Picture this: You're an expat engineer in the Middle East (like me), thinking you've got it made with that sweet tax-free income. Then one day, you stumble across this thing called "sound money" and… WTF? Everything you thought you knew about money gets turned on its head.

That's exactly what happened to me, and today I'm gonna share what I learned about sound money, why it matters (especially for us expats), and how you can use this knowledge to protect your wealth.

Before we dive in, if you're interested in how Bitcoin specifically can help you achieve financial independence, check out my detailed guide on Achieving Financial Independence with Bitcoin.

Why Is It Called Sound Money?

Did you know that the term "sound money" originates from the days when money was made primarily of gold?

Back then, the purity of the metal used in coins was literally audible.

When a genuine gold coin was dropped, it produced a distinct, clear ringing sound that signified its true value.

In contrast, coins that were debased with other metals produced duller or different sounds, alerting people to their reduced worth.

This audible difference ensured trust and confidence in the currency, as the unmistakable sound of pure gold served as a guarantee of its legitimacy and stability.

Thus, "sound money" came to symbolize money that was reliable, trustworthy, and backed by valuable, unaltered assets like gold.

The Problem with Our Current Money (AKA Why I'm Worried)

To put it simply – with money that isn’t sound – everything gets more expensive over time. What you could buy for $1 back in 1970 costs much more than $1 dollar today.

Right, let's get into it. The money in your bank account?

It's not what you think it is. And I'm not trying to sound like some conspiracy theorist here – this is just straight-up economics that nobody ever taught us in school.

What's Actually Going On With Our Money?

Remember when your grandparents talk about how a coca-cola used to cost like 5 cents?

Well, there's a reason for that, and it's not just because things naturally get more expensive.

As I explained in my post about why governments keep printing money, our current system of fiat currency is basically just… paper promises.

Here's the thing about fiat money:

  • It's not backed by anything tangible
  • Governments can (and do) print as much as they want
  • Its value is based purely on trust and legal decree

The Money Printing Machine Goes Brrr…

Since 2020, central banks have printed more money than ever before in history. Like, A LOT MORE. Let me throw some numbers at you:

  • In 2020 alone, the US increased its money supply by about 26%
  • The UK's money supply jumped by almost 20%
  • The EU wasn't far behind

And ye know what happens when you print more of something? It becomes worth less. Basic supply and demand, innit?

The Real Impact on Your Wealth

Let me break this down with a personal example. When I first moved to Oman in 2017, I thought I was sorted financially. Tax-free income, decent salary – living the dream, right? But then I started noticing something:

  1. My savings in British pounds were actually losing value
  2. Things were getting more expensive everywhere
  3. The interest rate in my "high-yield" savings account was a joke compared to inflation

What Makes Money "Sound"?

After realizing how broken our current money system is, I went down a proper rabbit hole trying to understand what makes money actually "sound." Here's what I learned:

The Five Pillars of Sound Money

  1. Scarcity
    • Can't be created out of thin air
    • Has a fixed or predictable supply
    • Example: Gold mining requires significant effort and resources
  2. Durability
    • Doesn't degrade over time
    • Can be stored for long periods
    • Think about how gold artifacts from ancient Egypt still maintain their properties
  3. Portability
    • Easy to move around
    • Can be transferred without significant cost
    • Particularly important for us expats moving between countries
  4. Divisibility
    • Can be split into smaller units
    • Each unit maintains proportional value
    • Essential for everyday transactions
  5. Fungibility
    • Each unit is identical to another
    • No premium for specific units
    • Critical for universal acceptance

Historical Examples of Sound Money

Throughout history, different societies have used various forms of sound money:

  • Gold and Silver: The classic sound money that worked for thousands of years
  • Rai Stones: Used in Yap (massive stone discs – not very portable but fascinating!)
  • Seashells: Used in various cultures (limited supply in inland areas made them valuable)
  • Bitcoin: The first digital sound money (more on this later)

As I discussed in Escape the Rat Race: Investing in Your Future with Alternative Assets, understanding these characteristics is crucial for protecting your wealth.

Bitcoin: The Modern Sound Money?

Now this is where it gets really interesting.

When I first heard about Bitcoin back in 2021 (yeah, I was late to the party 😅), I thought it was just another get-rich-quick scheme.

