Kash here.
Today we’re talking about Big Daddy Bitcoin.
And I want to address a question that I think is overlooked by most new people getting into the crypto space.
Why does Bitcoin have value?
I mean, we all know it does have value…
In less than a year it’s gone from around $5,000 to $45,000+…
But why?
And also why do so many people (myself included) believe it has the potential to increase in value even more….
Like former Goldman Sachs executive, Raoul Pal, who predicts “an enormous wall of money” will skyrocket Bitcoin to $1,000,000 by 2025.
Well, I’ve got some ideas about “the why” of Bitcoin.
And I’d like to share them with you, so if you’re interested in claiming your stake in the world’s largest cryptocurrency, you’ll have a better understanding as to why it’s not just some “fad”.
It all starts with a printer…
“Magic Money Printer” Makes The World Go WTF
What would you do if I gave you a “Magic Money Printer”?
You’d probably print some money, right?
Maybe you’d start off small, paying off your bills…
Then print a few stacks more to get rid of your mortgage…
And actually, while you’re at it, you could just buy a whole new house with a jacuzzi and snooker room…
Before you know it, you’re printing money like it’s going out of fashion… buying gold-plated toilet seats and raining down £50 notes on the Tesco cashier who’s packing your bags.
It sounds like a fantasy world, but this is pretty much how the Bank of England treats money creation.
Whenever they face a new problem, they just print a bunch of money to “fix it”…
For example…
- In the wake of the 2008 financial crisis, they printed £200 billion, most of which went to banks (the same people who caused the crisis)…
- And so far during the COVID-19 pandemic, they’ve printed and pumped an extra £250 billion into the UK economy
Splendid, so everything should be OK then, right?
Well, no, this “free money” printing creates two big problems.
First, someone’s got to pay it…
And that’s where you come in, as they lower the interest rate on your bank account…
And likely raise your taxes…
Second, the more money they just print out of thin air, the more everyone is asking…
“WTF… is this money actually worth anything any more??”
Or like Bloomberg puts it…
And, so investors around the world, small and big alike, are hungry for money that actually has real, intrinsic value…
Big Daddy Bitcoin Enters The Chat
Did you know that until 1931 you could walk into a bank and exchange your money for a lump of gold?
(OK, maybe not that much…)
That’s because we were on something called “The Gold Standard”, which meant that the paper and coin money we used every day was backed by physical gold in the bank.
This meant that the Bank of England couldn’t just print as much money as it wanted… they had to stick to the amount of gold they had tucked away in their vaults.
And, because gold is one of the rarest metals on earth, it kept the money supply in check…
“All the gold mined throughout history would fit into a square box with sides of around 20m in length”
– ScienceFocus.com
But that changed in 1971 when Britain (and the rest of the world) “came off gold”, which is why central banks can now print as much money as they want…
(I just wanted to use this GIF again…)
And that brings us to Big Daddy Bitcoin…
Bitcoin is like the best of gold AND money… combined!
That’s why economics professor, Saifedean Ammous, wrote a book called “The Bitcoin Standard: The Decentralised Alternative To Central Banking“.
Because Bitcoin can take on both roles.
Like gold, it’s rare…
It has a hard cap of 21 million coins, which is hardwired into its protocol with these lines programming code…
So, nobody can just print more of it.
But, unlike gold, which is…
? Difficult to transport
? Expensive to store safely
? And, as Ethereum creator, Vitalik Buterin, says, “lame“
Bitcoin is…
? Easy to transport (it’s digital)
? Free to store (again, it’s digital)
? And cool as a cucumber, with 1 in 3 people aged between 18 to 34 picking it over stocks or bonds
This is why it’s no surprise that Bitcoin is now WAY more valuable than every other major investment class, including gold…
(Bitcoin is the high brown line below…)
So, there you have it.
I hope this helped you see that Bitcoin is serving a real purpose in the world.
And why it has value.
As always, if you have any questions about Bitcoin or other cryptos…
Simply email your questions to clients@thebetchat.com, and I’ll make sure I cover them in the days and weeks to come.
Thank you for taking the time to read this.
