𝐑𝐞𝐭𝐡𝐢𝐧𝐤𝐢𝐧𝐠 𝐦𝐲 𝐜𝐫𝐢𝐭𝐢𝐪𝐮𝐞 𝐨𝐟 𝐭𝐫𝐚𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐞𝐧𝐬𝐢𝐨𝐧 𝐟𝐮𝐧𝐝𝐬 𝐚𝐧𝐝 𝐰𝐡𝐲 𝐁𝐢𝐭𝐜𝐨𝐢𝐧 𝐢𝐬 𝐬𝐭𝐢𝐥𝐥 𝐚 𝐛𝐞𝐭𝐭𝐞𝐫 𝐬𝐚𝐯𝐢𝐧𝐠𝐬 𝐭𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲

Having recently started working for a Bitcoin bank in Switzerland, I was introduced to the “privilege of having to” save through the traditional pension system. As a libertarian-minded, young Bitcoiner I do have my fair share of struggles with the traditional pension structure and I pretty much avoided it my entire life up until now.

After countless discussions with my parents and father-in-law about the flaws and unsustainability of the pension system, I felt compelled to delve deeper into understanding how it works.

Today, while I'm still skeptical and believe that young people like me should put the bulk of their savings elsewhere, I've come to realize the resilience of traditional pension systems.

In fact, I used to think pension systems are on the verge of collapse and that it would be wise to withdraw any savings sooner rather than later. However, I've realized that this risk isn't as imminent as I once believed. How come?

The answer lies in the fact that traditional pension systems are ultimately supported by their respective governments. When push comes to shove, our benevolent fiat overlords ensure that these pension funds remain solvent. A prime example of this occurred during the UK gilt crisis in late September 2022, which saw a sharp decline in UK treasury bond prices.

The intervention in the gilt market during that period was crucial in saving the British pension system from a potential crisis. Here's how it happened:

In years of low interest rates, UK pension funds leveraged their investments using Liability-Driven Investment (LDI) strategies. When bond prices dropped, these funds faced significant losses, triggering demands for additional collateral that many pension funds struggled to provide.

By stepping in to stabilize the UK gilt market, the Bank of England prevented a widespread collapse of LDI funds, averting a financial crisis that could have severely affected pensioners.

Given this outright government backstop for pension funds, why wouldn’t you want to be saving through this vehicle? I started this conversation by saying that I am still skeptical about pension funds and that I would put money elsewhere.

This is because in real-terms traditional pension systems are falling behind. Because of regulations, these funds have to be invested in government bonds. When governments, in coordination with their central banks, prop up treasury bonds to support pension funds, the resulting measures—no matter how complex and opaque to the average person—are likely to erode the purchasing power of those savings over time.

So, what’s the solution? It’s essential to look beyond pension funds. While stocks can be a viable option, I believe that Bitcoin offers the most promising investment opportunity.

In a world where government-backed collateral, primarily in the form of bonds, is continually devalued to sustain the pension system, Bitcoin represents a new form of market-based collateral with tremendous upside. I firmly believe that Bitcoin is well-positioned to become the ultimate market-based collateral of the future.

Although Bitcoin lacks government backing and regulatory support—similar to gold—its market size is poised to rival that of U.S. government bonds. Once that happens, its liquidity will compete with that of U.S. treasuries. Unlike gold, Bitcoin is entirely virtual, leading to lower custody costs, cheaper transportation, and easier verification. These advantages make Bitcoin a more efficient asset compared to gold, but it has not yet surpassed U.S. government bonds.

However, when considering Bitcoin's global accessibility, 24/7 liquidity, instant settlement, and uniform fungibility—especially when contrasted with the fragmented U.S. bond market, which includes securities with varying maturities—it's clear that Bitcoin has compelling advantages.

In conclusion, we can say that government-backed pension systems are the ultimate savings technology for boomers. They have served this generation well throughout their lives, and likely will continue to do so.

For millennials and younger generations, Bitcoin represents the next evolution in savings technology. By adopting it now, you stand to benefit disproportionately, just as previous generations have capitalized on their own era's ultimate savings vehicles.

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