Full disclosure here: I actually bought some Bitcoin at the peak and panic sold when it crashed back in 2021.

Classic rookie mistake.

My Bitcoin Journey

Let me share my full Bitcoin journey:

  1. First heard about it in 2020 but ignored it
  2. Started paying attention in 2021 when prices were rising
  3. Finally bought in at nearly the top in 2021 (🤦‍♂️)
  4. Panic sold during the crash
  5. Started actually learning about it 2022 – 2024
  6. Began accumulating regularly without trying to time the market since 2023

Bitcoin's Sound Money Properties

After actually studying Bitcoin (instead of just trying to get rich quick), I realized why some people call it "digital gold":

1. Scarcity

  • Only 21 million Bitcoin will ever exist
  • New coins are created at a predetermined rate
  • The supply is mathematically guaranteed (no central bank can change it)

2. Durability

  • Digital assets don't degrade
  • Bitcoin has never been hacked at the protocol level
  • Network has been running non-stop since 2009

3. Portability

  • Send any amount anywhere in the world
  • Transactions complete in minutes
  • No permission needed from banks or governments

4. Divisibility

  • Each Bitcoin can be divided into 100 million "satoshis"
  • Perfect for micro-transactions
  • More divisible than any traditional currency

5. Fungibility

  • Each bitcoin is identical at the protocol level
  • Accepted globally
  • No degradation in quality

Common Bitcoin Criticisms (And Why They Might Be Wrong)

Look, Bitcoin isn't perfect, but let's address some common criticisms:

  1. "It's too volatile"
    • Early stages of monetary adoption are always volatile
    • Volatility has decreased over time
    • Think long-term (years/decades) not short-term
  2. "It uses too much energy"
    • Miners increasingly use renewable energy
    • Energy usage secures the network
    • Compare to the energy usage of the traditional banking system
  3. "It's just digital nothing"
    • The same could be said of fiat money
    • Bitcoin's value comes from its properties and network effects
    • Think email vs. postal mail – digital can be better

If you want to learn more about getting started with Bitcoin, check out my beginner's guide: Understanding Cryptocurrency: A Beginner's Guide for Expats.

Beyond Bitcoin: Other Forms of Sound Money

Look, I'm big on Bitcoin, but I'm not one of those "Bitcoin maximalists" who thinks it's the only answer.

As I covered in Escape the Rat Race: Investing in Your Future with Alternative Assets, diversification is crucial for long-term wealth preservation.

As the money printer goes brr and more liquidity is injected into the economy ,which drives the everything code asset prices will continue to rise, however only optically.

Let me explain, let’s say you have a stock portfolio, every year the value of your portfolio is increasing by say 10% but in real terms, relative to your actual purchasing power, driven by the everything code, your portfolio is not beating the 11% hurdle rate and so your portfolio is actually losing value.

This is more important when you understand the economic singularity that is coming faster than we might think or want to really acknowledge.

Gold: The OG Sound Money

Gold has been mankind's go-to sound money for thousands of years. Here's why it works:

Advantages of Gold

  • 5,000+ year track record
  • Can't be printed or created digitally
  • Universally recognized
  • Highly liquid globally
  • Beautiful (yeah, that matters for adoption!)

Challenges with Gold

  • Storage Issues: Try explaining to airport security why you're carrying gold bars 😅
  • Transportation: As an expat, this is a real pain
  • Verification: Need specialized equipment or expertise
  • Divisibility: Can't exactly shave off a bit of gold to buy coffee

Silver: Gold's More Accessible Cousin

I actually prefer silver for smaller investments, and here's why:

Benefits of Silver

  • More affordable entry point
  • Industrial demand provides price floor
  • Historically fixed ratio to gold (though this varies now)
  • Easier to use for smaller transactions (if it comes to that)

Drawbacks of Silver

  • More volatile than gold
  • Lower value density (needs more storage space)
  • Higher transaction costs (percentage-wise)
  • Can tarnish (unlike gold)

Modern Alternatives

Some other sound money alternatives worth considering:

  1. Platinum/Palladium
    • Industrial utility
    • Rarer than gold
    • Less liquid market
  2. Land
    • They're not making any more of it!
    • Produces yield
    • Can't be printed
    • But: property taxes and regulations

Why Sound Money Matters (Especially for Us Expats)

As I shared in My Path to Personal Sovereignty: Starting the Journey, achieving true financial independence means not being at the mercy of any single government or currency.

