Jackson, now 2 years old, loves playing with his LoveEvery stacking cups set. Each cup in the set has a different pattern of holes on the bottom and sides. So when water is added in, it’ll come out in different patterns and at different rates.

As a curious toddler taking a bath, Jackson loves to fill up different cups and compare / contrast how fast or slow water leaks out (just like in the stock photo of the toddler above from the LoveEvery blog)

As entertainment value, I’d give it 5/5 stars!

However, these cups are NOT good for rinsing out shampoo. That’s because the water either leaks out faster than I can scoop. Or, because of the holes on the sides / bottom, it sprays water right in Jackson’s eyes as I am trying to wash out the shampoo on his head.

When it comes to washing out shampoo, I would only rate these cups 1/5 stars.

Zooming out

In general, life is easier when you pick the right tool for the job.

So when it comes to bath time play, the stacking cups are great. But it doesn’t make sense to use these leaky cups for other jobs, like rinsing out shampoo!

Now, zooming out, there are many situations in life when it doesn’t make sense to use a “leaky cup”.

I want to talk about one of those situations: saving money.

The art and science of saving money

As a parent, I’m responsible for where to store our family savings. Let me unpack this.

By “savings”, what I mean is the money that we earn today but don’t need / want to use right away. Instead, it is the money that we plan to use later…whether to cover the mortgage, pay for a vacation, settle tuition expenses, etc.

And specifically, when it comes to where we store our savings, this could range from keeping cash in the bank, buying stocks, bonds, real estate, or another type of asset.

(for more background context, I wrote about the make up of our savings here)

What to consider when it comes to your savings

When it comes to saving money, my two primary goals are to make sure:

1. whatever money we save today, we’ll be able to access it in the future
2. Whenever we need to use the money (ie. whether it is 1 or 5 or 10+ years from now), we’ll be able to buy as much stuff with it then that we could today*

*to hammer point 2 home, I desperately want to avoid a scenario where I save ONE MILLION hard earned dollars in the bank today, knowing it could buy the equivalent of a nice vacation house in Colorado…but by the time I go to use it in a few years, to find out that same ONE million dollars can now only afford a roll of toilet paper, like what is pictured below.

I don’t know about you, but I would be pissed off if my ONE MILLION hard earned dollars became worthless. If that were the case, why bother to even save, right?

Through this lens, when it comes to my family’s long term savings, it’s clear why there are some forms of money that I would never use as savings. Those include the Argentinean Peso, Lebanese Pound, or the Venezuelan Bolivar.

Why? It’s because they leak. A LOT. (and just to be clear, this is a bad thing)

How much is too much leaking?

Through countless hours of studying, I’ve realized that you can think about different kinds of money (ie. US Dollars, Euros, Argentinean Peso, etc) as the different cups in the LoveEvery toy set. Then, all you have to do is replace the word “inflation rate” (the number that CNBC throws out every day) with how leaky each cup is.

Putting these cups next to each other, it’s clear some are better than others when it comes to leakiness.

In the real world:

• Historically, the US Dollar has a 2% inflation rate. So think about this like a cup that only leaks 2% of the water out.
• The Argentinean Peso has nearly a 100% inflation rate (source). So this water cup will leak nearly ALL of its content out right away.
• The Venezuelan Bolivar has >>100% inflation rate (source). So now, imagine a water cup that doesn’t even have a bottom anymore…

Now, do you see why I wouldn’t store my savings in the Argentinean Peso or the Venezuelan Bolivar?

It’d be the equivalent of me putting water (ie. my savings) into a cup that has a lot of holes in it and one that will leak away fast! (again, a bad thing)

Everyone wants the US Dollar

It also explains why around the world, everyone wants the US Dollar. Even though it still leaks, it leaks the least.

As a matter of fact, when Tiffany and I traveled through Argentina back in 2015 (back story), everyone wanted us to pay using crisp and new $100 USD bills (vs. mangled up old bills). It’s because Argentineans were (and still are) storing their savings in US Dollars and wanted the crisp ones to put under their mattress.

Good news, bad news

The good news is that the US Dollar is the most desired form of money around the world. And it’s because it leaks the least (at historically, ~2%).

So if you are earn and hold US Dollars, good job! You are already doing better than most by default.

However, the bad news is that now (and going forward), the US Dollar is leaking more. Instead of 2%, it’s now something like 6% (source) with no signs it’ll be going back to 2% anytime soon…

Zooming out (again)

As the US Dollar leaks more, it is inevitable that more people will become aware that their savings are leaking away. That’s because each of us will notice (or have already noticed) that it is is getting harder to save up for things like your children’s schooling costs, buying a house, retiring early, etc.

So, knowing what I now know about leaky money, I’ve decided to do something about it.

Let me guess, bitcoin, right?

At bath time, I don’t use the leaky cups. It doesn’t make sense to. Instead, I use a cup that doesn’t have holes on the bottom. It’s just a better tool for the job.

Bitcoin is like a water cup. That doesn’t leak. And it doesn’t have holes on the side or bottom. And no matter what, no holes can be added either.

“How it does that” is a whole series of future articles that digs into monetary policy, decentralization, proof-of-work, mining, the Nakamoto consensus, and more.

But for now, the key takeaway idea is that bitcoin is a new savings tool that doesn’t / can’t leak away your wealth.

And with it, bitcoin is becoming an attractive place for families around the world to include as part of their long term savings portfolio. It’s not a coincidence that people living in countries with higher inflation also have higher bitcoin adoption. Like in Argentina (source), Lebanon (source). And Venezuela (source).

Conclusion

As a parent, I believe it’s vital to save for your family’s financial future. And I don’t think it’s too much to ask to have a way to save that doesn’t leak.

For me and my family, bitcoin is the water cup that doesn’t leak away our savings.