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Online Access Denied: The Fog of Digital Disruption

Monetary System
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We’ve written plenty of articles on digital disruptions--anything from human errors to full-blown cyberattacks--but this piece illustrates an event that hit close to home.

Last Monday, June 30, we were holding our monthly remote GSI Exchange meeting, discussing website matters and uploading articles and editorial commentary when suddenly...our entire website went offline.

I’m sure everyone has experienced something like this before, perhaps numerous times, but let’s take a moment to analyze what this meant for us here at GSI.

First, this temporary disruption rendered a huge segment of our team virtually useless as our website served as our primary mass communications platform. Without it, our content is both purposeless and powerless.

Second, and perhaps the more unsettling aspect of this disruption, we initially had no clue as to the source of the disruption. It could have originated anywhere--local, regional, or global.

Another unknown: was it due to a tech glitch, human error, or attack?

We checked WordPress and found our first clue:

Was WP itself down, or was it a third party vendor? Moments later, we received an update that answered our question.

Okay, so it's a third party vendor. But which one? Tech providers often work with several vendors. Nearly 40 minutes later, we learned which vendor might have been the first point of disruption. It was Alphabet--Google’s parent company!

But what happened exactly? So we looked for Google updates on the matter and found this:

It was a power failure incident. But what caused the power failure? Was it a downed line, tech glitch, human error, or an attack?

Here’s where it got confusing. Rumors began to spread. Some people were saying it was an attack, while others were saying it was a mere outage. The main point is at that moment, we didn’t know, nor could we have known had it not been to Google’s relative transparency.

The scary thing is that everyone using Google Cloud servers in the affected areas were 100% reliant on Alphabet to fix it. In short, we were all vulnerable.

If it was an attack, then an attack on Google would be tantamount to an attack on America (it’s digital infrastructure and everything social and commercial that relied on it).

If it was merely an outage, then the effect on America would still have been equivalent to a cyberattack as all things reliant on the cloud would have been rendered useless.

Let’s transfer this lesson to the domain of digital money and online banking.

If a disruption were to take place with your digital funds, you would invariably face a major fog, meaning you’d have no idea what happened, where it happened, the intent behind the disruption, and whether it was a simple error or a deliberate attack.

In such a scenario, the consequences are either “black or white”: your money is accessible or it's not, regardless of the reason behind the disruption.

If you need to buy groceries, pay bills, or if you have a business that needs liquidity, you’re out of luck. Similar to what we experienced when the Cloud was disrupted, anything you plan to do that requires money would simply be frozen or rendered useless.

If a major tech behemoth like Google can be disrupted, what are we to say about less powerful tech-driven institutions, like your local bank, financial institutions in general, your stock brokerage, your annuities provider, your stock or commodities exchange?

Your cash and digital assets (including paper gold and silver) would simply be frozen, inaccessible, or in a worst-case scenario, just gone.

Whether the disruption was due to a downed line, a machine glitch, human error, or someone trying to steal your money--none of it would make a difference since you’d be powerless to do anything to help resolve the situation.

You’d be 100% vulnerable to the companies that hold and therefore control your money.

If we were to glean any “learnings” from this incident, they would all reinforce the reason why we should be stashing some of your wealth in the form of privately-held physical gold and silver.

Your money is “your money” only if it's accessible on demand.

Your money is under your control only if nobody else can handle it, store it, and use it without your permission.

Your money belongs solely to you only if no other entity can track it or surveil it.

Anything less than these attributes would amount to a compromise.

We all have bank accounts, and most of us use our debit cards to make digital transactions.

But when it comes to storing our wealth, some of us want a hedge against “rare events” that can significantly harm our assets. Remember, certain rare events can have a lasting, if not terminal, impact on our wealth.

In contrast, creating a hedge against such rare disruptions is easy. All you need is a modest stash of physical gold and silver. Just bear in mind that should the financial system undergo a major financial disruption, you will be relying on your gold and silver and cash as the only accessible form of wealth you have.

Is this fear-mongering, or prudence? I’m not so sure there’s a difference between the two. All prudence is based on caution, and there’s no caution without the slightest dose of fear.

Should we have hedged a rare pandemic before COVID-19? Should tech companies buffer their cybersecurity measure before an attack? Should we wear a seatbelt when taking the car out for a drive? Might it be the case that “rare events’” happen more often than we think?

Should you protect your wealth, especially if the steps to protect it are relatively easy and convenient? That decision we’ll leave up to you.

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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