According reported throughout the week, MicroStrategy, a U.S.-based company that provides business intelligence, mobile software and cloud-based services, obtained a generous amount of Bitcoin. For several reasons, including to protect itself from the impending tidal inflation and, most interestingly, taking advantage of what the company believes to be the most authentic niche in storing value, even against gold, which has been a favorite of the sector in recent decades.
Bitcoin as national currency: what are the possibilities?
Jason Williams, the co-founder of Morgan Creek Digital, says the U.S. could become the first country to adopt Bitcoin as its national currency.
The United States will be the first country to adopt #Bitcoin as its national currency.
– Jason A. Williams 🚀 (@GoingParabolic) September 16, 2020
“The United States will be the first country to adopt Bitcoin as its national currency.”
To date, no country in the world has made Bitcoin a national currency, and the United States, like everyone else, is still in the early stages of tightening favorable regulatory guidelines. But the two alternative paths by which Bitcoin can become more dominant than it already is, and set in motion to become the country’s currency, is through the external adoption of institutional investors and traditional technology-leading companies.
The transition from gold to Bitcoin is necessary and is already underway
Bitcoin as the best store of value is increasingly consolidated. In 2019, investors doubled before the following year, and since then, there have been more investors moving money to their more reliable safe-haven assets than we’ve ever seen.
In preparation for the perceived economic recession, investors rushed to lock their assets in the safest form of storage. Remember that this started during the initial phase of political rigidity between the United States and the Chinese government, long before the pandemic hit globally. The USD has also been at its weakest with the United States presidential elections, among other rudimentary factors that have aggravated investor fears. Most American investors, of course, were looking for gold, silver and assets in the stock market.
The repeated printing of dollars to help stimulate, investors fought imminent inflation by securing tangible assets and the value of digital currencies began to explode. But the year-to-date performance of Bitcoin against gold, even with the latter holding the title as an unrivaled asset, was impressive. Bitcoin being the dominant cryptocurrency had an unbeatable performance of 64%, while gold peaked at 28% and silver, slightly higher at 49%.
The traditional gold acquisition curve among investors is flattening and seasoned investors are turning to Bitcoin. This is portrayed in the case of American hedge fund manager Paul Tudor. The billionaire macro investor revealed that he considered several bets on assets like gold, stocks, commodities and treasury bonds before realizing that there was a “growing role for Bitcoin”. That perception has attracted companies like MicroStrategy, whose top members are reiterating that their massive Bitcoin reserves should not be sold. Crypto-centric institutions, such as the gray scale, have also seen an increase in new investments.
The final result
The contained volatility is one of the end results. As investors buy Bitcoin in large quantities, volatility decreases and selling Bitcoin to avoid a reduction in value is addressed to some extent. Bitcoin could then be considered a more reliable asset than it already is. But even with this stability, Bitcoin needs to go through many other external stages to make the cut.
Bitcoin as a national currency, anywhere in the world, is a future possibility. But at the pace of the nation, cryptocurrency would have outgrown it long before centralized policies were weakened. Without national adoption, Bitcoin is still inherently valuable.