Discovering Bitcoin
Bitcoin means different things to different people.
To me, it’s the best long-term savings account ever created. Long-term meaning decades.
To some, it’s useless rat poison that will eventually go to $0.
To others, it’s an electronic cash system, a cryptographic proof, a permissionless protocol, a programmatic monetary network, digital gold, legal tender, a future reserve asset, a lifeline, an inflation hedge, a masterpiece, freedom of speech, hope, the future, the great equaliser, an opt-out, two fingers up to the establishment…
So who’s right? Well, the market will decide and that’s ultimately what gives me hope. Bitcoin’s 10-minute heartbeat is undeterred by opinion, personality, politics, war, regulation, legislation and $ value. Its rhythm will continue unabated as long as there’s a source of energy for miners to use, nodes to continue validating the blockchain and the internet is not somehow switched off.
Like many, I first came across Bitcoin in 2017 when the price really began to take off. I read 1–2 articles (headlines really) on its huge environmental impact and decided not to do my own research and not to buy in at that point. I had just accepted a job in the EV charging industry and was becoming increasingly environmentally conscious.
Understanding Bitcoin’s energy usage ultimately comes down to how much we value a global decentralised monetary system. Nic Carter states:
“If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering, then it would only be logical to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression, inflation, or capital controls, you most likely think that the energy is extremely well spent.”
The best starting point is recognising Bitcoin’s utility and real-world application. What does it mean to you? How will it affect your life and those around you? What value does it hold for those living under hyperinflation or those unable to access their own funds?
Regardless of the price, I buy Bitcoin every week on a Monday morning before work begins. Price is not important, but consistently buying little and often is what I think will make a difference in the long-term. My plan is to give my kids 1 Bitcoin each when they are 18. They can choose to convert it to cash or hodl it. It will be their choice. It’s their property at that point. Their keys, their coin(s).
So, what does the future hold for Bitcoin? Where will we be in 5 and 10 years time? My view for the near future is that things will continue to be choppy, prices, in my opinion, won’t return to +$50k for 18–24 months.
3 things need to happen for all-time-highs to be reached again and for mass adoption across generations. One, there needs to be regulatory clarity before the big investors start buying. Two, developers need to continue to build user-friendly applications and three, time needs to pass for education of Bitcoin’s value proposition and development of its use-cases in different countries.
Some use cases include:
> Instant global value transfer
> $62 trillion settled in 12 months
> Monetizing stranded energy assets
> Wealth protected from confiscation
> Best performing asset of the decade
> Free banking for ~1.7 billion unbanked
And what about the technical side of things? I know for many people it can be daunting learning about hashrates, bitcoin mining, blockchain technology, difficulty adjustments, let alone setting up a wallet and sending your first transaction. Discovering Bitcoin can be daunting at first, but there are plenty of resources out there to help simplify the technical jargon. Take this Brain article about Bitcoin Mining, it does a great job at simplifying what miners actually do:
“Most people misunderstand what bitcoin miners actually do, and as a result they don’t fully grasp the level of security provided by bitcoin’s hashrate.”
Simply put, mining is a lottery to create new blocks in the Bitcoin blockchain. There are two main purposes for mining:
- To permanently add transactions to the blockchain without the permission of any entity.
- To fairly distribute the 21 million bitcoin supply by rewarding new coins to miners who spend real world resources (i.e. electricity) to secure the network.
I am hopeful in the long-run that Bitcoin will be adopted by more and more people and used as the best long-term savings account ever created. It comes down to it’s value proposition of:
“Non-confiscatable digital scarcity secured in a decentralised system, verified by nodes.”
It doesn’t matter who you are, where you come from, what your beliefs are, your income or your surname — Bitcoin is an open protocol for all to join. With a cheap smartphone and access to the internet, you can buy a fraction of a Bitcoin and start investing for the future now.
Discovering and understanding Bitcoin taught me more about money, finance, investing, value, time and technology than throughout all my time at school, university and even work.
It gives me hope for a better future for all.