I have heard of many ‘decade ahead‘ predictions about the economy.
None of them ever prove reliable.
When they tell you that everything is fine with ‘little concern’.
That’s when you should expect an impending crisis.
And it’s going to catch everyone by surprise. Yet AGAIN!
But everything will change in 2020 onwards.
Bitcoin was last decade’s best performing currency. It has a predictable, stable, algorithmic monetary supply.
And yes, you can expect Bitcoin to keep chugging along .
But that’s old news and you already know that. Here’s what’s going to change in 2020.
Make sure you read this as it will prepare you for what’s coming.
2020 is going to be a phenomenal year for HODLers of Bitcoin! The upcoming year is bringing in some of the most spectacular halving displays, innovations in the second layer, eclipses in transaction volume as well as a generational shift in investing.
That said, casual onlookers and avid investors have a lot to look forward to in the new year. Here’s the list of all major astronomical bitcoin happenings we’ll be talking about for the 2020s:
1. The 3rd Halving event
When: April to June
Halvings happen every ~4 years. This is where the supply of newly minted bitcoins gets cut in half.
This means a lot less bitcoins are available in the open market for good.
Production cost for 1 BTC will double for miners come the halving.
And there will be another three Halvings in this decade alone.
In the current year, this event will reduce daily emissions of bitcoin from 1,800 to 900. The first Halving will commence, starting May, and the second one will begin in the month of March 2024; third will occur in 2028.
To the common observer, it won’t feel any different throughout the year, though. But it takes roughly $15 million dollars of demand a day to keep bitcoin priced at ~$8,000 today.
After the Halving, it will only take ~$7 million dollars. Assuming demand stays roughly the same as it is now, Bitcoin could do a 2X in price from here on in.
— Bitcoin (@Bitcoin) December 8, 2019
Why is HODLing 4 years such a significant time frame?
Halvings. YES! That’s right,
|Halving||Est. Date||Block Height||Block Reward (BTC)|
There will be 3 Bitcoin Halvings in next ~8 years ( The Bitcoin block mining reward halves every 210,000 blocks, the coin reward will decrease from 12.5 to 6.25 coins.)
If you can afford to HODL with a 4-year time preference, you’ll be leveraging one of the greatest asymmetric bets in history.
If you bought the very top of the Bitcoin Bull market in Nov 2013 (~$1150) & sold at the lowest roughly ~5 years later during the bear market (Dec 2018 ~$3150), you would’ve still made ~22% annual return, which beats most investors in all other assets.
You certainly can’t lose with a 4-year time preference… Bitcoin removes the uncertainty of a complex and fragile economy by ensuring that the supply is highly predictable and fixed.
2. Stock-to-flow achieve parity with gold.
Scarcity is the fundamental starting point of all economics.
And one of the best ways to measure scarcity is by using the stock-to-flow approach.
Stock indicates existing stockpiles. (already mined)
Flow is the measure of its new supply.
The ratio between the two gives you the a way of quantifying the “hardness” of an asset.
For example, gold has a stock-to-flow (SF) of 54. Diamonds has a SF 19 and Silver SF of only 3. SF of Bitcoin (BTC) is 25 at the moment.
— PlanB [Jan/3➞🔑] (@100trillionUSD) December 20, 2019
Whenever an asset or a commodity has global appeal (high demand), the producers are incentivized to increase the supply of the asset indiscriminately, thus adding to an already substantial stockpile (stock).
With gold, a price increase incentivizes miners to excavate more of it. But because gold is extremely rare, it remains practically impossible for goldminers to mine quantities of it large enough to depress the price significantly.
A bitcoin price increase, by contrast, attracts participants (also known as “miners“) to contribute additional computing power to the network, indirectly strengthening its security.
This is perhaps the most ingenious aspect of bitcoin’s design. Bearing the resemblance to the properties of gold. Hence the reference of Bitcoin as “digital gold“.
By May 2020 after the 3rd Halving event, it is calculated that the SF of Bitcoin (BTC) would reach the vicinity of 53. While gold would have still remained ~58.
According to pseudonymous quantitative analyst PlanB that goes by the Twitter handle of @100trillionUSD , Bitcoin would inexorably achieve a stock-to-flow ratio of more than 100 in the 4th Halving event sometime around 2024.
If you invested $100 into $BTC 9 years ago you’d now have ~$16,000,000
Perhaps it would be best to ditch gold altogether and participate the biggest digital gold rush the world has ever seen.
