Bitcoin Hits $100k and Why This All Ends Badly
A final warning to the majority
Imagine you just woke up this morning and turned on the news and all you heard on every channel was this buzzword called “Bitcoin” because it hit this arbitrary milestone of $100,000 overnight and your attention is a mix of curiosity, apathy, and annoyance simultaneously as you navigate the hectic holiday season. As you open the door to head out to your day a stranger is standing there blocking your path and you are suddenly faced with an impossible ultimatum: choose one asset —US dollars or Bitcoin— to immediately and irrevocably use as your vehicle for discretionary savings for the rest of the decade until January 1, 2030, with the future financial well-being of your family at stake.
The stakes are high and the stranger will not let you leave or go back inside without risk of permanent physical impairment until you choose and transfer all savings into USD or BTC, and the wrong choice could mean losing everything you worked for thus far or holding onto it but eroding the purchasing power of your wealth over generations regardless of your present net worth or losing out on the financial opportunity of a generation.
The first part of this scenario is your reality this morning because unless you live in a cave you will be inundated with the news cycle’s coverage of this milestone in Bitcoin and markets today. The stranger at your door is highly improbable (unless you take this post as the metaphorical stranger).
To simplify the comparison we will properly contextualize the notion of Volatility by analyzing the purchasing power and attributes of these two assets historically over time and through the perspective of each asset’s trend line moving forward and I will illustrate a simple hard asset example (a house purchase and sale) as the baseline of desired utility after focusing on three key criteria to help you make an informed decision as you face the stranger at your door: fungibility, global acceptance for payment, and portability across borders.
Lastly, I will leave you with more clarity on exactly “WHO” this ends so badly for in the coming years and hopefully enough of a catalyst to make some change to the inertia in your portfolio to offset the limited downside risk with potentially, a nest egg-saving, asymmetric, upside-reward.
To ground our discussion, let’s explore the historical performance of the US dollar and Bitcoin in terms of purchasing power before diving into the attributes that differentiate them.
The Decline of the US Dollar's Purchasing Power
Since the establishment of the Federal Reserve in 1913, the purchasing power of the US dollar has declined by over 96%, primarily due to inflationary policies and the transition from a gold standard to fiat currency. A dollar in 1913 could buy what would require nearly $30 today. This erosion stems from systemic monetary expansion and the loss of a tether to scarce, hard assets.
NOTE: The debasement of your purchasing power in dollars got so bad in recent years that the Fed “discontinued” reporting this data after 2020 see their own chart below and notice how they inverted it to make it look like it is going up versus down.
The dollar remains globally dominant, serving as the world’s reserve currency, but its value is intrinsically tied to central bank policies, which are prone to political and economic pressures. The result? A reliable medium of exchange and unit of account but a suboptimal store of value as illustrated in the graphic below since the creation of the Federal Reserve in 1913.
Bitcoin: 16 Years of Compounding Value
Since its launch in January 2009, Bitcoin has demonstrated extraordinary growth. As of today, the annualized rate of return (ARR) for Bitcoin hovers around 120%, significantly outperforming any other asset class during this period. What’s more compelling is that Bitcoin’s purchasing power has increased exponentially, from fractions of a cent per Bitcoin to over $100,000 as of this writing.
Bitcoin’s strength lies in its fixed supply of 21 million coins, making it deflationary by design. While volatility is a short-term concern, its long-term trend suggests that Bitcoin is increasingly viewed as "digital gold"—a scarce, durable store of value.
Let’s Look at a Real-Life Personal Example Illustration
A simple personal illustration of this from recent time shows you what my wife and I paid for a real estate purchase on June 3, 2017, in USD (or other major FIATS) versus what it would have cost in Bitcoin and then what I would have paid in each asset if I bought it from myself when we sold it January 2, 2022.
Answer: The Bitcoin would have bought me the same utility and house for 90 percent less of my asset base while the USD would have cost me almost 2x more. With its fixed supply of 21 million, all other hard assets eventually go to zero when priced in Bitcoin-Terms. More on that important concept from my previous article here
Comparing Two Assets Across Three Key Criteria
1. Fungibility
US Dollar: The US dollar is highly fungible, with every dollar interchangeable and universally recognized. However, physical cash can be marked or confiscated, and digital dollars are subject to monitoring by financial institutions. This is an important limitation as centralized authorities can use capital controls to keep you from accessing your assets for both justifiable or arbitrary reasons.
Bitcoin: Bitcoin is also fungible within its network, but its transaction history is transparent on the blockchain. This can affect fungibility when certain addresses are blacklisted due to legal or regulatory concerns. However, privacy-enhancing technologies and Bitcoin’s decentralized nature mitigate this risk and the recent U.S. court ruling to overturn the judge’s prior decision on Tornado cash was a MAJOR victory and precedent for privacy and freedom.
