yochanagrace
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You’ve probably dismiss Bitcoin the first time you heard it.
Bitcoin has the reputation of being used only by geeks or people buying drugs online. But narratives have changed since then.
Today we have the following Bitcoin adoption:
-Publicly listed companies holding Bitcoin
-Asset managers like Blackrock filing for Bitcoin Spot ETF (like a mutual fund or UITF in PH)
-El Salvador adopting bitcoin as legal tender. Other countries mining Bitcoin
-4 US presidential candidates that are pro-Bitcoin
If these smart investors and big institutions are adopting Bitcoin , it must means that Bitcoin is no longer viewed as scam right?
Why Bitcoin adoption is accelerating
Bitcoin is a new asset class. There’s nothing like it before.
Wall street firms and big banks are entering into Bitcoin because it is a new asset class that can be invested on.
It is an asset class that will be treated like stocks, bonds or gold. Pension funds, endowment funds, insurance funds, sovereign wealth funds etc. will soon allocate their money into Bitcoin.
Bitcoin will take capital from funds that are invested in stocks, bonds, gold, real estate etc.
One estimate of the total value or market cap of these investable assets (stocks, bonds, gold, real estate etc.) is $900 trillion.
In comparison, Bitcoin’s market cap today stands at only half trillion.
Why Bitcoin will be an investable asset
Today money is no longer backed by anything.
The biggest and arguably the most important asset in the financial system are government bonds issued by the United States.
This trillion dollar asset is backed by the United States. When you buy US government bonds, you are lending money to the United States.
The problem with US government bonds are:
First, the US has a lot of debt
Second, the US is in deficit. They spend more money than they make.
If you buy US bonds you’re lending your money to the US government. When you lend money, you evaluate the borrower if they can pay it back, you ask if the borrower is making enough money to pay you back. If the lender has lots of debt, that’s a red flag.
Even though the US has a lot of debt and they are not profitable (they earn less from taxes than what they spend), the US won’t default on their obligations.
It is because they can print more money to pay their debt.
It’s not as simple as printing paper money or electronic money. They will issue more debt or US government bonds to pay their old debts.
It’s like getting a new credit card to pay for your old credit card.
This is the bullish case for Bitcoin.
In an environment of growing debt and money supply that can be created out of thin air, assets that cannot be debased or produced out of nowhere become more valuable.
Bitcoin is like Gold because you can’t print or create them out of nowhere.
21 Million
Unlike fiat currency that can be created by governments.
Bitcoin has a hard cap. There is a limit of 21 Million Bitcoins.
This is the main reason why Bitcoin was created. It was meant to be a money that is controlled by no one. Governments cannot print more Bitcoin.
Will Bitcoin become the new form of money?
That’s the endgame or purpose of Bitcoin . But no one know when will this happen.
The good thing is that this doesn’t need to happen for Bitcoin to become successful.
Bitcoin will go up because the investors will search for an investment that cannot be created out of nowhere. There will be more money printed in the future because the governments has lots of debt. The only way they pay their debts is to print more money. In that scenario, assets that are limited in supply like Bitcoin will do very well.
Even though Bitcoin is at $30,000 as of this writing. We are still early. Because like I said, bitcoin becoming money as not the bullish case for bitcoin.
The bullish case for bitcoin is that the competing assets like government bonds are eroding in value.
Should you go all in on Bitcoin?
I’m not saying that tomorrow next year o the next decade everything will collapse. No one knows the future.
Since 1970s, there are people that saying that the dollar will collapse. The dollar collapsing is always a headline every year.
If you are fortunate enough to have some money left to save. You will loose it through inflation over time if you save it in cash.
That’s why we need to invest. And that is the thesis of this post.
To consider what Bitcoin is and how can it be a part of your savings & investment along with stocks, bonds , gold etc.
You’re the only who knows what the right % of allocation to Bitcoin because everyone has unique circumstances. The only wrong allocation to Bitcoin is zero.
This post originally appear here: https://diyinvestingforfilipinos.substack.com/p/why-you-should-get-some-bitcoin-just
Best free resources to learn Bitcoin: https://diyinvestingforfilipinos.substack.com/p/best-free-resources-to-learn-bitcoin
Bitcoin has the reputation of being used only by geeks or people buying drugs online. But narratives have changed since then.
