06Während I discussed in my previous Bitcoin price analysis on the current Status quo and the Bitcoin price since then, between 8.460 $ and 8.750 $ to oscillate back and forth, we want to talk today about the big picture.
The cause for this is the well-known cryptographer Nick Szabo, and interesting statistics of the Bitcoin bulls Willy Woo. More precisely, we want to go the following questions:
Bitcoin is all the classic investment options, the most lucrative tool for people with a low time preference? What exactly describes the time preference actually? What is the strength of Bitcoin compared to Fiat currencies?
The answers to these questions and more you can find here and now. It is, therefore, as usual, exciting.
“Bitcoin Hodler have a low time preference”
At least now it is official: Bitcoin surpasses all! The speech is of assets like Gold, real estate and shares. Data confirm that the Bitcoin exchange rate over 4 years, seen all the alternative investment trumps values.
Yesterday, the 22. January, underscore Nick Szabo once again, the success of Bitcoin as an investment instrument. He noted that Bitcoin values compared to many other assets, which are generally regarded as profitable, so far, unmatched remains.
According to Szabo BTC Hodler have a lower time preference. The time preference describes a concept in Economics and, in particular, in the micro-economy. It specifies the preference of consumers to forego consumption in the present for future consumption. In other words, it describes the time preference of how much consumers are able to operate with foresight.
How Bitcoin was a competitor of Gold
Such proactive management is of course only possible if we, as humans, have the ability to store value and wealth over the years. One of the older instruments for this purpose, without a doubt, Gold is. The use of Gold in the economy made it possible to save people thousands of years ago, through the generations value. Only through such investment instruments, they were able to develop a much more pronounced time preference.
In particular, since Gold is much transport was compared with other asset classes, such as Land & real estate is a durable, and divisible, and to liquidate easier. These facts alone already represent a major success criteria for the Gold. Now it is so that, in particular, Gold has given Bitcoin a very close competitor as an investment instrument.
But how well is performing a Bitcoin compared to the classic Alternatives, really? This is the question that we want to go in the Following to the bottom of it.
Bitcoin exchange rate – the most attractive investment opportunity
In this connection, drew Szabo in his argument to a chart from the statistics source Woobull to. In this statistics Bitcoin is compared for the period from 2012 to today, with shares and real estate of the United States, as well as Gold, bonds and emerging-market currencies.
Using the Sharpe Ratio to calculate risk-adjusted returns of the Woobull-Creator Willy Woo Bitcoin from 2013 (four years after the emergence of Bitcoin) for every four-year-old “Hodl”-period score.
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This period of time of 4 years reflects the period of time between the Bitcoin Halvings, in which the Block Reward for Bitcoin miners is reduced each Time by 50 %.
From the Graph, it is clear that the Bitcoin exchange rate the most attractive investment compared to other investment opportunities throughout instrumt. Only for a short time, the U.S. managed Stocks provide a way to compete with Bitcoin.
Only a free market produces “hard” money
For Szabo, the impressive risk-adjusted returns of Bitcoin Hand-in-Hand with his nature as a decentralized Form of hard money that is free from manipulation by governments and Central banks.
In comparison, the risks of the Woo offered investment alternatives from their vulnerability to the interference of a third party resulting, according to Szabo. In particular, emerging market countries will react, for example, currencies to the Dollar, which is not allowed to develop again according to the conditions of the free market, but its supply is controlled by the Federal Reserve Bank (FED) and the banking system as a Whole.
The next BTC Halving will reduce the inflation rate to 1.8%
Similar arguments for a Central principle in Saifedean Ammous’ popular book, “The Bitcoin Standard.” Here, too, the author discussed about the Lack of a free market of Fiat currencies is critical.
In the case of the already developing next Bitcoin Halving in may 2020 is now expected that the inflation rate of Bitcoin drops to 1.8%, under both the gold as well as the aim of the FED for the US economy falls, which increases the potential risk-adjusted returns further.
Without a doubt, the past Performance of the Bitcoin price speaks with almost 9.000.000% already now. As measured by the fact that the market is still relatively small, we may wait for the curious to see what will follow in the next few years.
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