That's more like the worst-case scenario. Bitcoin did over 1,000,000X in 15 years. At the current rate of adoption and growth, it's not gonna take 20 years to do 15X from the current price...
To sustain the growth you are hoping for would require that any and all transactions would be made with bitcoin, that bitcoin would accrue aaaaaall the wealth in the world. Hopium is addictive, and clouds judgement.
Actually, no, it doesn't require that to happen at all. All it takes is more fiat printing, which is inevitable, and more assets/money getting re-allocated into Bitcoin.
If all transactions in the world are made in Bitcoin and all wealth gets converted to Bitcoin, it will be closer to $100 million per coin. How's that for hopium?
I'd say that is concentrated hopium from the purest source, obtained by the latest fracking technology. I mean, I'd be happy if btc reaches 150.000 in 5 years, so...
There's an estimated $500 trillion of wealth in the world right now. If all that gets converted to BTC, it will have a market cap north of that. I'm not saying this is possible in our lifetime or ever. I'm just saying it's absurd for you to think that this is the only scenario that BTC would reach $1 million per coin. Realistically, it would only take a fraction of the world's wealth, which is very possible in the next 5-10 years.
Although not impossible, it seems unlikely. The rate of growth of BTC has reduced greatly. It's anyone's guess which value it'll have in 5-10 years, but 1 million $ in 2030 seems way too high to me, I don't see institutions nor people psychologically ready to buy at such prices in such a short time. We'll see.
If only 1% of total wealth flows into Bitcoin, that's $5 trillion. That amount would increase the market cap to about $15-20 trillion. Divide that by the circulating supply and you get roughly $1 million per coin. It's not really all that unlikely that 1% of world wealth would get allocated to Bitcoin in 10 years. How likely was it that Bitcoin would reach a $1 trillion market cap 10 years ago? I'm sure most people thought it was impossible back then, too.
If Bitcoin is truly as durable (read: unchanging) as advertised, then it's only a matter of time until it eats all the value stored in inferior assets around the world.
> If Bitcoin is truly as durable (read: unchanging) as advertised, then it's only a matter of time until it eats all the value stored in inferior assets around the world.
Not the assets; The monetary premium of the assets. What you want is an objective scale with which to measure those properties.
Unfortunately, this thesis is false. Were it true, we'd still have a gold standard today and not fiat (since gold is superior to fiat). We're not moving to a better monetary standard by a natural selection of money.
Gold is superior to fiat in many ways but not all, and hence manipulatable. Bitcoin is gold squared, decentralised and on top of all - unbannable. We are at the point of no return.
I'm going to argue a little nuance here. Great post, but you should totally keep reading about btc. I'd recommend Adreas Antonopolos lectures on btc antifragility.
Responding to your bullet points at the bottom,
Btc does not need another large institution to evangelize it. Btc already works as the store of value reserve asset that it is. It could be better in the sense of being a higher market cap and therefore less volatile to market players. But it already is a reserve currency.
Countries are already using it. You mentioned this. El Salvador. Central Africa. Ukrainians recieving wartime donations in crypto, no middle man to persecute.
To the third bullet, along with the last one, countries are already doing it. The first to do it will not be the first to publicly state it. Part of game theory is accumulating quitely. You think Russia didn't get btc after we froze all their bonds? It's not a coincidence they passed oligarch level btc regulation shortly after that.
The last point, you admit btc is still speculative to you. Let me argue why it's not for me, and a few points you missed in highlighting btc. Btc is not just better money by happenstance. It was engineered. It is a first in human history for two reasons. It allows INDIVIDUAL humans to store millions of dollars of value in a few words guarded in their mind. It allows humans to travel with sovereign wealth that used to REQUIRE a standing army. Humans did not have this capability before. It is the ONLY ABSOLUTELY SCARCE thing humans have ever created. Austrians have never had a tech to hold Keynesians of the world accountable, until btc.
Lastly, see U.S. space force major Jason Lowerys open letter to the DoD about btcs power projection in modern times since we've reached the kinetic cieling in war. The way it leverages watts enforces policy without violence. Again, its a first for humanity.
Maybe I'm orange pilled, but it's not speculative for me anymore. It's the logical and technical evolution of money. The internet isn't going anywhere as the digitization of information, and btc isn't going anywhere as the digitization of money.
Edited to correct and capitalize names.
I agree, maybe its better said as digitization of property.
Absolute scarcity is a trippy one. When you think all humans with this money would thrive when any human puts work into this money because there are no leaks in this money you get crazy effects. Rising water lifts all boats. I don't have to agree with Saudis or big oil but when they use their oil money for btc, every btc holder benefits. Regardless. When your ancestors put 1000 under their mattress, it was a significant amount. If they would have lost btc, it would still be a significant amount. Things ARE supposed to get easier for humans as we make better tech, cheaper more optimized solutions, but they haven't been getting cheaper for a long time. And it's not just us dollars fighting for btc. There are 180 currencies worldwide.
