appears now as though the peak of inflated expectations is fast approaching. When the crypto ICO frenzy ends – either through market forces, or due to heavy-handed government regulation – the plunge into the trough of disillusionment will commence. With the pace of scam ICOs growing, it would not be a surprise for this to occur in the second half of 2018.

Such is the new world of finance. Meanwhile, 2017 was a relatively quiet year for gold and silver with no major moves in either direction. Gold spent most of the year within a $150 per ounce trading range. With all the hype surrounding the crypto markets, this is quite an accomplishment.

It is unlikely that 2018 will be a repeat of 2017. If the crypto/ICO world begins its plunge into the trough of disillusionment, gold and silver stand to be beneficiaries. Scam digital assets will be shunned in favor of tangible assets with a proven history of maintaining their value.

The 25% plunge in the price of Bitcoin, and the steady rise in the price of gold and silver during the last half of December may be an early signal of what 2018 will look like. Only time will tell. One thing seems certain, however – there is a whole lot of shaking that is going to happen in the financial markets this year. And that nearly always favors gold and silver.   

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Mexico to Monetize Silver?

OWNx Team Global Finance and Economics, Gold & Silver Market, News & Current Events

On September 13, 2017, Mexico’s Chamber of Deputies met to discuss a potentially world-changing event regarding precious metals—specifically silver.

Mexico has had a history of using silver coins as currency before converting to the peso, which has been steadily losing its value against the US Dollar over the past forty years. This has put Mexico in a financially difficult place. It’s citizens have been unable to build up their savings as the peso continues to suffer.

In the September 13th forum, entitled, “The Promotion of Savings by Mexicans,” the Chamber of Deputies, led by Congressman Francisco Javier Pinto, discussed how the situation might be remedied. As the peso decreases in value, how can Mexican citizens—and their savings—be protected?

The answer, if it succeeds, could change the world of silver investing.

Saving money is vital to the growth of Mexico’s economy and the financial security of average citizens. However, a poll conducted in 2015 found that only 15% of Mexicans save money by depositing funds into savings or other bank accounts, buying stocks and bonds, or making contributions to an official retirement account. Meanwhile, 32% save their money by “stuffing [it] under the mattress.”

With the fluctuation of the peso over the past forty years, this method of saving has left Mexicans with little to guard against surrendering even more of their purchasing power, rather than retaining and increasing it.

The solution discussed by the Chamber of Deputies was to instate a law that would monetize Mexico’s Silver Libertad once more, allowing Mexicans to save and trade in their original currency.

By monetizing the Silver Libertad and encouraging Mexican citizens to purchase it, they could begin building formal savings for themselves, while safeguarding those savings against inflation and the continual devaluation of the peso.

Instead of fixing a permanent value in pesos on the Libertad, the bank would continue adjusting the value of the coins based on the price of silver in order to protect Mexicans from the peso’s decline.

How might this affect you?

Mexico is the largest producer of silver bullion globally, mining 186 million ounces of silver in 2016 alone. Much of this silver is then exported to other nations for minting and silver coin production. However, if the proposal percolating inside the Mexican congress were to gain political traction, it could cause a dramatic shift in the silver market, impacting silver prices and availability around the world.

If Mexico kept more of its silver in the country for production of the Libertad rather than exporting it, assuming the Mexican people responded favorably, buying the coins, the price of silver per ounce would rise globally.

Higher silver prices mean greater savings and wealth for current holders of silver—not just Mexicans who purchase Libertads, although we wish them well in their efforts to re-monetize silver!

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