In 2008, a mysterious person using the alias Satoshi Nakamoto created Bitcoin. The intention was simple – to provide a decentralised digital currency free from any of the banks that had just caused one of the worst global financial crises in history.
Fast forward to today and interest in Bitcoin is at an all-time high. Its price has soared from a fraction of a penny per coin in 2010, to over $68,000 earlier this year. Since 2015, its value has soared by more than 36,000%.
Despite growing mainstream adoption – from PayPal to Microsoft – Bitcoin has evolved over time as an asset class to become more than just a digital currency.
Investors now see it as not just a medium of exchange, but as a store of value and a hedge against inflation.
This shift has resulted in an increasing number of financial institutions embracing Bitcoin, with banks gaining exposure to cryptocurrencies within their portfolios. Wall Street, once sternly against Bitcoin, is becoming cryptocurious.
Critics of Bitcoin and other cryptocurrencies believe it to be a speculative bubble. But after more than a decade of commentators predicting its demise, it continues its jagged but upwards trajectory.
For many retail investors, Bitcoin has become a must-have in their portfolios.
Daniele Izzo, CEO and co-founder at intelligent crypto debit card and wallet Amon Tech, believes cryptocurrencies can go further.
“Cryptocurrencies are here to stay,” says Izzo. “We see Bitcoin as the retirement plan for millennials and the generations to come. But not just Bitcoin – we believe individuals should diversify their portfolios and invest in many cryptos.”
HODL vs inflation
Millennials, Gen Z and future generations face a completely different retirement route to their parents. Millennials have been hit by two recessions in their lifetime and saw their wages stagnate following the 2008 financial crash.
Soaring house prices have put the property ladder out of reach for many millennials. They often find themselves in the so-called “rent trap”, which eats into disposable income that could otherwise be allocated towards savings.
Meanwhile, record-low interest rates mean consumers are lucky to be offered 1% back on their savings. At the same time, inflation recently hit 6.8% in the US, while UK inflation has soared to a 10-year high of 5.1%.
That means the value of consumers’ cash held in most banks is dwindling each day.
Economists don’t anticipate a slowdown in inflation any time soon. The US has printed $13tr since the start of the pandemic – more than the US spent in all its wars since 2001. As that money continues to enter circulation, the dollar becomes weaker.
By contrast, Bitcoin has a finite number of coins that can ever exist – 21 million. This prevents its value from being diluted in the same way as fiat currency, with each bitcoin divisible into smaller units.
All this has helped to draw comparisons between Bitcoin and gold – historically the safe haven for investors in times of financial uncertainty.
According to a JPMorgan research note shared with its clients in October, Bitcoin is looking more and more like the new gold.
The investment bank said: “Institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.”
In an inflationary economic environment, digital-native millennials have increasingly turned to retail trading apps and cryptocurrencies in the pursuit of better returns on their savings.
Earn passive income from crypto
But one problem with holding cryptocurrency is that investors can only crystalise their earnings from rising cryptocurrency prices rise by withdrawing it as fiat currency. This often sees the user charged a fee by a cryptocurrency exchange, such as Coinbase, and also exposes investors to capital gains tax on any earnings.
It also means those in it for the long term will have to reinvest at a later date – possibly at a higher price – if they want to increase their cryptocurrency holdings.
Amon Tech believes there should be another way that lets investors keep their crypto and earn money from their investment.
To solve this problem, it has created a wallet that lets users buy and sell cryptocurrency with fiat currency that is linked to Amon Earn, which lets investors earn up to 12% annual interest on their crypto assets.
“Traditional wallets commonly don’t offer perks,” says Izzo. “With Amon Wallet, users can earn passive interest income on Bitcoin, Ethereum, XRP and more – with weekly payouts.”
Investors can then spend their interest via the Amon Card, which comes with perks such as cashback and a free monthly meal from Uber Eats.
In other words, investors can keep their crypto while earning passive income, then spend those earnings with a linked cashback-providing debit card.
By bridging the gap between fiat and cryptocurrencies, millennials can effectively make Bitcoin part of their retirement plan.
“At Amon, we believe in a future where fiat currencies and cryptocurrencies will co-exist,” says Izzo. “Crypto is already a part of the future of economies. Bitcoin is hailed as one of the best stores of values, with several large institutional players already investing.
“Only time will tell how crypto and fiat will co-exist, but we firmly believe in a world where this is possible.”