09 Jan A very mediocre glance at understanding Bitcoin, regurgitated from favorite Bitcoin Bulls
(Throw away acct)
There will only be 21 million Bitcoin EVER. An estimated of 2-3 million Bitcoin have already been lost forever on thrown out hard disks. Every Bitcoin that is lost is a gift to the community of Bitcoin holders is it makes a scarce asset even more scarce.
There exists 300 trillion dollars with of capital in the world. Due to the rapid expansion of the monetary supply (mainly USD & EUR) by their central banks- the cost of capital has tripled from 5% to >15% over the past year. Therefore, Bitcoin is a solution to a 300 trillion dollar problem. If we lookout over the next four years with- bonds and earning per share growth rates going to need to exceed that 15% hurdle in order to preserve wealth. Some will succeed many will not. What will the cost of capital be when the Biden administration takes over? Who has already announced plans to discuss the next round of fiscal stimulus.
Facebook is what happens when we pool social energy on software network. Google is what happens when we pool information energy on a software network. Bitcoin is what happens when we pool monetary energy on a software network (with no energy loss). Bitcoin is the first software network capable of storing ALL the monetary energy in the world with no loss of power over time and negligible transmission loss. Assuming broad adoption, that would make it the most valuable invention of the modern era.
Meanwhile, gold miners have incentive to conceal and minimize the full extent of their reserves, increase their capacity aggressively, and mine more gold as fast as they can ultimately inflating at 2%~ a year. Making them an enemy to gold investors. (Not to mention the asteroids made of GOLD and NICKEL (google it “Psyche 16 Asteroid”) (2.72 x 10^19 kg’s worth, a fuckload one might say) orbiting within Elon and SpaceX’s reach (approx 20 months of flight with today’s technology)(This a stretch for us plebeians to consider, but entirely relevant for people institutions trying to preserve wealth for the next several decades).
How are wealthy families supposed to pass value to future generations? Giving them the rights to gold bars in a vault they’ve never seen in a city they’ve never been too? Are families supposed to pass generational wealth through equity in a company that might not exist in 10 – 20 years AND overcome the current cost of capital at 15%? Are we going to trust the human variable of competent Board of Trustees, CEOs etc over the years to expand their enterprise? Perhaps some. How are Iranians, Venezuelans, North Koreans, Sudanese, Chinese, Afghans, Iraqis etc. going to flee their countries with their wealth? A backpack full of gold? Doubtfully.
As Bitcoin grows its encryption scales. Today, each Bitcoin bock on the public chain is 19.3 Trillion more secure than it was 10 years ago. Gold is still as secure as it was in 1937. The 21st century investors will lose trillions holding on to 20th century ideas. Bitcoin is an asset not a commodity. Commodities are abundant and should be traded. Assets are scarce and should be owned. Pure monetary energy is the IDEAL treasury reserve asset, and for the first time in history we can own some with Bitcoin.
The traditional concerns about Bitcoin have been that it might be hacked, copied, or banned. None of which has happened since inception in 2009. The most likely of all possibilities is banning the asset. Which would involve a national level firewall/internet iron curtain, which would NOT only filter out Bitcoin protocols but subsequently all e-commerce. A government would have to individually white list all internet traffic (good luck given it cannot be automated because of its dynamic and ephemeral nature, and changing by the hour). This method is not an option to first world countries. Take the US where 10% of our annual GDP is based on internet commerce.
As investors start to understand the Bitcoin story they’re going to migrate their capital on to the Bitcoin network. That would likely create a virtuous cycle of adoption followed by price appreciation, followed by value accretion followed by technology integration. Evidence? 51,249,900% gain in 10 years. July 2010: $0.08 per Bitcoin. January 2021: $41,000 per coin.
Companies/groups like Greyscale, MicroStrategy, PayPal, Square, SkyBridge Capital, Norway(government pension, some smart fellas), Vanguard 11.72% exposure to Norways BTC fund, Coinshares Ltd, Galaxy Digital Holdings, 3iQ, Blackrock (through Microstrategy), Morgan Stanley(through Microstrategy),(perhaps Apple and Google shortly).
Guggenheim Partners $400,000
Cathie Wood $400,000
Tim Draper $550,000
Raoul Pal $467,000
Anthony Pompliano $100,000
Me? Greater than the current annual 15% cost of capital…
At what metric and value will we recognize Bitcoin is here to stay?
37.81 Billion Average Daily Volume?
$743 Billion market cap?
51,249,900% gain in 10 years?
>100,000,000 active Bitcoin wallets?