Bitcoin (BTC) monetary justice could lead to the 2020s becoming the decade of hyperbitcoinization, which is a theoretical form of Bitcoin-induced currency monetization, said Lucas Nuzzi, head of network data at US-based crypto data provider Currency data.
“Everything we’ve experienced so far has strengthened Bitcoin’s value proposition,” he said during MessariMainnet is online conference earlier this week.
Nuzzi explained that the fair distribution and turbulent history of Bitcoins created this “truly decentralized and stateless monetary base.”
“And stateless outside of nation-states only. [There’s] no foundation, no development arm, no development company [behind Bitcoin]. It’s a truly stateless monetary base that strengthens the case for BTC as a store of value, which can now be backed by data and really confirms this idea that Bitcoin is the antithesis of interventionism and the kind of money we need to move into the 2020s go, “he emphasized.
Bitcoin’s predictable monetary policy
In the opening portion of his talk, Nuzzi addressed the paradox that has emerged when it comes to the US dollar.
“The reaction of central banks to the Coronavirus pandemic has created many money paradoxes,” said Nuzzi.
On the one hand, there is widespread concern about the intervention policies of central banks and markets that do not reflect reality at all. On the other hand, there is an increasing demand for US dollars. ”
Change in companies since the beginning of each program
As indicated in the above graph, which was part of Nuzzi’s presentation, the current quantitative easing program was much more aggressive than previous iterations. According to Nuzzi, there are estimates that the Federal ReserveBalance can reach $ 11 trillion by the end of the year.
The Fed’s balance sheet has risen to $ 7.165 trillion, up another $ 67.9 billion from last week, which is still a pace of $ 3.5 trillion in itself.
The Fed has increased its balance sheet by 90% since August.
They are crazy and reckless. pic.twitter.com/GhpK7xhf6N
– Sven Henrich (@NorthmanTrader) June 5, 2020
Despite this massive increase in activity by the Federal Reserve, the DXY (Dollar Index Spot) is up about 0.9% this year. In addition, there has been tremendous growth in USD-denominated stablecoins this year, with the total value of these stablecoins approximately doubling in recent months.
Notably, Bitcoin celebrated its third halving, halving the amount of new BTC that is regularly created, as central banks around the world ramp up their money printers.
Nuzzi also shared data indicating growth in the use of BTC as a store of value over the years. Recently, the one-year Hodl factor, which is a direct measure of the use of BTC as a value stock, surpassed 50% for the first time. This means that half of bitcoin’s supply has not moved for at least a year.
Advantages of BTC over gold
According to Nuzzi, the recent crisis should have been viewed as a potential perfect storm for gold.
Gold beetles initially felt justified because gold valued relative to world markets in the early stages of the pandemic, but gold itself [was affected] because of the global supply chain issues that caused the pandemic, “said Nuzzi.
As reported, millions of ounces of gold could not be delivered in March due to supply chain issues.
“People who thought they owned gold realized they were at the mercy of these third parties who are subject to other pandemic issues, and meanwhile Bitcoin was working as usual,” Nuzzi noted.
Nuzzi’s point was that the Bitcoin network settled $ 50 billion in money transfers in April.
“In an era of pandemics and social unrest, it is quite clear that a reliable store of value must be portable and digital,” added Nuzzi.
Coin Metrics’ network data analyst also pointed out that as Bitcoin’s issuance rate is declining due to halving, gold supply is increasing due to increased production in China, Russia and Australia.
“In fact, this year will be the first year in which Bitcoin’s inflation is lower than gold’s,” said Nuzzi.
Bitcoin is a widely distributed asset
Nuzzi also discussed the importance of decentralizing Bitcoin holders during his lecture. Notably, Coin Metrics co-founder Nic Carter pointed to the spread of coins on a cryptocurrency network as an important point of comparison between crypto assets during its own appearance on a panel at Mainnet.
“What makes Bitcoin unique as a fair monetary system is that, as the first successful crypto asset, there are in fact no guarantees or precedents that would indicate it would succeed,” said Nuzzi.
From Nuzzi’s perspective, Bitcoin’s turbulent history, including everything from the closure of the Silk Road black market to the block size wars, has been instrumental in increasing asset sales.
“These early adopters who experienced the first booms and busts of both activity and market [price] sold coins to newcomers because there were no guarantees of success and there was a lot of FUD [fear, uncertainty, and doubt], and these new entrants subsequently became early adopters and that cycle has undoubtedly democratized Bitcoin’s monetary base, ”said Nuzzi.
In an effort to illustrate this point more clearly, Nuzzi compared the spread of coins in Bitcoin to the relatively higher level of centralization of holdings in altcoins.
The above chart shows the year-over-year change in the number of addresses on each cryptoasset network containing more than 1% of the total money base.
“Here you can see that, compared to three years ago, the number of addresses decreased by more than 1% of Bitcoin’s offerings by 33%, and over the years Bitcoin has consistently decentralized its money base,” explained Nuzzi . “While assets like Ripple, Stellar and even Zcash have become increasingly central over the years.”
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