I’ve been thinking a lot about Bitcoin as a monetary signal.
To make a quick comparison this is like communications technology. Within communications technologies you have the signal (the true information you are trying to convey) and the noise (everything else). Most communications have some level of noise that impede the signal to some degree. (Signal to noise ratio).
Because Bitcoin has a set inflation rate with the total final units known in advance, we have the first money in history that is lossless. For once, if I sit in cash (meaning Bitcoin) I lose no buying power over time.
(Right now, you’re going to gain it. Later, in the years and decades to come, it may be closer to where gold is now where it doesn’t lose much buying power. Though even with gold you lose some. With Bitcoin, you wont lose any.)
Effectively, there is no noise. It’s all signal. And, like the most impactful communications technology today (the internet), it can be transferred across space and time near instantaneously.
I haven’t thought through the all of the implications of this fact yet but I’m confident they are profound.
For one, it means that investors can REALLY wait for their pitch as Warren Buffett advises people to do.
Despite always advising investors to do that, as everyone who first gets in the investing game understands, it’s a question of what do you do with your cash in the meantime. If you’re not in the S&P 500 you’re missing out on gains. But if you sit in cash for too long you lose too much in real return to make up for it in the times you take a swing and connect.
But now, an investor could sit and wait for their pitch for decades on end, knowing they are never going to lose buying power. That must have profound impacts in the future.
And it has profound value for us as investors now. It’s worth something. So I’m buying, buying, and buying Bitcoin. Because when folks start to wake up and realize this fact, it’s going to be important.
Bitcoin Meditations 