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NOTE: This blog post is based on a chapter in my book, Beyond Wall Street:  7 Principles of Risk Management and Wealth Preservation. Written in 2023, this chapter has been slightly updated and published here to reflect the current market.

Over the course of my career, I’ve witnessed four major economic bubbles rise, grow, and then burst. I’ve learned important lessons from them—lessons I actively apply in my day-to-day interactions with clients and in my personal investing strategy.

Recognizing bubbles is a crucial part of risk management. The better you are at spotting a bubble bursting, the more likely you are to take profits off the table, protecting your finances and overall investing capacity.

BUBBLES IN NATURE

Markets move in cycles—periods of growth followed by contraction. Financial bubbles are a part of this cycle, much like hurricanes are part of the natural ecosystem and climate of Florida.

Bubbles are characterized as abnormal activity within a particular sector or asset class that disrupts the market’s typical or natural rhythm. This disruption often results in rapid, unsustainable price increases—when the bubble bursts, it can lead to a sharp, significant decline in the affected asset’s value. This sudden downturn contrasts with the stability that typically characterizes a healthy and well-functioning market environment.

Preeminent American economist Hyman Minsky theorized that “stability leads to instability, the more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.” In other words, a strong, stable economy encourages riskier behavior and unrestrained monetary policy, making borrowing easier, which then can worsen crises if and when they occur.

Good risk management can’t eliminate market downturns, but it can help investors navigate them. You can control your own exposure—but not the crowd’s behavior. When collective euphoria gives way to panic, even the soundest portfolio can take a hit.

And that’s why spotting bubbles matters.

THE STATE OF TECH

To start, the tech sector is bursting with good ideas—great ideas, even—that never really get off the ground. For every Apple, there are about a thousand rotten ones. Even if they start to succeed, the likelihood of becoming the next Microsoft, Google, or Amazon is becoming increasingly complex as the field grows more crowded.

Truly novel ideas are rare—but when they emerge, excitement can quickly spiral into mania. The enthusiasm can grow out of control. Many economists now warn that we’re in the middle of an AI bubble reminiscent of the late-1990s dot-com frenzy.

After years of pandemic-fueled growth, tech stalled in 2022 as higher interest rates slowed the economy. Giants like Alphabet, Meta, Microsoft, and Amazon laid off thousands as revenues and stock prices fell. Then AI reignited the industry. Microsoft’s multibillion-dollar investment in OpenAI—creator of ChatGPT—triggered a race. Every major platform, from Google to LinkedIn, rushed to roll out AI tools. Startups followed in droves, and investors flooded the sector with cash.

On the surface, the NASDAQ looks just shy of its all-time high. But if you dig deeper, valuations are already well above dot-com levels.

THE DEEPER ISSUE

In the last decade, many renowned tech stocks have been reclassified into other categories. It’s not entirely clear why, but Meta (Facebook) and Alphabet (Google) were reclassified in 2018 from their original Information Technology classification to Communication Services. In March of 2023, PayPal, Visa, MasterCard, and Fiserv were moved over to the Financial sector.  Amazon, Tesla, and Netflix have been forced into the Consumer Discretionary and Communication column, respectively. If the above companies had not been reclassified, the official IT sector weight, estimated in 2023, would be 37%.

In fact, if you add all the information technology companies back to their original place, the sector weight surpasses the dot-com bubble peak by leaps and bounds. Currently, we have the most significant tech consolidation in the history of the S&P 500, even without putting major tech companies back where they were initially.

With AI dominating headlines, valuations have soared well past dot-com-era levels, suggesting we may be nearing the peak of a new tech bubble. Since the tech sector accounts for a massive share of the S&P 500 (and other indexes), and power is concentrated among a few major players, the entire industry is in a highly precarious position.

2025 REFLECTIONS

Today, as more and more AI companies appear, “hundreds of billions of dollars get channeled into technology whose ability to generate sustained profits is still largely untested,” Financial Post reported.¹ Meanwhile, people rush to invest, feeling the pressure. “[F]ear of missing out has fanned stunning valuation gains, prompting speculation that Nvidia Corp. alone might reach a market capitalization of $5 trillion.”²

Other consumer-forward tech—like social media companies—generates income from ads and data harvesting and has relatively low overhead due to cheap access to cloud storage and little need for physical real estate. Comparatively, AI is costly to develop and run, requires a massive amount of energy, and lacks easy income channels to push it mainstream in a stable way or to make it less of a financial burden on small start-ups.

Furthermore, enterprise-level investment remains limited. Many companies interested in contracting with an AI provider to deliver AI services to their clients ultimately decide not to participate, primarily due to the significant risks of data leaks and high costs.

The combination of high overhead costs, limited income, and difficulty attracting corporate investors makes AI a risky investment. Because AI technology has enormous revolutionary potential, it garners tremendous investor interest but creates a highly speculative environment. AI is still an immature, experimental asset that requires careful consideration rather than reckless enthusiasm.

Yet reckless enthusiasm persists, even with the echoes of the dot-com bubble still ringing in many ears.

