Satoshi’s Vision
According to the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System,” published by the pseudonymous figure Satoshi Nakamoto in 2008, Bitcoin was created as a response to the flaws in the traditional financial system. Nakamoto’s primary motivation was establishing a decentralized digital currency that operates on a peer-to-peer network, eliminating the need for intermediaries like banks or governments. Bitcoin aims to enable secure, transparent, borderless transactions while addressing concerns related to the “double-spending problem” (where the same digital token is spent more than once).
Regardless of where you stand on Bitcoin, it’s tough to argue that it hasn’t been a raging success and probably has blown up more than Nakamoto ever dreamed. For example, in late 2009, the first recorded exchange of Bitcoin for dollars pegged one Bitcoin’s value at $0.00099. Today, that number has ballooned to ~$35,000 per coin, and if Bitcoin were a stock, it would be in the top 10 in terms of market value ($668B USD). Today, we will do our best to illustrate unbiased arguments and data for Bitcoin as a currency or store of value:
Arguments for Bitcoin as a Currency
Proponents of Bitcoin as a currency highlight its potential to revolutionize the traditional banking system. They argue that Bitcoin transactions are fast, borderless, and offer low transaction fees compared to traditional banking systems or international money transfers. Evidence is starting to mount that citizens in hyper-inflation plagues countries are using Bitcoin as an alternative currency. Did you know Bitcoin’s price recently notched an all-time high versus three hyperinflation-plagued nations? (Nigeria, Turkey, Argentina) Impressive when you consider that Bitcoin is far off of its highs of $69,000 versus the US Dollar.
Pictured: Bitcoin vs. Turkish Lira
Spin: Currently, it is hard to argue that Bitcoin’s primary function is as a currency. However, in inflation-plagued countries like Nigeria, Turkey, and Argentina, desperate citizens are turning to Bitcoin as a way of escaping the financial prison that is rampant inflation. For countries like the United States, Bitcoin does not make sense to use as a currency as the US Dollar offers far more stability.
Arguments for Bitcoin as a Store of Value
Bitcoin advocates argue that it serves as a store of value akin to gold. Benefits of Bitcoin include its limited supply (only 21 million coins will ever exist) versus traditional currencies that can be printed in unlimited quantities, leading to inflation. Proponents also argue that Bitcoin’s scarcity and the decentralized nature of blockchain technology make it a reliable store of value. Amidst geopolitical escalations, rampant global inflation, and volatility in equities, Bitcoin is up more than 100% in 2023. In the past, Bitcoin has not only survived but thrived in situations like the 2008 Global Financial Crisis and the 2020 Covid-crash. In recent months, Bitcoin and Gold (universally thought of as the main store of value) have decoupled from the equity markets and gained ground.
Pictured: Bitcoin (orange) decouples from traditional assets.
Spin: With the US National Debtencroaching on nearly $50 trillion (and likely to grow due to geopolitical escalations in the Middle East and Europe), it’s tough to argue against an alternative that has a limited supply and has held its value since its inception in 2009. The comparison chart between gold and Bitcoin provides further evidence.
Bottom Line
There is much more to the Bitcoin bull move than the hype surrounding a potential ETF approval. Evidence is mounting that Bitcoin is not only a trading vehicle but is becoming a real-world currency and a store of value.
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