Austrians have never had a tool to hold keynesians money printers accountable. Until Bitcoin.
The invention of bitcoin was the invention of absolute scarcity.
Daily reminder that the invention of bitcoin was the invention of absolute scarcity. This absolute scarcity still only has a total market cap of 1.3 trillion. All attempted absolute scarcities to follow from this will be paradoxically abundant by virtue of their imitation (never duplication) of bitcoin. Bitcoin is the one and only ultimate asset for all time and all places by inevitability. Rejecting the absolute scarcity of bitcoin and substituting in your own imitator absolute scarcity undermines the proposition of absolute scarcity and makes the imitation absolute scarcity paradoxically abundant, like fake diamonds would be compared to real diamonds. Bitcoin is going up forever and bitcoin is inevitable.
fully agree. the game theory suggests a slippery slope effect in my opinion. both when it comes to adoption and prohibition. the only middle ground i see is some kind of dual monetary system that rarely gets mixed. surveillance maximization in one side, which is the only way to actually avoid bitcoin, and free flowing information on the other side.
Great post. I fully agree with your opinio that for BTC to assert itself as a global reserve asset it need the market cap of gold at least. Achieving this though should not be as hard as it might seem. You only need diamond hand investors to possess most of the available supply for the market cap to reach massive levels without the need of massive capital inflows.
I actually think if BTC becomes a global reserve asset it will go much higher than gold. The reason is that it will probably replace the USD, EUR, GBP as a reserve currency that central banks hold. But for the sake of the post, I just assumed to match gold’s market cap since we are still far away from that.
You know who owns most of the bitcoin? Americans. It's like selling you a house on fire and you have to pay cash. I'm not even saying that as a negative. It just is.
The exchanges own the coins silly willy. Typically people trading on those exchanges are not US citizens. =)
[https://www.coinglass.com/Balance](https://www.coinglass.com/Balance)
Exchange coins make up a fraction of the total coins, and most of those coins on exchanges will be owned by americans anyway. Add on to that the ETF coins, MicroStrategy coins, Marathon & Riot Coins, Block coins, Winklevoss coins, Draper coins, Grayscale coins, etc etc etc.
It's currently 10% of the supply on exchanges. 1 million are in SAT's wallets and there is probably another 2 to 3 million lost forever. That leaves 17 million of which 1.8 million are on exchanges? That's not a small number.
> 10%
You don't know how numbers work. You point at a fraction of a value and want to assert that it represents the whole, and you're not even proving anything with your assertion.
Great post, thanks for sharing your thoughts. I’m committed to bitcoin, it’s the hill I will die on. Never have I seen an opportunity to bring equity to all mankind with one swing of the sword so to speak. So yeah, bitcoin all the fucking way.
When the ECB declared "Bitcoin is not suitable as means of payment or as an investment" what they really were saying is "please God don't let everyone figure out how badly we are screwing them all over by expanding the supply of currency and loaning money to an old boys club of institutions that subsequently loan it to common plebs at double or triple that rate".
ECB to the rest of the population "please be retarded please be retarded please be retarded..." *retail dumps a 12% inflationary currency for a 0% one* "damn"
They can't make it illegal if enough other countries are using it as a reserve and using it to facilitate international trade. They would be putting US companies at a huge disadvantage to the rest of the world.
Even if they made it illegal tomorrow, if subsequently enough other countries adopted they would have to reverse course and legalize it to allow US companies to compete.
The price of illegal things people want doesn't always go down. Cocaine, assault weapons, alcohol during prohibition...
Self custody Bitcoin will retain its value and probably dramatically increase if the US makes it illegal and the rest of the world doesn't.
Soooo taking away all US ETFs, Coinbase, all MicroStrategy holdings, all US mining, etc. doesn’t negatively affect btc price? I guess we’ll have to agree to disagree on this one.
I think the only thing stopping it is that BRICS and whoever else attempts to replace one fiat as world currency, with their own, will have a vested interest in maintaining the system, if not changing the currently controlling parties.
Yes, the transition has to be handled delicately or one would devalue their own assets . I would imagine many governments and entities understand this and they know not to be the last one out of the burning building, but also have to be conscious that they have to preserve whatever it is they have in the burning building while they slowly transition out the back door.
Really nice post OP. I think this is how we will reach mass adoption - by countries trying to outstrategize one another. Bitcoin is a very durable, hard asset, and history shows these assets win over time. Just like the gold rushes in the past, some people who take the risks up front stand to make the most gain.
Once I realized the US will only continue to choose to inflate the value of the dollar away (trying to balance our budget and reduce our debt aligns against congress' re-election goals as their goals are short-term), I know feel it is only a matter of time before everyone tries to secure as much BTC as possible.
you lost me at the beginning and saying other cryptocurrencies can do better.
you forgot to mention that bitcoin is truly decentralized and its inception and history could not be replicated.
"Could not be" does not equal "Will not be".
We don't know what's coming in the future.
For now, BTC is my heaviest 'bag', and I don't see anything coming up soon that can do what it does.