For example, according to the Financial Times, at least 10 AI startups—all without profit—have reached valuations of over $1 trillion in the past year.³ Though many in the industry are sounding the alarm, feeling uneasy about the parallels to past bubbles, the AI industry seems unfazed. CNN reports that “the AI industry’s response has been to shrug and watch their valuations tick higher and higher…and even if there is a bubble, proponents say, the dot-com bubble gave us companies like Amazon, and the internet became, well, the internet.”⁴

Meta’s latest guidance from its Q2 2025 earnings call in late July projects capital expenditures of $66-72 billion for 2025, mainly driven by AI infrastructure. This is a significant rise from earlier estimates. Additionally, Microsoft’s fiscal year-end report for June 30, 2025, shows capital expenditures of over $80 billion, mostly spent on AI-enabled data centers and cloud infrastructure.

Costs are only set to rise. McKinsey found that “by 2030, data centers are projected to require $6.7 trillion worldwide to keep pace with the demand for compute power. Data centers equipped to handle AI processing loads are projected to require $5.2 trillion in capital expenditures, while those powering traditional IT applications are projected to require $1.5 trillion in capital expenditures…Overall, that’s nearly $7 trillion in capital outlays needed by 2030—a staggering number by any measure.”⁵

Even OpenAI, which is arguably the most famous and successful AI company to date, has yet to turn a profit. With an estimated 15.5 million paying subscribers and an estimated $11.6 billion in revenue in 2025, it is burning a total of $26 billion to keep the lights on, resulting in a loss of $14.4 billion.⁶

This, taken with the already heavy consolidation of tech on the S&P 500 and other indexes, paints a truly troubling picture. Can the market sustain another tech bubble? And if it bursts, what happens next?

INVESTOR TAKEAWAYS

AI’s potential is vast, but investing directly in it is risky. Investors seeking exposure to the boom might look to supporting industries—especially energy. The AI revolution runs on electricity, and demand for power generation, storage, and infrastructure is set to rise sharply. Unlike AI startups, energy producers serve a universal, time-tested need.

However, it’s important to remember that even financial bubbles have their positives. The dot-com bubble of 2001 caused a severe crash, but the companies that endured went on to achieve incredible success. The internet boom established the infrastructure that enabled its growth, resulting in the emergence of new industries such as Amazon. Those companies developed innovative, impactful technologies that were once hard to imagine prior to the bubble, such as mobile phones, online shopping, payments, and entertainment, which are now commonplace. Major technological breakthroughs—such as cryptocurrency and, yes, even AI—have come from innovations that now feel normal to us.

Ultimately, the key takeaway for investors is that even if the AI bubble bursts, history consistently shows that the investments that fuel it often lead to significant economic growth and groundbreaking innovation, which eventually revive the market and nourish the natural market cycle.

 SOURCES:

1. As AI-Bubble fears spread, a $35 billion fund manager positions for inflows. (2025, October 12). Financial Post. https://financialpost.com/pmn/business-pmn/as-ai-bubble-fears-spread-a-35-billion-fund-manager-positions-for-inflows
2. Ibid.
3. Conboye, J., & Hammond, G. (2025, October 16). ‘Of course it’s a bubble’: AI start-up valuations soar in investor frenzy. Financial Times. https://www.ft.com/content/59baba74-c039-4fa7-9d63-b14f8b2bb9e2
   4. Morrow, A. (2025, October 18). Why this analyst says the AI bubble is 17 times bigger than the dot-com bust. CNN. https://www.cnn.com/2025/10/18/business/ai-bubble-analyst-nightcap
4. Noffsinger, J., Patel, M., & Sachdeva, P. (2025, April 28). The cost of compute: A $7 trillion race to scale data centers. McKinsey & Company. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-cost-of-compute-a-7-trillion-dollar-race-to-resultingscale-data-centers
5. Isaac, M., & Griffith, E. (2024, September 28). OpenAI is growing fast and burning through piles of money. The New York Times. https://www.nytimes.com/2024/09/27/technology/openai-chatgpt-investors-funding.html?ref=wheresyoured.at

Sir John Templeton pioneered global value investing by buying quality companies during periods of maximum pessimism. His disciplined, contrarian approach continues to influence the investment philosophy at Everglades Parkland Advisors, an investment management firm focused on challenging conventional thinking through disciplined research, long-term strategy, and risk management.

In my book, Beyond Wall Street, I attempted to profile an investor in each chapter—people I admired, and especially people who I felt represented my own investing philosophy in some way. Some people I had learned from, others I watched during my own career, but each of them shaped the way my colleagues and I approach the market.

Starting this month, I want to continue that theme by profiling great investors who embody the core philosophy of Everglades Parkland Advisors or have achieved enormous success we can all learn from.

The first of these profiles is of Sir John Templeton. So, who was he, and why is he deserving of being on this list of great investors? 

In Beyond Wall Street, I wrote:

One of the golden rules of the investing world is “buy low, sell high.”… It’s easier said than done. Buying low and selling high means that you make an investment when it isn’t worth much and then sell it off when it’s at its zenith to make maximum profit. It can be extremely difficult to pinpoint when the highs are at their highest, and the lows are at their lowest, and falling into a herd mentality is all too easy.

Templeton was a master of buying low and selling high. When he died in 2008 at the age of 95, he was a multi-billionaire. How did he do it? Read on to find out.

