Disclaimer: This is just my opinion on Bitcoin and not financial advice
“Bitcoin is revolutionary. Maybe one of the best inventions in history”, says many. Anyways, all thanks to Satoshi Nakamoto.
But is it the application (Bitcoin) or the tech behind that application aka Blockchain that is more revolutionary? To me, it’s all about Blockchain and not Bitcoin.
Although NFTs brought me into the world of web3, I got very much interested in crypto which of course is something you need to buy NFTs.
So, I bought Ethereum and I bought some NFTs. Then it went on to SOL and investing in other coins.
And while I am through this journey, I tried educating myself on Bitcoin too. I focused on how it works and what makes it so unique.
Bitcoin is definitely one of the best applications ever designed. The concept of ‘unstoppable and unhackable money’ is probably everyone’s dream.
But I’ve never invested in it.
Bitcoin (as a network) is a “Peer-to-Peer Electronic Cash System” is brilliant. But Bitcoin (as an asset – $BTC) somehow, the narrative got changed from unstoppable money to a store of value (still unstoppable though).
That’s because it is highly volatile. It is never gonna be used as cash. The price is not gonna be stable even after all the 21M bitcoins (a total that’ll ever exist, which also makes Bitcoin a scarce asset).
Let’s say I pay 10BTC to buy a house from you. 2 months after the purchase, the value of BTC might go up like 200% or maybe go 50% down.
So it’s like using gold or an apple stock as a medium of exchange. We don’t do that right?
Bitcoin can’t be printed like how the government prints money. That’s great!
But it’s not money anymore, right?
I am not saying FIAT currency is great, but I still don’t think ‘The Bitcoin Way’ is the best way to fight against FIAT, considering that it’s never going to be a currency.
Even the “Store Of Value” narrative, I don’t get it. And that’s also maybe because I never understood gold.
I don’t see value in Gold. As of 2021, Gold has a market cap of 11.83 trillion dollars. If you give me gold right now, I’d immediately sell-off for whatever the price it is and buy something else that I like or even travel.
I even looked up to what all the big personalities said on Bitcoin in the past. The arguments are on both the extreme ends of the spectrum.
Michael Saylor says Bitcoin is a perfectly engineered monetary system for the first time in 5000 years while on the other hand, while Warren Buffet says it’s a speculative asset that produces nothing. He also made a statement that he wouldn’t even buy all the Bitcoins in the world for $25.
Charlie Munger called Bitcoin “A rat poison”, Bill Harris (Former Paypal CEO) said Bitcoin is the biggest scam in history, and Nassim Taleb called Bitcoin an “Open Ponzi Scheme“.
On the other side, Peter Theil (the don of ‘Paypal Mafia’) believes that Bitcoin is the first encrypted money that has the potential to do something like ‘change the world’.
Bitcoin, a digital asset is being called ‘The Digital Gold’ or ‘Gold 2.0’.
The only reason why I HODL Bitcoin is only for the price to go up!
You might say: “What about all the other cryptocurrencies you are holding? You are doing it for the price to go up?”.
Yes, but those assets can produce something. Like earning a yield on a real estate token that I stake from a Real Estate project that was built on top of Ethereum or investing in (or buying) a Solana NFT that provides me access to a design tool or a stable coin that I can use and transact on some other blockchain.
Tascha did a good job in explaining why she sold all Bitcoins using a ‘farmer’ as an example. Read the article here.
Here is a line that is taken from an Investopedia article: “If Bitcoin does not achieve success as a medium of exchange, it will have no practical utility and thus no intrinsic value and won’t be appealing as a store of value.”
Now, Avalanche, Ethereum, Polkadot, or any other cryptocurrencies are also highly volatile too. But the point is they weren’t designed as a replacement for a FIAT currency.
ETH or some other Layer 1 assets are like a fuel that runs the digital world or the new internet called web3 via Dapps, Defi, and NFTs whereas Bitcoin is like gold in the digital world.
To me, Bitcoin (in terms of network and its creation) is a technological achievement. Remarkable cryptography that is mixed with beautifully designed consensus mechanisms and incentives. If it’s not for Bitcoin, we wouldn’t have seen all the innovations that happened in this space.
On the other side, Bitcoin (as an asset) is a speculative asset. Or
Maybe I am not able to see the big picture that you (if invested in Bitcoin) or many other investors are seeing. I don’t know. Try to educate me if you can.
Thanks for reading.