5 reasons why you should have Bitcoin
By: Henrique Centieiro
Tags: Gold, Bitcoin, Blockchain, Cryptocurrency, Crypto

Bitcoin is here to stay. The new gold standard, crypto asset, cryptocurrency, no matter what you call it and how you see it. It passed the tipping point—the point from now where mass adoption is the most likely outcome.

These are the 5 reasons why you should have Bitcoin:

Bitcoin is the most secure and resilient IT system ever created

Bitcoin is paving the roads for mass adoption

The new monetary policies (money printer goes brrr)

Investment decisions and portfolio allocation

You can trust the system

The most secure and resilient IT system ever created

The technology has matured over more than ten years since its first inception in January 2009 by Satoshi Nakamoto. Bitcoin has been a roller coaster, but probably the safest roller coaster in the world. Its technological rails make it the most secure IT system globally, offering the best CIA ever possible — Confidentiality, Integrity and Availability — 3 important key points in security.

In this period of time, the public also gained more confidence in Bitcoin as a store of value. The Bitcoin network has been attacked from every angle: attacked by hackers, politicians (left and right), countries, boomers, media and so on. During this period, Bitcoin has gained more and more resiliency, thicker skin and more fans.

Bitcoin cannot be hacked. I don’t wanna go to technical in this article, but the type of cryptography used, ECDSA digital signatures and SHA256 hashing mechanisms, would take billions of years to be cracked by a hacker. So it’s not going to happen during our lifetime.

Paving the roads for mass adoption

Although still far from mass adoption, it’s said that 10% of the US population owns Bitcoin, and new big institutions are big time on Bitcoin.

We can pretty much look at the Amplify Blockchain ETF — BLOK — and see a long list of companies that are part of the ETF: Voyager Digital, Galaxy Digital, MicroStrategy, Hut 8, PayPayl, Riot, Grayscale, Square, Sivergate Capital, and many more. These are all multi-billion companies listed in the stock exchange that are investing in Bitcoin. In addition to this list, other big names like Mastercard, Facebook and Tesla are also exploring how to offer Bitcoin services to their customers or already offering them.

Square Cash App allows to buy and sell Bitcoin

On Paypal, you can also buy/sell Bitcoin

Tesla started to accept payments in Bitcoin

And I could go for hours listing companies that now accept Bitcoin or allow users to buy and sell cryptocurrencies. Whole Foods… Etsy… Starbucks… Newegg… Home Depot… Rakuten, the list goes on.

Small companies also started to accepted Bitcoin payments years ago! https://www.flowerdeliveryhongkong.com/ is one of the biggest online flower shops in Hong Kong, and back in 2017, I was already buying flowers with Bitcoin there! And apparently, now they not only sell flowers, but they also sell hardware wallets: https://www.flowerdeliveryhongkong.com/en/bitcoin

Money Printer goes brrr and the new monetary policy disaster

The growing demand for Bitcoin in 2020 and 2021 is motivated by the new economic policies that governments around the world are adopting. MMT — The Modern Monetary Theory that most countries seem to be adopting say that

“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” — Alan Greenspan

Well, the new MMT policies just say that Central Banks can print infinite amounts of money.

Don’t worry, buy Bitcoin 🤣

The new economic policies trying to soften the effects of the COVID have been focusing on printing more currency — increasing its supply — and keeping the interests rates very low. This results in increased money circulating in the economy, which seems to be good in the short term, but it will harm whoever holds USD in the long term. As a result, inflation and dilution of shareholder value will hit hard, and the only safe place to keep the money is Bitcoin.

For sure, people will argue that Bitcoin’s volatility is a risk. Still, when compared to USD, one could argue that Bitcoin has done better in the last couple of years than USD as the USD supply is very unpredictable and volatile. USD decreases its value by 20% compared to the British Pound in 2020, the money supply increases by 40%, and high inflation is looming. On the other hand, Bitcoin rose 600%. Which one do you prefer?

Investment decisions and portfolio allocation

The new monetary policies are diluting the money that you have in your pocket. Do you prefer to hold to a depreciating asset (USD/fiat) or buy the new gold standard hedge against inflation — Bitcoin?