A CHILDHOOD OF CURIOSITY 

His mastery of investing and the laws of probability had foundations in his upbringing. Born in 1912 in Winchester, Tennessee, he was encouraged by his parents to experiment, explore, and expand his horizons. His mother, Bella, an educated, worldly woman, “gave the boys the means to do with the world what they wanted to do,” Harvey Templeton, John’s nephew, reported.² With their father, an enterprising entrepreneur, Templeton’s parents allowed their children to “buy dynamite to dispose of backyard tree stumps, and gunpowder to manufacture [their] own fireworks.”¹  Templeton’s first business venture of note was selling his fireworks to his friends for a price three times the cost of production.²

Such intellectual curiosity and entrepreneurial spirit followed him into adulthood, when he attended Yale University. Inquisitive and bright, he graduated at the top of his class in 1934. But Templeton was also scrappy—he attended Yale during the height of the Great Depression. After his father informed him that he could no longer afford the tuition, Templeton funded his own schooling himself, taking several small jobs and playing poker. His niece, Lauren Templeton, noted: “Uncle John often remarked to me that that was one of the best things that had ever happened to him in his entire life.”³ The requirement to fend for himself reinforced the idea that he needed to take measured, calculated risks to achieve. 

After graduating from Oxford University (where he was a Rhodes Scholar) with a law degree in 1936, Templeton spent a year traveling. Historians have since noted this year as one that made an incredible impact on his life. “He had come from this small town in Tennessee and really hadn’t seen the world,” a colleague noted. “His eyes were opened.”² The next year, 1937, marked the beginning of his work on Wall Street and his entry into the world of investing.

ENTERING WALL STREET

Templeton was hired by Fenner & Beane, which subsequently merged with Merrill Lynch. Templeton left soon after the merger and went on to found his own investment advisory firm. Although his tenure at Fenner & Beane was short, he had a front-row seat to investor behavior in the depths of the Great Depression. That experience, coupled with his intellectual curiosity and worldly understanding, shaped his investing philosophy. 

A hallmark of that philosophy was to go against the crowd. Known as contrarian investing, it involves identifying “points of maximum pessimism.” In Templeton’s own words, he described these moments of maximum pessimism as “the best time to buy, and the time of maximum optimism is the best time to sell.”¹ 

In a now-famous move, Templeton demonstrated his contrarian approach with incredible results. In 1939, with World War II looming, Templeton borrowed money and selected 104 companies selling their shares for less than a dollar each. He spent $100 on each company, averaging about 100 shares per company. By the end of the war, only four companies had failed to return a profit. He held the shares for an average of 4 years, resulting in a 400% increase in his portfolio. He summarized his approach this way: “When people are desperately trying to sell, I buy. When people are desperately trying to buy, I sell. It has worked out very well over the years.”⁶

Templeton was not an oracle. His success was not based on predicting every market move correctly. He did not know that his investment would be as successful as it was. Instead, his success came from having a disciplined investment framework and the patience to follow it. Like Templeton, Everglades Parkland Advisors believes successful investing requires clear thinking, careful risk management, and the discipline to identify opportunities others may overlook.

FAMOUS FOR FRUGALITY

A large part of Templeton’s success can also be attributed to his frugality. Templeton was known for scrimping and saving. He was a bargain hunter, buying undervalued, high-quality stocks. In his own words, he described his thriftiness in picking stocks as never having “bought a stock because I liked it. I bought it because it was a cheaper bargain than any similar stock I would buy anywhere in the rest of the world.” He learned this method from the famed economist and investor Benjamin Graham, who called it “value investing.” Graham theorized the core principles of value investing and is known as the father of value investing. Other famed practitioners of value investing include Warren Buffett, Charlie Munger, and Walter Schloss, among many others. 

After his death, the Washington Post profiled him as someone who “scoured the world for bargains.”⁷ Even the Economist noted his frugality: “Sir John revered thrift and had a horror of debt. His parents had taught him that in small-town Tennessee, instilling it so well that in his white-columned house in the Bahamas, overlooking the golf course, he still cut up computer paper to make notebooks.”⁸

He continued to have incredible success, starting a mutual fund in 1954. By 1992, when he sold the fund to Franklin Templeton, an original investment of $10,000 would reportedly be worth $2 million. The fund was unusual for its time because it scoured the world for high-quality investment opportunities. Templeton was not the first to champion value investing, but he was one of the first to invest globally, a major effect of his world travels.  Money Magazine called him “arguably the greatest global stock picker of the century” in 1999, and there was a lot of truth to that statement.⁷

STAYING THE COURSE

Always fearing the impact of herd mentality and groupthink, Templeton relocated to the Bahamas in 1968. He wanted to stay as far away from Wall Street as possible. Templeton acknowledged that buying during moments of fear required tremendous discipline. Going against the crowd is emotionally difficult—but that discipline is exactly why contrarian investing can create opportunities. “It is extremely difficult to go against the crowd—to buy when everyone else is selling or has sold, to buy when things look darkest, to buy when so many experts are telling you that stocks in general…are risky right now,” he admitted.⁶ Staying away from the chatter helped him stay the course and remain successful. 

Similarly, throughout my career, I have seen many good investors, with good heads on their shoulders, get caught up in the hype. The truth of the matter is, the hardest investing decisions are rarely mathematical—they are emotional. At Everglades, we make a conscious effort to think critically about every move we make. We pride ourselves on building investment decisions around clear-eyed, logical thinking and careful risk management, rather than reacting to short-term noise. 

