*Brand Partner Content*
Bitcoins are scarce. The total number of bitcoins that can be created is artificially limited to, and can never exceed, 21 million units. No other real asset has such a defined and verifiable rarity. How much gold is stashed in the basements of banks? How much more gold will we extract from the earth – and someday, how much gold will we extract from outer space? Gold and all tradable real assets can be manipulated as a result of the unverifiable amount of certificates in circulation. Bitcoin, on the other hand, has a known upper limit.
Moreover, Bitcoin is the first and, as of yet, the only, digital network that has managed to merge the digital world with real goods – namely, Bitcoin is tethered to energy and time. This makes bitcoins a real rare good with a thermodynamic hedge.
Bitcoin can withstand the attacks of states or large companies, and it is a global financial settlement system in which anyone can participate and from which no one can be excluded. Globally, the dominant reserve currency is the United States dollar. This allows the United States to unilaterally impose sanctions against other entities, and has serious consequences for international trade when other states are precluded from using the USD as reserve currency. This confers the United States with a unique position of power. Bitcoin dilutes this power. For example, Iran currently uses Bitcoin to conduct global trade – Bitcoin is therefore already a real alternative to traditional currency.
In addition to being a medium of exchange, Bitcoin is also an incredibly stable value store, again as a result of the limited maximum amount of coins. As such, on the one hand, Bitcoin lays bare the inflation of fiat currencies and is a thorn in the side of central banks. At the same time, however, it carries enormous advantages for and bolsters the sovereignty of states.
Florian Koschat is an Austrian investment banker and CEO of PALLAS CAPITAL. His deep knowledge on Bitcoin he gets from a cooperation with the expert www.blocktrainer.de