As our understanding of Bitcoin grows, a deep realization is taking hold that it has unique properties that make it a superior savings technology and perhaps the king of all assets. Born in 2009, this innovative cryptocurrency has defied skepticism and emerged as a formidable force in the financial world.
Phases of Understanding Bitcoin
The journey to realizing Bitcoin’s full potential often follows a predictable path. Initially, Bitcoin is met with skepticism and ridicule, and is often dismissed as a speculative fad or a tool for illicit activities. But as early adopters reap enormous benefits, curiosity is piqued. According to data from Blockchain.com, the price of one Bitcoin has risen from just $0.08 in 2010 to over $70,000 in May 2024, creating numerous millionaires and billionaires over time.
As understanding grows, Bitcoin is transforming from a speculative investment into a legitimate asset class and a potential hedge against the weaknesses of the traditional fiat monetary system. With global debt levels expected to fall to $292 trillion by the end of 2021 (according to the International Monetary Fund), declining purchasing power due to rising inflation, and the precariousness of Keynesian economics, Bitcoin is proving to be a decentralized, scarce and censorship-resistant alternative to centralized monetary systems.
Final takeaway: Bitcoin as a good savings technology
Anyone who truly understands the basics of Bitcoin will eventually realize that it is a good savings technology – a store of value that maintains and grows purchasing power, increasing in value over time. Unlike fiat currencies, which have an infinite supply and the potential for inevitable depreciation, Bitcoin has a fixed issuance schedule and is limited to 21 million, thus guaranteeing its scarcity and long-term appreciation in value. To date, over 19 million Bitcoins have already been mined, with less than 10% of the total supply still in circulation.
This realization leads to a rethink. Rather than viewing Bitcoin as a speculative asset that can be traded for short-term gains, it becomes a long-term savings vehicle, similar to a bank account but without losing purchasing power. As MicroStrategy CEO Michael Saylor once said, “Bitcoin is the king of assets” and once this truth is internalized, the temptation to “take profits” disappears and is replaced by an unwavering commitment to accumulating and holding Bitcoin as a superior form of money.
Advantages of Bitcoin as an Asset
Bitcoin’s dominance as the king of assets comes from its unique properties:
1. Scarcity: With a fixed supply cap of 21 million Bitcoins, Bitcoin’s scarcity is built into its protocol. This ensures that its value is maintained and may even increase over time as demand increases.
2. Decentralization: Bitcoin runs on a decentralized network and is free from any central authority or government control. This reduces the risk of censorship, seizure and manipulation.
3. Borderless and Permissionless: Bitcoin crosses geographical boundaries and can be sent and received from anywhere without the need for intermediaries or permission, enabling true financial sovereignty.
4. Immutable and Transparent: The Bitcoin blockchain is immutable and provides a verifiable and transparent record of every transaction, ensuring the integrity of the network.
5. Divisibility: Bitcoin can be divided into smaller units (Satoshis), allowing for micro-transactions and making it more accessible and usable as a medium of exchange.
As traditional financial systems struggle with growing challenges, Bitcoin’s value proposition is becoming increasingly compelling. While assets such as fiat currencies and government bonds are subject to depreciation and reduced purchasing power, Bitcoin offers a reliable store of value and a hedge against financial turmoil. According to data from the Federal Reserve Bank of St. Louis, the purchasing power of the US dollar has declined by more than 87% since 1913, highlighting the need for alternative assets that preserve wealth over the long term.
The path to understanding Bitcoin is a transformational journey that has taken people from skepticism to speculation, to investing and hedging, and finally to the realization that Bitcoin is a superior savings technology – the king of assets. As this realization spreads, backed by concrete data and real-world events, Bitcoin’s adoption and prominence in investment portfolios will continue to grow, solidifying its position as the preeminent asset of the digital age.