What problem is Bitcoin trying to solve?
Bitcoin was created to serve as a global, digital counterpart to fiat currency.
As we explained in part 2, there has been no global currency peg since President Nixon took the US off the gold standard in 1971.
This may work in the short term, but it will not work in the long run because governments all over the world are debasing their fiat currencies in order to generate growth through financial engineering.
It’s the classic Tragedy of the Commons, but this time it’s only between nations using fiat currency.
To date, this has been accomplished through the bond markets, which currently offer no actual yield.
You’ve probably observed that current fiscal and monetary policies are polarizing social classes around the world.
Overuse of inflationary monetary policies with no monetary peg has resulted in this.
But making a large amount of cheap money available through banks does not guarantee that demand for everything will rise at the same time… That’s called the Cantillon Effect.
Bitcoin has been compelling fiat currencies to conform to its rules for 13 years since it has a finite quantity of coins and runs on a decentralized protocol akin to the Internet Protocol (IP) or Transmission Control Protocol (TCP).
Why is Bitcoin’s price so volatile?
Sure, Bitcoin’s price is volatile… for now.
It’s a new type of money that’s only 13 years old with a relatively low market capitalization compared to other fiat currencies like the US Dollar or the Euro. As a result, you’ll experience wild swings.
At the same time, it’s already the #14 most valuable currency in the world, right behind the Brazilian Real and the Swiss Franc.
Furthermore, the Bitcoin protocol follows a four-year cycle that is based on game theory incentive structures that are employed to perform fiat money transactions.
This cycle is simple, and it’s crucial to comprehend why volatility rises every four years.
In Part 4 of this report, I’ll explain a model that values Bitcoin based on scarcity.
Just know this for now: Volatility is a feature, not a bug. Those who understand Bitcoin well enough, embrace volatility and even hope for it so they can buy more sats for less fiat on downswings.
What makes Bitcoin’s money supply fixed?
You’ve probably heard of the term Blockchain…
Consider what I could do if I could send you a digital photograph.
You are the only one who can have that digital photograph after you obtain it.
It is not possible to copy or send a copy to another family member.
That is, after all, what Blockchain permits.
With 21 million Bitcoins, Bitcoin has accomplished this.
And, before you reply, “There aren’t enough units for the entire planet,” keep in mind that 1 Bitcoin may be broken down into 10-8 units.
In other words, the total number of units is 2,100,000,000,000,000. And because of blockchain technology, there will never be any more.
With over 20,500 crypto assets, why Bitcoin?
To begin, keep in mind that Bitcoin is an open source, decentralized protocol.
When researching how protocols achieve widespread worldwide adoption, it’s important to include network effects across communication channels.
Wikipedia, while not a protocol, can be used as an example.
Anyone might clone Wikipedia’s open source code, alter the name, and then try to recruit new people to overtake Wikipedia as the internet’s primary source.
Because of network effects, this does not occur.
For pegged money, Bitcoin has the strongest protocol network effect. And that’s highly likely to remain in perpetuity.
But governments can just ban it, right?
This was a serious worry for Bitcoin in the early years of protocol development.
In today’s world, the opposite is true. It’s impossible to ban Bitcoin.
State governments, such as Wyoming’s, have already passed legislation to safeguard Bitcoin holders.
Furthermore, countries such as Germany, Australia, South Korea, and others have already passed legislation to defend property rights.
And of course, in El Salvador, it’s already legal tender.
Bitcoin’s game theory will always lead more nation states to adopt it over time.
Once one country tries to ban it, another country will use that as an opportunity to attract more Bitcoiners to its country with multiple incentives.
Last, but not least…
If you’re reading this right now, you’re aware that something isn’t quite right.
The world you knew 20 years ago is no longer the same as it is now…
Guess what?
It’s all due to fiat money, fiscal spending, and inflationary monetary policy.
Future bailouts and additional debasement of fiat currency will further exacerbate this tendency, as they will be based on the same policies that got us here in the first place.
Bitcoin is the solution to the world’s out-of-control policies and incentive structure.
There’s no way this could possibly answer all of your questions. You probably have more now…
So, stay tuned for Part 4 in your inbox bright and early tomorrow morning at 6am.
Musk, Dalio and Cuban Are Loading Up on this One Coin
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Mark Cuban proclaimed this coin “will dwarf bitcoin.”
Billionaire hedge fund manager Ken Griffin said it’s “superior to bitcoin and will eventually replace it.”
And Elon Musk made sure it was one of the only three coins he owns.
It’s called the Next Gen Coin…
And the financial elite say it could be 20X bigger than bitcoin.
That’s because, as this presentation explains, this coin has the ability to “power the rails of global finance”… a $100 trillion industry.
Yet 99% of Americans don’t even know this coin exists.
But that’s about to change (for you).
As you’ll see in this special interview, crypto expert Ian King reveals full details on this coin… and why you should invest before the upgrade date.