Today we have the following Bitcoin adoption:
-Publicly listed companies holding Bitcoin
-Asset managers like Blackrock filing for Bitcoin Spot ETF (like a mutual fund or UITF in PH)
-El Salvador adopting bitcoin as legal tender. Other countries mining Bitcoin
-4 US presidential candidates that are pro-Bitcoin
If these smart investors and big institutions are adopting Bitcoin , it must means that Bitcoin is no longer viewed as scam right?
Why Bitcoin adoption is accelerating
Bitcoin is a new asset class. There’s nothing like it before.
Wall street firms and big banks are entering into Bitcoin because it is a new asset class that can be invested on.
It is an asset class that will be treated like stocks, bonds or gold. Pension funds, endowment funds, insurance funds, sovereign wealth funds etc. will soon allocate their money into Bitcoin.
Bitcoin will take capital from funds that are invested in stocks, bonds, gold, real estate etc.
One estimate of the total value or market cap of these investable assets (stocks, bonds, gold, real estate etc.) is $900 trillion.
In comparison, Bitcoin’s market cap today stands at only half trillion.
Why Bitcoin will be an investable asset
Today money is no longer backed by anything.
The biggest and arguably the most important asset in the financial system are government bonds issued by the United States.
This trillion dollar asset is backed by the United States. When you buy US government bonds, you are lending money to the United States.
The problem with US government bonds are:
First, the US has a lot of debt
Second, the US is in deficit. They spend more money than they make.
If you buy US bonds you’re lending your money to the US government. When you lend money, you evaluate the borrower if they can pay it back, you ask if the borrower is making enough money to pay you back. If the lender has lots of debt, that’s a red flag.
Even though the US has a lot of debt and they are not profitable (they earn less from taxes than what they spend), the US won’t default on their obligations.
It is because they can print more money to pay their debt.
It’s not as simple as printing paper money or electronic money. They will issue more debt or US government bonds to pay their old debts.
It’s like getting a new credit card to pay for your old credit card.
This is the bullish case for Bitcoin.
In an environment of growing debt and money supply that can be created out of thin air, assets that cannot be debased or produced out of nowhere become more valuable.
Bitcoin is like Gold because you can’t print or create them out of nowhere.
21 Million
Unlike fiat currency that can be created by governments.
Bitcoin has a hard cap. There is a limit of 21 Million Bitcoins.
This is the main reason why Bitcoin was created. It was meant to be a money that is controlled by no one. Governments cannot print more Bitcoin.
Will Bitcoin become the new form of money?
That’s the endgame or purpose of Bitcoin . But no one know when will this happen.
The good thing is that this doesn’t need to happen for Bitcoin to become successful.
Bitcoin will go up because the investors will search for an investment that cannot be created out of nowhere. There will be more money printed in the future because the governments has lots of debt. The only way they pay their debts is to print more money. In that scenario, assets that are limited in supply like Bitcoin will do very well.
Even though Bitcoin is at $30,000 as of this writing. We are still early. Because like I said, bitcoin becoming money as not the bullish case for bitcoin.
The bullish case for bitcoin is that the competing assets like government bonds are eroding in value.
Should you go all in on Bitcoin?
I’m not saying that tomorrow next year o the next decade everything will collapse. No one knows the future.
Since 1970s, there are people that saying that the dollar will collapse. The dollar collapsing is always a headline every year.
If you are fortunate enough to have some money left to save. You will loose it through inflation over time if you save it in cash.
That’s why we need to invest. And that is the thesis of this post.
To consider what Bitcoin is and how can it be a part of your savings & investment along with stocks, bonds , gold etc.
You’re the only who knows what the right % of allocation to Bitcoin because everyone has unique circumstances. The only wrong allocation to Bitcoin is zero.
This post originally appear here: https://diyinvestingforfilipinos.substack.com/p/why-you-should-get-some-bitcoin-just
Best free resources to learn Bitcoin: https://diyinvestingforfilipinos.substack.com/p/best-free-resources-to-learn-bitcoin
