Bitcoin isn’t crypto. Yes, it is a type of cryptocurrency, but don’t accidentally lump it in with every other shitcoin out there.
A new crypto shows up every week. That’s not an exaggeration. Whether it’s a whole new protocol or just a token built on top of the Ethereum blockchain, there is always some kind of hype.
Forget the hype. Bitcoin is substance.
This isn’t a Bitcoin blog, so why am I talking about it? Because the thing that gives Bitcoin its value as a financial instrument is absolutely relevant to this conversation, and I don’t want you to think the same type of opportunity exists in Ethereum or another crypto.
Bitcoin is Scarce
There will only ever be 21 million Bitcoin ever. This is integral to Bitcoin’s design.
Every four years, the reward for mining Bitcoin is cut in half. That means right now, the reward is 6.25 bitcoin per block. After the next halving, the reward will be 3.125 bitcoin per block.
Eventually, miners will all be harvesting bits of a single block. By then (later this century), one can expect Bitcoin to be easily past a $1 million USD per coin—easily. It will likely be much, much greater, but that’s a whole 80 years away, so.
After this, Bitcoin can still be mined and traded, but without any additional block rewards. Any mining will simply be as a way to facilitate future Bitcoin transactions, and a small reward to miners will be what incentivizes continued mining.
This is the chief financial value of Bitcoin: it will run out. Dollars and other fiat currencies can be produced on the government’s whim. Ethereum, Litecoin, and Dogecoin will keep being produced forever. There is not halving.
There is literally no limit to how many Eth, Litecoin, or Doge will ever exist. It will proliferate forever. AKA the scarcity of the Ethereum, Doge, and whatever else you have decreases every single day.
Even if someone wanted to create another cryptocurrency where scarcity was the main feature, there wouldn’t be any point because the scarce crypto already exists. It is already scarce, and there is already demand. It meets the economic need.
Bitcoin is not crypto. Bitcoin is scarce. Other crypto is not.
Bitcoin is the Brand, Crypto is the Copy
If any crypto is to survive, Bitcoin will. If Doge hits $100 per coin, Bitcoin will remain.
I highly, highly doubt another coin will every surpass the value or market cap of Bitcoin. Even if it did, Bitcoin would not die. The brand is simply too great, it has too much of a committed community, and it’s growing in its technical ability and usage.
It is the only cryptocurrency that a nation openly has on its balance sheet.
The lightning network is making it useful for day-to-day transactions.
It is volatile and should be bought by those hoping to day-trade it. It should be owned by those confident in an inflationary future of runaway monetary policy.
When the world becomes more aware of how inflation is stealing from them, and world governments decide to ironically print more money to give it away to angry constituents, you will see which asset people flee to for stability. Hint: it’s not physical bars of gold. It’s highly liquid, absolutely scarce currency.
Bitcoin is Decentralized
This is what every blockchain claims to be. For most, it isn’t true.
The two big terms to know are proof of work and proof of stake. When you hear about “mining” like in Bitcoin, Ethereum, or Doge, that uses proof of work. It’s essentially computers guessing at solutions to math problems over and over until they accidentally solve it. The rate at which a computer solves it determines how hard the next problem will be. (Current protocols try to time rewards so they issue at a relatively stable rate.)
Most new coins out there are using proof of stake. This is not the same. It’s a valid way to run a chain, but it’s inherently not decentralized. Proof of stake works by finding who the big stakeholders are and relying on them to validate transactions for a small reward. The trouble is it works by rewarding the people who have the most coins the most often. So if you own roughly half of the coins in a chain, you’ll get rewarded half the time for validating transactions.
That’s literally the opposite of decentralization. The rich get richer by design.
I bring it up because while the next biggest chain (Eth) doesn’t use proof of stake, the biggest holder and creator of the chain Vitalik Buterin is suggesting that’s what everyone moves to “for the environment” AKA for the benefit of the biggest stakeholder.
Investing in Crypto? There’s Only One Real Option
Bitcoin is scarce, decentralized, and has staying power.
Whether you’re moving countries, want diversification, or are just trying to stay ahead of the inflation wave, don’t waste your cash on useless pump-and-dump schemes.
Pic the asset that has better returns in the last 10 years than literally anything else.