Bitcoin is a major paradigm shift that is drawing people into the world who have never before been interested in how the current monetary and financial system works.
Many people who buy Bitcoin have never even been interested in the world of traditional finance.
These people understand that their interest in succeeding in the Bitcoin world is to take advantage of their greatest natural advantage: the confidence they will develop in the Bitcoin revolution, and ultimately, the time they will be able to HODL Bitcoin no matter what.
What is the Relative Strength Index (RSI) of an asset?
In this article, I’d like to revisit with you a frequently used indicator called the Relative Strength Index (RSI).
The first thing to remember is that the RSI is not a Bitcoin-specific indicator. It has been used in the stock market for a very long time. This indicator is calculated from the price momentum of an asset.
Several factors are taken into account when calculating the RSI of an asset like Bitcoin. These factors are the price change of the asset in question and the speed at which this change occurs. These movements, which can swing sharply from one extreme to another, are considered oscillations.
Bitcoin’s RSI oscillations are therefore rated between 0 and 100.
Bitcoin’s RSI reveals whether it is overbought or oversold
From Bitcoin’s RSI, you can tell at any given moment whether Bitcoin is overbought or oversold. At an RSI of 70 or higher, the asset in question is considered to be overbought. An asset is considered oversold when the RSI is below 30.
Investing is not an exact science, but this is simply a signal for traders to identify the price trend of an asset, the divergences, and the potential swings.
To give you an idea, here is the evolution of the RSI of Bitcoin since mid-2017:
Bitcoin’s RSI evolution since mid-2017
On this chart, you can see the blue line that represents the evolution of the price of Bitcoin. It is very close to $58K at the time of writing.
At the bottom, you can see in purple the evolution of the RSI of Bitcoin.
Currently, the RSI of Bitcoin is 71.7. We are slightly above 70. So some people are talking about Bitcoin being at the beginning of an overbought trend. Nevertheless, you should keep in mind that the 70 and 30 values are not fixed.
Some people prefer to consider 80 and 20 as thresholds.
The RSI is used in technical analysis to determine bullish or bearish divergences
Under these conditions, Bitcoin would not yet be in an overbought market. It was at the beginning of 2021 when it exceeded 90. The current period that has seen the price of Bitcoin stabilize between $53K and $58K was, therefore, necessary to allow the market to take a break before going on to break new records.
Traders use Bitcoin’s RSI for their technical analysis. From the RSI, they determine whether the market is in a bearish or bullish divergence.
In the case of a bullish divergence, the RSI rises as the price of the asset in question continues to fall. This shows that more and more people are continuing to buy the asset in question while its price is falling. Confidence continues to be present in the asset.
For a bearish divergence, the RSI falls while the price of the asset rises. This highlights the fact that the asset is losing its upward momentum.
The RSI is measured based on the change in an asset’s price between 14 periods, which can be either daily or hourly based. The average gain of the asset within the period and the average loss are divided and plotted on the zero to 100 scale.
It is interesting to study the RSI on multiple timeframes: 1 day, 6 hours, and 1 hour. This gives a better indication of how the price moves over a short, medium, or long-term period.
Final Thoughts
As I explained in the introduction, the RSI is mostly used by Bitcoin Traders. Nevertheless, even if you are a Bitcoin HODLer, you owe it to yourself to know what it means, but especially how traders use it.
This will allow you to better understand the short-term price movements of Bitcoin and the technical analysis using RSI that can appear on various sites.
After reading this article, the RSI will hold no secrets for you. You will also have understood why I think this Bull Market is still in its infancy. During the Bull Markets of 2013 and 2017, Bitcoin’s monthly RSI was above 95 for at least 3 months.
As you can see we are still a long way from that in 2021. This Bull Market still has huge opportunities to offer all those who believe in Bitcoin.
Attempt to answer this mysterious question concerning the Bitcoin supply limit to 21 Million units.
Image: Shutterstock
For many people, Bitcoin is simply the new fashionable way to get rich fast. These people are taking a shortcut, which may well play tricks on them in the future.
In life, there are no shortcuts. There is no quick fix for getting rich fast. Everything is the product of hard work and perseverance.
Bitcoin is all about power. Bitcoin is the best savings technology in the world. You place the fruits of your hard work within the Bitcoin network, and it will be protected from the ravages of monetary inflation in a way that is resistant to censorship.
This is currently Bitcoin’s greatest value proposition. As the adoption of Bitcoin by the general public progresses, you will be able to use it as a means of payment in everyday life. However, we are not there yet. That is why I repeat that we are still at the beginning of the Bitcoin revolution.
I have been writing daily about Bitcoin for several years now, sharing my ideas, opinions, and some knowledge.
The most rewarding thing is then to be able to have exchanges with newcomers in this world. It is always interesting to listen to what drives these people to come to the world of Bitcoin. Even better, I listen carefully to the questions they may have and try to provide them with answers as best I can.
One question I am often asked is this:
Why Did Satoshi Nakamoto Limit Bitcoin’s Supply to 21 Million?
This is an extremely recent question to which few people generally provide answers.
This question can be divided into two parts. The first is why Satoshi Nakamoto has limited the supply of Bitcoin. The second is why did he choose the figure of up to 21 million BTC?
Why is Bitcoin supply hard-capped?
I will start by answering the first question, which seems to be the most obvious.
Satoshi Nakamoto understood that the problem with the current system is the total freedom given to central banks to print as much fiat money out of thin air as they deem necessary.
Thus, a few central bankers have far too much power over all the inhabitants of the earth. We should be able to trust them blindly, but history has shown us that this is impossible, as Satoshi Nakamoto rightly pointed out:
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
You understand here that Satoshi Nakamoto created Bitcoin to address the problem of trust in the current banking system. Bitcoin is a successful attempt to return power to the people regarding money.
The fact that Bitcoin supply is hard-capped has ultra-positive implications for its users
To address the problem of the endless debasement of fiat currencies in the current system, Satoshi Nakamoto has therefore limited the maximum supply of BTC that could be issued.
This limitation was defined within the Bitcoin source code. All nodes running on the network guarantee this essential rule.
This has incredible implications for the fruit of your labor that you secure within the Bitcoin network. If you buy 1 BTC today, you are guaranteed to still own 1 BTC out of 21 million in 10, 20, or 50 years.
With all other fiat currencies, you cannot have this essential guarantee.
Why did Satoshi Nakamoto choose the number 21 million BTC?
The second question was why Satoshi Nakamoto chose the 21 million BTC limit. Indeed, he could have chosen 20 million or 26 million after all.
To begin with, it is interesting to look back at some of Satoshi Nakamoto’s messages on this question:
“I wanted to pick something that would make prices similar to existing currencies, but without knowing the future, that’s very hard. I ended up picking something in the middle.”
Satoshi Nakamoto then added in an email exchange with the developer Mike Hearn this:
“If Bitcoin remains a small niche, it’ll be worth less per unit than existing currencies. If you imagine it being used for some fraction of world commerce, then there’s only going to be 21 million coins for the whole world, so it would be worth much more per unit.”
Satoshi Nakamoto could therefore have chosen this number of 21 million to foresee a possible alignment with fiat currencies. Thus, 0.001 BTC (1 mBTC) could have been worth $1 at term. This prediction became true in 2013. Today, 0.001 BTC is worth much more than that.
A philosophical explanation is put forward by some
Another hypothesis is related to the global money supply at the time Satoshi Nakamoto created Bitcoin. At that time, the global money supply was $21T. Known as the M1 Money Supply, this number includes the total value of all physical money in the world, including cash, coins, and travelers’ checks.
If we imagine that Bitcoin could one day become the world’s reserve currency, the figure of 21 million units for Bitcoin would have the following equivalence: 1 BTC = $1 million. The Satoshi, the smallest unit of Bitcoin, would then have represented $0.01.
All this, however, remains only conjecture.
In terms of conjectures, other people have imagined a mathematical explanation for this choice. To do so, they have assembled the various parameters of Bitcoin’s programmatic monetary policy.
Others prefer the mathematical logic behind the figure of 21 million
The Bitcoin core software adjusts the difficulty to mine a new block every 10 minutes on average. From this average, 210,000 blocks should be mined during each 4-year cycle. At the end of a cycle, a Halving takes place reducing by half the reward allocated to miners mining a block of transactions correctly.
In the first cycle, the reward was 50 BTC. It was halved to 25 BTC per block mined in 2012. It then dropped to 12.5 BTC in 2016, before dropping to 6.25 BTC after the Halving of May 2020.
By extrapolating this reduction, you will notice that the sum of the block rewards over each 4-year cycle is equal to 100:
50 + 25 + 12.5 + 6.5 + 3.125 + 1.5625 + … = 100
Multiplying this number by the number of blocks mined in each cycle, 210,000, you get the maximum number of BTC that can be put into circulation: 21 million. The Bitcoin supply is 21 million units no matter what.
Final Thoughts
It’s easy for everyone to understand why Bitcoin supply is hard-capped. Satoshi Nakamoto made this choice to make Bitcoin hard money. However, it is harder to know why he chose the figure of up to 21 million BTC.
