So, the other day, Jarrad Markel and I were celebrating a birthday at his house and the topic of Dogecoin came up. This turned into a spiraling conversation about cryptocurrency, and my friend Paul Markel cracked a few jokes about “Internet Bitcoins,” that made me realize there may be a whole segment of preppers out in the world who don’t see the use-case for a peer-to-peer transacting process that doesn’t rely solely on trust and the government.
As a younger guy that exists in the online ecosystem, I thought it might be my duty to write this article. While I’m certainly no subject matter expert, I do have a bit of experience in the world of cryptocurrency. From 2016 to 2019 I was an avid hobby-miner, and I have been purchasing and storing cryptocurrency since early 2016 as one of my primary preps against financial calamity.
In this article, I’m going to lay-out what I know. I’m also going to tell you why I think cryptocurrency might just be as or more valuable than precious metals as a prep. If the only reason you’re prepping is for the zombie apocalypse, than this article might not be for you. If you prep for self-sufficiency however, I’m going to be talking directly to you.
Is Cryptocurrency a Scam?
Whenever I bring up cryptocurrencies in my circle of friends who prep, they always look at me like there’s a phallic object growing off of my forehead. The main reason for this, is that cryptocurrency as a whole is still viewed as a scam by some people. That’s for good reason too. It’s not uncommon in the world of crypto to hear about ponzi schemes or pump and dump tokens with no real use-case. For example, as recently as 2018, a crypto called Bitconnect, which was a pretty obvious ponzi-scheme, pulled an exit scam on their user-base to the tune of $250 million USD.
That said, I can say that an overwhelming majority of cryptocurrencies are not a scam. For the remainder of this article, we’ll be primarily talking about the two largest tokens that exist on the market today. Bitcoin, and Ethereum. These are both proven projects with real world use. So know that whenever I am referencing a cryptocurrency in general, it’s most likely one of these two.
Remember, nothing in this article is to be taken as financial advice. I am not a financial advisor. I’m just a gun guy, a prepper, and someone who spends a lot of time living in the internet ecosystem. Make sure you do your own research before you make any investments in this space.
Why Should a Prepper Care about Cryptocurrency?
No matter how you look at it, cryptocurrency is inevitable as long as the world remains connected to the internet. Bitcoin started in 2008 as a direct response to the 2008 financial crisis. The objective of the peer-to-peer electronic cash system was to build “a system for electronic transactions without relying on trust.” The founder of Bitcoin was an unknown cypher-punk operating under the moniker ‘Satoshi Nakamoto,’ and his goal was to build a better, decentralized system of currency that would take power away from the central banking system.
So why should a prepper care about Cryptocurrency? Well, it’s true that most pop-culture visions of preppers show a guy in his underground bunker with a shotgun and ten year’s worth of freeze-dried food stuffs. In this space however, we all know that it’s about more than that. Prepping is about self-sufficiency, and not needing to ask for help. It’s about being able to help your neighbor when the government can’t even help itself. The reality is, TEOTWAKI is a worst case scenario, but it’s not the main reason any one preps at all. We prep for calamity, and we prep for chaos, but most of all we prep because the world will inevitably change.
The U.S. Dollar has decreased in value by 2% to 5% every year since the turn of the century. We’ve seen financial crisis after financial crisis strike, and the solution is always to print more USD backed by nothing but promissory notes. Bitcoin and Cryptocurrency are a hedge against the dollar going defunct in a society that hasn’t fully collapsed, just the same as ammunition is a hedge against the world going defunct in a society that has fully collapsed.
In my opinion, the end of fiat currency backed by government promises is an inevitability.
Important Things for Preppers to Know About Cryptocurrency.
If you’re here, I’m going to assume that you are brand new to the world of crypto. For that reason, I’m going to lay out some basic fundamentals that you should know. There will be links in every sub-section that will take you to other websites. These are websites and tools that I personally use to keep track of my own crypto holdings. It’s worth noting, that while I do dabble in short-term investing, over 75% of my cryptocurrency holdings are on a hardware or paper wallet, specifically held onto in the same way one would hold onto gold or silver bullion or bars.
The Blockchain in a Nutshell.
What is the mysterious Blockchain everyone is always talking about? How does it work? What does it do? Why do I care?
Here’s a great video from Wired explaining it. The woman, who explains the Blockchain in five different levels of understanding, does an amazing job of breaking this all down in a very digestible way.
Where to Buy Crypto.
