Charlie Munger, Warren Buffett’s longtime right-hand man, recently predicted that over the next 100 years, inflation will cause fiat currency (that is, government-issued currency) to plummet to zero. Munger’s track record speaks for itself, so people tend to listen whenever he has something to say about markets or the economy.<\/span>\u00a0<\/span><\/p>\n These comments are noteworthy given the current economic environment, with soaring <\/span>inflation<\/span><\/a> grabbing headlines and hurting consumers’ pockets. But from an investment perspective, people have a worthwhile option in front of them to place a bet with Munger’s comments in mind.<\/span>\u00a0<\/span><\/p>\n It’s the world’s top cryptocurrency, an asset that he has publicly eschewed. But I think that if you’re looking for the opportunity to build life-changing wealth, then you should seriously consider <\/span>Bitcoin<\/span><\/strong> ( BTC<\/a> 0.77%<\/span> )<\/span>.<\/span>\u00a0<\/span><\/p>\n Cryptocurrencies<\/span><\/a> can no longer be ignored by investors. And Bitcoin in particular, with its decade-plus history, is cementing itself as a smart place to park your money.<\/span>\u00a0<\/span><\/p>\n Institutional investors, such as ARK Invest, are extremely bullish on Bitcoin. And corporations like <\/span>Block<\/span><\/strong>, <\/span>MicroStrategy<\/span><\/strong>, and <\/span>Tesla<\/span><\/strong> have even converted some cash on their balance sheets to the cryptocurrency. With the introduction of secure and seamless connections between the traditional financial system and the crypto economy, like <\/span>Coinbase Global<\/span><\/strong>‘s\u00a0Prime offering, it is easy for entities to gain exposure to the burgeoning asset class.<\/span>\u00a0<\/span><\/p>\n Then there is the potential for real utility. Other nations could follow El Salvador in making Bitcoin legal tender within their borders. And the massive global remittance market, at approximately $500 billion, is ripe for disruption due to slow processing times and high fees. Again, bitcoin could be the solution.<\/span>\u00a0<\/span><\/p>\n Although future returns might not resemble the past, I believe there is a material chance that <\/span>Bitcoin continues beating the market<\/span><\/a> in the years ahead.<\/span>\u00a0<\/span><\/p>\n Inflation, spurred by the ultra-loose monetary policy since the Great Recession, is a key component of modern capitalism, as it encourages consumers to spend. And this is what Charlie Munger was alluding to.<\/span><\/p>\n Bitcoin, on the contrary, is characterized by absolute finiteness. There will only ever be 21 million coins in circulation, and this is based on computer code that can’t be tampered with. A situation like this is in stark contrast to fiat currency. <\/span>\u00a0<\/span><\/p>\n Image source: Getty Images.<\/p>\n<\/div>\n With inflation reaching record levels in recent months, the concept of Bitcoin as a hedge against rising prices is coming under intense scrutiny. Add in heightened geopolitical risk, and investors would expect safe-haven assets, like gold, to receive a boost. This situation has played out, as the precious metal is up about 8% this year. Bitcoin, on the other hand, is down 19% in 2022 as of March 8. But it’s worthwhile to zoom out and gain a better understanding of the true goal of investing.<\/span>\u00a0<\/span><\/p>\n It is not a smart idea to jump in and out of asset classes on a short-term basis simply because of certain macroeconomic events. The goal of investing, which is a long-term game (at least five years in the future), is essentially to increase your purchasing power over time. This simple fact is why holding cash is such a poor financial decision over a longer time frame. Inflation eats away at its purchasing value.<\/span>\u00a0<\/span><\/p>\nBitcoin is now a legitimate store of value<\/span>\u00a0<\/span><\/h2>\n
Bitcoin as an inflation hedge<\/span>\u00a0<\/span><\/h2>\n
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