What is the state of Bitcoin – Delphi Digital

Investing - August 25, 2020

Video Overview

Is Bitcoin an asset or a currency? This is an important question. In order to find a possible answer, we went through the “State of Bitcoin 2020” report. This is an in-depth report on Bitcoin as an investment by Delphi Digital.

The report was released a day prior to Bitcoin’s halving. It couldn’t have been timed better. The Bitcoin halving is one reason why Bitcoin is considered a unique investment. The cryptocurrency is limited and verifiably limited. This means that not only are there a fixed number of Bitcoins, but this can be checked. This is what “verifiable” means; the ability for something to be verified. In this case, Bitcoin’s supply.

Only 21 million BTC will ever be in existence. This will happen in the year 2140. Currently, just over 18.7 million Bitcoins are in supply. Bitcoins are produced in a phased manner. A lot of coins were produced (or mined) in the early days. Fewer Bitcoins will be produced as we get closer to 2140. This happens by a system called halving. This is when the number of Bitcoins supplied decreases by 50%. This happens once every four years. The last one was on May 12, 2020.

Bitcoin as a store of value

This gives Bitcoin a reason to be a “store of value”. This is why, Delphi Digital suggests, Bitcoin has “long-term value proposition”. This gives the cryptocurrency advantages over traditional safe-haven assets. A safe haven asset is one that you can buy to retain value. Gold is the most widely used asset. Because gold is precious and has a limited supply, it is a store of value. But gold’s supply is not verifiable. No one knows how much gold is left to be mined. Tomorrow, if a meteor full of gold crashes on earth, the price will plummet. This can’t happen with Bitcoin. Not because a meteor of Bitcoin can’t crash on earth. But because no one can increase its supply.

A neutral currency

Delphi Digital also suggests Bitcoin will become more valuable as the geopolitical tensions rise. This is because Bitcoin is global but it does not belong to a single country. No government can control it, ban it, or regulate it. They can interfere with Bitcoin businesses. But the cryptocurrency and its network cannot be stopped. As inter-country tensions rise, a non-country asset will be sought. Investors, if not countries, will look to Bitcoin.

Will this mean BTC can displace a country’s currency? Delphi Digital seems to think, it could. They say, these tensions will “setup for broad-based currency debasement”. Whether Bitcoin will take modern currency’s place, time will tell.

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