As Bitcoin Nears $100K, Here's Why It’s a Must-Own Asset

Bitcoin Is Sound Money, The Dollar Is Not

TL;DR

With Bitcoin nearing $100,000, it’s time to address some important issues.

Here at the Pragmatic Investor, we’ve been bullish on Bitcoin for a very long time. 

In another life, before I was Pragmatic I was a gold bug libertarian. 

It took me some time, but I finally figured out that, despite what Peter Schiff would have you think, the world is not going to collapse next year.

But that doesn’t mean sound money isn’t important, and Bitcoin is exactly that.

In a world that probably won’t collapse, but will require ever-increasing amounts of “money” i.e. currency debasement to keep the wheels turning, monetary hedges like Gold, and Bitcoin are a must-own for ANY investor.

In fact, allocating part of your wealth to these assets is the only way to truly protect yourself from the constant nagging bite of devaluation.

It’s simple really and just a matter of taking action, which is why I’m here today to do my part, by trying to, concisely,  lay out the foundations of money, gold and Bitcoin.

A whole book could be written on this topic, many have, but who has time for that?

I’ll reveal the secrets of Bitcoin in around 1000 words. And, for those interested, I will also reveal my personal Bitcoin targets and outlook.

Expect to learn:

• What Money Is

• Why Gold Was The Standard Of Money

• How Bitcoin Is Similar To Gold

• How Bitcoin Is Different To Gold

• What Moves Bitcoin’s Price, For Now

• Realistic Bitcoin Price Targets; Short, Medium and Long-term

What is Money?

Money transcends its material form, reflecting human values and priorities. Its misuse can exploit economic systems, while its proper understanding fosters prosperity. By grasping its functions and historical evolution, individuals and societies can better navigate its complexities.

Money is a tool enabling the exchange of goods and services. Historically, it evolved to overcome the inefficiencies of barter systems, where direct exchanges required a "double coincidence of wants." Money acts as a common intermediary, representing value universally. It can take various forms, such as salt, gold, or fiat currencies, but its essence lies not in its physical properties but in its ability to facilitate trade.

Why Does Money Matter?

Money is indispensable in modern economies for several reasons:

1. Medium of Exchange: It simplifies transactions by replacing barter, making trade efficient and universal.

2. Store of Value: Money allows individuals to save and accumulate wealth over time. This ability underpins economic stability and progress, enabling investments in infrastructure, technology, and societal growth.

3. Measure of Value: Prices expressed in money provide a shared reference for valuing goods and services. This aids in resource allocation, guiding production and consumption.

Properties of Money

To perform its functions effectively, money must exhibit these attributes:

• Divisibility and Portability: Practical money is easy to carry, divide, and transact. Precious metals like gold historically fulfilled this due to their high value in small quantities.

• Stability: Stable value ensures trust in money as a reliable measure of worth. Precious commodities like salt or gold historically achieved stability due to limited supply and consistent demand.

• Durability and Longevity: Good money retains value over time, unaffected by physical degradation or significant economic changes.

Why Stability Matters

Stability in money’s value prevents economic disruptions. When value fluctuates, inflation or deflation ensues, distorting prices, disincentivizing saving or spending, and impairing debt management. For instance, frequent currency devaluations can erode savings and create economic imbalance.

Why Gold Was Chosen as Money

Durability and Stability

Gold and silver have historically been favoured as money due to their durability. Gold is highly resistant to corrosion and oxidation, ensuring its value remains unaffected by time or environmental conditions. This permanence allowed ancient societies to use it confidently as a store of value.

Ease of Use

Gold is among the easiest metals to work with due to its malleability. Unlike many metals found in ores requiring extraction, gold is often discovered in its pure state. This practicality made it ideal for minting coins.

Intrinsic and Universal Value

Gold's brilliance and rarity led to its early association with deities and royalty, granting it universal appeal. This intrinsic allure transcended cultures, ensuring widespread acceptance and facilitating international trade.

