Does Bitcoin have ballast?

Bitcoin critics often repeat a mantra, stating that the cryptocurrency has no ballast, so it has no value. The North American currency, for example, has not had ballast since 1971, when the gold standard ended . At that time, it was possible to go to any bank and demand to exchange your cash notes for an equivalent, predetermined amount in gold . This forced governments and central banks to limit the amount of money in circulation, as this parity was fixed. After all, what is ballast? What currencies or values ​​are currently backed? We will explore this definition in the universe of economics and investments, and try to understand if there is something similar in Bitcoin, or at least establish a floor in its quotation. What is ballast? Ballast emerged as a facilitator of transactions, avoiding the need to physically carry coins , gold, silver or any asset that served as collateral. People and companies started to deposit such amounts in a bank, seeking security or profitability . Banks were required to maintain a balanced number between the notes issued and the amount of goods deposited. Otherwise, it would not be able to cover the withdrawals, and consequently it would be bankrupt. In summary, ballast is the guarantee that fully covers a monetary instrument . A real estate fund, for example, is fully backed by direct participation in real estate, Certificates of Real Estate Receivables - CRI, or Real Estate Credit Notes - LCI. Does money have ballast? As mentioned above, fiat currencies such as the Dollar (USD), British Pound (GBP) and Euro (EUR) do not have any kind of ballast. In the past, the dollar was paired at 35 for every 31.1 grams of gold, or an ounce . How important is ballast? In the financial market, ballast remains an important concept , and remains used in Letters of Credit for Real Estate - LCI, Bank Deposit Certificates - CDI, and several other instruments. The oil contract traded on the Chicago stock exchange is fully barrel-based , including its settlement requires physical delivery. When banks negotiate loans, loans with physical guarantee, it is nothing more than a backed contract . If the borrower of the real estate loan fails to settle its installments in a timely manner, the property itself serves as collateral, and may be taken by the bank. In other words, any loan agreement, be it land, automobiles, the production of an industry, has a guarantee, a physical guarantee that fully covers the loan amount . Does Bitcoin have ballast? No. The Bitcoin quote is free, varying solely and exclusively according to the demand between buyers and sellers . There is nothing to guarantee its convertibility into fiat currencies, gold, or any other value. Some analysts claim that Bitcoin's ballast is the average cost of mining, this block validation process that requires a great deal of computational effort, and consequently a high expenditure of electricity. Regardless of the validity of this Bitcoin cost price theory, this does not serve as ballast, as there is no obligation or way to exchange your cryptocurrencies for a certain amount of electricity, or fiat money . If the price falls after mining, or buying, there is nothing that this holder can do, since it is the free market that determines the price. In this way, it is possible to safely say that Bitcoin has no ballast . Want to understand how a Bitcoin transaction works? This other article explains the mechanism behind the blockchain, in addition to the main advantages and characteristics of its transactions. The value of Bitcoin It is not possible to state precisely what makes each buyer determine the price they are interested in acquiring Bitcoin in this way, determining the market price. However, the characteristics that make cryptocurrency desired, and differentiated, are scarcity, the possibility of self-custody, fast and secure transfers, in addition to the inability to sanction transactions, or to block values . Gold is an equally scarce asset, but with a significant increase in prices, mines that were previously economically unviable are now open for exploration. Thus, it is possible to experience a significant increase in supply, causing negative pressure on prices. In addition, the cost to check and transport gold safely is infinitely higher than Bitcoin. In contrast, the number of Bitcoins offered per year is completely predictable, following a mathematical equation , in addition to having its factor reduced every 4 years, in the process called halving, or cut in production. The other cryptocurrencies, although very similar, cannot replicate this egalitarian distribution model, in addition to its decentralized nature, with thousands of users running their own nodes (nodes) around the world. In another article we explained in detail how Bitcoin is safe , the rules of operation of its blockchain, in addition to regulatory issues. Stablecoins, the paired currencies Stablecoins are cryptocurrencies whose quotation is paired with some other value, typically the US dollar . There are several ways to achieve this objective, the most common of which is the ballast, that is, maintaining the amount issued in Dollars kept in a bank. In this way it is possible to enjoy the benefits of transparency and agility of the blockchain, without giving up the predictability of the currency quote. The Bitcoin Market trades the stablecoin USD Coin (USDC), 100% regulated and backed by Dollars , regularly audited by Grant Thornton LLP. Making money with Bitcoin There are several long-term trade or investment strategies that can be carried out using Bitcoin and cryptocurrencies. Although it is an asset typically with greater volatility, or an average daily price fluctuation, it has a significant profitability history, in addition to enormous potential .