Bitcoin S2F Model Creator Reveals 4 Reasons Why He First Bought BTC
Fixed supply and interest rates that refuse to turn negative were among the top advantages of swapping fiat for BTC, says PlanB.
Bitcoin (BTC) was the top choice of famous analyst PlanB thanks to its scarcity and zero likelihood of negative interest rates.
In a series of tweets on July 7, the creator of Bitcoinâ€™s stock-to-flow price model explained what drove him to buy the cryptocurrency.
PlanB: â€œMost people are asleepâ€� on BTC
PlanB has become well known as an outspoken BTC supporter. His price model has undergone several incarnations, and currently predicts a Bitcoin price of $288,000 by 2024.
So far, stock-to-flow has tracked Bitcoinâ€™s metamorphosis with almost 100% accuracy. Before he created it, however, PlanB was eyeing macro factors and an exit from fiat currency.
He wrote on Twitter:
â€œWhy I bought #bitcoin in 2015-2016 (before the model):Â
– 46M millionaires in the world, only 21M BTCÂ
– can’t use gold or $ in space or Mars, need something elseÂ
– nobody can freeze account or block transactionsÂ
– 0% interest rate is better than negative interest rateâ€�
The reasoning will sound familiar to many. Bitcoinâ€™s fixed supply, non-physical nature, decentralized structure, and â€œhardâ€� money credentials continue to make it an investment choice for both large and small volume investors.
Since 2015, negative interest rates, in particular, have proliferated, with Bitcoin offering a safe haven from central bank taxes and the erosion of the value of cash savings.
Continuing, PlanB said that mainstream consumers were still unaware of Bitcoinâ€™s benefits as money.
â€œIt is funny isn’t it? In The Netherlands people have about $400B on their bank savings accounts, earning 0% interest (above $1M interest rate is negative),â€� he wrote in another post.Â
â€œThis $400B could be put in bitcoin and put to work to earn at least 6% interest, $24B/yr. Most people in NL are asleep ..yetâ€�
Bitcoin stock-to-flow price model as of July 8. Source: Digitalik
Bitcoin credentials in a nutshell
As Cointelegraph has often highlighted, Bitcoin rewards low time preference investors by not incentivizing spending or borrowing as quickly as possible. The opposite is true of fiat, issuers of which use negative rates and inflationary policy to penalize long-term savers.
At the same time, miners are incentivized not to alter Bitcoinâ€™s fundamental attributes â€” fixed supply and fixed emission â€” as doing so would compromise their own prosperity.
As Saifedean Ammous summarized in his popular book, â€œThe Bitcoin Standard,â€� this form of â€œdigital scarcityâ€� is unprecedented in history, and allows Bitcoin to fill a niche that no other money has yet managed, including gold.
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