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A warning to Bitcoiners about how complacency very easily paves the road towards failure.
The Reserve Bank of Zimbabwe (RBZ) has said it will start issuing gold-backed digital tokens on May 8. The first phase of the launch will see the digital tokens being issued for “investment purposes with a vesting period of 180 days.” The RBZ also revealed that the gold-backed digital tokens “would be used both as [...]
The post Zimbabwe’s De-Dollarization: Central Bank to Issue Gold-Backed Digital Currency in Early May appeared first on Crypto Breaking News.
Veteran trader and renowned chartist Peter Brandt says bitcoin is “vying to become the Level 1 ‘store-of-value’ standard replacing fiat currencies and government bonds.” He explained that fiat currencies, like the U.S. dollar, “will still be used to buy groceries and pay for gas.” Moreover, he expects governments to “constantly be issuing new currency replacements.” [...]
The post Peter Brandt: Bitcoin Vying to Replace Fiat Currencies as Primary Store of Value appeared first on Crypto Breaking News.
“I will explain why I allocate a share of my wealth to bitcoin and how I see it as ideal for preserving the value of my net worth.”
The advent of Ordinals has brought renewed attention to debates about bitcoin’s role as “digital gold.”
Federal Reserve Chairman Jerome Powell’s recent acknowledgment of cryptocurrency’s staying power as an asset class in the U.S. economy carries significant implications. Firstly, his statement indirectly suggests that cryptocurrency can potentially serve as a hedge against inflation, given its durability as an asset class. By recognizing the lasting presence of cryptocurrencies, Powell implies that they […]
After realizing that taking out a home loan meant his property was never really his, a military member sold his house to buy bitcoin instead.
As a permissionless store of value, bitcoin allowed me to escape the dangers of Russia’s invasion of Ukraine. And it can help you, too.
By eliminating reasonable stores of value, the fiat economic system incentivizes us to seek debt, hope for luck and take on other poor habits.
According to the South African government, crypto entities — or businesses whose activities include the exchange or transfer of crypto assets — are set to be included in the list of so-called accountable institutions starting Dec. 19. Businesses that convert one crypto asset to another or that conduct transactions where a crypto asset is transferred
The post South African Government to Add Crypto Entities to ‘List of Accountable Institutions’ appeared first on BTC Ethereum Crypto Currency Blog.
Bitcoin is freedom money that exists for the people, by the people and of the people.
Bitcoin is freedom money that exists for the people, by the people and of the people.
Let Fidelity take the wheel and drive you through the wonderful world of volatility. Bitcoin critics wield one of the asset’s main characteristics as an unsolvable failure, but, is it? According to Fidelity, “bitcoin is fundamentally volatile.” That doesn’t deter it from fulfilling “its ultimate investment objective of preserving wealth over long time periods.” Related Reading | Fidelity Says What We’ve Been Thinking: Countries & Central Banks Will Buy BTC The company said all that in Fidelity ‘s latest edition of “The Research Round-Up.” In their longer explanation, they use oil and gold as examples to explain the whole volatility process. We’re in the summarizing business, though. Here at NewsBTC, we will distill their article, state the main points, and briefly comment on them. Fidelity Explains Bitcoin’s Fixed Supply “Bitcoin is unique in that it is a good whose supply is completely inelastic to changes in price. In other words, supply does not (and cannot) change in response to price.” There will only ever be 21 million bitcoin and that’s that. With other goods, there’s a cycle. “Going back to economic principles, we know that when demand increases for a good, in the short-term the price will rise. However, the higher price then incentivizes suppliers to produce more. More supply will then bring down the price.” This doesn’t happen in bitcoin. “With bitcoin, supply cannot change regardless of what price does. Therefore, any change in demand, short-term as well as long-term, will have to be reflected by changes in price.” It’s only logical. The laws of supply and demand can only affect the price, and so they do. “There is no change in supply to dampen the effect of price moves, even over the longer-term.” Mix that with an ever-decreasing supply of new coins, due to the halvings, and you have a perfect recipe for what bitcoiners call “number go up technology.” Fidelity summarizes the phenomenon with a quote from Parker Lewis: “Bitcoin is valuable because it has a fixed supply and it is also volatile for the same reason.” Those two characteristics come in a package. BTC price chart for 03/09/2022 on FX | Source: BTC/USD on TradingView.com Bitcoin As A Store Of Value “Something that has low volatility is not necessarily a good store of value in the long run, while something that has high volatility does not mean that it can’t be a good store of value in the long run.” It’s easy to get scared by volatility. Investors, traders, and