3 Money Lessons I Learned While Travelling
Being in the middle of travel right now, I’ve not had a lot of time to wax philosophical about the adoption of bitcoin. But I have had time to reflect on the way that the various placed I’ve been think about and use money.
These experiences have been useful in framing how I spend my time on a day to day basis. My problem is not in finding what to work on, it is choosing the best thing to work on.
If anything, I have too many opportunities and not enough time. So spending time talking to and interacting with people from different countries helps in this manner by giving me “on the ground” knowledge of people’s economic realities.
I can use this information to stay informed on what I should be spending my time on to positively affect the most amount of people.
Cash is King
If I’ve learned one thing on my travels, it is that most people still use cash. It is still the primary and dominant way for people to transact with one another.
In city centres such as London, Mumbai, and Amsterdam, digital payment methods definitely have solidified their presence. However, when travelling to more rural areas, especially in India, it became evident to me that digital payments are a product of convenience.
People will use what is convenient to pay in and merchants will evidently use the method that the majority of their audience wants to pay them with.
People are Aware of Inflation
Even though people knew that the value of their cash was decreasing over time, they were still willing to hold, save, and transact in cash. This speaks to how embedded cash is in our culture.
It also speaks to the day to day nature of a segment of the population. I realized that saving for the future is a luxury, as it isn’t even an available option for some when there’s a family to feed with your daily earnings.
My prediction here is that communities will need to experience a certain level of economic pain in regards to currency devaluation before they’re willing to look at switching to another currency entirely.
The key here is understanding that even though individuals can make the switch to something like a “bitcoin standard”, unless the broader community does it, individuals become economic islands.
We are Early
This naturally brings me into the second thing I learned in my travels. With respect to bitcoin adoption, and wider cryptocurrency adoption, we are so very early. Although people generally know that cryptocurrency exists, very few people know “what it is”, “how it works”, or “how it solves a problem”.
The issue here is about being aware that there is even a problem. Although most people were aware inflation exists, not enough people are conceptualizing it as a problem that affects them as an individual, or as a problem that is affecting them at a pace worth worrying about.
I’ve said this in previous newsletters, but things are going to have to get a whole lot worse before we see another wave of adoption.
It does seem like each wave of adoption corresponds with some major economic event. For example in 2020, because of the COVID-19 crisis, trillions of dollars were issued in a very short period of time. This naturally led some people to worry about what impact this would have on the inflation rate of their country.
As expected, within 12-18 months, Bitcoin set new all time highs, partially as a result of larger economic actors joining the game, but also because a ton of new adoption at the individual level as people started worrying about the integrity of their savings.
I surmise that we’re in, or on the precipice of the next global economic event that will trigger another wave. Hopefully this takes us beyond the “early” stage.
The next major economic event
I think that the next major economic event will be related to currency controls.
In February of 2022, we saw Canada implement currency controls by shutting down the bank account of people that supported the freedom convoy.
To my surprise, people we spoke with in India were aware of this specific event taking place, and expressed their concern for the implications of these actions taken by government.
This is in conjunction with the economic warfare taking place between Russia and the rest of the world. Currency controls are going to become a norm, and with more control comes more demand for things that cannot be controlled.
India’s UPI is a pre-CBDC
The people of India have been on the receiving end of consequences from currency controls. In 2016, the Indian government abruptly ended the acceptance of the 500 and 1000 Rupee note.
This event became known as Demonitization. With this event came the official launch of UPI (Universal Payment Interface). This demonitization event was, and still is largely controversial. We heard anecdotes from both sides of the debate while in India.
Proponents of demonitization say that it has helped governments tackle money that only circulates in the cash economy, thus resulting in less tax revenue for the government. On the other hand, demonitization took place in a span of 3.5 hours. So if you were holding 500 or 1000 Rupee notes at 20:15pm (when the announcement was made) you had 3.5 hours to deposit them in your bank account, or else lose the value of the notes.
So naturally, those without inside information, or those without the knowledge that this demonitization was taking place ended up losing out the most. Regardless of where you stand with the demonitization, this is a form of currency control wherein the outcome had winners and losers. This event perfectly illustrates three things.
Currencies are backed by nothing but trust
Governments can render units of currency valueless
We are at the whim of those who control the levers of the money supply
In my opinion, this is a sign of things to come when CBDCs are implemented globally.
Pre and Post CBDC
The traceability of Indian currency is far greater now that UPI has been implemented across the country.
Almost everywhere we went, people would accept digital Rupees through UPI, as well as cash. I look at both the digital payment system, and the behaviour of the government as indicators for what a post-CBDC world will look like.
Of course the government wants to put centralized digital payment solutions in place because it gives them more control over the currency. They can track its use, trace the path it takes through the economy, and redirect it if need be.
But these are not features that are designed with the end user in mind. Those within the cash economy have the most to lose from a system such as this.
I am against systems that sacrifices the interests of the majority poor, in order to manifest systems that benefit the minority rich.
I encourage those reading this newsletter to challenge the idea of the usefulness of a government controlled payment system, as I’m sure I’m biased.
Preparing for things to come
I spend a lot of time trying to figure out how the world is likely to shift. A huge takeaway from the last 6 months of travelling is that whatever the outcome will be, there will be many currencies.
I think government money can survive another stretch of time. But the longer that this whole charade draws on, the more absurd things will get.
My next letter will be on negative interest rates, what they are, and what you can expect.