Digital Beans-A take on key Bitcoin issues I keep hearing from friends and family

1} What's that one thing that makes any asset so special?

The simplest explanation I could think of is asking yourself, what drives the price? It's literally demand and supply

Now,

Let's look at bitcoin from the angle of demand and supply which specifically makes it a very unique asset.

How many people know how many bitcoin there's ever going to be?

Its 21 million

How many people in here know how many bitcoin come into the market every day?

Its 6.25 BTC every ~12 mins

And so if you know what supply is going to be, then you only have to understand what demand is doing.

Is demand increasing or decreasing?

If people figure that out then in this market they have an advantage over traditional investors, right?

You may ask why?

If you trade stock,

How many of you have woken up one day and you're like, shit, these guys just issued a bunch more equity. These guys are buying back stock. You have to worry about the supply side and you don't know what they're going to do

2} Bitcoin's survival from a technology standpoint is in the decentralization

But the resilience of value ends up being in this idea that the fixed supply only has to have increasing demand over time in order for the price to continue to grow.

And so when you see that, that's when it feels no different than real estate. Fixed supply of land, and land has been valued over thousands of years across generations

I think the biggest takeaway is,

The idea that in traditional assets, you have to think about both sides of the coin.

How much supply is there, how much exists out there, gold or diamonds or whatever it is, and the demand side, which is how many people want it

When it comes to bitcoin, I think that it is the only provably scarce asset at the moment.

And the reason why scarcity is so interesting is because it drives the price of any asset. This is a heuristic that becomes more important in the digital world.

3} One of the critiques of Bitcoin specifically is this idea that Bitcoin is not backed by anything, right?

Well, neither is the Dollar

Infact, Bitcoin is backed by the single most important thing in today's world - "Computing Power"

Ask yourself, what is the single most valuable commodity in the world today? It's not oil. It's not corn, it's not wheat. It's not any of that stuff. It's Computing power.

Computing power is the single most valuable commodity in the world. That's why things like Amazon's AWS trade at such crazy multiples, if they were a separate company. It is because ultimately they're no different than standard oil 100 years ago.

So essentially,

Bitcoin is actually backed by the strongest computer network in the world, which means that it is backed by the most valuable commodity in the world.

And so if you look at that, you say it's definitely worth something,

And it's the market has to decide what that value is

But definitely there is. And add an angle of Bitcoin's use case as a:

1. Store of Value

2. Payments Mechanism

3. Decentralized money

4. Inflation Hedge

5. Technology

The potential is unlimited

The global cryptocurrency market cap today: $1.24 Trillion

Weekly change: -1.30% | Yearly change: 16.62%

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $581 Billion.

Weekly change: -1.68% | YTD change: 79.82%

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: 48.33% | Last year (July 2022): 41.83%

The market sentiment has been back to high greed levels now post Bitcoin pumping in the last week as the likes of Blackrock filed for Bitcoin Spot ETF (bullish news)

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

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW.

The significance of the charts - understand how the supply of Ethereum is decreasing post the merge, which means “deflationary economics” for the Blockchain

Supply change since merge POS -295,274 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

To Survive the New Era of Robot Spam, Look to Crypto’s History Human communication systems are under threat from linguistic robots (AI). But the same spammy problem helped lead to the creation of Bitcoin.

McDonald's Launches Game in 'The Sandbox' Metaverse McDonald’s is the latest major brand to debut an immersive metaverse game experience—with NFT and crypto rewards, too.

And now the funny part,

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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