Bitcoin (BTC) emerges as an alternative and the “best tool” for saving in this new economic era compared to traditional assets, a new research report from Unchained claims.
The latest research findings from Bitcoin financial services firm Unchained show that Bitcoin’s superior monetary properties, including immutable scarcity, position it as the best solution to the “innovation trap” investors face.
Unchained researcher Joe Burnett explains the innovation trap as a situation where innovation-driven free market forces lead to an increased supply of certain goods and services, which in turn leads to low prices and, eventually, the debasement of such assets. According to Burnett, this erodes one’s ability to make long-term savings.
“In a world of abundance, hyper-productivity, and intensely competitive markets, storing significant wealth outside of Bitcoin will be increasingly difficult.”
Fortunately, “we’ve discovered the trap,” Burnett says, taking us close to the economic singularity where “most wealth ends up in Bitcoin.”
“Your wealth is melting”
Sharing research findings on the value of various traditional assets, including fiat currency, stocks, gold and real estate, Unchained explains that they are all vulnerable to increasing supply, with their value trending toward zero over time.
In holding the U.S. dollar and other fiat currencies, for example, the research found that with time, they reduce in value against basic consumer goods.
The report said these currencies are designed to debase against goods and services that can be produced faster and cheaper, including shelter, food, and energy.
“The U.S. dollar is down 92.8% over the last 5 years.”
U.S. dollar debasement over time. Source: Unchained
Burnett says that as more and more people recognize that “money designed to debase against basic consumer goods is not a great savings vehicle,” they try to hold their savings in other assets such as stocks, precious metals such as gold and silver and real estate.
According to the findings, these are also “melting away,” with the 20 year Treasury Bond ETF down more than 94.8% over the last 5 years. Stock investors face different layers of risk emerging from fierce competition and equity dilution – issuance of more shares, leading to a decrease in the value of existing shares.
“As markets become more efficient and competition intensifies, excess profits (alpha) are ultimately driven down toward zero in the long run, along with the market value of the equity.”
Using the S&P 500 as an example, the research revealed that this index is “down 87.6% over the last 5 years.”
Burnett observed that even gold and silver are not immune to the effects of increased production capabilities and competition.
The findings reveal that the annual rate of gold production increased from below 100 tonnes in the 19th century to just above 1,000 tonnes in the 1950s. Technological advancements in mining and processing have made extracting this gold easier and more efficient, contributing to a gradual increase in their production, which currently stands at over 2,800 tonnes per year.
“The potential circulating supply of gold has no serious limit, and gold holders will have their savings endlessly devalued as humanity becomes more productive at mining and extracting gold.”
Annual gold production. Source: Unchained Bitcoin - the new economic reality
The findings echoed Burnett’s views earlier this year when he argued that Bitcoin was one of the best monetary tools that nobody can print more of because of its "immutable absolute scarcity."
In the report, he demonstrated Bitcoin’s “superior monetary properties” in comparison to other asset classes saying, “it’s not only reasonable, but prudent to visualize traditional storeholds of wealth as measured in this superior asset.”
Monetary properties of different assets. Source: Unchained
Immutable scarcity is at the core of Bitcoin’s value proposition as a savings tool. This characteristic will be even more significant after the next Bitcoin halving, which is just four days away. This halving is expected to reduce issuance from 6.25 BTC to 3.125 BTC per mined block.
Michael Saylor, a renowned Bitcoin bull and advocate, also believes BTC is superior to other asset classes.
Source: Michael Saylor
Burnett concluded by saying that Bitcoin’s discovery 15 years ago as a novel tool for savings, trade, and economic calculation created a new economic reality that should be ignored.
“If you ignore it and continue saving in inferior assets at high valuations, your economic competitors will adopt it and outcompete you.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
