Bitcoin Musings

I am paying attention to Bitcoin. 21 million coins outstanding is a lifetime cap, and a certain amount of those coins are lost forever. Bitcoin has outclassed all other cryptos, though there is a continued likely place for Ethereum, and lots of room for Stable Coins, and yes, different ICOs have unique benefits too.

While Stable Coins capture many of the crypto benefits, since they are tied to something else, they are not a store of value. To me, the Bitcoin market cap today of 21 million coins multiplied times the current price of $8200, a total market cap of $160 billion, is not a lot, and it is a one time thing. Gold is $250 billion a year; Bitcoin is $160 billion once. 

Of course there can be unlimited new cryptos, but it sure seems like the literally thousands of ICOs, with modestly differentiated features here and there, haven't amounted to original expectations or concerns about Bitcoin dilution. Bitcoin feels like the defining crypto currency, which was something that was more uncertain one and two years ago. 

Custodianship is more and more secure. Protections against manipulation are being dramatically enhanced. There is lots of discussion about Stable Coins, which after all, truly solves the fundamental raison d'etre of crypto in the first place, as long as the link is one that has some substance. With Stable Coins the crypto universe offers the immediacy of secure transferability and the linkage ... depending on what it is, provides some asset value protection. 

For those who want transferability and the opportunity for absolute asset value protection, assuming Bitcoin continues maturing as a valid instrument, then Bitcoin could be the most important "answer" within the crypto universe. 

Of course Bitcoin can be "diluted" by unlimited new ICOs but so far, it sure feels like Bitcoin is in the driver's seat. Naturally, even as a legitimized instrument, whether Bitcoin acts as a store of value is a function of demand. Usually in economics, we need to look at both the supply side of the equation and the demand side... but in the case of Bitcoin, there is no issue of incremental supply... though as stated, there can be unlimited other crypto supply. 

Will the demand for Bitcoin increase, taking the price higher from today's levels? I think so, but as a trader and an investor, cognizant of relatively recent lows in the $3000 area, let alone Bitcoin prices, not many years ago, of less than $1.00 per coin, I am being careful. But I won't be TOO careful since it feels as if the story is coming together, with institutional legitimacy in the happening mode. 



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