PHILANTHROPIC EFFORTS

Templeton was a philanthropist. He established the Templeton Prize for Progress in Religion in 1972, and it remains one of the largest cash prizes in the world, valued at over $1.4 million. He also established the John Templeton Foundation, which funds research that increases “the pace of religious inquiry so that it might match the progress in science.”¹ 

Through the foundation, Templeton encouraged the curiosity, adventure, and intellectual advancement that defined his childhood. The foundation funded “ventures ranging from an essay contest for youngsters to explore the spiritual principles of life, to an ‘honor roll’ for character-building at universities, to a new college at Oxford University.”¹ In 2005, Templeton told Business Week, “What I’m financing is humility. I want people to realize that you shouldn’t think you know it all.”⁹ Today, the foundation gives away roughly $150 million per year in grants.⁵

WHAT WE LEARN FROM TEMPLETON

Templeton wasn’t simply lucky. He had a strategy that dictated how he approached the market, and his rules for investing, published in 1993, still hold today. I still think about Templeton regularly as I go about my day, using his mottos as a guide. Here are a few of my favorite nuggets of wisdom from Templeton:

ON INVESTING FOR THE LONG-TERM: “The stock market is not a casino, but if you move in and out of stocks every time they move a point or two, or if you continually sell short…or deal only in options…or trade in futures…the market will be your casino. And, like most gamblers, you may lose eventually—or frequently.” At Everglades, we’re big believers in letting an investment accrue value over time. The market fluctuates constantly, but those who hold onto their investments with a long-term goal are less likely to have their portfolios upset by standard market ups and downs. Long-term investing allows investors to look beyond short-term market fluctuations and focus on lasting value.

ON DOING THINGS DIFFERENTLY: “You can’t outperform the market if you buy the market. And chances are, if you buy what everyone is buying, you will do so only after it is already overpriced.” I find myself repeating this refrain at least once a week. Following the crowd means performing like the crowd. Most people are just fine with doing that, and theoretically, if the market is strong, it can lead to some solid returns. Investors seeking outcomes that differ from the rest of the market need to be willing to think differently, too. This mindset, paired with effective risk management, is something we at Everglades pride ourselves on.

ON INVESTING FOR VALUE: “When buying stocks, search for bargains among quality stocks…”In many ways, this is similar to going thrifting. At a thrift store, there are racks and racks of clothes to sift through, but the things that every good bargain hunter wants to take home are high-quality treasures for low cost, like finding a Cartier watch at Goodwill. This is the basis of value investing, and a key consideration here at Everglades. 

CONCLUSION

Sir John Templeton pioneered a groundbreaking global approach to value investing, bought and sold against the tide of the rest of Wall Street, and believed firmly that logical, sober, long-term investments are better than emotional, panicked, short-term investments. His contrarian, single-minded vision paid dividends, and many investors try to emulate his success (including here at Everglades). As a philanthropist, he gave a tremendous amount of money to charity and remains an inspiration for all of us to this day. At Everglades Parkland Advisors, our investment philosophy is built on many of the same ideas Templeton pioneered: clear-headedness, logical reasoning, long-term thinking, risk management, and the willingness to seek opportunities others may overlook.

KEY TAKEAWAYS: 

• Templeton’s value investing approach focused on identifying quality opportunities overlooked by the market.
• His contrarian philosophy emphasized patience, discipline, and the avoidance of emotional decision-making.
• Everglades Parkland Advisors draws inspiration from these principles by focusing on long-term investing, independent thinking, and risk management.

FOR FURTHER READING: 

1. Philanthropy Roundtable. (2023, January 12). John Templeton. https://www.philanthropyroundtable.org/hall-of-fame/john-templeton/

2. John Templeton Foundation. (2022, July 20). Contrarian | a film about the life of Sir John Templeton (FULL LENGTH) [Video]. YouTube. https://www.youtube.com/watch?v=jbmMo7kqZE4

3. The Financial Economics. (2025, May 25). The greatest stock picker of 20th century | Sir John Templeton | Lauren Templeton [Video]. YouTube. https://www.youtube.com/watch?v=Iq3NGTd0ge4

4. Miller, J. J. (2008, July 1). Sir John M. Templeton, RIP. Philanthropy Roundtable. https://www.philanthropyroundtable.org/magazine/sir-john-m-templeton-rip/

5. John Templeton Foundation. (2022, March 8). The purpose of the John Templeton Foundation – John Templeton Foundation. https://www.templeton.org/news/the-purpose-of-the-john-templeton-foundation

6. Templeton, J. (1993). 16 Rules for Investment Success: And for your family, house, tuition, retirement. . . [Press release]. Retrieved July 6, 2026, from https://www.franklintempleton.com/forms-literature/download/TL-R16

7. Holley, J. (2024, March 4). John Templeton, 95; billionaire invested in science, religion. The Washington Post. https://www.washingtonpost.com/archive/local/2008/07/09/john-templeton-95-billionaire-invested-in-science-religion/f41f513e-6f66-4fee-9b1e-bb37b53848cf/

8. John Templeton Foundation. (2025, July 31). Sir John Templeton – John Templeton Foundation. https://www.templeton.org/about/sir-john-templeton

9. John Templeton: global stock picker’s remarkable life story. (2025, August 18). LGT Private Banking. https://www.lgt.com/global-en/market-assessments/insights/financial-knowledge/how-john-templeton-reconciled-god-and-mammon-301542

Is Bitcoin a commodity, security, or property? According to the Commodity Futures Trading Commission (CFTC), Bitcoin is classified as a commodity. A couple of years ago, the Securities and Exchange Commission (SEC) also ruled that Bitcoin is a commodity. The Internal Revenue Service (IRS) considers Bitcoin as property, and it is subject to taxable gains, just like stocks and real estate.