One thing is clear, we are on track to witnessing the hardest asset ever conceived.
3. Genesis day – 3rd January 2009
When Satoshi Nakamoto disappeared, he left us with a clue, an Easter egg in the genesis block.
And in that 11-year-old Easter egg, he cites the Times headline – “Chancellor on brink of second bailout for banks”
During the 2008 – 2009 financial crisis, we were so close to the banking system going belly-up that people couldn’t get cash out of ATMs.
Imagine, hundreds of billions of ‘fake‘ dollars get artificially injected each day into the system to keep fragile banks from going under.
Not only that, people’s hard earned money which they save in banks were confiscated by the government themselves as bail-ins.
If you live in Cyprus, Greece, Italy, Lebanon, Hong Kong, Argentina, Venezuela or even Barcelona, you’ve seen this play out in real-time.
By repeatedly bailing out the weak banks, the entire financial system becomes extremely fragile.
Nature loves the occasional purge. Volatility is a part of nature. Humans detest them.
In markets, ‘cleanups‘ are vital for getting the ‘weak hands‘ or the fragile out of the way.
Purges are vital to ensure hidden vulnerabilities don’t accumulate silently under the surface.
Small forest fires periodically cleanse the system of the most flammable material, so this does not have the opportunity to accumulate.
Systematically preventing forest fires from taking place “to be safe” makes the big one much worse.
For similar reasons, the economy becomes very weak during long periods of steady prosperity devoid of setbacks.
Stability gives us the illusion of prosperity. It’s bad for the economy in the long run.
Light control works, but close control tends to lead to overreaction, sometimes causing the system to completely break down.
This is called a “Black Swan” event. The last a Black Swan event happened was 11 years ago.
Did central banks fix the problem? No. And that’s the problem. What they did was unintentionally create a bigger distortion by suppressing the symptoms.
Now the risks are even greater than before as they have now taken us all further out on to the same ledge.
The Genesis day (3rd January) each year offers us a perfect window into the mind of Satoshi Nakamoto.
4. The Death of Fiat Money
The forces that hold the fiat money system together look fragile and they could unravel further in the 2020s.
Decades of low labour costs. Mounting global debt. High Inflation and wealth inequality.
Even the governor of the Bank of England admitted that central banks are running out of ammunition to combat a downturn.
Over this decade, some of these forces will begin to wreck havoc. Everyone will be affected.
Demand for alternative currencies like Bitcoin is already standing by ready to absorb a multi-trillion dollar opportunity.
Monetary debasement significantly contributes to the wealth transfer from poor to rich. The rich have access to the money before it loses its purchasing power (via borrowing), and thus harvest wealth from the poor. As the money cheapened in the 90s, the wealth gap grew in tandem: pic.twitter.com/T9HxIHLP2k
— Tuur Demeester (@TuurDemeester) January 3, 2020
Politically, it is always too tempting to create more money out of thin air when there’s nothing backing it.
If you’re living paycheck-to-paycheck, can you really afford to save the entirety of your wealth in fake money?
Should money be scarce like Bitcoin?
We run into scarcity because while resources are limited, we are a society with unlimited wants. Therefore, we have to choose. We have to make trade-offs. We have to efficiently allocate resources. We have to do those things because resources are limited and cannot meet our own unlimited demands.
Without scarcity, the science of economics would not exist. Economics is the study of production, distribution, and consumption of goods and services. If society did not have to make choices about what to produce, distribute, and consume, the study of those actions would be relatively boring. Society would produce, distribute, and consume an infinite amount of everything to satisfy the unlimited wants and needs of humans. Everyone would get everything they wanted, and it would all be free. But we all know that is not the case. The decisions and trade-offs society makes due to scarcity is what economists study. Why are certain decisions made and what is the next best alternative that was forgone? – Study.com
5. Bitcoin transaction volume exceeds the entire internet
2019 transaction volume:
The entire Internet $4.1T
Bitcoin to exceed the Internet in 2020.
BTW Bitcoin pertains to investment velocity while the Internet is payment velocity. Quite different, Bitcoin is currently a store of value, so investment is more important https://t.co/v6oSZM01NJ
— Willy Woo (@woonomic) January 2, 2020
The industrial-era of the printing press brought us fiat money issued by governments ruling over territories that were confined by borders.