even true believers let their feeling get in the way and exit the market with every little bump in the road. However, there’s no one that has holded bitcoin for more than four years and is in the red. Literally no one. Related Reading | Bitcoin Volatility Drops To 15 Month Low; What This Could Mean Let’s get an obvious example from Fidelity, “The U.S. dollar is not volatile but has also not been a good store of value in terms of purchasing power, while bitcoin is considered very volatile, but has been a much better store of value over the past ten and even five years.” “Volatility is a byproduct of price discovery, and there is no other way for price discovery to happen in a free market.” Even though bitcoin is 13 years old, it’s still going through price discovery. How much is bitcoin really worth? We won’t know for years, even decades. “This process of individuals all coming to adopt bitcoin in different ways and timeframes necessarily must produce volatility,” completes Fidelity. Fidelity Thinks Bitcoin’s Volatility Is Decreasing “The limited historical evidence we do have so far appears to be showing volatility declining over the long-term.” Bitcoin Volatility decreasing | Source: Fidelity The graph clearly shows that volatility is slowly fading. This is only logical. Fidelity explains, “as gold went through a major price discovery process in the 70’s, which then resulted in amassing a larger base of investors, volatility naturally declined.” We’re still early, though. This is not financial advice, but, for now, you should learn how to ride volatility and use it in your favor. Featured Image by Chris de Tempe on Unsplash | Charts by TradingView and Fidelity
Shortly after my first steps into the world of Crypto at the start of 2021, I found myself in a debate over what Bitcoin’s future use and utility may be. At the time, even though I liked to imagine the result of being an early investor in a Bitcoin world, though I wasn’t fully convinced of either ‘digital cash’ or ‘digital store of value’ use case arguments. I was mostly invested in the blockchain technology for the huge volatile returns associated with a developing tech market.
The person I was debating with (much older and wiser than myself, with plenty experience in investing), continued to ask the question “why Bitcoin? What is the unique utility that will allow it to become a store of value over others?”
I found this tough to answer definitively as I listed the extensive benefits and qualities of blockchain tech, realizing that many of these qualities are not directly owned by bitcoin. Everyday new coins/tokens, although many being so-called “sh*t coins” and not being layer 1, are listed with the aim of having the same divisibility, transaction speed, low fees, security, anonymity and transparency as the bitcoin network. Though I do not see any of these as better alternative Bitcoin, it did put a dent in my bullish mindset of Bitcoin’s future when thinking of what next best thing can be created in a cryptoverse while it is developing at such fast pace.
Because of Bitcoin’s volatility and expected adoption rates, the use case of Bitcoin as digital cash is becoming increasing more difficult to picture in the short to mid term. Unless your are “all in” Bitcoin with all of your financial assets, why would you use Bitcoin as everyday cash when you expect it to 10x value in the future? You wouldn’t use 1BTC to buy a car at $40,000 when most investors are confident that 1BTC will be worth $100k in the coming years, possibly sooner. Anyone with a fraction of a Bitcoin is much more likely to ‘hodl’ their asset as a store of value that provides much greater benefit than buying depreciating assets. This example, accepted as unfeasible, allow us to move on from the use case of ‘digital cash’ and approach the ‘store of value’ concept.
For Bitcoin to become a strong ‘store of value’ asset, it must have a form of unique utility superior others...
As I continue, I will list these benefits in bold and draw a conclusion geared towards achieving a store of value.
The ‘store of value’ concept does not allow people to use Bitcoin for everyday transactions, at least until the market has gained mass adoption world wide and the market cap has settled out, reducing volatility on Bitcoin’s expected growth curve. In the meantime, it shows Bitcoin to serve as the best store of value while the world transitions from traditional monitory policies to a digital, decentralized monitory system.
Means of Exchange: can be related to Carl Menger’s widely accepted theory on the origin of money. Menger, the founder of the Austrian School of Economics, who’s theory on the origin of money is that each person had different goods required to suit a need, in order to acquire those goods, they had to trade with others. This became difficult as there was not always someone looking to trade for that exact good, leaving their good with no value without demand, a medium of exchange would be required to allow a trade to occur between multiple parties. The is where money became a valuable good according to Menger’s quote:
“not because they value the goods themselves for direct consumption, but because they believe the goods can be easily exchanged for other goods they wish to consume.”
