Don’t Worry, Bitcoin Is Already Technically Ready for Mass Adoption for What It Does Best
Bitcoin is the best store of value for the masses.
At the beginning of 2020, a majority of institutional investors still considered Bitcoin dangerous. Those who did not see Bitcoin as dangerous saw no interest in investing money in it.
The coronavirus pandemic that gripped the world at the beginning of March 2020 has totally changed the situation for Bitcoin. In a few years, this coronavirus pandemic will probably be remembered as a tipping point for Bitcoin.
This pandemic triggered the economic crisis that had been expected for months. This economic crisis was incredibly brutal because it was due to a pandemic and not to a banking or financial crisis as was the case in 2008 for example.
The lockdowns imposed in most countries of the world have hurt economies.
To deal with the economic consequences of these lockdowns imposed to limit the spread of the coronavirus, the central banks and governments of the world’s major economic powers took measures of exceptional magnitude as well.
The Fed printed more than $3,500 billion out of thin air in just a few weeks. Globally, the bill has reached $12 trillion so far.
This, of course, has enabled the governments of the world’s major economic powers to pass stimulus packages financed by public debt. In the United States, this public debt is now over $27.2 trillion.
Great monetary inflation will intensify in the coming months and years
On November 5, 2020, the Fed, through the voice of Jerome Powell, explained that it intends to continue to pursue an aggressive monetary policy in the coming months.
This will revolve around two axes:
- Maintaining interest rates at zero.
- Extension of the “unlimited” quantitative easing program.
Jerome Powell made it clear that the Fed still has a range of tools at its disposal to support the U.S. economy until the vaccines against the COVID-19 be available to the masses.
The Fed once again called for more intervention by the U.S. government to support the U.S. economy.
This call from the Fed is directed at the U.S. Congress, which has been slow to agree on a second stimulus package. The amount of this plan is what is currently stalling. On the one hand, Republicans are pushing for an envelope of between $800 billion and $1.6 trillion.
On the other hand, Democrats are pushing for something more ambitious, up to $2,200 billion.
The election of Joe Biden as the next President of the United States is unlikely to facilitate an agreement on this stimulus package since the Senate should remain in Republican hands.
Nevertheless, it seems obvious that Congress will have to take action sooner or later. This should bring the U.S. public debt closer to $30 trillion.
Bitcoin is seen as the best hedge against this great monetary inflation
As Paul Tudor Jones put it so well in May 2020, we are currently experiencing great monetary inflation. Faced with this situation, we must choose the best available store of value to protect ourselves.
Bitcoin is the best hedge against this great monetary inflation.
This is my conviction, but also that of all Bitcoiners. And in recent months, a growing number of institutional investors have felt this way, as shown by the phenomenal success of the Bitcoin fund of Grayscale investments.
At the time of writing, Grayscale investments holds nearly 470,000 BTC for its customers, most of whom are institutional investors.
In the wake of MicroStrategy, and then Square, large companies will follow the trend of making Bitcoin at least 1% of their reserve assets.
Bitcoin’s biggest value proposition in 2020 is clear
It is clear to everyone what Bitcoin’s biggest value proposition is in 2020:
Bitcoin allows you to protect your wealth over time in a way that is resistant to censorship.
A majority of people understand this in 2020.
Only a few aggrieved minds continue to criticize Bitcoin by saying that it is technically not ready for mass adoption at this time.
This type of assertion is based on the premise that Bitcoin must be a means of payment for everyday life right now to be considered a success. Before reaching this stage, Bitcoin must first become a store of value adopted en masse by the general public.
- Bitcoin as a store of value.
- Bitcoin as a means of payment and exchange in everyday life.
- Bitcoin as a unit of account.
Currently, Bitcoin is progressing at high speed on Phase 1. Bitcoin is technologically ready for mass adoption as a store of value. It is the only thing that matters now, and for years to come.
The rest will come in due course.
Bitcoin does not yet need to be a means of payment for the masses
Bitcoin can already be used as a means of payment and exchange. In fact, this is what millions of people in emerging countries or countries under authoritarian regimes are doing.
If you have any doubts, go and see what is being done in Venezuela, Nigeria, Iran, Argentina, or Lebanon. Bitcoin is already a Plan A for millions of people there.
In 2020, Bitcoin is not being asked to be able to absorb the 708.5 billion digital transactions that have been made in the year 2019. Bitcoin does not need to be able to handle 1.9 billion transactions per day. It is therefore useless to make calculations in this sense.
Bitcoin can currently handle a maximum of 7 transactions per second (TPS). On average, it is currently at 5.5 per second. Bitcoin is therefore far from Visa and its 1,700 transactions per second.
The good news is that this is not what Bitcoin is being asked to do for 2020 and the years to come. Bitcoin’s transaction fees, which may increase from time to time on the network, are also in no way a barrier to its mass adoption as a store of value.
The best current strategy with Bitcoin is HODL no matter what. Bitcoin HODLing is a strategy that has been profitable 99% of the time since the creation of Bitcoin. With this strategy, possibly too high transaction fees or the number of transactions per second that can be validated on the network are not a problem.
Within 10 to 20 years, when Bitcoin has become widespread as a store of value, and its market cap has reached the $9 trillion market cap of gold, then it will be time to move fully into Phase 2 of Bitcoin’s mass adoption in more detail.
But until then, I do not doubt that the community will have succeeded in making the Lightning Network (LN) a success that matches the expectations of Bitcoin users. We just have to give it time and wait for the need to become real.
When the need becomes important enough for a majority of people, the adoption of the LN will also explode. So, don’t worry.