When the internet came along, a new cyber-economy emerged. Suddenly, the world’s money started to transcend beyond physical existence.
Money turned into bytes of digital data.
But when the new infrastructure was laid on top of the old, friction began.
Not only is it messy, slow and inefficient; the elaborate framework of central planning and its accompanying rituals got in the way of economic activity happening on a global scale.
Perhaps one of the most glaring facts about the modern economy today is the size of the foreign exchange market. The Bank of International Settlements estimates that the size of the foreign exchange market to be $5.1 trillion per day for April 2016 ($1,860 trillion per year).
The World Bank estimates that the GDP of all the world’s countries combined is $75 trillion in 2016. This means that the foreign exchange market is 25 times as large as all the economic production that takes place in the entire planet.
— A v B ⚡ (@ArminVanBitcoin) June 28, 2018
It’s important to understand that the foreign exchange market is like a middle man.
An intermediary that was born out of this friction.
It isn’t a productive process for the world economy flowing on the internet.
There is no economic value being created in transferring one currency to another. It is a cost and a huge inconvenience to be paid by the people.
Economist Hans Hermann Hoppe calls this “a global system of partial barter“. It cripples global trade by exacting high transaction costs.
Not only is the world wasting large amounts of capital, energy and labor attempting to improve this inconvenience, (energy that could be put into better use in other areas of the economy) businesses and individuals worldwide frequently incur significant losses.
Think about each time you make a PayPal transaction on a foreign website with your local currency. The fees from swiping your credit card overseas.
Think about each time you send money abroad to your family or the potential customers who are reluctant to buy your product because of the exchange rate.
All of this adds up over time.
A borderless economy requires a borderless currency. Bitcoin is governed by mathematical algorithms that have no physical restrictions.
- borderless and
Bitcoins are easily verifiable, highly portable, infinitely divisible and pre-programmed with a fixed supply of 21mil.
6. Bitcoin becomes a safe haven currency
— Willy Woo (@woonomic) January 8, 2020
Bitcoin is a tool for sending value all around the world, but it’s also an insurance policy against FIAT.
It’s an exit. An escape valve. A lifeboat.
And the thing about lifeboats is that you hope you don’t need them ever. But it’s important to have them nonetheless.
As a sovereign individual, understand that your power exists solely as a choice ready to be exercised by opting out of a corrupt, war-mongering, violent and chaotic regime.
How do you opt-out? You VOTE with your money.
You vote by exiting FIAT which enables the monopoly of violence for something neutral, censorship-resistant and fair which Bitcoin offers.
You vote by saving in a currency that enables you to protest against an authoritarian or a terrorist regime.
Imagine a dictator who’s fully committed on some kind of terrible policy that leads to hyperinflation, war, sanctions and a bloated bureaucracy, well, if he knows the population can be taken hostage by closing the borders and imposing currency controls, it would be a cinch.
He would have absolute power. MAXIMUM Power!
But if a dictator does that and people start exiting with their money, it will draw the power out of his currency, then ultimately his choices will be constrained.
He will have to think twice before choosing to create conditions that would make his people opt-out of his FIAT currency.
The fact that it simply exists, prevents him from doing it.
That’s powerful optionality.
People need options.
It changes the power dynamic between people and their government. Bitcoin plays this crucial role.
7. A Reset of the Financial System
Central banks started quantitative easing (QE) & negative interest rates as a temporary measure to bail-out banks 10 yrs ago after the financial crisis..
— PlanB (@100trillionUSD) December 29, 2019
You may think a systemic wide failure of the financial system may not happen in your country.
Unfortunately, there’s nothing that says that your country is exempt from the laws of finance and thousands of years of historical precedent.
These things change.
Ask Portugal who used to be the holders of the world’s reserve currency centuries ago. Today they’re just part of the Euro.
These things ebb and flow. They rise and fall.
If you treat money as a way of storing wealth for your future, don’t let it fall into the hands of someone who is clueless.
ECB President: ’We Should Be Happier to Have a Job Than to Have Our Savings Protected… I think that it is in this spirit that monetary policy has been decided by my predecessors and I think they made quite a beneficial choice. ’
Who is ‘We’?
Money shouldn’t be easily produced or left in the hands of the select few in power.
Eventually every institution that distributes money, power, or status becomes corrupted.
- Greeks set to face heavy fines if they don’t spend 30% of their income.
