Rajat Soni, CFA - Will everyone go homeless and starve to death on a Bitcoin standard?
The speaker addresses a common misconception that Bitcoin cannot be used as money because its value is constantly increasing, leading to a lack of motivation to spend it. They argue that Bitcoin's value rises due to the US dollar's poor value retention and Bitcoin's finite supply. As more people understand and adopt Bitcoin, its value will continue to rise, making it more desirable for transactions. Merchants will eventually prefer Bitcoin over fiat currencies due to its stability and inability to be created out of thin air, unlike traditional currencies. The speaker predicts a future where Bitcoin becomes the standard for global commerce, with merchants demanding it for goods and services. They highlight that Bitcoin's utility will increase as more people and businesses adopt it, leading to a shift in how transactions are conducted globally. The speaker also contrasts Bitcoin with gold, emphasizing Bitcoin's ease of transfer and self-custody, which makes it more practical for commerce. They foresee a future where Bitcoin is widely accepted, and merchants offer discounts for Bitcoin payments, making it a preferred currency for transactions.
Key Points:
- Bitcoin's value increases due to the US dollar's poor value retention and Bitcoin's finite supply.
- As Bitcoin adoption grows, its value will continue to rise, making it more desirable for transactions.
- Merchants will eventually prefer Bitcoin over fiat currencies due to its stability and finite nature.
- Bitcoin's utility will increase as more people and businesses adopt it, leading to a shift in global transactions.
- Bitcoin offers ease of transfer and self-custody, making it more practical for commerce compared to gold.
Details:
1. 💡 Debunking Bitcoin Myths
- A common misconception is that Bitcoin cannot function as money because people might hoard it instead of spending it, fearing its value will increase.
- There is a concern that if Bitcoin becomes widely accepted as money, it might lead to reduced spending on essentials and leisure, as people may prefer to save it.
- Experts argue that like any currency, Bitcoin's role as money depends on its acceptance and stability, which can encourage spending rather than hoarding.
2. 📈 Bitcoin's Value Dynamics
2.1. Supply and Demand Dynamics
2.2. Adoption and Market Perception
2.3. Future Expectations and Spending Behavior
3. 🛒 Future of Bitcoin in Commerce
3.1. Merchant Adoption of Bitcoin
3.2. Integration of Bitcoin into Wall Street
4. 🔄 Bitcoin vs. Gold: Usability
- Bitcoin can be used for commerce and transferred globally without intermediaries, unlike gold which requires a third party for transactions.
- Bitcoin allows for full self-custody and immediate final settlement, whereas gold transactions can take days or months for settlement.
- Gold is impractical for large transactions like buying a house, while Bitcoin can be used for such transactions by transferring from one wallet to another.
- Currently, Bitcoin is seen more as an anti-inflation asset rather than a widely accepted currency, with most of the world not using or understanding it.
- Bitcoin is not yet used as money because people prefer to hold onto dollars, which they perceive as losing value over time, but this may change as merchants' preferences evolve.
5. 🔮 Bitcoin's Long-term Potential
- Bitcoin is expected to become more integrated into everyday transactions over the next 10 to 30 years, with the potential for use in places like Starbucks and through networks like the Lightning Network.
- Major companies such as Visa, MasterCard, Starbucks, Walmart, Amazon, Apple, and Microsoft may start offering Bitcoin-related services or accepting Bitcoin as payment, indicating a shift towards mainstream adoption.
- Merchants might offer discounts for payments made in Bitcoin to avoid transaction and processing fees associated with traditional currencies, potentially offering discounts ranging from 3% to 10%.
- The speaker expresses a desire to accept Bitcoin for services, highlighting a community subscription service priced at $20 per month and one-on-one coaching sessions, but notes that most customers currently prefer traditional payment methods.
- Despite the potential for widespread adoption, challenges such as regulatory hurdles, technological infrastructure, and consumer trust need to be addressed to facilitate Bitcoin's integration into mainstream commerce.
6. 🌐 Bitcoin as Global Currency
- Bitcoin's value proposition lies in its limited supply, unlike fiat currencies like the dollar, which can be created out of nothing.
- Merchants may prefer Bitcoin over dollars as it cannot be inflated or created at will, preserving its value over time.
- As Bitcoin becomes more widely accepted, consumers will need to use it for everyday transactions, such as groceries and gas, especially if merchants only accept Bitcoin.
- Bitcoin's utility increases over time as it can be used to purchase more goods and services, enhancing its purchasing power.
- Payment processors and merchants will increasingly want Bitcoin, leading to more businesses accepting it and charging fees in Bitcoin.
- Merchants benefit from accepting Bitcoin as they do not have to pay transaction fees, unlike traditional payment methods.
- The adoption of Bitcoin is still in its early stages, but it is expected to grow significantly over the next 10 to 30 years, becoming easier to use as a global currency.