Why Bitcoin and not Gold, Bonds, Stocks or Other Cryptocurrency as Store of Value
Before we get into Bitcoin (BTC), let see how mobile intelligence changed the world before 2020 and now Bitcoin is dominating the monetary network.
In 2007, Apple came forward with the iPhone but it was a toy, there was no cut and paste there was no app store by 2009. The iPhone 3 was not a toy anymore it was a business tool that made enamored with the idea of software leaping off of a computer onto a handset and when software goes from solid state to vapor state and now it’s around us and with us and we sleep with it 24 hours per day.
It means something different and so when the mobile wave the observation was software networks are de-materializing everything in the world. They’re de-materializing money and identity and everything you able to hold in your hand such as the photograph, camera, recorder, video, map and much more.
Here is a very good example of de-materializing a map. Google Map is the magic map it tells you where to drive how to drive whether you should go there the directions to take and it’s in the palm of your hand even talks to you
and Rand McNally was a simple 20th century map and it worth 50 million bucks, google maps is worth 50 billion dollars.
Apple de-materialized Kodak what maybe Instagram did and you went from taking photos on a Canon camera and storing them in a box or a photo album. Facebook and Instagram and the iPhone and it wasn’t worth the same, it wasn’t worth ten times as much it was worth, a thousand times as much. The
conclusion of the mobile wave was the world’s going to change the networks, Google’s an information network, Facebook’s a social network, Apple’s a mobile network and Amazon’s a retail network.
They’re going to eat the world and they’re going to destroy more than 15,000 other companies that are competing with them because Apple able to ship a better camera to a billion people overnight for a nickel and nobody in the history of the world could ever upgrade or ship a product for no variable cost to the entire planet for nickel and yet that’s what Apple, Google and Facebook does that and that’s the part of Amazon that works well is that de-materialization of the retail storefront to a billion people for a nickel.
Over the last 8 years what happened is Bitcoin was copied 6500 times and it’s the winner of the crypto wars so how do you get comfortable with it, well after it’s been attacked 6500 times by clones and they’ve all failed. After it emerged to be 95% of all of the proof-of-work networks, like 95% of all the monetary energy in the crypto asset space is on the bitcoin network then you know it’s Facebook, it’s not myspace so we had to watch it get to a point of maturity where it’s seasoned and we had to watch all of these bad exchanges failed, all the bad actors failed and we had to watch the development of a regulatory apparatus so now you have KYC regulation on the exchanges in the U.S. You have clarity with regard to how it’s taxed, you have clarity with regard to what it is and isn’t.
People are starting to understand it’s not a currency, it’s not a payment network, it’s a bank and cyber space that allows billions of people to store their money. It gives them a simple, straightforward, affordable and secured savings account for people that can’t set up their own hedge fund and don’t know and can’t get into a hedge fund.
They just want to put their money in a bank you know that the politicians and country has destroyed the savings account over the past 30 years. You put your money in a savings account maybe fixed deposit account and get 5% interest and everybody believed that the money was going to be more valuable in the future you wouldn’t lose your money and that option has been deprived and so that is bitcoin has emerged from casino gambling scary to the savings account.
Our savings and loan at the end of the universe and that’s the journey of the 10 years and I think everyone should get excited to Bitcoin when reading these or searching around the internet what is Bitcoin and learn about this huge monetary ark.
Bitcoin is the only one with the immaculate conception that’s truly decentralized. It’s the money it’s the crypto asset of the people, there’s not an example of a digital network that hit a hundred billion dollars in market cap that was vanquished subsequently like you. A lots of billion dollar things failed, lots of ten billion dollar things fail but once you get to a hundred billion dollars, the market is spoken right.
The thing that makes people that own and invest in bitcoin passionate about it is because it really does enforce the concept of freedom, truth, liberty and sovereignty. One interesting example you’re an investor you have a bunch of money, you want to leave it for your granddaughter 30 years, from now your choices are gold or bitcoin. Okay this is the real problem, 10 trillion dollars in gold, hundreds of billion dollars in bitcoin. Well if you actually choose gold you have to put your gold in a bank and trust the counterparty to take care of that gold, that’s mean you’ve surrendered all your monetary energy. Money is monetary energy, you’ve surrendered your life energy to a bank a counterparty trustee and in the last hundred years they all failed. Every bank fails, you’re trusting a company or you’re trusting a country and if the bank doesn’t fail and 95% of the cities and in the world you know the banks failed in them over 100 years, but the countries and the regimes failed too.
On the other hand, if you actually buy bitcoin you have the option not the obligation but you have the option to take custody of those keys that is advantageous for you and two reasons. The first is you know you can switch custodians quickly in half an hour, you can move your money from one bank to another bank, one country to another country that keeps everybody honest. It is useful in a capitalist world if you have options and no one’s holding you over a barrel. The second is i can hold a gun to your head pull the trigger to kill you and take your gold but like but if i hold a gun to your head and pull the trigger i can’t get your bitcoin.
There is a very important subtlety there which is at the end of the day you control your life force, it shifts the balance of power back to the individual versus the bank the custodian the country anybody that would coerce you and steal your life force from you and in that way.
The number one problem every investor in the world is facing right now, there is 250 trillion dollars or more worth of this problem is i have monetary energy and i need to put somewhere to store the value, how am i going to conserve my monetary energy in the current macroeconomic climate as long as the central banks are expanding the broad money supply M2 expanded by 5% and 0.5% a year for 10 years.
