Bitcoin is savings technology
Using bitcoin to get more dollars misses the point.
When you save money in a government currency like U.S. dollars, inflation gradually erodes its purchasing power, meaning your savings buy less over time. That's a frustrating reality for anyone trying to plan for the future, and it's what pushes people to look for alternatives.
Some people approach bitcoin as traders. They buy it hoping the price will rise, intending to sell it for a profit. For them, bitcoin is just a vehicle — what they're really after is more dollars. But a growing number of people are coming to bitcoin with a completely different mindset. They're not trying to get more dollars, they're trying to rely on dollars or other assets less. For these savers, accumulating bitcoin isn't just a means to an end, it's the goal.
Purchasing power simulation
Fifteen seconds to feel the difference between melting dollars and a fixed supply.
Bitcoin consistently performs well as long-term savings due to its high degree of future certainty. We know that there will only ever be 21 million bitcoin, a fixed supply limit. We know the rate at which this supply is entering circulation. And we also know that these fundamental features are reliable across time. Changing them would require forming a consensus among bitcoin users who appreciate bitcoin precisely because it reliably resists change.
Confidence in long-term plans rises when uncertainty about the future is reduced. If you hold dollars — even within a high-yield savings account — you must contend with the reality that the inflation rate of the next decade is unknown and outside your control. If you treat stocks as savings, various economic and geopolitical risks need to be considered. If you hold a diversified basket of cryptocurrencies, altcoins replacing one another in popularity can wreak havoc.
Physical gold was the historical standard for reducing uncertainty, because there is a finite amount of the durable metal on Earth. However, using gold as savings still leaves unanswered questions, such as exactly how much there is in circulation today, how much more will be mined any given year, and how much will be in circulation decades from now. This information relies on estimates from miners and other centralized authorities, who may have misaligned incentives related to providing accurate numbers. New gold extraction techniques (such as filtering seawater or mining asteroids) also have the potential to disrupt expectations.
How stable is the monetary policy?
Long-term savers demand reliability across time.
With bitcoin, anyone can verify the current and future supply independently, without trusting anyone else to report the numbers. All you'd need to do is run bitcoin software on your own computer that connects to the rest of the bitcoin network. If it's authentic, it will be recognized as valid by the network. And by investigating the code, you could see the details of the 21 million limit and how those coins are unlocked according to a predefined schedule. Even without running the software yourself, knowing that you could, and that thousands of people are constantly auditing bitcoin this way, provides the same confidence.
If you own some amount of dollars, it's unknown what percentage of the total supply you have, now and in the future. If you own some amount of gold, it's also unclear. But if you own some balance of bitcoin, you know you have a fixed percentage of 21 million — forever. That level of certainty and reliability has never existed for any other asset in human history.