Economic Stability

Gold's scarcity and consistent global demand ensured its value remained stable, even during periods of increased supply. Its stability as a monetary base supported economic systems for centuries.

Gold's unique combination of beauty, practicality, and stability made it a cornerstone of global currencies for thousands of years.

Bitcoin as a Modern Successor to Gold

But gold became somewhat impractical as we moved into a credit based digital economy. Not impractical, perhaps, but more susceptible to corruption. 

Bitcoin was created to mimic gold due to its reputation as the ultimate store of value. Like gold, Bitcoin is scarce, with a fixed supply of 21 million coins, mirroring the finite nature of gold reserves. Mining both demands effort, whether through physical excavation or energy-intensive computational processes. This connection to real-world labour has earned both assets universal recognition as neutral and borderless forms of money, free from centralized control.

Practical Advantages of Bitcoin

Bitcoin surpasses gold in practicality. While gold is divisible, trading it requires physical handling or reliance on centralized institutions to mint coins or issue certificates, introducing inefficiencies and counterparty risks. Bitcoin, being purely digital, allows seamless peer-to-peer transfers without intermediaries, enabling secure, decentralised exchanges in a world increasingly reliant on digital solutions.

Resistance to Censorship

Historically, gold has been vulnerable to confiscation and regulation, such as the U.S. Gold Reserve Act of 1934 and current limitations on ownership in some countries. Bitcoin, however, operates on a decentralised blockchain, making it inherently censorship-resistant. Its anonymous, peer-to-peer transactions cannot be easily halted or controlled, even in restrictive environments.

Enhanced Security and Portability

Physical gold requires secure storage, making it susceptible to theft or hoarding by powerful entities. Bitcoin, by contrast, exists digitally and can be safeguarded using private keys. Its decentralised nature ensures that no single party can monopolise its supply or manipulate its availability, preserving its role as a fair and resilient asset.

Bitcoin (And Gold) Are The Ultimate Hedge

While gold’s long history makes it a reliable store of value, Bitcoin’s superior practicality, resistance to censorship, and robust security position it as a more versatile and future-ready alternative in the modern financial landscape. Bitcoin builds on gold’s strengths while addressing its limitations, making it a valuable evolution in the concept of money.

Does this mean we will be trading in Bitcoin any time soon?

Likely not. This is where we must remain Pragmatic. Controlling one’s own currency is too powerful an ability for a country to give up, and to unwind the global dollar system would threaten to plunge us back into the dark ages.

But that doesn’t mean that gold and Bitcoin are meaningless. In fact, gold hasn’t been “officially” money for decades, but the Central Bank still holds it, and it has served as a hedge against devaluation since the fiat dollar system began.

And this is becoming increasingly more important because monetary debasement is just going to keep increasing, in the long run. 

We live in debt-fueled economies that rely on constant increases in debt and refinancing in order to continue. 

And a debt can always be refinanced, as long as you have control of the currency. While I would love to see a world with balanced fiscal budgets and a return to sound money, even Trump won’t do this.

Debasement is a built in feature of the system, we can’t keep going without it, which is why assets like Gold and Bitcoin are a must hold

Bitcoin Price Targets

With that said, you may have heard me talk about different Bitcoin price targets. In the short-term, Bitcoin will experience volatility, with clear tops and bottoms.

Let’s not forget that Bitcoin ultimately tracks liquidity.

And while liquidity will generally tend to go up, as the need for more debt to service prior debt increases, liquidity is also cyclical in the shorter term. There will be moments of more and less abundant liquidity, which is why Bitcoin’s price will be volatile.

Ultimately, Bitcoin is an asset that should be held long-term and added to on any dips. 

But, if like me, there’s a little tiny degenerate gambler in there, then you might want to take advantage of certain price swings.

In the next section I will discuss short, medium and even long-term price targets for Bitcoin using both technical and fundamental analysis.