There is an old saying that a rising tide lifts all boats.
If you’re not familiar with that saying, what it means is that as things get better in one part of a situation, it carries over to make everything better in other parts of the situation.
I employ that metaphor a lot – and for good reason! The technical name for this phenomenon is the network effect.
…the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive feedback systems, resulting in users deriving more and more value from a product as more users join the same network.
That’s why crypto adoption is so crucial to crypto’s growth as an asset class – and, of course, to crypto prices. As interest in cryptocurrency increases, adoption increases, and so does acceptance – supporting specific cryptocurrency prices directly (and, indirectly, supporting all prices).
So today we’re checking in on cryptocurrency adoption proposals from surprising sources. Think of the stodgiest, most backwards and innovation-averse bureaucracy you can imagine.
Now, add crypto adoption to the mix…
A surprising cryptocurrency proposal in Minnesota
I say surprising because most people simply aren’t paying attention to fiscal innovation proposals from Midwestern state-level agencies.
However, if enacted, this one proposal has the potential to start a giant chain reaction which could cause demand for crypto to explode.
So, what’s going on? Eddie Mitchell reports writes:
The proposed “Minnesota Bitcoin Act” would grant the Minnesota State Board of Investment (SBI) rights to invest state assets into BTC and crypto.
It would also offer crypto as a payment option for state taxes and fees, following Colorado, Utah, and Louisiana, which have various crypto payment options for taxes and other state services.
The Minnesota SBI oversees the state’s retirement funds, trusts and cash accounts, managing just under $150 billion. It’s logical to assume the Minnesota SBI is a fiduciary, meaning they’re legally and ethically required to make prudent decisions. (We explored the role of fiduciary responsibility here.)
Considering their fiduciary role, diversifying with crypto is a big deal! The proposal means that crypto is a valid, investable asset class – at least, according to the fund managers at the Minnesota SBI.
Even better, it means another state would begin accepting cryptocurrencies as payment for taxes and fees.
Now let me explain why that’s a big deal…
How currencies work
First, you need to understand just a little about the economics of currency.
Historically, money was directly linked to commodities – either useful, consumable commodities (wheat, rice, barley – bread and beer in ancient Egypt) or hard commodities (silver and gold). This kind of money makes intuitive sense. You want it for your own consumption, or because of its intrinsic value.
Today, there’s no modern currency that’s backed by any commodity. In fact, most currencies only have value because the issuing nation requires taxes be paid in that currency. The government creates a supply of currency and creates demand for it! When you travel overseas, make sure to spend all your euro or bhat before you get home – because a foreign currency is totally useless outside its issuing nation’s borders.
With me so far? Good.
Now, imagine, just for a moment, that you no longer needed currency for any reason.
We can already pay for just about any product or service with crypto. Just about the only reason we need fiat currency is to tuck into our nieces’ and nephews’ birthday cards… And to pay taxes.
Currencies including the dollar come with a built-in expiration date. Whether people realize it or not, every dollar is slowly, steadily losing purchasing power: 97% over the last century – and a shocking 18% in the last four years alone. I didn’t make the numbers up, folks.
Now, devaluing their currency solves a lot of problems for a government – and it creates a lot of problems for everyone else. Over the last few years, even states themselves have grown frustrated with the steady devaluation of their dollars. And they’re doing something about it!
State governments want to accept cryptocurrencies as payment because they want to own cryptocurrencies! They want to diversify their assets with a store of value that’s inflation-resistant and easy to transact! It’s a whole lot easier to put up a sign that says NOW ACCEPTING CRYPTO than it is to build a state precious metals depository and start stocking it with gold and silver bullion.
That’s a pretty big deal to me!
Maybe you’re thinking that just four states out of the 50 is nowhere near critical mass?
You’re right.
54% of U.S. states are engaged in cryptocurrency adoption
That’s not a typo. More than HALF!
Krishang Saraogi with TechStory writes,
In a significant move reflecting the evolving landscape of financial regulation, 27 U.S. states have introduced legislation aimed at integrating bitcoin and other digital assets into their financial frameworks.
Think about that for a minute.
Over half of all U.S. states are already looking into cryptocurrencies for transactions and/or for investment use for government pensions.
They can see the growing demand for crypto, and that’s only going to make it more attractive to your average investor.
Remember, a rising tide lifts all boats.
So, as more and more state and local governments begin to both invest in and accept cryptocurrencies for payments, that makes crypto feel more legitimate and acceptable to the average person.
And as they perceive it to be more legitimate and acceptable, they’ll start to diversify their own investment portfolios into cryptocurrencies, too.
And that will drive demand for crypto even more.
More government acceptance means more consumer acceptance and demand which leads to higher prices which leads to even more demand.
More government investing into cryptocurrencies also means more consumer acceptance and demand which leads to higher prices which also leads to even more demand.
And so on – in a positive feedback loop – that keeps trending in one direction.
Crypto has a really, really bright future ahead!
And that’s why you want to look into cryptocurrencies right now because the earlier that you invest, the more time that you have for the value in your crypto investments to increase and for you to be able to invest more into crypto.
That all adds up to the potential for even greater returns for cryptocurrency owners. You can be one of the beneficiaries!
If you’re wanting to find out more about cryptocurrencies so you can investigate this opportunity further, request your free Insider’s Guide to Digital IRAs, and get started on your due diligence. Don’t wait!
Alternately, if you’ve made up your mind to begin diversifying with cryptocurrencies right now, you can get started with BitIRA here (takes just 5-7 minutes).