Some are looking for a philosophical explanation, while others are satisfied with an explanation based on a mathematical model. I will leave you to make your own opinion based on the elements I have just revealed to you.
Indeed, the only person who can know the truth is Satoshi Nakamoto. A mysterious character if ever there was one, Satoshi Nakamoto has decided to never unveil the meaning of the figure of 21 million as well.
Life is strange sometimes. I write daily about Bitcoin, money, and economics in general. This allows me to combine two great passions: writing and economics. While writing has always been a passion for me, I must confess that my interest in economics and money did not appear until much later.
To tell you the truth, I wasn’t interested in it at all when I was in high school.
Economics seemed to me to be too complex a field. Looking back, I know now why I felt that way back then. Everything is done with the educational system so that you don’t have the will to discover how the current monetary and financial system works.
Discovering the ugly truth about the current system was a brutal shock
Those who take the step and dare to discover the ugly truth are always shocked. The shock is even brutal. You suddenly ask yourself how it is possible that such an unfair system can exist for 50 years now.
I am talking about a system that favors a tiny minority of people while excluding hundreds of millions of people. I am thinking here of those people on the African continent who are totally excluded from the banking system.
As Westerners, we live in the comfort that does not protect us from all this. For the moment at least. Because the future could be much less cheerful with this current system where central bankers have all the power to print as much money out of thin air as they deem necessary.
I had little interest in these subjects in the past.
Reading the 3,219 words Bitcoin white paper was the first step of an awesome journey
I was intrigued by the fact that the creator of this revolutionary new system had chosen to remain mysterious, but also to offer his system to the world as a magnificent gift for future generations.
I am first and foremost a developer. So what interested me most at the time was the technical side behind the Bitcoin blockchain. I was amazed to see how Satoshi Nakamoto was able to uniquely assemble seven already well-known technological elements to create the first successful implementation of a decentralized digital currency.
The Bitcoin code is open source, so I went to study it carefully.
Then I couldn’t help but implement my own version of the Bitcoin blockchain in the Java programming language. My goal was not to invent a replacement for Bitcoin, but simply to try to reproduce everything I had read in the Bitcoin white paper.
After successfully implementing my own Bitcoin-like blockchain, I didn’t go any further. I have to admit that I didn’t realize at the time the incredible impact that Bitcoin could have on the world of the future.
After limiting myself to the technical side of Bitcoin, I finally opened my eyes to this incredible monetary revolution
I had limited myself to the technical side of Bitcoin. That was a mistake because Bitcoin is first and foremost an incredible monetary revolution. I realized this at the end of 2016 when I returned to take a closer look at Bitcoin.
It was from there that I began to seek a better understanding of the why of Bitcoin. I already had a good understanding of how it works in 2014 by implementing my own version of the Bitcoin Blockchain, but the need for Bitcoin had not yet become clear to me.
So I sought to better understand money, the economy, and how the current system works.
This is something I never thought I would do in my life. However, the 3,219 words of the Bitcoin white paper pushed me to understand all these things that I found too complex before. I made the effort, and today I don’t regret it at all.
Wanting to understand the why of Bitcoin pushed me to learn more about money and economics
By reading books on all these subjects, I really understood how the current system was flawed. I could also understand why it could not be fixed. The people in charge of this system simply don’t have the will. The current system benefits them so much, that changing it would be a real folly from their point of view.
Little by little, I realized that Bitcoin was the solution. The best solution for the people to take back control of their money. An inclusive solution where everyone has the same opportunities. Whether you’re American or Nigerian, Bitcoin doesn’t care.
All you need to buy it is a smartphone and an Internet connection.
Accessible to all, Bitcoin is a revolution for millions of people excluded from the current system. A plan A for their daily lives. It’s no coincidence that Bitcoin is used in countries that are emerging or under authoritarian regimes.
Understanding the flaws in the current system is the key to understanding the importance of Bitcoin for the future
My story with Bitcoin is probably not unique. I know many other people who followed the same path before becoming Bitcoiners. From the solution, we sought to better understand the issues it sought to address.
To fully understand the importance of Bitcoin to the world of the future, you can’t just study the Bitcoin system. You have to go beyond that and study the current system. If you don’t understand the flaws in this doomed system, you won’t realize the inevitability of Bitcoin for the future.
Bitcoin has greatly changed my life by teaching me to develop critical thinking skills and patience. A currency revolution is never instantaneous. To benefit from it, you have to be able to be patient by supporting Bitcoin day in and day out.
This is what I do by sharing my knowledge and opinions every day via articles.
I have been able to meet people with exciting ideas. All of this has made me grow on all levels. If someone had told me all this the day I read the 3,219 words of the Bitcoin white paper, I probably wouldn’t have believed it. But it’s true: Bitcoin has radically changed my life on every level.
Final Thoughts
By realizing the importance of taking back the power over the fruits of my labor, Bitcoin has allowed me to start building a better future for myself and my family. That’s what Bitcoin was designed to do: to empower you as an individual.
If you still haven’t read the Bitcoin white paper, I have only one piece of advice for you: do it. Don’t be afraid of the technical passages, and focus on the essential ideas to get started. By daring to do so, I am sure you will take the first step on a fascinating journey that will change your life forever.
All Bitcoiners keep repeating that Bitcoin is a true monetary revolution. I am in the same case since I keep repeating it over and over again. We cannot do otherwise, since it is obvious from our point of view.
The Bitcoin protocol is indeed what allows tens of millions of users to have absolute confidence in Bitcoin. In September 2020, Bitcoin passed the 100 million user mark. In February 2021, Bitcoin surpassed the $1 trillion market cap for the first time.
All this would not have been possible without the genius of Satoshi Nakamoto in designing the Bitcoin system.
However, contrary to what some people believe, the magic of the Bitcoin protocol is due to the assembly of different technological elements already proven. If you take the time to read the Bitcoin white paper, you will see that the key elements that are at the heart of the system have been known for a long time.
The Bitcoin protocol is based on private/public keys and Merkle trees
The private/public keys used at the heart of the Bitcoin protocol are based on the Elliptic Curve Digital Signature Algorithm (ECDSA). More specifically, Bitcoin uses a special curve called secp256k1.
This curve has an order of 256 bits, taking 256 bits as input, and returning an integer of 256 bits as output.
To represent the transaction data of a block, the Bitcoin protocol relies on a particular data structure called Merkle Tree. This is a tree in which each leaf node is labeled with a block of data, and each non-leaf node is labeled with a cryptographic hash of the labels of its child nodes:
Merkle Tree sample on the Bitcoin Blockchain
The purpose here is to ensure that data blocks received by other nodes in the Bitcoin network are received without damage or alteration. It is even possible to verify that other nodes are not lying by trying to send false data blocks.
Cryptographic hash functions are used ingeniously in the Bitcoin protocol
For the cryptographic hash function, Satoshi Nakamoto has relied on the SHA-256 algorithm, also known for a long time.
A cryptographic hash function will take data as an input and produce an output of fixed length. This output is usually represented by a string of characters in hexadecimal format.
These functions are deterministic, which means that if you input the same string of characters several times for a given function, you will get the same output each time. The following illustration gives a good visual overview of what a cryptographic hash function is:
Cryptographic hash function
More importantly, a cryptographic hash function has the distinct advantage of being a one-way function. It can therefore be easily computed but very difficult to reverse. These functions are often referred to as “trapdoor functions”:
A cryptographic hash function is a one-way function
While calculating the hash of a string with a cryptographic hash function is very fast, the reverse calculation is very complex and time-consuming.
Indeed, there is nothing more efficient than a stupid and mean systematic approach during which it will be necessary to test all possible combinations at the input of the hash function to find the same output.
The Proof-Of-Work algorithm uses the properties of the cryptographic hash functions
The Proof-Of-Work algorithm relies on cryptographic hash functions to work.
Given a certain difficulty, the Bitcoin network miner must find a hash for the block starting with a given number of zeros. As shown in the previous diagram, the miner has the result of f(x) starting with a certain number of zeros.
He then has to find the value x that allows him to reach this result. To do this, at each attempt, he increments by one an integer variable called nonce within the block being mined.
The more the difficulty increases, the more difficult it becomes. The greater the miners’ computing power, the more possible values they can test per second. They maximize their chance of finding the right x value, and thus of getting the Bitcoin reward for correctly adding a new block to the Bitcoin Blockchain.
The mining difficulty is automatically adjusted every 2,016 mined blocks
This is where Satoshi Nakamoto thought of everything.
He planned an automatic difficulty adjustment to mine new blocks every 2,016 mined blocks. This corresponds to an adjustment every two weeks since on average 144 blocks are mined every day. This adjustment keeps the predictability of new BTC issuance over time.
As the Hash Rate available on the Bitcoin network increases, the difficulty increases in relation to the next adjustment. When the Hash Rate drops, the difficulty is adjusted downwards.
To give you an idea, here is the evolution of the difficulty on the Bitcoin network for mining a block:
Evolution of the difficulty on the Bitcoin network
As you can see, this difficulty continues to increase over time. Bitcoin network is therefore a little more secure every day than it was the day before.
