Liquid Gold

Bitcoin's main use-case, as envisioned by it's mysterious creator Satoshi Nakamoto, was a peer to peer electronic cash system. A digital payment system on a decentralized public blockchain that would forever eliminate the middle-man, the government, the Central Bank and other banks. Digital cash, so to speak.

_{source: PxHere}

The use of past tense in the opening of this post is intentional; after ten years of maturing and despite developments aimed at making transactions faster, the general consensus is that Bitcoin's main use-case is that of digital gold. It's being used as a store of value and also functions as the main gateway for new users to enter the marketplace of cryptocurrencies of which there are thousands now, many of which are much better suited to perform the function of digital cash. But I'm here today to expand on Bitcoin's description as digital gold; it's actually digital liquid gold. Gold (and also silver) is the traditional store of value but isn't very liquid at all, and requires some serious safety-measures if you want to transport or liquidate it. This is why almost all gold trading is now done through futures, a "paper market."

Bitcoin on the other hand is very liquid: speeds aren't high enough to reliably and comfortably sustain trading volumes needed for full mainstream adaption as digital cash, for which it has to be able to process tens of thousands of transactions per second, they are plenty high to quickly transfer large amounts to anywhere in the world. This makes Bitcoin the perfect safe haven in case of sudden financial turmoil, like the next crash of the fiat economy which is sure to happen, it's only a question of "when," not "if." Bitcoin can be quickly and easily liquidated for fiat money if needed; try and do that with gold... If inflation leads to a total crash of the economy and even cash isn't available anymore, gold won't help you; it'll be cigarettes or cryptocurrency that'll save you...

It seems we are now in Bitcoin's next accumulation-phase; we've seen a drop of 84% in BTC's price since the all time high of December 2017 of almost 20,000 dollar dropped to the low point of just over 3,000 dollar in November 2018. Well, we've just past the 6,000 dollar mark on the slow climb back up, I'm sure you've all heard or seen that already. We're also on the verge of having a large influx of larger and institutional investors with exciting prospects like Fidelity set to start trading digital assets for institutional investors, and Bakkt set to launch later this year. This is sure to introduce many new "whales" into our fledgling marketplace, which is good news.

_{source: Wikimedia Commons}

Yes, you read that correctly: more whales is good. Like me, some of you are now thinking about Bitcoin's huge volatility, and that for sure a lot of the sudden price movements during the bull- and subsequent bear-markets were caused by just a proverbial handful of extremely large players in the market, and yes, market manipulation by the hands of some of them has most likely happened. And you're right to suspect that initially the advent of more and bigger players will lead to some more wild days, months and even years ahead. But over time, Bitcoin's market capitalization will be spread over a growing number of owners and some of the whales will help accelerate that process. And Bitcoin's general direction will be upward, very much upward...

How? Simple really; some of these institutional players will be the representative of thousands of individual investors. Take pension-funds for example; they will serve their clients well by investing part of their money in Bitcoin as it acts as a perfect buffer in times of financial mayhem, yet easy to liquidate. And I'm sure you're able to think of a lot more whales that represent not just one individual, but invest on behalf of tens, hundreds, thousands of small investors. And even if the whale is an individual, he or she might want to liquidate part of their portfolio to buy a new castle, or take over someone else's business; Bitcoin's liquidity combined with a rich person't mindset and spending pattern can cause large fluctuations in price, so it's not all manipulation.

Even though we might see one or two more retractions in BTC's price, things are looking up in crypto-land; even if volatility temporarily goes haywire again, the long-term perspective doesn't change. We've got DApps and digital cash on dedicated ultra fast decentralized blockchains like EOS, Steem, Tron and even Litecoin on one hand, and liquid gold made accessible to large investors on the other, all helping accelerate mainstream adaption. What more could we wish for? Wait... don't answer that ;-) Listen to the hour long interview with Tuur Demeester, who has written an extensive report for Adamant Capital in which he explains why he thinks we're in the next accumulation-phase for Bitcoin, and how the advent of institutional players will effect the markets in the long and short term:

_{Tuur Demeester on Why Bitcoin is in Heavy Accumulation}

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