Verdict: The dollar holds an edge for fungibility in regulated systems, but Bitcoin is evolving to rival it, and the regulatory environment in the world’s leading economy has just embraced it meaning you don’t only have to think about moving to El Salvador or Argentina with your coin if the crap hit the fan.
2. Acceptance Rate Globally as Payment or Exchange of Value
US Dollar: The US dollar remains the most widely accepted currency globally, used in nearly all countries either directly or through currency pegging. It is the backbone of international trade and finance.
Bitcoin: While Bitcoin adoption is growing, it is still nascent compared to the dollar. Many merchants and financial institutions are beginning to accept Bitcoin, particularly in regions with unstable fiat currencies or where financial inclusion is limited. Its borderless nature offers significant potential for global acceptance.
Verdict: Today the dollar still dominates in terms of current global acceptance as a percentage of transactions as the world’s reserve currency, but Bitcoin’s adoption trajectory and its censorship resistance suggest long-term potential for parity and I don’t know anyone in any country that would accept Bitcoin if you offered to send them some today.
3. Portability Across Borders
US Dollar: While the dollar is physically portable, moving large sums across borders often requires intermediaries such as banks or customs declarations, making it cumbersome and prone to restrictions or seizures. Not to mention that when you break down the 252 days (out of 365) in a calendar year that the exchanges and banks are open (an average of 6.5 hours per day) in terms of actual 24-hour day equivalents, your non-cash US Dollar-based asset purchases can only be executed 68.25 days per year:
-Total trading hours per year: 252 days × 6.5 hours =1,638 hours
-Converting to full 24-hour days:1,638 hours ÷ 24 hrs = 68.25 d
Bitcoin: Bitcoin is peer-to-peer and borderless by design. A Bitcoin wallet can store millions or billions of dollars worth of value on a single seed phrase, making it highly portable. There are no intermediaries required to transfer Bitcoin, and transactions settle quickly on the network regardless of borders. This makes it a superior choice for those needing to preserve control over their wealth while moving across jurisdictions and allows for peer-to-peer transfers of value in any size 24/7/365.
Verdict: Bitcoin is unparalleled in its portability and freedom from intermediaries. There is no comparison.
The Ultimate Question: Preserving Future Generations' Purchasing Power
Given the choice between these two assets as the sole vehicle for discretionary savings, Bitcoin emerges as the superior option for preserving purchasing power for future generations. The reasons are clear:
Long-Term Purchasing Power: While the dollar has steadily lost value over the past century, Bitcoin’s deflationary design ensures that its purchasing power appreciates over time.
Censorship Resistance: Bitcoin offers sovereignty and control over wealth, free from the influence of intermediaries or government policies.
Borderless Utility: Bitcoin’s portability ensures that it can move seamlessly across borders, providing a global hedge against local economic crises.
Conclusion: The Choice of a Generation
If faced with immediate physical harm to choose one, the prudent decision for long-term wealth preservation is Bitcoin. While the dollar offers real and faux stability and widespread acceptance today, its trajectory of declining purchasing power makes it a poor choice for future generations. Bitcoin’s deflationary nature, portability, decentralized node network, and growing adoption make it the clear winner for safeguarding wealth in an increasingly uncertain financial landscape.
The challenge is not just to survive the current system but to escape the herd and comfort zone before you get slaughtered. THIS IS NOT FINANCIAL ADVICE but the logic above says that those who don’t own some of their savings in Bitcoin will see how badly this ends in a few short years. The choice is yours—choose wisely.
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SOURCES SUPPORTING THIS ANALYSIS SO YOU CAN DIG DEEPER:
Purchasing Power of the U.S. Dollar Over Time: Visual Capitalist provides a detailed visualization of the dollar's purchasing power decline since 1913.
Bitcoin Annual Returns: StatMuse offers data on Bitcoin's annual returns from 2009 to 2024.
Bitcoin Price History: Bitbo Calendar presents a comprehensive timeline of Bitcoin's price evolution from 2009 to 2024.
U.S. Dollar Value Decline: Pragmatic Capitalism discusses the loss of the U.S. dollar's purchasing power since 1913.
Bitcoin Historical Annual Returns: Altcoin Investor provides insights into Bitcoin's historical annual returns.
U.S. Dollar Inflation Calculator: In2013Dollars.com offers an inflation calculator showing the value of $1 from 1913 to 2024.
U.S. Dollar Historical Value: Stratfor visualizes the buying power of the U.S. dollar over the last century.
Bitcoin Historical Price Events: 99Bitcoins provides a historical price chart of Bitcoin with significant events from 2009 to 2024.
U.S. Dollar Purchasing Power Analysis: The Foundation for Economic Education analyzes the decline of the dollar's purchasing power.
Bitcoin Annual Total Returns: Good Financial Cents compares Bitcoin's annual returns with other asset classes.
Good insight!