7 Reasons to HODL Bitcoin _ COLLECTIVEXCHANGE bitcoin value in usd

HODL is crypto jargon for “hold on for dear life”

“in five years, if you try to use fiat currency, they will laugh at you. Bitcoin and other cryptocurrencies will be so relevant … there will be no reason to have the fiat currencies”― tim draper , billionaire investor and bitcoin owner

First, let’s review the six reasons to hold bitcoin that are hopefully well-understood…

/* for those who are already familiar with the reasons to HODL bitcoin, here’s the TLDR for the new reason from near the bottom of the article: when a fixed supply currency like bitcoin and/or other cryptocurrencies are the de facto currency standard in the united states, everyone who held onto their tokens will owe virtually no short-term or long-term capital gains taxes on their bitcoin when they eventually do sell or spend it. */ the six known reasons to HODL bitcoin: 1 – its price has surged to about 583,170,000% of its may 2010 value.Bitcoin value in usd

that’s when laszlo hanyecz paid 10,000 bitcoins for two large pizzas, which were worth about $30. That puts bitcoin’s 2010 valuation at around $0.003 per coin (about one-third of a penny each). History may repeat itself and the price may continue to surge.

As of writing this article, one bitcoin stands at $17,583.30. The price of bitcoin has surged 73.3% just in the past seven days alone. Even so, it’s still only a small percentage of wise investors pouring money into it (perhaps 10 to 30% of the U.S. Population).

What’s so annoying is how the mainstream media and the public seem to focus on its drops in price, and ignore most of its surges, even though those drops are all a blip in the epic shadow of a 583,169,900% increase. This has a simple psychological explanation: most people focus on the drops and ignore the overall growth because they want to convince themselves that they were right in never buying into bitcoin.Bitcoin value in usd it can feel good to read the 20% “crash” articles when you’re not invested in bitcoin: it makes you feel smart.

Regardless of bitcoin’s future price, it’s hard to argue that 99%+ of people didn’t miss out when they didn’t buy bitcoin in 2010 because they’d be sitting on a 583,169,900% increase today (I know I’m not happy about missing that opportunity). People who have a decent knowledge about the history of the price of bitcoin are delusional to think that they didn’t miss out on something, if they didn’t invest in 2009 or 2010.

The two pizza purchase in 2010 was perhaps the first bitcoin purchase of physical goods. But bitcoin was potentially worth even less and has surged even more since satoshi nakamoto first mined it in january of 2009.

The first mined coin was just after the peak of the financial crisis when lehman brothers went bankrupt on september 15, 2008.Bitcoin value in usd this probably was not a coincidence.

Here are a few charts looking at the growth of bitcoin and hopefully giving you an idea of where the current bull market may be heading based on previous bull markets:

A. Here’s a chart from mid-2010 until now showing the price of bitcoin (please note how extreme the current bull run seems):

2 – many earlier hodlers of bitcoin are now multi-millionaires, even if they only put 30 bucks into bitcoin in 2010 or $1,000.00 into bitcoin in early 2012.

HODL was a typo of the word “hold”, and the term has stuck ever since. HODL has taken on the meaning, after first written, of hold on for dear life.

HODLing is the philosophy that many of the early bitcoin adopters embrace. Bitcoin is trending up so if at all possible they will never spend or sell it. They believe bitcoin will keep going up, perhaps indefinitely until the U.S.Bitcoin value in usd dollar is virtually worthless just like the paper money became worthless in weimar republic germany from 1918 to 1924.

The U.S. Dollar is very similar to the printed money in weimar germany. Both currencies are not not backed by gold, silver, or anything else. The only difference is the speed the governments printed extra money.

The german paper mark literally lost over 99.99999999% of its value in less than six years. The U.S. Dollar has lost over 96% of its value since 1913.

That year 104 ago was vital because it marked the foundation of the federal reserve, the central bank of the united states. The core of bitcoin’s value is that it can be transferred to someone else or spent without any third party or any bank, let alone a central bank, and it will never be inflated beyond its ultimate max supply of 20,999,999.9769 bitcoins.Bitcoin value in usd this limit is built into the code that runs bitcoin. The miners that control the code have an incentive to keep the limit, or else the coins they are mining would probably lose huge value.

