The Logic of Investing Bitcoin
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Louis Liu, an adviser at Magi Capital Group, explained that the uniqueness of Bitcoin is that it is the first software that is sovereign and separates money from the government. The emergence of the Bitcoin blockchain is the first time in the history of human civilization that sovereignty is represented on a computer platform with a universal currency, namely Bitcoin.
Bitcoin has decentralized sovereignty, it does not depend on the single entity that controls the system. Compared to 2017, the computing power of Bitcoin has reached a new record of 100 quintillion hashes.
The greater the computational power, the more people are involved and invest capital to mine Bitcoin. That is, the Bitcoin network is increasingly decentralized and has sovereignty that cannot be paralyzed.
Liu said, there is currently a misunderstanding regarding the blockchain and decentralized values. Blockchain is not an innovation according to Liu, but just jargon for marketing purposes. A truly disruptive innovation is not the blockchain, but the currency of the Bitcoin and the Bitcoin blockchain.
Social Value
Second, about the economic value of Bitcoin. Bitcoin is not a company, so there is no income or dividends so there is no intrinsic value. Bitcoin is a currency, and like other currencies, there is no intrinsic value. The value of Bitcoin lies in its use as a currency where Bitcoin is better than gold and the dollar because it is more rare, open and peer-to-peer, Liu explained.
Nevertheless, if Bitcoin is successfully used in mass, it will not necessarily replace the currency of any country. Bitcoin can be a currency in the middle class, above the country's currency, as a standard of value and a neutral monetary clearing system.
According to Liu, the value of non-political monetary standards is urgently needed in today's world with an excessive supply of money. Bitcoin has the potential to become a non-political international clearing standard. As money is scarce in the era of capital inflation, Bitcoin can be a tool to fight inflation (reducing the value of money from time to time).
Investment Value
Third, the value of Bitcoin investments. The history of the Bitcoin protocol does not involve innovation, competition and disruption like a successful company or startup. Because, once the Bitcoin protocol is created, it is very difficult to change it. At present, the Bitcoin protocol is the standard for "internet money" and no other protocol has yet reached a scale large enough to rival Bitcoin.
The total number of other crypto asset users does not reach 5 million, and these networks process less than 1 percent of Bitcoin transactions per day. Liu said, it was more profitable for companies to build businesses on Bitcoin, like the Lightning Network.
Sloping Bitcoin prices at US $ 3,200 then skyrocketed to US $ 10 thousand in 2019, a good sign for Bitcoin that has come out of the bear market. This year, Bitcoin will experience halving in which block rewards are reduced from 12.5 BTC to 6.25 BTC per block. This means that this year is a good time to buy Bitcoin, explained Liu.
If Bitcoin becomes the standard of value and an international clearing network, then the value could be far greater than gold. The whole gold market is worth around US $ 8 trillion. If the Bitcoin market reaches the same size as gold, then one Bitcoin will be worth US $ 300 thousand.
For more details, see in-depth discussion links about the Bitcoin Investment Logic
https://medium.com/@Louishliu/an-in-depth-discussion-on-the-investment-logic-of-bitcoin-f0380e839cbc
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