Within the cryptovesre, Bitcoin is becoming more useful as a means of exchange as it is listed on almost all major crypto exchanges/digital apps and can be very quickly and cheaply converted to most cryptocurrencies/tokens whether it be finance projects, gaming tokens, nft tokens, or centralized stable coins for everyday use. In return, this also allows each of these assets to be returned to a Bitcoin for a store of value very quickly and cheaply when not in use and you do not want your capital to be at risk from other potentially depreciating factors associated with any given token/coin.
The potential risk associated with any crypto coin or token could be:
This makes Bitcoin an ideal means of exchange between daily use currency/tokens in the future. In the long term, as more and more people move to digital assets, why would I hold my saving in a bank account receiving 0.01% interest while being subjected to 7% inflation when I can uphold my saving’s purchasing power in BTC?
As is already the case on most exchanges and wallets at present, the total value of asset on the account are summed u and total in BTC, not fiat currency like USD.
This ability BTC has to be unaffected by the bullet point list above, gives it an inert property above others, that questions the ironic term ‘stable coin’ given to fiat trackers such as US tether. I believe most people will look for ‘store of value’ assets moving to the future.
Rarity: As there are only 21 million Bitcoin available...
The value will always remain high as an increasing number of people discover, learn and use digital currencies. The having reward in the year 2120 is set to be 0.00000018BTC, or 18SATS (satoshis) as it may be called then. For bitcoin to maintain this having method, the value of 1 Bitcoin will truly be astronomical as we will have to see high value in Satoshi’s to continue mining.
For example: in the year 2040, the reward for minors to mine a block will be cut to 0.19BTC with halving cycles from the current block reward of 6.25BTC. If the value to minors in 2040 is to be just as fruitful in purchase power as It is today, BTC value would have to multiply with a factor of 32 by then. That excludes inflation and the migration of potential cryptocurrency users which I will mention below.
I believe that the combination of the above (cheap and fast means of exchange, originality and rarity) does give bitcoin its own unique utility in the long term timeframe, thus a store of value. This utility will grow in use as the current momentum in the financial world grows towards digital asset control. Other previous stores of value like Gold and precious materials, do have many core uses that made it a desirable store of value but this cannot be moved or exchanged as quickly, cheaply, or freely across borders. Giving such less utility in a world where people want this at a touch of a smartphone.
Momentum will be key to holding up this ‘store of value’ case for Bitcoin...
As I said at the beginning of this note, I firmly believe that blockchain technology will be the next big life changing tech to be used worldwide, similar to the development of the internet. And just like the internet, no one could have predicted how it will be used and what form it will take 40 years down the line. However, aside form all the advantages up for debate, there is a natural momentum shift that will take place. As more people over the years grow up tech savvy and are will be open to understanding and using cryptocurrency, there will be an equal amount of the older generation, who never would get on board with the idea of cryptocurrency, that will be leaving inheritance to the younger generation, likely to be held as savings or investments in some digital form 30-40 years from now.
For example, my parents are still unsure and lack trust in everyday online banking apps, something I use everyday and probably would be in financial distress without. To them, idea of paying with smartphone wallets are very risky and the concept of holding money in a digital wallet on a blockchain is completely mind-blowing, it is condemned at the first mention of it.
The progression of this is that I’m sure my kids, in 10-15 years from now, will be substantially more tech savvy than my parents and most likely myself as well. They will have a natural exposure and understand to use the crypto world just as is did growing up with the internet. This will inevitably increase the number of blockchain users, bitcoin wallets and contribute heavily to mass adoption world wide, just as the internet did with the more people that use and understand it.
In 1998, according to 'www.internetworldstats.com', internet had approximately 147million users, 3.6% of world population. According to 'earthweb.com', cryptocurrency users are currently sitting just above this at 3.9% of world population. Plenty of headroom for crypto user to grow in the coming years as the above mentioned momentum shift takes place. As of March 2021, the estimated internet worldwide was 5.1Billion (65% world population).
It is also gradually becoming more common to see previous critics of Bitcoin begin to publicly hedge their bets by allocating a couple percent of their portfolio into the cryptocurrency.
This natural momentum shift creates a snowball effect in adoption of a bitcoin, with countries, banks, institutions all making headway into the cryptoworld trying to get ahead of the curve. This will result in Bitcoin application and interface becoming more user friendly, greasing the hinges for the incoming herd, just as internet banking has and continues to do.
In conclusion...
