Don’t underestimate the store of value feature of Bitcoin
Bitcoin is known to be a store of value like gold and silver. Gold has a way longer track record what makes it a more certain investment, but the properties of Bitcoin are better, so it is likely that Bitcoin will overtake gold over time. Bitcoin is easier devisable, transportable and to verifiable. Furthermore, the new generation grows up with the internet and is more attracted to modern tech like Bitcoin than to classic assets like gold.
Bitcoin is and will remain to be the only crypto that is a real store of value
There are multiple cryptocurrencies available, but Bitcoin is the only one that accomplished to be a true store of value. There are multiple reasons:
Bitcoin is the only truly decentralized cryptocurrency
Bitcoin is the only cryptocurrency that started off under the radar and grew so big that it is not possible to destroy or compromise anymore. Also the creator is anonymous and disappeared not long after the launch, so there is no leader, CEO or owner of the network.
Most of the altcoins use less decentralized consensus algorithms. The few altcoins that use decentralized algorithms have a known creator, owner or even a centralized company behind it. This means that a government or another entity can destroy or compromise the network by bribing or forcing the leader.
You can see this in Ethereum, Litecoin and Bitcoin Cash for example. They use all proof of work what is a decentralized and secure algorithm, but they have a leader or multiple leaders. Vitalic, the creator of ETH can easily make changes in the network by telling the community what he wants. The Litecoin price crashed when the creator announced that he sold all his LTC and the value of Bitcoin Cash is only based on the advertisement and effort of their leaders. All these coins are in big danger when the leaders get compromised.
Bitcoin has by far the most secure network
Bitcoin is based on Proof of Work (PoW), this means the network is secured by the ‘work’ that the miners deliver to the network. The work is measured in hashes per second and comes to existence through real world resources being electricity and specialize hardware. To compromise the network you will have to deliver more work than all the miners together.
Bitcoin has by far the most work behind of all the PoW coins and Proof of Stake (PoS) is unproven on scale and leads to centralization over time (rich get richer). This means that all altcoins are easier to attack or compromise than Bitcoin. This also means that Bitcoin miners can attack some altcoins (alts with same algorithm), but non of the altcoins can attack Bitcoin. It is possible for 20% of the Bitcoin miners to destroy Bitcoin Cash, but it is impossible for Bitcoin Cash miners to destroy Bitcoin.
The hash rate behind Bitcoin is huge and growing
Bitcoin is most stable because it is the biggest network
Bitcoin is the biggest coin in market capitalization and trading volume what makes it least volatile. Beside that Bitcoin is the reserve currency so the demand will also grow when altcoins get hyped. A store of value want stability and Bitcoin meet this requirement best (still volatile, but this improves when the network gets bigger).
###The failure to hardfork Bitcoin was a good thing
Some people complain that Bitcoin is hard to change, but this is a feature and not a bug. The scaling debate took years and eventually there is no single hardfork done. This is a VERY good thing if you hold Bitcoin as a store of value, because you know that the Bitcoin you buy today is still the Bitcoin you bought in to in 10 or 20 years. Bitcoin has proven to be resistant to efforts to change the network by minorities, only near full consensus will allow a fork. Bitcoin is the ONLY crypto currency that has proven this!
Why is the store of value feature huge?
The store of value feature is very important because there is a ton of money to be stored. You can compare a store of value coin to a savings account and a medium of exchange (cheap and fast payments) coin to a spending account.
Normally a saving account contains thousands or sometimes even millions of dollars and a spending account only a few hundred. This means Bitcoin can get to huge valuations with way less users than an altcoin that is focussed to be a medium of exchange (cheap payment system)
Gold is the most important vehicle to store value at the moment and has currently a market cap of 7 trillion. Beside that, Bitcoin will also attract money from a stunning 21 trillion worth of offshore accounts because bitcoins can be hidden, transactions cannot be blocked and when you manage your keys properly bitcoins can’t be seized.
When Bitcoin can capture 10% of this market the price will theoretically have to rise 14 X. This is ONLY for the store of value use case, many other use cases are possible with bitcoin (speculation, payment, remittance, ect.)
