I'm a believer in the tech, but 25% of the world's value is insane. Gold is about 1% of the world's value at $12T market cap. I think it's more likely that bitcoin matches the total value of gold relative to the whole world as the world continues to become more digital. Bitcoin's real growth won't happen from it overtaking value in other industries, it will come from consistency holding it's inflation adjusted value while fiat continues to plummet.
Thanks Jesse for great article. I read all of your tweets and articles. One question is bothering me for some time. Please find it below.
Question: We have to understand that most of this wealth (real estate for example) is in form of debt. This new money gets created only when anyone requires debt to buy new home. So, when people start buying fewer homes, then overall debt would go down and hence overall money in the market would also go down. With this, overall real-estate market of 330T would be lower. Now, apply this logic to all assets and you end up with much lower overall wealth than 900T and hence, BTC overall market cap also would be lower. I am curious how do you think about this argument ?
Not really. I don't have questions around Bitcoin potential. However, we need to understand that total existing overall value we are giving to any asset class is not because people are choosing to store their (already existing) extra surplus into that asset, but, instead they are taking debt, which is creating money out of thin air and hence adding to overall market size of that asset. Now, if people stop taking any debt, then extra money doesn't get created and it would be largely left to people's existing wealth (which is a good thing). This reduces overall market size of that asset that bitcoin would capture and hence eventual value of bitcoin (in terms of dollar) would also be less. Thoughts ?
I think that btc can go up (total value with dept - real value of the housingmarket). What I believe is that btc is going to reprise everything to the real value if it is easier/better to store the value in btc. So if a house is 350k but the real value 200k, the 350k - 200k = 150k will move into btc.
For now and as long as fiat "is the thing" - but when bitcoin devoured most fiat how will people take on debt? Only in putting other assets like bonds or art or gold or equity or property on the table which now also will be devoured by bitcoin which will lead to hyperbitcoinization...
Interesting read to say the least. The only part I really disagree with in your perspective, is the ability of Bitcoin to capture 50% of gold's TAM. Gold is a reserve asset already for central banks, and the biggest player have been stacking for years now. The Ruble is backed by gold, and with the Mir system in Russia expanding and the SWIFT alternative growing every month, it's apparent that gold will have a role to play in a new multipolar financial system, it's only a question of how much. Since Bitcoin can't inherently be controlled by central banks, they will not adopt it willingly in my view.
It's a great point. I actually was torn a bit on that one. I think gold stands to gain relative to other assets over the coming decades also, but at the same time, I think Bitcoin takes at least half of the "hard money" category in the process. ultimately, I decided to keep it simple for this analysis, and not introduce the wrinkle of expected future growth or shrinking of other asset categories besides Bitcoin. but yes, would not be surprised if we see Bitcoin at $200T while gold has a ~4x to $50T (or something like that)
I guess I just don't share the degree of optimism your advocating (at this time). I fear that the wave of government bans will come soon, since the SEC is killing off all competition to the USDC BlackRock pseudo-duopoly shared with USDt
Good luck getting world-wide coordination from all countries trying to ban Bitcoin. Spoiler: it won’t happen bc they cannot agree on anything (climate issues, etc). So if some decide to try a ban, all they will do is shoot themselves in the foot while others prosper. They will then be forced to double down to try to make up for their initial mistake.
Well, the BIS ultimately has total control over the fiat system, so if they mandate something, the world's central banks will obey, that's the order of things. In 2008, they coordinated the global bank bailouts (and bail-ins) and every member complied without question. I hope there won't be such a thing come into effect, but I wouldn't put it past them at this point
You're right BIS could mandate something like that. But unlike narcotics Bitcoin isn't harmful to people so what would their justification be? They have to tread VERY carefully because by attempting to outlaw it they will only prove how necessary it is. The Streisand Effect.
