Parker Lewis, head of enterprise improvement at crypto lending platform Unchained Capital, says there are just a few basic features backing Bitcoin’s worth.
In an interview with Peter McCormack on the What Bitcoin Did podcast, Lewis addresses the favored conception that Bitcoin (BTC) is backed by nothing and has no intrinsic worth.
Comparing Bitcoin to the US greenback, Lewis factors out how most declare that the US greenback is backed by the American authorities. However, the crypto veteran questions the substance of that assertion.
“Someone will very casually say Bitcoin isn’t backed by something with out understanding the precept, as a result of they’ll say ‘the greenback is backed by the federal government.’ But then they will’t clarify properly, if the federal government prints three trillion of them would you continue to worth it? So what’s it actually backed by?
If the federal government printed one other $10 trillion, would you worth the factor the identical approach that you just did immediately as a result of I can clarify to you why they’re going to print one other trillion [dollars], $2 trillion, $3 trillion, $5 trillion, most likely $10 trillion or extra. It’s very predictable.”
Lewis says the one factor that backs any type of foreign money “is the credibility of its financial properties.” With this in thoughts, he says Bitcoin maintains its worth by credibly implementing its mounted provide of 21 million BTC.
“The mechanisms in place that enable for Bitcoin to credibly implement a 21 million provide, to have achieved monetary shortage are the very issues that give it enticing financial properties.”
Lewis names three key basic features that enable for Bitcoin to implement its worth. They are Bitcoin’s mining operate, its nodes and the non-public keys wanted to entry every BTC. Together, he says they align to solidify BTC as a foreign money.
“Basically, the keystone is the foreign money (BTC). The foreign money itself is what aligns all of the pursuits between the miners, node operators and individuals who maintain the foreign money and maintain non-public keys.”
The Unchained Capital govt says that if Bitcoin can proceed to take care of a tough cap on its provide, he believes BTC can finally turn out to be the reserve foreign money of the world.
“When we take into consideration what backs Bitcoin, I might say it’s an enormous assertion to say that if Bitcoin credibly enforces a hard and fast provide of 21 million, it can turn out to be the worldwide reserve foreign money. I imagine that to be a real assertion.”