Connecting Silver to Cryptocurrency

The only way we can understand something is by the stories people tell about it. There is no other way, except for coming up with a story of your own from scratch. But this is very difficult in today's media-saturated world.

Therefore, I shall be exploring the stories behind silver and bitcoin in an attempt to unite the two. It is my belief that bringing these two communities together will greatly benefit both, in a sort of symbiotic relationship.

So, what is the story behind investing in silver today? For this question, we are assuming you are considering the actual, physical silver metal, not any of the derivatives in stock markets. These are the silver metal pieces that you must buy and store in your home. The storing in your home aspect of silver already relates it to bitcoin, which also must be stored on computers (presumably in your home) and safeguarded.

To start with, we must dispel the notion of "intrinsic value". The very phrase is an exercise in tautology. Neither silver nor bitcoin contain any "intrinsic value". What the value comes from is the human desire to utilize the product. But this desire can vanish in an instant. Silver's value comes from two things, both of which are human desires: its store of value and its industrial uses. Bitcoin's value comes from two similar things: its store of value and its technological uses. Both of these values, for both silver and bitcoin, are of course intrinsically connected. Many people mistake this intrinsic connection for intrinsic value, but it is not the case.

Where bitcoin goes a little different from silver is that one of bitcoin's technological use cases is to act as a currency. This is perhaps its most exciting technological use: to take over the internet as "the internet money" of our time. Another one of its uses is as a gambling chip, which has also proven popular. Silver really does not compete with bitcoin when it comes to uses on the internet. Silver is, however, used in things that make the internet possible, such as the electronic connections on circuitboards and keyboards.

Like bitcoin, silver hovers in the space between being a currency and being an asset. It does this far more than gold, which has historically mainly been used by the elites due to its rarity. The masses (except for the upper echelons of the merchant class) instead mostly traded in silver, which was much more plentiful. Obviously, the amount of people using silver coins and bullion as currency today is very small and not on a trajectory to increase: bitcoin is slated to take over that use case. Silver will instead become an integral part of the hardware on which bitcoin and other technologies of the future rely.

Bitcoin, as we all know, is limited to 21 million coins. Many people bawk at the idea of a bitcoin being worth a huge sum of money because who would ever buy a bitcoin for $100,000? But they don't understand that a bitcoin can be denominated as little as 1/1,000,000th of a bitcoin. And the same is true of silver, which is used in such tiny amounts in keyboards and circuitboards that it is not economically advisable to recover the silver.

As the "internet of things" evolves, more and more silver will be consumed for more and more computers. We're already using more silver than we are mining, and how much silver is there available in the world? Nobody knows for sure, and any estimate you find online should be taken with a grain of salt. But we know it is a finite amount, and we also know that silver tends to exist mostly in the upper crust of the earth. This means that most rich sources of silver have already been mined: there is no option left for finding large quantities of silver unless drastic measures are taken, such as establishing large recycling programs for all devices to extract their silver, or asteroid mining. For either of these options to be economically possible, the price of silver would have to skyrocket.

And therein lies the rub. What unites silver and bitcoin more than anything is their "to the moon" projections in price. Bitcoin is much more similar to silver than gold in this way, because while gold is sure to increase in price in the upcoming years, it is not going to be on a very fast trajectory like silver and bitcoin. However, the partnership is not all sunshine and roses, which I will get into more in my next post.

In conclusion, anyone who loves bitcoin should invest at least a little in silver, and vice versa. These two seemingly different assets are actually quite united and fighting the same fight together.