According to Bloomberg, bitcoin’s 9 million percent price rise makes it the best performing asset of the last decade. But what if I told you that even in 2021, Bitcoin is still one of the most undervalued assets there is?
If you are one of those people who has thought of putting money into bitcoin, but just could not pull the trigger, then you are not alone.
The crypto community today is flooded with people who, unfortunately, do not understand the fundamentals lying behind these digital assets. And because bitcoin has amassed a significant following of these “weak hands,” institutions and principal investors may become more cautious when it comes to putting money into bitcoin.
When they see that people do not agree on basic questions like “What gives Bitcoin its value?” and “How does Bitcoin derive its worth?,” it creates uncertainty, and they could become reluctant to go all in.
The question of the value of bitcoin is very general and multifaceted. There are two ways to explain this. One is the traditional way, which describes bitcoin’s value in terms of the power that goes into mining.
But here I want to touch the other side of the coin. The side that is not discussed as often. And that has to do with our current financial system.
Elon Musk has already said that cryptocurrencies will be the media of exchange on Mars. But even if we stick to Earth, Bitcoin is a disruptor. It has all the ingredients that are required to let it go on and become the future “currency” of the world.
While our financial system is failing us, Bitcoin is providing solutions to all the problems we are facing in our monetary system. In essence, Bitcoin’s value really comes from the worthlessness of our current financial system..
The Evolution Of The Monetary System
After the barter system, historically, gold has always been used as a medium of exchange. But because gold is not portable, as time passed, we established the currency system. We decided that we would print papers and assign value to them so that every piece of paper would be backed by a certain amount of gold.
As such, we could print currency only if we had an equivalent amount of gold in reserve. In this way, we established a portable exchange system with gold still being the actual medium.
As the sphere of influence of the United States grew bigger, slowly the monetary system evolved in a way that all the currencies in the world were fixated to the dollar. But the dollar was still backed by gold. So, at its core, it was still the same thing.
The biggest blow to our financial system came when, in 1971, U.S. President Richard Nixon announced that the United States dollar was no longer going to be backed by gold. It is as if he pulled the rug from under the financial system. All of a sudden, every currency in the world was no longer backed by anything.
Were they even currencies anymore? Or just pieces of paper? Regardless, this gave rise to our current financial system, the fiat monetary system.
The Fiat Financial System
So, our current fiat monetary system is not backed by anything. This is a problem on so many different levels.
In the case of Bitcoin, at least, its value can be explained in terms of the mining power contributed to the network. But here, there is no actual explanation really. The only reason that a piece of paper has value is because the government enforces it.
Now, because the fiat system is not backed by anything, this means that there is no real limit on the amount of money that the Federal Reserve can print.
When you keep printing currency (as we have seen during the COVID-19 pandemic response), it is as if you are robbing people of their money. The more you increase the supply of the money, the more it takes from the purchasing power of money that was already in circulation. This leads to inflation. So now, people have to pay more of their money to get the same thing, and that is due to no fault of their own.
Another huge problem with our current financial system is that it is being regulated by the central bank. The central bank is the actual authority behind the transactions.
When you see all of these people, and hell, even countries, get sanctioned, they lose access to their money. Have you ever thought about that? Have you realized that in the current financial system, people do not really own their money?
So, you can work for sixty years, earn a decent amount of savings — but at any point, the central bank can decide that, for one reason or the other, you are no longer eligible for the benefits of your years of hard work. I’m not saying that this will happen, all I am saying is that there is definitely a possibility that it can happen.
Bitcoin: A Solution?
Now that we understand the monetary system, the next question is: How does Bitcoin solve any of these problems?
Let’s go first to the inflation rate. Unlike the unlimited printing of fiat currency, the total supply of bitcoin is capped at 21million. Bitcoin has a reducing rate of inflation, and as soon as the last bitcoin is mined in 2140, the rate of inflation will reach zero. You would no longer be able to create a bitcoin. So, that pretty much takes care of the inflation problem.
Next is the question of the third-party authority. When you transfer money in the current system, it is the banks that actually perform this transfer. They literally update numbers within the two accounts involved in the transfer, subtracting an amount from one and adding it to another. Yes, it is this simple. But then the question remains, how can you do business with people without any authority actually actioning those transactions?
