Alright, I've been meaning to write this post for quite a while now but with the recent price madness, I just didn't have the time to do it.
In any case, I've noticed that a lot of crypto Twitter is covered with price predictions and it's bumming me out.
YouTube has also been infested with "professional" traders who are trying to convince me that they can catch wicks and somehow be profitable consistently trading Bitcoin-based on technical analysis.
That's fine by me, I don't mind people attempting to apply traditional trading techniques to a market which has virtually nothing in common with regular stocks and currencies.
However, when those same people come out publicly, claiming that "buying Bitcoin now is still early because it will reach $1 million, conservatively" - that's what I have an issue with.
These people (I'm intentionally not using any names but I'm pretty sure you're well aware of the most influential YouTubers and Twitter traders) claim that they have a sound understanding of Bitcoin. They claim that it's going to be the new money - much better than the "old" money. They say that it's inherently better and it takes away a lot of the flaws of current monetary systems.
Words such as immutability, censorship-resistance, scarcity, fungibility, and whatnot, are thrown out regularly and used as main strongholds of Bitcoin and other cryptocurrencies.
And then they usually say "that's why a price of $1 million per Bitcoin could even be a conservative target." Okay, what the actual fuck? Let's take it slowly though, and I'll try to explain why I think that if Bitcoin reaches $1 million it means it has failed.
The Intended Purpose Of Bitcoin
Let's start from here. First things first - the very headline of Bitcoin's whitepaper published by Satoshi Nakamoto is "Bitcoin: A Peer-to-peer Electronic Cash System." What the hell has this got to do with the dollar value of Bitcoin?
Bitcoin was designed to be used as a means of transaction. In other words, you go to your local coffee shop, you order your favorite double-shot espresso and a chocolate croissant and you pay your bill with 100 satoshis (for instance.) You don't care how much your satoshis are worth in dollars, euros, RMB, and whatever other fiat currency you might be using. You don't care because it doesn't matter. Your vendor accepts satoshis and he has already priced his products in satoshis. Everyone has done so. This is what Bitcoin is all about.
Of course, this is a thousand miles away from happening, if it's going to happen at all. But that's what it should be used for.
And here's where my issue with price predictions come. Claiming that Bitcoin is the "new and better money" and then putting a price target on it means you have no fucking idea of what this cryptocurrency is intended to be. Why? Well, if Bitcoin is priced at $1 million it means that it's still compared and valued in fiat currency - the very thing that it aims to replace. If it's the better money, why would you care how much it's worth in the current, not so good type of money? Because you don't care about Bitcoin's intention - you only care about its fiat value. And that, my friends, is called hypocrisy and speculation.
And that's the harsh truth that a lot of people fail to accept. Bitcoin is currently used for speculative purposes and nothing else. Nobody, not even those hardcore Bitcoin maximalists that you see on Twitter every day, uses Bitcoin for transacting - they "stack sats."
It's a Double-Edged Knife
Stacking sats is a concept that's twofold. First, there are those who believe in everything I wrote about above - that Bitcoin will eventually become the established monetary standard and them stacking sats now will pay out in the future. This is also where scarcity kicks in. I read a report somewhere that if you own 0.25 BTC today you are pretty much in the 1% of the people who own most Bitcoin and that it's almost impossible for this to change. This is kind of cool. Imagine a world where 0.25 BTC puts you in the 1% club. That I can accept - stacking sats for the purpose of using them when possible.
The other side, however, is just as mentally-challenged as what I tried to explain above. Stacking sats because you want to sell them later is alright. Doing so while claiming that you think Bitcoin will become the new money is just sad. Stop it.
$1 Million Per Bitcoin Is A Lot
Bitcoin has a finite supply. There are only 21 million bitcoins that will ever be in existence. With that said, 21 million x 1 million is 21,000,000,000,000. I have absolutely no idea what this number is but it has twelve zeros in it and that's an awfully lot of zeros to be in a number.
If this happens, Bitcoin is no longer a market that can be easily manipulated. It attracts the attention of regulators and governments. Yeah, you think that legislators currently give a damn about Bitcoin and that the last few years were good for its regulatory statute? Think again - nobody gives a fuck about cryptocurrencies in terms of legislation. Despite the fact that you read some stuff here and there, legislators have zero idea of how to handle them. And they're not really to be blamed - cryptocurrencies are challenging to put in a standard regulatory framework.
Take your taxation laws for instance - where do you realize your Bitcoin profits? What kind of taxes do you pay on it? What kind of expense exemptions are you entitled to? If you bought 1 BTC at $200 but sold it at $2000, what's your realized taxable profit? If then the remaining of your Bitcoin stack decreased and you are in the red, what happens with your taxes? Are your losses deductible? I personally have no idea how this works in my country and it's not that I haven't tried to understand. Here's the thing - the authorities don't know. A lot of them have barely heard about Bitcoin, let alone creating a comprehensive and applicable framework for it.
If Bitcoin becomes a multi-trillion dollar market, it's going to be a regulatory madness and classifying all this is nothing but a storm of legislation which has nothing in common to what we are currently used to.
It's Distributed, But Is It?
Sure, in theory, Bitcoin can be distributed but in reality - is it? It's certainly one of the most distributed cryptocurrencies but there are whales. Lots of them. They do whatever they want with the price. Just a few days ago Bitcoin went from $8,700 to $8,900 to $8,700 in less than 2 minutes. If that's not a classic example of market manipulation then I don't know what is.
But trading aside, a lot of bitcoins are concentrated in the hands of a small group of companies and people. We argue that its finite supply is a benefit which eradicates inflation and doesn't allow people to print more, but how good it actually is? The truth is that this creates the opportunity for certain people to own a major chunk of all bitcoins and, potentially, do whatever they want with the entire system. That's not a lot better than what we actually have right now.
To Wrap It Up
Don't get me wrong, please. I love Bitcoin and the idea behind it. I love the benefits that it could bring. But I'm also realistic. People, in their nature, are greedy fucks. That's the factor that Bitcoin can't quite deal with. All of those benefits work in principle, but in practicality, it could all be turned to shit real quick, and, if history is any indicator - it probably will be.
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