Let’s compare two vastly different monetary technologies.
One is government fiat currency (USD) and the other is bitcoin.
One has an exponentially growing future supply, and the other has a fixed total supply. One is unpredictable and controlled by central bankers and politicians, and the other is predictable and controlled algorithmically by code and user consensus.
Unlike USD monetary technology, saving bitcoin makes other bitcoin savers wealthier.
Why is this unlike the USD? Because the Bitcoin monetary system is not based on debt. It’s based on a counterparty risk free asset with no dilution risk.
In the USD system, it is true that if more people save USD then the value of USD goes up relative to other goods and investments, but since the USD is based on debt, USD savers systematically decrease everyone’s wealth by sparking a deflationary spiral, which ultimately gets met by more money printing.
Because the Bitcoin monetary system is based entirely on bitcoin (an asset with no counterparty risk and no dilution risk), bitcoin savers actually make other bitcoin savers more wealthy by increasing their purchasing power today.
How? Deciding to save bitcoin for the future (HODLing) increases the purchasing power of everyone’s bitcoin until someone finds it reasonable to either invest or consume using their bitcoin now.
Inflationary monetary technologies disincentivize saving. Dollars are printed to prevent deflationary spirals, and gold is mined when the cost to mine gold is below the price to sell it.
Bitcoin is the only monetary technology with a perfectly scarce supply, which highly incentivizes saving.
Bitcoin is Better.
This new monetary technology called Bitcoin is actually infinitely better than all forms of previous monetary goods. This idea of perfect scarcity is greatly underestimated.
Unlike money today, everyone will hold a large portion of their portfolio in cash (bitcoin). You would be incentivized to do this because the purchasing power of Bitcoin will grow in line with global productivity. Holding bitcoin will be like storing wealth in a low cost index fund or a diversified portfolio (like a 401k). Except it will be magnitudes more valuable because Bitcoin offers the same NgU (“Number Go Up”) technology, but with no counterparty risk and no dilution risk.
As a result, a large majority of bitcoin will be locked up forever. Anyone saving for the future will be holding bitcoin. Large holders will likely never sell a majority of their bitcoin and most coins will be passed down generation after generation. (Great Law of The Iroquois — “think seven generations ahead”)
Over the last two years, many people saw @100Trillion’s S2FX price model and thought it was too bullish to be possible. After watching Bitcion climb from $3,000 to $50,000, it now appears to possibly be too bearish.
Bitcoin will replace traditional stores of value. These include Gold, M2 (fiat money in your checking and savings accounts), global fiat denominated debt, and portions of the equity and real estate markets. The following price targets indicate when the market cap of bitcoin becomes equivalent to each traditional store of value asset.
Below I am discussing real terms, NOT nominal. Quoting bitcoin in nominal terms will not make sense in the future.
Gold = $0.5M BTC
Gold + M2 = $5M BTC
Gold + M2 + Global Debt = $17.1M BTC
Gold + M2 + Global Debt + 50% of Stocks + 50% of RE = $26M BTC
(Above) * High Propensity to Hold BTC? * Risk Free Nature of BTC? = $100M+ BTC
Essentially, Bitcoin is Everything there is, divided by 21 million.
Bitcoin is Underestimated.
Some analysts have long term price targets of $5M-$10M per BTC as Bitcoin sucks up wealth stored in gold, fiat money (M2), and fiat denominated debt.
This could potentially be drastically underestimating the future purchasing power of Bitcoin. Bitcoin will hold all global store of value. But today’s store of value is likely dramatically undervalued, because there are many risks with holding all sorts of assets (stocks, bonds, real estate, art, etc.) and no single asset matches Bitcoin’s perfect scarcity.
Bitcoin’s perfectly fixed supply helps incentivize individuals to lower their time preference and save for the future. Meaning the technology itself encourages more saving and more forward thinking which results in an even higher propensity to hold bitcoin.
Bitcoin has no counterparty risk and no dilution risk. This new technology won’t just suck in value from the old world. It will usher in a new renaissance allowing humans to store and channel monetary energy in ways and sizes never thought possible.
New technologies like electricity, automobiles, computers, and the internet helped reshape the world. They created abundance not only for the inventors but for society as a whole. In fact, these technologies created so much abundance and growth that the amount of wealth they created did not exist beforehand.
Reinventing money itself to a degree of perfect scarcity will ignite a creation of wealth to unimaginable levels. We likely cannot fathom the amount of wealth capable of being stored on the Bitcoin blockchain.
This newfound wealth will align individuals and society itself to focus on a more long term sustainable future for many generations to come.
Bitcoin’s scarcity will lead to global abundance.