The Fundamentals of Bitcoin’s Value with Phil Geiger - WBD577

Phil Geiger is the Managing Director of Concierge Services at
Unchained Capital. In this interview, we discuss how a robust
protocol and monetary policy, a vital utility for energy
producers and a committed community of hodlers, makes Bitcoin an
extremely low-risk investment.


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No other scalable commodity, currency or asset has as robust a
fixed supply issuance as Bitcoin. 21 million coins. That’s it.
The rough consensus governance process, miners’ financial
incentives, and a highly decentralized node verification process
combine to make this digital scarcity rigid. No altcoin can
compete. “Digital scarcity is a one-time phenomenon” - Phil
Geiger, April 2020.


There are those that have been pushing the edges of this assumed
commitment. They are motivated by different concerns, chiefly
that a declining supply will impact security: how can a 51%
attack be avoided when the volume of Bitcoin issued becomes
significantly low and eventually finishes? Can transaction fees
alone secure the network?


But it is the fixed supply schedule that supports Bitcoin’s
value, from which all other considerations follow. According to
Phil Geiger, these 21 million coins already exist. Both in terms
of the supply schedule and the fixed limit. This is what
underpins the huge investment by miners: a transparent monetary
policy, and scarcity that supports the price. Changes to this
could seriously damage minings assimilation into energy
production.


This is what makes, in Phil’s view, Bitcoin an extremely low-risk
investment compared to other assets (both digital and physical).
The proof is in the hodling behaviour. Using Bitcoin is vital for
the transition of Bitcoin from a defensive store of value to a
productive medium of exchange, the fact that those hodling
Bitcoin for more than a year is at an ATH shows investors still
remain extremely confident in its long-term success.


So, what about long-term security? Decreasing block rewards will
incentivise miners to maximise the use of block space. Combined
with more users this should drive up Bitcoin transaction prices,
thereby supporting the transition to a post-block reward world.
The issue is whether there are enough incentives to ensure miners
don’t game the system. This needs to be debated. But, making
Bitcoin inflationary isn’t the answer, because this is the
essence of Bitcoin.