Bitcoin, Cryptocurrency, and Libertarianism

Bitcoin, Cryptocurrency, and Libertarianism, by SoyBoyFriend.

The money that’s currently moving into Bitcoin is of unknown origin, scope, and attitude. Are these buyers long-term holders? Or are they fickle day traders who sell at the first signs of double-digit losses? Are they 20-year-old college students? Or are they 55-year-old lawyers and surgeons? Nobody knows. So I will not speculate here on the short-term price action. In the long term, it’s reasonable to predict it will continue to climb into the hundreds of thousands of dollars per Bitcoin. …

I am not a certified investment specialist, nor do I have a PhD in economics from a “diverse” Ivy League university. But I did stay at a Holiday Inn Express last night, and I did have the foresight to load up on Bitcoins back when it was trading between $12 and $100. And more importantly, I haven’t sold. …

Central bankers, Wall Street traders, CNBC pundits, etc believe Bitcoin’s value is due merely to people collectively deciding it has value. This is akin to believing hammers have value to carpenters because carpenters collectively decided to use hammers rather than pillows to bang nails into wood.

Bitcoin has all the qualities of a sound medium of exchange (MoE) and store of value. As a tool for this purpose it is (almost) unparalleled. Bitcoin is highly divisible, cheap to store securely, easy to count, impossible to counterfeit, cheap to transport, easy to hide, accessible anywhere in the world (that has Internet), limited in supply, fungible, etc. That isn’t to say it’s perfect, or better than gold in every way. Only that it’s extremely useful, and superior to gold in some ways. It doesn’t need to be perfect in order to be worth tens of trillions of dollars.

To clarify, I am not under the illusion that Bitcoin is the be-all-and-end-all. However, it is a technology of such magnitude that it only comes along maybe once or twice in a typical person’s lifetime, much like the Internet itself. The Bitcoin network is hindered by a bottleneck in throughput (transactions per second are between 7 and 14), but in the long-term this won’t matter because most transactions will be conducted off the main blockchain using trusted third parties and other decentralized networks like Lightning. The main blockchain will become the “settlement layer” for the elites, banks, corporations, etc. …

Bitcoin is a global network, so it will probably be years before people in India and China can buy it easily through their brokers. There’s a lot of bullish news to look forward to. This is why I recommend a long-term outlook, ie 10+ years.

He is of course talking his own book, but many of the points are solid. We shall see.