If you have seen the comedy, Groundhog Day with Bill Murray. You know, the day goes round and round. Much like most global economies. Boom, then bust, and start over again. Also, currencies all over the world are stuck in groundhog day. They are devaluating, some faster than others. Even the global reserve currency, the USD has lost most of it’s value since being established in 1913. 98% and increasing. We have posted many, many charts showing this in past blogs. 50 years ago a brand new car was about $2,000. Today you pay close to that for a high end bycycle. This trend will never improve. Everday, groundhog day. You work, you save, and every year your dollar does’nt go nearly as far. Raises average 1.5% to 2% annually in the US. Inflation is now 14% to 20% if you include gas, energy, food, rent, or a mortgage. CPI does not include living expenses in the calculation. Inflation is a hidden tax we all pay. In some countries, it is far worse. Those are the countries attempting to make Bitcoin legal tender. El Salvador, Mexico, Brazil, Tonga, Nigeria, Paraguay, Uraguay, Argentina and many more to follow in the next 5 years.
Below is a graph about the reflexivity of Bitcoin. As over 300 million people globally are crypto currency users. Most are Bitcoin users. The demand grows as the number of users grows, which creates higher prices, which creates more users. Reflexivity can also be called the network effect. Bitcoin is growing faster than the internet did in the 90’s. Use the network effect to your advantage. See this graph below:
Thanks to Fidelity Digital Assets for this graph. They wrote an excellent article about why Bitcoin is the only crypto currency that is money. It is on it’s own independent blockchain. The rest of the crypto currencies are on other blockchain’s. Bitcoin is the only crypto currency that passes for money, better than the USD. This next graph shows how that is with each category that establishes good money:
Because Bitcoin is capped at 21 million coins that will ever be produced. It’s scarcity is the one trait that gives Bitcoin emmense value over Gold or any fiat currency. There are about 50 million millionaires in the world. If all of them put $10,000 into Bitcoin that would take 13,403,747 Bitcoin at today’s prices. There are only 2.1 million Bitcoin left to be mined. Therefore, Bitcoin would have to increase in price to $238,095 just for all Millionaires to buy $10K worth of it. If the entire global middle class bought $500 worth of Bitcoin. What would the price be? No other crypto currency has this scarcity, on it’s own blockchain. Below is a graph showing Bitcoin ownership compared to other crypto currencies:
Hash rate was cut in half after China banned mining. Now look at the hash rate:
Terra hashes are how mining is measured in Bitcoin. This chart above shows how Bitcoin has out run even China banning mining. The miners from China moved all over the world and exceeded the previous all time high in hash rate. Bitcoin is not going to die, or go to zero. It is too powerful now! As more and more countries approve it as legal tender, adoption will explode. The price it is at right now ($37,500) cannot maintain for long. Even if this bear trend Bitcoin is in persists, eventually the market will explode up. We have seen it countless times before.
Here is the conclusion to the Fidelity article linked below:
CONCLUSION:
Traditional investors typically apply a technology investing framework to bitcoin, leading to the conclusion bitcoin as a first-mover technology will easily be supplanted by a superior one or have lower returns. However, as we have argued here, bitcoin’s first technological breakthrough was not as a superior payment technology but as a superior form of money. As a monetary good, bitcoin is unique. Therefore, not only do we believe investors should consider bitcoin first in order to understand digital assets, but that bitcoin should be considered first and separate from all other digital assets that have come after it. Click here to read more.
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