Why There's Nothing Better Than Bitcoin
Can Bitcoin be replaced by something better? Probably never.
Whenever skeptics of Bitcoin hear about why Bitcoin will be the future, they challenge it with the assumption that something better than Bitcoin will be invented. The problem with Bitcoin trading on exchanges with a fixed price is that people think that Bitcoin is like a stock in the stock market. You can buy, sell, and trade it similar to stocks. But Bitcoin is nothing like the stock market, it is the opposite of stocks and equities.
The stock market trades on sentiments of different companies and the companies that are expected to grow and make more revenues are the ones who get more capital. The company's stock price is based on its performance, which is made of humans.
Apple has pretty much stopped innovating after Steve Jobs passed away no one knows for sure that Apple will continue innovating. Though Apple maintains the No.1 (or recently No.2) in the market cap of companies, no one knows if it will continue to be like that after 10 or 20 years. (Bitcoin is so early that it's not even as big as one of the tech companies.)
At some time in the future, there might be "The Next Apple". Someone will challenge the status of Apple as the dominant player in the tech market and people will sell their Apple shares and buy the next Apple. Such behavior keeps happening in the stock market. People are always looking for the "next big innovation" from a new company.
Tesla came into the car market and scaled fast. There will be someone who disrupts Tesla too in the future. At that time investors like you and me, who just want to protect the purchasing power of our money will need to make a sell/buy decision. And if we make the wrong decision, we might lose money.
Our goal in life should be to make the best products and services we can offer the world through our businesses, our best talent to our employers, and our best creativity to our fans. Remember that what money can buy is made by other humans. The world becomes a wealthier place when we do our best work.
Instead of doing my best work, if half my time goes trying to determine which company will perform the best, how can I do my best work? I am not trying to "make money" by "investing" in companies. I just want to "save" my money so that I can pay my bills in the future.
You cannot "invest" in Bitcoin. You can only save the money that you already have in Bitcoin instead of other savings mechanisms. Many people treat houses like a savings account and that's why they "invest" in real estate even after they have one or two homes for their family and personal use. That's one of the reasons why houses are unaffordable for millennials and Gen Z.
We are not trying to do the job of being intelligent investors. We just want to save the money that we have worked hard to earn. Our focus is on our work, and what we create. Investment is when you take a risk and bet on a company and believe that the capital you give them will be used in wise ways such as hiring good talent and investing in the right places for the company's growth. If the leaders in the company make bad decisions, you will lose your investment.
Saving is when you save money that you have already earned in a place that can be used in the future if you choose not to work anymore. When buying Bitcoin, you are not lending money to someone with the hope that they will put it to good use. You are just saving in Bitcoin.
Bitcoin is a commodity. You are buying a commodity that might get to a point in the future where there is no option to buy it. You can only earn it.
If you live in the USA, do you think you can buy dollars? You can only earn in dollars or sell your assets in return for dollars.
Similarly, if and when Bitcoin becomes the world's currency, you will not be able to buy Bitcoin. You can only earn in Bitcoin or get paid in Bitcoin in exchange for goods and services.
Please remember that paying or getting paid in Bitcoin, right now, is not legal in many countries. Right now, Bitcoin also has not matured as a medium of exchange. It is only a long-term store of value and is seen as an alternative asset form. We are making an intelligent guess that Bitcoin will become the world reserve currency and if it does, it's a good idea to own some.
Until you get to a point when Bitcoin becomes the world reserve currency and is legally accepted across many countries in the world, we still "buy" Bitcoin and save in Bitcoin. This is an opportunity to take part in the infrastructure of money itself that might become the most dominant currency of the world in a decade or two.
Bitcoin is not a way to make money. Bitcoin is money. A form of money is so strong that you don't need to buy assets with that money to make sure that your purchasing power is protected in the future. You can just keep it as money.
Bitcoin is so strong that it will protect your purchasing power more than any other asset. As Bitcoin continues to grow, the stock market is bound to suffer because only the companies that can beat the returns of Bitcoin will get funded.
Bitcoin's price in dollar terms is increasing because you are seeing the world in dollar terms. You are seeing Bitcoin in dollar terms because most people are selling their goods and services in exchange for dollars. When people start accepting Bitcoin for their products and services, you will pay for them in Bitcoins or Satoshis and you will not care what the dollar price of the Bitcoin is.
