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Why We May be Undervaluing the Digital Asset?

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The illustration Bitcoin (BTC) as gold coins and digital asset with colorful background

Any digital asset, for instance Bitcoin, may still be undervalued by many people around the world. If only more people knew about the scarcity of digital assets, we would see them valued much higher today.

The population of the world is currently around 7.7 billion people. Divide this total by the number of available Bitcoin and our calculation shows each person could only hold approximately 0.003 BTC each. This number could decrease over time as the world population increases.

That figure gives you a great overview of how scarce Bitcoin is. However, it does not take into account a number of other external factors. Most significant is the fact that up to 30% of Bitcoin may be lost due to user error, or locked away forever as is the case with Satoshi Nakamoto’s known wallet.

Bitcoin (BTC) scarcity is illustrated in a diagram

Bitcoin as a digital asset is still undervalued by us

Given the facts, we can further drill down and analyse Bitcoin scarcity at a more practical level. Let’s look at the three largest cities in the world: Japan (Greater Tokyo ~38 million people), India (Delhi ~24 million people), China (Shanghai ~28 million people).

Given the large populations in these centres, mathematically not all citizens in these population centres could even hold 1 BTC each. If you currently own a whole Bitcoin; you are in the top 0.25% of holder’s in the world. Let’s quickly look at some useful facts. A University of Cambridge study revealed the following:

  • Person to person transactions are on average $100 USD
  • Business transactions are approximately $50,000 USD
  • User accounts are continuing to grow rapidly
  • ID Verified accounts are also growing rapidly
  • Most users are ‘ordinary’ users

The above points are why most in the cryptocurrency community is bullish around the prospect of institutional investment. Smart business people are seeing scarcity combined with the technological breakthrough of the blockchain and are actively moving from passive observers to investors.

New methods of onboarding and use are being developed or maturing that will likely see an increase in investment in this area. Given the opportunity for growth in comparison to other assets, the positivity around institutional uptake is likely warranted.  

Let’s look at Gold as an example of a tradeable scarce asset. Gold trades at $40 million dollars per ton; or $42,000 dollars per kilogram. The market cap of gold is over $7 trillion dollars, compared to the total cryptocurrency cap of $184 billion dollars. The room for growth here is phenomenal.

Moving forward; Bitcoin has real opportunity to store wealth in a manner similar to Gold, with even more liquidity, divisibility and safety than its physical counterpart.

Chart showing room for growth for Bitcoin

In summary, Bitcoin was built with scarcity as one of its pillars. Not only does this allow certainty for investment purposes, but it also builds in protection against inflation automatically. Due to up to 30% of the digital asset being inaccessible, we may actually be undervaluing Bitcoin up to this level.

Now, would you love to try the real value of Bitcoin? Do not hesitate to contact Easy Crypto team for more information about Bitcoin.

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