Bitcoin is ten years younger than the euro, how they can learn from each other

Bitcoin celebrates its 11th birthday in January of 2020. Around that time, the euro will turn 21. So there is exactly one decade between the two coins.

Cross-border

There is a striking similarity between bitcoin and the euro. The euro is in fact the first real cross-border currency. You could say that the success (ok, opinions are divided) of the euro in a certain way created the climate for other types of international payment methods.

But you cannot draw the comparison between bitcoin and fiat currencies one-on-one. Many people see bitcoin not as a currency but as a commodity. But bitcoin is indeed sound money, or sound money in English. That is because there is a maximum stock and predictable issue.

Fiat is issued flexibly

The issue of fiat is, to put it mildly, used flexibly to stimulate or hinder economic growth. Central banks aim for inflation of 2% per year, just enough to prevent stagnation.

The supply of bitcoin was inflationary for a long time. But now, for the first time, bitcoin inflation is falling below the level that central banks hold. With only 3 million bitcoins to be mined, BTC is entering the next phase of scarcity.

Central banks remain busy

On the other hand, you see that central banks continue to lower interest rates and apply quantitative easing.

The interest rate of the European Central Bank is lower than zero, and the US Central Bank is now pumping billions of dollars into the US economy. These financial injections are intended to alleviate the fear of insolvent commercial banks.

Bitcoin is still young

We now know that bitcoin has a fixed offer. Yet the market is still young and sometimes you see large amounts of bitcoins being sent back and forth. This is because the majority of the current bitcoins are in the hands of a rich elite of early adopters. There are also (unfortunately) still whales that sell, buy or trade in large numbers of bitcoin to influence the market.

Halving is coming

We are just over 200 days away from the next half. As a result, the block reward will fall from 12.5 bitcoin per 10 minutes to 6.25 bitcoin. Historically, these bitcoin block halvings lead to a bull run.

That sentiment now seems far away because the price has mainly fallen in recent weeks. But don’t forget that the price is slightly different than the value. And the value of bitcoin is constantly increasing, you can tell by the fundamentals. The computing power, number of transactions and the total number of users continue to grow.

The blue vertical lines are the halving dates for #Bitcoin. pic.twitter.com/JLlfyKsPrB

– Alex Melen (@amelen) October 17, 2019

Speaking of the price, you can see above that the price for the previous halvings also decreased by 40 percent. The sentiment may not be too good now, the previous halvings seem to indicate that the good times are returning soon.