Additionally, when people look at investments — where to park your savings — the options are not very attractive in 2020 and 2021:

Term deposits and saving accounts pay close to zero interest

Bonds pay historically low interest

Stocks seem to be performing, but we need to take into account that the stock market is denominated in USD (or other fiat currencies), and USD is hugely losing value, and we will face inflation, meaning that the real stock market performance is probably not that good

Gold has been underperforming in 2020 and 2021, although the economy is not doing well

What other asset classes out here do not share these same issues? Well, only Gold (and precious metals) and Bitcoin. We see, however, a big shift from Gold to Bitcoin. In such circumstances, we should see the Gold price rising a lot, but in one year, it rose only 20%, signalling that probably people don’t see it as much as they use to see it as a safe heaver.

Bitcoin may have some volatility (usually no more than tech stocks), but now it’s more and more seen as a safe haven and protection against inflation. It seems it will continue to be like this as long as governments continue to treat their currencies like Monopoly notes.

Trust the system

Bitcoin is also called the “Internet Magic Money”, but there’s actually nothing magic about it. Everything is based on mathematics and immutable algorithms that assure us of the stability of the Bitcoin system. Bitcoin blockchain provides a layer of trust confidence that doesn’t rely on centralized parties. Funny enough, Bitcoin’s white paper was released only a few months after banks starting to collapse after the 2008 subprime crisis. When banks failed behind society’s trust system for money, a new money trust system was created. A trust machine that doesn’t require any banks or centralized parties. There is a trust system with no CEO, no employees, no office, no legal entity, no politics, and no ideology—a trust system that everybody can trust: Bitcoin.

Bitcoin relies on mathematics, cryptography, consensus mechanisms and hashing. It’s the most transparent monetary system that ever existed. The USD (and all the other fiat currencies) rely on governments and Central Banks. It’s most untransparent monetary system that ever existed.

So Bitcoin was the very first blockchain launched in January 2009 by Satoshi Nakamoto. Satoshi Nakamoto is the pseudonym for the person/s that have created Bitcoin, but nobody knows who Satoshi was. He/she/they cover any marks/clues that could lead to the person that has created Bitcoin. I hope that we will never know who Satoshi was. Thousands of people have been investigating and written books, but hopefully, we will never know. Bitcoin is faceless. Bitcoin is a system, a code that gives us the capabilities to treat it as digital gold. In the same way, we don’t know who the gold creator was to trust that gold has value (there’s no gold inventor). We don’t need to know who’s Bitcoin’s creator.

Bitcoin price is close to the price of a 1Kg Gold bar. So which one would you choose?

Bitcoin is based on blockchain technology, and blockchain is nowadays a much broad concept. There are thousands of different blockchains and cryptocurrencies that are changing the way people do business. However, we will be focusing mainly on Bitcoin, the specifics of the Bitcoin technology and Bitcoin use cases.

After 12 years of its creation, Bitcoin starts now hit the mainstream. Although Bitcoin has high latency, i.e. it’s relatively slow and can’t handle more than seven transactions per second. It handles 322 thousand transactions per day at the end of the day, moving billions of dollars every day. More than 100 million Bitcoin wallets were created, proving that Bitcoin is getting more and more accepted by the general public. Bitcoin’s market cap has also passed 2021, the one trillion dollars mark, which is remarkable!

Bitcoin and blockchain, like any other technology, didn’t appear out of anywhere. Blockchain, Bitcoin’s underlying technology, is the sum of a few technologies that already existed before Bitcoin. Technologies such as cryptography and digital signatures, peer-to-peer networks like BitTorrent, double-entry bookkeeping, digital cash technologies previously developed like Hashcash from Adam Back, B Money from Wei Dai and Bit Gold from Nick Szabo and other projects from the cypherpunk community — also helped.

Big names of the cryptopunk community fueled most of the creation of Bitcoin. People like Hal Finney, Nick Szabo, Wei Dan, Adam Back, David Chaum, Dave Kleiman, Len Sassaman, and Craig Wright are among the names that provided important contributions during the creation early stages of Bitcoin.

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Disclosure: views expressed are purely personal and do not reflect any organisation’s views or thoughts the writer of this article may be affiliated or associated with. This is NOT financial advice, and I’m not recommending anything. This article is only for educational purposes.