The biggest mistake novice people make in their understanding of Bitcoin is thinking that the only reason people attribute value to bitcoin is because of collective belief.
The truth is the Bitcoin environment was designed to incentivize people to keep increasing its value every step of the way so it's almost mathematically impossible for its value to stop increasing until all the bitcoins are mined decades from now.
What does this mean?
People aren't participating in Bitcoin just because they believe it's better than Federal reserve currency or something else.
They're participating in it because they are PAID to mine coins.
Every minute or 5 minutes or so whatever the number is a certain amount of Bitcoin is going to be released into the environment automatically and the person who solves the mathematical puzzle with their computer the fastest the first in other words is going to get that bitcoin.
So from day one when people were sitting around with their PCS they were wasting 600 watts of energy for no reason they could run a program in the background that actually gave them Bitcoin just for letting their machine idle.
Of course in the beginning you got a lot of Bitcoin. I don't remember the numbers whether it was 10,000 Bitcoin you'd get if you solve the puzzle first or what but the point is there was an incentive to participate in Bitcoin.
People didn't just sit around and say "oh let's all join together and start using Bitcoin and one day it'll be worth a lot of money because we'll convince other people that it's better than other money". No. That's not what happened.
People were incentivized to participate. And as more people participated and more and more computers were thrown at it and more and more people started doing things with Bitcoin and more and more people realize that Bitcoin started to have some real value - for example when somebody bought a pizza for 10,000 Bitcoin - which at the time was like "wow this is real money" - more and more people wanted to get the Bitcoin reward for solving the puzzle the fastest with their PC computer.
And this is only increased as the value of the Bitcoin has increased. As Bitcoin Rose and Rose and price to suddenly $10 each $50 each it reached the $100, at each milestone people really wanted to start putting their computers to work to win that reward of bitcoin.
And this is continued when Bitcoin passed the value of 1 oz of gold at $1200 which a lot of people never thought it would. But anybody who really studied the Bitcoin environment KNEW that mathematically it HAD to pass the value of gold. Then again everybody realized "hey this is a contest I can participate in to win real money".
Now one thing that really helped that was something called pooling which I won't get into in a big way but basically what it means is you decide to get together with a hundred other computer owners and you decide that you're all going to mine together for Bitcoin and if one of you wins in that pool the Bitcoin is evenly distributed among all 100 of you based on how many calculations your computer could do so you get to combine your chances and you get a reduced reward. Sort of like pooling for a lottery ticket.
That brought a lot more people into the game who did not have high-end equipment because even if they didn't have high-end equipment that would have much of a chance to actually win a Bitcoin on their own they would get a percentage of the Bitcoin that was won by the group according to the power they did have.
So they would get an equal percentage return based on the power of their machine. So suddenly everybody could participate even if they didn't have the fastest machine. And you can still join mining pools today with even the slowest computer although your reward will be pretty tiny but still the value of that tiny reward over time may increase tremendously. Remember the people who are getting 10,000 bitcoins a pop mining before when they did that the value of those bitcoins was basically a penny and then they became worth a pizza so even though they weren't getting much reward value at the time if they understood that Bitcoin would One Day become worth a lot of money then they were mining based not on what it was worth today but what they knew would be worth tomorrow.
But here's the other really big reason why Bitcoin mathematically must increase in value unless there's some kind of legal block or war or something (but quite frankly I think even in that case just like you can't stop the sale of cocaine or fentanyl you're never going to be able to stop mining in the in the using a bitcoin.)
That big reason is this:
The reward for winning the contest with Bitcoin gets cut in half every 4 years. It's called the havening h a v e n i n g some people call it the halvening h a l v e n i n
What that does is when Bitcoin goes up in value and everybody is holding on to it because they know it's going to go up in value and they're not spending it (which is actually a great attribute of Bitcoin contrary to what a lot of the people think) then the only way to really get more coin is by mining. And if you're one of those people who's doing the mining like we described above (and now it's huge industries with warehouses full of computers and machines that are designed specifically to mine Bitcoin) then if the reward gets cut in half every four years then it creates an artificial scarcity in Bitcoin supply that automatically makes people have to bid more money in the Open marketplace to buy bitcoin.
Everybody knows that the scarcity is going to increase as time goes on so as you can probably guess everybody who has a brain realizes that the value of each coin you're holding is going to get higher and higher as the open market availability of mind Bitcoin gets cut in half every four years.
So I hope you see that the Bitcoin marketplace is not driven by "belief".
It is driven by hard monetary incentives.
Mathematically it is almost impossible for Bitcoin to not continue to increase in value as long as it is being mined.