The reward for miners is divided by two for every 210,000 blocks mined and tends towards zero over time
Another key technological element of the Bitcoin protocol is the automatic halving of the Bitcoin reward every 210,000 mined blocks. This gives Bitcoin a quantitative hardening type of monetary policy.
The last Halving took place in May 2020. At each Halving, a supply shock occurs in the Bitcoin world. The supply of newly issued Bitcoins is halved, while the maximum supply remains fixed at 21 million units. Together with a constantly increasing demand for Bitcoin, this produces a significant increase in the price of Bitcoin.
Another important element that I haven’t mentioned so far is the timestamping of the Bitcoin Blockchain blocks.
Each block contains a date in Unix format. This is part of the hash of a block and makes it more difficult to manipulate the Bitcoin Blockchain. Indeed, a timestamp is considered valid only if it is larger than the median timestamp of the previous 11 blocks and smaller than the adjusted network time + 2 hours.
“Network-adjusted time” is the median of the timestamps returned by all nodes connected to your node. As a result block timestamps are not exactly accurate, and they do not need to be. Block times are accurate only to within an hour or two.
The final touch is the networking of the Bitcoin system in P2P mode
Finally, all this is networked via a P2P architecture. Bitcoin is a completely decentralized network. Its Blockchain is permissionless and trustless. This means that anyone can become a node in the Bitcoin network. This is something I urge you to do to really take control of your money.
By putting your savings into the Bitcoin network, you become your own bank branch.
By running your own node on the Bitcoin network, you become a bank on your own. This is the highest level of sovereignty that everyone should aim for in the Bitcoin system.
Final Thoughts
As I have shown you, the magic of Bitcoin lies in the unique assembly of all those technological elements that existed before. However, no one had ever thought of combining them in this way.
This is where Satoshi Nakamoto’s genius lay.
It is thanks to this design that the Bitcoin system became the first successful implementation of a digital currency. If Bitcoin is a technological disruption in its own right, it is above all its implementation to give credibility to its monetary attributes that should be remembered here.
The next time you decide to put the fruits of your labor into the Bitcoin network, you will have a better understanding of why it is completely safe to use the Bitcoin protocol. For the rest, I advise you to go further by discovering the Ten Commandments of Bitcoin.
An opportunity to demystify the most common Bitcoin objections once again.
The world we live in is more uncertain than ever. It is a reality that many people have rediscovered with astonishment following the coronavirus pandemic that has hit the world since the beginning of 2020.
In this totally uncertain world, however, there are some certainties:
Central banks will print more and more money out of thin air.
Governments will borrow more and more money, which will continue to skyrocket the public debts of the world’s major economic powers.
Opponents of Bitcoin will continue to use the same outdated clichés to relentlessly attack Bitcoin.
The fundamentals of Bitcoin will remain unchanged.
And then, the next morning when we wake up, everything starts all over again. The same people make the same completely false attacks against Bitcoin. The central banks continue to apply the same monetary policies that are at the root of all the economic crises that we have suffered for decades. Governments continue to increase public debts, thereby mortgaging the destiny of future generations.
Among the objections to Bitcoin, there are six that keep coming up. In what follows, I propose to show you once again why these objections are totally false. Most importantly, you will understand that the powerful in the current system use these objections simply to prevent the people from taking power over their money by buying Bitcoin.
Bitcoin is a Ponzi Scheme
Since its inception, Bitcoin has very often been accused of being a Ponzi Scheme by its critics. On the last day of the year 2019, Tendayi Kapfidze, the chief economist at America’s largest online lending marketplace LendingTree, wanted to make a name for himself by declaring:
“I am convinced that Bitcoin is nothing more than a pyramid scheme. You only make money based on people who enter after you.”
This attack is nothing new, as it frequently occurs when economists or politicians wish to criticize Bitcoin and find no real argument against it. To put an end to this myth now, I suggest you refer to the detailed report on Ponzi Schemes published in 2014 by the World Bank.
This report was written by the highly respected Kaushik Basu, former Chief Economist of the World Bank but also Professor of Economics at Cornell University.
In his report, Kaushik Basu says in particular:
“Contrary to a widely-held opinion, Bitcoin is not a deliberate Ponzi. And there is little to learn by treating it as such. The main value of Bitcoin may, in retrospect, turn out to be the lessons it offers to central banks on the prospects of electronic currency, and on how to enhance efficiency and cut transactions cost.”
Kaushik Basu
I think there’s nothing more to add. Just read what Kaushik Basu says in his report, and even more so what he demonstrates. The people who continue to think that Bitcoin is a Ponzi Scheme in 2021 are clearly misinformed people with whom you should not waste your time.
Bitcoin promotes money laundering and illicit activities
The powerful people at the head of the current system love to put forward this cliché that is all the rage with the general public. Bitcoin would promote money laundering as well as the financing of illegal activities.
At the beginning of 2021, Christine Lagarde, the president of the European Central Bank, has once again used this objection at the Reuters Next conference:
“Bitcoin is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”
A few days later, it was the turn of Janet Yellen, soon to become Secretary of the Treasury in the United States, to attack Bitcoin and cryptocurrencies, saying that stricter regulation should be put in place as soon as possible:
“I think many cryptocurrencies are used, at least in a transaction sense, mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering doesn’t occur through those channels.”
Unlucky for these two people who hold important positions in the current system, Chainalysis released its 2021 Crypto Crime Report at the same time. In his annual report, Chainalysis has just estimated that 10 billion dollars had been used for illegal purposes in 2020 in the cryptocurrency world. This is a reduction of half compared to 2019.
It represents only 0.34% of all transactions in 2020 in the cryptocurrency world.
Meanwhile, more than 2,000 billion dollars are used in the current system every year for illegal activities. So I’m sorry to disappoint Janet and Christine, but if they want to tackle the problem of money laundering and the financing of illegal activities, they have to look at the U.S. dollar and the Euro. Obviously, they won’t.
Sticking to this estimate of 2,000 billion dollars used annually for illegal activities in the current system means that for every U.S. dollar used for illegal activities, only $0.005 is used for illegal activities in the cryptocurrency world.
This is enough to put a definitive end to this objection, which constantly comes up in the mouths of the opponents of Bitcoin.
Bitcoin has value because more and more users think it has value. It is the same with all fiat currencies. The notable difference is that it is your governments that force you to consider the U.S. Dollar or the Euro to have any value.
Bitcoin responds to a need that will continue to grow in the years to come: that of having a store of value to protect the fruits of its labor from the ravages of monetary inflation in a way that is resistant to censorship.
This will take time, but the revolution will come to an end in the future. All you have to do is be patient and keep full confidence in the Bitcoin revolution.
Bitcoin will be replaced by cryptocurrencies with superior technology
Bitcoin was presented to the world on October 31, 2008, by Satoshi Nakamoto. Its network was officially launched a few weeks later on January 3, 2009. For twelve years, the Bitcoin network has been running permanently. Its technology has not changed. Its fundamentals have remained the same, which is incredible strength in a world as uncertain as ours.
For the opponents of Bitcoin, this stability of Bitcoin is precisely what heralds the coming end of Bitcoin. Listening to them, Bitcoin’s technology is outdated. New cryptocurrencies are launched every day. One of them will eventually overtake Bitcoin.
Many finally take the example of Myspace and say that the network could not keep its first-mover advantage for long. The arrival of Facebook then changed everything. Today, Facebook is the undisputed leader in the world of social networks, and Myspace no longer represents anything.
This example is used frequently. It is totally false. Bitcoin should be seen as a protocol. Bitcoin is the protocol of money for the Internet. It will not be replaced by more powerful technology. Bitcoin will evolve and be constantly improved.
Bitcoin is too volatile to be a reliable store of value
Bitcoin’s volatility is a feature, not a bug. It comes from the fact that Bitcoin is the only truly free market in the world. Its network is always running, and its users have the freedom to find Bitcoin’s equilibrium price. There are no circuit-breakers in the Bitcoin world as there are in the stock market.
The best way to take advantage of this volatility in the Bitcoin price is to buy Bitcoin in DCA (Dollar-Cost Averaging) mode automatically. Then you will need to become a Bitcoin HODLer. To do so, you need to really understand the why of Bitcoin which will help you develop a long-term vision.
Everyone who has a long-term vision of Bitcoin will end up benefiting from it. It’s all about time, patience, and trust. Since 2010, the price of Bitcoin has risen from less than $0.1 to over $34K at the time of writing. Bitcoin is the best store of value available to the greatest number.
The trick is to understand how it works to take advantage of Bitcoin.
As Bitcoin’s market cap increases, this volatility will tend to decrease, which will encourage the use of Bitcoin as a means of exchange in everyday life. We will then be in Phase 2 of the mass adoption of Bitcoin. Most importantly, by that time, Bitcoin will have caught up with and then surpassed the gold market cap. It is only a matter of time because the success of Bitcoin is inevitable.
Bitcoin will be banned by the regulators
Opponents of Bitcoin keep repeating that if Bitcoin becomes too big, it will end up being banned definitively by the regulators of the world’s major economic powers. This is something that comes up frequently.
