I predict that some time in the next ten years, a single Bitcoin will exceed the price of a median single-family home in the United States. According to Zillow, that price right now is $236,900.
zillow.com/home-values/
zillow.com/home-values/
Brush this off, or let me explain how and why it will happen. It all started in 1944 with the Bretton Woods System. Countries abandoned the gold standard for the dollar standard, but the USD was still redeemable for gold.
thebalance.com/bretton-woods-…
thebalance.com/bretton-woods-…
But, this agreement wasn't to last because the US government wasn't responsible with its money supply (sound familiar?). So, in 1971 Nixon took us "temporarily" off the gold standard. Watch.
In order to stabilize the dollar, we created the "Petrodollar" in a deal with the Saudis. Now, all purchases of oil would need to be settled in good old greenbacks.
investopedia.com/articles/forex…
investopedia.com/articles/forex…
However, being permanently involved in the middle east was not without its own consequences and complications. Fast forward to today and we can clearly draw a line between Iraq, 911, and now this. China pushes back on the Petrodollar.
scmp.com/comment/articl…
scmp.com/comment/articl…
Adding more strain to the US dollar, is that nagging fiscal irresponsibility. Don't blame the Fed for printing, they have no choice! We are currently running around 4% of GDP in the hole. That's approximately $1 Trillion dollars per year we have to print.
Good thing we have a printing press, keep cranking those dollars out. But, there's just one tiny problem. Our government's debt is high, and keeps growing each year. The only way we can pay the bill is with incredibly low interest rates. fred.stlouisfed.org/series/M2
If interest rates ever start to go back up, it will literally bankrupt the Federal Government. Why does this matter? Well, rates going back up are the Fed's primary weapon against inflation.
No big deal you say, inflation is low. Nothing to see here. Two problems with this: 1) Is inflation really low? 2) Even if it is, what happens when inflation comes back?
Let's first look at the idea that inflation is actually low. You could use core CPI, but remember that last time we printed a bunch of money it got sucked up by the banks, the stock market and in general the financial system itself.
multpl.com/shiller-pe
multpl.com/shiller-pe
What might it take to finally bring the whole system down? What about another global recession kicked off by.. I don't know maybe the fact that the whole world is running zero or negative interest rates for the exact same reason we are? Governments and corporations alike.
Or, some kind of a pandemic? That probably won't happen...
So, how does Bitcoin play into all this? Well there's never been a form of money like Bitcoin. It has the ability to fulfill the MoE (method of exchange) and the SoV (store of value) at the same time. It's digitally native, scarce and secure. @hasufl
uncommoncore.co/wp-content/upl…
uncommoncore.co/wp-content/upl…
Bitcoin can act as a life raft to protect people suffering from hyperinflation.
Already countries around the world are taking this opportunity to digitize their money. But is this a good thing? Will these state backed digital currencies provide people with freedom, strong property rights, and censorship resistance? Doubtful.
Enter Bitcoin, a non sovereign digital bearer asset that can be used around the world to settle large transactions. Here's @nic__carter to help explain:
At the same time, Bitcoin can be moved with incredible speed for everyday payments using the incredible technology of the Lightning Network.
lightning.network
lightning.network
In conclusion, I see Bitcoin as the most likely candidate to back (at least in part) a new world of emerging digital currencies. Bitcoin is a censorship resistant, scarce, digitally native asset that only needs to survive while the current system crumbles around it.
