Right now, Bitcoin is just shy of $55,000 per coin. Considering it was $3500 in March of 2020, and you, me and pretty much 99.9% missed out on that incredible run up. However, if you take any time to really understand Bitcoin, then you’ll realize that we are still in the early innings of a 9 inning game.
Bitcoin is the only money in the history of money that humans have used that satisfies all 4 of these rather important criteria:
- It is completely decentralized, meaning that no one person or group of people control it. It’s a peer to peer payment system.
- It has a fixed supply. There will be 24 million coins and never more than, ever. Written into the code that cannot be altered no matter how badly powerful forces want to alter it, is this finite number of Bitcoin.
- It is easily transferable. It can be paid instantly to anyone, anywhere in the world within 10 minutes.
- It is completely safe and verifiable. The only way anyone can steal your Bitcoin is to have your private key. In order for anyone to hack the system and send fraudulent Bitcoin, they would just have to have access to tens of thousands of computers or “nodes” – ALL AT THE EXACT SAME TIME.
Bitcoin is a store of value that has never been created before in the long history of humanity. Let’s take a deeper dive into these 4 points at the limitations our current and past types of money have had.
Bitcoin is Decentralized
The most important value to the Bitcoin currency is that its decentralized. For example, the US dollar in the year 2020 saw a 23% increase in its supply. This is due to the Federal Reserve, the US govt central bank that controls the money supply. They have the unrestricted license to print money, and there are no checks and balances. It’s called quantitative easing, which the only thing it eases is the value of the dollars in your bank account. It’s not like the US central bank is the only one to do it – throughout history and even today, every single fiat currency has been through this hyper printing press. It’s why no fiat currency has EVER survived. (Fiat currency is government issued currency that is not backed by a physical commodity, such as gold or silver, but rather the government that issued it).
Fixed Supply
Obviously our dollars don’t have a fixed supply, but let’s take a look at the only store of value that has a very limited supply – gold. If we look at gold across the long timeline of history, it’s the only store of value that’s ALWAYS held up. Because it’s rare, and indestructible – of course it can be lost, or stolen, but it can’t physically be destroyed. And because it’s so rare, only a small amount of new supply enters the global system per year – less then 3% is mined and added to the current supply. So that keeps the value intact – if all of a sudden a huge mine were to be discovered and increased the supply of gold in 1 year by 50%, then we would have a huge drop in value of all gold. But that hasn’t happened and is extremely unlikely.
Bitcoin is Easily Transferable
Gold is a great store of value, however it is definitely NOT easily transferable. Paying anyone in gold is not only difficult because it must be physically transported and especially in large amounts it’s not easily divisible – imagine paying someone with a bullion (large brick of gold). Figuring out how to calculate the value and make an exact payment is very complicated. Certainly dollars are easily transferable, however they have this big problem previously described called the printing press – every day your dollars are debased.
Bitcoin is Safe & Verifiable
If you’re still not sure on how Bitcoin and blockchain technology works, then I created a previous blog that gives 3 examples that can help not so smart people like me to understand it, or to at least think I understand it. But once you get it, then you’ll be clear on why it’s safe and verifiable – I believe it’s important to make a serious attempt at understanding it, because is a key point as to why it’s such an incredible store of value.
Because Bitcoin satisfies all 4 of these points, and the government is printing money on a massive scale never before seen in the history of our great country, AND not only retail investors but major companies are now buying Bitcoin as a store of value (Tesla just bought $1.5 Billion, with a B), and eventually central banks will almost be forced into buying it because they don’t want to be buying it later when it’s super high – you aren’t too late. Yes, it will most likely be volatile, and you may buy in and then watch it drop 30% the next day. That definitely can happen. But if you HOLD on for the next 5 years, it’s almost certain you will be up quite a bit. Let’s just say you buy in at $50,000 then it drops to $30,000, then in 5 years it’s up to $200,000 and you are up 300%? Would that be so bad? You won’t care that much that you could have timed it better and bought it at $30k. Just keep adding it to your portfolio every month when your income rolls in, and trust the process and ignore the volatility!