This is where the beauty of Bitcoin comes into play! Bitcoin is a peer-to-peer network. When you do a certain transaction on Bitcoin, the blockchain is updated by all of your peers. It means everyone is an authority in the Bitcoin blockchain. So, if everyone is an authority, that means, technically, no one is the single authority. That is why we never have to worry about central bank regulations when it comes to Bitcoin.
To boil it down, on one side, we have a financial system, which is leading to an insane amount of inflation. A system which is backed by nothing. A system that is completely controlled by a central authority. On the other side, you have a system that has almost no inflation, a peer-to-peer network that has no central authority, and the cherry on the top is that the fees are significantly less in Bitcoin when compared to our current fiat system.
Too Long, Didn’t Read (TLDR)
Bitcoin was the best performing asset of the last decade. However, unfortunately, due to the presence of “weak hands” in the crypto community, institutions and principal investors still tend to be more cautious when it comes to investing in bitcoin. They do not really understand how bitcoin is valued. The value of bitcoin actually comes from the worthlessness of our current financial system. The current financial system is doomed to collapse. The currencies of the world are pegged to the dollar and the dollar is not tied to anything. As a result, there is really no limit to the amount of money that the Federal Reserve can print. This is like robbing the people of their money. It reduces purchasing power of the money that was already in circulation and as a result, causes inflation.
Adding to this, a third party like a central bank has the actual control of your money. So, in our current financial system, your money is not really yours. Therefore, the system is bound to crash sooner or later. The solution is something that has no inflation. The answer is a peer-to-peer network without any third party. The answer is Bitcoin. And once Bitcoin starts taking over as a currency, its value will rise tremendously. That’s why it’s still one of the most undervalued assets of our time.
This is a guest post by Fahim Ahmadi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
SingularityNET Partners With Ocean Protocol Prior to the AI-Based DeFi Fund Launch
[Press Release – Amsterdam, Netherlands, 18th May 2021]
The collaboration will see the OCEAN token’s inclusion in SingularityDAO’s index fund/investment portfolio. Moreover, SingularityDAO is designed to leverage AI at multiple levels: AI manages dynamic token-sets, executes predictive market-making strategies to provide liquidity for these token-sets on DEXs, and predictively models hedging strategies.
All this AI requires a lot of data to learn and improve, which is why SingularityDAO is a natural user of Ocean data sets – data sets published via Ocean Market (and other Ocean-based markets) into the Ocean ecosystem. The Ocean ecosystem is host to many diverse and varied trading and DeFi data sets. These make excellent candidates for consumption by SingularityDAO’s AI agents to enhance its financial modeling.
I’m really excited by the opportunity to work together with Ocean Protocol, one of the most respectable projects in crypto that has been constantly delivering community-driven, decentralized data solutions. SingularityDAO will constantly make use of data to train our ML and I can’t think of a better partner than Ocean Protocol. – Marcello Mari, CEO at SingularityDAO
The news follows the successful completion of a total of $5.2 million raised in three different rounds for the highly anticipated Governance Generation Event on MANTRADAO, which reached its hard cap within less than 2½ hours.
The protocol, described as ‘DeFi meets decentralized AI,’ held the event exclusively for SingularityNET $AGI holders and attracted 5,800 registrations in one week. The token sale raised $1.6 million (8,000,000 SDAO).
The successful Governance Generation Event follows a recent private sale wherein SingularityDAO raised $2.7 million of funding from a number of top-tier investors such as AlphaBit, Marshland Capita, GBV, and SMO Capital. SingulariyDAO’s governance token has been generated on May 13th and distributed on the same day. It is currently trading on Uniswap.
SingularityDAO is a decentralized platform, governed by the SDAO token, tasked with governing DynaSets. DynaSets are diversified baskets of cryptocurrency assets dynamically managed by AI and curated by the protocol. SingularityDAO brings the financial sophistication of AI-managed funds to DeFi, deploying SingularityNET’s AI technology to navigate complex markets.