This year 2020 it expanded by 24%, if the monetary supply expands by 10% to 15% a year for the next three to four years the banks are sucking the oxygen out of the room they’re sucking 10% to 15% percent of the purchasing power from all of your investments. The question is i mean if i’m holding cash and i have 1 million in cash and i’m looking at losing 15% of the purchasing power every year for five years, the risk was i’m going to lose 75% if i do nothing. It made it easy for me to take another decision because i expect that the doing nothing with money with cash is losing more half to 75% of your purchasing power and it’s not a problem if the money supply is not expanding right the expansion of the monetary supply is like i’m sucking 5% of the auction out of your room every year or every month how long will it be before you leave now, what do i do with that well i got to find a store of value.
How about bond? Bond is only a store of value if the coupon is higher than the rate of monetary expansion unless i have expectation that the interest rate will fall so a 5% bond can work as long as you keep cranking down the interest rates. However when interest rates get to zero unless you go negative bonds don’t hold value everybody in the bond market has figured this out either interest rates go negative or you got to exit now.
How about stock? Stock can hold value if the cash flow per share grows faster than the rate of monetary expansion. Google, Amazon, Facebook they work in the last decade because they’re growing 20% and the money supply is expanding 5% but if the money supply expands by 15% how many equities are going to expand cash flow per share by 20% by the way how do you do that if you’re not. You have to leverage up right, so if i’m growing 10% a year cash flows i have to borrow money i go short the dollar i borrow billions i buy my stock back my cash flow per share goes above the hurdle rate and so i can hold value. So the conclusion is no, 99.9% stocks are not able to be store of value.
Ok, so bonds are a problem, stocks are a problem, cash is a problem now you got to go to precious metals. Am i going to buy gold? The miners are going to create 3% more gold every year. People you know the gold supply is centralized and infinity (there is no end for gold mining), there is counterparty risks the central bankers hypothecate it and create gold derivatives. There is no scarcity with gold under the best case in a hundred years you’re gonna to lose 85% of your money when they just mine 2% more gold a year under the worst case you’re going to lose it all from a counterparty risk and in the mid case you’re going to lose up to 95% because people keep generating gold derivatives.
This is why gold is breaking down against the fed balance sheet you can see it breaking down on the charts this year it’s not working. If gold goes to a hundred thousand dollars an ounce, gold miners are going to frack gold like there’s no tomorrow. It’s a commodity and commodities make awful money because human beings can create more so you work your way through bond, stocks and gold.
What’s left? Crypto is the only asset you can’t print more of well. There’s about 6500 choices in the market right now but the winner ‘Bitcoin’ it turns out the one that no company controls no country controls, it’s capped at 21 million total supply and also called as ‘The Grandpa of Crypto’.
Highly recommended you to read this It worth $1,000,000 USD per Bitcoin in 5 years if you’re doubt to buy Bitcoin at the moment.
It is totally strange to have a financial instrument which is scarce and capped in total supply because you can print more tech stocks, you can create more bonds, you can mine more gold, you can issue more fiat currency, as long as the market is needed. On the other hand in the engineering world when you’re designing pneumatic systems or hydraulic systems, nobody ever built a pneumatic system with a leak a hydraulic system with a leak, your swimming pool doesn’t even work with a leak. Everybody knows if there’s a leak in the fuselage or the airplane it’s not going to fly it’s going to explode. So you know you don’t have a leak in a nuclear reactor, you don’t have a leak you ever try to go across the ocean in a ship with a leak.
Let see the idea of a closed system is basically something called adiabatic lapse you know an adiabatic system is no leak, it is a closed system. When you have mass in the system that can either leave or can be added, all you can do is inject energy. Bitcoin is the classic closed system there’s 21 million coins virtual bars of gold in the system you can’t remove any you can’t add any. There’s no inflation and what you can do is you can heat it up if you’re buying bitcoin above the four year or the 200 week moving average you’re heating up the system, if you’re buying it below the 200 week moving average you’re cooling down the system. The entire thing’s like a massive monetary battery a capacitor, it’s storing energy and and what we’ve done is created a system where i can take a hundred million dollars of monetary energy, i can even put it into the bitcoin network and it’ll sit there for as long as you can imagine, never power loss that’s the genius of it.
It is the first time in the history of mankind, we have created a monetary energy network that will store the energy over time with no power loss. We’ve never had a money, we’ve never had a thing that could do that gold didn’t do, that copper and silver doesn’t do, that fiat doesn’t do even stocks and bonds don’t do. What I can say it is really an engineering breakthrough.
Bitcoin is the first perfected crypto asset that serves as a long-term store of monetary energy that’s what is going on right now and here.
Bitcoin is not a currency, it is not a payment network, currency is the province of the government, always has been always will be the IRS sets the tax code for currency, you can’t use bitcoin as a currency because the tax code is hostile to it and it would generate a hundred thousand accounting entries and tax obligations for no reason whatsoever. There’s no point in bitcoin being thought of that, bitcoin is not a payment network. Apply Pay, Square Cash, PayPal, WeChat Pay and Alipay are payment networks they works well and billion times better than bitcoin or any crypto will ever work so crypto’s inappropriate as a currency, even though people call it ‘cryptocurrency’ it’s a wrong choice of words we should move it out from the lexicon we should refer to as ‘crypto asset’.
Crypto is an awesome technology for creating a scarce asset as a store of value the 250 trillion dollar. The way of spending is very simple, just convert your asset to fiat currency on payment network like PayPal, that’s it. Let the governments be the governments, let the big tech companies do what they do best and let bitcoin do what it can be the best in.
That’s all for today and I hope you guys enjoy this, thank you Michael Saylor for the inspiration and informative content, hope we are doing the right things on bitcoin, Cheers!
At this moment Bitcoin price is $16,863 which has dropped 12% in few hours from $19,000, obviously this could be the best moment to load up more BTC into your crypto wallet.
How to get started to Buy, Sell and Earn Bitcoin?
- Sign up a free account on Binance Exchange
- Sign up a free account on DiuBTC Exchange
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