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Many people ask:
How can #bitcoin
be a “store of value” when it is volatile in price?
Time for a thread.
How can #bitcoin
be a “store of value” when it is volatile in price? Time for a thread.
1/ What makes the best “store of value”?
If we can only pick ONE feature, it is its built-in “predictability”.
If we can only pick ONE feature, it is its built-in “predictability”.
2/ Gold is more predictable than copper and silver in supply and quality. That’s why gold won.
Fed is more predictable than Central Bank of Argentina. That’s why USD wins.
Fed is more predictable than Central Bank of Argentina. That’s why USD wins.
3/ Predictability leads to trust. Trust makes Money.
If everything is left to free markets of “money”, the candidate with the best “predictability” wins - OVER TIME.
If everything is left to free markets of “money”, the candidate with the best “predictability” wins - OVER TIME.
4/ #Bitcoin is designed for maximum monetary predictability with its supply cap, difficulty adjustment and 4-year halving mechanism.
Its simple predictability is why #Bitcoin is such a compelling (and arguably the best ever) candidate for store of value in human history.
is designed for maximum monetary predictability with its supply cap, difficulty adjustment and 4-year halving mechanism. Its simple predictability is why #Bitcoin
is such a compelling (and arguably the best ever) candidate for store of value in human history.
5/ Bitcoin had its “predictability crisis” when BCH forked out of Bitcoin.
Luckily, community has made the choice, and the market has spoken. We are back on track.
Luckily, community has made the choice, and the market has spoken. We are back on track.
6/ Now switching to price volatility.
For #bitcoin, price volatility is inevitable. It’s both noise and an edge.
When you have a supply cap and a 24/7 free trading market, it is only logical to see its price to fluctuate. Free markets work.
For #bitcoin
, price volatility is inevitable. It’s both noise and an edge. When you have a supply cap and a 24/7 free trading market, it is only logical to see its price to fluctuate. Free markets work.
7/ With more people waking up to its store of value feature, its price level will go up over time, as what we’ve witnessed over last 12 years.
Again, this upward trajectory is inevitable if everything is left to free markets.
Short term volatility is nothing but noises.
Again, this upward trajectory is inevitable if everything is left to free markets.
Short term volatility is nothing but noises.
8/ Market price is also the most important signal #bitcoin sends to the world.
The seemingly paradox of short-term volatility and long-term appreciation continue to draw new audience in.
A beautiful positive feedback loop!
sends to the world. The seemingly paradox of short-term volatility and long-term appreciation continue to draw new audience in.
A beautiful positive feedback loop!
9/ Next time if someone tells you #bitcoin cannot possibly be a good store of value because of its price volatility, show her this gold price chart over time and ask her:
“Sorry - Which one in this chart is not stable again?”
cannot possibly be a good store of value because of its price volatility, show her this gold price chart over time and ask her: “Sorry - Which one in this chart is not stable again?”
End/
@GoldmanSachs This thread was inspired by your strategist who is equating “store of value” with a “constant dollar price tag”.
Cheers https://twitter.com/crypto/status/1357368876342902787
Cheers https://twitter.com/crypto/status/1357368876342902787
