Crypto Beans #14 Currencies are not a store of value

Hey there everyone! 👋 This is Shivam. I bring to you the 14th weekly edition of Crypto Beans. This is an effort through which I try to share my thoughts on the crypto space and help you stay updated. Your 0 to 1 guide in crypto.

Read time - 3 mins

In this edition, the article I explore is titled "Currencies are not a store of value!" Hope you enjoy it.

State of Crypto affairs - A quick look at the market 

The global cryptocurrency market cap today: $1.21 Trillion

Weekly change: 0.38% | Yearly change: -42.32% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $538 Billion.

Weekly change: 2.22% | YTD change: 66.56%

Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 46.18% | Last year (March 2022): 40.29%

Greed and fear index 

The market sentiment has been turning, now the market seems to be getting more cautious with the news around layoffs and looming recession.

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Is ETH ultrasound money? 

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW, as there is a shift in the narrative for Ethereum to become a store of value due to the expected reduction in ETH emissions.

Supply change since merge POS -68,279 ETH

The graph highlights POS vs POW issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

Spill the beans (Explain to me like a 5 year old) 

Fiat Currency: Decay by Design

Imagine owning an asset that never loses its value! Sounds too good to be true, right? Unlike currencies that devalues with time!

Well, not all assets are created equal

Some appreciate in value, others lose value over time, like a car accumulating miles or a building without maintenance. Even assets that don't visibly deplete can lose value over time.

Take currencies, for example. For the past 50 years, we've been in a monetary experiment where money is a "fiat" currency, backed by nothing at all. Central bankers and governments want you to spend or invest your money, rather than save it.

So they designed the currency to lose x% of its value every year. This is what is happening right now, but now and that percentage has risen to 6% in case of US and Indian economy.

It's eating away into the fruit of our hard labor

Enter Bitcoin, the newest entrant in the global money competition. The Only Thing They’re Making Less and Less Of

Unlike traditional currencies, Bitcoin's value is not linked to the global economy or a policy goal of losing value every year. Instead, Bitcoin's value is linked to increasing scarcity. Its design is based on a simple mathematical principle of decreasing issuance over time, making it the only asset in the world that is becoming more scarce with each passing day.

Think of it this way

Owning Bitcoin is like owning a piece of land that they're making less and less of. Sure, owning real estate is a great investment because so little new land is made every year. But Bitcoin is on a whole different level.

It's an asset that's becoming more scarce every day, and its value is only going to increase as demand continues to rise. If you're an investor, what matters most is how your assets will perform over time.

And right now, Bitcoin is the fastest horse in the race.

The two types of modern currencies we’ve now looked at have very different DNA. The first, fiat currency, is designed to exponentially decay in purchasing power over time. The second, Bitcoin, is designed to exponentially appreciate in purchasing power over time.

This ultra-simplified representation of the nature of the U.S. dollar and Bitcoin also contains the implications of a world-changing economic reality. Bitcoin will continue appreciating while fiat currencies will continue decaying. It’s in their DNA.

What's brewing today? Bringing fresh beans to you: 

Crypto Pundits Romance the Hyperinflation and Dollar Death Narrative. Is It a Real Scare? Coinbase's former CTO, among others, has predicted that bitcoin will reach $1 million as the dollar fades, but these doomsayers are ignoring other historical precedents.

Amazon's NFT Plans Teased in a Receipt Mailed Friday Afternoon: In an email to CoinDesk's Nikhilesh De, Amazon appeared to confirm that digital tokens, an NFT gallery and resale opportunities are coming to the site.

How Web3 Will Evolve the Way Businesses Connect With Customers: Commerce and engagement tool Dispatch is making Web3 interactions as simple and streamlined as clicking on a web ad.

Whats meme-ing? Better make sure this is fun

And now the funny part,

What did you think of today's edition?  

Reach out to me on Twitter or Linkedin for any feedback :)

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.