The following interview is sponsored by 21bitcoin.app
Daniel, what’s currently going wrong with our financial and monetary system?
The current international fiat money system, which is centrally managed, is only 21 years older than me. It was only 50 years ago that the US went off the gold standard. As we have become increasingly aware of since the 2009 financial crisis, low interest rates and monetary expansion have led to record inflation and massive debt. Central banks are now faced with a dilemma: either fight inflation with higher interest rates or let inflation run hot. Both threaten the very foundations of our current financial system.
Why is bitcoin the solution?
Bitcoin is fundamentally different. It’s a new way of storing and transferring value and, unlike the euro, is not a debt instrument but an asset that lies outside the traditional financial system. Bitcoin is the only sufficiently decentralized network where nobody can tamper with the rules of the network or change the limited supply of 21 million. In addition, Bitcoin can be stored or transfered easily and inexpensively without having to trust third parties.
Do Central Bank Digital Currencies threaten Bitcoin’s position?
It is true that the world is becoming more and more digital and so is our money. Some central banks are already developing their own digital currencies, which further increase their control options. This will not change anything in the fiat money system. In contrast, Bitcoin represents the only digital alternative that no one can alter or censor.
Isn’t Bitcoin too volatile?
Bitcoin has gone from $0 to a trillion dollar market cap over the course of 13 years. And this monetization process continues as more people gain trust. The market for Bitcoin is still relatively small which is why there have always been large price fluctuations in the past. Currently, less than 2% of the world’s population holds Bitcoin. As adoption increases, so does the overall value of the network. Successful investors such as Ray Dalio, Stan Druckenmiller and Paul Tudor Jones already own Bitcoin themselves and recommend an allocation in the portfolio.
What is the best strategy to invest in Bitcoin?
In our opinion, a long-term and regular (dollar cost average) investment is the best way to get exposure to the new asset class Bitcoin. With 21bitcoin we want to provide the easiest and most cost-effective onramp to help users automatically build a Bitcoin position. We also offer personal customer service, a German bank account and are registered by FMA Austria.