The total 21 million bitcoins will be mined on or around the year 2140. Right now about 16,726,837 bitcoins have been mined. So it will be a slow mining of bitcoins from here to hit the revered “21 million”. The U.S. Government, however, prints as many U.S. Dollars (or electronically add ones/zeros to bank accounts) as it can if it can find a way to do so (most other countries can do this with their respective currencies as well). This unlimited printing of money is the exact opposite of bitcoin. Bitcoin is strictly limited to that 21 million number.

Many bitcoin whales who have millions or billions of dollars worth of bitcoin won’t sell a penny of their coins no matter how high the price goes, unless they need money to survive or to sustain their lifestyle.Bitcoin value in usd

HODLing keeps the supply of tokens that are put up for sale very low in the supply/demand equation, which is accelerating the price of bitcoin. One day the bitcoin “bubble” could deflate for a prolonged period, but we’re not near that until perhaps 50% of the current fiat cash in the world is instead in cryptocurrencies. All crypto tokens, bitcoin or otherwise, are worth 447,683,393,683 dollars right now. There’s an estimated (perhaps conservatively) $90 trillion worth of fiat money in nations of the world. To get halfway to the $90 trillion, the value of all cryptos would need to be 100.517 times where they stand right now.

One hundredfold investment opportunities are not easy to find, and the opportunity shouldn’t be ignored, even if we missed out on the 583 millionfold investment opportunity that could have been had in 2010.Bitcoin value in usd

The seventh, new (I think) reason to HODL bitcoin:

When the U.S. Dollar hits weimar republic levels of inflation (our current rate of spending and debt expansion essentially guarantees this, unless our government spends a ton less. Also, greater adoption of bitcoin may accelerate this trend), people will no longer accept the U.S. Dollar and bitcoin or another currency will become the de facto currency. No one will want dollars anymore, except perhaps to burn for heating purposes.

When a fixed supply currency like bitcoin and/or other cryptocurrencies are the de facto currency standard in the united states, everyone who held onto their tokens will owe virtually no short-term or long-term capital gains taxes on their bitcoin when they do eventually sell or spend it.

Today, if the U.S. Dollar rises in value, you don’t owe taxes on the capital gains.Bitcoin value in usd it’s a currency, not capital.

Even if the government tries to somehow tax the profits made from bitcoin, the hyperinflation will make the dollars they take in worthless. As an example: let’s say you sell a billion dollars worth of bitcoin in december of 2018 (perhaps by buying a car or house with the bitcoin)… the government would charge you about 20% in taxes for most of the gains, because that’s the highest-earner bracket for long-term capital gains taxes. When you owe the tax in april, it may be like owing a 0.02% tax instead of a 20% tax because the U.S. Dollar has by then devalued another hundredfold.

Take a look at this chart showing the devaluation of the german paper mark in the later 1910s through the early 1920s:

Image source

The logarithmic chart above tells most of the story, but background explains it all.Bitcoin value in usd

Germany owed money to multiple nations in a currency other than their own, so they printed the german paper mark and used it to buy the required currency on the open market so that they could pay the amount that they owed. They owed this money as reparations because they lost world war I (to the victor go the spoils, right?). As germany flooded the market with paper marks, the going price of the mark plummeted, so germany needed to print ever more of the marks to buy more of the other currency that they needed to pay their war reparations. This feedback loop was fast, but in today’s global, millisecond news and market information economy, the deflation will potentially be in days not years, once the downward spiral gets into full swing.

The U.S. Government will want to print dollars to pay for the military equipment and “services” that they provide, but the chinese and others will stop lending to the U.S.Bitcoin value in usd in dollars, and printing more dollars will quickly be futile. The government will have to force the people to pay taxes in bitcoin or another non-dollar currency since the dollar will no longer have value.

The side effect of all of this will be no more cheap money lent to the U.S. Government from other countries. This is because inflation will cause a virtual default on the national debt, which means the interest rates we have to pay after that will be monumentally higher. Only borrowing bitcoins (or possibly another crypto or non-dollar currency) will let the U.S. Spend more than it brings in from non-dollar taxes: that means drastic cuts if we stay at current taxation levels.