My Bitcoin philosophy!
Updated: Feb 9, 2021
Over the past five years, I have held the belief that Bitcoin is the greatest store of value that currently exists when it comes to modern forms of currency, especially given the digital world we continue to live in. Because of this, it is my philosophy that I should hold as much of the digital asset as possible and only use fiat money when it is absolutely necessary. So, often when it comes to deciding between an “unnecessary” good and Bitcoin, I normally choose the latter.
The Federal Reserve Bank of Saint Louis has stated that the primary characteristics of good money are “durability, portability, divisibility, uniformity, limited supply, and acceptability”. In the following paragraphs I will communicate why I believe Bitcoin fits all of these characteristics of good money except the last one...yet!
Durability. Because of Bitcoin's underlying blockchain technology, it is impossible to destroy a Bitcoin due to the fact that every transaction is recorded and tracked on the distributed ledger, meaning the transaction sheet is shared with every computer in the world that contributes to running the network. The only way that Bitcoins disappear from the network is if they become unretrievable due to a custodian losing or forgetting their password.
Portability. A good way to look at Bitcoin is as an internet application, similar to email. And just like email, a Bitcoin can be sent from one side of the world to the other via the internet. Because of this there is not a more portable store of value in the world. Not to mention the network does it for little cost, between .10 cents and 3 dollars! So while Wells Fargo charges immigrants 10-15% to send money home to their families, Bitcoin provides the same service for a very small cost comparatively!
Divisibility. Each Bitcoin can be divided up to eight decimal places and is split into 100 million satoshis. These eight decimal places can, and likely will, increase as the price of Bitcoin continues to rise in the future and the amount of smaller transactions being sent increases.
Uniformity and limited supply. Every Bitcoin is the same and there will only ever be 21 million of them, sadly the same can not be said for the US dollar as it has been experiencing unprecedented inflation during the pandemic. It is because of this fixed supply that I consider Bitcoin to be the greatest store of value in history, even over gold as even gold can be found and occasionally counterfeited.
Acceptability. This is where Bitcoin is currently lacking. There are currently 100 million Bitcoin wallets with value in them and 11% of Americans hold Bitcoin. Although this is encouraging, it is not enough to consider Bitcoin as widely acceptable and practical for everyday use. This is also why people who own Bitcoin today could be considered very early adopters in the future.
So when I made the decision back in early 2017 to move almost all of my fiat currency into Bitcoin it was based on these core principles of sound money. But because Bitcoin is not widely accepted, this philosophy is only adapted by a few in the Bitcoin/Cryptocurrency community.
When it comes to why I have become so drawn to Bitcoin, I would say that it has a lot to do with my Fathers upbringing being from Argentina. Growing up, when we would sit at the dinner table I would hear stories about the slow decay of the country and the eventual debasing of the currency. These stories have implemented in me the understanding from a young age that country’s can and do fail! The US is no exception, especially given the current state of the country and the amount of fiat being printed.
Unfortunately, the current decline and printing in the United States has only strengthened my philosophy of obtaining as much Bitcoin as possible. Although, it gives me great comfort to know that there is a safe haven for people in Bitcoin where no government can devalue the currency and take away their hard earned value!