Dear Germans, From An American
It is time we have a chat about money and how to make it. As an American, please allow me tell you my perspective on how technology can bring huge opportunity into the German investment space which is evidently plagued along with the rest of the world with near zero to negative yielding bonds and savings accounts.
Germany is the only country in the EU to again increase their savings ratio which now stands at over 17% including pensions insurance. In Q1 2019 alone, total savings increased EUR 153 bln to EUR 6.17 tln representing EUR 74,000 per German citizen. EUR 4.5 tln or 75% of all savings in Germany are held with little to no yield. German bonds sit with negative yields. Would you really PAY someone to LOAN money to them?
Nevertheless, the European Central Bank is driving interest rates deeper into negative territory. Savings’ yields in Germany are typically between 2% to 4% lower than savers in Norway, Netherlands, the UK, and the US. Legendary investors such as billionaires Ray Dalio of Bridgewater and Jim Rogers who once was George Soros’s right-hand man and contrarian investor have stressed there are now serious incentives to move money into alternate investments as what was once safe is less so in today’s debt-ridden, fiat-debasing, lower growth world. Banks are cutting nearly 60,000 jobs worldwide with the largest number of layoffs in Europe. Should things go from bad to worse, what is stopping banks from limiting withdrawals such as RBI recently did?
Of course, it is understandable that as prudent, risk-averse investors you would continue to prefer solid, low-risk investments. Given that Germany for all its structural challenges still has the largest GDP in the EU at 21.3% and a population of 83 mln, your purchasing power is immense. Indeed, Germans are perfectly positioned to take advantage of paradigm-shifting technologies that carry exponential rates of growth.
Enter blockchain. While you may have heard of blockchain as a hype, you may not know that blockchain’s superior efficiencies if well applied will result in massive cost reductions that will help force deregulation which in turn brings higher yields to investors such as yourself. Blockchain is revolutionary technology [ALJ1] across most industries.Blockchains solve the problem of getting people who don’t know or trust each other to still come to agreement by using mathematics, cryptography, and peer-to-peer networking to create digital trust. This results in simplified validation which speeds up transaction execution times by reducing process barriers thus materially reducing costs.
As one of numerous examples, institutions issuing their bonds or notes have fewer layers of bureaucracy during the issuance. Customers can then access and transact with retina or facial recognition identification while benefiting from borderless accounting and reconciling of private wallet IBAN accounts on any device. The end result is swifter, more convenient execution at a fraction of the cost as trustees, identification steps, manual administrative work, and unnecessary layers of intermediaries as well as outdated, costly infrastructure are eliminated.
Another example includes using a blockchain-based network to tokenise assets. Such assets can be physical such as real estate and commodities or non-physical such as stocks, bonds, bandwidth, energy, CPU power, file storage, and digital items.
HanseCoin is capitalizing on asset tokenisation by using blockchain technologies to offer greater yields at arguably lower risk as interest rates head lower. HanseCoin’s tokenised securities are part of the next storehold of wealth in a world of fiat debasement and negatively yielding debt.
As a consequence, blockchain can usher in a return to classical economics where fiat currency is pegged once again to something scarce such as gold or even bitcoin. Coinmonks, one of Medium’s fasting growing publications, found the issue sufficiently intriguing and they recently published my article on the matter.
The aforementioned Ray Dalio of Bridgewater who has run one of the top performing funds since the 1970s says:
· “I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the ‘big squeeze”’
· “There will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots”
· “In such a world, storing one’s money in cash and bonds will no longer be safe”
· “It is also a good time to ask what will be the next-best currency or storehold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system”
The answer is clear. Solutions such as HanseCoin transcend and transform the issuance and investment process, the availability of secondary market liquidity through tokenisation, and the convenience for issuers and investors. HanseCoin capitalizes on paradigm shifts. Onerous unintended consequences of MiFID regulations have decimated not just the German closed end fund market with red tape-infested, cumbersome validation and compliance per outdated, non-automated, fixed or misguided algorithmic models. Blockchain combined with artificial intelligence in compliance solves this.
Tens of billions of euros are up for grabs by those very few regulatorily compliant entities who tokenise hard assets by way of blockchain technology such as HanseCoin. The space is young. HanseCoin with its first mover advantage is en route to securing over 50 projects with a total volume of over EUR 250 mln that wish to be tokenised on its platform. And that’s just the start. HanseCoin aims to disrupt massive markets including project finance which stands at 56 bln and Lease & Asset Finance at 334 bln. This all requires solid infrastructure and a credibility transfer, thus HanseCoin’s tokens are designed to list on major exchanges in Germany such as Deutsche Boerse and Boerse Stuttgart who migrate quickly to comprehensive Digital Exchanges benefiting from digital publishing and the collaboration of some of the largest German publications to market themselves. This ensures market wide publicity and ultimately sufficient liquidity when tokens list.
Indeed, HanseCoin is positioning itself to break major ground by tokenising project development yields in real estate, plant machinery and equipment, and industrial infrastructure on land and ships on water. It could be said HanseCoin is tokenising the planet. Save wisely, and stop wasting your savings’ money on low yielding products which are not as safe, liquid, and value protecting as they once were. Consider adding tokenised securities that can carry higher reward with lower risk to make money.