Hello. It’s conrad, your friendly neighborhood magic internet money man.
Reading that title will no doubt cause some eye-rolling in TF, but this thread isn’t for those people. People are free to invest in whatever the hell they want, so if you read this and your immediate reaction is to jeer the piece of the Valhalla community that respects these sorts of discussions, I invite you to hold your tongue.
Regardless of your views on cryptocurrency, hopefully you’ve done a bit of research on what exactly sets BTC apart. If that research was only surface-level, it’s important to understand that of every cryptocurrency traded today, BTC is the only one of its kind. There is no CEO that its developers report to, there is no agency responsible for issuing more coins, there is no singular narrative for why BTC is important. People have exposure to BTC for numerous reasons, and most of those reasons are perfectly sensible (regardless of the prevailing sentiment in the public).
I’m writing this thread to give you at least one more reason to consider. I don’t intend to come across as a doomsayer, and I don’t care what your personal reasons are for either supporting or ignoring BTC, but no currency lasts forever. So why not hedge your bets?
Pt 1: The U.S Dollar and Fiat Currency
Don’t worry, I’m going to keep these relatively short. Just wanna do some formatting to make it look like I know what I’m talking about.
First I just want to link to the national debt clock. If you’ve never visited this site, it is honestly scary to sit and watch. But here’s the meat of this section: the buying power of USD continues to drop (along with every other fiat currency), and projections of America’s debt-to-GDP for the next few decades do not look good. Hint: the percentage continues to go up. @The_Ni gave me this great source for the current debt-to-GDP, just for reference. If you glanced at the second link, the recovery after WWII was sharp and sustained, two words that cannot be used to describe the drop from the recent high.
This year is a sobering reminder of the frailty of the world economy. Even when faced with that frailty, the Fed is being pressured to pivot before there is irrefutable evidence that inflation is under control. Fight inflation with inflation, right? Last currency to collapse wins! Does that sound like a winning strategy?
Here’s a question… when your nation’s currency loses over 20% of its value against the world reserve currency in a little more than a year, where the hell do you stow your rapidly-devaluing currency? Here’s a thought.
Sorry for all of the hyperlinks, but the places I’m linking to tend to explain things better.
Part 2: So What’s Your Damn Point?
I’m glad you asked! Here’s what I’m trying to get across. If you look at every currency’s performance over the last couple of years, USD is near the front of the pack, but it’s still inflating and will continue to do so. Our own government is in denial that we’ve entered a recession, and not even economists understand what’s going to happen should our debt-to-GDP continue to rise. The next year does not look favorable.
Is the USD going to collapse anytime soon? I have no clue, and the fact that I can’t say one way or the other gives me pause, and it should probably give you pause, too.
So then is Bitcoin the way out? That’s not what I’m trying to get you, dear reader, to consider. Yes, BTC has lost 80% of its value in USD since its recent ATH; you should not ignore that fact and I’m not going to ask you to. What I’m trying to get across is even if you don’t see Bitcoin as a magical safe-haven (for the record, I don’t), at the very least it is translatable to every other currency in existence, including those that don’t exist yet. If your currency of choice collapses, who the hell is going to trade you for their yet-to-collapse currency? And yes, I get it, the chance that Bitcoin becomes worthless is some amount greater than 0%; though historically speaking, the chance that your fiat currency of choice eventually goes to zero (given enough time), is 100%. Bitcoin could eventually fail, but Bitcoin doesn’t figure into this example because Bitcoin is not fiat. There’s no precedent for something like BTC, not even other cryptocurrencies.
So what do you stand to gain if you have a portfolio worth $20,000 and you decide to hedge against fiat currencies by allocating 1% of it into bitcoin? Well at the time of writing this, BTC/USD = $19,460.00
1% of $20,000 is $200, which nets you ~0.01038 BTC. That’s 1% of 1 BTC, of which there will never be more than 21,000,000, at least 2,000,000 of which will never be transacted again. So your $200 of eternally-inflating currency just purchased you a stake in a permanently limited, naturally deflationary digital commodity. And if you hold onto that 1% of 1 BTC, you are permanently in the top 1.9 billion richest BTC holders in a world of about 7.753 billion humans. That’s top 25%. I know it seems like hyperbole, but I only frame it this way to paint a picture.
If BTC goes to zero? Well shit, you’re out $200.
And if you held that $20,000 - the world’s leading fiat currency - in a cash position for the past year? You’re out $1600.
Just food for thought.
Thanks for reading. Feel free to let me know how crazy I am below.