- Italy is making all cash payments above 2,000€ illegal in 2020.
8. Bitcoin becomes the World Currency
Remarkable clip of Bill Gates answering David Letterman's questions about what the internet can offer him.
This was only twenty four years ago. pic.twitter.com/ACjTEKcwc1
— Rhythm (@Rhythmtrader) December 27, 2019
Bitcoin is like the internet ~20 years ago.
The internet was an underestimated thing in the 90s. Without being in the right place in the right time, Bill Gates glittering company, Microsoft might never have taken off the ground.
Nobody knows about the fates of timing quite like Gates.
Just rewind the clock to March 1992. Bill Gates was being interviewed in every news channel and media outlet about his cool little gadget called the computer.
27 years later, we now all have them in our pockets.
“It’s amazing how little he saw coming or even the potential reach at the time. Little did they know that people would be streaming this on their phones 20 yrs from then. It’ll be amazing to see how little we see coming over the next 20. – @jswihart”
It’s even more remarkable that Bill Gates himself was underselling the internet’s potential!
Jack Dorsey, CEO of Twitter says, “Bitcoin is becoming the Internet’s national currency.” This is perhaps the most logical step in our evolution as a planetary civilization. It should be founded based on mathematical truth and not on primitive command-and-control systems.
Deutsche Bank analysts are positing that the world may be using bitcoin as a Unit of Account in 2030.
One by one, individuals and companies alike are bending the knee to the hardest money the world has ever seen.
— Marty Bent (@MartyBent) December 6, 2019
Bitcoin is a Schelling point for a world teeming with different cultures, races, countries, backgrounds, ethnicity and beliefs.
Indeed, its hard to get everybody on the same page. Just as Jack Dorsey runs Twitter, Reid Hoffman runs LinkedIn, Marc Andreessen and Peter Thiel controls Facebook – but they all are rallying under the Bitcoin flag.
If you really think about it, no country or community would ever line up behind a company based in one particular country. Just like no global community would line up behind Google, Facebook or WeChat.
It’s politically and economically unsettled.
Now, even though these different companies are tough competitors, they all cooperate on Linux.
Linux is open source. It’s a demilitarized zone where everyone can work together and contribute on the platform without depriving each other off their contributions.
In many respects, Bitcoin is similar in a way that it’s an open-source platform that anyone in the world can build, secure, send and receive money from anywhere.
It’s open 24/7, every single day of the year (zero bank holidays) Free to use and operates on a cryptographic protocol that’s unhackable.
At some point, someone may sell you the idea that cryptocurrency ‘X’ is better than Bitcoin in so many ways. Remember most of the time when someone’s selling you that, understand it’s just the other person making money off you.
That person will likely keep Bitcoin in their portfolio while waiting to dump all the “other junk cryptocurrency” at the right opportunity so that he/she can amass more bitcoins.
Bitcoin is thus many people’s first choice and many people’s second choice. This means it will become the community’s first choice.
9. Bitcoin Hashrate hits another new all-time high
BREAKING: Bitcoin's hashrate just hit a new all-time high.
111,000,000,000,000,000,000 hashes per second. pic.twitter.com/PdawIGgfUp
— Rhythm (@Rhythmtrader) December 23, 2019
“Imagine the digital equivalent of placing the entirety of the U.S. Military around a school playground to protect it from invasion and you will get an idea of how overly fortified Bitcoin is...” @Saifedean; The Bitcoin Standard
@aantonop in 2016: The pyramids were a declaration to every other civilization in history: “behold, this is the measure of our civilization … this is proof of work … proof of abundant resources … this cannot be built cheap.” https://t.co/Q499mDOrGG
— Tuur Demeester (@TuurDemeester) March 22, 2018
Bitcoin’s resistance to attack is rooted in three properties: its barebones simplicity, the vast processing power (Hashrate) that does nothing but ensure the safety of this very simple design, and the distributed nodes which need to achieve consensus on any change for it to take effect.
This global undertaking is analogous to building the Great Pyramids of Giza.
Only this time it’s built on a digital public ledger using massive amounts of work to secure the information for generations to come.
This is called Proof-of-work. And it’s an ingenious way to use energy to ensure no-one can alter the past.
Think about the structures we build today.
Barely anything is built to last. People build cheap. That way its cheaper to rebuild or alter in the short term.
