There is a vision of Bitcoin where it would gobble up all assets in the world. Eventually, everything would be tokenized into bitcoins. First, Bitcoin would eat up currencies. Then, equities, then real estates. There are strong supporters of this vision.
Can this vision become true? I believe it would NOT happen. Such future would be a dystopia. When everything is pegged into 21 million bitcoins, we would all be slaves to the bitcoin owners. It’s also likely some would use violence to seize bitcoins from others.
Bitcoin is Financial Freedom, not Slavery
There are only 21 million bitcoins. How can billions of people on this planet acquire bitcoins? Bitcoin ownership is also known to be heavily concentrated. If I believe that Bitcoin would eat up everything, why should I ever give up my bitcoins? Many bitcoin owners believe in this vision. They are holding on to their bitcoins.
It is a tug of war. Bitcoin owners try to convince everyone else of Bitcoin world domination. Everyone else tries to resist this vision. Even when you jump ship, you quickly realize that there are people who own more bitcoins than you. Such vision creates a divided world: bitcoin owners versus everyone else.
Instead of locking our minds into Bitcoin world domination, we should think of Bitcoin as a new financial option. It is a new investment category, Store of Value, a new kind of financial freedom. As bitcoin owners, we invite people to examine bitcoin properties and potential.
Saving versus Spending
Some people advise to put all money into bitcoins. That is the form of saving and investment. When you need to spend money on something, you convert the corresponding amount of bitcoins to spend. Upcoming multi-sig wallet would enable more security for this scenario.
I don’t think this scenario would happen. We cannot constantly calculate pro and con of converting our investments. It is wise to directly deduct pay checks for retirement saving. Too many financial decisions often leads to worse result. Human brain needs separation between saving versus spending. We have several store of values: equity investment and real estate. Brokerages and banks are happy to provide us financial products to take out money from our assets. But it is often unwise to follow these advice. They only make money for brokerages and banks, not us.
Bitcoin is a Store of Value
Bitcoin is a fairly good store of value. It is decentralized, has network effect, not controlled by government entity. We can make a choice of investing a small amount of saving into this new Store of Value. It is a new type of financial freedom. The Lindy effect makes Bitcoin more likely to survive. But the Lindy effect likely makes Bitcoin remain a Store of Value. That is still an exciting future. We will have new financial options to choose.
PS: Don’t let excitement fool you. Beware of financial frauds.