Welcome to the 16th edition of The Bitcoin Newsletter
In a world marked by escalating violence and conflicts, safeguarding wealth becomes crucial. Bitcoin, as a mobile digital store of value, emerges as a solution, addressing the challenges posed by unrest and armed conflicts globally. This 15th edition focuses on the significance of Bitcoin's mobility amid increasing conflict.
Given the drastically changing geopolitical and macroeconomic landscape, I'll be sharing two newsletters this month to navigate the scenario. Stay tuned for another newsletter at the end of the month, where I'll discuss expectations for 2024 and insights into the upcoming Bitcoin Halving, following our regular schedule.
As always, feel free to share any feedback with me (via direct message/X), as this helps us to produce better content for you!
Best Regards,
Leon
1) Bitcoin = the protocol and payment network
2)bitcoin = the currency
DEEP DIVE
The importance of Bitcoin’s mobility
What would a digital world look like that is facing a global conflict in which people store their wealth primarily in real estate?
One would assume that people would start to question this way of storing value - after all, real estate can easily be destroyed - and would start to think about storing value digitally, because digital stores of value cannot be destroyed so easily.
In fact, this is the status quo. We live in a highly digitalized world, but most of humanity still uses physical goods to store value. Real estate serves as the world’s most used store of value. An estimated ~330T of global wealth is held in property (Myers, 2023).
More recently, however, macroeconomic and geopolitical headwinds have exposed the weakness of real estate as a physical store of value. It is expensive to maintain, easy to confiscate, difficult to move or liquidate in times of crisis and easily destroyed. What do you do when war breaks out? You can’t take real estate with you. This may sound like a dystopia to you, but if you’re serious about long-term wealth management, you should consider the worst-case scenario.
I don’t think a world war, in whatever form, is at all illogical. Who would have thought a few years ago that there would be war in Europe? Now there is one in Ukraine. Given the ongoing and ever-increasing global tensions between Western and Eastern superpowers, how can we be sure that such a conflict will not spread globally?
As a digital and mobile store of value, bitcoin serves as an ideal hedge against the threat of war, confiscation or destruction. It is easily portable, divisible, durable, censorship-resistant, noncustodial and easy to move or liquidate in times of crisis.
Bitcoin can be sent anywhere in the world at little cost. In addition, bitcoin is relatively easy to maintain. You don’t have to worry about daily maintenance, rent or repairs and can self-custody bitcoin. To store bitcoin safely, all you need is a basic computer without internet access and a BIP39 Key generator — or just buy a hardware wallet for less than $50.
The auctioning off of Jewish property was popular in Nazi Germany. As you can see in the photo below, which shows a crowd in the town of Lörrach happily attending such an auction. German Jews were deliberately humiliated by having their property confiscated or destroyed.
Families who had secured their wealth in companies, real estate, gold or similar stores of value that are vulnerable to confiscation, often lost everything overnight and, unfortunately, some later lost their lives. After their wealth had been taken from them, it was often no longer possible for them to leave Germany for financial reasons, and so they were left at the mercy of the Nazi henchmen.
This is a painful history lesson that teaches us the importance of storing wealth in a digital asset like bitcoin, which is difficult to confiscate and easy to liquidate or move in times of crisis.
Little can stop you from taking your bitcoin (wealth) with you. You are not dependent on lengthy bureaucratic processes as with real estate and do not have to worry that your bitcoin will be destroyed or confiscated in the event of war. Furthermore, Bitcoin is the first monetary technology to benefit from chaos. In the event of war, physical assets can be destroyed and fiat currencies can be inflated. However, due to its decentralised, digital nature, the Bitcoin network is virtually indestructible and the supply cannot be increased at will. Therefore, the network becomes stronger in times of crisis as more market participants have an economic incentive to join the network. This also leads to increased demand for bitcoin, the network's native currency.
Due to the digital nature of the Bitcoin-Network, there is no local dependency. In case you need to relocate, you can memorise 12 words, the backup (seed phrase) for your wallet, and take your bitcoin „with you“. In my article “Bitcoin is a Possession, not Property” I highlight that bitcoin is a digital asset that you can fully control.
In my opinion, in the face of impending conflict and uncertain times, it is preferable to hold wealth in a digital asset such as bitcoin rather than in physical assets such as real estate, art or gold, which can easily be destroyed, taxed or confiscated.
Furthermore, one should be able to fully control this asset; Company shares, stocks, ETFs or other digitised stores of value are not as safe from seizure as bitcoin, which is the ideal store of value. Bitcoin is digital, fixed in supply, easy to maintain, difficult to confiscate, tax or destroy and easy to move or liquidate.
Encapsulated within Bitcoin is wealth that you genuinely possess, along with the liberty to use it according to your preferences. Bitcoin is freedom.
WORTH TO KNOW
Podcast and publications
Bitcoin verstehen Podcast
In keeping with the topic of this newsletter, the German Bitcoin podcast “Bitcoin verstehen” (Understanding Bitcoin) has published a review of the episode that we recently recorded “Bitcoin: Die Immobilien 2.0” (Bitcoin: Real Estate 2.0) in which the advantages and disadvantages of Bitcoin vs. real estate for wealth preservation are discussed in just under 15 minutes. WATCH
Bitcoin vs Real Estate: What is the better store of value?
My article “Bitcoin vs. Real Estate: Which is the Better Store of Value?” has been translated into four languages. The article is available in English, German, Polish and Slovenian on EuropeanBitcoiners.com (EB), a project for free and open source Bitcoin education. READ
Balancing Bricks and Bytes: The Evolving Role of Real Estate and Bitcoin in Wealth Creation
Can Bitcoin meaningfully complement the real estate industry as a liquid digital store of value? I explore this question in my new article for Coinfinity, an Austrian Bitcoin Brooker. READ
Bitcoin is Digital Real Estate
Bitcoin Magazine contributor and author Tim Niemeyer filmed an explanation video for my article “Bitcoin is Digital Real Estate” for his Bitcoin education channel “Zoom Out”. WATCH
IDEAS OF INTEREST
Unleashing Bitcoin: The Power of Permissionlessness - Bitcoin's permissionlessness empowers individuals by giving them control over their finances and promoting innovation within the network. It removes barriers to entry, censorship, and restrictions, allowing for greater financial freedom and the potential for groundbreaking advancements in the world of finance and beyond. WATCH
If you want to support me. Feel free. You can send me some satoshi/bitcoin.
My lightning address is: law@getalby.com
My bitcoin address is: bc1qyc9q89wjzmvaw729tj3wsrsfhft53mjycrjxdk
Nostr PubKey
npub1v5k43t905yz6lpr4crlgq2d99e7ahsehk27eex9mz7s3rhzvmesqum8rd9
Resources
Leon A. Wankum - Bitcoin is a possession, not property READ
Leon A. Wankum - Why real estate investors should have Bitcoin strategies READ
Photo Credit: Photo by Anastasia Vlasova / Getty via theatlantic.com
Disclaimer: the content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Make sure you do your own research before making any investment and be aware of your own risk tolerance. If you like to build on my thoughts, feel free, but please cite me as the source. 2023 - Leon A. Wankum.
Editing and content creation by Clemens Haidinger.