About Ocean Protocol
Ocean Protocol’s mission is to kickstart a Web3 Data Economy that reaches the world, giving power back to data owners and enabling people to capture value from data to better our world.
Data is a new asset class; Ocean Protocol unlocks its value. Data owners and consumers use the Ocean Market app to publish, discover, and consume data assets in a secure, privacy-preserving fashion.
Bought the Dip? MicroStrategy Purchased $10M in Bitcoin at $43.6K
Michael Saylor’s NASDAQ-listed company continues with its initiative to purchase sizeable amounts of bitcoins at frequent intervals. The firm said earlier today it had allocated another $10 million in cash in BTC, and its total stash is over 92,000 coins.
- The founder and CEO of the business intelligence giant announced the latest purchase on Twitter earlier on May 12th.
- It reads that the firm has bought 229 bitcoins for $10 million in cash at an average price of $43,663 per coin.
MicroStrategy has purchased an additional 229 bitcoins for $10.0 million in cash at an average price of ~$43,663 per #bitcoin. As of 5/18/2021, we #hodl ~92,079 bitcoins acquired for ~$2.251 billion at an average price of ~24,450 per bitcoin. $MSTRhttps://t.co/fU6LN4WbKI
— Michael Saylor (@michael_saylor) May 18, 2021
- Keeping in mind the multiple purchases made since August 2020, the firm holds 92,079 bitcoins. MicroStrategy has paid $2.251 billion for its stash, with an average price of $24,450 per token.
- Although this is far from being the largest single acquisition, as the company once bought more than $1 billion worth of BTC, this one actually comes in a compelling moment.
- In fact, buying 10 million coins at an average price of $43,663 means that MicroStrategy has taken advantage of a popular narrative in the crypto community – buy the dip.
- The price of the primary cryptocurrency has suffered severely in the past week or so after Elon Musk announced that Tesla has stopped receiving BTC payments for its electric vehicles.
- In a matter of days, bitcoin fell from over $58,000 to a three-month low of $42,000.
- Although losing $16,000 of value in less than a week could be considered a major blow, and some investors disposed of their coins even at a loss, MicroStrategy has reaffirmed its promise to continue buying bitcoin as part of its reserve treasury strategy.
JPMorgan’s Securities Services to Offer TradingHub’s Analytics Solutions
The Bank is planning to offer trading analytics solutions to its buy-side clients.
TradingHub, a trade analytics services provider to the global financial markets industry, today announced that JPMorgan, one of the leading investment banks worldwide, will offer TradingHub’s trading analytics solutions to its institutional clients.
According to the official announcement, JPMorgan’s new offering will include TradingHub’s Transaction Efficiency and Accuracy Monitor (TEAM) solution. TradingHub is currently providing trade analytics services to several investment banks and investment management firms worldwide.
TEAM is a new tool by TradingHub that enables financial services companies around the world to evaluate execution costs at the order, trade, instrument, or asset class-level, and compare against peers on an anonymized basis.
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Commenting on the latest announcement, Neil Walker, Chief Executive and Founder of TradingHub, said: “We are delighted JPMorgan has identified TEAM as a highly novel and valuable product and is giving its clients access to our market-leading trade execution analytics service. This important relationship with JPMorgan will give more asset managers access to our services in a seamless and efficient manner via its open platform.”
JPMorgan has accelerated its global partnerships since the start of 2021. The US-based financial services provider recently partnered with Singapore’s DBS Bank and Temasek to develop a new blockchain-based platform for cross-border payments.
TradingHub mentioned in the latest announcement that the main focus of TEAM is to facilitate buy-side firms in the identification of financial brokers providing the best execution. TEAM also provides greater transparency to sell-side institutions. “Providing clients with access to unique services which help them manage transparency across the trade lifecycle is more important than ever. We’re excited to be working with TradingHub and offer TEAM as part of our growing platform,” Richard Crozier, Head of Product for Data and Analytics at JPMorgan Securities Services mentioned in the official announcement.
JPMorgan is planning to facilitate buy-side clients by providing integrated solutions through an open platform. In the last quarter, JPMorgan posted strong growth in revenues and profit.
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