Callback
Contact
+1 514 288 1997
Andrew Kamsky is a writer at CCN.com specializing in economics and finance, with a main focus on Bitcoin, and a chart analyst for X page Stockmoney Lizards, where he analyzes Bitcoin’s price movement.
A photon of light takes roughly eight minutes to travel from the Sun to the Earth, a testament to the consistent timing found in nature. Similarly, Bitcoin has a block time of approximately 10 minutes, meaning that each block of transactions on the network is confirmed within this time frame. This design is a technical choice to mimic predictable natural processes.
Satoshi Nakamoto, the creator of Bitcoin, designed the Bitcoin protocol to mirror the reliable and predictable physical laws found in the natural world. Just as the consistent speed of light contributes to the stability of our physical reality, Bitcoin’s 10-minute block time contributes to the stability and predictability of its network, reinforcing its role as a secure and reliable savings technology.
Over the past decade and a half, Bitcoin’s role as a decentralized digital vault, against all odds, has continued to prove its worth. Despite significant government pushback, including attempts to regulate, restrict, or even ban Bitcoin in various countries, the digital currency has consistently and predictably increased in value.
Bitcoin’s growth has followed a recognizable pattern, with the market seeing cycles of intense price discovery, sharp corrections, and subsequent consolidations. Each cycle has repeated every four years over the past fifteen years, reinforcing Bitcoin’s reputation as a savings technology.
In hindsight, this recognizable pattern has made Bitcoin increasingly predictable over time. Typically, Bitcoin tends to rise approximately for one year, followed by a year of decline as the markets unwind from the aftermath of euphoria and greed, leading to necessary price corrections.
The subsequent two years are marked by a phase of consolidation and accumulation, where prices stabilize, and investors and traders prepare for the next cycle. Given this historical pattern, the current cycle top is anticipated to occur around the fourth quarter of 2025.
In April 2024, Bitcoin underwent its fourth halving, a process where the rewards for mining new blocks are reduced by half every four years. This self-induced supply shock is typically a catalyst for Bitcoin’s sustained value. As the halving introduces negative digital entropy, the reduction in Bitcoin’s mining reward every four years gradually enhances the system's stability and predictability, rather than leading to disorder.
In a more traditional sense, entropy measures disorder or randomness. Bitcoin’s halving process can be seen as introducing negative digital entropy because the halving has systematically increased order on the network. As Bitcoin becomes scarcer, it promotes greater acceptance and trust in the cryptocurrency worldwide. This growing confidence attracts more investors and institutions to the network, leading them to save using Bitcoin, thereby creating a self-fulfilling prophecy.
As Nakamoto suggested, ‟It might make sense just to get some in case it catches on.” This sentiment brings together the idea that as Bitcoin’s network and trust grow, unlike fiat currency, holding Bitcoin becomes increasingly advantageous, solidifying Bitcoin’s ability to act like a reliable savings technology.
Bitcoin becomes a powerful savings tool over time, thanks to its foundation in cryptographic principles developed over the past 50 years. This foundation began with the pioneering work on public key cryptography by Whitfield Diffie and Martin Hellman in the 1970s.
Bitcoin continues to leverage these cryptographic discoveries. Public key technology, which has proven its reliability over half a century, is fundamental to facilitating transactions on the Bitcoin blockchain. at the Layer 1 level.
By accepting Bitcoin as a savings technology that follows predictable cycles, the asset can be strategically bought during the ‘winter’ season of market lows, with adequate profits taken during the ‘summer’ highs and those profits reinvested back in the next ‘winter’ season. The confidence in these cycles is maintained as Bitcoin’s hash rate consistently reaches all-time highs, reinforcing the network’s security and utility in future.
If the next cycle unfolds differently than expected, it will provide new insights into Bitcoin’s changing role in global finance. However, if Bitcoin follows its familiar pattern, it will further validate its cyclical movements, allowing investors to plan strategically and optimize a savings strategy with the future in mind, or at minimum the next four years. Adopting the correct mentality to preserve wealth over time.
Some argue that just because Bitcoin has had three similar cycles in the past, it doesn’t guarantee future cycles will follow the same pattern. While past cycles don’t ensure future outcomes, Bitcoin’s fundamental principles, such as its scarcity, decentralization, and security, remain intact. Furthermore, individuals or entities that hold Bitcoin align actions and decisions to achieve a shared goal, without conflicting interests or the risk of betrayal.
Pure coordination in game theory encourages participants to work together in maintaining the network's stability and value. The inherent incentives built into Bitcoin’s protocol encourage rational actors, miners, investors, and users to continue innovating on the network, increasing the blockchains’ value in the future. This self-fulfilling prophecy of incentives helps maintain Bitcoin’s resilience, even as market cycles might change.
The cycles might evolve, but the core value proposition of Bitcoin as a store of value and hedge against inflation will continue to be relevant.
If Bitcoin were to render fiat currency obsolete, the shift would likely lead to widespread global adoption of the digital currency, potentially placing those who haven’t adopted it, referred to as ‘no-coiners’, at a significant disadvantage. In the near future, a transition out of fiat into Bitcoin may be rapid, accelerated by the development of wallet technology that becomes so fast, easy, and accessible to the world, the traditional financial system simply evaporates, much like outdated systems before it.
As Bitcoin continues to be integrated into the global economy, those who do not adapt may find themselves at a competitive disadvantage in a rapidly transforming financial environment that is leading into hyperbitcoinization. This raises the question: Can one afford not to own Bitcoin?
Bitcoin’s true value lies not only in its market price but also in the foundational principles it embodies. Through the concept of negative digital entropy, Bitcoin is evolving beyond just a speculative asset. It is proving to be a powerful savings technology that rewards patience and disciplined investment.
Those who adopt a Bitcoin standard, trusting and preparing for its cycles, driven by both human behavior and digital asset technology, are likely to find themselves in a stronger financial and mental position. As a hedge, wealth is effectively being transferred into a harder form of money, offering protection against the devaluation of fiat currencies, and reducing the risks associated with inflation.
Henley & Partners assists international clients in obtaining residence and citizenship under the respective programs. Contact us to arrange an initial private consultation.