Every country has outlawed cocaine for example but the price and demand is sky high because of it. A kilo of cocaine fresh from Peru is approx $1000 to buy direct from the producer (less if you buy in bulk) but sells for $60-100,000 by the time it hits the streets. They can shut off fiat on ramps all they want but it will simply move P2P and that will exponentially drive up price which will draw even more attention to it. You need to get it thru your head they CANNOT stop Bitcoin. They don't have the manpower to enforce jack shit/ While you're pissing your diapers about imagined Govt control hardcore BTCers are scooping up Sats for insanely low prices. Stop thinking like a fearful cuck and see beyond the fearporn BS govt loves to feed you.
haha, i think you misunderstand where I'm coming from, but this is just text, so I'm not blaming you at all. I am very anti-statist. I do not in any way support government, centralized power or external authority. I would love nothing more than to see Bitcoin become the new global reserve currency. I understand government cannot "stop" Bitcoin, but, they can do exactly what they did with private gold ownership in 1933 under FDR. If you don't think the government won't come to people's houses, kidnap them, and throw them in jail, you are very naive. The central governments will do whatever it wants, and if you try to protect yourself and your property, they will steal that too. They do not care whether you claim to lose your keys in a boating accident, they can imprison you without charge or reason indefinitely in the US, and there is no legal protection left. Thanks obama. I am no "fearful cuck" as you falsely believe, I also don't consume government propaganda, I prefer my propaganda to be relating to self-sufficiency and personal responsibility :)
Gold failed. The moment banks started counterfeiting it with paper gold it lost. "Muh gold back ruble" lol listen to yourself. NO ONE TRUSTS RUSSIA. NO ONE. You think anyone will believe anything Russia says or China about their gold backed currency....hahahahahahahahahahhaahahhahahahahahhahahahahah JFC man. If something is backed by gold it means you can walk into a bank and exchange the paper for real Gold correct? So you think you'll be able to walk into a bank in China and demand real gold?! You'll end up sewing facemasks with the Uguyur Muslims for 20 years. You gold bugs are just delusional beyond belief. We are living in an internet world chap, BTC is native internet money. Good luck sending your gold shavings over your computer. You need to do a lot more research your understanding of Bitcoin is extremely limited. There's plenty of free resources out there. Start by watching Saylor/Breedlove series. Good luck.
once again, you misunderstand where I'm coming from by assuming a lot. I am not a "gold bug," I have studied financial markets for more than 20 years, I'm well aware of the global manipulation of gold and silver prices through paper derivatives. Outside of NATO, most of the rest of the world trusts Russia, but that's not the point here. BRICS already accounts for 40% of the global population - there will be a revaluation of gold and silver at some point in the future, just no date when. I never said anything about going to a bank in China, I would never assume the CCP would allow its subjects to control real money, just like Japan, there's no real money left. Don't judge me, Phil, as you clearly don't know me, and have no understanding of what I do or do not know. I said nothing to attack you and I expect you to respect my right to freedom of speech as well as I do yours. Saylor is a cultist just like Max Keiser, I already went through that rabbit hole
I don't think people with bonds are going to swap it for bitcoin anytime soon.. bonds are considered the safest bet right now, and people who buy it tend to be conservative. Bitcoin is considered volatile and risky... the swap will come from other asset classes.
Bondholders aren't 100% blind. I think it will become clear the only way to pay off high national debts will be financial repression - printing money and running inflation hot above bond yields. Can bondholders stomach that for a decade and watch their relative purchasing power get wrecked? If ultra conservative they will switch to gold first, then later bitcoin.
But then we remember... 500x "ago" was $60. In 2012.
And before that some saw 500x from $0.12 - in late 2010.
And before that $0.00024 - so basically 2009.
If you don't think bitcoin will do another 500x in your lifetime, you're not paying attention, or you're not expecting to live long enough to see it. I am. If bitcoin doesn't do another 500x multiple in 30 years, I'll be surprised. And I'll still be waiting - it's a belief system at this point.
The banks paying attention will certainly drive the next rollercoaster feature we haven't had a chance to preview.
Wow, keep up the great work. None of us own enough bitcoin
I'm a believer in the tech, but 25% of the world's value is insane. Gold is about 1% of the world's value at $12T market cap. I think it's more likely that bitcoin matches the total value of gold relative to the whole world as the world continues to become more digital. Bitcoin's real growth won't happen from it overtaking value in other industries, it will come from consistency holding it's inflation adjusted value while fiat continues to plummet.
Excellent post, Jesse. Great one to share with TradFi folks.
Awesome stuff Jesse
Well said Jesse. A far more formal and reasoned explanation of my “back-of-the-napkin math” I can direct people to.
Thanks! That was the exact goal for this one!
Excellent work!