Bitcoin was created precisely to allow you to hedge against this type of arbitrary decision by the powerful people at the head of the current system. As of 2014, a senior member of the Federal Reserve Bank of Saint Louis studied Bitcoin and concluded that “enforcing an outright ban on Bitcoin is close to impossible… well-run central banks should welcome the emerging competition”.
Any attempt to punish those who possess Bitcoin would end up reinforcing the very existence of the Bitcoin system. To stop the Bitcoin network completely, the Internet would have to be shut down, which would mean shutting down the current banking system as well. Unthinkable!
Rather than fighting unnecessarily Bitcoin, it seems to me that the authorities will instead try to integrate Bitcoin into the current system. Rather than fighting, the American authorities intend to take advantage of Bitcoin. In the summer of 2020, the Office of the Comptroller of the Currency (OCC), which is a branch of the United States Treasury Department, gave the green light to American banks to offer Bitcoin services to their customers.
The U.S. government collects billions of dollars in taxes each year on the profits generated with Bitcoin by their U.S. citizens. There is therefore no interest in depriving themselves of such a financial windfall. Further regulation will be defined sooner or later, but it will not seek to ban Bitcoin. Rather, it will seek to take advantage of it.
No concern for Bitcoin and its users from this point of view.
Final Thoughts
Opponents of Bitcoin keep criticizing Bitcoin using the same objections. The problem is that it has been proven many times already that these objections are totally false. Unfortunately, false information seems to get into the minds of the general public more easily.
This is logical since the false information is propagated by politicians, bankers, economists, and journalists in whom the people often have great confidence.
Unfortunately, these people abuse this trust in an attempt to protect the current monetary and financial system at all costs. As a Bitcoiner, my role is to keep coming back to this false information to help as many people as possible to see what Bitcoin really is, and what it can do for your future.
Follow the Ten Commandments of Bitcoin to the letter to take full advantage of the Bitcoin revolution.
The Bitcoin revolution will succeed. It is inevitable. Bitcoin has been progressing since its creation, following the path that all revolutions that end up triumphing take.
Remember that famous quote frequently attributed to Mahatma Gandhi:
“First they ignore you, then they laugh at you, then they fight you, then you win.”
In reality, it is an apocryphal quote. This means that it is wrongly attributed to Gandhi. The latter took this quote from a speech in 1914 by the union leader Nicholas Klein.
In any case, you understand well what this quote means.
Revolutions are always ignored at their beginning. This was the case with Bitcoin when it was officially launched on January 3, 2009, by Satoshi Nakamoto in complete anonymity. In the early 2010s, Bitcoin began to make a name for itself.
Nevertheless, the powerful people at the head of the current monetary and financial system looked at it with disdain and mocked Bitcoin. For them, Bitcoin was nothing more than the amusement of a few geeks.
When Bitcoin price surpassed $1,000 for the first time in 2013, Bitcoin began to make these politicians, central bankers, and other economists laugh less. The battle against Bitcoin became even more intense during the Bull Run at the end of 2017 when its price quadrupled in a few weeks to almost $20K.
A speculative bubble was created around Bitcoin price. Its explosion was inevitable. It caused a bear market that lasted throughout 2018 and plunged the Bitcoin price just above $3K. Many of Bitcoin’s opponents took the opportunity to announce once again the impending death of Bitcoin.
As always, Bitcoin rose even stronger. At the end of the first quarter of 2019, the Bitcoin price started to rise again, approaching $14K at the end of June 2019. Despite this, the opponents continued to resist by fighting Bitcoin.
The year 2020 was marked by a pandemic of a magnitude not seen in decades. The economic crisis that was triggered by this pandemic was so sudden that a liquidity crisis followed in March 2020. All liquid markets around the world were heavily impacted.
As the only truly free market in the world, Bitcoin was necessarily more impacted than the others. In a few hours, its price dropped by more than 50% from $8K to less than $4K.
This was the moment of glory for the opponents of Bitcoin, but also for the Bitcoiners who were able to accumulate even more BTC. The Bitcoiners knew that the Bitcoin price was bound to rebound afterward with the third Bitcoin Halving approaching. That’s what happened.
As expected, the Bitcoin price rebounded. The rebound has been incredibly strong as Bitcoin price has risen +400% since March 2020 to allow Bitcoin to beat its All-Time High just below $20K on December 1, 2020.
Throughout this rise in Bitcoin price, a growing number of major players have changed their mindset about Bitcoin. Many have realized that there is no point in fighting the Bitcoin revolution. Its success would be inevitable. Bitcoin is currently the best hedge against monetary inflation.
This has motivated institutional investors, great companies, and even PayPal to come to this world.
They all want to take advantage of the Bitcoin revolution. They need Bitcoin more than ever. Faced with such a monetary revolution, those who choose to stay along the path always end up being overwhelmed. This is what history has always taught us.
If the Bull Run we have just experienced since October 2020 were supported by smart money, retail investors will soon be flocking to the Bitcoin world throughout 2021. Indeed, the Bitcoin price is promised to rise sharply. I see the Bitcoin price able to reach $100K at the end of 2021.
The arrival of many retail investors in the coming months seems to me to be the right time to remind the Ten Commandments of Bitcoin. For those already present in the Bitcoin world, it will also be an opportunity for a reminder that is never superfluous.
I. Not your Keys, Not Your Bitcoin
Bitcoin is P2P money. When you see written that someone has Bitcoin, it is an abuse of language. In reality, that person owns a portion of the Bitcoin Blockchain.
To access this portion of the Bitcoin Blockchain, this person must have the associated private key. Without this private key, you will not be able to use that portion containing a certain amount of BTC.
When you decide to purchase Bitcoin, you must understand that the most important thing is to have the associated private keys in your possession. Without this, you will not be in complete control.
Therefore, third-party platforms such as PayPal that allow you to buy Bitcoin lock you into the same risks as with the current monetary and financial system.
Bitcoin aims to give you back the power regarding money. Without your private keys, you will not be able to regain that power. Some people say that the only thing that interests them about Bitcoin is the fact that it is the best hedge against monetary inflation.
This is what we hear from most institutional investors. As an individual, you would be making a mistake if you reasoned that way. If you buy Bitcoin, choose to enter completely into its revolution. To do so, you must have the private keys to your Bitcoins. Period.
II. Do not reveal what you own in BTC
Some people love to tell everyone how much money they make. They even go so far as to reveal all the details of what they have in their bank account.
People who flaunt their wealth in front of everyone justify themselves by saying that they have nothing to hide because they earn that money by working hard.
To be a member of the Bitcoin Club, you need to embrace its first essential rule, and apply it no matter what:
You must never reveal what you own in Bitcoin to anyone.
Being a true Bitcoiner requires humility to be willing to learn more and more about Bitcoin and money in general. The humility you develop will cause you to be discreet about what you own in Bitcoin.
Never revealing to anyone what you own in Bitcoin is also a matter of security.
From the moment you reveal what you own in Bitcoin, you can jeopardize your own security. Bitcoin price is set to rise sharply in the years to come. So it will be tempting for ill-intentioned people trying to steal your BTC.
It would be a shame if you were to miss out on the Bitcoin revolution in the future for breaking this commandment.
In the future, if someone asks you what you own in Bitcoin, you will only have to answer that you are forbidden to say. This is part of the Bitcoin Club rules.
In fact, that is my answer to those who frequently ask me this question when I publish stories online. They take it as a joke and ask me again, but my answer is always the same: I never break this commandment. I would advise you to do the same.
III. HODL Bitcoin no matter what
Many people buy Bitcoin without being totally convinced by the Bitcoin revolution. It may seem trivial to you, but in reality, it’s a big problem that puts their money at risk.
So, when you buy Bitcoin, you should be aware that its price can fluctuate significantly up and down. For upward fluctuations, you will need to be able to manage them more easily. On the other hand, you should be prepared to control your emotions when the Bitcoin price drops sharply.
This happened in March 2020 during the liquidity crisis I mentioned earlier. In a few hours, the Bitcoin price went from $8K to less than $4K. Many panicked and sold their BTC at a loss.
At that time, I was talking about the sale season in the Bitcoin world. This allowed all Bitcoiners to accumulate even more BTC. It was a perfect opportunity. But to do that, you have to have complete confidence in Bitcoin. To gain this confidence, there is no secret: you must deepen your knowledge of Bitcoin.
Since the Bitcoin price fell in March 2020, the Bitcoin price has increased by +400%.
With the current price of Bitcoin between $18K and $19K, HODLing Bitcoin has been a profitable strategy more than 99.6% of the time:
Bitcoin Profitable Days
This should make you feel confident that to fully enjoy the Bitcoin revolution, you need to HODL Bitcoin no matter what. Don’t make the mistake of playing the trader, when trading is an activity in its own right that requires specific skills that a majority of people don’t possess.
The electronic money created by Satoshi Nakamoto is the hardest money in the world.
The consequences of a currency like Bitcoin are countless. One point too often overlooked with Bitcoin is that it promotes freedom by allowing millions of people to protect their wealth in a way that is resistant to censorship.
Bitcoin is a unique invention that differs from the cryptocurrencies that were created later, not in terms of technology, but rather in terms of monetary attributes. The monetary attributes of Bitcoin are unique.
