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Why Bitcoin is the king of assets
Like the understanding of Bitcoin spread, a profound awareness takes hold: Bitcoin has unique characteristics that position it as the superior savings technology and probably the king of them all resources. This revolutionary cryptocurrencylaunched in 2009, it has defied skeptics and emerged as a formidable force in the financial world.
The stages of understanding Bitcoin
The journey to fully understanding Bitcoin’s potential often follows a predictable path. Initially met with skepticism and derision, Bitcoin is often dismissed as a speculative fad or a tool for illicit activity. However, as early adopters reap substantial benefits, curiosity increases. According to data from Blockchain.com, the price of a single bitcoin has increased from just $0.08 in 2010 to over $70,000 in May 2024, minting numerous millionaires and billionaires along the way.
Cryptocurrency tracker
As understanding deepens, Bitcoin transitions from a speculative asset investment to a legitimate asset class and a potential hedge against the fragilities of the traditional fiat system. With global debt levels reaching a staggering $292 trillion by the end of 2021 (according to the International Monetary Fund), rampant inflation eroding purchasing power, and the precarious state of Keynesian economics, Bitcoin emerges as a decentralized, scarce, and censorship-resistant alternative. to the centralized monetary system.The final realization: Bitcoin as a superior savings technologyThose who truly understand the fundamentals of Bitcoin ultimately recognize it as a superior savings technology: an appreciable store of value that preserves and enhances purchasing power over time. Unlike fiat currencies, which are subject to infinite supply and inevitable devaluation, Bitcoin’s fixed, decreasing issuance schedule, limited to 21 million coins, ensures its scarcity and long-term value appreciation. To date, over 19 million bitcoins have already been mined, leaving less than 10% of the total supply remaining to be put into circulation. This awareness leads to a change in mentality. Instead of seeing Bitcoin as a speculative asset to be traded for short-term gains, it becomes a long-term savings vehicle, similar to a bank account but without the erosion of purchasing power. As Michael Saylor, CEO of MicroStrategy, said, “Bitcoin is the king of assets,” and once you internalize this truth, the temptation to “take profits” diminishes, replaced by a constant commitment to accumulating and maintaining Bitcoin as a superior asset. form of money.The advantages of Bitcoin as an asset
Bitcoin’s dominance as the king of assets comes from its unique properties:
1. Scarcity: With a fixed supply limit of 21 million bitcoins, Bitcoin’s scarcity is fixed in its protocol, ensuring its value is preserved and potentially improved over time as demand increases.
2. Decentralization: Bitcoin operates on a decentralized network, free from the control of any central authority or government, mitigating the risk of censorship, seizure or manipulation.
3. Borderless and Permissionless: Bitcoin transcends geographic borders and can be sent and received without the need for intermediaries or authorization from any entity, allowing for true financial sovereignty.
4. Immutable and Transparent: The Bitcoin blockchain is immutable and provides a verifiable and transparent record of all transactions, ensuring the integrity of the network.
5. Divisibility: Bitcoin can be divided into smaller units (satoshis), allowing for microtransactions and allowing for greater accessibility and usability as a medium of exchange.
As traditional financial systems grapple with growing challenges, Bitcoin’s value proposition becomes increasingly compelling. While assets such as fiat currencies and government bonds are subject to devaluation and erosion of purchasing power, Bitcoin offers a reliable store of value and a hedge against financial turmoil. According to data from the St. Louis Fed, the purchasing power of the U.S. dollar has declined more than 87% since 1913, underscoring the need for alternative assets that preserve wealth over time.
The journey to understanding Bitcoin is transformative, taking individuals from skepticism to speculation, then to investing and hedging, and finally to the realization that Bitcoin is a superior savings technology – the king of assets. As this awareness spreads, reinforced by hard data and real-world events, Bitcoin’s adoption and prominence in investment portfolios is likely to continue to grow, solidifying its position as the pre-eminent asset of the digital age.
(The author is Vice President, WazirX)
(Disclaimer: The recommendations, suggestions, views and opinions provided by the experts are their own. These do not represent the views of the Economic Times.)