Bitcoin has survived for 13 years, and this year is already shaping up to be another great year.
Sorry haters.
It’s important to remember, everyone who has held onto Bitcoin for more than three years has made money.
But if you still don’t know why to buy Bitcoin, here are 15 reasons why:
Record rate of adoption
According to the Grayscale study, over half of current Bitcoin investors began putting their money into Bitcoin only over the last 12 months. In addition, 44% of respondents have become more favorable to Bitcoin in the past year.
It all boils down to this.
Grayscale’s survey results show a rapidly shifting appetite for Bitcoin despite the negative coverage by the media.
Most useful inflation hedge
More dollars have been printed in the past 15 months than the previous two centuries combined. It seems evident that people are beginning to look for hedges against inflation.
But inflation is much higher than you think. According to Shadowstat,inflation is closer to 15%, but the rigged government number is still only 6.8%.
Goldman Sachs and others said that Bitcoin has become akin to digital gold. It’s become an investor’s hedge against money printing.
The fixed total supply to 21 million
Unlike traditional fiat currencies, Bitcoin cannot be printed by central bankers. A limited number of Bitcoins are available because the total supply is 21 million coins. Currently, around 18.9 million Bitcoin have been mined. This leaves less than 3 million that have yet to come into circulation. Additionally, more than 30% of Bitcoin was lost.
The more people get involved in it, the more a price rises. In other words, more demand higher the value. So, scarcity is one factor that shows it’s not too late to invest in Bitcoin.
Lindy effect
Bitcoin has survived for 13 years.
According to something called the “Lindy Effect,” Bitcoin’s hard-won survival suggests it will endure for at least another decade.
The Lindy Effect essentially states that the future life expectancy of a non-perishable thing, such as a technology, is proportional to its current age.
If the Lindy Effect holds, Bitcoin could achieve the trust and use required to push prices close to $1 million. However, investors will need to be patient. It might take a couple of decades.
Increased institutional adoption
BTC is becoming more mainstream in 2022. More institutional money was ever invested in Bitcoin last year. Whether it was Microstrategy’s massive purchases or a successful ETF launch, it all indicates that institutional demand is on the rise. And with the Lightning network’s help, more financial institutions embrace Bitcoin as payment.
Stock-to-flow model predicts $288,000 price
There are numerous models on how to value Bitcoin.
One of the most commonly used has been the stock to flow (S2F) model,an indicator used in commodities for decades and has now been popularized by an analyst PlanB.
It’s easy to understand why stock to flow has gained popularity, as it is relatively simple to grasp and has proven surprisingly accurate to date.
PlanB argues that Bitcoin’s growing scarcity will increase its value. In terms of a Bitcoin price prediction, this model says that the Bitcoin price could reach $288,000 in this cycle if the model continues to hold.
Additional ETF approvals
2021 will go down in Bitcoin history as the year when the first Bitcoin exchange-traded fund (ETF) was launched. ProShares Bitcoin Futures ETF (BITO) became an overnight success.
Without ETFs, many large funds were prevented from exposure to Bitcoin.
According to the Greyscale study, more than three-quarters (77%) of U.S. investors said they would be more likely to invest in Bitcoin if an ETF existed.
There are many additional Bitcoin ETF applications filed at the SEC, such as Bitwise Asset Management and Grayscale.
One powerful example of the impact an ETF can make is gold. The first Gold ETF was approved in 2001 and marked the beginning of a 6-year bull run, resulting in a 700%+ price appreciation.
It can’t be confiscated
The 2008 financial crisis has taught us that financial institutions are not immune to failure. The bank can freeze your fiat currency, or the government can seize your assets with little to no warning.
Bitcoin is different.
Holding some of your wealth in Bitcoin allows you to maintain custody over your own funds and makes it easy to travel with your wealth across borders.
With Bitcoin, you can be your own bank. As long as you don’t share your private keys with other people, police and government regulators included, nobody can confiscate it.
Bitcoin is the largest cryptoasset
It didn’t die in early 2014, when the largest exchange at that time, Mt. Gox, collapsed.
It survived hackers that stole large amounts of Bitcoin from exchanges.
It survived an 83% crash in 2017 from $20,000 to almost $3,000 as media called Bitcoin a bubble that had burst and left it for dead.
And it didn’t just survive. It became more resilient and robust.
It’s antifragile.
Last year, Bitcoin was the best performing asset class, with a 66% increase in 2021.
Compared to the rest of the crypto market, Bitcoin is the longest-running, with the most robust network.
Fastest adoption ever
According to the Real Vision data, the internet grew from 1990 to 2000 at 63% a year. At that time, it was the fastest adoption of any technology in recorded history.
In 1997, there were 140 million internet users, and the industry was growing at a 63% rate. Bitcoin now has roughly the same number of users as the internet in 1997. But it’s growing at 113% a year, which is double the speed of the internet.
At that growth rate, it will have a billion users by 2024.
Bitcoin is better than gold
Lots of people see Bitcoin as digital gold. But Bitcoin is even better.
There is no way the 8 billion people will hold gold. That wouldn’t work. But it works with Bitcoin.
Blockchain technology has perfected the idea of the store of value and fixed all the defects of gold. When given the facts, it’s easy to realize that Bitcoin is 100 times better than gold.
When in doubt, zoom out
Although Bitcoin can be volatile, it has outperformed many traditional assets in the long term. For example, if you held Bitcoin for the last ten years, it returned an impressive 192% annually. The chart below shows the annual compound returns.
The Lightning Network increased speed
One of the biggest pushes for Bitcoin as a payment solution came after the success of the Strike app in El Salvador, which is built on the Lightning network.
The Lightning Network is a solution built on the pre-existing Bitcoin blockchain, improving its processing speed and scalability. It enables quick, feeless transactions as it processes payments off-chain, decongesting the main blockchain. Such a structure significantly boosts the operating speed and scalability through added layering.
Diversification to the new asset class
In booms and busts, stocks, real estate, gold, and bonds usually move in the same direction. As you can see on the table below, most traditinal performed similarly in the long run. In other words, they are closely correlated and don’t provide any diversification. Bitcoin has come up as a rescue because it is non-correlated and free from politicians and central banks.
Fix the money, fix the world
The early adopters of Bitcoin were visionaries and philosophers. They wanted financial liberty. They saw that big banks playing fast and loose with people’s money triggered the 2008 financial crisis. They saw that governments worldwide bail the banks out using your money to give exit bonuses worth tens of millions of dollars.
Therefore for some, the question “should I buy Bitcoin?” is less about the price and more about Bitcoin’s philosophy. Bitcoin is a movement. Bitcoin’s fundamentals mean that “big brother” can’t control, censor, or confiscate your money.
Bitcoin is a belief in financial liberty, inclusiveness, and transparency.
In other words, if you fix the money, you fix the world.
Final thought
It’s not too late to invest in Bitcoin. We are still at an early stage of Bitcoin adoption.
No one knows, of course, if Bitcoin goes to $300,000 this or back to $30,000. But, in the long run, I’m confident it will replace gold and low-yielding debt instruments.
Given the possibility of such high returns, perhaps it would be prudent to have a small amount of Bitcoin, just in case.