Some will try to make you believe that their cryptocurrency has better technology than Bitcoin. They will tell you that their cryptocurrency can handle more TPS (Transactions per Second). However, they will fail to tell you that this is at the expense of decentralization which is an incredible advantage of Bitcoin.
Don’t be blinded by the empty rhetoric of the founders or supporters of these cryptocurrency projects.
In the long run, only Bitcoin really matters. Moreover, we will stop giving too much importance to these cryptocurrencies by showing that Bitcoin is special. There is Bitcoin and there are cryptocurrencies. Everybody gets it sooner or later.
Some later than others, which will have cost them a lot of time, and even worse, a lot of money often.
V. Your seed is your key
The first of the Ten Commandments of Bitcoin is to always have the private keys associated with your Bitcoins in your possession. Under these conditions, you should not leave your Bitcoins on trading platforms longer than necessary.
A good way to store your Bitcoins is to send them on a hardware wallet. Your wallet will initially generate a seed phrase and ask you to write it down on paper.
A seed phrase, also called a backup seed phrase, is a list of words that stores all the information you need to retrieve access to your BTC stored on the Bitcoin Blockchain. A seed phrase with 24 words is now the standard, as it provides better security.
So you absolutely need to secure your seed phrase because your seed is your key.
If one day you lose your hardware wallet or it doesn’t work anymore, your seed will be your life insurance. You will be able to regain access to your Bitcoins thanks to it. It also means that anyone who manages to access your seed phrase will be able to take all your Bitcoins from you.
Store it in a safe place, but not in a file on your computer or smartphone. Paper is a better solution, but it can deteriorate over time. The solution is to use a metal backup. Several companies offer perfect products for this.
It costs more than a piece of paper but ensuring the security of your Bitcoins is well worth spending a few dozen dollars.
The last solution is to memorize your seed phrase.
VI. If it looks like a scam, It is a scam
Bitcoin is more than just a financial investment. However, its performance since its inception has fueled the greed of hundreds of thousands of people. In the future, it will grow to hundreds of millions of people.
It is worth mentioning that the Bitcoin price has shown a performance of +28,000,000% since 2010. Bitcoin has been the best performing asset of the 2010s, transforming $1 invested in 2010 into $90K at the end of 2019.
Some people only think about money and therefore fall into this trap. Out of greed, but also out of gullibility, these people end up believing all the promises that some people make to earn more Bitcoin.
Unfortunately, some people have still fallen into the trap.
So this command is there to remind you of something very important: if it looks like a scam from near or far, it is a scam. If it looks too good to be true, it is a scam. Anything that promises to win Bitcoin without doing anything is a scam.
Transactions on the Bitcoin network occur between the address of a sender and the address of a recipient. An address on the Bitcoin network is an alphanumeric identifier of 26 to 35 characters.
An address on the Bitcoin network should be considered as an invoice that can be generated free of charge. There are three types of address formats currently in use:
P2PKH that starts with a 1.
P2SH that starts with a 3.
Bech32 beginning with bc1. Bech32 is a bitcoin address that is fully compatible with SegWit.
When you wish to receive Bitcoin, you will create an address on the Bitcoin network that you will send to your contact. If you wish to send Bitcoin to someone, you will need to ask your contact to send you the address they have created on the Bitcoin network.
If a transaction is made on the Bitcoin network with the wrong address, you risk losing the BTC transmitted during that transaction.
Given the valuable nature of Bitcoin, it would be a shame to lose money for a character input error. This command is there to remind you that you have to check each address of a transaction several times.
Not once, not twice, not three times, but at least four times. This will give you additional guarantees that your transaction will go through the Bitcoin network correctly.
VIII. Buy BTC with money you can afford to lose
In the world of traditional finance, there is one golden rule:
Never Invest Money That You Can’t Afford To Lose.
This rule also applies to the Bitcoin world. You should only buy Bitcoin with money you can afford to lose.
Don’t put yourself in an uncomfortable financial position to buy even more Bitcoins. You could be trapped afterward into making bad choices. To be able to sustain the Bitcoin revolution, in the long run, you need to be smart with your Bitcoin buying strategy.
A good solution is to smooth out your costs by adopting a Dollar Cost Averaging strategy as I told you at commandment III.
This means buying Bitcoin regularly, month after month, for example.
IX. Make your own decisions
When you enter a new field, you will quickly be tempted to follow the most well-known influencers in that field. This is not a bad thing as long as you remain aware of one essential reality :
Influencers, and other experts, give their opinions, but in the end, it is up to you to make your own investment decisions.
In the Bitcoin world, you will notice that a lot of people share their opinions on social networks or forums. I, myself, share my opinions on Bitcoin with you.
Nevertheless, I always take care to tell you that it is not investment advice that I am giving you, but simply my opinion. My goal is to help you educate yourself properly about Bitcoin, money, and economics.
With what I share with you, you will then be able to make your own decisions in a more informed manner. You will therefore maximize your chances of making the best choices for you and your future.
As such, you should keep in mind the following proverb:
“The counselors are not payers.”
People who pretend to give you investment advice without telling you that it is only their personal opinions are not the ones who will risk losing everything if they make a mistake.
This should alert you to the need to make your own investment decisions.
At the end of the day, you will always be alone with your choices. Take as much information as you can, think about your personal strategy, and then act according to your convictions.
This way, you will not fall into the trap of those who blindly follow the advice of Bitcoin’s influencers.
X. Use Bitcoin divisibility to accumulate more
Many people think that the current Bitcoin price is too expensive for them to buy it. The Bitcoin price is indeed beyond $18K at the time of writing.
These people probably don’t know that Bitcoin has an incredible advantage over gold: Bitcoin is divisible up to eight digits after the decimal point.
The smallest unit of Bitcoin is called the Satoshi. We have the following equivalences:
Besides, I would advise you to make the volatility of Bitcoin your greatest ally rather than your worst enemy. When Bitcoin price undergoes strong corrections like the one experienced in March 2020 for example, you should take advantage of it to accumulate more BTC.
All this can only be done if you have total confidence in Bitcoin.
Conclusion
The bull rally that the Bitcoin price has just experienced at the end of this year 2020 is nothing compared to what awaits us in 2021. A much more phenomenal Bull Run is expected, which will see hundreds of thousands of retail investors flocking in droves.
To ensure that this Bull Run does not end as badly as it did at the end of 2017, it seems essential to remind new entrants of some basic principles. The Ten Commandments of Bitcoin that I have just detailed will enable new entrants to this world to take full advantage of Bitcoin in complete security.
Provided, of course, that the Ten Commandments of Bitcoin are applied to the letter.
Bitcoin is a monetary revolution that will change the world of the future.
Bitcoin is a monetary revolution that will change the world of the future in terms of money. Bitcoin’s unique monetary attributes are supported by Blockchain technology, which, combined with Bitcoin, becomes a technological disruption.
The consequences of a system such as Bitcoin on the world of the future will be numerous and will go beyond money.
By offering the same opportunities to all the inhabitants of the Earth, Bitcoin will change the game by allowing a redistribution of the cards that the current monetary and financial system does not allow for. This system is flawed and not fixable.
In what follows, I propose you to discover 10 famous quotes that will help you to open your eyes to the why of Bitcoin, but also the importance it will have in the world of the future.
Satoshi Nakamoto on trust problem with central banks and banks that Bitcoin addresses
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”
Satoshi Nakamoto, Founder of Bitcoin
The current monetary and financial system was unilaterally introduced by Richard Nixon in August 1971 when he ended the convertibility of the U.S. dollar into gold.
This system was then officially legalized by the Jamaica Accords in January 1976. It is based on a blind trust that citizens should be able to have in central bankers and private bankers.
Unfortunately, history has shown us that it is impossible to have this level of trust in the men at the head of the current system. The central bankers, who are not representative of the people, can print thousands of billions of dollars out of thin air in a snap of the fingers.
This is the only response that the Fed and other central banks seem to know to all the ills of the economy. To do so would be like treating the ailments of an alcoholic by giving him a little more alcohol every day. You understand that this can only get worse over time.
Private banks are at the center of an opaque banking system that favors the natural inclination of humans for corruption. Money laundering scandals multiply year after year without sanctions commensurate with the crimes committed.
I’m not even talking about the waves of credit bubbles that the unscrupulous attitude of these private banks creates, or the little respect they show for the privacy of citizens.
Friedrich Hayek on the need to take money out of the hands of governments
“I don’t believe we shall ever have good money again before we take it out the hands of governments.”
Friedrich Hayek
Born in 1899 in Vienna, Austria, Friedrich Hayek is an economist and philosopher recognized as one of the most important thinkers of liberalism in the 20th century.
Friedrich Hayek worked in the field of the information economy, analyzing, in particular, the causes of economic crises, especially the 1929 crisis. He developed a theory of entrepreneurship, the role of political institutions, and the reforms he believed were necessary for the modern monetary system.
He belongs to the Austrian School which advocates different liberalism from the majority neoclassical liberalism which consists of challenging the mathematization of the economy, in considering that economic crises are caused by speculative bubbles.
In this respect, Friedrich Hayek thus separates himself from the dominant model embodied in particular by Milton Friedman.