But what is Bitcoin, exactly? In our opinion, Bitcoin is a pure commodity. Now, let’s be super clear here: Bitcoin is not a commodity in the same way gold or other rare earth materials are, which must be removed from essentially valueless soil. It isn’t a raw material used to manufacture or produce finished goods, such as crude oil. While both gold and crude oil are valued due to the effort required to extract them and their inherent supply scarcity, Bitcoin is a commodity based on its protocol scarcity.

Therefore, to understand Bitcoin, you must understand the Bitcoin protocol.

But first, a bit of history.

Bitcoin emerged as a new digital asset class following the release of the Bitcoin white paper in 2008 and the launch of the network in 2009. Though it was the first successful cryptocurrency, it was surrounded by mystery. It was developed by an unknown individual or group under the pseudonym Satoshi Nakamoto. Nakamoto was active in the Bitcoin community until April 2011, when he sent a message to developer Mike Hearn, saying: “I’ve moved on to other things. Bitcoin is in good hands…”¹ He has not been heard from since, and his Bitcoin wallet, holding an estimated 1.1 million BTC, has not been touched since 2010.

The impetus to create a cryptocurrency like Bitcoin has been attributed to the global financial crisis of 2008. It was “a backlash against the failings of the conventional financial system, with its overleveraged shadow banks and daisy chain of leverage and maturity mismatch.”² The 2008 white paper painted a vision in which the financial world becomes simply a peer-to-peer transaction, eliminating the problematic middleman, and it largely achieves that goal using unique coding and standards (protocol) that allow it to maintain this vision. One common theme in most early cryptocurrencies is that, in theory, there is no inflation—as dictated by the source code, the supply cannot be increased and can’t be debased by inflating the supply as central banks do.

Bitcoin is not a company. It has no central control system, CEO, or executive team making decisions. Instead, it’s open-source code available to anyone, meaning anyone can copy it to create a competing cryptocurrency—though competition in the space has been surprisingly peaceful. Bitcoin operates on a protocol designed by Satoshi Nakamoto, agreed upon by everyone using it. The Bitcoin network (the system of miners who record and verify transactions) is distinct from the Bitcoin protocol (the set of rules governing the digital asset).

Miners confirm transactions and, in the process, release new Bitcoins into circulation. While any internet-based system could be a target for hacking, the Bitcoin network has never been hacked in its seventeen years of operation. Its resilience comes from being distributed across thousands of computers, preventing any single group of miners from gaining control or creating a central point of failure.

Bitcoin is a digital asset maintained on a blockchain—a public, cloud-based ledger that anyone can view. Every Bitcoin transaction since the network began is recorded and visible without special permission. Transactions are processed continuously and confirmed in “blocks” roughly every ten minutes by the miners, who are rewarded for verifying transactions and securing the network.

Now with the basics out of the way, let’s discover what drives Bitcoin’s price and its incredible peaks over the years.

The Economics of Bitcoin

Bitcoin economics are driven primarily by three vectors—equipment cost, degree of difficulty, and the halving, with price discovery shaping value over time.

Equipment Cost

Bitcoin’s equipment cost is determined by the price of the Bitmain Antminer S21 XP machine, which is primarily used for mining. This machine is essentially a server, although many call it a “mining rig.” The current Bitmain Antminer S21 XP costs approximately $5,000. The life expectancy of this server is approximately 3 years, as the processors are continually updated. Also factoring into the cost of the Antminer is Bitcoin’s degree of difficulty and hash rate. The hash rate is the average computational power of the network.

Currently, the hash rate is approximately 900 exahash per second (one quintillion 10¹⁸ per second). One year ago, the hash rate was approximately 600 exahash per second. The higher the hash rate, the more powerful and expensive the equipment becomes. Newer models boast higher speeds, advanced chips, more efficient cooling, and higher energy use, all of which contribute to the cost of the machinery.

These advances are among the factors driving the appreciation of Bitcoin. As computational speed improves, the purchase of new mining equipment will continue. This will continue to increase the hash rate as the number of mining rigs continues to grow. An increasing hash rate means it will be more expensive to mine Bitcoin, thereby increasing the price of Bitcoin.

Halving

At the time of writing, the number of Bitcoins mined is 19,896,200. From now until the year 2140, only 1,103,800 Bitcoins will be produced. Several Bitcoins have been lost (also called “BitRot”). These are cases where owners cannot access their coins since they have lost their private key.

Unlike gold and other commodities, Bitcoin’s rate of issuance is strictly controlled by its mining protocol, which follows a fixed schedule regardless of outside factors. Every four years, a “halving” reduces the reward miners earn for adding a block to the chain by half. In 2009, miners earned 50 BTC per block; by 2024’s halving, that reward had fallen to 3.125 BTC. The next halving, scheduled for April 14, 2028, will reduce it to 1.5625 BTC. These built‑in scarcity measures mimic precious metals like gold and have often been followed by price increases.

