Information Is A Commodity, Bitcoin Is Money — What’s Most Important
Bitcoin is a great. The funny thing is, the more you learn about this magic internet money, the more you love the idea.
What I think is most important:
Bitcoin is one of the best inventions since the Internet. Money is a belief system. Trust in governments and central banks is fading. New solutions are needed.
Claiming “Bitcoin is worthless” is similar to claiming “information is not a commodity.” Much of the economy, especially software, is one thing: information. The things that are important and valuable to our generation are entirely digital: accounts, games, programs, social media, operating systems, etc. We are witnessing now how classic valuables like works of art coming into the digital world. Some are already more valuable than “real art.”
Bitcoin will not replace the dollar as a reserve currency for now, but will compete with gold as a store of value. For a digital world, we need digital gold. Physical gold is unwieldy, difficult to divide, and risky to own.
There will be a maximum of 21 million Bitcoins. A large portion of all Bitcoins has not been sold within the last 12 months according to various statistics. Investors hold with full conviction, despite strong volatility.
The market capitalization (MC) of gold is roughly $10 trillion. If BTC reaches the same MC, one bitcoin would rise to +$500,000. Assuming Bitcoin is at least a 5 to 10 times improvement over gold, the mid-term valuation is a good $2.5 to $5 million for one Bitcoin.
The U.S. has passed the next $1.9 trillion stimulus. With this, roughly 40% of the global reserve currency has been printed within the last twelve months. For the 20s, it is almost guaranteed: Many more trillions will be printed. And interest rates will remain at zero or become negative. Cash is losing purchasing power in a big way.
After Microstrategy, Tesla, Square and Co. more companies will invest in Bitcoin. Companies are doing their shareholders a favor by putting a cash stake in an asset that has historically grown 200+% a year.
We are heading towards a decentralized world. For every large (software) company, there will be decentralized competitors, built on millions of computers, with no central server, no single decision maker. One example: social networks. They can basically censor who they want. Censorship is always ‘great’ (“Trump is a moron blah blah blah”) until it hits you — or the people and ideas you care about. Free speech is more important today than ever. Our world needs money with these characteristics.
Bitcoin will go to $300k, $500k, maybe higher in the next few months. Then when BTC falls to $150k, the joy will be huge for many. “Bubble burst,” they will say. Again. Yet we started the year 2021 with a good $30k….
At this point with a market cap hovering around the 1 trillion mark, I think the chance of Bitcoin hitting 1 million is far greater than Bitcoin hitting 0.
We are at the beginning.
Disclaimer: This is no financial advice. I am no financial advisor.