Most people who get into Bitcoin use it as a speculative store of value, holding it either as a hedge against inflation or because they think the price will appreciate over time. Speculation is massive in this market, even though it’s only a micro-cap in terms of overall market value compared to the world economy.
The issue is with a brand new asset class valuation models don’t know how to price in technology, risk, network effects and more. It’s all so unique; there is no template like there is for commodities or tech stocks that now have an established track record and set of data.
The truth is no one knows where Bitcoin will go, and the last 10-12 years of data cannot tell you what it will do in the next 10-12 years.
What is an asset
Bitcoin is often called an asset, so are stocks and even real estate, even when it’s not always the case. Buying stocks, Bitcoin, or real estate hoping the price goes up to sell later is speculation. Buying stocks, Bitcoin and Real Estate and generating a return in cash flow and then listing to offers to sell this cash flow generating ASSET well that is when it becomes an asset.
When investing in stocks, you should focus on ones that pay dividends; this is an asset. When buying real estate, you should focus on land that can be used to create products or produce, get a rental income; when the land can generate an income, then it is an asset.
So what about Bitcoin?
HODL’ing has its limits
HODL’ing is a great strategy, don’t get me wrong, I am a massive fan of HOLD’ing and the reward for having prudence, and it has its merits. It provides a floor for Bitcoin, teaches you how to save, rewards your frugality and gives you the capital you can use to generate income in the future.
The vast majority of my BTC goes into HODL’ing as I build a buffer and safety net for myself around the one coin level. The rest I use to build cash flow and use BTC as an asset.
Cash flow is going to make BTC valuable
- I’ve been leveraging some BTC in CE-FI apps like blockFI and Celsius, providing collateral for loans and getting a return for it.
- I’ve used BTC to invest in solar panels that pay me a monthly return for anyone who uses that electricity and I get paid in BTC
- You can leverage Bitcoin as a market maker on exchanges and earn payment in the transaction fees.
- Your BTC holdings if early enough would net you Bitcoin Cash, HEX and Bitcoin SV airdrops which you could sell or try other things within the market
- You could use your BTC to set up a lightning node and earn satoshis for validating transactions
While the opportunities to earn with your BTC are not the most attractive, these options weren’t around a few years ago. In years to come, there will surely be more ways to use your BTC to earn income.
This is one of the reasons I am bullish on owning this in my personal balance sheet. Just like fiat can net you an income in fixed interest accounts, money market accounts and more. BTC will have the same financial products built on it in the future of that I have no doubt.
Imagine having your BTC stored safely on a ledger and getting monthly payments for allowing others to put it to work; isn’t that the dream?
Producitivy from BTC
The more productive use we have with BTC, the more it appreciates to everyone. Instead of holding it to sell later to create production then, BTC users need to find ways that BTC itself generates more economical use and value that it is accepted for work, services, products and more.
Once we crack this part of the economic puzzle, it will be gangbusters for BTC as anyone who holds it could use it to generate income and leverage their holdings.
