Bitcoin Becomes a Reserve Asset
With the advent of Bitcoin (BTC), our understanding of the financial system we are used to has undergone a significant change.
Bitcoin has changed our worldview and opened up new horizons. More and more people in the world, small businesses, large companies and stock exchanges are beginning to see all the advantages of Bitcoin, seeing in it the best reserve asset.
The endless emission of Central Banks, increasing the market money supply and playing with artificially lowering the interest rate, gives us the stabilization of the usual financial and payment system. But also a decrease in purchasing power by tens of percent, devaluing our savings. This led to the fact that ordinary people, small and large businesses, began to look for an alternative reserve asset.
So Bitcoin, despite the volatility inherent in cryptocurrencies, in contrast to the usual fiat money. Shows stable growth in value, which makes it popular and attractive as a reserve asset.
Against this backdrop, more and more large exchanges and companies acquire and hold (hold, store) Bitcoin, seeing huge potential as a reserve asset.
The list of companies and exchanges that own bitcoins on the balance sheet is constantly growing. Some companies have balances in the tens of thousands of BTC, such as MicroStrategy and Galaxy Digital. But the clear favorites are the exchanges Coinbase, Huobi and Binance, which balance in the hundreds of thousands.
Although huge amounts of money are involved here, when we look at the largest companies in the world, it is a drop in the ocean.
Let’s imagine just nine of the S&P 500 companies with $ 600 billion in short-term investments and cash. Pay attention to Bitcoin and invest about 5% of their funds in it, this will lead to an increase in market value many times over.
Today, the market capitalization of Bitcoin is approximately $ 256 billion. Most companies see Bitcoin as an alternative investment, which does not diminish its potential. At the end of 2018, the alternative investment market was $ 13.4 trillion. We understand perfectly well that as soon as the sharks of the world of finance accept Bitcoin as a reserve asset and invest in it even a small part of their assets, its price will rise significantly.
For example, we can recall the words of Michael Saylor’s theory
Bitcoin does not carry the dangers of the familiar financial system. Which makes cryptocurrency an attractive and interesting alternative to asset storage.
Since there is a good way to evaluate an investment, it is to spend $ 100 million, fast forward 100 years and see what happens.
What happens if you have $ 100 million in fiat currency and put it in a major bank in 1900? We will face two risks: the risk of bank failure and inflation. Almost every major bank has gone bankrupt within 100 years. Combine this with inflation, and we will get a minimum 90% chance of losing all our assets.