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The Null Hypothesis's avatar

Bitcoin optimizes on the 5 attributes of money better than any other substance in history:

1. Scarcity - Bitcoin is capped at a finite amount of 21 million coins. There is no other commodity where you can definitively identify the terminal amount. Over 90% of all bitcoin that will ever be produced are already in circulation. It is currently growing at less than 2% per year and beginning in 2024 it will grow at less than 1% per year.

2. Durability - Bitcoin is maintained by the most secure computer network in history. It does not degrade over time and cannot be destroyed (only lost through sloppy custody). If there is electricity and the internet 200 years from now, it is highly likely there will still be bitcoin being used as a store of value if not also as a medium of exchange and a unit of account. I put the likelihood of bitcoin surviving this timespan higher than any currency currently in circulation. Anyone owning bitcoin today and practicing prudent custody could hold it for free for the next 2 centuries.

3. Portability - For the first two attributes, you could squint and say gold isn’t too far behind in scarcity and durability. Portability is a big loser for gold. Try to move $1,000,000 worth of gold from North America to Australia. How great do you feel about that process? How much did it cost you. Now move it back in 6 months. Bitcoin can be moved anywhere on the planet in an hour at a very low cost. You can exit any jurisdiction with 12 memorized words in your head that secure any amount of money you want to bring with you. Best portable asset ever invented.

4. Divisibility - Try paying for a cup of coffee with gold. That’s about 1/360 of an ounce. Each bitcoin is made up of 100,000,000 Satoshis. So you could buy that same cup of coffee with 23,000 satoshis. (Today). Obviously Bitcoin’s volatility hasn’t lent itself to being a great daily currency yet, but the ladder of money is first store of value, then medium of exchange, then unit of account. Bitcoin has appreciated at >100% a year since inception. Best store of value during its existence.

5. Recognizability - Here is one spot where gold may have a global advantage currently at the headline level. More humans on earth may currently see a gold bar and recognize/value it than bitcoin. However - this gap is closing every year. And if someone tried to hand you 20 oz of gold in a trade for your car, would you trust that it was real gold? Or would you have to find some way to test the heavy yellow stuff? (Then where do you store it, how do you spend it, how do you move it?) Bitcoin may already have the lead here in a practical sense. You know when you got paid in real bitcoin.

I’m assuming your question was in good faith, so i spent some time on my answer. I could be wrong. I don’t think i will be. The only question for me is on what timeline will i be right. I wish i knew.

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Jen X's avatar

Fantastic breakdown. Really really well said.

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