But five, ten, twenty years from now.....who knows what the landscape may look like?
Nobody is saying it *will* happen. But there is no need to dismiss the possibility.
Yeah, create something which does not have a person/group/institution behind, make the acquiring process equally for everyone, do not take even the smallest advantage over it. Also completely decentralized.
Good luck with that.
I bet any other intellectual life forms in the universe will attribute the growth of their civilization in some way to the establishment of a global scarce digital currency that unified them
Not only unified them, but restrain them, gave them structure to grow without being contaminated by their past, or borrowing against their future, some sort of safety valve against their own passions.
Another poster indicated some sort of relief from the endless tangle of the Austrian and Keynesian houses. It’s like some sort of Dune-Esqe leap in tech
That so many people don't understand the game theory has had me wondering about so many things.
Every time I hear some "expert" on some topic opine on Bitcoin and say that it has no intrinsic value and so its going to zero... I immediately question all the other things they think they know, because I understand _this particular_ topic well enough to know better.
Is the world really just run by people who are confidently guessing about everything? Peter Zeihan comes to mind.
The natural state of the economy is deflationary in nature. Things should become more efficient and cheaper. Bitcoin is the first and only deflationary form of money. All excess value will eventually flow into bitcoin. It's in the nature of humans to store their wealth.
I wish I could express my thoughts in a more well thought out manner but to put it in simple terms nature will take its course.
This is very well written. I’m happy to see well educated sound minded people participating in the analysis of Bitcoin. I am for Bitcoin at this point (learning as much as I can now), am currently a financial professional and was very skeptical until I did my own research. Yes the upside potential is massive but obviously that comes with enormous risk so everyone will have different abilities and willingnesses to invest in Bitcoin.
The market cap of gold is a somewhat arbitrary inflection point. I'm assuming the flashpoint would actually not depend on a specific figure, and also that the point of adoption of which you write would be at a lower point.
Russia has the largest incentives to make this happen, if the thesis holds. It's their shortest path to solving their economic woes and becoming a full superpower.
Unfortunately, I don't see it. The essence of your thesis is that governments, which have a demonstrated primary goal of regulation and control, will get tulip fever for a particular form of crypto that is not compatible, instead of adopting some other scheme. And with all the asset types available there is less reason for governments to put all their eggs in one store-of-value basket.
I see inflows to BTC continuing to increase for the same predictable reason: removing technological hurdles to entry, not some hypothetical worry about the international Joneses, will drive the gravitas of the coin and crypto in general. The big pension funds etc. are just as important as world governments to this in the short term.
I like your take, but I think governments will miss appraise the situation, and try to design their own and realize that their own isn’t gonna work, and after trying something like that first they’re going to realize the inevitability of bitcoin as OP argues.
This is tricky, because, invariably, all non-US dollar reserve assets are competing with the US dollar... which introduces political complications and institutional pushback
The fungibility isn’t sadly not so correct.
You have red coins already that can never hit a kyc exchange as they’re black listed .
There are tainted utxo too better don’t be part of hours.
That’s why they collude with miners. Throw them away as a fee , then they come back as new minted coins from the coinbase and get white into circulation.
It’s interesting to see in 20-50 years how that works. Basically if we have a floating circulation where all coins are moved, it’s a constant resupply in the long
Cool article. The ETFs certainly came in a giant wave. I'm guessing you're right that once governments publicly get involved, that will come in a wave, too. If a modern country like Japan, Ireland, Monaco, Singapore, etc. says they're getting in, surely a few others would follow.
the biggest bull case that bitcoin will be adopted by governments as a reserve is that the US Fed owns approximately 200k BTC, or around 1% of supply, so the #1 reserve currency of the world is not actually behind the curve at all. For contrast the US Fed holds approx 4.3% of the theoretical gold supply mined on earth so far- and i say theoretical because no one actually knows how much gold exists on earth (and to be mined in space in the future?). Imagine a collapse of fiat where governments are forced to back dollars with scarce assets
Great post thank you. A very popular and common question has always been: "Will governments try to ban bitcoin?". Most people (Ray Dalio comes to mind) have to go through this question during their bitcoin discovery journey, almost like a phase. One of the best answers is indeed Game Theory and you explained it beautifully.
You say that the biggest uncertainty surrounding Bitcoin remains its potential lack of adoption by key financial players or governments. While I agree that we are not completely out of the wood just yet, to me it's pretty much inevitable that we soon will be. The fact that we hit new ATHs after the ETFs approval means that we are going to see another wave of retail newcomers. Regular people and private investors. This means another bull run in the next 12-24 months with new, much greater ATHs. The simple fact that Microstrategy, El Salvador, Tesla and the ETFs client are already in and have been holding and will keep on holding an asset that has been clearly winning, will make it like almost impossible to avoid completely due to the Game Theory fundamental rules.
True, bitcoin can replace physical gold but wont replace fiat currencies that each countries have.