Friedrich Hayek knew during his life different monetary systems. He knew the gold standard system set up at Bretton Woods at the end of the Second World War, then the current system set up unilaterally by Richard Nixon in August 1971.
Friedrich Hayek has spent his life alerting people to the dangers of the current system.
He has always been very critical of this system. For Friedrich Hayek, it was essential to have competitive money outside the control of the States. This would be the best protection against the risks of inflation.
For Friedrich Hayek, it was obvious that inflation decided by governments has always been carried out solely for the benefit of the governments themselves:
“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”
Today, many people think that money should absolutely be a prerogative of the States. In his book “The denationalization of money” published in 1976, Friedrich Hayek argued for a money market outside the monopoly of the States.
According to him, it is essential to move away from the dogma that money should be the responsibility of the States.
Indeed, Bitcoin exists in limited quantities. There will never be more than 21 million BTC in circulation. The monetary policy of Bitcoin does not depend on any arbitrary decision of humans.
Written into Bitcoin’s source code, Bitcoin’s monetary policy is programmatic. Everything is inevitable with Bitcoin.
Milton Friedman on the role that an e-cash will play in reducing the role of governments
“I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed, is a reliable e-cash.”
Milton Friedman
Milton Friedman is an American economist, considered one of the most influential in the 20th century. An ardent defender of liberalism, he was awarded the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.
He works in both theoretical and applied fields of research, being at the origin of the monetarist movement, and the founder of the Chicago School.
In the latter part of his life, Milton Friedman witnessed the emergence of the Internet. Fascinated by this invention, Milton Friedman considered that the Internet would be one of the main factors in reducing the role of governments in money matters.
The prerequisite for this was the existence of reliable e-cash.
The Bitcoin created by Satoshi Nakamoto meets this pre-requisite once stated by Milton Friedman. It is the first step in the separation of money from the hands of the State. In the years to come, Bitcoin will continue to grow in importance in societies around the world.
Satoshi Nakamoto on why Bitcoin is different from the previous e-cash failed attempts
“A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990’s. I hope it’s obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we’re trying a decentralized, non-trust-based system.”
Satoshi Nakamoto, Founder of Bitcoin
Since the creation of Bitcoin by Satoshi Nakamoto, many people have been reticent about its chances of success with the general public.
As early as the early 2010s, Satoshi Nakamoto explained to Bitcoin’s critics why his invention was different. All the e-cash systems that failed in the early 1990s had one thing in common: they were all centralized.
Bitcoin is the first attempt at an e-cash based on a decentralized system. The Bitcoin Blockchain is permissionless and trustless. That makes all the difference.
More than eleven and a half years after the official launch of Bitcoin, everyone will easily agree that Bitcoin is an incredible success that has been able to surpass the $200 billion market cap.
These founders of Altcoins claim loud and clear that their technology is superior to Bitcoin. Their cryptocurrency would have more potential than Bitcoin for the world of the future when you listen to them.
The beautiful words of these people make some people believe that it is useful to look for the next Bitcoin. In reality, it is a misunderstanding of things that will waste a lot of time and money for those who fall into this trap.
Bitcoin should be seen as the money protocol for the Internet. As Paul Buchheit, the creator of Gmail, said, Bitcoin is the equivalent of the TCP/IP layer of the Internet.
While the Internet has evolved since its launch in the 1990s, it has never been replaced. Web giants such as Google, Amazon, Facebook, or Apple have not created a new Internet. Instead, they have relied on the Internet to build products and services worth hundreds of billions of dollars.
With Bitcoin, it will be the same. The Bitcoin protocol will evolve, and these products will be built on the Bitcoin Blockchain in the years to come.
Marc Andreessen on Bitcoin’s incredible network effect
“In fact, Bitcoin is a four-sided network effect. There are four constituencies that participate in expanding the value of Bitcoin as a consequence of their own self-interested participation. Those constituencies are (1) consumers who pay with Bitcoin, (2) merchants who accept Bitcoin, (3) “miners” who run the computers that process and validate all the transactions and enable the distributed trust network to exist, and (4) developers and entrepreneurs who are building new products and services with and on top of Bitcoin.”
Marc Andreessen
Marc Andreessen is an American entrepreneur and investor, but also a software developer famous for creating Mosaic. As a reminder, Mosaic was the first popular web browser in the world.
He then co-founded Netscape. He is now a general partner of Silicon Valley venture capital firm Andreessen Horowitz.
In addition to these activities, Marc Andreessen has been a strong supporter of Bitcoin since its early days. He has been explaining for a very long time that Bitcoin is the future regarding money. When asked in the past why Bitcoin was going to be a resounding success, Marc Andreessen emphasized the four-sided network effect of Bitcoin.
Consumers will pay for Bitcoin through merchants who will accept Bitcoin as a means of payment. Then, the Bitcoin miners will make their computing power available to the network so that blocks can be mined and transactions can be executed correctly.
Finally, the developers and entrepreneurs who will be encouraged to build new products and services on top of the Bitcoin Blockchain.
This network effect will only increase the utility of Bitcoin over time. Bitcoin should be seen as a monetary network that can change the world in terms of money.
Erik Voorhees on the two reasons why Bitcoin is so valuable
“Economists and journalists often get caught up in this question: Why does Bitcoin have value? And the answer is very easy. Because it is useful and scarce.”
Erik Voorhees
Opponents of Bitcoin, be they politicians, bankers, or economists, often argue that Bitcoin has no intrinsic value. These people do not seem to understand that the value of something is totally subjective.
For those people who are interested, I invite them to read this excellent Wikipedia article on the subject of the “Subjective theory of value”.
The supporters of this theory explain globally this:
“The value of a good is not determined by any inherent property of the good, nor by the amount of labor necessary to produce the good, but instead value is determined by the importance an acting individual places on a good for the achievement of his desired ends.”
Thus, the U.S. dollar is only valuable because a majority of people decide it is. It is the same for gold. For Bitcoin, it is the same.
Bitcoin users are convinced by the monetary revolution that Bitcoin embodies. They want to believe in the better world that Bitcoin builds for everyone in the future.
Erik Voorhees already gives two main reasons why Bitcoin is so valuable. This is due to its usefulness and its scarcity.
The latest is one of the 6 main reasons I often give to all those who tell me that Bitcoin is worthless:
Bitcoin is scarce. Bitcoin is the hardest money in the world. There will never be more than 21 million BTC in circulation. Bitcoin’s programmatic monetary policy is there to abstract it from the corruption inherent in humans. It is a great advantage to finally have good money at our disposal.
Bitcoin is transparent. The transparency of the Bitcoin network is to be contrasted with the opacity of the current banking system. Nobody knows what is going on at the heart of this system. Nevertheless, the tip of the iceberg is chilling with fines for money laundering or manipulation that keep falling against the world’s major banks. The people deserve better.
Bitcoin has no leader. Bitcoin belongs to all its users. Its goal is to give power back to the people by removing the control of money from the hands of governments. This is the number one prerequisite for us to have good money available again, as Friedrich Hayek said in 1984.
Bitcoin is decentralized. Rather than a system with a single point of failure, Bitcoin relies on a decentralized system based on its users. They are the ones who ensure the operation and security of the Bitcoin network by providing their computing power. This works perfectly because Bitcoin has never been hacked in more than eleven years of existence.
Bitcoin is synonymous with freedom. Bitcoin protects 5 fundamental human rights. It gives you the freedom to live your life on your own terms. In a world where governments and web giants threaten your freedoms, Bitcoin is your best money weapon to keep control.
Janet Yellen who admits the Fed’s inability to regulate or supervise Bitcoin
“The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way.”
Janet Yellen, Chair of the US Federal Reserve, Feb 27, 2014
For all defenders of a world where the money is taken out of the hands of governments, Bitcoin is great hope. Bitcoin is our best chance to have a weapon to protect our privacy when it comes to money in the future.
With the future rise of central bank digital currencies (CBDCs) or the digital currencies of companies such as Facebook’s Libra, Bitcoin will be the only alternative for people around the world.
Former Chair of the Fed, Janet Yellen had confessed in early 2014 that the U.S. central bank had no authority to supervise or regulate Bitcoin.
Chris Dixon explaining that Bitcoin brings us into the era of math-based currencies
“There are 3 eras of currency: Commodity based, politically based, and now, math based.”
Chris Dixon
Founder of Hunch, which was later acquired by eBay, Chris Dixon put his finger on what Bitcoin was all about: entering the era of mathematically based currency.
Previous eras had been those of commodity-based currencies, and those of politically based currencies.
These currencies have shown many significant drawbacks, and mankind is ready to move towards a better solution for the many with Bitcoin. Bitcoin abstracts the people from the risks of corruption inherent in the humans who run the current system.
The transparency of Bitcoin allows everyone to verify everything that happens on the network. Everyone is free to form their own opinion of what the truth is at any given moment. This is one of the essential reasons for Bitcoin’s success.
This new era will benefit the greatest number of people and help build a fairer world.
Tyler Winklevoss on Bitcoin that protects us from human error
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”
Tyler Winklevoss
The Winklevoss twins are famous American entrepreneurs in more ways than one. They are at the origin of the idea that led to the creation of Facebook by Mark Zuckerberg. Zuckerberg then stole the idea from them and made Facebook an incredible success.
