Almost everybody who looks at Bitcoin initially believes it is a stupid idea that would never work. It seems made up, created out of nothing, electronic “geek money”. And it is.
But if you look at it more closely, you understand that in the current monetary system Bitcoin makes perfect sense, and here is why:
- Only 21M bitcoins will ever exist. Compare this to any fiat currency that is created out of thin air by central bankers gone mad in perpetual Quantitative Easing. The USD has lost 99% of its purchasing power since 1913 when the Federal Reserve was created. Why would anyone keep their savings in this shitcoin? Let this sink in.
- Bitcoin cannot be confiscated. Compare this to any fiat currency sitting in a bank account which is controlled by the same banking system that created it. Bitcoin is based on cryptography and unless you give away your private key nobody can access it – think of it as an unbreakable vault that only you can access.
- Bitcoin is a decentralized network and as the network grows so will its value. The blockchain space is growing exponentially, just like the internet grew in the nineties. There are thousands of enthusiastic engineers and developers contributing and adding hardware, protocols, features and applications just like it happened with the internet, web and open source software. Everybody dismissed Linux when it first appeared. It was a clunky operating system with no user interface other than a black Unix terminal but it grew to gain market share from Microsoft’s Windows and Apple’s Mac. Bitcoin is doing the same to centralized fiat currencies. Remember, the USD and all fiat currencies are based today only on the faith people put in them – they are basically centralized social networks.
- The financial system is ripe for disruption. In the current economy there is no more space for middlemen. What Amazon did to retail businesses needs to happen in finance too, and it will. Bankers take a huge cut of every money movement, they are parasites sucking the blood our of everyone else for little value added. Bitcoin fixes this and gets rid of unnecessary intermediaries.
- The banks are failing. The financial crisis of 2008 did not go away. It cannot go away because it was caused by the fake monetary system we have worldwide. Mathematically, this problem cannot be fixed – it has to do with the very way fiat currencies are created (see this previous article for a super basic explanation). During the 2008 financial crisis banks in Europe limited access to funds – people in Spain, Greece, Cyprus and other Western countries could not access their own money. Bitcoin fixes this as nobody else is in control of your funds.
It Bitcoin perfect? No. You need internet access or it is useless – but I would rather wait until I have access to internet again than having my assets confiscated or stolen so its advantages outweigh its shortcomings. Governments might ban it – but the US also banned gold in 1933 and gold was illegal for 41 years (sounds unbelievable but there is no limit to government abuse of power if citizens allow it).
The above are just a few reasons why adding Bitcoin to your assets is a good idea these days.