Hi Friends!
Hope you are doing well and staying healthy. Can’t believe it’s now December as 2020 comes to an end. Although this year has been crazy to say the least, there are many things to be thankful for at the same time. For one, maybe the most important you and I are both well and alive. I honestly think that your mindset is everything because it’s the only thing you control and everything you do flows from your thoughts.
Anyways…
I know we’re a few weeks away from Christmas and the New Year, but I wanted to say Happy Holidays in advance! May you have a wonderful time with your loved ones during this season!
Ok let’s get started since there’s a lot to cover on Bitcoin.
What Is Bitcoin?
Bitcoin is simply a decentralized, digital currency. It was created back in 2008 by Satoshi Nakamoto (pseudonymous person or group). Here is Bitcoin’s whitepaper for your reference.
Let’s start by saying that Bitcoin wasn’t created out of thin air overnight. It actually has a very long history and the end result became Bitcoin. Bitcoin’s history started with a prominent cryptographer named David Chaum who was known for developing electronic cash back in 1980-1990s.
Fast forward to 2008, Satoshi solved a major problem that previous cryptographers couldn’t solve which was called double spending or Byzantine Generals' Problem. This article explains this much better than I can, so click here for further reading. And thus came Bitcoin.
Satoshi’s original vision was to use Bitcoin as a peer-to-peer digital currency. However Bitcoin’s narrative evolved to digital gold over time mainly for its store of value proposition.
A store of value are things such as gold, silver, art, and real estate. It’s an asset that retains purchasing power in the long run. For example, a very nice suit can be bought today or even back in the 1900s with an ounce of gold (today’s price is $1,800/oz) because gold is a store of value.
Why is Bitcoin Digital Gold?
Because the supply of Bitcoin is fixed at 21 million. Only 21 million Bitcoins will ever exist in the world. The very last Bitcoin to be minted is in the year 2140. This fixed supply creates digital scarcity making Bitcoin valuable. For something to have value, it needs to be scarce. The first edition Pokémon Charizard is a good example. It’s currently listed on Ebay for $8,000 and the condition is used. Why would someone pay $8K just for a paper card? Because it’s scarce.
Going back to Bitcoin’s value.
Today there are about 47 million millionaires on Earth. Every one of those millionaires can’t own a full Bitcoin even if they wanted to since there are only 21 million Bitcoins to ever exist. But wait last time I checked, Earth’s population was 7.6 billion people. Talk about massive, potential value for Bitcoin.
The one thing that the Internet hasn’t disrupted up to now is money. Everything else has been disrupted. Airbnb owns no real estate, Uber owns no vehicles, YouTube creates no content, Instagram owns no cameras, and so on.
What is Bitcoin disrupting? Money. Bitcoin is decentralizing control and power of centralized money.
So Where is Bitcoin Going?
The short answer is it’s going to THE FREAKIN MOON BABY! hahaha. Actually there is some truth to that, but let me explain. Historically Bitcoin has been following a 4-year market cycle. It started from 0.008 cents to $1, $1 to $100, $100 to $1,000 & $1,000 to $20K.
In terms of where Bitcoin is going, I personally like Tim Draper’s prediction of $250,000 per Bitcoin by 2022-2023 (Tim revised his timeframe). He made this prediction back in 2018 at Draper university in the above picture. His last prediction of $10K Bitcoin came true during the last 2017 bull run, so I respect him.
Here are a few well known investors who believe Bitcoin is digital gold.
Paul Tudor Jones - Hedge Fund Pioneer Paul Tudor Jones Says He Holds 1%-2% of Assets in Bitcoin
Cameron & Tyler Winklevoss - The twins bought $11 million worth of Bitcoins in 2013
Tim Draper - Bought 30,000 Bitcoins back in 2014
When To Buy Bitcoin?
As I’ve shared in my previous two newsletters. You want to buy any given asset, Bitcoin in this case, when price is cheap. Price becomes cheap when it falls. Back in March of this year, Bitcoin dropped to $4,000. That was a good time to buy compared to today’s price of $19,387 (price as of writing this issue).
Black Friday was only a week ago. Hopefully you got some great deals on your purchases. But think about the discount you got on them. Is your purchased item less functional or even less valuable because of your discount? No, of course not right. If anything you’re happy about the price you paid for the same value you got.
Have the same approach to buying Bitcoin or any asset in general. You’re more likely to make money when you buy at (super) cheap prices. But keep in mind, the market needs to fall in order for you to buy cheap, so have patience. Buy low and sell high is the game. It’s counter-intuitive and goes against human nature however remind yourself of Black Friday.
Last Thoughts on Bitcoin
My personal prediction is $1M per Bitcoin by 2030. Yeah I know, it’s a super wild prediction and I could be wrong too but here are my reasons:
1) Bitcoin is revolutionizing how value is being transferred amongst humans. Since inception Bitcoin has transferred over $11 Trillion. And this number will only grow within the next decade.
2) Fixed supply of 21 million Bitcoins & massive demand. In the very beginning, no one took Bitcoin seriously and only saw it as Internet magic money. And back then there was little to no demand. Come today, it’s a different story. Many institutions to the average person wants Bitcoin. Price goes up with there is more demand than supply, which has been the case for Bitcoin.
3) The US Dollar along with every other fiat currency (Yen, Euro, British Pound, etc.) is losing its value every year as seen in the above picture. Historically every fiat currency has failed over time. This means come one day the USD will fail too. Bitcoin has a chance at replacing the USD as the reserve currency, who knows right.
4) The economy is going fully digital. This trend only helps Bitcoin because Bitcoin lives on the Internet. Bitcoin is basically a network or a protocol meaning layers can be built on top of Bitcoin to make it better. Think about how slow the Internet was back in the 90s and early 2000s. The speed was a joke back then right. But now we have download speeds of 200 megabytes per second for the average household. Since Bitcoin is simply code, developers will make it more efficient down the road.
5) What do Facebook, Apple, Amazon, Netflix, and Google have in common? They all changed the way we live. You and I most likely use one if not all of these services. Imagine if you invested in just one of these companies early on. Sure hindsight is 20/20 and it’s obvious today, but it wasn’t back then. In the same way, I think the same will probably be true for Bitcoin sooner than later.
The end.
Wow this newsletter was longer than expected. Hopefully you’re a little bit more aware about Bitcoin after reading everything. If you have any questions, feel free to ask Google. And please do your own research because you might arrive at a different conclusion.
Thanks for reading!
Until the next one,
DHL
P.S. If you’re serious about buying Bitcoin, check out the below resources. Disclosure: I will get a referral fee if you choose to sign up for any service. I personally use all to buy Bitcoin, so I can vouch for them.
Cash App (click on Cash App) - The easiest way to buy Bitcoin immediately using your phone.
Gemini (click on Gemini) - This crypto exchange is regulated the best, is the most secure, and owned by the Winklevoss twins.
SwanBitcoin (click on SwanBitcoin) - This is perfect to automate your DCA (dollar cost average) into Bitcoin and it has the lowest fees too. I use this service too.