Less Than a Year; Recession and Bitcoin Halving

The Bitcoin halving countdown finally shows less than 365 days. This time halving is more meaningful than before due to the economic conditions we are in. Accepting Bitcoin as a global currency is not going to happen in a day but there are non-negligible signs supporting the idea of using Bitcoin as a global currency. In this article, I will go through the reasons and signs that support why Bitcoin is here to stay and what can its real value be. I will mention the global systemic risks of monetary policies, for example, high inflation and interest rates in developed economies, and how a death spiral is leading the economies to a dystopia in the last part of this article

Firstly, just because I don’t want to sound like an obsessed Bitcoin-maximalist and conspiracy theorist, I will identify the real-life use cases of Bitcoin to determine the real value of Bitcoin before I mention global money problems in the last part.

Let’s start with the first use case of Bitcoin; sending money. If the entire Bitcoin network was an international money transfer startup in which miners are contractors to provide service like local banks and tellers and users are clients to receive service like individuals like us, the Bitcoin network company would be the most transparent company with the cheapest and fastest transactions. There are global companies that provide money transfer services across the globe, Western Union, MoneyGram, Paypal, TransferWise, and Remitly.

1. Western Union: $4.16 Billion

2. MoneyGram: $1.02 Billion

3. TransferWise : $4.1 Billion

4. PayPal: $83.15 Billion

5. Remitly: $7.8 Billion

Those are only a few major, well-known western money transfer companies and there are many more if we include Chinese, Russian, Indian, and African companies. We can calculate the total value of randomly selected five well-known money transfer companies, with a rough estimate of $100 Billion. If the Bitcoin network was a private company, the valuation should exceed $100 billion.

But, of course, the Bitcoin network doesn’t generate income for Bitcoin holders. But we must consider that those companies make money from foreign currency conversion. There is a spread between the rates on the TV screens and the rates you are offered by those companies. Bitcoin solves this problem too. You can anytime swap and exchange your Bitcoins with any other fiat or cryptocurrency in a democratic decentralized web environment.

Another source of income for those companies is instant transfers, you probably used the Venmo app and saw the message stating that you need to wait up to 3 days or pay a fee for an instant transfer when you make a deposit to your bank account. Bitcoin doesn’t charge you for a faster transaction. It takes one or one and a half hours on the main network, and seconds on the lightning networks.

Anyone with an internet connection, no matter where he/she is located, can create a Bitcoin wallet and receive funds in a very short time without leaving their couch. You can be a citizen of country A and reside in country B, you don’t need local identity documents to create an account with the network. It is free and permissionless for anyone.

Lastly, let’s talk about the global economic conditions that pave the road for Bitcoin. The pandemic was the first of its kind in entire human history and left us with problems that we have never had before. We are living in interesting times since then. Central banks printed lots of money to keep economies floating and resurrected the inflation monster. Now central banks are raising interest rates to tame inflation. I can keep writing about all problems we currently have but I prefer to recommend readers to read Nouriel Roubini’s article . He has more credibility as an authority in economics and finance and he clearly explains the expected storm in economies. Yes, when you read the article, Bitcoin stands out more as an alternative.

Now, I am thinking about how I can preserve my wealth under those conditions. I can’t buy a house because the prices almost doubled up, and I can’t buy treasury bonds or T-bills because the return is lower than inflation. I can’t buy stocks because their prices have been falling for more than a year. It is a quite hard time to decide where to store your wealth. Bitcoin stands out when I bring all the pieces together. But, we must answer some questions first; will Bitcoin's price go up during 2023? Is it the right time to buy Bitcoin?

When you first hear that halving is less than a year away, you know the bull market is approaching too. If you don’t know what I mean, you should take a look at article to learn the cycles of Bitcoin. But, is it going to be the same again? Because the economical conditions are getting harder and household income and purchasing power are fading, I assume that individuals and institutions will have less money to invest in the current year. We already see some signs for example the collapse of two banks in the US; Signature bank and Silicon Valley Bank, and the troubled too-big-to-fail lender Credit Suisse in Europe.

Bitcoin stands out, yes, it is a great investment alternative and solution for the problems we have now. But the adoption is still not on the desired level. There are local enthusiasts, and communities in small experimental economies such as Bitcoin Town, and Bitcoin Beach. The number of places where you can buy daily needs by paying Bitcoin is highly limited even in London, New York, Istanbul, or Moscow. You can’t buy a cup of coffee or a loaf of bread by using Bitcoin in most places.

How I see things is, Bitcoin is a highly promising startup which is already gone public at its launch with fair distribution. Masses think that the startup will eventually be successful and invest in it so the price keeps going up. But the startup still lacks turning its promises into reality. The adoption level is far from making Bitcoin a global currency.

I'm not making a claim or prophesying. I am curious to see where we are heading too. Decreasing purchasing power in a shrinking economy leads to questioning the perception of money in individuals' eyes. I certainly know that we will hear unpleasant words like "high inflation" "high interest rates" "stock market crash" "Bank crash" and "Bitcoin".