Is BTC Now a ‘Safe Haven’: The Perceived Value of Cryptocurrency

A gentleman asked a crypto expert acquaintance of mine in a post, “Is Bitcoin now a safe haven?”

Before we try to answer this question, let’s go over a quick concept:

Tokenomics: What is the economic value of a person? Most might say that there are a myriad of criteria and indicators that might help estimate the economic value and potential of a person. We call these indicators, ‘qualifications’ or ‘competencies’. In the Crypto world, we call the attributes which indicate a crypto’s potential value, ‘tokenomics’. For anyone worth their salt who wishes to dive into the obfuscated world of cryptocurrency, a deep understanding of the principles of tokenomics is imperative. Here is a link to a great video on the subject. It is not the central focus of this particular article, but I would be remiss if I didn’t include it considering its importance: https://youtu.be/ftCaqG7wckg?si=dd27Dt2PeQyXCrnJ

IS BTC now a ‘safe haven’?

After 4 years of study and aggregating crypto and blockchain news, it is my opinion that cryptocurrencies tend to behave, ‘as we treat them’, or perhaps better stated, how we ‘perceive them’ in a given instance. In the specific instance of BTC however, there is another indelible, mathematical factor that cannot be avoided. To continue using the energy-hungry, POW-based asset, the value of the asset must continue to go up as the ‘halving schedule’ (Halving: every 4 years* the amount of BTC rewarded for creating a block is cut in half) progresses, in order to cover the increased energy, equipment, and overhead costs of mining (creating groups of transactions, called blocks). This makes Bitcoin a sum-0 value proposition (Pass/Fail) $1,000,000(+/-)/BTC: $0/BTC. This is suggested to be by design and is locked into the protocol’s code, and cannot be changed or the asset ceases to be BTC. Simply stated, if people use it, the value must go up to cover the block creation(mining) costs, inherently creating locked value. If was not profitable, no one would process transactions and the chain would die.

What does the perceived value of crypto mean?

Imagine for a moment that you lived on an island where there were gold nuggets simply lying in the sand on its beaches. On one particular day, the local people valued the nuggets and used them for trade, and then other days they simply discarded them back on the beach.

One day the people realized that the nuggets on the sand were becoming scarce, and that there were much fewer nuggets than there were people. This is the point where all the nuggets got scooped up from the sand and were traded from then on as a greatly regarded store of value. So, now what are the value of the nuggets? Are they a ‘safe haven’? I would venture to say that in this scenario, yes they are now. But they didn’t start that way. They only became valuable when the local people collectively perceived them and treated them as though they were.

So what’s the answer, is it a safe haven or not?

What is safety? Search Labs Ai Overview states:

Free from danger: Protected from harm, loss, or danger, or not likely to cause harm or danger. For example, “The children are quite safe here”.

• Involving little risk: Not likely to lead to mishap or error. For example, “a safe estimate”.
• Dependable or trustworthy: Can also mean careful to avoid danger or controversy. For example, “a safe guide” or “a safe player”.
• In secure custody: Denied the chance to do harm. For example, “a criminal safe in jail”.

According to this definition, it appears the answer is: NO, maybe, sort of, and not yet. What we have is an ambiguous term with ambiguous answers. We are also facing a Schrödinger’s Cat scenario. Let’s break down the answer:

• Is BTC a safe haven free from danger, harm, or loss? No, due to volatility especially in the short term.
• Does BTC pose little risk? No, due to volatility, regulatory scrutiny, and an uncertain final outcome, there is risk.
• Is BTC dependable or trustworthy? Let’s focus on trustworthiness. Trustworthy as far as the protocol working correctly when is is implemented correctly, then yes, it could be considered trustworthy. However, if you lose your private keys to your BTC wallet, you lose access to your funds forever. Would you still consider that trustworthy? Is it trustworthy that it will never go down in price? No. Is it trustworthy in the sense that it will always be around? It is arguably the world’s first* and oldest cryptocurrency in a fast growing ecosystem that is currently working on gen4 blockchains which provide incredible functionality and real-world use-cases. Think of a pristine 57Chevy. Classic, valuable, desirable, and a great long-term store of value. Is it the only or best vehicle today? No. Is it dependable? The fact that all the information is spread across the globe in a decentralized manner makes BTC very secure and is considered immutable. Is it dependable for the user? This is fully subjective in too many ways to dive into here.

My personal thoughts and opinions on a safe haven (NOT FINANCIAL ADVICE): Considering what our options are these days for investment and a long-term store of value, I like BTC. I choose to believe that it will not utterly fail and that in the long term, and that it will stabilize as all the ‘nuggets’ start to get hoarded. I see the potential for some significant long-term gains, which could even produce generational wealth with proper investment and a positive outcome, were the mass general public to adopt and keep BTC as a long-term store of value. I think BTC will significantly share the road with existing and new, incredible emerging blockchain technologies. While BTC can bootstrap new tech to a certain extent, going back to our 57Chevy scenario, even changing the entire motor and suspension on the 57Chevy is not going to make it a Koenigsegg Agera RS. Anyone who says otherwise is fooling themselves. But that’s just me, I could be wrong about all of it, so do your own research.

Disclaimer:

Cryptocurrencies can be highly volatile. Not financial advice. Never invest more than you are willing to be laughed at for losing. Be careful using leveraged positions, especially on short positions, as improper investing methods can lead to catastrophic losses. Always do your own research.

-J. Santi

Acknowledgments:

Original awesome LinkedIn post by the legendary, Dan Held https://www.linkedin.com/posts/ugcPost-7226372609196597248-vxQJ?utm_source=share&utm_medium=member_desktop

And the inciting post 😉 🙂, by Charlie Peterson 🪜