Since ancient times, all monetary systems have failed and caused many social disasters. However, financial analyst Steve Dubied says BTC is different and could save humanity.
After inflation hit the headlines, the price of the pioneering cryptocurrency kept dropping. Its supporters have touted Bitcoin (BTC) as an ideal hedge against inflation for over ten years. The financial press seldom mentions that subject, leading to wonder whether BTC has lost its virtues.
Satoshi Nakamoto created Bitcoin to offer users a decentralized currency that no government institution could manipulate. From a maximum of 21 million units, 19 million are already in circulation, while over 3 million will remain lost forever. In addition, the issuance of the other 2 million coins will go to future generations.
The technology of Bitcoin allows transmitting it between peers instantly and securely. The costs of fees are the lowest, and no third parties have the right to judge the transactions. Unlike fiat currencies, whose refinancing through bond markets accumulates expenses, BTC has no debts.
The Bitcoin network has strengthened because it relies on its Proof-of-Work (PoW) consensus, which has not stopped growing since its launch. It consumes negligible amounts of energy (0.16%), primarily using renewable energy for its operation.
Its scarcity and reliability make Bitcoin the ideal store of value thanks to its decentralization and instant exchange.
Humanity has looked for this value preservation for thousands of years. Since ancient times, all monetary systems have failed and caused many social disasters, of which the current inflation is just one episode.
Despite Its Dropping Price, Bitcoin Has Many Virtues
Over the last few years, BTC has become a technological tool as fiat currencies have significantly depreciated. It even compares to a Nasdaq-listed company since it does not make profits and suffers punishment for rising interest rates.
Even though Bitcoin has dropped as low as Netflix, the comparison is meaningless. The current management of BTC is absurd and ignores all its virtues in hard times.
The US inflation rate went from 0.12% to 8.58% over the last two years. Meanwhile, the Federal Reserve (Fed) funds rate increased from 0.25% to 1.75% during that period.
In addition, the real interest rate in the US dropped from +0.12% to -6.30%.
The US real interest rate has fallen by 0.3% since Bitcoin reached its all-time high in November 2021. Meanwhile, the price of the cryptocurrency has dropped by 69%. However, it is the first time its features and logic have been so significant and well-founded.
Growing numbers of long-term holders wait to hoard Bitcoin as mass adoption increases. Over time, the reason for the creation of the cryptocurrency and its financial merits will become evident.
Steve Dubied is a financial analyst whose company CONSULFIN SA is in Switzerland. He worked as a risk and portfolio manager for institutions and hedge funds between 2005 and 2015. Cryptocurrencies have interested him since 2017, as they provide a technological advance that seeks to solve the growing global monetary drift.
By Alexander Salazar