If you’re brand new to cryptocurrency, and have never purchased it before, the best way to enter the space is through Coinbase. While it doesn’t have every cryptocurrency on the market listed, it has the major players all in one place. It is also a simple and easy to way to start your research into the popular cryptos that exist, and it has an efficient means to turning fiat currency into cryptocurrency, and cryptocurrency back into fiat currency. It’s also worth noting that Coinbase has their own mobile wallet system that is very user-friendly, and allows the user to gain direct access to the keys of their crypto, which we’ll explain a little bit later in this article.
If you want to dig deeper into the rabbit hole, you can check out exchanges like Binance, and Kraken as well. These are also two reputable exchanges that service the United States. Their functionality is a little less user-friendly, but they’re perfect for someone who is looking to get deeper into the world of Cryptocurrency.
For research purposes, I highly recommend CoinMarketCap, and CoinGecko. These are two platforms that track the entire market, and they will also help you read more into the development process of each token.
When to Buy Crypto.
If you dive deep into the world of crypto, you’ll find that the market for each currency varies wildly. Some days cryptocurrency sky-rockets, other days it drops in value dramatically. This is because the market for crypto is extremely volatile right now as crypto continues to prove itself not only as a store of value, but as a purpose-built tool to advance technology and currency around the world. Knowing this, it can be hard to make a decision on when is the right time to get in. I’m going to simplify all of it for you since you are a prepper.
Dollar cost average. The same thing you would do with Gold or Silver.
When you want to put a few bucks in, put a few bucks in and don’t worry about the price at the time of your buy. You’re accumulating the currency itself, and storing it for an emergency. You’re not day-trading here and trying to make a living off of the market. Just DCA into your positions, and hold onto it until the need for it finally comes up.
Use the two webpages above (CoinGecko and CoinMarketCap) to keep track of the prices and do research. If you ultimately decide to hold your crypto on an exchange, try not to get sucked into checking the charts every day and letting your emotions drive your decisions.
How to Keep Your Crypto Safe.
If you’ve spent any time at all paying attention to cryptocurrency, then you’ve probably heard about people misplacing millions of dollars. As a prepper, I feel your concern. I’m going to simplify this process for you as well, and make it super easy for you to keep your cryptocurrency safe.
First of all, understand that a cryptocurrency wallet is not a wallet like you keep in your back pocket. It’s easy to think of it this way, as when you open the wallet on your device, it displays your crypto collection in whatever way your wallet’s user interface chooses. The truth of the matter however is that your cryptocurrency exists within the blockchain ecosystem itself. You access it through your wallet with a set of keys. The keys are the code, or password that allows you to access the storage of your crypto inside of the blockchain. Think of your wallet as the keyring that gets you into your shed to get your tools.
As long as you have the keys to your shed, you can get inside of it and access your tools. There’s a few ways to store the keys to your cryptocurrency. Some are safer than others. The least secure way would be to trust that an exchange like Coinbase, Binance, or Kraken will upkeep your shed long-term. This isn’t the safest bet, because these are companies, and companies sometimes dissolve or get regulated out of existence. We have seen this in the past with companies like Poloniex or Mt.Gox. The next least safe option is to store your crypto on a hard-drive wallet on your PC. While this is semi-safe, it’s dangerous in the same way as storing gold inside of your house. Someone could steal it.
Offline Methods of Storing Keys.
There are two incredibly safe ways of storing your cryptocurrency. The first is a hardware wallet. You can find hardware wallets on Amazon pretty easily. Two of the best brands in my experience are Trezor and Nano. That said, when looking at a hardware wallet, do your own research and find the wallet that fits your needs the best. If there’s interest, I may review some of these in the future with a follow-up post. The major downside here is that you’re relying on a piece of electronic hardware to keep your crypto safe. While hardware wallets are notoriously durable, at the end of the day it’s still a piece of hardware, and hardware can break.
The most secure way of storing your cryptocurrency is through the memorization of your keys. Whenever you generate a wallet, you are given a security phrase. The mnemonic seeds that are generated are the keys to your cryptocurrency. Memorization and paper backups are how I secure all of my cryptocurrency wallets. While I won’t say where I store the paper back-ups, for my own protection, each of my wallets is backed up in this non-electronic way, which ensures I will never lose access to my cryptocurrency.
How Much Crypto Should You Have?
