Why Bitcoin is the King of Assets

As the understanding of Bitcoin spreads, a deep awareness takes hold: Bitcoin has unique characteristics that position it as the superior savings technology and probably the king of all resourcesThis 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 understand Bitcoin’s potential often follows a predictable path. Initially greeted with skepticism and ridicule, Bitcoin is often dismissed as a speculative fad or a tool for illicit activity. However, as early adopters reap substantial gains, curiosity grows. According to data from Blockchain.com, the price of a single bitcoin has soared from just $0.08 in 2010 to over $70,000 as of May 2024, creating numerous millionaires and billionaires along the way.

As understanding deepens, Bitcoin moves from being a speculative asset investment to a legitimate asset class and a potential hedge against the frailties 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 Technology

Those who truly understand the fundamentals of Bitcoin ultimately recognize it as a superior savings technology, a store of appreciating value that preserves and increases purchasing power over time. Unlike fiat currencies, which are subject to infinite supply and inevitable devaluation, Bitcoin’s fixed and decreasing issuance schedule, capped at 21 million coins, ensures its scarcity and long-term appreciation in value. To date, over 19 million bitcoins have already been mined, leaving less than 10% of the total supply remaining to be released into circulation.

This realization forces a change in mindset. Instead of viewing Bitcoin as a speculative asset to be traded for short-term gain, 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, has said, “Bitcoin is the king of assets,” and once this truth is internalized, the temptation to “take profits” diminishes, replaced by a continued commitment to accumulating and holding Bitcoin as a superior form of money.

The Benefits of Bitcoin as an Asset

Bitcoin’s dominance as the king of assets stems from its unique properties:

1. Scarcity: With a fixed supply limit of 21 million bitcoins, Bitcoin’s scarcity is built into its protocol, ensuring that its value is preserved and potentially increased 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 geographical boundaries and can be sent and received without the need for intermediaries or permission from any entity, enabling true financial sovereignty.

4. Immutable and Transparent: The Bitcoin blockchain is immutable, providing a verifiable and transparent record of all transactions, ensuring the integrity of the network.

5. Divisibility: Bitcoin can be broken down into smaller units (satoshis), enabling microtransactions and allowing for greater accessibility and usability as a medium of exchange.

As traditional financial systems face increasing challenges, Bitcoin’s value proposition is becoming increasingly attractive. While assets like 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 by more than 87% since 1913, underscoring the need for alternative assets that preserve wealth over time.

The journey to understand Bitcoin is a transformative one, taking individuals from skepticism to speculation, then to investment 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 preeminent asset of the digital age.

(The author is the vice president of WazirX)

(Disclaimer: Recommendations, suggestions, opinions and views provided by experts are personal. They do not represent the views of the Economic Times)

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(Disclaimer: The opinions expressed in this column are those of the author. The facts and opinions expressed here do not reflect the opinions of www.economictimes.com)

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