Part 4 #StartInvestingInCrypto

Here are 5 reasons why I invest in Bitcoin.

1. Inflation Hedge/wealth protector

All my assets are denominated in fiat currency/USD and at the same time, the fed is flooding the market with cash. This inherently reduces the purchasing power of the currency. Also, every year inflation erodes 2% of my assets. As Paul Tudor Jones says cash is a wasting asset.

Whether inflation is happening or not depends on what indicators you’re looking at and where you live. But Pomp paints a very interesting perspective:

You merely need investors to BELIEVE that inflation is coming and you will see these assets increase. Investors are constantly moving capital based on what they believe will happen in the future. They buy a stock because they believe it will go up in the future. They buy a home because they believe it will create future cash flow or price appreciation. In the case of gold and Bitcoin, they are buying it today because they BELIEVE inflation is coming and these inflation hedge assets will provide them protection.

2. Scarce Asset

Bitcoin is truly the only scarce asset in the world. Only 21 million bitcoin will ever be mined. No one can print more and flood the market with it to debase it. Econ 101 — Low supply of Bitcoin will lead to higher demand and price in the future.

18.5 million Bitcoin have already been mined. Also, Bitcoin is on a deflationary supply schedule — it will get more and more difficult to mine Bitcoin.

One other key aspect to keep in mind is that even though 18.5 Million bitcoin have been put into circulation, but more than 60% of that has not moved in the last 12 months. This means that less than 8 million Bitcoin are actually available for purchase from the total Bitcoin supply.

When so many people are flocking to buy Bitcoin. Supply and demand economics dictates that Bitcoin is bound to rise in price due to its increased demand and capped supply.

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