Bitcoin Developer Jimmy Song Bought Bitcoin at $30: It is a Sound Investment and Money
In an interview with Valentin Schmid of The Epoch Times, Bitcoin developer and Paxos Principal Architect Jimmy Song offered his insights into the advantages and merits of bitcoin as money, a store of value, long-term investment, and a safe haven asset.
According to Song, one of the most important aspects of bitcoin as sound money is its unique monetary policy. Unlike most assets and reserve currencies which can be manipulated and controlled, bitcoin’s maximum supply will always remain at 21 million. Because bitcoin has a fixed supply limit and demand towards bitcoin from casual investors, institutional and retail traders are always increasing at an exponential rate, logically and mathematically, the value and price of bitcoin have to increase.
Song admitted that he was first exposed to bitcoin and a new asset class in cryptocurrencies when the price of bitcoin broke the $1 mark. But, Song purchased his first bitcoin when it was valued at $30. Today, despite the recent major price correction of bitcoin caused by the Chinese government’s nationwide ban on local bitcoin exchange, bitcoin price remains above $3,600. For Song, that is a 120-fold return on a long-term investment.
“You’re not going to be able to inflate it in any way. Bitcoin is sound money because there is a fixed supply limit and demand is always increasing. That creates a really good investment, at least from my perspective, and so I bought some at around $30. I do wish I bought a lot more but everybody in Bitcoin does,” explained Song.
Hence, as many prominent and early investors in bitcoin including Tone Vays, WhalePanda, and Tuur Demeester explained, the most stable, secure, and smart method of trading bitcoin is trade less, hold longer, and do not overreact to short-term volatility.
But, apart from its limited supply, there are various aspects of bitcoin which provide the digital currency value. In a study, JP Vergne, a professor at Ivey Business School, discovered that the best indicator of the short-term price development of bitcoin and cryptocurrencies, in general, is developer activity around it. Vergne wrote:
We found that the best predictor of a cryptocurrency’s exchange rate is the amount of developer activity around it.
Bitcoin is a decentralized financial network and a peer-to-peer protocol in nature. Thus, it is immutable to attacks and operates on top of a transparent ledger. But, bitcoin’s decentralization also makes it difficult to reach consensus. It is challenging for developers to integrate innovative software such as Segregated Witness (SegWit), the BItcoin Core development team’s scaling and transaction malleability solution because almost everyone within the network including miners, node operators and developers have to agree to it.
Song reaffirmed a similar point to Vergne. During the interview, he explained that active developer activity around bitcoin which provides the network security value ultimately drive the bitcoin price upwards and provides it with fundamental value.
“Things like the Bitcoin software just aren’t smart enough to handle stuff like that. It has to be people that actually fix it and that’s what I think gives Bitcoin a lot of security value — because you have all these people watching it and not just like computer software that’s running on its own. It’s developers, it’s the people that are actually checking the code or watching the network figuring out low probability scenarios and how to immunize against those. That’s what gives it value. That’s what gives us security. That’s what makes it a great store of value,” said Song.
Bitcoin is still a $60 billion financial network. Many respected financial analysts including RT’s Max Keiser and Wall Street analyst Tom Lee believe bitcoin could evolve into a multi-trillion dollar financial network in the upcoming years, given that conditions are met and developer activity around it remains vibrant.