Store of value is the essential feature for 2nd layers
Bitcoin is rolling out 2nd layers like RSK and LN at the moment to accomplish things that cannot be done on the base layer. In the future more systems will be build on top of the blockchain and eventually Bitcoin will be able to do everything that altcoins can do now.
The fact that the core feature of Bitcoin is store of value makes it very suitable for 2nd layers. People who store their value in Bitcoin store big amounts and don’t care when the fee is a bit higher when they cash out after years of holding or move their funds. This means that the miners can be paid by the holders to ensure a huge security level that is also used by the 2nd layers without the need for users to pay for it.
An altcoin that works on PoW will always have transaction fees to secure the network and these fees will rise when the use increases. 2nd layers can deliver the same service for (as good as) free while providing a way higher security level. This makes scaling way easier too.
The exiting part is that the 2nd layers will add value to the Bitcoin network and this will attract more miners and buyers. The increase in miners will make the network more secure for the holders and 2nd layers as well. The extra buyers will boost this symbiosis. Over time it will be proven that 2nd layers are way more efficient than single blockchains and Bitcoin will suck up all the altcoins.
True decentralization and game theory
There have been many attempts already from different entities that try to control Bitcoin and they all failed. When altcoins become as relevant as Bitcoin it will be extremely hard to resist these attempts because they are not truly decentralized thus have a single point to attack.
Bitcoin is coming in a stage where it is undeniable, so all the powerful entities in the world will try to destroy or control it. They found out (or will soon) that they can’t destroy it so trying to control it is the only option.
While compromising the leader or company is possible with altcoins, in case of Bitcoin the only way to take (some) control is by BUYING or MINING it. When the big boys like governments, central banks and big companies figure this out a huge armsrace is very possible. They all will rush to come in first to own an as big as possible part of the blockchain as cheap as possible and they know the first to buy can buy for a better price.
When this happens it will be HUGE for the price, it will rocket to over millions per coin. This scenario will not play out for altcoins, because there are simply easier ways to take control by compromising the centralized aspect.
Conclusion:
Store of value is not only a feature to attract a lot of money to the network, but it is a requirement to become the most secure blockchain on earth where extra layers can be build on to become “the internet of money and trust”. Bitcoin is the only cryptocurrency that meets this requirement and thus by far the most interesting asset at the moment.
Disclaimer:
This is no trading advise, I just share my knowledge and vision
Previous post:
https://steemit.com/bitcoin/@michiel/big-short-stock-market-and-big-long-btc-i-think-so
Best way to store your wealth in BTC and control your own private keys:
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Paying with monero is much more private, and thus secure.
I certainly like Monero and because it is anonymous on default it will live in harmony next to bitcoin at least for the coming years, but it won't play the enormous exiting global game that BTC wil play.
Maybe not for the average user, as it receives little media attention. But for criminals, untraceable transactions (which can't be stopped or intercepted) have huge value.
monero circulation supply is infinite
great post my man...waaw
Thanks!
my new steemian has not much idea about bitcoin and alcripto, but this enlightenment adds my insight into cripto and especially bitcoin. thank you @michiel. Salam dari @mukhtarilyas #mukhtarilyas.
Thank you, I like to share my views and help newbies out. More posts will come
this is so great. you got the great point here
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i could use that...:)
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i could use that...:)
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i could use that...:)
thanks for this informative post, man!
I believe younger generations would prefer to hold Bitcoin rather than gold, I would hypothesise the popularity of bitcoin would increase in a downwards fashion from the ages of 40 to 18. The younger generations are the ones that will drive what is considered 'value', just in the same way the did with Uber.
If I told you 10 years ago that people will get in a strangers' car and be delivered to their desired destination without paying physical cash you would think I'm crazy. This same thinking can be applied to Bitcoin.
Disclaimer: This is not advice, just my personal opinion.
Sounds interesting!
Then what if the founder of an alt coin disappeared like Satoshi? Then they got the same power not to be destroyed or ruined by investors?
The reason without leaders is enough to make the bitcoin valuable? Without the leaders, The BTC is late and hard to correspond to the need of investors and high hashes.
I agree with the symbolic meanings of BTC, but, do not agree with the effectiveness of BTC. Look at the late transmitting time and high cost relative to other coins that want to be new key currency of Crypto.
Anyways, Thanks to @michiel, your nice post with insightful messages. Take care~