After winning their battle in court against Mark Zuckerberg for the theft of their idea, the Winklevoss twins used the millions of dollars they received in compensation to buy BTC in large quantities in the early 2010s.
They also took advantage of the opportunity to create the Gemini trading platform, which is one of the most widely used in the United States.
They are Bitcoin billionaires who explained their bold choice at the time by the fact that they wanted to believe in a currency that could abstract humanity from human error. In fact, Bitcoin is based on a mathematical model that does not depend on political decisions or the inclination for human corruption.
Bitcoin responds to the great emerging need for the coming years: to be able to protect its wealth over time in a way that is resistant to censorship.
Satoshi Nakamoto’s invention holds out the hope of building a fairer, and therefore better, world for as many people as possible in the future.
Conclusion
Bitcoin has been evolving at its own pace day after day since its official launch on January 3, 2009. This is something essential to ensure that the Bitcoin revolution can be carried out safely.
A lot has been said about Bitcoin since its creation. In this story, I have listed 10 quotes that will help you better understand the importance of Bitcoin for the world of the future. The secret is not to listen to what the powerful at the head of the current system say, but to do your own research.
That way you will find out how money works, and then why the current system is flawed and not fixable. Then you will be able to understand why Bitcoin is the answer to these flaws. This will give you a chance to become aware of the monetary revolution that has been progressing block by block for more than eleven years.
This monetary revolution aims to build a better world for all in the future, and you absolutely have to open your eyes to get on board. If you don’t, you may bitterly regret it in the future.
(Disclaimer: This story contains an affiliate link for the book “The denationalization of money”. If you choose to purchase after clicking this link I may receive a commission at no additional cost to you. Thank you for your support!)
You make decisions constantly in life. Every day, you have to decide things that will impact your day, your week, and even a few months ahead. Some decisions are so obvious that you don’t even realize you are making a choice.
Yet you make many choices all the time.
If you take the time to analyze the situation, you realize that there are basically two types of decisions in life:
The hard ones.
The easy ones.
Examples of hard decisions related to the current system
Some decisions are difficult because you know that there is a wrong choice among the options available to you. The decision you make will therefore have potentially negative impacts.
When such decisions are presented to you, it is probably a sign that the system in which you are operating is not stable. For example, a decision you made previously may no longer be the right one.
As conditions change, you must constantly analyze the situation to make the right decision. The risk of error is therefore great.
With the current monetary and financial system, you are a perfect example of an unstable system. You make decisions with your fiat money, and then conditions are constantly changing because of decisions made by a minority of people.
The decisions you made were good a few months ago, and then the Fed decides to pursue an aggressive monetary policy. On the program, interest rates are lowered to zero, then unlimited printing of U.S. dollars out of thin air.
The decision you could have made yesterday with your money is no longer valid almost overnight. You constantly have to make new decisions with your fiat money to know how best to preserve your wealth over time.
A revolutionary system shows you what an easy decision is
An easy decision is one that you know exactly what the outcome will be. While buying Bitcoin might have been a difficult decision in 2010 as Bitcoin’s chances of success were not guaranteed, the situation has clearly changed in 2020.
Now, Bitcoin is more likely to reach the million dollar mark within 20 years than to drop to zero.
Mindset concerning Bitcoin have been constantly changing since the creation of Bitcoin. More and more institutional investors are choosing Bitcoin over gold as a hedge against the great monetary inflation we are currently experiencing.
Large companies like MicroStrategy and Square are making Bitcoin their reserve asset. PayPal is entered in the Bitcoin world and will offer a buy/hold/use Bitcoin service to its 346 million users starting in early 2021.
All signals are green for the mass adoption of Bitcoin as a store of value to be boosted as never before in the months and years to come.
Buying Bitcoin is now an easy decision
Buying Bitcoin is an easy decision above all because it is a stable system. Bitcoin has very clear rules of the game that cannot be changed by the arbitrary decisions of a corrupt human minority.
When buying Bitcoin, you know two essential things:
The maximum supply of Bitcoin is 21 million units. This will never change because no one has an interest in changing that rule.
Bitcoin’s monetary policy is programmatic. The schedule of the issuance of new Bitcoins is predictable.
You can already predict how many Bitcoins will be in circulation at the next Halving, and then the next. You know that all Bitcoins will be in circulation around 2140.
When you buy Bitcoin, you have guarantees, which makes your choice easier. You know that 1 BTC of 2020 will still represent 1 BTC out of 21 million BTC in 2050 or 2100.
The first decade of Bitcoin’s existence has only confirmed the advantages of this system
What makes your decision to buy Bitcoin even easier is to see what the benefits of this system produce in real life conditions. While the endless monetary inflation of the U.S. dollar has continuously devalued its value for decades, Bitcoin has steadily increased over the last decade:
Bitcoin price evolution over the past decade
While the Bitcoin price was $0.07 in August 2010, it approached (or broke) a new All-Time High on November 30, 2020 with a price of $19,749.
In just over ten years, the Bitcoin price has increased by +28,000,000%.
This should make your decision whether or not to buy Bitcoin easier. Although Bitcoin will not perform as phenomenally in the future, its upside potential is still impressive.
Bitcoin is a revolution that will take everything in its path. The big question now is to guess who will be the next big player to enter into the Bitcoin world.
Bitcoin is at a major turning point in its history. More and more big players decide to enter the Bitcoin world. The year 2020 has been marked by a coronavirus pandemic that will be recalled in a few years as the tipping point for Bitcoin.
In his book, Malcolm Gladwell explains that once this tipping point is reached, everything becomes different afterward. The coronavirus pandemic was a major event that triggered an economic crisis on a scale not seen in decades.
Central banks and governments always apply the same ineffective policies
The responses of central banks and governments have been those employed consistently since the establishment of the current monetary and financial system in August 1971:
Lowering interest rates to zero.
Printing money fiat out of thin air ad infinitum.
Increase in public debt to finance stimulus plans to support the economy.
The problem is that crisis after crisis, the magnitude of the measures to be implemented keeps increasing. If billions of dollars were enough in the early 2000s, tens of billions of dollars were needed in 2008. And in 2020, we are talking in trillions of dollars.
As the world’s leading economic power, the United States is obviously at the top of this ranking with a public debt that now exceeds $27.300 billion. The ratio of public debt to GDP has reached a record level in the United States:
U.S. Federal Debt: Total Public Debt as Percent of GDP
Globally, the norm is now to have a public debt-to-GDP ratio well above 100 or even 110% in most of the world’s major economic powers.
The current situation is unsustainable, and a Bretton Woods 2.0 will not be enough
Well aware of this, many economists and politicians now call for a Great Reset of the current system. A kind of Bretton Woods 2.0 to put the world back on the right track by taking into account the new challenges of the 21st century.
What these economists do not understand is that the great monetary inflation we are currently experiencing cannot be stopped as long as central banks have such unlimited power in monetary creation.
“I don’t believe we shall ever have good money again before we take it out the hands of governments.”
Friedrich Hayek has spent his life alerting people to the dangers of the current system
He has always been very critical of this system. For Friedrich Hayek, it was essential to have competitive money outside the control of the States. This would be the best protection against the risks of inflation.
For Friedrich Hayek, it was obvious that inflation decided by governments has always been carried out solely for the benefit of the governments themselves:
“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”
Today, many people think that money should absolutely be a prerogative of the States. In his book “The denationalization of money” published in 1976, Friedrich Hayek argued for a money market outside the monopoly of the States.
According to him, it is essential to move away from the dogma that money should be the responsibility of the States.
Friedrich Hayek considered that money should not be the prerogative of the States
This conception, which seems obvious to us today, is very recent. In the Middle Ages and until late in history, the control of money by the royal power was limited to certifying that a gold coin was equal to one gram of gold.
Kings did not have the power to act on the money supply in circulation as central banks do today.
Friedrich Hayek, who died in 1992, must be turning over in his grave after seeing central banks print more than $10 trillion out of thin air since March 2020. Friedrich Hayek was already concerned about all this in the mid-1970s.
For him, the big culprit was the English economist Keynes. He was guilty of pushing strongly the idea of control of currencies by governments and central banks.
To stop this inflationary spiral, Friedrich Hayek saw two possibilities:
A return to the gold standard, which makes it possible by the scarcity of the precious metal to limit inconsiderate monetary creation.
Or a competition between currencies.
Bitcoin is the solution Friedrich Hayek dreamed of. The emergence of Bitcoin is thus the realization of Friedrich Hayek’s dream. Hayek’s vision is therefore gradually taking over from that of Keynes, which has been dominant since the middle of the twentieth century.
Attitudes are changing and Bitcoin is becoming the number one option against the GMI
A major player in the Bitcoin world with its ultra-popular CashApp application that facilitates the purchase of Bitcoin, Square then joined the movement in early October 2020.
At the end of October 2020, it was the turn of PayPal to announce its upcoming entry into the Bitcoin world. By early 2021 at the latest, PayPal will allow its 346 million users worldwide to buy/sell Bitcoin directly from its platform.
