Finally, an informed opinion on bitcoin requires a substantial investment of time and energy in learning about the technology. Even if one is prepared to commit that time, the underlying protocols, competitive landscape and regulatory backdrop are all constantly changing making the learning curve extremely steep. Bitcoin supporters often view skeptics as luddites that “just don’t get it” while skeptics see bitcoin enthusiasts as the frenzied evangelists emblematic of the top of every great bubble throughout history. Reasonable voices get drowned out by headlines of impending crashes and calls for a $1 million bitcoin price.
As an aside, we will not be digging into how distributed ledgers (i.e. blockchains) work or the many other uses of this technology in this Insights. Bitcoin was the first digital currency and it remains the largest and most well-known; it’s an informative archetype.
A Circular Opinion
With Soggy Sweat’s opinion of Whiskey as a backdrop, we present our “view” on bitcoin:
We can be sure of very little in this life, but we are sure of this: Bitcoin is the perfect currency. Bitcoin makes it possible to send money anywhere in the world, at any time of day, in a fraction of the time and for a fraction of the cost of using a traditional bank intermediary. Its transactional value is evident in hundreds of thousands of dealings every day.
Bitcoin is relatively scarce – there will never be more than 21 million in circulation. While central banks can conjure up new fiat by the billions and trillions with the mere press of button, bitcoin’s scarcity makes it a superior store of value.
Bitcoin is electronic and therefore costs nothing to store, is nearly frictionless and is perfectly transportable – something that cannot be said for gold. It is also a better unit of account than other currencies as it is nearly perfectly divisible, at least to the eighth decimal.
Bitcoin also allows investors to store and transfer wealth outside an increasingly leveraged and fragile banking system – one that is governed by the arbitrary guidelines of a heavily regulated bureaucracy of toll-takers. It is the “internet of money”.
The potential market for bitcoin spans every person on earth with the ability to access the internet and the desire to transact for anything, anywhere.
As the first-mover in the race for a truly global digital medium of exchange and store of value, there should be absolutely no doubt that bitcoin is the currency of the future and a crucial part of any serious investment program.
Except of course that bitcoin is nothing but electrons floating about the ether with no legal recourse or claim outside of a byzantine world of anonymous people that pride themselves on skirting authority. Bitcoin has little, if any, intrinsic value, and even that is only because of its waning usefulness today.