When you look to the Pyramids, as you ride up the sand dune on a desert camel and see a monument that’s 481 feet in the air, taller than the Statue of Liberty, and go “Wow!”, that expression alone is a testament to what the builders of the pyramid 4,000 years ago understood. There’s no way that something like that can be built cheap.
It is a declaration to every civilization that visits or shall come to pass, “Behold! this is the measure of the Egyptian civilization.”
This is proof-of-work of our civilization. An intelligent race, rich and abundant. You cannot built this unless you can feed 100,000 mouths. Or commit resources for decades.
Today, while we don’t know exactly how it was built, what we do know is that they required massive amounts of energy and work.
8/ In contrast to many megastructures of the past, the Bitcoin megastructure doesn’t require slave labor for the massive amounts of work. Quite the contrary is the case. It’s a system of voluntarily participating individuals looking out for their own benefit. pic.twitter.com/2mGRqdn0Bu
— Simon Lutz (@simonlutz21) June 29, 2019
This begs the question: How can a digital civilization build to last?
Will future historians look back and conclude that our civilization is nothing but “fake news, fake money, fake people” or will they find a digital artifact of immutability that is as good as written in stone?
Through Proof-of-Work (PoW) Bitcoin uses energy to stand the test of time instead of thick stones in the pyramids.
It serves to protect every block of information to ensure no one can simply alter valuable information.
Especially when it involves money of the people.
It’s going to be expensive because it’s giving us something intrinsic, neutral, open, borderless, immutable and censorship-resistant at a cyber-planetary scale.
The final Bitcoin event of the decade will be the grandest one of all as bitcoin becomes the world’s dominant form of money.
Not only do nation states adopt it as a world currency, every single person on the planet will price anything and everything in satoshis. (1 BTC = 100,000,000 satoshis)
In this scenario, people will no longer price bitcoins in terms of FIAT money.
If you still try to use fiat currency, people will laugh at you.
Rejecting Bitcoin will cost more than adopting it.
To give you a clue on how much Hyperbitcoinization would make each BTC worth:
The Great Wealth Transfer
> Over the next 25 years, $68 trillion will change hands among various generations in 45 million U.S. households.
> It’s expected that there will be a generational shift in investing.
> Education and innovation in investing has likely never been so important. Invest in the young! pic.twitter.com/3Tb6TMywRB
— Gabor Gurbacs (@gaborgurbacs) January 4, 2020
This is what we have today —
- $7.7T of gold
- $73T value in global stock markets
- $127T in money (coins, notes, checking, savings)
- $215T in debt (and growing)
- $217T global real estate
- $1.2Q+ in derivatives
- and more
(Q = quadrillion = 1,000,000,000,000,000)
If Bitcoin becomes the only unit of account, medium of exchange and store of value it will need to absorb this global glut of value.
There will be nearly 21 million coins once the last Bitcoin block is mined. It’s estimated 20% of current mined Bitcoins are forever lost. If this loss rate holds then the total accessible will be at most 16.8 million. The list of global value of all money totals about $1.8Q.
Some basic math:
Global value of all money= $1.8Q.
Divide by 16.8 million Bitcoins = $107,142,857
Round result = $100,000,000/Bitcoin
100,000,000 satoshis per Bitcoin
$100,000,000/Bitcoin ÷ 100,000,000 satoshis per Bitcoin
= $1 per satoshi
The middle class and poor have to wake up and participate in the greatest digital gold rush in the history of our evolution. Do not let the media and talking heads fool you into thinking it’s nothing but hot air.
Look at some of the numbers in the U.S. alone:
- American billionaires: 607
- Americans in poverty: 38M
CEO/worker pay ratio: 278:1
- Wealth of 3 richest Americans: $345B
- Wealth of bottom 50%: $250B
- Top 1% wealth since 1989: +$21T
- Bottom 50% wealth since 1989: -$900B
The billionaire class is crushing everything in its path. Now you know why conventional media are playing to their tune.
So get out there. At the very least, buy some Bitcoin.
Remember, you don’t have to own a whole Bitcoin. You can own just a fraction of a coin.
We’ve only just begun…
In the world of Bitcoin, there’s so much more to delve into. That’s why I created The Zodiac Collection, that tells the story of Bitcoin and the cryptocurrency revolution from every angle you can dream up.
There’s a lot of exciting stuff to read — I’ve selected a few of the stories, to start with, below.
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