And since the amount of Bitcoin that gets mined is cut in half any every year the length of time that Bitcoin is going to be mined stretches out a long way since there can only be a hard limit of 21 million bitcoins.
So when someone says they "believe in Bitcoin" they're not saying it's a faith-based thing. It's not that they think Bitcoin is somehow more fairer than Federal reserve dollars or it's just more egalitarian or it's just more useful or easy to carry although it is in many ways all of those things.
They are saying they believe in MATH and they believe in the factor of value that happens when you have an exponential decreasing new supply of any asset.
For example imagine if gold had this situation. If You already knew there was a scarce supply of gold but you knew for a fact that every 4 years the amount of new gold coming out of mines would be cut in half and it was an absolute mathematical certainty. What do you think that would do to the price of gold? Well that's the situation with Bitcoin.
And I have to say when I understood the mathematical certainty of the increase of value of Bitcoin that's when I got on board.
And there are a lot of smart people here who probably never had that explained to them and they're going to get it when they understand people are paid to participate in bitcoin. Why would people stop if they get paid to participate? How could it collapse if they're getting paid to participate and the scarcity of the asset continues to get more and more scarce every 4 years? It would be so illogical and almost theoretically impossible for it to permanently collapse.
They're going to get it.
And one of the reasons I say that is we are approximately one year away from another havening where the amount of new Bitcoin mined will be cut in half.
Over the life of Bitcoin every time we have started approaching that cycle the value of Bitcoin has started to rise. Then as they've hit that cycle it's typically gone up exponentially in value. in the past it's been as much as 100 times or 10 times or 15 times.
you can look at the graphs in the past but it's such an increase in value that it has to be charted on a logarithmic graph.
And typically what happens then is the news media start talking about Bitcoin millionaires and how Bitcoin has been the most incredible investment of the last year and that brings all the people who don't understand Bitcoin in to start buying Bitcoin on the open market. So the value goes up even more.
Then you hear more stories of people getting rich with Bitcoin and then that brings more people in and then the value of Bitcoin goes parabolic.
At that point the last crazy FOMO investors who got in too late and don't understand the cycles start mortgaging their homes to take the gamble hoping that they too will get rich.
That's usually what happens at the top of the cycle.
And then of course the havening is over. the euphoria has raised the price too high and it settles back down.
Bit it never in fact I don't think it has ever settled down to less than 10 times the previous high
The previous high this time was $60,000 and that was approximately 3 years ago well actually two about one year after the haveening when the euphoria cycle was in full swing.
It dropped down to 30 and then down briefly to 15,000 and now it's back up to $30,000 as The happening approaches and all the smart people who took their money out at the top are starting to get back in getting ready for the next roller coaster ride.
So I'm telling people here this because I want this group of people to be as wealthy and capable as possible in the future.
People will have to have means and influence and money is one of those ways..
So I hope this helps some people understand why belief in Bitcoin is not based on a faith.
Belief in Bitcoin is based on monetary profit and mathematical certainty.
And as many people have said the value of Bitcoin will probably eventually equalize to the total value of all assets on earth. And that puts it into the many trillions and trillions and hundreds of trillions of dollars which makes each bitcoin's worth incalculable.
At the very least Bitcoin in the near term probably within the next 10 years and possibly within this next havening will equal the total value of all the gold in the world which would make each Bitcoin worth approximately $360,000. That would only be 5 times the previous high value of $60,000 which is much LESS of an increase than in previous halvening cycles.
Now whether that will happen in the next happening cycle or not I am unsure. There is a decline in the exponential increase with each havenning now but the increase is still huge.
So whether or not Bitcoin will go up 10 times in value or 100 times in value or five times in value with the next haveening cycle peak over the next year is really anybody's guess.
but if you look at a logarithmic graph you can see with mathematical certainty why it has to continue to increase in value - especially now that it's on regular stock exchanges so that all the world's wealth becomes equivocated or collateralized in Bitcoin.
Just like it is now collateralized in the sum total of the stock market the gold market bonds and other aspects of investments.
This is not investment advice and I'm not an investment advisor. These are just my own personal beliefs. All investments are risky blah blah blah.
Addendum:
Link to one graph of price over time correlated to havening events . Note it looks like this graph was actually made around the year 2000 and 18 or 19 so after that it's projections
https://www.tradingview.com/chart/BTCUSD/iTNIYPN1-BTC-Logarithmic-Price-Curve-Updated-with-the-Halving-Events/?utm_source=amp-versionHere is a graph which shows the price color coordinated with the supply of bitcoins being mined which of course correlates completely to a havening event.
https://miro.medium.com/v2/resize:fit:720/0kXfQm5_KePqB9WEH