Thanks Jesse! Great read.
Thanks Jesse for great article. I read all of your tweets and articles. One question is bothering me for some time. Please find it below.
Question: We have to understand that most of this wealth (real estate for example) is in form of debt. This new money gets created only when anyone requires debt to buy new home. So, when people start buying fewer homes, then overall debt would go down and hence overall money in the market would also go down. With this, overall real-estate market of 330T would be lower. Now, apply this logic to all assets and you end up with much lower overall wealth than 900T and hence, BTC overall market cap also would be lower. I am curious how do you think about this argument ?
Isn’t what you describe actually the process of Bitcoin eating other asset classes, not a counter argument?
Not really. I don't have questions around Bitcoin potential. However, we need to understand that total existing overall value we are giving to any asset class is not because people are choosing to store their (already existing) extra surplus into that asset, but, instead they are taking debt, which is creating money out of thin air and hence adding to overall market size of that asset. Now, if people stop taking any debt, then extra money doesn't get created and it would be largely left to people's existing wealth (which is a good thing). This reduces overall market size of that asset that bitcoin would capture and hence eventual value of bitcoin (in terms of dollar) would also be less. Thoughts ?
I think that btc can go up (total value with dept - real value of the housingmarket). What I believe is that btc is going to reprise everything to the real value if it is easier/better to store the value in btc. So if a house is 350k but the real value 200k, the 350k - 200k = 150k will move into btc.
People will still take on debt in order to accumulate and speculate on Bitcoin’s appreciation (Volcano Bonds, Microstrategy).
For now and as long as fiat "is the thing" - but when bitcoin devoured most fiat how will people take on debt? Only in putting other assets like bonds or art or gold or equity or property on the table which now also will be devoured by bitcoin which will lead to hyperbitcoinization...
...or so I think...
Interesting read to say the least. The only part I really disagree with in your perspective, is the ability of Bitcoin to capture 50% of gold's TAM. Gold is a reserve asset already for central banks, and the biggest player have been stacking for years now. The Ruble is backed by gold, and with the Mir system in Russia expanding and the SWIFT alternative growing every month, it's apparent that gold will have a role to play in a new multipolar financial system, it's only a question of how much. Since Bitcoin can't inherently be controlled by central banks, they will not adopt it willingly in my view.
It's a great point. I actually was torn a bit on that one. I think gold stands to gain relative to other assets over the coming decades also, but at the same time, I think Bitcoin takes at least half of the "hard money" category in the process. ultimately, I decided to keep it simple for this analysis, and not introduce the wrinkle of expected future growth or shrinking of other asset categories besides Bitcoin. but yes, would not be surprised if we see Bitcoin at $200T while gold has a ~4x to $50T (or something like that)
I guess I just don't share the degree of optimism your advocating (at this time). I fear that the wave of government bans will come soon, since the SEC is killing off all competition to the USDC BlackRock pseudo-duopoly shared with USDt
Good luck getting world-wide coordination from all countries trying to ban Bitcoin. Spoiler: it won’t happen bc they cannot agree on anything (climate issues, etc). So if some decide to try a ban, all they will do is shoot themselves in the foot while others prosper. They will then be forced to double down to try to make up for their initial mistake.
Well, the BIS ultimately has total control over the fiat system, so if they mandate something, the world's central banks will obey, that's the order of things. In 2008, they coordinated the global bank bailouts (and bail-ins) and every member complied without question. I hope there won't be such a thing come into effect, but I wouldn't put it past them at this point
You're right BIS could mandate something like that. But unlike narcotics Bitcoin isn't harmful to people so what would their justification be? They have to tread VERY carefully because by attempting to outlaw it they will only prove how necessary it is. The Streisand Effect.
