Bitcoin A Triple Point Asset
In the world of finance, Bitcoin has emerged as a unique asset class, defying traditional categorisations. It's a digital asset that simultaneously functions as a store of value, medium of exchange, and unit of account. This unique combination of properties has led some to describe Bitcoin as a "triple point asset," a term borrowed from thermodynamics where a substance can exist simultaneously in all three states: solid, liquid, and gas. Moreover, Bitcoin is also being recognised as the first exponential asset, a concept that will be explored in this article.
Bitcoin as a Store of Value
A store of value is an asset that maintains its value over time without depreciating. Bitcoin, with its digital scarcity and resistance to seizure, has proven to be a reliable store of value.
Digital Scarcity of Bitcoin
Bitcoin's protocol ensures that there will only ever be 21 million bitcoins in existence. This digital scarcity mimics the scarcity of gold, but with the added benefit of being easily divisible and transferable.
Comparison with Gold
Just as gold has been a store of value for thousands of years due to its scarcity and durability, Bitcoin is becoming a digital store of value for the internet age. However, unlike gold, Bitcoin is not physically vulnerable and can be transferred across the globe in minutes.
Bitcoin's Resistance to Seizure
Bitcoin's decentralised nature makes it resistant to seizure or censorship. As long as you keep your private keys secure, your bitcoin is safe. This makes Bitcoin an attractive asset for those living under oppressive regimes or in unstable economies.
Bitcoin as a Medium of Exchange
A medium of exchange is something that buyers will exchange with a seller when they want to purchase goods or services. Bitcoin, with its predictable and immutable supply, fulfils this role effectively.
Predictable and Immutable Supply of Bitcoin
Bitcoin's supply is not subject to the whims of governments or central banks. The Bitcoin protocol ensures that new bitcoins are created at a predictable and decreasing rate. This predictable supply makes Bitcoin a reliable medium of exchange.
Comparison with the US Dollar
Unlike the US dollar, which can be printed at will by the Federal Reserve, Bitcoin's supply is algorithmically capped at 21 million. This makes Bitcoin a deflationary asset and protects it from the inflationary policies that can erode the value of fiat currencies.
Censorship Resistance of Bitcoin Transactions
Bitcoin transactions are censorship-resistant. This means that no single entity can prevent a bitcoin transaction from occurring. This makes Bitcoin an attractive medium of exchange for those living under oppressive regimes or in countries with strict capital controls.
Bitcoin as a Unit of Account
A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions. Bitcoin, with its immutable ledger and potential to revolutionise the accounting system, could fulfil this role in the future.
Revolutionary Improvements in the Accounting System with Bitcoin's Immutable Ledger
Bitcoin's blockchain is an immutable ledger that records all transactions. This transparency could revolutionise the accounting system, making it more efficient and less prone to manipulation.
Possible Future Scenarios for Bitcoin as a Standard Unit of Account
While it's still early days, there are scenarios where Bitcoin could become a standard unit of account. For example, in a future where Bitcoin becomes the dominant global currency, prices could be denominated in Bitcoin rather than in local currencies.
Bitcoin as an Exponential Asset
Bitcoin's unique properties as a triple point asset and its potential for exponential growth make it a compelling investment. The concept of Bitcoin as an exponential asset is based on the idea that its value can increase exponentially due to its unique properties and potential for widespread adoption. This is a step function change and improvement to all functions of money that Bitcoin brings.
Bitcoin's Future Value
Peter suggests that Bitcoin's future value could be much higher than its current value. He provides a rough estimate of $7 million per Bitcoin based on current global trade volumes and the limited supply of Bitcoin. He also suggests that Bitcoin could eventually make up a significant portion of the world's total value, with only a small percentage tied up in other assets like stocks, bonds, and property.
Bitcoin's Impact on Society
Peter believes that Bitcoin will bring about significant societal change. He suggests that Bitcoin could transform finance and create a new market for time-locked Bitcoin. He also believes that Bitcoin could help people avoid the pitfalls of other investments and improve their lives by providing a secure and reliable form of savings.
Bitcoin's unique properties as a triple point asset make it a compelling investment and a potential game-changer in the global financial landscape. Its digital scarcity, resistance to censorship, and potential as a unit of account set it apart from traditional asset classes. As Bitcoin continues to evolve and gain acceptance, its impact on the global financial system could be profound.
Recap of Bitcoin's Triple Point Asset Features
Bitcoin's digital scarcity makes it a reliable store of value. Its predictable and immutable supply, along with its censorship-resistant nature, makes it an effective medium of exchange. And its potential to revolutionise the accounting system could see it become a standard unit of account in the future.
Reflection on the Potential Impact of Bitcoin in the Global Financial Landscape
As Bitcoin continues to be integrated into the traditional financial system, it could underpin a host of markets. Bitcoin's potential as a form of collateral is particularly exciting. As Peter McCormack, a Bitcoin expert, explains in his podcast, Bitcoin's properties make it a superior form of collateral that could underpin all other markets. This could lead to an explosion in Bitcoin's price and a significant shift in the global financial landscape.
Final Thoughts on the Continuing Evolution of Bitcoin and its Role in the Monetary System
Bitcoin's journey is far from over. As it continues to evolve and gain acceptance, we can expect to see more innovative uses for this triple point asset. Whether it's being used as collateral in bonds and insurance policies, or as a tool for estate planning, the possibilities are endless. As McCormack puts it, "Bitcoin being a triple point ledger open to anyone on the network all of a sudden when you can time lock that and you can see every obligation on the network it creates a level of trust that we just haven't seen."
Finally, Bitcoin's potential as a triple point asset is enormous. It's a digital asset that defies traditional categorisations and has the potential to revolutionise the global financial system. As we look to the future, it's clear that Bitcoin is more than just a cryptocurrency - it's a new kind of asset that could reshape our understanding of finance and money.