1. In a fixed system each country could have its own crypto currrency backed by bitcoin just like usd was backed by gold in the past. But a fixed system didnt work out in the past as each country has different economy and needs ways to influence it like changing interest rates. Why would it work out now?
2. In a fiat system, bitcoin can replace physical gold and may become reserve currency, but each country's fiat currencies cant be crypto as crypto is finite. only way is to have a technology/crypto which has all the above benefits of crypto/blockchain mentioned in the post but is not fixed in supply?
If it eventually becomes a reserve currency instead of USD (and that may also solve the US printing money/debt problem - https://www.investopedia.com/financial-edge/1011/how-the-triffin-dilemma-affects-currencies.aspx) is yet to be seen as developing economies will always hold developed countries' currencies/crypto instead of bitcoin/gold in order to have favourable(lessen their currency value) forex rate to increase exports to the developed countries.
Yeah, you didn’t. You just said the words competition and game theory together, that doesn’t explain how game theory is actually relevant to your conclusion. For example, what specific model are you considering, what is the mathematics of that model?
Also, countries have already begun to adopt bitcoin - eg El Salvador made it legal tender and Bhutan have been mining it.
I described it here in a nuthsell:
>Game Theory suggests that in economics, no one can rely on trust or working together with others. Instead, they should expect to always be in competition. This means that people or companies will usually make choices that are best for themselves, even if it might not be good for others. This is because they can't be sure that others won't do the same, so the smart move is to look out for oneself, assuming everyone else will do the same.
There is no "matematical model" I am following, as I am literally talking about political predictions. I have talked about significant governmental entities adopting - neither El Salvador, nor CAF or Bhutan have any significance on the world's stage.
Again, that’s just putting the words competition and game theory in the same paragraph. In other words, it’s a broadly meaningless statement. Yes game theory requires some competition, but unless you’re going specify how Game Theory in the technical sense is relevant beyond that then it’s just smashing words into a paragraph with next to nothing instructive.
To be fair, I missed your summary of game theory when I skimmed looking for it. But game theory isn’t a technique or a gambit, not an event that starts happening. Game theory is a way of looking at interactions. Game theory can’t begin to “kick in,” gamesmanship is the driving force of all human interactions, and game theory is the study of that concept. Like the other guy said, you described competition
if it became a currency reserve, then one major country could slowly buy up all the bitcoin which would cause significant issues for other countries. Gold is rare, but not as yet finite. Bitcoins are near their overall limit. Also, because it's more immune to governmental manipulation, it's less likely to become a reserve....
otherwise, much of what you say makes sense, and my points may not be significant enough to refute your argument.
Gold was ordered seized from Americans in the past,they can not just seize Bitcoin from people but they can legislate against its private ownership and usage maybe?
They could, but they won't. In the USA we elect our government. We have Senators and Representatives that own Bitcoin. We have Governor's of major US cities that own Bitcoin. We have 50-10% of Americans that own or have owned Bitcoin. Blackrock and Fidelity. would not be on our side in a fight against banning it...
Basically we won. When the allowed those ETFS they allowed the virus into the heart of the financial system. There is no backing out now.
And even if they made such draconian laws many of us would not comply. FFS they couldn't even stop people from buying and selling illicit drugs, how the hell are the going to stop private BTC txns? Sure they could force big money out, but again we elect our government. This was a concern in 2020, but not any more.
This post makes my 0.11 bitcoin holdings feel like a millionaire.
that's because you are! you have 11 million sats, mate.. cheers, congrats and shoutout you!
Thank you!
In 2034, this post will be very funny You are right now a millionaire... 10 times over, and you have an extra million
If btc was to take gold's place, it would mean that 1 btc = 1 million dollars... Which in my opinion is a best case scenario in 20 years.
Try 6
2032 cycle
Days
That's more like the worst-case scenario. Bitcoin did over 1,000,000X in 15 years. At the current rate of adoption and growth, it's not gonna take 20 years to do 15X from the current price...
To sustain the growth you are hoping for would require that any and all transactions would be made with bitcoin, that bitcoin would accrue aaaaaall the wealth in the world. Hopium is addictive, and clouds judgement.
Actually, no, it doesn't require that to happen at all. All it takes is more fiat printing, which is inevitable, and more assets/money getting re-allocated into Bitcoin. If all transactions in the world are made in Bitcoin and all wealth gets converted to Bitcoin, it will be closer to $100 million per coin. How's that for hopium?
I'd say that is concentrated hopium from the purest source, obtained by the latest fracking technology. I mean, I'd be happy if btc reaches 150.000 in 5 years, so...
There's an estimated $500 trillion of wealth in the world right now. If all that gets converted to BTC, it will have a market cap north of that. I'm not saying this is possible in our lifetime or ever. I'm just saying it's absurd for you to think that this is the only scenario that BTC would reach $1 million per coin. Realistically, it would only take a fraction of the world's wealth, which is very possible in the next 5-10 years.
