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Bryan - Singapore
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Bitcoin, Financial Product of the Decade?

September 2017

Although, clearly, we're finding ourselves in a China-fueled pull-back at the moment, the general consensus amongst the Bitcoin community remains unchanged: Bitcoin is on track to be the financial product of the decade.

Let's drill that down a little.

Of all investment classes out there, only a handful are finite. The most obvious of these are gold and Bitcoin. Now, by gold we mean to include the other precious metals too, such as platinum and silver, although gold is probably the most actively traded.

But as it happens, even gold isn't really finite, since additional gold is mined all the time, particularly when the price of gold renders the mining process lucrative. Once this happens, newly-mined gold will enter the market at a fairly decent clip, since miners are keen to maximize their investments.

So, that leaves Bitcoin as the only truly finite asset. The maximum number of Bitcoin to ever be available (by the year 2140 only, mind you) will be 21 million. At the moment, there are about 15 million Bitcoin in circulation. That's 15 million Bitcoin for every single investor, individual or institutional, to do battle over.

Small wonder the value of Bitcoin has been climbing as steeply as it has.

But since these two decentralized stores of value, gold and Bitcoin, share quite a few other traits, it's a good idea to do a compare and contrast. We'll then be able to distinguish which of these two is more deserving of the title "Financial Product of the Decade".

Let's do that next.



Gold has a long history of course. It has survived 5,000-odd years of wars, peace, the rise and fall of nations and has universally been accepted around the world. Gold is tangible too. It's solid, shiny, weighty and even feels substantial.

But this weight can also work against it. It's not feasible as a means to transfer value cross-border, let alone on a regular basis. Gold is also not very good for buying small items. It's not so divisible, to say the least.

Some people (read: gold bugs) say that in the event of a global calamity such as a post-world war scenario, their gold is going to be of more use to them for buying food, water etc. than Bitcoin could be. They say that Bitcoin's utility requires electricity and internet, neither of which may be around, rendering it useless.

What these gold proponents forget is that in times of severe global upheaval, food supplies are most likely severed, so neither gold nor Bitcoin will be of very much use. Not to mention the fact that most gold investments are in certificates or derivatives, rather than transactional nuggets or coins.

But the whole post-apocalyptic argument is pretty much moot anyway, because should such a situation ever arise, then we'll all have much more serious issues to worry about then our long-term investments.

Bitcoin, New kid on the Block

Now, Bitcoin of course is a very new arrival on the investment scene. And at this stage we just don't know for certain if it will be around a few years from now. But it is safe to say that, based on its albeit relatively short history, it looks like Bitcoin isn't about to just disappear. It's got way too much potential to just disappear.

To wit, sending capital from country A to B? Couldn't be easier with Bitcoin. All you need is an internet connection. Cost? Ever since SegWit activated, the cost of transferring capital by means of Bitcoin is likely to be one dollar or less, at most. And dropping. Micro-transactions are possible too now, since transfer fees could, in time, become as low as 10 or 20 cents, given Bitcoin's soon-to-be-operational Lightning Network and Sidechains.

Best of all, the money transferred reaches its recipient within minutes, anywhere in the world, rather than the several days or even weeks it currently takes banks, Western Union, Visa, Amex etc. to process and consolidate money transfers.

Dirt-cheap fund transfers around the world that arrive at their destination practically instantly and don't have a single central point of failure, but offer iron-clad security. What's not to like?

Incidentally, Bitcoin can be divided into 100 millionth of a Bitcoin. This tiny unit is called a Satoshi, after Bitcoin's founder, Satoshi Nakamoto. In other words, Bitcoin high divisibility: check.

But what cinches it in the gold versus Bitcoin debate must surely be past and future performance. Let's face it, which one is likelier to be up 1000% three years from now? The answer is of course, Bitcoin.

But there's more.

Bitcoin's main traits are the fact that it's decentralized whilst still as good as incorruptible. This means there are intermediaries are involved. This doesn't only result in lower fees all-round, but also takes out the human factor. No more fiat manipulation, no more money dilution and no more corruption. Bitcoin is powered by the Blockchain, a digital public ledger of economic transactions that's incommutable.

To be sure, Bitcoin's workings under the hood are not easy to fathom for the layman. This is not doing it a lot of favors in terms of it becoming generally accepted, this much is true. But as the world is becoming more and more one with the digital side of life, internet, computers, smart phones, it's clear that the time for Bitcoin has come.

The Future vs. the Past

Bitcoin is the future. This applies especially to millennials, those born around 2000. They've been around the digital world from birth, are at ease with all things digital. In view of this, Bitcoin makes a lot of sense to them. Compare this to gold, which historically, although perhaps not exclusively, is the domain of older generations.

Bottom line: Bitcoin looks to be shaping up for bigger things, in all likelihood at the expense of the established players. Sure, it's early days yet, and there will be further shifts, scares, crashes and shake-ups in the crypto space, not the least of which as a result of the rounds of regulations that we know are on the way.

Clearly, the world of Bitcoin is in the midst of a profound bull market, one that is accelerating with each new Bitcoin ETF and derivatives vehicle approval, with each additional billion added to its market cap, with each new country giving its nod.

Bitcoin is a technology gold rush that's playing out as we speak. And as its huge potential is being unleashed, Bitcoin will become the financial product of the decade.



Disclosure
I wrote the above article myself and it expresses my own personal opinions and views on Bitcoin. I am unable to guarantee that the information and/or results will be correct. Furthermore, whilst I own some cryptocurrencies, I do not receive compensation for my writing and I have no business relationship with any of the companies mentioned in above article. In addition, I am not an investment advisor and above article is for purely informational purposes. Investors are advised to personally undertake adequate due diligence, or to consult a financial advisor in order to determine what assets - if any - are appropriate to invest in.

Bryan
Bryan, a Singapore PR, has spent two separate stints in Singapore, spanning close to two decades. As is the case for most non-techies, although Bryan's first exposure to Bitcoin was around 2010, it wasn't love at first sight. However, Bitcoin's impressive resilience, meteoric rise and world-changing potential have converted Bryan, to the extent that he has now pivoted to fully commit to Bitcoin.

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