I have also reviewed the excellent book The Fiat Standard that goes into a lot of detail just how broken our financial systems are.

The Unique Expat Challenge

Living abroad exposes us to financial risks that most people never think about:

  1. Multiple Currency Exposure
    • Earning in UAE Dirhams
    • Saving in US Dollars
    • Future expenses in British Pounds
    • Retirement maybe in another currency
  2. Political Risks
    • Government policy changes
    • International sanctions
    • Currency controls
    • Tax law changes
  3. Banking Challenges
    • Limited access to "home" financial services
    • International transfer fees
    • Account closure risks
    • Investment restrictions

Real-World Examples

Let me share some personal experiences:

  1. The COVID Wake-Up Call
    • Borders closed overnight
    • Banking services restricted
    • Had to maintain multiple currencies
    • Made me realize the importance of having portable wealth
  2. Currency Devaluation
    • Watched the British pound drop after Brexit
    • Saw friends lose savings in Turkish Lira
    • Experienced the impact of USD strength on other currencies

For an idea on just how much your purchasing power has decreased over the decades – check out my blog post on how much currency has devalued.

As I discussed in Living in the Middle East: My Experience as an Expat Engineer, these challenges are just part of expat life – but they don't have to catch you off guard.

Getting Started with Sound Money

Right, so you're convinced that sound money matters – but where do you actually start? Here's my step-by-step guide based on what I wish I'd known earlier.

1. Education First

  • Read "The Bitcoin Standard" (seriously, this book changed everything for me) – check out my review here.
  • Study monetary history – check out the fiat standard book – my review here.
  • Understand the difference between sound money and currency.
  • Understand the money printer.
  • Learn about inflation and monetary policy

2. Start Small and Strategic

First Steps:

  1. Emergency Fiat Fund
    • Keep enough fiat for 3-6 months of expenses
    • Split between multiple stable currencies
    • Easily accessible
  2. Bitcoin Basics
    • Start with a small regular buying plan
    • Learn about secure storage
    • Don't try to time the market
  3. Precious Metals
    • Consider small gold or silver purchases
    • Research secure storage options
    • Compare dealer premiums

3. Common Mistakes to Avoid

Trust me, I've made most of these mistakes so you don't have to:

  1. FOMO Buying
    • Buying just because the price is going up
    • Not understanding what you're buying
    • Getting swept up in hype
  2. Poor Security
    • Not properly securing your Bitcoin
    • Keeping crypto on exchanges
    • Not having proper backup plans
  3. Overextending
    • Investing money you can't afford to lose
    • Not maintaining emergency fiat reserves
    • Going all-in on one thing

4. Advanced Strategies

Once you've got the basics sorted, consider:

  1. Jurisdictional Diversification
    • Multiple banking relationships
    • International precious metals storage
    • Bitcoin multisig setups
  2. Privacy Considerations
    • Understanding financial privacy
    • Learning about Bitcoin privacy
    • Protecting your wealth information

Final Thoughts

Look, I know this has been a lot to take in. When I first started learning about sound money, it felt like taking the red pill in The Matrix – suddenly seeing the financial system for what it really is.

But here's what I want you to remember: Understanding sound money isn't just about protecting your wealth – it's about taking control of your financial future.

As I wrote in From FIRE to SovFIRE: Sovereign FIRE – The New Path to True Financial Independence, this journey is about more than just money – it's about personal sovereignty and creating true independence for yourself and your family.

Want to Learn More?

  1. Essential Reading:
    • "The Bitcoin Standard" by Saifedean Ammous
    • "The Fiat Standard" – eye-opening stuff about our current system
    • "When Money Dies" by Adam Fergusson
    • MicroStrategy’s Playbook – why they are so bullish and why I think you should be too.

Remember – no effort learning about this stuff is wasted. Every bit of knowledge helps you make better decisions for your financial future.

What are your thoughts on sound money? Have you started investing in any sound money assets? Let me know in the comments below!

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Adam

I am on a journey to embracing a less stressful, more self sufficient life through my passions for renewable energy, off grid living and financial independence.

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