Because the international house says that besides the popular cryptocurrency, all other forms of money look … obsolete. How strong is the argument that … they won’t reach everyone.
The ‘bomb’ fell from its subsidiary Fidelity Digital and Fidelity Digital Assets. In her Twitter account she posted a study of ”Unchained Capital”, which concludes that besides Bitcoin all other forms of money seem outdated. And not only that. But also that Bitcoin does not reach everyone (https://twitter.com/DigitalAssets/status/1223306849275076608)!
For those who don’t know what ‘Fidelity’ is, this is an investment giant, one of the world’s largest asset managers. It employs over 50,000 employees and serves 30,000,000 customers. Under its supervision are 7.8 trillion. ($ 7,800 billion), mainly through a ‘bouquet’ of funds.
Here’s some excerpts from the study (https://unchained-capital.com/blog/bitcoin-obsoletes-all-other-money/):
When talking about Bitcoin, there are generally two conditions that seem to apply at any one time. Everyone always feels that it is too late to buy now and everyone wishes they had bought more. There are exceptions to every rule, but Bitcoin has an amazing ability to penetrate people’s psyche.
It seems that the 21 million, which is the maximum number of coins to come, is scarce, as more and more people realize that this number is not going to be violated. The demand for Bitcoin is driven by the credibility of its monetary properties.
Anyone who thinks that Bitcoin will be the dominant global currency may seem crazy. Its value is just $ 150 billion, minimal compared to the global financial system, which supports $ 250 trillion in debt. Gold alone is worth $ 8 trillion (50 times the size of Bitcoin). What are the chances of this happening? The idea sounds ridiculous or, at least, too low as a possibility.
While the number of people with whom a person can maintain social relationships is inherently limited, the same limits do not apply to monetary networks. A monetary network allows millions (if not hundreds of millions) of people unknown to one another to add value to the network, with relatively few direct connections. When the adoption of a monetary network increases by one order of magnitude (10x), the possible network connections increase by two orders of magnitude (100x).
Over time, the value of Bitcoin will continue to increase. It has an optimal monetary policy and this policy is strictly implemented on a decentralized basis. The element of trust has ceased to be disputed, as it proves to be the rarest form of money ever. The finite quantity is what sets it apart from all other forms of money.
Rarity is one side of the equation. The other crucial aspect concerns demand. Bitcoin is becoming increasingly rare as a result of the two-way operation of increasing demand and a completely inelastic supply. Rarity generates demand, while increasing demand creates more scarcity. It sounds circular, because it is. If there was only one person interested in the 21 million coins, there would be nothing rare or useful.
However, if 100 million people want to acquire Bitcoin, 21 million start to become rare. If the network reaches one billion users, 21 million will become extremely rare. In addition, Bitcoin will be of greater use as it will now have stability.
Bitcoin combines rarity with the ability to subdivide each unit into 8 decimal places. This way you can carry any amount of value, no matter how big or small it may be. Rarity alone is not necessarily valuable. Neither is the property of divisibility. It is their combination that makes them valuable.
Bitcoin is often described as digital gold, but in reality it is not a fair qualification. Bitcoin combines the power of natural gold with the potential of the digital dollar. Gold is rare, but difficult to divide and carry, while the dollar is easy to carry but not rare. The main comparative advantage is the fact that Bitcoin can be transferred directly through a communication channel without the need for a third party intermediary such as banking institutions. This is fundamentally different from digital payments on fiat systems, which depend on reliable intermediaries.
** The article does not constitute a prompt for the purchase or sale of the said securities. Provided for informational purposes only.