Because of all the above factors - I believe this momentum shift will continue to snowball from today, to allow us to reach mass adoption of Bitcoin faster than first thought. Though it may not be anytime soon that it is used for everyday transactions like money, it will be used as store of value to easily facilitate everyday use through other monies.
We know the idea of Gresham's law — but it cannot be applied directly to bitcoin without some modification.
Those who've got a soft spot for stores of value like real estate may appreciate the familiar investment appeal of bitcoin.
Real estate, the traditional store of value in modern times, has many attributes that make it an inferior choice to bitcoin for a store of value.
Bitcoin has long been praised by market participants to be the ultimate store of value (SOV) asset. The world's largest crypto asset by market capitalization has been known to hold itself exceptionally well when compared to other assets. Guaranteed Bitcoin doesn't rise as much as other assets in a bull market, but it didn't use to bleed also, during market-wide drawdowns or moderate to severe corrections. In the absence of any other utility or the ability to support smart contracts, store of value was the only and the best narrative Bitcoin had. However, recent events show that this might be changing.
Store Of Value? Bitcoin Has Shown Weak Performance Against Ethereum In The Past WeekA market-wide correction is currently underway, Bitcoin is showing weaker performance against Ethereum, signaling that the market's chief narrative of Bitcoin being the store of value (SOV) might be failing. Ethereum is down 2.9% over the past week being traded at $4168, on the other hand, Bitcoin has seen a depreciation of 14.4% and is currently changing hands at $48,920. This is surprising since opposite events are the norm in such conditions.
Ethereum Performance Against The BTC Pair - CoinGeckoEthereum has also shown exceptional strength and tremendous growth against the BTC pair. In the past week, the ETHBTC pair has gone up from 0.0756 BTC to 0.0852 BTC. This is a very small data sample, but it does appear that Bitcoin's narrative as a store of value (SOV) might be in danger and the recent weak performance is raising questions. Unlike Ethereum, which has a plethora of utility and use cases, Bitcoin's sole narrative as of late has been acting as the store of value (SOV) to hedge against market volatility, inflation and deterioration in financial macro conditions.
Ethereum Has Seen 68.45% Net Reduction In Issuance - Watch The BurnThe culprit might be the Bitcoin inflation rate. The world's largest crypto asset by market capitalization is capped at 21 million and it has a predictable inflation rate. Every four years the inflation or the supply that is being brought into circulation is cut in half. The current inflation rate is 1.80% per annum. It's a good thing to have, considering that scarcity is central to the highly subjective concept of the store of value (SOV). However, Bitcoin's chief competitor Ethereum has pulled a new trick by burning a portion of fees, proportional to network usage.
Ethereum Is About To Go Deflation - ultrasound.moneyIt's called EIP1559 and it's here to make Ethereum a better store of value (SOV) by providing a revolutionary new mechanism to regulate supply and provide for a dynamic long-term robust security + monetary policy. Since its introduction, EIP1559 has burned 1,131,166 ETH (worth $4.75 billion) against 520,898 ETH issued (worth $2.1 billion) - it's a net reduction of 68.47%! Over the last seven days, Ethereum per annum inflation rate has fallen to 1.2% against Bitcoin's 1.8%.
https://cryptoticker.io/en/ethereum-bitcoin-halvenings/Not only does Ethereum has a lower issuance rate than Bitcoin now, but holders are also guaranteed that any activity on the network will burn ETH with burning rising with network usage. Ethereum is currently disinflationary (meaning that the rate of inflation is decreasing), however, there is one more event called the Merge, which will make it deflationary. The switch from Proof of Work (POW) to Proof of Stake (POS) will see the issuance cut by 90% as the network doesn't need to pay as much to POS validators, what it used to pay miners.
https://cryptoticker.io/en/ethereum-merge-event-altair-hardfork/Proof of Stake (POS) isn't as resource hungry as Proof of Work (POW). It will contribute to making Ethereum (ETH) a better store of value (SOV) than Bitcoin. The net supply will actually start to reduce every year and the less circulating supply or scarcity will result in value enhancement for the remaining supply. Ethereum merge is expected by the Q1 of 2022 and is likely to make the above Ethereum performance against Bitcoin the norm, rather than a one-off exceptional event.
Store Of Value Ethereum Bitcoin© Cryptoticker
The post Store Of Value? Bitcoin Shows Weak Performance Against Ethereum appeared first on CryptoTicker.
Leah Wald discussed Bitcoin on Monday, saying it is "one of the strongest monetary networks."
Only Bitcoin successfully navigates the tricky issue of maintaining monetary energy over time.
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