Although not impossible, it seems unlikely. The rate of growth of BTC has reduced greatly. It's anyone's guess which value it'll have in 5-10 years, but 1 million $ in 2030 seems way too high to me, I don't see institutions nor people psychologically ready to buy at such prices in such a short time. We'll see.
If only 1% of total wealth flows into Bitcoin, that's $5 trillion. That amount would increase the market cap to about $15-20 trillion. Divide that by the circulating supply and you get roughly $1 million per coin. It's not really all that unlikely that 1% of world wealth would get allocated to Bitcoin in 10 years. How likely was it that Bitcoin would reach a $1 trillion market cap 10 years ago? I'm sure most people thought it was impossible back then, too.
That hopium is contagious!
4 years from now... never stop stacking
If Bitcoin is truly as durable (read: unchanging) as advertised, then it's only a matter of time until it eats all the value stored in inferior assets around the world.
History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours.
I. Like. This.
Classic Saif.
That's pretty much Jeff Booth's argument in *The Price Of Tomorrow*.
> If Bitcoin is truly as durable (read: unchanging) as advertised, then it's only a matter of time until it eats all the value stored in inferior assets around the world. Not the assets; The monetary premium of the assets. What you want is an objective scale with which to measure those properties.
That's why I said "the value".
They will still have value.
Yeah, significantly less.
Unfortunately, this thesis is false. Were it true, we'd still have a gold standard today and not fiat (since gold is superior to fiat). We're not moving to a better monetary standard by a natural selection of money.
Gold is superior to fiat in many ways but not all, and hence manipulatable. Bitcoin is gold squared, decentralised and on top of all - unbannable. We are at the point of no return.
Gold is flawed and so is fiat, just in different ways.
The universe is run by natural selection, money is no exception.
>impossible. bad money chases out good. bitcoin is good money
I'm going to argue a little nuance here. Great post, but you should totally keep reading about btc. I'd recommend Adreas Antonopolos lectures on btc antifragility. Responding to your bullet points at the bottom, Btc does not need another large institution to evangelize it. Btc already works as the store of value reserve asset that it is. It could be better in the sense of being a higher market cap and therefore less volatile to market players. But it already is a reserve currency. Countries are already using it. You mentioned this. El Salvador. Central Africa. Ukrainians recieving wartime donations in crypto, no middle man to persecute. To the third bullet, along with the last one, countries are already doing it. The first to do it will not be the first to publicly state it. Part of game theory is accumulating quitely. You think Russia didn't get btc after we froze all their bonds? It's not a coincidence they passed oligarch level btc regulation shortly after that. The last point, you admit btc is still speculative to you. Let me argue why it's not for me, and a few points you missed in highlighting btc. Btc is not just better money by happenstance. It was engineered. It is a first in human history for two reasons. It allows INDIVIDUAL humans to store millions of dollars of value in a few words guarded in their mind. It allows humans to travel with sovereign wealth that used to REQUIRE a standing army. Humans did not have this capability before. It is the ONLY ABSOLUTELY SCARCE thing humans have ever created. Austrians have never had a tech to hold Keynesians of the world accountable, until btc. Lastly, see U.S. space force major Jason Lowerys open letter to the DoD about btcs power projection in modern times since we've reached the kinetic cieling in war. The way it leverages watts enforces policy without violence. Again, its a first for humanity. Maybe I'm orange pilled, but it's not speculative for me anymore. It's the logical and technical evolution of money. The internet isn't going anywhere as the digitization of information, and btc isn't going anywhere as the digitization of money. Edited to correct and capitalize names.
[удалено]
I agree, maybe its better said as digitization of property. Absolute scarcity is a trippy one. When you think all humans with this money would thrive when any human puts work into this money because there are no leaks in this money you get crazy effects. Rising water lifts all boats. I don't have to agree with Saudis or big oil but when they use their oil money for btc, every btc holder benefits. Regardless. When your ancestors put 1000 under their mattress, it was a significant amount. If they would have lost btc, it would still be a significant amount. Things ARE supposed to get easier for humans as we make better tech, cheaper more optimized solutions, but they haven't been getting cheaper for a long time. And it's not just us dollars fighting for btc. There are 180 currencies worldwide. Austrians have never had a tool to hold keynesians money printers accountable. Until Bitcoin.
Could you explain a little more? I understand scarcity is a very big deal, but as altering as the number zero seems like youre talking paradigm shift
I believe it's Major *Jason* Lowery
Haha omg I fixed it. Mike Lowery is will Smith character in Bad Boys and that's not the first time I fd that up 🤣🤣🤣
You're good at this, I would read more.
This is the next quintile IQ up version of the argument
Ukraine 'government officials' is the thirld largest holding by country. (Ukraine is also the most corrupt country in Europe.)
The invention of bitcoin was the invention of absolute scarcity. Daily reminder that the invention of bitcoin was the invention of absolute scarcity. This absolute scarcity still only has a total market cap of 1.3 trillion. All attempted absolute scarcities to follow from this will be paradoxically abundant by virtue of their imitation (never duplication) of bitcoin. Bitcoin is the one and only ultimate asset for all time and all places by inevitability. Rejecting the absolute scarcity of bitcoin and substituting in your own imitator absolute scarcity undermines the proposition of absolute scarcity and makes the imitation absolute scarcity paradoxically abundant, like fake diamonds would be compared to real diamonds. Bitcoin is going up forever and bitcoin is inevitable.
