(Andriy Onufriyenko/Getty Images)
Bitcoin is a global, decentralized currency that is beyond the control or guarantee of any country. Recent months in the Bitcoin ecosystem have been marked by a fever pitch of optimism based on the approval of Bitcoin spot market exchange-traded funds. These ETFs are driving Bitcoin’s adoption into the mainstream through the retirement accounts of millions as well as the portfolio constructions of thousands of financial advisors and institutional investors.
The ETFs miss the point, though. Bitcoin is not an asset to hold; it is a currency to use. Bitcoin doesn’t have a price, it has an exchange rate. The future of bitcoin is not that of an asset sitting in an ETF or buried in one’s backyard in a hardware wallet. Currencies are meant to transact.
Zac Townsend is the CEO and co-founder of bitcoin-denominated insurance company Meanwhile. This op-ed is part of CoinDesk’s “Future of Bitcoin” package published to coincide with the fourth Bitcoin “halving” in April 2024.
Though everyday transactions like purchasing a cup of coffee may not be an ideal use for bitcoin, a future where a healthy economic activity is expressed in bitcoin is predicted. Bitcoin excels as a storage of value, a means of settling large scale payments, offering financial services, among others.
Last year saw at least 57 countries with an inflation rate exceeding 10%. The United Kingdom recorded an inflation rate of over 9%, while the United States saw theirs rise above 8%. Comparatively, the day-to-day fluctuation of the bitcoin to fiat exchange rate may appear a lesser risk for those residing in countries with a history of inflation, governmental or currency fluctuations than long-term financial and monetary mismanagement seen on a global scale.
However, for this envisioned future to materialize, there’s a need for businesses and institutions to establish themselves within the Bitcoin economy. For instance, Meanwhile has set up one of the first ventures of this sort: a fully operational, regulated life insurance company that deals exclusively in bitcoin. Regulated by the Bermuda Monetary Authority, we operate on a modified accounting basis with bitcoin as our currency unit.
We operate a life insurance company like any other. But instead of being in a currency with depreciating purchasing power — like dollars, euros, yen, Swiss francs, or pound sterling — our currency is bitcoin, which is appreciating as a store-of-value.
That means that our company truly operates on the Bitcoin Standard. We state our balance sheet and income statement entirely in bitcoin. Our policyholders pay their premiums in bitcoin, and we make guarantees and promises in bitcoin – agreeing to pay all claims out to beneficiaries entirely in bitcoin. We do our solvency calculations and make all our regulatory filings in terms of bitcoin. We keep our insurance reserves denominated in bitcoin. We state policy values and do all our actuarial math in bitcoin.
This approach means that, as the saying goes, one bitcoin equals one bitcoin. Our policyholders can sleep safe knowing that exchange rate fluctuations do not affect our business, and we can operate knowing that we can meet our promises for the same reason. Bitcoin’s exchange rate has fluctuated between $15,500 and $70,000 over the course of operating the company, but our balance sheet keeps growing in bitcoin terms with no volatility.
We are just one of the first companies to operate in this way, but we should not be the last. Entrepreneurs, builders, bitcoin (and crypto) natives, and, honestly, much of the world’s population will increasingly see the value of building their businesses and their lives on the Bitcoin Standard. Like us, that means they can stop worrying about the exchange rate of bitcoin to the dollar today, or tomorrow, or next month, or even this year and start thinking about bitcoin as a store-of-value that will clearly be worth more in the decades to come.
At Crypto Dummies, we strive to demystify the complexities of the cryptocurrency world for enthusiasts of all levels. Through insightful articles, guides, and analysis, we cover topics ranging from blockchain technology to market trends and investment strategies. Stay informed and empowered with Crypto Dummies – your go-to source for accessible crypto knowledge.