Ray Dalio still believes, wrongly, that Bitcoin will be stopped by governments if it becomes too big. Ray Dalio is totally mistaken. Bitcoin can no longer be stopped, and above all, the trend is rather towards a better consideration of Bitcoin through more favorable regulations.
At least this is the hope that was born after the election of Joe Biden as the 46th President of the United States.
Warren Buffett still thinks that Bitcoin is a “Rat poison squared”, but after all, at his age, it seems logical that he is not able to question himself to understand why Bitcoin is revolutionary. So I can hardly imagine that Warren Buffett will be one of the next to enter the Bitcoin world.
If Warren Buffett will not be among those who will enter the Bitcoin world in the coming months, the big question is who will be next.
The arrival of PayPal brings credibility with the general public
The entry of PayPal is important because it brings enormous credibility for Bitcoin. PayPal is a major and highly respected player in the online payment world. Those who were still hesitating to cross the pass because of Bitcoin’s bad public image will probably be reassured.
In the summer of 2020, the Office of the Comptroller of the Currency (OCC), which is the U.S. banking regulator, gave the green light to U.S. banks to buy and hold Bitcoin for their customers.
It is therefore easy to imagine that American banks will be the next to offer Bitcoin purchase/holding services to their customers.
If this is not a good thing from the point of view of the Bitcoin revolution, since banks are part of the problem that Bitcoin wants to solve, it is something that will greatly boost the adoption of Bitcoin by the general public.
U.S. banks will follow PayPal’s lead in the coming months
Jamie Dimon, who said in May 2020 that he regretted calling Bitcoin a fraud at the end of 2017, explains that he sees Bitcoin gaining a sustainable foothold. He nevertheless specifies that it is not his thing. He urges JPMorgan to enter the Bitcoin world to take advantage of it.
Since May 2020, JPMorgan has been offering its banking services to Coinbase or Gemini, for example.
In 2021, I imagine that JPMorgan will end up offering Bitcoin to its customers. In the wake of JPMorgan, other American banks will follow like Morgan Stanley or Citibank. Citibank has just published a report in which its analysts see Bitcoin capable of reaching a price of over $318K by the end of 2021.
This is even more optimistic than my forecast of a $100K Bitcoin by the end of 2021. But why not …
Apart from the American banks, what other players could come into the world of Bitcoin in 2021?
The GAFA, with Amazon and Apple in the lead, will eventually come to the Bitcoin world
I think immediately of Amazon, which could enter the Bitcoin world by accepting Bitcoin as a means of payment on its site. This would be something that would boost the credibility of Bitcoin, but also its use.
Besides Amazon, Apple would have a double interest in entering the Bitcoin world quickly. The first would be to use part of its $192 billion cash reserve to buy Bitcoin. This move could then be followed by many other major companies in the United States. They are sitting on mountains of cash that are suffering the effects of this great monetary inflation.
But Apple could also generate a lot of money if it integrated Bitcoin into Apple Pay, which is becoming more and more popular. Apple could build a secure crypto wallet directly into its iPhones.
While this might have seemed utopian a few months ago, the probability that these players will enter the Bitcoin world in the coming months and years is growing.
Conclusion
Bitcoin is a real revolution that is set to last. Faced with such a monetary revolution, there is only one choice: embrace it as soon as possible to get the most out of it. The GAFAM will be no exception to the rule, and they will have to enter in the Bitcoin world sooner or later.
It will be a matter of survival for them as well.
I have not even mentioned here the governments that are becoming more and more involved in Bitcoin to free themselves from the American yoke on the world. I am thinking of Iran or Venezuela, who see Bitcoin as a way to free themselves from the American sanctions.
In any case, the future looks bright for Bitcoin, and the best is yet to come. Don’t be surprised by the great announcements for Bitcoin that will multiply in the months and years to come. This is just the beginning.
(Disclaimer: This story contains affiliate links for some books. If you choose to make a purchase after clicking these links I may receive a commission at no additional cost to you. Thank you for your support!)
Bitcoin is the money of the people supported by the people. A unique invention in the history that puts people at the center of the system.
Bitcoin is a unique invention in the history of mankind.
You have probably heard this phrase hundreds of times. I apologize in advance because I use it frequently as well. At the same time, how can you not be enthusiastic about such an incredible invention as Bitcoin?
It’s hard to remain measured when you really understand the potential of Bitcoin to build a better world for all in the future.
Yet, some people may find it hard to understand why Bitcoiners constantly talk about a unique invention in the history of mankind when they talk about Bitcoin.
Some beginners may not dare to ask for information about it. This is a mistake, because any question, however trivial it may seem to some, is worth asking if the need arises. After all, Bitcoin’s motto is “Don’t trust, Verify”.
Bitcoin encourages you to develop your critical thinking skills. To do so, you need to do your own research and ask questions if necessary. Then, it will be up to you to synthesize and form your own opinion of things.
Money has not always been a prerogative of the States
Nowadays, a majority of people think that money creation should be a prerogative of the States.
This conception, which seems obvious to us today, is very recent. In the Middle Ages and until late in history, the control of money by the royal power was limited to certifying that a gold coin was equal to one gram of gold.
Kings did not have the power to act on the money supply in circulation as central banks do today.
Friedrich Hayek, who died in 1992, must be turning over in his grave after seeing central banks print more than $10 trillion out of thin air since March 2020. Friedrich Hayek was already concerned about all this in the mid-1970s.
For him, the big culprit was the English economist Keynes. He was guilty of pushing strongly the idea of control of currencies by governments and central banks.
A return to the gold standard, which makes it possible by the scarcity of the precious metal to limit inconsiderate monetary creation.
Or a competition between currencies.
Bitcoin is our best chance to finally get good money
The emergence of Bitcoin is thus the realization of Friedrich Hayek’s dream.
Indeed, Bitcoin exists in limited quantities. There will never be more than 21 million BTC in circulation. The monetary policy of Bitcoin does not depend on any arbitrary decision of humans.
Written into Bitcoin’s source code, Bitcoin’s monetary policy is programmatic. Everything is inevitable with Bitcoin.
New Bitcoins are not created out of thin air. Each Bitcoin produced will have required a significant consumption of energy. Anyone who criticizes Bitcoin on this point does not understand that this is precisely what makes Bitcoins so valuable.
The intrinsic characteristics of Bitcoin have incredibly positive consequences for those who possess it.
As long as you have the private keys associated with your Bitcoins, no one can confiscate them from you. No one can stop you from making the transactions of your choice around the world on the Bitcoin network as well. Bitcoin gives you total power.
Bitcoin allows you to resist censorship
Government authorities cannot censor you. The banks can’t do anything against you either. This is why I consider the potential entry of American banks into the Bitcoin world as bad news.
Bitcoin was designed to free people from the yoke of the central bankers and the private bankers. If you buy Bitcoin through a service offered by your bank, you would have the same problem as with the current banking system: you would be at the mercy of your banker’s arbitrary decisions.
Bitcoin’s programmatic monetary policy with very precise rules that will never change gives you enormous guarantees in an increasingly uncertain world. Unlike the money supply of the U.S. dollar and other fiat currencies that are constantly increasing, you know that the number of BTC will remain limited to 21 million no matter what happens.
The endless inflation of the U.S. dollar keeps devaluing what you own
Your purchasing power in the U.S. Dollar will never stop decreasing. Since Richard Nixon introduced the current system in 1971, the U.S. dollar has lost 85% of its value. This is huge, and it makes any hope of saving your money useless.
The emergence of Bitcoin has shown that the future of money is digital. It gave Facebook ideas to launch its own digital currency. The Libra project was launched with this in mind. The States have calmed Facebook’s ardor since then, but the idea is well in the heads of the Web giants.
By offering you their digital currencies, these Web giants could target your money habits even better. They would then be able to generate even more advertising revenue thanks to the fine knowledge they would have of all the transactions you make.
CBDC will be a threat to your right to privacy
If it’s not the Web giants, it will be the states that will try to impose their Central Bank Digital Currencies (CBDC) on you. China is advancing at high speed on its digital yuan project.
The e-RMB project is the missing piece in the massive surveillance arsenal that China has put in place over the last ten years with the Chinese social credit system.
Other states will follow China’s lead sooner or later. As a citizen, Bitcoin will be your best weapon to protect your society from the mass surveillance that is being built.
With Bitcoin, people will be able to protect their privacy when it comes to money. By combining Bitcoin with other decentralized tools, you can gradually regain your online sovereignty. You have to fight for it. A right is never definitively acquired.
Conclusion
Contrary to some of society’s advantages that are restricted to the elite, Bitcoin is accessible to all. Bitcoin offers the same opportunities to all its users. Anyone can become a Bitcoin user. You can choose to take your destiny into your own hands by becoming a full node of the Bitcoin network at any time.
That is where Bitcoin’s great strength lies. Everyone is free to form their own opinion of the truth at any time. Bitcoin’s motto “Don’t trust, Verify” is not in vain. Bitcoin constantly encourages you to develop your sense of critical thinking.
By putting people back at the center of the system, Bitcoin is our best chance to build a better future world for all. It is up to you to come and participate in building that world.
