6-Figure Bitcoin – Ahmad Al-Sharqatli

Bitcoin is going to 6 figures, it’s a matter of when rather than if, of that I have no doubt. We are being afforded a generational opportunity to create wealth and those who don’t take it can only blame themselves.

This is by no means to say that a long term sustainable bottom is in and the purpose of this entry is to provide my personal macro view on Bitcoin, rather than the technicals and short-medium term swings. As such, notwithstanding just how bullish the long term Bitcoin chart may be, I will only be addressing the fundamentals.

To truly appreciate the power of what Satoshi managed to create, some context is in order.

Let’s start off with a brief history of money, which started with the barter economy; a carrot farmer would exchange his produce with an apple farmer and so on and so forth. Obviously, this model had its short comings and we soon saw commodities starting to be used as currency.

Salt was the first notable mention, valued at the time for its preservative abilities. Soon after it was gold, valued for its fungibility and rarity. In fact the term “salary” is derived from “sal”, Latin for salt.

It wasn’t until international trade took off, that gold’s shortcomings as a mode of payment started showing up. See, it was difficult to transport a large number of gold coins across continents; ships got wrecked, and pirates took advantage.

Local bars at the ports saw the opportunity and started accepting gold coins in return for an IOUs (I owe you); a certificate that granted the holder a claim for gold coins. These same “institutions” started issuing debt, in fact this is the first instance of fractional reserve banking, but I digress.

Due to gold’s shortcomings “money” later on evolved to gold backed paper, and has since the Nixon Shock of the 1970s evolved to fiat. A piece of paper which has value because issuing central banks say so (fiat “latin”; let it be).

Money has since then become increasingly digital; by no means did Bitcoin innovate the concept of digital money, in fact, the first attempt at digital money dates back to 1976, in the form of “digital cash”.

We use digital money daily, to pay for our morning coffee, to shop online, when we transfer funds, etc… Point being, the true innovation behind Bitcoin resides in its ability to disintermediate how we transfer value by solving the byzantine general problem, how it does so and perhaps equally as important in the monetary policy built into it. Lets simplify…

The internet changed the world because it allowed us to transfer information digitally; consider sending a letter by post vs sending an email!

Bitcoin allows us to transfer value digitally the same way email allows us to transfer information. Where, email is enabled by the internet, Bitcoin’s ability to transfer value is enabled by blockchain, this is important because;

Blockchain by nature of the technology, allows Bitcoin (or other crypto-assets of course), to transfer value in a disintermediated manner.

Our entire financial industry is run by intermediaries. If you want to transfer money to any business or individual you need an intermediary to act as a trusted third party between the sender and receiver, think PayPal, Venmo or even your very own commercial bank.

Bitcoin, enabled by blockchain tech, disintermediates the middle man and allows us to transfer value peer-to-peer directly without the need for any third party.

Additionally, Bitcoin is able to affect this transfer, almost instantly (anyone say lightning network?), without censorship, at negligible transaction costs, across borders, while keeping a permanent chronological record of every single transaction that has ever taken place in an immutable (cannot be amended) and secure manner; in fact, Bitcoin is the only payment method on earth to have never been hacked, having till this day settled trillions of dollars’ worth of financial transactions while netting its miners hundreds of billions in returns.

But, in my opinion, especially as we witness an economy akin to the infamous credit crunch of ’08-’09, the true value of Bitcoin lies in the monetary policy built into the Bitcoin blockchain itself, a policy that no single entity can change;

As inflation continues to climb to levels unseen in recent history, financial markets continue to tumble and the importance of an asset that can store value during turbulent times is increasingly emphasized, enter Bitcoin!

The supply of Bitcoin is limited to 21 million; this can’t be changed. The rate at which new Bitcoin is produced is halved every 4 years (210k block to be exact), as opposed to the US$ for example which had 40% of its current supply injected over the past 2 or so years. Bitcoin has been around since January of ’09 and thus far about 19MM Bitcoin have been mined, it won’t be until 2140 that the last bitcoin is due to be mined.

This monetary policy, in very simple terms, limits supply and provides expectation that is untethered by political or economic factors.

The properties afforded to Bitcoin by blockchain tech, some of which mentioned above, in addition to updates coming to the Bitcoin blockchain increases demand; it is undoubtedly the best form of digital value transfer to this day.

Hence, it only stands to reason, that the price of any asset should increase when supply is limited while demand increases.

But, if Bitcoin, is truly is a great payment system that has all these properties and that was founded during a time of financial uncertainty and quantitative easing to act as a store of value, isn’t now a great time for its price to be increasing? Why has it lost its about 70% over the past 8 months and why are some experts proclaiming it dead?

The answer to whether Bitcoin is dead is simple; Bitcoin has been proclaimed dead over 400 times, only to bounce back stronger. Why has it lost 70%? Also easy! Markets are cyclical, Amazon lost 98% of its value during the dot.com crash.

Unfortunately however I have only one explanation as to why we haven’t seen price explosions at a time where there’s a perfect storm of geo-political and economic uncertainty coupled with record high inflation, a storm that Bitcoin was built to withstand; that is regulation.

This industry is still in its infancy and so is its regulatory framework. It is still very much a work in progress, and it is my firm belief that a 6 figure Bitcoin will become a reality when the regulatory landscape enables institutions to gain exposure to Bitcoin, something that we work day in, day out, to achieve at AYMBot®.