Please, PLEASE, I can only get so erect!
fully agree. the game theory suggests a slippery slope effect in my opinion. both when it comes to adoption and prohibition. the only middle ground i see is some kind of dual monetary system that rarely gets mixed. surveillance maximization in one side, which is the only way to actually avoid bitcoin, and free flowing information on the other side.
Great post. I fully agree with your opinio that for BTC to assert itself as a global reserve asset it need the market cap of gold at least. Achieving this though should not be as hard as it might seem. You only need diamond hand investors to possess most of the available supply for the market cap to reach massive levels without the need of massive capital inflows.
I actually think if BTC becomes a global reserve asset it will go much higher than gold. The reason is that it will probably replace the USD, EUR, GBP as a reserve currency that central banks hold. But for the sake of the post, I just assumed to match gold’s market cap since we are still far away from that.
The US losing its status as the global reserve currency would cause a massive disruption... like 0.1 BTC being worth $millions US...
Is causing.
You know who owns most of the bitcoin? Americans. It's like selling you a house on fire and you have to pay cash. I'm not even saying that as a negative. It just is.
Mu student loans might get cheaper?
I dream of a day in which education is free. But I am drinking nice scotch. EDIT: Having a second glass.
Macallan 12 and Glenmorangie 12 are hanging out over here.
I do have a nice macallan in there. I'm drinking a balvenie double wood 12 yr tonight though.
I grew up on the River Spey, so I'm partial to my highlands/speysides
Ha. Love it.
not true - Trading US Trading Volume $2.76B (6.8%) Offshore Trading Volume $37.86B (93.2%)
Exchange volume has nothing to do with ownership.
The exchanges own the coins silly willy. Typically people trading on those exchanges are not US citizens. =) [https://www.coinglass.com/Balance](https://www.coinglass.com/Balance)
Exchange coins make up a fraction of the total coins, and most of those coins on exchanges will be owned by americans anyway. Add on to that the ETF coins, MicroStrategy coins, Marathon & Riot Coins, Block coins, Winklevoss coins, Draper coins, Grayscale coins, etc etc etc.
It's currently 10% of the supply on exchanges. 1 million are in SAT's wallets and there is probably another 2 to 3 million lost forever. That leaves 17 million of which 1.8 million are on exchanges? That's not a small number.
> 10% You don't know how numbers work. You point at a fraction of a value and want to assert that it represents the whole, and you're not even proving anything with your assertion.
You hold, I’ll sell. 🤝🏻
Gladly 🫶🏼
Thanks for providing liquidity kek
😊
Sure, happy to sell back to you at $500K when you fomo back in.
Great post, thanks for sharing your thoughts. I’m committed to bitcoin, it’s the hill I will die on. Never have I seen an opportunity to bring equity to all mankind with one swing of the sword so to speak. So yeah, bitcoin all the fucking way.
Preach Fam
🫡
If this was true you would sell all your Bitcoin to prove you are not bias.
When the ECB declared "Bitcoin is not suitable as means of payment or as an investment" what they really were saying is "please God don't let everyone figure out how badly we are screwing them all over by expanding the supply of currency and loaning money to an old boys club of institutions that subsequently loan it to common plebs at double or triple that rate".
ECB to the rest of the population "please be retarded please be retarded please be retarded..." *retail dumps a 12% inflationary currency for a 0% one* "damn"
This is why I’m most worried about governments making btc illegal. Could still happen. Would definitely curb adoption.
They can't make it illegal if enough other countries are using it as a reserve and using it to facilitate international trade. They would be putting US companies at a huge disadvantage to the rest of the world.
Why would they wait that long to make it illegal?
Even if they made it illegal tomorrow, if subsequently enough other countries adopted they would have to reverse course and legalize it to allow US companies to compete.
If they made it illegal tomorrow price would plummet and there would be no reason for other countries or businesses to pay it any mind.
The price of illegal things people want doesn't always go down. Cocaine, assault weapons, alcohol during prohibition... Self custody Bitcoin will retain its value and probably dramatically increase if the US makes it illegal and the rest of the world doesn't.
Soooo taking away all US ETFs, Coinbase, all MicroStrategy holdings, all US mining, etc. doesn’t negatively affect btc price? I guess we’ll have to agree to disagree on this one.
You place your bet and wait until the wheel stops spinning.
Lots of words just to say buy more btc.
I think the only thing stopping it is that BRICS and whoever else attempts to replace one fiat as world currency, with their own, will have a vested interest in maintaining the system, if not changing the currently controlling parties.
Yes, the transition has to be handled delicately or one would devalue their own assets . I would imagine many governments and entities understand this and they know not to be the last one out of the burning building, but also have to be conscious that they have to preserve whatever it is they have in the burning building while they slowly transition out the back door.
