The Case for Bitcoin

The following was a comment i wanted to write, but i felt it was huge enough that it warrants its own post, as the reach is higher, and more people can learn.

I kept it unedited so both the person meant for it, and any onlookers can still understand the context.

The comment was about the true value of bitcoin, if it's undervalued or not, how we can give it a (at least approximate) valuation, and if dips are good indicators to buy or not.

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You should basically learn about economics

business cycles

the Austrian school of economics

how inflation and fiat distort economies, the great depression

how free market solutions are always better than government ones

(free market solutions are often positive sum, while the government is, at best, zero-sum or even negative sum)

And that the need for a standard (in regards for currencies) is paramount, a currency that has inherently has value is of absolute importance.

I will give you an example that I wrote a while ago just to explain the absolute utility of a monetary standard (Gold, BTC, Silver, etc)

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You come into a new town with lets say a pouch that has 2 Dollar's worth of gold. (the unit "Dollar" was historically used as a measurement, such as "Pound" (weight). a Dollar is a name for 1.5 grams of gold, so in effect, you have 3 grams worth of gold.)

You come to this town for their very amazing financial sector, and for some odd reason... Eggs!

So you find the nearest bank to deposit your gold, let's assume you pay a Dollar for a year to deposit your money.

They ask you if you want an IOU, which is a paper slip that promises that they will give you the amount of gold you have written on the paper in exchange for actual gold, at any time, and you say yes.

Note: If you look at the actual British Pound today (look it up), it still says "I promise to pay the bearer on demand the sum of "X" Pound Sterling", which is a reference to paying the amount of pounds of gold back. when "pound" used to mean the weight of the actual material.

They gave you 10 paper notes, each accounting for 1/10th Dollar (notice the abstraction)

Now gold is inherently valuable, much more so than silver, so, in this example, if you wanted to buy a dozen eggs, the amount charged by the farmer might be low in comparison to the gold that he wants in exchange (it is less than a single gold paper note);

Meaning you're going to pay too much unless you exchange your moneyto more of something that is less valuable; In this example, Silver

So before you buy your dozen eggs that are worth half a gold paper note, you go to a silver trader.

For this demonstration, a singular gold-backed IOU is worth 2 silver-backed IOU's (IOU being the promise that you can exchange it for actual silver at the bank.)

So you exchange 5 (half) of your 10 gold-backed paper money to 10 silver-backed IOU's.

Meaning, you have 10 Silver slips, and 5 Gold slips.

Now that you have the equivalent of "half a gold paper note", being the silver IOU, you can finally go buy your dozen eggs that cost 1 silver IOU, and you indeed buy them, with 9 silver IOU's remaining.

Now if you go back, you have actually successfully traded your pouch that has 3 grams worth of gold into a subscription to use a bank's facilities for one year, 5 gold-backed paper IOU's, 9 silver-backed paper IOU's, and a dozen eggs.

So if you choose to trade your IOU's for actual gold, you get gold (or equivalent) that is worth 0.95 Dollars, as you spent 0.05 Dollars (so half a gold backed paper note, or more accurately, one silver backed paper IOU) to buy eggs,

(The term note, slip, IOU, paper, etc. are used interchangeably)

Now scale this Ad Infinitum. the "economy growing" means more people using money to exchange goods and services, and more people coming in from outside and depositing their gold to interact with the local economy to trade in positive sum development.

The bank loans out the money that you payed to use their services. They might charge interest to make back the risk they took, or they might invest money and get back their investments in the form of shares in newly established companies.

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As you can see in this simple example, no government was "needed", no taxation is "necessary", and no inflation "eased the economy".

Unfortunately we live with the big 3 lies. (I can explain further if you want, this topic is big enough as it is)

Now, thankfully, bitcoin is decentralized

No government can truly 100% regulate bitcoin

(loopholes will always exist; even china is embracing it rather than cracking down on it, which says a lot about that police stat)

Bitcoin is transparent and private (enough) to make taxation practically impossible, unless you declare it yourself.

Bitcoin is NOT inflatable. It is a strict supply of 21 million coins that will ever exist, and until then they reward book keepers to maintain a TRUTHFUL and TRUSTFUL ledger.

The ledger technology created was the first of its kind, spawned a whole new asset class (crypto currency)

Bitcoin facilitates internet transactions (P2P Cash system)

Bitcoin has ALWAYS (and will always) grow/n; there is demand for a internet money

Think Indians logging on for the first time

Chinese, Americans, Europeans all using a common currency to exchange

a currency that will ONLY grow as more people buy cellphones, laptops... More people learn about bitcoin

more people realize that governments arent magicians that bring free stuff and prosperity

more people that realize using decentralized and trustless stores of wealth rather than centralized ones is infinitely better

more people that realize that invisible money, untaxed money is ALWAYS better than visible, taxable wealth.

FDR stole all of America's gold by decree in 1933 and formally abolished the Gold Standard after making a mockery out of it

The government inflated the dollar irreversibly as a fix for the Great Depression

Which was something that could've ended so much sooner, yet ultimately prolonged as the government kept distorting the economy, intervening, and inflating the value of the dollar.

Bitcoin prevents that.

MEANING, any speculative dip is a win because actually, bitcoin is yet so undervalued as it is, and any dip means that you get to own it for a bit cheaper, you get to be early in a truly free age (at least a preview of it) where free and sovereign money exists and is STILL attainable.