Price Discovery

Unlike other commodities, in which price is set mainly by supply and demand, Bitcoin’s price is determined through continuous buying and selling, and influenced by the abovementioned factors, including equipment cost, scarcity from halving events, and market sentiment. All of these forces interact to set Bitcoin’s value in real time, within the constraints of its fixed supply and intentional scarcity.

In conclusion, Bitcoin is a unique and innovative asset whose protocol causes the cost of production to rise over time, allowing its value to increase accordingly. This fundamental yet brilliant protocol design supports its investment performance and sets it apart as a distinct asset class unlike any other. Many investors still underestimate how exceptional its economic model truly is. However, as more people learn about Bitcoin, the hope is that it will transform the way we handle, spend, and think about our currency.

Citations:

^1. Learn_With_Fullo. (2023, December 13). Bitcoin: 13 years ago Satoshi Nakamoto posted his last message [Online forum post]. Binance Square. https://www.binance.com/en/square/post/1309003657793

^2. Shin, H. S. (2022, December 16). The great crypto crisis is upon us. https://www.bis.org/speeches/sp221216.htm

Recently, I was asked to weigh in on one of the most contentious debates of the past few years: Gold vs. Bitcoin.

I’m not here to dispute or rewrite the original article, but I do want to provide a bit more context about why I chose to support Bitcoin. In short, it’s the longevity factor.

Let’s start with gold. Historically, gold has always acted as a hedge against inflation and debased currencies. In nearly every economic climate, gold has maintained its value, offering individuals a means to preserve and protect their wealth.

Gold has a long and fascinating history. First coveted for its beauty, it was used to create jewelry and other decorative objects. But it was in Ancient Egypt that gold became a medium of exchange, facilitating the trade of goods and services. ¹ Over the last 6,000 years, gold has been—bar none—the most influential asset in global economies, markets, and empires. From the gold standard to the Gold Rush, gold has consistently proven its worth as either a hedge or a speculative investment. Not many assets can make such a claim.

Additionally, gold has a fantastic reputation: people trust gold and view it as a sign of wealth and power. In 2023, Investing News Network reported that central banks around the world held roughly 35,715 metric tons of gold, roughly one-fifth of all the gold ever mined. ² That number was expected to increase, and it has. ³ “Central banks purchase gold for a number of reasons: to mitigate risk, to hedge against inflation, and to promote economic stability. Increased concerns over another global financial crisis have, as expected, led central banks once again to build up their gold reserves.” For central banks, holding gold is a crucial method of safeguarding against unexpected economic shocks.

In today’s uncertain economy, marked by political upheaval and high inflation, investing in gold remains a prudent hedge and a safe bet. It’s part of the reason gold has always been a key element of our investment process at Everglades Parkland Advisors.

Gold becomes especially relevant in moments like these, when the geopolitical environment feels like a boiling pot. Historically, gold has performed well in times of international tension because individuals and countries alike want to retain—and increase—their gold reserves, seeing it as a “safe haven” for their wealth. ⁴ As David Weinerman mentioned in the article above, domestic factors such as tariffs and a ballooning national debt have contributed to gold’s recent performance, driven by concerns about economic stability.

However, the conversation becomes even more intriguing when Bitcoin enters the scene. While it’s still in its infancy, Bitcoin has the potential to rival—and possibly even replace—gold in the future as a classic hedge against inflation or an investment for wealth protection.

As emphasized in the article, Bitcoin is more scarce than gold, more liquid, and is backed by state-of-the-art technological innovations that record and verify transactions. Bitcoin has been the best-performing asset of the last decade, and in 2024, its price broke an all-time high of $100,000.

Thanks to its decentralized architecture and built-in scarcity, Bitcoin has become an appealing inflation hedge for many investors. With increased regulation, institutional adoption, and market maturity, Bitcoin is poised to become a classic inflation hedge, much like gold, but with new and enhanced features.

That’s not to say that there aren’t risks. The technology continues to improve and is nearly foolproof, but bankruptcies, scams, and unregulated platforms have plagued the broader cryptocurrency market. Investors must exercise caution when investing in new coins or trusting untested platforms to secure their digital assets.

Of course, due to the newness of Bitcoin, it is incredibly volatile, which can be a critical consideration. For risk-tolerant investors, Bitcoin’s volatility adds to its appeal. However, those who are more hesitant may find this inherent volatility to be a deterrent. I generally advise clients to take small bites—consider allocating between 1% and 5% of their portfolio to Bitcoin, depending on their risk tolerance and investment goals.

As mentioned, gold has historically outperformed Bitcoin during periods of geopolitical strife; however, it’s worth noting that Bitcoin has also made a significant impact. Because it’s decentralized—there’s no need for a third party to ensure security or transparency—Bitcoin appeals to many countries. For example, it has been used on both sides of the Russia–Ukraine conflict, by Iran to circumvent U.S. sanctions, and, controversially, it was reportedly used by Hamas, which spent $165 million in crypto to finance their infamous October 7th attack on Israel.

This highlights Bitcoin’s strengths and weaknesses: decentralization. While decentralization insulates Bitcoin from the control of a single government or central bank, keeping it somewhat unaffected by poor monetary policy, it also opens the door to potential abuse. However, as adoption continues and regulations evolve, I believe we’ll see increasing oversight that’ll, over time, close many loopholes.

