Letter #242: Bitcoin's "Optimal" Use Is As Money
Read now to learn how no money is more powerful or more beneficial than Bitcoin.
Dear Readers,
So many companies and influencers in the Bitcoin space want the community to believe that Bitcoin's main purpose is to help “diversify” one’s investment portfolio or improve “risk-adjusted returns”. In short, they see Bitcoin as, first and foremost (or maybe even entirely), an investment vehicle.
I suppose they're not alone. Ask most people how they view Bitcoin, and chances are that the responses you’ll get center around how Bitcoin for them is a means to get more money. Unfortunately, likely few of the answers you’ll get will acknowledge that Bitcoin IS money.
To some degree, that makes sense. After all, we've been conditioned over recent generations to believe that money is whatever the governments of the world tell us is money, and nothing else. They certainly haven't told us – with the notable exception of El Salvador – that Bitcoin is money, so what should we expect?
We should expect more of ourselves.
The truth is that we decide what money is. Long before governments started mandating use of their fiat currencies, societies moved from one monetary medium to another in search of the one that would best preserve wealth and facilitate economic transactions. Gold was, in many respects, the epitome of money for several millennia. But Bitcoin, in most respects, has far surpassed even gold as money:
Gold is a durable metal lasting thousands of years. Bitcoin is an ever-expanding network of computers that, in theory, can last forever.
Gold is a finite resource – we've only found so much in the ground so far. Bitcoin's supply is capped and there's no realistic way that the cap can be removed.
The ability to mold gold into different shapes and sizes allows it to be used in transactions large or small. Each Bitcoin can be subdivided into 100 million parts on the layer-1 blockchain, and even infinitely on higher layer solutions, so there's no limit to Bitcoin's use in transactions of any size.
It's hard to imagine a better money than Bitcoin simply because there is no better money than Bitcoin in today's world. So using Bitcoin as nothing more than an investment vehicle to earn more fiat leaves the vast majority of its true value completely untouched and wholly misunderstood.
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This is not financial or business advice. This newsletter and related content are for informational purposes only. Cryptocurrencies and digital assets can be risky. Always do your own research before making any sort of investment.