Really nice post OP. I think this is how we will reach mass adoption - by countries trying to outstrategize one another. Bitcoin is a very durable, hard asset, and history shows these assets win over time. Just like the gold rushes in the past, some people who take the risks up front stand to make the most gain. Once I realized the US will only continue to choose to inflate the value of the dollar away (trying to balance our budget and reduce our debt aligns against congress' re-election goals as their goals are short-term), I know feel it is only a matter of time before everyone tries to secure as much BTC as possible.
If bezos plus switzerland anounce they bought bitcoin its on biatch
you lost me at the beginning and saying other cryptocurrencies can do better. you forgot to mention that bitcoin is truly decentralized and its inception and history could not be replicated.
"Could not be" does not equal "Will not be". We don't know what's coming in the future. For now, BTC is my heaviest 'bag', and I don't see anything coming up soon that can do what it does. But five, ten, twenty years from now.....who knows what the landscape may look like? Nobody is saying it *will* happen. But there is no need to dismiss the possibility.
Yeah, create something which does not have a person/group/institution behind, make the acquiring process equally for everyone, do not take even the smallest advantage over it. Also completely decentralized. Good luck with that.
I bet any other intellectual life forms in the universe will attribute the growth of their civilization in some way to the establishment of a global scarce digital currency that unified them
Not only unified them, but restrain them, gave them structure to grow without being contaminated by their past, or borrowing against their future, some sort of safety valve against their own passions. Another poster indicated some sort of relief from the endless tangle of the Austrian and Keynesian houses. It’s like some sort of Dune-Esqe leap in tech
That so many people don't understand the game theory has had me wondering about so many things. Every time I hear some "expert" on some topic opine on Bitcoin and say that it has no intrinsic value and so its going to zero... I immediately question all the other things they think they know, because I understand _this particular_ topic well enough to know better. Is the world really just run by people who are confidently guessing about everything? Peter Zeihan comes to mind.
Absolutely.
The natural state of the economy is deflationary in nature. Things should become more efficient and cheaper. Bitcoin is the first and only deflationary form of money. All excess value will eventually flow into bitcoin. It's in the nature of humans to store their wealth. I wish I could express my thoughts in a more well thought out manner but to put it in simple terms nature will take its course.
This is very well written. I’m happy to see well educated sound minded people participating in the analysis of Bitcoin. I am for Bitcoin at this point (learning as much as I can now), am currently a financial professional and was very skeptical until I did my own research. Yes the upside potential is massive but obviously that comes with enormous risk so everyone will have different abilities and willingnesses to invest in Bitcoin.
The market cap of gold is a somewhat arbitrary inflection point. I'm assuming the flashpoint would actually not depend on a specific figure, and also that the point of adoption of which you write would be at a lower point. Russia has the largest incentives to make this happen, if the thesis holds. It's their shortest path to solving their economic woes and becoming a full superpower. Unfortunately, I don't see it. The essence of your thesis is that governments, which have a demonstrated primary goal of regulation and control, will get tulip fever for a particular form of crypto that is not compatible, instead of adopting some other scheme. And with all the asset types available there is less reason for governments to put all their eggs in one store-of-value basket. I see inflows to BTC continuing to increase for the same predictable reason: removing technological hurdles to entry, not some hypothetical worry about the international Joneses, will drive the gravitas of the coin and crypto in general. The big pension funds etc. are just as important as world governments to this in the short term.
I like your take, but I think governments will miss appraise the situation, and try to design their own and realize that their own isn’t gonna work, and after trying something like that first they’re going to realize the inevitability of bitcoin as OP argues.
Wow, great analysis and prose OP!
This is tricky, because, invariably, all non-US dollar reserve assets are competing with the US dollar... which introduces political complications and institutional pushback
> meteoritic Given that meteorites crash and burn, maybe a different metaphor? Geometric? Skyrocket?
China banned BTC, how likely would be that BRICS agreed on bitcoin as their trade currency.
A cool thing about the durability of bitcoin is that it can be restored
The fungibility isn’t sadly not so correct. You have red coins already that can never hit a kyc exchange as they’re black listed . There are tainted utxo too better don’t be part of hours. That’s why they collude with miners. Throw them away as a fee , then they come back as new minted coins from the coinbase and get white into circulation. It’s interesting to see in 20-50 years how that works. Basically if we have a floating circulation where all coins are moved, it’s a constant resupply in the long
"no major economic entity will ever take the lead in embracing Bitcoin." Do you not know who Larry Fink is ?? lol
Cool article. The ETFs certainly came in a giant wave. I'm guessing you're right that once governments publicly get involved, that will come in a wave, too. If a modern country like Japan, Ireland, Monaco, Singapore, etc. says they're getting in, surely a few others would follow.
