Been calling the buy since it was $5k.
Why BITCOIN?
Hundreds of coins, why bitcoin.
- Why did you think of bitcoin first on the word crypto? Mindshare?
- Market share at 70%. Part of the value is a function of network effects (Metcalfe equation).
- Sharpe ratio, best out of all assets.
- Highly uncorrelated to all assets ( though this will increase. A con of growing market cap)
- The sole best use of blockchain is a cryptocurrency due to stasis built into decentralization.
- 24/7 trade. The network never failed for 10 years.
- Best open-source developers vs all other coins, even Ethereum ( Not a maximalist, but bitcoin should be in better shape than others in the long-run)
- Not beneficial for governments to ban crypto. They want to control hype, bets, and laws around it but not restrict it (evident from china state media). Also to implement NIRP (negative interest rates), is there a better way than your own digital crypto? To implement your crypto where do you hire? Without a crypto industry, programmers don’t know what crypto is. Other cases of government encouraging bitcoin already taking place eg. Wyoming.
- To point 8, the government is not a single entity. People like Cynthia Lewis actively own and promote bitcoin.
- Regulation (except banning) causes entrenchment. All countries enacting laws already eg. some classify it as property to tax it.
- Bitcoin cannot be banned. When Roosevelt forbade the hoarding of gold via Emergency Banking Act in March 1933, gold did not lose it’s value (of course, since money was pegged to gold too). Decentralized banning? Impossible. Country US bans, country CN wins from fund inflows. Classic prisoner dilemma.
- Solution for the government is to an improved centralized cryptocurrency. But when people are comfortable with crypto, bitcoin gains traction again. All roads lead to Rome.
- Stock-to-flow ratio is higher than gold post this halving. So… bitcoin is now the rarest, incorruptible, fungible, tradable asset and rarer every halving. We can debate bout the S2F model for bitcoin another time.
- Smart money (Venture Caps i.e. Andreessen ) rushing in. Flood of money causes huge developments eg. Defi, NFT. Innovation from big tech into Ethereum etc. Fear NIRP? No worries stake your bitcoin for 2% / year and earn capital appreciation too. Everything a bank can do, crypto can and will be able to do more. Finally, after all the altcoins progress is done, it all goes back to the reserve currency which is …
- Payment companies like Square’s cash app increasing Bitcoin awareness and market cap. They just bought $50m of bitcoin too. Will Paypal miss out on 1–3% on trading fees? Institution-led bull market by buying bitcoin for treasuries?
- All that money that was supposed to buy bonds, treasuries has to go somewhere. Commodities? Currency?
- Unhackable. Quantum computing? Improving crypto too.
- Physical money is easier to conduct illegal trade than an open distributed ledger. Privacy coins like Monero are banned in many countries. As with all things like the Iraq war, Big tech, governments need a narrative to establish regulation for increased taxation etc.
- It is so hard to use bitcoin to trade. If the value is really in replacing money then yea. But why is gold worth more than money? Being a protocol (email/ defi) is worth little. Being a store of value is worth much.
- Too volatile. Less volatile than the current market, definitely much less at larger market caps. Volatility as a function of market cap in other words. A huge proportion of coins are always off-chain HODLing, reducing volatility.
- U.S reserve currency’s reduction in market share. Reserve currency, USD, pound in previous centuries, had the backing of the superpower. Fragmentation of power will create a vacuum to be filled. Death of petrodollar. The net of Petrodollar reduction to be accounted for by neutral assets when countries trade.
- Technical reasons to buy now like miner confidence, off-chain trend but I shall not go further.
- One of the most effective way the government can slow the ascent of bitcoin, as they did with gold: Derivatives. Countering that would be the ever-improving crypto ecosystem, making it obsolete. The UK banned it recently so who knows.
Bitcoin is the holy grail of money mankind has been looking for. So interesting how undervalued it was, and is. Expensive at 200b market cap? Gold is $7t. Finally, crypto must and will permeate everything. Stock exchanges, payment systems you name it. Whether those platforms still survive or are overtaken by decentralized exchanges remains to be seen.
Do you think you will buy Bitcoin after all these points? What is stopping you or unanswered questions? Do comment below.
