Why Bitcoin Matters... In Two Slides
The only two slides you need to understand the importance of Bitcoin
Slide 1:
TCP/IP brought us the Digital Revolution by changing the speed and means by which we communicate globally.
Bitcoin is the next wave of the Internet Revolution.
Details:
TCP/IP is the base layer of the internet. Bitcoin integrates with it while adding another “base layer” that transfers data and value in a peer-to-peer operated network.
The core foundation of the internet is Transmission Control Protocol (TCP). It is a standard ruleset that allows applications and devices to exchange messages over a network. The Internet Protocol (IP) portion, is a set of standards that addresses and routes data over the internet. Together, these two protocols give us what we refer to as the internet.
Bitcoin, another protocol, defines the rules for the Bitcoin network which piggybacks on the TCP/IP layer but adds additional layers of security (cryptography), peer-to-peer decentralization, and the transmission of data and value.
The major applications on the Bitcoin layer are still under construction just as they were in the 1990’s. Then, email was the early driver for what ultimately led us to “the web”.
Slide 2:
For 40 years, financial markets have operated in a short volatility environment. As Interest rates fell, it was more advantageous to collect interest before it evaporated.
With the rate trend reversing, we’ve entered into a long volatility regime. During long vol periods, it’s more advantageous to own assets that increase with rates.
See interest rate’s impact on the Black-Sholes Model
A change in environments will make it much harder on the derivatives economy and more advantageous to physical assets and other assets positively correlated with rising rates over time.
Strategies that have worked for decades will no longer work or need major asset allocation adjustments to continue to perform respectably.