Would crypto be a good asset in a crisis
According to a recent disaster preparedness survey, more than 75% of Americans are not ready to have enough food or water, even after going through COVID-19.
When it comes to money, some experts recommend a target of $ 2,000 in cash in the event of bank failure. However, the US Federal Reserve reports that nearly 40% of Americans could not handle a $ 400 cash emergency. It makes sense to have food, water and money available in the event of a disaster.
But disasters and crises take many forms. Natural disasters such as the wildfires that are spreading this summer in California or the hurricanes that ravage the east coast of the United States have caused mass evacuations. As we have all seen and experienced over the past year, civil unrest or a pandemic can force families and individuals into protective lockdown.
Not to mention the possibility of an economic collapse. Consider the consequences if a country’s currency becomes hyperinflationary, or if supply chain disruptions cause prolonged stockouts in stores, or if the 2008 housing collapse is repeated globally – producing a prolonged economic crisis, which can be just as dangerous as any natural crisis. calamity.
In all of these scenarios, and other macro-level crises, would it be a good idea to have some of your investments in cryptocurrencies along with a supply of cash, food, and water? The answer is yes – but it is a qualified yes (besides the most important disclaimer that this is NOT Financial advice).
Scenario 1: SHTF aka Mad Max Post-Apocalypse
We must remember that the massive adoption of cryptocurrencies is still several years away due to price volatility, regulatory scrutiny, and technical complexity. So, in an “S ** t Hits the Fan (SHTF)” scenario where economic upheavals occur or society collapses, not everyone will universally accept cryptocurrencies as a method of exchange. Under these circumstances, the cryptos would likely be worthless.
In a “Mad Max” type scenario, it is better to have skills to trade such as woodworking, nursing, butchery, mending clothes and shoes, repairing small engines, manufacturing. candles and soaps, etc. Additionally, fiat currencies may not be worth much either.
Perhaps the best option to consider from a ‘currency’ perspective would be to have a pre-supply of durable goods such as bandages of different sizes, matches, candles, disinfectants, soaps, shampoos, zip-loc bags, toothpaste and toothbrushes, socks, large garbage bags, bottled water, plastic cutlery, paper plates, toilet paper, aluminum foil, plastic sheeting, zip ties , duct tape and hand tools. All of these have multiple uses with increased value in an SHTF situation.
If the power grid goes down, it will be difficult, if not impossible, to access the internet and subsequent crypto exchanges to remove your crypto and convert to dollars. Even though your funds are converted and transferred to your bank, the banking system may not function fully and may be down intermittently or permanently.
In this type of ‘worst case’ scenario, it is a better idea to have a reserve of silver that can easily be measured in fractions of ounces as a method of exchange, like these Canadian silver plates of. two ounces. Each plate contains 19 silver âcoinsâ with unique weights and multiple denominations that make up two ounces of silver.
These âflexâ silver coins are a solid store of value and have served as a reliable method of exchange for centuries, with a unit of account stamped in both troy ounces and dollar equivalent, which almost. everyone understands. Unfortunately, the cryptos lose in the SHTF scenario.
Scenario 2: economic or financial collapse
Okay, enough dystopian dialogue – which is unlikely anyway.
However, a temporary government shutdown, prolonged recession, or economic collapse in some countries are much more likely to occur, sending shock waves through global financial markets.
In these cases, select cryptocurrencies such as and would be your best options as an extended store of value, with a stable coin such as the USD coin as the preferred method of exchange and unit of account.
As long as the power grid, mobile phone networks, and the internet remain intact, these crypto assets can be used for any type of payment or peer-to-peer transaction that operates independently of a bank or government.
It’s best to have the bulk of your cryptocurrency assets off-chain, in cold wallet storage such as a Trezor or Ledger hardware wallet – before disaster strikes. Also, be sure to keep these cold storage devices in a secure location that is physically separate from your wallet recovery phase.
Your cryptos can be protected from hackers in a cold store, until you feel comfortable putting them back online. Avoid storing unstable cryptos that aren’t in the top 10 market caps – people will only care about major cryptos (if they care) during a crisis.
Scenario 3: Natural disaster evacuation
In any evacuation scenario, cryptocurrencies are arguably the best asset due to their discreet portability and easy mobility.
Whether it’s a hurricane, flash flood, chemical spill, nearby riot, tornado warning, bomb threat, or whatever item that requires you to leave quickly, your cryptocurrencies in a chiller wallet are your best bet.
You can hide it in a coat liner or in plain view hanging from a key ring. It’s simple to move and instantly hide billions of assets stored on any of these devices – try this with any other asset.
Just move you and your loved ones out of harm’s way to an area with mobile phone service or internet connectivity and you can access your cold storage assets. Make sure you don’t leave your recovery phrase in the disaster zone, otherwise your cryptos may never be unlocked if the recovery phrase is destroyed or lost.
Diversification of disasters
The bottom line is, no asset is perfect for every disaster scenario. As with your investments, your âdisaster assetsâ should be diverse and mobile.
Keep in mind that your most valuable assets can change during a crisis. For example, in a prolonged global food shortage, a bag of protein bars will be worth more than an ounce of gold in a few months.
Make sure you have a few weeks of food (minimum 2,500 calories per day per person) and water (minimum one gallon per day per person) on hand. Also, make sure you have a mix of easily divisible cash and cash, and cryptocurrencies in a cold storage wallet – don’t forget the respective recovery phrase for the wallet.
Cryptocurrencies can be a solid asset option during a crisis, as long as the power stays on and internet access is available.
On the reverse
- Very few families or individuals are equipped for any type of protracted disaster scenario and have not thought about what they could do to prepare in advance.
- Currency and methods of exchange are a consideration – but not the most important, especially if public safety crashes, a government is overthrown, or a cataclysmic natural disaster strikes.
- Safe shelter, water and food are the most important assets in the event of a disaster.
Why should you care?
Even though we have been through the COVID-19 pandemic, we are lulled by a sense of complacency. Far too many people rely on their local, state and federal governments to get them out of a crisis. What if government assistance does not arrive or arrives too late? Be your own helper and safety net.
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