How Bitcoin Is Changing From A Volatile Gamble To Foundation For Wealth-Building

The crypto markets have been a bit shaky lately‭, ‬thanks to even more geopolitical uncertainty‭. ‬But what I haven't seen before‭ ‬-‭ ‬and what's been filling me with a new sense of pride and wonder‭ ‬-‭ ‬is Bitcoin holding steady‭. ‬Really steady‭. ‬

In my short time exploring this space‭, ‬that kind of stability is unheard of‭. ‬Of course‭, ‬it could crash by the time this is published‭, ‬which got me thinking about one of the most common fears people who don't understand Bitcoin still cling to‭: ‬“What if it goes to zero‭?‬”‭ ‬However‭, ‬it's a fear I no longer have‭. ‬

Let's rewind‭. ‬I like to look up older prices of Bitcoin in times of uncertainty‭. ‬But the prices can't be too old‭, ‬or I start feeling sorry for myself that it took me so long to start investing‭. (‬Imagine buying Bitcoin on February 21‭, ‬2014‭, ‬when it bottomed at‭ $‬111.60‭ ‬after the Mt Gox crypto exchange went bankrupt‭.) ‬

Eighteen months ago‭, ‬Bitcoin was around‭ $‬42,000‭ ‬-‭ ‬up dramatically from‭ $‬25,000‭ ‬in September 2023‭. ‬All it takes is a quick glance at the charts to see how dramatically Bitcoin has outperformed other‭, ‬more traditional investing avenues like the S&P or gold‭, ‬since its inception in 2009‭.‬

And lately‭, ‬it's starting to feel‭ ‬-‭ ‬dare I say‭ ‬-‭ ‬much less volatile‭, ‬too‭. ‬For those of us paying attention‭, ‬that's a big deal‭. ‬Because what happens when the asset once criticised for its volatility is no longer volatile‭ ‬-‭ ‬just as everyone from Pakistan to the US company GameStop wants it‭? ‬

Michael Saylor‭, ‬co-founder of MicroStrategy‭, ‬now Strategy‭, ‬which is one of the world's biggest Bitcoin holders‭, ‬said it plainly in a‭ ‬Bloomberg‭ ‬interview this month‭: ‬“Winter is not coming back‭. ‬We're past that phase‭. ‬If Bitcoin's not going to zero‭, ‬it's going to‭ $‬1‭ ‬million‭.‬”

His confidence rests on the core principles of Bitcoin‭, ‬which include scarcity‭, ‬immutability and resistance to inflation‭, ‬along‭ ‬with steadily growing demand‭. ‬More nations are signalling openness to Bitcoin and companies across the globe are adding it to their balance sheets‭.‬

I didn't really expect this kind of shift‭. ‬Like many others‭, ‬I was just curious and figured I'd just sell some to capitalise if the value went up‭. ‬But starting in summer 2024‭, ‬I noticed the smartest-seeming people in this‭ ‬space started announcing‭: ‬they have no plans to sell their Bitcoin‭. ‬Ever‭. (‬To quote Saylor's February post on‭ ‬X‭: ‬“Sell a kidney if you must‭; ‬but keep the Bitcoin‭.‬”‭)‬

But how can you use it‭, ‬I wondered‭? ‬The answer to that question is becoming obvious‭. ‬There's an entire financial ecosystem developing around Bitcoin‭ ‬-‭ ‬one where you can benefit from ownership‭, ‬and its potential growth‭, ‬without ever having to let go of it‭. ‬That part takes some mental rewiring‭, ‬too‭. ‬You have to forget everything you think you know about finance‭. ‬

I won't pretend to grasp all the technical stuff‭, ‬but there are a few practical ways people are using their Bitcoin‭ ‬-‭ ‬and they actually make a lot of sense‭.‬

One is crypto-backed loans‭. ‬You use your Bitcoin as collateral to get a loan in regular money‭ (‬or stablecoins‭), ‬so you can cover‭ ‬expenses or invest while still holding on to your BTC‭. ‬When you pay back the loan with interest‭, ‬your Bitcoin is returned to you‭. ‬It's a simple idea‭, ‬and platforms like Strike and Milo in the US are already offering these tools‭.‬

The interest rates will seem very high‭, ‬but given BTC's forecasted growth‭, ‬this is no payday loan scheme‭. ‬I recently heard John Vasquez‭, ‬a trusted US crypto voice‭, ‬talking about borrowing at 14‭ ‬per cent to fund a cash-flow business‭. ‬He expected to pay it off in 10‭ ‬months‭ ‬-‭ ‬and felt confident doing it‭.‬

Then there are people like Mark Moss‭, ‬founder of Market Disruptors‭, ‬who spoke at Bitcoin Mena in Abu Dhabi last year‭. ‬He's built an entire five-year retirement strategy for mere mortals around Bitcoin loans‭. ‬His theory‭? ‬Accumulate Bitcoin‭, ‬borrow against it as it grows and skip tax events by never selling‭ ‬-‭ ‬keeping the principal intact‭.‬

Some are using these loans to buy real estate or invest in other assets‭. ‬Others are covering their living costs while their Bitcoin‭ (‬hopefully‭) ‬continues to appreciate‭. ‬Of course‭, ‬if the market drops‭, ‬there's always the risk of liquidation‭, ‬which is scary‭. ‬

Another method that's catching on‭: ‬earning passive income by depositing Bitcoin on reputable platforms‭, ‬where it functions like an interest-bearing‭ ‬account‭. ‬These platforms lend your BTC to institutional borrowers and pay you a portion of the interest‭. (‬Just like a bank would‭ ‬with regular money‭) ‬Sounds good in theory‭ ‬-‭ ‬but it does mean leaving your crypto on an exchange‭, ‬which many in the space advise against‭. ‬I'm still figuring that one out‭.‬

For those who want to ease in‭, ‬there are crypto-linked debit and credit cards‭, ‬which let you borrow against your Bitcoin and pay‭ ‬off the balance monthly‭ ‬-‭ ‬just like a regular credit card‭. ‬I have my eye on that option‭, ‬although I don't see it yet in the UAE‭. ‬

One product I can see myself using‭: ‬the new Bitcoin Rewards Credit Card‭, ‬launching in the US this autumn‭. ‬It's a partnership between Coin base and American Express‭, ‬offering four per cent back in Bitcoin on every purchase‭. ‬Bitcoin as the‭ ‬new air miles‭? ‬On that one‭, ‬when I can get it‭, ‬I'm all in‭.‬

Bitcoin might still feel fringe or futuristic‭, ‬but what's clear to me is this‭: ‬the ecosystem is growing‭, ‬the tools are evolving‭, ‬and the more I learn‭, ‬the more I want to know‭.‬

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