It is now nearly impossible to avoid talking about Bitcoin when approaching the topic of investing. Economists at DBS Bank seek to investigate the many opportunities that Bitcoin brings and highlights three of them.
Carry USD1t in your pocket
“Decentralisation – Power to the people. Bitcoin functions on open source software, meaning that decisions to maintain or improve the system are transparent and must be agreed on by a large enough consensus of users – a ‘monetary democracy’, if you will. With power in the hands of the people, some form of the ‘Tinkerbell effect’ is also at play here – an effect that describes things that will continue to exist if people continue to believe in them. With Bitcoin, its discontinuation will only occur when its participants no longer believe it to be a viable medium of exchange. As it stands, this outcome is increasingly remote, with choruses of doubters continuing to fall by the wayside.”
“Limited supply – Effective store of value. The effect of both the limited absolute stock, decreasing rate of mining production and high energy production requirement serves to constrict supply of Bitcoin with the passage of time. Coupling this with an elevated demand through familiarity and adoption sees Bitcoin increasingly stabilising at higher valuations. Bitcoin is birthed through a huge expense of energy, produced in limited reserve – running in direct contrast to an endless supply of fiat currencies that can be seemingly printed to existence on a whim. It is only causal then, to observe the latter being devalued against the former.”
“More Crypto-commodity than Cryptocurrency – High value density increases ease of portability. Theoretically, all the world’s private keys can be stored on a USB drive – valued at c.USD1t. No other physical commodity can rival this portability of wealth.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.