How is Bitcoin the Hardest Asset?
Skipping the obvious joke— We are not talking about something tangible verses digital and even some traditional definitions such as from investopedia.com:
- A hard asset is a tangible or physical item or resource that an individual or company owns.
- Often, the value of hard assets moves in the opposite direction of the value of soft assets, creating a buffer against losses.
- Hard assets can be long-term assets, such as machinery or short-term assets, such as raw materials or inventory.
Note: Most hard assets over time deprecate in value…either technology makes them obsolete or physical components of the asset erode, rust, spoils or degrade over time etc.
The most important property (or trait) of a “hard” asset is durability and holding value over longer periods of time.
Historically gold was king, but gold does not have a fixed supply.
If the price of gold goes up more gold is mined, and the supply increases, which limits upwards price movement. This will always be the case as someone eventually will even mine gold from asteroids or harvest gold atoms from seawater.
Bitcoin (BTC) has a finite fixed supply. Yes BTC can be forked to have different properties including supply, but the forked blockchain is no longer the same blockchain with the same properties.
Bitcoin is more secure than gold. Gold can be confiscated by the government (see USA 1930s). Gold can be stolen, needs to be stored in vaults with ongoing security costs. Bitcoin can be secured with just a key phrase…or the key can be divided among multiple people none of which can gain access alone.
Bitcoin’s ledger is kept intact via 100,000+ computer nodes all over the planet even nearly a worldwide power failure or an electromagnetic pulse (EMP) can’t get them all.
Unlike gold, bitcoin and blockchain coins are also easily transportable, divisible and exchangeable, making crypto a superior type of money.
Speaking of money, even the world’s current reserve currency the USD is not where you want to keep your wealth (even if you could earn interest over the annual inflation rate). The purchasing power of the USD since 1913 (when the privately owned Central Banks took over) has lost like 96%. In 2020 alone the USA’s Federal Reserve has added 30% more USD to the supply—expect to see commensurate inflation in upcoming years.
What about property? Property bubbles eventually pop (Tokyo early 90’s)…it might take even more than 30 years since the last crash as in the case of Australia or Canada, but with each passing day that trend is less likely to continue. Current pops: USA commercial real estate is crashing. Residential property is influx due to population movements caused by Covid-19 from urban to rural, or from high tax states such as California, New York to Texas or Florida.
Also government mandated differed rental & mortgage payments won’t last forever so old bills and bankruptcies will occur. Even afterwards more movement will likely happen again once Covid is cured and businesses and families adjust to a new post-covid reality.
What about equities/stocks? A handful of tech companies does not make a market…and even high-flying tech companies (Apple, Facebook, Amazon, Netflix, Alphabet, and Tesla) won’t be such a safe haven after company stock buybacks are discontinued and/or central bank money printing or helicopter stimulus money slows or stops.
If you compare the price of bitcoin over time to any asset NONE have performed as well.
Microstrategy.com has a great tool to compare Bitcoin with other assets.
Risk-adjusted returns of currencies, indexes, metals, stocks, & bonds vs BTC.
https://www.microstrategy.com/en/hyperintelligence/asset-vs-btc
Disclaimer: This post is for informational and entertainment purposes only— it is not financial advice or is in anyway intended to provide any financial recommendation.
“Independent News Reporting by Ken Burridge”
Independent journalist, blockchain and sustainability activist, EV of the Year Judge, photographer, and author that has published over 1500 articles. Mr Burridge’s travels have taken him to over 40 countries and 300+ major cities. He is originally from the USA, but has been residing in Australia for the last nine years. Connect to Ken Burridge on: Twitter, voice, facebook, minds, Linked in, Uptrennd, official website
