2020 was especially memorable for Bitcoin. To help commemorate our readers this year, we asked our network of contributors to reflect on Bitcoin’s price action, technological development, community growth and more in 2020, and to reflect on what it’s all about. 2021 can mean. These authors responded with a collection of thoughtful and thought-provoking articles. click here to read all the stories from our end of year 2020 series.
The short, 12-year history of Bitcoin is filled with exciting times. From the impeccable fertilization born by Satoshi Nakamoto to the extreme polarity between face-melting pumps, catastrophic fixes, infamous exchange hacks and internal Bitcoin civil wars; not many years have been as exciting for Bitcoiners as 2020.
Since the infamous Bitcoin crowd has had “Paul Revere’d” for years, it looks like the institutions are finally coming. The new demand over the coming years will drive Bitcoin to become the next world reserve currency.
The case for a modern value store
By the end of 2020, more than 5 percent of the total supply of bitcoin as a tax reserve asset will be held on the balance sheet of more than 20 public and private companies, a trend that began to materialize this year.
During the same period, the M1 money supply of USD – a measure used by economists to quantify the amount of money in circulation in a given country – increased by more than 60 percent. The reckless monetary and fiscal policy put in place by central banks and governments as a global response to COVID-19 has put bitcoin in the spotlight as a potential, new store of value.
This direct liquid injection of USD into the United States and the wider world economy is known as quantitative easing (QE) or ‘pressure of money’. The Fed’s commitment to arbitrarily increase the money supply distorts price signals, lowers real wages, increases inequality in wealth and ultimately destroys the free market. Savers are punished as their time and wealth is plundered among them by the cancer process of inflation. Although the world’s reserve currency status creates an inherent question, it does not appear that this trend of monetary devaluation may continue for long in the future. The case for a currency with a hard supply that cannot be manipulated arbitrarily by governments and institutions has never been so strong.
In steps is the Bitcoin Bull Bull Bull, Gigachad Michael Saylor.
Saylor, one of the longest-serving CEOs of an exchange-traded technology company, became the Bitcoin rookie of the year this year after buying Bitcoin (about $ 70,000) for nearly $ 1.3 billion with the balance sheet of his company, MicroStrategy. He is not the only one who notices this trend.
Paul Tudor Jones, Stanley Druckenmiller, Scott Minerd – names all associated with institutional hedge funds – have opened their minds and portfolios to a bitcoin grant. Large, private banks such as CitiGroup have issued price forecasts of $ 300,000 to $ 400,000 for next year. As we continue to destroy the purchasing power of the dollar, this game-theoretic trend of scarce asset allocation will only continue to increase in the future.
Last, and certainly not least, the beautiful NgU (Number Go Up) technology integrated with Bitcoin continues to drive us to new heights. On December 16, bitcoin reached its previous 2017 high of 2017, rising above $ 20,000 for the first time. The further rise in the price of bitcoin over the next decade will increase its general use as a corporate treasury reserve asset. A higher price will attract new attention, leading to more awareness and ultimately less volatility. Bitcoin remains a shining beacon of hope in a world built on monetary slavery.
Protocol improvements and ecosystem innovation
As a technologist, the improvements to the various layers in the Bitcoin protocol remain the most exciting progress of 2020. Schnorr Signatures / Taproot / Tapscript, through a multiple Bitcoin Improvement Proposal (BIP), was merged into the core code base earlier this year. . ‘Taproot’, as it is commonly known, drastically improves the digital signature algorithm by Bitcoin. Massive improvements in privacy, scalability and transaction efficiency on the chain are built into the Taproot upgrade. This series of upgrades will further increase the acceptance of the Lightning Network, multisignature transactions and CoinJoins, ultimately leading to a more secure and private Bitcoin experience.
In addition to the improvements to the core protocol, the innovation ecosystem around Bitcoin improves the tools available to Bitcoiners. I would like to give a shout out to some of my favorites:
- Swan Bitcoin: a new way to buy bitcoin that forces you to make a long-term mindset through dollar costs.
- Specter: A desktop interface that can be integrated with hardware wallets and enable a user-friendly multisight.
- Strike: A payment application that allows users to pay an invoice in bitcoin using USD.
- ColdCard: A secure way to store private keys with a device that is not connected to the Internet.
In addition to Bitcoin instruments, developer grants by corporate and non-profit entities began to normalize throughout 2020. Organizations like the Human Rights Foundation, Square, Kraken and more have started sponsoring developers to encourage them to work full time on improving Bitcoin. Websites like BitcoinDevList and BitcoinACKs have encouraged your average Bitcoiner to contribute to the Bitcoin circular economy by donating sats to developers.
Ultimately, thought leadership continues to enhance the educational experience of Bitcoin, known colloquially as ‘falling off the rabbit hole’. Podcasts, books, articles, conferences and personalities on Bitcoin Twitter still suffocates the complexity of Bitcoin with digestible and entertaining content suitable for front-runners and Bitcoiners. As more and more people dedicate their lives to Bitcoin, the influx of intelligence and ingenuity will throw humanity into the stratosphere of innovation in the coming decades. This synergy of thought leadership will enhance anyone who seeks it.
Looking Forward: The Struggle Ahead
As we approach the new year and we imagine the way forward, it seems that there are some trends up front. The first is the launch of central bank digital currencies (CBDCs) that seek to replace the private banking sector with a combination of central banking and fintech. New currencies such as the digital dollar and the digital yuan seek to accelerate the Orwellian future we are heading for through direct taxation, capital controls, financial supervision and a universal basic income.
I want to be explicitly clear: these currencies are not as threatening to Bitcoin as any fiat currency is today. More than 90 percent of the U.S. dollar is already digital, and most governments want to phase out cash completely in the next few years. Creating a CBDC does not solve the problem of monetary dismantling or the problems of financial supervision and censorship. Bitcoin remains the only incorruptible money that exists today.
The second trend will try to regulate Bitcoin. We are already beginning to hear rumors of restrictions on self-preservation floating around. The complete ban on self-preservation is unlikely, but withdrawal limits and additional KYC regulations are almost certain. Over the next few years, there will be direct attacks on anyone who wants to use Bitcoin privately. We must fight back against this. Privacy in itself is not illegal and is the basis for freedom. If Bitcoiners give up the ability to preserve their bitcoin themselves by handing it over to institutions, it is one of the only real threats to Bitcoin.
The Bitcoin protocol is designed on the binding incentives of social consensus. Anyone who chooses to use Bitcoin should agree to a set of rules that are validated by others on the network. If you take care of bitcoin yourself, you agree to these rules. If you manage a Bitcoin node and verify your own transactions, you agree to these rules. If you exploit bitcoin and contribute to the security of the network through energy and work, you agree to these rules. The relinquishment of the ability to care for and independently control bitcoin invalidates the social consensus of the Bitcoin protocol and allows the rules to be changed. Individuals must be willing to fight for what they believe in. I believe in Bitcoin and am ready to fight for it.
Finally, after all attempts to counterfeit Bitcoin have failed, governments will have no choice but to adopt it or risk aging. This is the last phase in the path to a Bitcoin Standard. Competitive game theory will force the hands of governments to start acquiring bitcoin in any way necessary, namely through mining. After all the tools in the government arsenals have been depleted, a new world reserve coin will appear. It will be bitcoin.
This is a guest post by Kaz Bycko. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.