However, in the long term, Bitcoin may overtake gold. We’re already seeing real-world adoption in countries like El Salvador, Argentina, and Turkey. These countries have extremely high inflation rates, causing residents to seek alternative methods for preserving the value of their cash. This trend reflects the significant role gold has played throughout its long history, particularly in similar economic climates.

Additionally, from a technological standpoint, Bitcoin has a few advantages over gold. Bitcoin’s blockchain uses cryptographic algorithms and a global network of miners to validate and secure every transaction. This process is highly energy-intensive, but also makes it nearly impossible to hack or tamper with. Gold, on the other hand, has long been plagued by issues of being heavy, easily tampered with, and highly susceptible to theft. Gold’s logistical challenges, such as moving it from one place to another, do not plague Bitcoin.

Especially as younger generations enter the market, it isn’t hard to imagine Bitcoin making significant gains on gold. Children raised in a world of cutting-edge technology are less wary of digital, non-tangible assets and investments. With adoption increasing every day, central banks are exploring the possibilities of digital currencies. Countries like El Salvador, as mentioned above, have made Bitcoin legal tender. If Bitcoin were to grab even 10% of gold’s estimated $17 trillion market cap, the price could rise dramatically.

Given its security, technological foundation, and decentralized nature, Bitcoin is still in its early stages. Only time will tell what it ultimately becomes, but it has the potential to reshape how we approach currency, investing, and global markets.

Finally, but perhaps most importantly, while the article above frames Bitcoin and gold as rivals, that doesn’t necessarily need to be the case. Many experts view them as complementary: gold provides stability while Bitcoin offers long-term growth. Gold offers tried-and-true protection, while Bitcoin offers cutting-edge technological security. Together, they create a compelling opportunity, providing investors with a well-rounded portfolio. I strongly agree with this point of view: Gold isn’t going anywhere anytime soon, and neither is Bitcoin, so there is little reason to pit them against each other. Ultimately, both are essential assets to have in your portfolio.

¹ Symeonidis, P. (2023, September 1). Gold: the most precious of metals. FocusEconomics. https://www.focus-economics.com/blog/gold-the-most-precious-of-metals/

² Pistilli, M. (2025, February 13). Top 10 Central Bank gold reserves. Investing News Network (INN). https://investingnews.com/daily/resource-investing/precious-metals-investing/gold-investing/top-central-ba nk-gold-holdings/

³ Central banks keep gold in focus in February. (2025, April 3). World Gold Council. https://www.gold.org/goldhub/gold-focus/2025/04/central-banks-keep-gold-focus-february

⁴ Ngo, V. M., Van Nguyen, P., & Hoang, Y. H. (2024). The impacts of geopolitical risks on gold, oil and financial reserve management. Resources Policy, 90, 104688. https://doi.org/10.1016/j.resourpol.2024.104688

President Trump’s tariff plan is shocking to some and confusing to others. It’s all anyone can talk about these days, and it’s undoubtedly causing upheaval in the market. Many don’t feel confident that the market will withstand the pressure of rising costs. But don’t kid yourself: this was a long time coming.

For far too long, the U.S. has kicked the can down the road in terms of fiscal responsibility. The last twenty years of monetary policy have been largely disastrous, as we have forgotten the key rule of staying financially afloat: one cannot spend more than they earn.

This is true in business, home economics, and especially government. I like to distill it into a handy little formula: Govt = Revenues – Expenditures.

If you want to make and retain wealth, you must not outspend your income. You must keep debt at a minimum or pay it down regularly. This is basic common sense. As I mentioned in Chapter One of my book, Beyond Wall Street: “Here’s our problem in the simplest terms: At the time of writing, we have a national debt of $32.17 trillion dollars in the United States. At the current rate of spending, we’re set to hit over $40 trillion by 2028. This number does not include current and future obligations of national programs like Social Security and Medicare…Our country’s high and rising debt matters because it devalues our currency, threatening our economic future and society as a whole…Now, with this mess on our hands, the United States has broken its covenant with her people.”

That chapter was written over 2 years ago, and nothing was done except to increase the level of debt the country owes. What has followed has been unfortunate but expected: deficits have ballooned, and we must take action or experience the consequences within the decade.

Currently, the U.S. government collects approximately $5.2 trillion in federal revenue, while federal spending for the fiscal year 2025 is projected to be about $7.0 trillion, resulting in a deficit of roughly $1.9 trillion.¹The national debt stands at approximately $36.56 trillion. This means we consistently spend more than we earn, and we cannot realistically pay down our debts because we continue to borrow to fill the gap.

Even if revenue were to increase, paying off the debt would remain a massive challenge, as we’re mainly making interest payments rather than reducing the principal. We’re in an unsustainable, thoughtless cycle of borrowing just to stay afloat.

This situation has only been possible because of the U.S. dollar’s role as the world’s reserve currency. Other nations hold U.S. dollars to stabilize their economies, facilitate international trade, and store value. This reserve status is a tremendous privilege—it creates built-in demand for the dollar and enables the U.S. to borrow money at lower interest rates than it otherwise could.

Because foreign governments, banks, and corporations need dollars to do business, the dollar is in high—but somewhat artificial—demand, which keeps it structurally overvalued regardless of our fiscal health. Without reserve currency status, the dollar would likely fall in value due to mounting debt and continuous deficits.

