What exactly is the bull case for bitcoin? I have not seen it clearly explained. I’ve got an open mind.
In more specific terms you mentioned the unbanked. How does crypto solve the problems that leave them unbanked?
In more specific terms you mentioned the unbanked. How does crypto solve the problems that leave them unbanked?
Gold cannot be memorized nor can its total amount in existence, in the universe, be known. It does, however, work without electricity.
Essentially bitcoin is a really good store of value with superior monetary properties to all other assets. If you want to store wealth for a hundred years there's nothing better. Even gold has 2% devaluation per year and has custodial risk, whereas bitcoin has no devaluation (21M supply cap), is easy to self-custody, and is very secure (high energy use/decentralized).
However bitcoin has superior intrinsic monetary properties to all other stores of value, including gold, so the equilibrium market cap might be extremely high.
I could see there being some crypto use case I haven’t understood yet. But I don’t understand why bitcoin specifically needs to rise in value. It seems like a rent based system rewarding the original owners. And that would only work if other systems depended on bitcoin.
However, the use cases are very different. Bitcoin is about money (as a distinct concept from currency). Think of it as a new type of central bank --that's Bitcoin's target market, and always has been (look up "Chancellor on the brink" in the 1st Bitcoin block). Bitcoin also intends to be peer-to-peer cash. This is what the lightning network aims to be, or the BCH fork depending on your point of view.
Ethereum is about smart contracts. Think: decentralized organizations, tokenized probabilistic outcomes, insurance, yield generating investments, etc.
As it turns out, the two can be very complementary. For example, Bitcoin can be wrapped (WBTC or similar) and represented on the Ethereum chain. This allows Bitcoin to be a store of value which can be collateralized and borrowed against using an Ethereum contract (e.g. Compound, AAVE, etc.). This is one narrow, but important use case: Ethereum can enable BTC holders to access liquidity.
MakerDao, Uniswap, Compound Finance, Yearn Finance, just to name a few. It's only just starting to take off, see more metrics here https://defipulse.com/
Another area taking off on Ethereum right now are "Non Fungible Tokens". Basically digital art trading on crypto.
Theoretically, this is all possible within the polkadot ecosystem. I have complete animosity across my transactions. I can browse the different smart contracts across the various parachains. I can transact online without worrying that due to my past purchase history that it's going to charge me more such as Airbnb and other flight aggregators.
I can cancel my subscriptions by not no longer executing the contract instead of going through GUI's designed to be hard to cancel.
I can get paid internationally without extremely high fees.
I can buy synthetic stocks, other coins, use Yield farming, or just stake my polkadot to earn 14% more DOT a year. Fiat money is automatically -2% a year.
Exchange it seemlessly into bitcoin to buy a Tesla.
Warren Buffett said it best on gold. It just sits there. Here’s one quote I found. In another he compared buying gold in 1900 vs us stocks.
“ I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.” I
Not so much that it'll soar - but should retain it's value because of the cap and decayed mining
Further from that Buffett on his gold criticism - there is no hypothetical "bitcoin asteroid" that could hit earth and tank the value, or a new discovery
You don't have to be all-in on bitcoin, it's a hedge and a better version of the role metals play(ed). Personally my own preference is bitcoin sits somewhere between stocks and cash - that's exactly what Tesla are doing with their own cash management
[1]: https://vijayboyapati.medium.com/the-bullish-case-for-bitcoi...
Please let me know what you think
But I looked at the source text and saw Jevons said gold was an exception to the rule in that it developed as a currency late in the cycle.
“ The use of esteemed articles as a store or medium for conveying value may in some cases precede their employment as currency.”
The author has made a basic error in their major thesis. And they still haven’t shown why bitcoin needs to have a sky high value.
The other half of the essay is describing ratings for different types of currencies. But this is description, not argument for why it must rise in value.
Let's imagine for a second that most people on earth want to hold bitcoin, becuase they believe the price will not go down (i.e., it will remain stable or go up).
Then, they would rather accept bitcoin for payment, were it as easy to accept the fiat of whereever they live. This is because fiat is designed to lose purchasing power.
The way to make it "easy" will be solved by second layer solutions like lightning or even custodial solutions, these need not occur on the bottom layer all the time.
Anyway, to your last sentence. Why it must rise in value.
Satoshi created "number go up" technology which aligns perfectly with human greed and adjusted to occur in large swings on a four-year basis. No growth in price can be linear btw, because how would the front-running look?
Believers in bitcoin believe in "number go up" [1]
[1]: https://www.ministryofnodes.com.au/2021/01/26/what-is-number...
Then obviously Bitcoin would be extremely valuable and useful.
If such networks collapsed how could most people keep bitcoin secure? Or run the computing power to power the network?
With gold, money and other valuables you can carry them with you and hide them.
What can be hacked are exchanges and wallets. You can keep your coins out if these as long as you want and carry them as gold or cash and do in place transactions whenever the network is available. You can even use physical coins, which are simply piece of paper with the key written on it. The receiver would need to have a connection to verify that the funds are still there though.
No jurisdiction has any power over who owns what coins. The best they can do is to physically extract the fund from person like extracting any secret(torture, punishment if they don't comply etc.). If the person of interest dies with his secret, the coins are gone forever because the premise of BTC is that it is kept in a distributed database that can only be changed(and the only possible change is addin new records) with cryptographic validation and governments don't have a power over mathematics.
Bitcoin also has the fee problem, and more recently Ethereum. Other cryptocurrencies like Bitcoin Cash with larger block sizes don't have the same transaction fee problems.
Cryptocurrencies are still relatively new. Most of the problems are being solved and the technologies are improving rapidly.
Which means you need to cash out to fiat $$$. And then you need 3rd party authorisation while jumping through all the KYC hoops.
Bitcoin is an MVP with immense traction that has inspired hundreds of related innovations which will be worth trillions. It is the most widely accepted cryptocurrency at today’s merchants and exchanges, and likely the most researched and understood.