At what point does BTC shuts up all its critics?

3 Min Read
689 Words

btc.JPG

From a BTC skeptic to a BTC believer and then to a perma-HODLer, I have come a long way. I follow most people on Crypto Twitter and therefore see the arguments for and against BTC. One argument that simply hasn't died down is about whether BTC is a store of value or not, and that does it have a use case. It is still a volatile asset but surely, those who think Bitcoin is a scam should have mellowed down their views, especially after seeing BTC survive and thrive for 10 plus years. There is enough written material as well to provide an answer to all concerns about bitcoin - abuse of electricity, too many miners in china, and govt. shutdowns etc. Then what will it take to put all arguments against bitcoin at rest? What follows now is pure conjecture, but hopefully, this is how BTC critics shut up for good.

In a bull market, it is fairly easy to say that BTC is a store of value, while in a bear market, BTC can be written off. What is funny is that non-BTC maximalists diss bitcoin even when they can clearly see their currencies/tokens dropping 2 or 3 times more than BTC, during a bitcoin correction. Adoption has been on the rise during the last 10 years and now we are also witnessing institutional adoption. Whether it be Tesla and Microstrategy adding bitcoin to their treasuries or Payment providers trying to accept BTC as a payment method or large custodians showing interest in crypto custody, adoption is on the rise.

There is also something extremely exciting happening at the same time - DeFi, specially borrowing and lending. I think we are witnessing the setting up interest rate curves for many crypto assets and once that is established, BTC will be gold standard collateral for most of this space.

I do think that increasing adoption will make BTC a store of value. Whether something has value or not is not determined by its use case. Vintage Rolexes have no use case. A 30 dollar phone can show the time and run a stopwatch. So if more people agree that BTC has value, it does. Regarding volatility, when more players are in the market and better financial models can assess the cheapness or expensiveness of BTC based on historical prices, then there should be more buyers with big money bags at more levels. More players will simply imply reduced volatility of bitcoin. Even gold is volatile and can correct ~50%, as it did over 5 years from 2010 to 2015. Despite such a correction, even central banks have been buying and HODLing Gold.

gold.JPG

What increased institutional adoption is doing is 2 things -

  1. It is cementing BTC's position as Digital Gold.
  2. Over time, this will help BTC to be incorporated in most macro models, alongside gold, and its volatility will not be such that BTC falls 10 percent and then recovers all in 2 hours, every other week. Of course, it may not remain as exciting.

The next phase that truly puts to rest any arguments against BTC's use case will be banking activity shifting to DeFi. Exchanges, staking etc. is all fine. The real thing that banks do is lending - to retail customers, small/medium/large businesses, leverage for trading etc. Crypto by default replaces the need to put savings in a deposit. Staking, providing liquidity on Decentralized exchanges, farming, or any other way also helps savers earn interest. With the likes of PayPal, MasterCard and Visa working towards using crypto networks and currency for payments, the real shift will be needed in terms of users actually spending their crypto. Actually, stable coins can help do that. People can take out USDC loans and buy things. We may also have Credit cards. I would not be surprised to see some of this seeing the light of day during 2021. In such a scenario, if an asset-backed loan can be cheaper if the asset is BTC, then BTC will become the ultimate reserve asset. At that point, even Peter Schiff will no longer remain a critic.