Some time ago I wrote about the dangers and potential risks of Bitcoin. Now it’s time to reverse the equation. Take into account the risk of a 180 degree turn. Because what if Bitcoin doesn’t reach 0?
This is a very interesting thought experiment and always reminds me of the following quote from Satoshi:
Today’s topics:
- A binary question.
- What market does Bitcoin compete with?
Binary question
A binary question is a closed question with only two answers, for example ‘yes’ or ‘no’. To go Bitcoin successful? There are only two options here: yes or no.
Bitcoin is a binary bet. Or it will be an incredible success and the longer it lasts, the better the chances. Or it goes to 0. There is no middle ground.
It becomes digital gold and more or goes to 0.
• What is the risk that I will be right?
• How great is the appreciation potential?
• What heights can Bitcoin reach?
To find out how high Bitcoin can reach, we first need to determine what market Bitcoin is in. Capital has to come from somewhere and flow into Bitcoin. Where does this value come from?
Most people think of Bitcoin as a currency. This is true, but it causes confusion because Bitcoin is much more than a currency.
What market does Bitcoin compete with?
Digital gold has been mentioned before. It is a means of storing value, just like gold. In reality, Bitcoin is ‘digital gold’ – designed to amplify gold’s strengths and eliminate its weaknesses. This means that Bitcoin competes with gold and other valuable assets – this is its market: value itself.
Therefore, Bitcoin competes with other assets that store value. In other words, the total market of all available assets. Because all possessions serve to store value. The image below shows what the general market looks like.
*The total value of all assets worldwide is estimated at 900 billion. In Dutch it is 900 trillion, 900,000,000,000,000 (a 9 with 14 zeros after it). It is difficult for our brains to estimate the value of this.
Currently, Bitcoin represents only a small decline in the total value of all assets worldwide.
There is a lot of prosperity. These are different types of assets. Investors are interested in storing their value in assets that can grow their wealth more effectively in the future.
Therefore, any asset that does this best can attract capital from any other asset class. In this sense, Bitcoin’s total addressable market is the equilibrium of the world. A total of $900 trillion of that. As long as Bitcoin has the most attractive properties as a store of value in the investment landscape, this will remain the case.
All the value stored in a given asset can theoretically be attributed to Bitcoin. All individuals have to do is decide that Bitcoin is a better asset than what they currently own.
Currently, the total global allocation to Bitcoin is just 0.05%. $0.5 trillion out of $900 trillion. This is 1/2,000th of the global asset value.
University degree
For now, only one simple question remains: what properties does Bitcoin have as a store of value?
Compare them to existing stores of value. Is Bitcoin better?
And will more than 0.05% of the world’s capital eventually realize that they want to invest in such an asset?
Bitcoin expert Rick Hutting writes a weekly column on this subject during the weekend. You can sign up for your free daily newsletter online by clicking here. You can also follow him on Linkedin.
Source: BTC Direct
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Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
