Why Bitcoin Is the Best Asset for Business
''You either have to work 10 times harder than a bitcoin holder, or you just hold bitcoin.'' – Jack Mallers, Strike CEO
Over the past decade, bitcoin has demonstrated unprecedented dominance in performance across all major asset categories, establishing itself as the premier benchmark of value among both digital assets and traditional assets.
Investors who recognize this trend fundamentally shift their financial paradigm. Rather than measuring profit in terms of fiat, they measure success through the expansion of their bitcoin holdings. Every investment decision and expenditure is carefully evaluated against the opportunity cost of acquiring additional bitcoin.
Given bitcoin's impressive track record of superior performance to all other asset classes in nine out of the previous twelve years—by several orders of magnitude—the fact that it’s replacing treasury bonds as the de facto "risk-free rate" benchmark should come as no surprise.
This paradigm shift is particularly evident among those well-versed in monetary history who recognize and appreciate bitcoin's mathematically enforced, immutable scarcity as a cornerstone of its enduring value proposition. Just as treasury bonds serve as the bedrock of traditional finance, bitcoin is the new essential benchmark against which all other investments are measured.
If taking on additional risk isn’t generating more bitcoin, why is that risk worth taking?
Fiat money
Holding wealth in an economy with a 2% inflation target is problematic, and especially problematic when 7% is the true average in the US, as previously mentioned. To maintain this target, any increase in production capacity requires an equivalent level of monetary debasement. Fiat currency, devalued through this debasement, fails as a store of value when compared to bitcoin.
Assuming equivalent demand, anything devalues against a perfectly scarce asset. The price of bitcoin itself reflects fiat depreciation in terms of bitcoin.
Real estate
The real estate market purports the illusion of stability and consistent financial gains. However, this façade can be deceptive, particularly when considering the insidious force of monetary devaluation.
Real estate's steady appreciation masks a more complex economic reality, where the erosion of purchasing power silently chips away at perceived wealth accumulation. This dichotomy between the tangible nature of property investments and the intangible, yet potent, impact of currency depreciation demands careful scrutiny and should challenge the conventional wisdom surrounding real estate as a foolproof investment strategy.
Worldwide, the $320 trillion stored in property markets is mostly made up of individuals trying to safeguard their wealth and maintain its value over time. The fact that half of the owned residential real estate in the United States is not occupied highlights how property ownership extends beyond mere habitation, functioning as a “profitable” venture that, as a result, creates artificial scarcity, which reduces everyday people’s access to home ownership over time.
One might argue, then, that the expansion of the real estate market's valuation is partially attributed to the absence of a dependable asset for preserving wealth, rather than being solely based on sound investment principles.
This phenomenon could result in an influx of new developments, potentially leading to a commoditized housing market characterized by intense competition and diminishing rental yield margins. Real estate is stationary, difficult to convert to cash quickly, and involves unpredictable risks. Despite its substantial returns in fiat-denominated terms, real estate is not the optimal method for true capital preservation.
It all goes back to a store of value’s potential for dilution. Is investing in an apartment complex a prudent long-term wealth preservation strategy, given the potential for real estate market saturation?
Stock market
Investment in a diversified stock portfolio does not generate real wealth creation but rather acts as the shadow of a mechanism for capital preservation. While nominal gains may create the illusion of increasing wealth, the real value of stock investments remains relatively constant when adjusted for inflation and currency supply growth.
Investing in stocks inherently involves counterparty risk, management risk, operational risk, and political risk. In the short term, outsized returns and well-timed execution in the stock market can grow wealth, but in the long term, indexes and exchange-traded funds (ETFs) alike have merely tracked the rate of monetary expansion, leaving investors flat in terms of real returns.
Another problem is that the Investment Company Act of 1940 means a company that holds more than 40% of its total assets (excluding cash and government securities) in investment securities may be classified as an investment company by the U.S. Securities and Exchange Commission (SEC).
Gold
Despite its 6000-year history and moderate physical scarcity, sufficient technology can mine gold indefinitely. As our technology improves, so too will the rate at which new gold enters circulation. Once you understand that the true inflation rate far exceeds the 2% target that the Fed aims for, investing in gold or even bonds won’t make the cut if your goal is to preserve wealth.
“Gold’s role, therefore, has not been to be a performant store of value, which is why we don’t find it on virtually any corporate balance sheets globally. Instead, it’s more of a pure defensive store of value, physically held by nation-states and households in reserve for worst-case economic scenarios, or as a portfolio diversifier relative to bonds. Gold has been particularly useful as an accessible and reasonably liquid store of value in developing countries with less-performant stock markets and ever-devaluing currency, but it is lackluster when there are better options available and when you’re trying to keep up rather than merely play defense.” – Lyn Alden
Bonds
Bonds have long been a staple in conservative investing, especially for corporate treasuries seeking liquidity and predictable returns. Traditionally, bonds serve as a cash equivalent, making them relatively less risky compared to equities or other investments. However, higher and higher inflation increasingly undermines the role they serve in investment portfolios.
Inflation eats away at the real returns on bonds, turning even nominally positive yields into negative real yields. No CFO or business owner can justify parking significant cash reserves in an asset class that delivers negative real returns of 3%, 4%, or more. The risk-reward profile simply isn’t favorable any longer.
Commodities
No matter how you look at it, commodities are not a good long-term investment. As the demand and subsequent price increase, so does the production of new supply to eventually meet the demand. Whichever commodity is in high demand will attract an influx of market participants. They will work to increase its supply, thus bringing the price back down.
Bitcoin is the apex asset
Unlike all other assets, bitcoin is the only one that no one can produce more of to meet its demand.
The reality is that every asset is trending towards zero when measured in bitcoin. This trend represents the long-awaited alignment of technological innovation putting deflationary pressure on costs. As this trend continues, more businesses are realizing the importance of measuring growth in terms of bitcoin. It’s rapidly realizing its perception as the “gold standard” benchmark for determining value.
How that reshapes financial investment at large is unprecedented.
Adopt the best asset for your business
No matter what you compare it to, bitcoin proves its superiority year after year as the best-performing asset a business can hold on its balance sheet.
With all other assets, you have to manage the balance of risk and premium. With equities, your money runs the risk of loss due to third-party mismanagement of the company. With bonds, you have to rely on politically driven incentives keeping overall inflation low. With real estate, gold, commodities, and simple cash, their potential for supply inflation undermines potential returns.
Bitcoin is the only asset on the planet that lets you enjoy the premium without the risk. There’s no risk of supply growth, no risk of counterparty interference, and no reliance on political or economic shifts within our monetary system. Bitcoin sits outside of it all, enforcing its rules on those who use it, not allowing others to bend it to their will.
The only risk you take on is whether or not others decide bitcoin is an asset worth holding. But given its fundamentals—and the historical performance to reflect the integrity of those fundamentals—it’s clear that bitcoin is an idea whose time has come.
To get started with bitcoin and learn how its benefits extend far beyond mere investment value, get in contact with us today. We’ll help you adapt to the Bitcoin Business Standard, and you can experience the freedom, flexibility, and autonomy businesses are supposed to enjoy in the 21st century.
