When your Uber driver, your hairdresser and your brother in law start pitching some idea, it’s usually time to get out.

Buy the rumor, sell the news as the old adage goes. When the weak hands (you and me) notice a trend, the strong hands are already selling and we end up funding their big pockets.

This has been the case for the stock market, real estate and most forms of speculative investments. Yet, every time a new opportunity arises, we fall for it as if it’s never happened before.

But is this the case for cryptocurrency?

Let’s see.

1. Timing

We all wish we could go back to 2009 and buy a million Bitcoins for a few dollars. Looking back, it seems surreal it has gone from nothing to $60,000 in a matter of a few years.

The market cap for Bitcoin is $1 Trillion now, making it the 10th most valuable asset in the world. Just for reference, Google is worth 1.2T, Apple 2.2 T, and Gold is 10T but it took those a lot longer to get there compared to BTC.

Obviously, we’ve missed the boat…right?

Well, it depends.

Nobody knows the future, but institutional investors are pouring in, retail investors are waking up and with an ever-shrinking supply, it could definitely go much higher.

It could also go to zero, everything is possible. Unlikely, but possible.

2. Supply and demand

Bitcoin supply is capped at 21 million by design, that is the maximum that will ever exist. 18 million are already in circulation, leaving 3 million left to be mined. What happens when there is a limited supply and an infinite demand?

The price will shoot through the roof.

So far only a handful of institutional investors have made a move — Tesla, PayPal, Square, MicroStrategy — but many others are watching closely and getting ready to jump in. When Google, Apple, Amazon, and countless others join the party there won’t be enough coins for everyone.

And that’s only the beginning.

Governments, International conglomerates, hedge funds, pension funds and national estates, they all want in. The squeeze is going to be like nothing we’ve ever witnessed before.

3. Scarcity

Why is a Van Gogh painting so expensive? Two reasons.

1.It’s a masterpiece

2.It’s scarce.

If there was only one diamond in the world, what would its price be? A lot.

One of the strengths of bitcoin compared to other assets is limited supply.

The reason gold has been so valuable and managed to rise for millennia is mainly scarcity. It’s very hard to find, mine, melt, transport and store it. That difficulty limits the supply while the demand grows overtime.

Bitcoin is the same, only better. Scarce, expensive to mine, slow to produce, and impossible to fake. The guy who invented it — Satoshi Nakamoto — was (is) a true genius. Why would you make an inflationary currency like $US when you could make a deflationary one? Beats me.

4. The Blockchain

Limited supply is just one part of the equation. The other part is immutability.

Bitcoin is based on the blockchain protocol by which every transaction is registered in a public ledger that can’t be altered… ever. Not the FBI, not the CIA, not Russia, not China, and not North Korea. Whatever data there is in the blockchain, stays there forever.

A hacker could go into the federal reserve and play havoc (it’s happened) but no one can hack the blockchain. It’s that good. The most reliable way to record transactions ever.

And it’s not used just for finance. Smart contracts, and Decentralized apps (Dapps) are going to revolutionize many industries like notary, property, health, identity proof, supply chain, etc.

When this happens Bitcoin, Ethereum and some Alt-coins will be pushed even higher due to network effects.

5. Network effect

We live in the era of the winner takes it all.

What search engine do you use? Google

What social media platform owns the market? Facebook

Who is the winner in online shopping? Amazon

Think of an electric vehicle. Tesla

In every category there is one clear winner and the rest have to make do with the leftovers.

Now, what category is Bitcoin in?

According to the experts, bitcoin is not a currency but mainly a store of value as in digital gold.

In this category Bitcoin has already overtaken silver and may one day do the same with gold. If it does, the price of bitcoin could reach $1 Million.

There are many other cryptocurrencies but those are in a different category. Ethereum is more like a gigantic computer that facilitates the development of smart contracts and Dapps. Other Alt-coins allow faster and cheaper transactions, with different use cases like betting, gaming, interoperability, banking etc. They are all fighting for a niche. Some will succeed, and many will disappear but none is even trying to compete with Bitcoin at this point, they just can’t.

There are many reasons for this but the main one is the network effect — the first mover always has an unfair advantage, that’s why Apple couldn’t compete with Microsoft in the 80s and why Microsoft can’t compete with Android now. The number 1 spot was already taken.

6. FOMO

Only about 1.7% of the world population owns a tiny fraction of Bitcoin. When the other 8 billion people try to get in, the squeeze is going to be monumental.

21 million divided by 8 billion is: 0.002625 Bitcoins

That’s the amount we each should have if it was fairly distributed. At the time of writing, owning that share will cost you about $150. It seems like a tiny share of 1 Bitcoin (less than 1% actually) but even that portion will be extremely difficult to own in the future.

Once you take into account institutional investors buying thousands of bitcoins, the hodlers who already have millions and are never going to sell and those who lost their wallets or died without revealing their private keys, the amount available for the rest of us is tiny. Again supply and demand.

I reckon that if you could get 0.1 Bitcoin ($6000 now) you can be very wealthy in the near future.

I’m not trying to instill FOMO into you, I’m just saying that the possibilities and the probabilities show a promising future for the price of such an extremely scarce asset.

7. FIAT money

Fiat currencies are those who are controlled and created by a central government, i.e, $US, Euro, Yen, etc.

The biggest problem with FIAT is inflation. They keep printing money like there is no tomorrow devaluing it further and further. It’s estimated that for the next ten years inflation could be at least 10% a year. That means that if you have $100,000 in the bank, by 2030 it’ll shrink to $50.000 (in today’s real value)

Are you ok with that? Well, if you aren’t, you should look for alternatives. Gold, real estate, silver… or Bitcoin.

Whatever you do, don’t keep cash in your pocket, it’s wasting away as we speak.

Conclusion

Yes, it’s too late to buy Bitcoin. You should have bought it years ago. In 2030 people will say it again, it’s too late now. In 2040 they’ll say, it’s too late now and so on. You get the picture.

The best time to plant a tree was 20 years ago. The second best time is now.

The biggest institutional investor of bitcoin is Michael Saylor through MicroStrategy. Well, he only heard of Bitcoin in 2020! If last year wasn’t too late perhaps this year is not too late either.

It’s taken 5000 years to create something better than gold, the next thing is unlikely to happen anytime soon.

Study the technology and get used to the new concept. Once you learn about it there is no going back.

Disclaimer: Not financial advice. Do your own research. Only invest what you are willing to lose and all that palabra.