What are the Benefits of Bitcoin?

The benefit of Bitcoin is NOT that it is anonymous, but that it is uncensorable, permissionless and requires no trust in a 3rd party. Even if they know who you are, they cannot prevent you from using the network because Bitcoin doesn’t care what your name is, what your tax status is or whether you even have a taxpayer identification number. The only place they can frustrate the use of Bitcoin is at the edge of the system where Bitcoin is converted to fiat currencies.

• First, most secure blockchain that no one person/group controls & impossible to attack
• Decentralized / distributed (no need to trust anyone)

The 21M supply will be credibly enforced forever (unlike fiat) due to open sourced and decentralized rules/protocol. I can send it P2P immediately across the world with no permission or middleman – recipient only needs internet access. Also possible with stablecoins however those are mostly USD (and therefore subject to long term USD inflation) and are on centralized blockchains that governments could pull plug on…

A Bitcoin enthusiast argued that he holds Bitcoin for the same reasons he holds gold and silver: to preserve purchasing power… as insurance against monetary debasement… a perpetual credit default swap on the US dollar.

The largest company’s today derive most of their value from the networks they create (Amazon & META) or products used to access networks (Apple & Nvidia). Bitcoin has different characteristics but can simply be thought of as a revolutionary monetary network. Capital assets (equities, gold, real-estate) are good at preserving purchasing power but aren’t great for transacting small purchases. Currencies such as the dollar are great for buying coffee but are a terrible store of value over time. Bitcoin is a hybrid in that it generally improves in purchasing power over time, while also being more transferable than real estate or equities. It is the original blockchain with the strongest network effects and most security. All other digital currencies have sacrificed security in an attempt to do something better than BTC, but IMO that trade-off is too risky. Bitcoin has grown to the point where a would-be challenger is unlikely.

I’d like to share two more points to further my beliefs. First, Bitcoins current network is IMO, similar to the internet in the early 1990’s. The infrastructure is there and most everyone is heard of it, but the user experience is still pretty clunky for everyday users. Just a few years ago, you had to go through sketchy sites to but the asset but now we have publicly traded exchanges and most major asset managers sell the ETF. This past summer, I paid my landscaper with bitcoin and he could accept the payment with less fees compared to Visa/Mastercard. I’m not saying this alone shows it’s maturity but if you extrapolate these trends another 10 years or so, I believe its reasonable to assume the technology become much more user friendly.

Secondly, Bitcoin’s market cap is about $1.8T which has created large gains for investors. However, that market cap is probably too small for large institutions to use as a store of value because they’ll move the price with each trade. I believe that the price should continue to grow, albeit at a decreasing rate, to a point were were large buyers can get in and out of the market with minimal effect. To your point though, if the network doesn’t gain traction and/or if the market-cap flat-lines or decreases to the point were institutions can’t trust it as a store of value, there will be risks to it long term.

Bitcoin has become a store of value, like gold. Except you don’t need to physically hold it anywhere, it doesn’t cost money to transport it, and if you follow protocol, can’t be stolen or taken away. It isnt mined out of thin air, it takes serious computing power usually in the form of warehouses in the arctic cold because of how much heat it generates. This is a point of contention, the electricity use… it has a perfect accounting system. In the future, when a coin is worth like 200k, which it might reach, you could buy a car with mere decimal points.