This is the purely subjective section of the article. I’ll tell you personally that I keep about 10% of all my money in cryptocurrency, and I have since around 2016. I also hold a very small amount of gold and silver bullion as well. For you, there is no right or wrong answer in how much cryptocurrency you should own. You should only invest what you are comfortable with, and never let greed or the fear of missing out drive your decisions. That could be a $5 weekly buy in on something like Coinbase that you move off of the exchange once a month, or it could be much more.
The answer here all depends on you and your current financial situation. In a true TEOTWAKI event, I don’t think cryptocurrency will hold any true value for you. Unlike gold or silver, cryptocurrency requires, at the very least, a working internet infrastructure to exist for the time being. This could eventually change however, as some rural parts of Africa have already started to find work-arounds using SIM cards to swap their cryptocurrency without having it ever touch the internet.
How to Build a Small Crypto Stash for Free.
Much like the days of old, where you would stand in a river and pan for gold, or dig deep into a mountain to find a vein of silver, you can get cryptocurrency through nothing more than work. The fortunate thing about getting cryptocurrency through work however, is that all you need is some electricity and a graphics processing unit, or an already establish collection of other cryptocurrencies.
There are two ways that you can get cryptocurrency for (mostly) free. There are other methods as well, such as Coinbase Earn, or a few select mobile games, but I’m going to discuss the two primary ways here. These are the two tried and true methods, and they are the best way to actually build a collection of cryptocurrency on your own without investing hard-earned fiat. Which one you choose depends on what type of blockchain you are primarily planning to save in.
In the world of crypto, there are two primary types of validation for the blockchain. These two methods are Proof of Work, and Proof of Stake. Let’s talk about them a little bit.
Proof of Work Cryptocurrency.
Proof of work is a consensus mechanism that validates transactions inside of the blockchain. Basically, the TL;DR version of this is that processing power is needed to validate the decentralized transactions occurring on the blockchain. To incentivize people to contribute to the need for processing power in a proof of work system, cryptocurrencies award contributors with a small amount of cryptocurrency every time their machine is used to validate a transaction. If you want to learn more about this from an expert, I suggest checking out this article.
How does this work, and where can you get your virtual pick-axe? Well, it’s both complicated and not complicated. We’ll go with the easiest version, and if you follow through and decide you want to learn more, then you can see how deep the rabbit hole goes on your own. To get started all you need is a basic personal computer with a halfway decent graphics processing unit. Anything from the NVIDIA 10 series and up will be sufficient to get you in the water with your pan.
For beginners, I would suggest checking out NiceHash. They’re a reputable company that has been in the game for a long time. For full disclosure, they did experience a major security breach in 2017/2018 which saw a lot of miners losing a lot of money. Their reputation actually comes from that incident though, where they personally reimbursed every single miner that lost money. They’re a trustworthy source to get started in mining.
Proof of Stake Cryptocurrency.
Proof of stake cryptocurrency is a bit different than Proof of Work. Unlike Proof of Work, the processing power comes without the need for electricity and extremely high-end hardware, and puts the power in the hands of the actual cryptocurrency holder. How it works is you stake cryptocurrency you actually own into the validation process, and the blockchain chooses nodes to secure the blockchain at random. If the transaction turns out legitimate, then you as well as other members of the node you are in get rewarded with cryptocurrency.
Think of proof of stake as a high-interest savings account. That’s probably the best way to describe it. You earn a percentage of your cryptocurrency back based on the actions and movements within the blockchain itself. That percentage is based on the amount of the cryptocurrency you have staked. You can read more about proof of stake consensus here on the Ethereum webpage.
If you’re using something like Coinbase, you can also easily stake PoS cryptocurrencies directly inside of your Coinbase account or wallet.
Final Rounds on Cryptocurrency and Preparedness.
At the end of the day, anyone who is into preparedness, or preparing for a financial crisis, should be looking at cryptocurrency. The fact of the matter is, regardless of the volatility in the market, adoption is already occurring around the world. Countries that are third-world are turning to cryptocurrency as a viable alternative to their own economic systems, and many of them are already starting to see benefits from it. Just like gold and other precious metals, cryptocurrency should have a home in your preparedness check-list.
That said, I’m just one guy with an opinion. I’m sure there will be loads of questions and thoughts about this article, so go ahead and leave them in the comments section down below. I’ll do my best to answer those questions, or point you in the right direction if I don’t have a solid answer from my own knowledge or understanding of the space. I know that there is a lot of speculation and volatility in the market, which to some makes cryptocurrency not a valuable prep, but hopefully this article helped convince you just a little bit that maybe this whole Bitcoin thing isn’t just some internet fad.