I know what you’re thinking; not another crypto article betting on bitcoin again, but hear me out. I’ve seen many articles talking about Bitcoin’s price ‘going to the moon,’ and they look at things like the “algorithmic price patterns” and “stock to flow models” but that all gets very complicated and very boring.
Today I want to approach it from a different perspective and show you why I think that if you’re going to become a millionaire, investing in bitcoin will be the fastest path to getting you there; within the next decade. There’s something really exciting that’s been happening in the world of Crypto, and it happened just this week, and no one’s talking about it.
BTC vs S&P 500
I was listening to Kevin O’Leary, one of the investors on the TV series Shark Tank and he was talking about how he thinks bitcoin will beat the S&P 500 index by 4% or four percentage points, and that got me thinking. The S&P 500 is essentially one stock that represents 500 companies in the US stock market, so it’s a good measure of the top-performing companies, and that one fund is expected to give you a rate of return of around 7% to 10% per year. Kevin thinks that bitcoin will beat the S&P 500 by an additional 4%, giving us a rate of return of anywhere between 11% to 14% a year, which is incredible.
I agree with Kevin that bitcoin will beat stocks, but I can’t entirely agree with him on how much I believe he’s overly conservative. Realistically I think bitcoin will surpass the S&P 500 by at least 9 to 10%, so twice as much as the S&P 500. If I put on my ‘moon boy stonks hat,’ I think bitcoin will reach $300,000 to $500,000 per coin before the end of this decade. Let’s imagine you bought one whole bitcoin at $40,000, and let’s assume that nine years from today, at the same time that one bitcoin became worth $500,000. That is a rate of return of 1,150%.
If you annualize that, it’s a rate of return of 30%+ per year, which is a little over triple that of the S&P 500. Let’s assume that instead of buying one bitcoin, you bought three. That would make you a millionaire, in this example, by 2030. But let’s imagine that instead of purchasing the two Bitcoins, you put $80,000 into an S&P 500 tracker fund. In this case, you would become a millionaire by the year 2047, roughly 17 years after becoming a millionaire with Bitcoin if you bought now.
Let me break it down for you and tell you why I think this because there have been some huge developments in bitcoin recently that I think will be the tipping point of this Crypto fuelled decade. Crypto has had the biggest piece of news this week, and believe it or not, this is bigger than the issuance of bonds in the Ethereum blockchain bigger than Elon and Tesla buying bitcoin, and no one is talking about it.
Suppose a country outside of the regular financial system uses currencies like the Dollar, the Yen, the British Pound, the Euro, and stated adopting Bitcoin. Could you imagine what would happen to Cryptocurrencies?
True cryptocurrency adoption
Well, the first country to ever adopt Bitcoin as a national currency was El Salvador. President Nayib Bukele announced that the citizens of El Salvador will finally be able to buy, sell, denominate in, and pay their taxes with Bitcoin. The best part about it is that they won’t pay any capital gains taxes on that money. This means if you’re a citizen of El Salvador and want to buy something at the grocery store with Bitcoin – if it doubled in value since holding it and you just used it – you would not pay any taxes on those gains.
HUGE NEWS! This is more than just a proposal; this is a bill that passed with a majority vote. You’ll be able to do all that as a citizen of El Salvador in just three months. This is massive, and here’s why; El Salvador has a population of 6.5 million people. Imagine all the businesses that are going to start using bitcoin and start accepting it. Of these six and a half million people, roughly 70% of Salvadoreans don’t have a bank account. If one percent of Bitcoin’s current market cap gets invested into El Salvador, It could increase its GDP by something like 25%, which is huge.
Playing with the big boys
Not only does it give an advantage to its citizens as a way of meaningfully saving money and increasing their net worth and wealth, but it also gives the country a huge economic advantage that other countries will start to notice and start following in their footsteps. So you’re probably thinking, ‘Who cares about El Salvador?’ it’s not a major economic player. But that’s what people said when the first tiny businesses of the world started accepting Bitcoin. People said, who cares? They won’t make a dent; wake me up when the first publicly traded companies start accepting Bitcoin and adding it to their balance sheets.
It is what ended up happening; here we are in 2021 and Tesla, Microstrategy, Twitter, Square, and PayPal. This is just one of the dominoes in a long line of dominoes that will start to fall as the world notices. This is Trillions of dollars worth of potential that will flow into Bitcoin over the next decade; here’s a second path of getting there.
This is something that Tyler Winklevoss said at the Bitcoin conference, which is that there are 50,000 publicly traded companies in the world right now. Of those 50,000 companies, only 32 companies own Bitcoin. That represents 0.00064% of the world’s corporations. When hundreds of companies own it, what happens to the price? I think this path alone could push us way beyond $300,000.