For almost 11 years, Bitcoin has been a relatively good way to make more fiat. But due to recent money-printing initiatives from central banks, it will finally reach the safe haven status for which it was created.
There will only ever be 21 million bitcoins – but the governments and central banks will inflate fiat currencies to the point that everyone will question their value.
As the fiat experiment is crumbling, the credibility of the entire system will become dubious even to the most optimistic of statists. If US Congresswoman Rashida Tlaib was able to receive mainstream media coverage for her idea to mint two platinum coins worth $1 trillion each, then it’s clear that we’re witnessing the beginning of a mass awakening.
Interestingly, the price of platinum is $608/ounce. Yet the plan is not to mint coins that weight 1.64 billion ounces (102.7 million pounds, or 51398 tons) each. That’s 1/7 of the Empire State Building’s weight.
Why bother with that when the government can use its monopoly in order to designate value to mundane objects? A piece that costs less than $1000 to produce can be evaluated at $1 trillion – and this is a serious proposal by an elected member of the US Congress.
This ridiculous plan to inject more money into the US economy via minting overvalued coins will most likely be rejected. Nonetheless, it proves to us that the fiat money experiment is struggling to maintain credibility.
Also, this proposal makes the valuation of Bitcoin look much more realistic: right now, one BTC is slightly more expensive than its production cost. And there are still plenty of places worldwide where it’s no longer profitable to mine. Yet compared to the $1000 platinum coins that are meant to receive an official valuation that’s 1 billion times higher, Bitcoin looks like very good money.
Fiat is crumbling and we’re gonna go to the Moon… except that this time it will make very little sense to sell.
You think $20k was high in December 2017? As soon as the freshly printed trillions hit the streets, we’re gonna see unprecedented levels of inflation. And once people figure out that holding onto their money makes very little sense and actually costs them precious labor time, they will look for alternatives.
Bitcoin, gold, real estate, and land are all assets that can only appreciate in scenarios of hyperinflation. They are scarce in supply and will reach unprecedented levels of demand as soon as people realize how stupid the fiat game really is.
The speed at which Bitcoin will hit new all-time highs against the US dollar will be both comical and tragic. On one hand, it’s amusing to see how the FED has failed at preserving the value of what was meant to be the global reserve currency – and the consequences of this unfortunate experimentation will affect the entire world.
On the other hand, it’s going to be painful to observe real people losing jobs and life savings due to the carelessness of central banking. To bankers and politicians, it’s all a numbers game. To some of us, it can be a case of “I told you so” arrogance. But to thousands of working-class people, it’s the kind of tragedy that legitimizes civil unrest and revolutions.
Imagine working 9 hours a day for 10 years, saving half of your earnings every day. You take the money, deposit it in a bank and expect 2% interest to cover the inflation rate. But when shit hits the fan, the FED starts printing, the interest rates go to 0, and bank runs get discouraged to the point that you can no longer take your money out.
Then you see how the money that you’ve earned in 10 years can actually be made in only a few months. Then you hear about $2000 handouts for staying at home which get converted into Universal Basic Income, and you realize that all the hard work and frugality made no sense. Isn’t that infuriating and frustrating? It feels like Sisyphus pushing the rock uphill, only to have it rolled back by the almighty government.
Money printer go BRRRRRRRR? Bitcoin number go up!
Bitcoin will soon hit 20k once again. But it won’t be the same 20k from December 2017, as the value of USD has decreased over time. But don’t worry, soon enough lots of people will find out about Bitcoin’s monetary policy and take the price to 50k.
And by the time politicians and bankers take the fiat experiment to the “Game Over” screen, Bitcoin will have reached unbelievable prices against the USD.
This means that in the long term, it’s probably a good idea to buy BTC and hold it for multiple years until the system crashes. It makes sense to sell it only if you buy something that is absolutely necessary to improve your life.
20k, 30k, 50k, 100k, BRRRRR. As soon as the USD inflation becomes evident, Bitcoin will be in very high demand. Just like every other asset that is limited in supply and has every reason to face high demand.
Unlike gold, land, and real estate, it can be argued that Bitcoin is not tangible, has a lower network effect, and likewise doesn’t benefit from the same long history of being traded.
However, Bitcoin can’t be confiscated or censored. Your government can, at any point, seize the gold in your vault or collectivize your private property. Examples of both cases are slightly older than a century and are bound to happen once again in moments of crisis.
And if you think that your democracy is antifragile and your civil liberties are undeniable because we’re living in the 21st century and abuses of power are ancient history, just look at how many governments have enacted martial law to deal with the Covid19 threat.
Also, you have no guarantees about the existing or total supply of gold, real estate, or land. With Bitcoin you can see the stats at any moment and be sure that you’re not being mislead.
Verification is likewise important: making sure that you receive the right amount of land or gold of the right purity is a slow, costly, and labor-intensive process which requires specialized equipment. In the case of Bitcoin, you can run a full node for about $100 and make sure that all incoming transactions are valid.
There is a lot that Bitcoin gets right, and there is certainly a great future for it in finance. It’s a hedge against governments and their greedy central banking policies which steal from the hard workers to save themselves, and it’s the kind of money that people have always aspired to have:
A) provably finite (there will only be 21 million and the mining rewards decrease by 50% each 4-year cycle);
B) uncensorable (you can send your coins to anyone and nobody can stop you as long as you pay your fee);
C) unconfiscatable (as long as you protect your cryptographic keys, nobody can simply take them away from you);
D) predictable (you can estimate the BTC supply for the next 120 years, and there’s a hard cap. Can you say the same about gold, fiat money, or real estate?).