To maintain the supply of dollars globally, the U.S. must run a persistent trade deficit. We import more than we export, and we pay for those imports in dollars. Exporter nations—like China—receive those dollars and often reinvest them into U.S. Treasury bonds, helping to finance our debt. While this keeps global trade functioning, it comes at the cost of swelling U.S. debt.

Because the dollar underpins global finance, foreign and domestic investors are eager to hold safe, dollar-backed assets like Treasury bonds and don’t mind a lower interest rate. That demand gives the U.S. an edge few other countries enjoy: the ability to borrow large sums of money at low cost.

But that edge is not guaranteed forever.

If the U.S. were to lose its reserve currency status, demand for Treasury bonds would decline, forcing us to offer higher interest rates to attract buyers. Our borrowing costs would rise sharply, and the flexibility we’ve relied on for decades—to run deficits, finance wars, fund stimulus programs—would evaporate.

If the U.S. were to lose its reserve currency status, demand for Treasury bonds would decline, forcing us to offer higher interest rates to attract buyers. Our borrowing costs would rise sharply, and the flexibility we’ve relied on for decades—to run deficits, finance wars, fund stimulus programs—would evaporate.

Enter tariffs. Although they are somewhat unpopular with the public, these taxes on foreign goods have a significant advantage: they can be used to pressure countries into a new accord that addresses artificial dollar overvaluation, ballooning debt, and persistent trade deficits. Theoretically, how would this work?

Using tariffs as leverage, the U.S. could explicitly require that countries reduce their U.S. dollar holdings by shifting their Treasury holdings to longer dated obligations. Most countries hold short-term Treasury bonds that mature within 2-3 months. However, if we mandated that foreign countries investing in Treasury bonds use long-term treasuries, which would mature 10+ years down the line, we could stabilize borrowing costs, buy time to address our debt crisis, and reduce the growing risk tied to short-term refinancing.

That risk arises from decisions made by former Treasury Secretary Janet Yellen, who inexplicably financed the government by borrowing short-term at significantly lower rates—similar to financing the cost of your home on a credit card with a monthly bill instead of locking in a stable, long-term mortgage rate. This decision, while cheaper in the short term, exposed the U.S. to escalating refinancing risk, meaning that all that short-term debt comes due simultaneously. As it happens, it is coming due this year to the tune of $9 trillion. To avoid paying it all at once—since we cannot afford it—we must refinance the debt. If interest rates rise, our overall costs grow even further out of control.

A single basis point (0.01%) decrease in yield on the 10-year Treasury results in a reduction of interest expenses by one billion dollars. Consequently, the U.S. has saved nearly $100 billion in borrowing costs due to the recent decline in the 10-year yield. The mistakes made by the former Treasury Secretary are significant, underscoring the critical importance of interest rates and the precariousness of the market. The current Treasury Secretary, Scott Bessent, is fully aware of this, as he has repeatedly pointed out this monumental error. “What we are looking at is building the long-term economic fundamentals for prosperity, and I think the previous administration had put us on the course toward financial calamity,” he noted recently.

The plan, as I understand it (and regardless of its poor implementation and communication), is to impose tariffs on the countries to which the U.S. owes money to lower refinancing rates and weaken the U.S. dollar. Tariffs impose greater economic pressure on our creditors—particularly those reliant on exports—than they do on the U.S. consumer base in the short term. This also may put significant pressure on their currencies, forcing them to weaken and prompting lower—and more realistic—valuations of the U.S. dollar. A weakened U.S. dollar would allow us to reduce the real value of our enormous debt, remedy trade deficits, enhance competitiveness in trade, generate income to help pay off our debt, and promote lower long-term interest rates.

As noted, Scott Bessent has framed this approach as a crucial step toward long-term financial stability—a hard path, but a necessary one. This, though hard to imagine with the rising costs of goods and services, is correct. Without serious, sustained effort, our economic good fortune will disappear dramatically. In fact, Bessent reported recently that “50, 60, maybe almost 70 countries” have already been in touch with the administration to negotiate better trade deals.³

Many other creditor countries will need to acquiesce to reduced U.S. borrowing costs, weakening the dollar (and possibly other currencies) and stabilizing our debt situation. These countries, relying heavily on the dollar, have no choice unless, of course, they shift to another asset that is out of the traditional financial system. That alternative asset could be Bitcoin, gold, or something else. We’ll explore what the future of Bitcoin and gold looks like in the next blog post.

For now, the truth remains: tariffs may be a bitter pill to swallow in the short term, but an ounce of prevention is worth a pound of cure. Rising costs will sting—but if managed correctly, this strategy paves the way toward healthier monetary policy, a lower national debt, and better long-term financial opportunities for us all.

^{1Congressional Budget Office. (2025, February 13). Monthly Budget review. https://www.jec.senate.gov/public/vendor/_accounts/JECR/fiscal/January%202025%20Fiscal%20Update.pdf}

^{2 Fiscal data explains the national debt. (n.d.). https://fiscaldata.treasury.gov/americas-finance guide/national-debt/}

^{3 Murphy, A. (2025, April 7). Scott Bessent says up to 70 nations want to negotiate over Trump’s tariffs. Fox Business. https://www.foxbusiness.com/economy/scott-bessent-says-up-70-nations-want-negotiate-over trumps-tariffs}