You earn in Bitcoin, you buy in Bitcoin and you choose not to invest the Bitcoin somewhere else because you are not chasing a higher return than what Bitcoin is already giving you in terms of increased purchasing power.
If you are not happy with Bitcoin's increase in buying power through time and want to take risks to get even more than what you already have then you are free to invest in companies in search of higher returns. However, it will be hard for companies to beat Bitcoin's growth in purchasing power at least for a few decades.
If you are just saving your money in Bitcoin, you are not a risk taker. You are a person who avoids risk. Real estate, stocks, and most commodities are at risk. We are forced to become risk-takers because until now, we did not have a savings mechanism that could protect our purchasing power in the future. Bitcoin is volatile and it looks risky, but for people who understand its depth, it is not risky.
There are too many places to invest the capital and no one big winner and that's why some people win and some people lose with their bets. Bitcoin is not a bet. By saving in Bitcoin, you are being safe and conservative and focusing on your best work.
Bitcoiners will be more productive, more creative, and more giving to the world because they know that their purchasing power is retained in the hardest-to-produce form of money in the history of mankind. They are not trying to move money between various assets trying to make the best "return on investment".
People who chase investments, and the next big thing are perpetually trying to beat the inflation of money that is manufactured by central banks through debt distribution.
We are in this system not because some people made an evil plan, but because there was no better system until Bitcoin.
People chase incentives and the incentives reinforce the system that produces incentives. Bitcoin changes that incentive structure and retains fairness in the system for all players involved.
There will come a point where no matter what you invest your money in, the total money supply will expand faster than the returns you can make and you will lose that race. The only way not to lose that race is not to race there in the first place. You opt out. You choose an alternative form of money, which is the best investment and also the best asset.
The only way to win some games is to quit that game. Quitting is the winning. You refuse to participate. If you say No to playing the game, it is impossible to lose that game. And you should be intelligent enough not to play games where the only possible outcome is that you lose and they win.
By choosing not to play the investment game and play the savings game, you are seeding the foundation of a global money system that is fair, transparent, and controlled in a distributed way by the people who want the best for themselves and others.
In the future, people might say that you are lucky because you were able to buy some Bitcoin early on when it was still available for sale. It would be mind-blowing for future generations to learn that people were still accepting fiat currencies which are expanding in return for the hardest money the world has ever seen. They won't have that opportunity. But you know that you just didn't get lucky.
You had the patience to read this deeply, written by a madman who thinks that Bitcoin, given enough time, as long as it stays secure and decentralized, will eat every other asset, every other currency, and every other money-growth scheme built by man since the beginning of time.
Bitcoin is people's money. A people's asset. A people's network. We agree to play by the rules, give value to something, and stay fair to each other.
There is no such thing as the next Bitcoin because there is no such thing as the next chess, the next English, or the next internet. Consensus and rules that benefit people in a network reinforce the network and in return, the network reinforces the rules.
Bitcoin's most important rules are:
Only 21m Bitcoins ever
Nodes remain light, so the blockchain remains light and that leads to more nodes and mode decentralization
1 Block every 10 minutes
Halving every 210,000 blocks
256-bit encryption for wallets
All the coins in the network are the same (fungible)
1 Bitcoin is 100,000,000 satoshis (divisible)
Blockchain doesn't lie.
Bitcoin cannot be copied (immutable).
No one controls it, no one can increase the supply, no one owns it, no one has exclusive rights over it and no one can shut it down because there is no single point of failure.
If you have read this far, I hope it is sinking in that the human species has two major periods. Before-Bitcoin and After-Bitcoin.
I hope you are getting the gravity of what we are discussing here. This is the most important invention, after language itself in the human timeline.
A secure, decentralized fair money system that doesn't discriminate against nationality, religion, gender, or most importantly, consciousness itself. Bitcoin is a money system of rules, by the people, for the people.
Let me end this chapter with the JCI Creed which is so much in alignment with the ethos of Bitcoin.
"We believe: That faith in God gives meaning and purpose to human life;
That the brotherhood of man transcends the sovereignty of nations;
That economic justice can best be won by free men through free enterprise;
That government should be of laws rather than of men;
That earth’s great treasure lies in human personality;
And that service to humanity is the best work of life."
Have a great day.
Cheers,
Deepak Kanakaraju