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Time To Pull The Trigger On Bitcoin

Summary

Bitcoin has proven itself to be resilient surviving external slander, internal war and competition from "2.0" Digital Currencies .

Bitcoin currently derives its value from speculation of future use as an improved store of value over Gold

The Pyramid Scheme, Criminal Haven, Hacker Bait, Drug Money, Dead. These are all terms thrown around by the mainstream media to describe Bitcoin during its short history in this world. A typical 8 year old would have long overdosed on said drugs and ceased to exist but yet having died close to 100 times in the eyes of the media, Bitcoin continues to defy all reason and survive.

As if external death wishes weren't enough, bitcoin in recent years has consistently faced an onslaught of internal bad actors attempting a coup on the currency. From malicious miners, greed seeking individuals and companies with flawed business models pressured by VC investors to speed up their bitcoin based business model, Bitcoin has failed to deviate from its mission. The developers that work tirelessly to develop and implement software upgrades that are well tested; the community that educates itself on developments to vote with their nodes are to thank. It is this decentralized nature that makes Bitcoin so hard to change and thus so hard to control as these bad actors have discovered. Hurdles await in the near future but if history is any indication, the Bitcoin community will not be compromised.

2.0 Digital Currencies have popped up but Bitcoin as the first and most secure digital asset with a limited supply acts as the digital gold to others silver. Digital currencies like Ethereum and Litecoin hold promise and may fulfill different needs but as of now Bitcoin is the undisputed heavy weight with the largest network effect. 

So how does Bitcoin derive its value and why is this not a bubble. Bitcoin holds all of the same properties that make gold attractive as a store of value; Arguably it is an improvement:

Divisible - To the 10th decimal place

Durable - Digital thus forever durable

Homogeneous - Every unit is the same

Portable - This is where Bitcoin stands apart from Gold as a far easier to transfer on a global scale at the click of a mouse.

Limited in Supply - 21 Million Cap on number of bitcoin mined ever

Stable - It is Not Currently stable with large bouts of volatility. As investors grow volatility will naturally fall.

All these attractive features combined with its Decentralized nature,  separate from any government and central bank printing machine is what make Bitcoin a potentially improved store of value and fiat currency hedge.

Considering the Gold Market is $8 Trillion in size, the Total value of Bitcoin is 75 Billion, or 0.9% of Gold. This is not an asset that fits into investors neat little box of discounted cash flows and relative valuation as some will have you believe. It is a Nobel Prize worthy invention, enabling scarcity and uniqueness in the digital realm not possible before Bitcoin. It is an evolution of money capable of displacing not only gold but weaker fiat currencies run by irresponsible government agents. This is just scratching the surface of the potential of Bitcoin.

Disclosure: I am/we are long BTC.