By Funsho Ajibade
Bitcoin, the savior, the messiah, the game-changer, it could make you a millionaire!
Bitcoin is becoming very mainstream but understanding cryptocurrency and the magical blockchain technology behind it is when people start to turn back around and walk away scratching their heads.
Fiat currencies (pound, dollar, euro, etc) have never lasted and are always replaced with a new monetary system. The average lifespan of a fiat currency is only 27 years based on the last 775 that were created. There are a couple of exceptions, one being the British pound sterling that is now over 300 years old.
The underlying problem with traditional currency is that it depreciates dramatically due to inflation. The pound has lost 99.5% of its value since it was created, which sends a clear signal that it too is doomed to fail. The formula is simple, nations gain debts due to things like war, market crashes, pandemics, unemployment, etc. In order to keep stability in the currency, countries borrow money from the central bank who literally starts printing more of it (whether on a printing press or figures on a screen in a digital sense) who then distributes the newly created funds to retail banks to put back into circulation.
The result? That currency has now been devalued by the total circulating supply being larger than it was originally.
Companies now have no choice but to raise prices in order to remain profitable and we on the surface have to pay more for services or products that have not changed in any way.
Ultimately, cryptocurrencies like Bitcoin are the antidote to this age-old problem because you can’t print more Bitcoin.
Bitcoin has 21 million coins and no more can be added to it, this is called a finite supply, unlike traditional currencies that have an infinite supply. The main difference in value is that it cannot be inflated or deflated. If lots of people buy Bitcoin the price rises in correlation to supply and demand so when there are very few Bitcoins left to buy, the price will naturally become more expensive due to its scarcity.
Take account of all the money in the world (roughly $80 trillion all told) and consider what will happen to the value of it as inflation continues to rise in every single fiat currency in existence. People will have two options, keep their money where it is and lose some of their wealth, or invest in other assets as a hedge for safety. Cryptocurrency is now being recognized as a means to do that, institutional investors and major corporations alike are starting to put part of their wealth into this market, a trend that will only continue to increase as people lose faith in fiat currencies. The cryptocurrency market only needs to have a market cap of one-tenth of the money in the world and Bitcoin will be worth upwards of $142,000 per coin.
Tyler Winklevoss, one of the first billionaires in cryptocurrency has estimated a $500,000 per coin price on Bitcoin and believes it will take over conventional commodities like gold. Tim Draper, prolific venture Capitalist investor estimates by 2022 we will see $250,000 per Bitcoin and Mark Yusko from Morgan Creek Investments, a former skeptic of Bitcoin, believes it will achieve $100,000 a coin by the end of 2021 and $500,000 by the end of 2030.
And so, the magical blockchain technology originally dismissed by so many, has come to provide a tangible defensive measure against the formidable power of inflation.
Funsho Ajibade is an educator, mentor, and advisor for digital asset investment with We Coach Crypto. Specializing in blockchain technology, cryptocurrency, DeFi and disruptive emerging decentralized technologies in the finance sector, he is on a mission to educate the world to understand the future of finance.