It’s hard to understand Bitcoin if you’re not tech nerd. It appears to be private money, which seems ludicrous.
Until I did a deep dive on Bitcoin I was a skeptic. I thought there is no way private money can work. However, what I discovered is that it’s not really private money. Instead, it’s a digital collectible that happens to be liquid and transferrable.
It’s a new type of barter asset that was inevitable with the invention of the Internet. Its value is determined only one way supply and demand. So, what gives it demand?
The skeptics say that demand is completely based on FOMO and people chasing a fad that will blow up. However, that assumption could be wrong. What if it is a barter asset with functionality?
Now, what is that functionality? 1) The ability to bypass banks and do direct transactions between two parties. 2) The ability to borrow money without paperwork (all you need is crypto collateral). 3) The ability to use smart contracts outside the banking system.
Those are only part of Bitcoin’s potential functionality. The other factor is perhaps the main reason it is interesting. And that factor is as a store of value (SOV). Many think this is total BS. But the halving and low amount of supply makes SOV a strong argument to hold it.
The combination of functionality and SOV makes Bitcoin a high valued digital asset. This is why I’ve been bullish and remain bullish. Institutional hodlers are coming. They will push Bitcoin to the moon.
So, that leaves us with risk. What kills Bitcoin? At this time, nobody can provide a lucid answer. You can’t turn it off. You can’t regulate it (except in specific countries). The only main risks I can see are quantum computers (but that won’t happen anytime soon) and something better (good luck with that).
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