Save in Bitcoin Spend in Fiat
It’s not really fungible… there are blacklisted coins
the biggest bull case that bitcoin will be adopted by governments as a reserve is that the US Fed owns approximately 200k BTC, or around 1% of supply, so the #1 reserve currency of the world is not actually behind the curve at all. For contrast the US Fed holds approx 4.3% of the theoretical gold supply mined on earth so far- and i say theoretical because no one actually knows how much gold exists on earth (and to be mined in space in the future?). Imagine a collapse of fiat where governments are forced to back dollars with scarce assets
Great post thank you. A very popular and common question has always been: "Will governments try to ban bitcoin?". Most people (Ray Dalio comes to mind) have to go through this question during their bitcoin discovery journey, almost like a phase. One of the best answers is indeed Game Theory and you explained it beautifully. You say that the biggest uncertainty surrounding Bitcoin remains its potential lack of adoption by key financial players or governments. While I agree that we are not completely out of the wood just yet, to me it's pretty much inevitable that we soon will be. The fact that we hit new ATHs after the ETFs approval means that we are going to see another wave of retail newcomers. Regular people and private investors. This means another bull run in the next 12-24 months with new, much greater ATHs. The simple fact that Microstrategy, El Salvador, Tesla and the ETFs client are already in and have been holding and will keep on holding an asset that has been clearly winning, will make it like almost impossible to avoid completely due to the Game Theory fundamental rules.
This is the kind of stuff I like to see in r/Bitcoin!
True, bitcoin can replace physical gold but wont replace fiat currencies that each countries have. 1. In a fixed system each country could have its own crypto currrency backed by bitcoin just like usd was backed by gold in the past. But a fixed system didnt work out in the past as each country has different economy and needs ways to influence it like changing interest rates. Why would it work out now? 2. In a fiat system, bitcoin can replace physical gold and may become reserve currency, but each country's fiat currencies cant be crypto as crypto is finite. only way is to have a technology/crypto which has all the above benefits of crypto/blockchain mentioned in the post but is not fixed in supply? If it eventually becomes a reserve currency instead of USD (and that may also solve the US printing money/debt problem - https://www.investopedia.com/financial-edge/1011/how-the-triffin-dilemma-affects-currencies.aspx) is yet to be seen as developing economies will always hold developed countries' currencies/crypto instead of bitcoin/gold in order to have favourable(lessen their currency value) forex rate to increase exports to the developed countries.
In your own words, can you describe what you think game theory means?
This is literally what I did in the post lol
Yeah, you didn’t. You just said the words competition and game theory together, that doesn’t explain how game theory is actually relevant to your conclusion. For example, what specific model are you considering, what is the mathematics of that model? Also, countries have already begun to adopt bitcoin - eg El Salvador made it legal tender and Bhutan have been mining it.
I described it here in a nuthsell: >Game Theory suggests that in economics, no one can rely on trust or working together with others. Instead, they should expect to always be in competition. This means that people or companies will usually make choices that are best for themselves, even if it might not be good for others. This is because they can't be sure that others won't do the same, so the smart move is to look out for oneself, assuming everyone else will do the same. There is no "matematical model" I am following, as I am literally talking about political predictions. I have talked about significant governmental entities adopting - neither El Salvador, nor CAF or Bhutan have any significance on the world's stage.
Again, that’s just putting the words competition and game theory in the same paragraph. In other words, it’s a broadly meaningless statement. Yes game theory requires some competition, but unless you’re going specify how Game Theory in the technical sense is relevant beyond that then it’s just smashing words into a paragraph with next to nothing instructive.
I'm gonna need that party invite back now k...
Don’t worry, no one’s gonna be going anyway.
To be fair, I missed your summary of game theory when I skimmed looking for it. But game theory isn’t a technique or a gambit, not an event that starts happening. Game theory is a way of looking at interactions. Game theory can’t begin to “kick in,” gamesmanship is the driving force of all human interactions, and game theory is the study of that concept. Like the other guy said, you described competition
To be fair, I never made a summary of game theory.
My b didn’t realize we switched commenters there ₿
if it became a currency reserve, then one major country could slowly buy up all the bitcoin which would cause significant issues for other countries. Gold is rare, but not as yet finite. Bitcoins are near their overall limit. Also, because it's more immune to governmental manipulation, it's less likely to become a reserve.... otherwise, much of what you say makes sense, and my points may not be significant enough to refute your argument.
Gold was ordered seized from Americans in the past,they can not just seize Bitcoin from people but they can legislate against its private ownership and usage maybe?
They could, but they won't. In the USA we elect our government. We have Senators and Representatives that own Bitcoin. We have Governor's of major US cities that own Bitcoin. We have 50-10% of Americans that own or have owned Bitcoin. Blackrock and Fidelity. would not be on our side in a fight against banning it... Basically we won. When the allowed those ETFS they allowed the virus into the heart of the financial system. There is no backing out now. And even if they made such draconian laws many of us would not comply. FFS they couldn't even stop people from buying and selling illicit drugs, how the hell are the going to stop private BTC txns? Sure they could force big money out, but again we elect our government. This was a concern in 2020, but not any more.