Every country has outlawed cocaine for example but the price and demand is sky high because of it. A kilo of cocaine fresh from Peru is approx $1000 to buy direct from the producer (less if you buy in bulk) but sells for $60-100,000 by the time it hits the streets. They can shut off fiat on ramps all they want but it will simply move P2P and that will exponentially drive up price which will draw even more attention to it. You need to get it thru your head they CANNOT stop Bitcoin. They don't have the manpower to enforce jack shit/ While you're pissing your diapers about imagined Govt control hardcore BTCers are scooping up Sats for insanely low prices. Stop thinking like a fearful cuck and see beyond the fearporn BS govt loves to feed you.
haha, i think you misunderstand where I'm coming from, but this is just text, so I'm not blaming you at all. I am very anti-statist. I do not in any way support government, centralized power or external authority. I would love nothing more than to see Bitcoin become the new global reserve currency. I understand government cannot "stop" Bitcoin, but, they can do exactly what they did with private gold ownership in 1933 under FDR. If you don't think the government won't come to people's houses, kidnap them, and throw them in jail, you are very naive. The central governments will do whatever it wants, and if you try to protect yourself and your property, they will steal that too. They do not care whether you claim to lose your keys in a boating accident, they can imprison you without charge or reason indefinitely in the US, and there is no legal protection left. Thanks obama. I am no "fearful cuck" as you falsely believe, I also don't consume government propaganda, I prefer my propaganda to be relating to self-sufficiency and personal responsibility :)
Gold failed. The moment banks started counterfeiting it with paper gold it lost. "Muh gold back ruble" lol listen to yourself. NO ONE TRUSTS RUSSIA. NO ONE. You think anyone will believe anything Russia says or China about their gold backed currency....hahahahahahahahahahhaahahhahahahahahhahahahahah JFC man. If something is backed by gold it means you can walk into a bank and exchange the paper for real Gold correct? So you think you'll be able to walk into a bank in China and demand real gold?! You'll end up sewing facemasks with the Uguyur Muslims for 20 years. You gold bugs are just delusional beyond belief. We are living in an internet world chap, BTC is native internet money. Good luck sending your gold shavings over your computer. You need to do a lot more research your understanding of Bitcoin is extremely limited. There's plenty of free resources out there. Start by watching Saylor/Breedlove series. Good luck.
once again, you misunderstand where I'm coming from by assuming a lot. I am not a "gold bug," I have studied financial markets for more than 20 years, I'm well aware of the global manipulation of gold and silver prices through paper derivatives. Outside of NATO, most of the rest of the world trusts Russia, but that's not the point here. BRICS already accounts for 40% of the global population - there will be a revaluation of gold and silver at some point in the future, just no date when. I never said anything about going to a bank in China, I would never assume the CCP would allow its subjects to control real money, just like Japan, there's no real money left. Don't judge me, Phil, as you clearly don't know me, and have no understanding of what I do or do not know. I said nothing to attack you and I expect you to respect my right to freedom of speech as well as I do yours. Saylor is a cultist just like Max Keiser, I already went through that rabbit hole
I don't think people with bonds are going to swap it for bitcoin anytime soon.. bonds are considered the safest bet right now, and people who buy it tend to be conservative. Bitcoin is considered volatile and risky... the swap will come from other asset classes.
Bondholders aren't 100% blind. I think it will become clear the only way to pay off high national debts will be financial repression - printing money and running inflation hot above bond yields. Can bondholders stomach that for a decade and watch their relative purchasing power get wrecked? If ultra conservative they will switch to gold first, then later bitcoin.
Your post did NOT age well. Bonds are now crap/volatile and inverted.
It's still way less volatile than bitcoin.
500x? Sounds crazy.
But then we remember... 500x "ago" was $60. In 2012.
And before that some saw 500x from $0.12 - in late 2010.
And before that $0.00024 - so basically 2009.
If you don't think bitcoin will do another 500x in your lifetime, you're not paying attention, or you're not expecting to live long enough to see it. I am. If bitcoin doesn't do another 500x multiple in 30 years, I'll be surprised. And I'll still be waiting - it's a belief system at this point.
The banks paying attention will certainly drive the next rollercoaster feature we haven't had a chance to preview.
Totally. And, if you missed Bitcoin in 2012 right now the Bitcoin of AI ($TAO by BitTensor) is $66.
I believe next 9~10 years btc will be valued in 10 millions dollars.
Great article! I enjoyed reading it, thank you very much.
This is excellent information.
Probably covered amongst equities and bonds, but I believe bitcoin in cold storage is the best pension as well as savings account.
I have a few hundred thousands sats in my lightening wallet to play with ofc!
Great piece. Thank you.
We enjoyed your article. Thanks for writing it up!
Here's our most recent musings on bitcoin.
https://specialsituationinvesting.substack.com/p/eight-ways-to-value-bitcoin#details