Why would someone buy bitcoin now?

And how we can learn from it.

July 08, 2022

GM 👨‍👩‍👧‍👦

Seedphrase Daily👋 Your segway into the weekend starting off your Friday with some crypto news and topics.

Today’s estimated research time is 5 hours condensed into a reading time of 4 minutes. Stay tuned to where we talk about:

  • 🙋‍♂️Your questions answered 

  • 🤔Why would someone buy bitcoin now? 

  • 🦍Ape now, pay later service by Teller

  • 🌴Planting Plays 

  • ⏮Weekly recap

🙋‍♂️Do you have any crypto related questions that need answered?

We can't thank you guys enough for our growth over the past few months. Our Seedphrase community of degen go-getters has grown, and it's only natural some of you have questions!🤗

This is a segment where we dedicate ourselves to getting you guys more involved with the research by including the questions you send us in the anonymous form below or through any of our social media.

A question we received via Twitter was:

Why would someone buy Bitcoin now? 🤔

After some thought and going through rabbit holes on Youtube, we stumbled upon this Michael Saylor interview on Altcoin Daily that was an hour-long. Yes, we watched the whole thing, but here's what he said so you don't have to go through that:

Bitcoin doesn't cost anything to hold 💸

The only way to hedge inflation is when you want to acquire desirable assets you can afford to hold for a long time. But to buy an asset like real estate, you would need a substantial amount of cash, and even if you manage to scrape by, you'd have to keep up with the monthly payments, repair costs, taxes and more. 

Here's where Bitcoin comes in. Bitcoin doesn't cost anything to hold for ten years like a house, meaning you're not tied to anything but the money you already decided to invest. There will be no monthly payments and no one knocking on your door because you forgot to pay the fees.👮‍♂️

On top of that, you can choose to Dollar Cost Average (DCA) with Bitcoin. We went in-depth here. Instead of putting all you own into a house, you can slowly DCA into Bitcoin while not forcing yourself into an uncomfortable position. Like trying to buy a skyscraper..

Bitcoin is bigger than currency. 🌎

Most things you buy are currency derivatives correlated to the strength of what other currencies are valued at. The US dollar? 80% of all US dollars in existence were printed in the last 22 months, so prices are catching up. That Vintage Rolex? It went up in value because there were only 17 of them made. So if we can't measure the price action directly, we have to find assets that are not correlated to a currency and form a conclusion on what makes an asset valuable. 

  1. Scarcity - if everyone has it, no one cares about it, like a TV. 

  2. Desirability - if no one wants it, then it will have no value.

  3. Affordability and Holdability- If people can't afford to hold it for long periods, it will eventually get taken away or sold quickly, making it undesirable or unattainable. 

  4. It interests people of power - We have to come to the reality that there are people that make the rules. And if they are researching things, we should probably be interested because they have a broader view of the world. 

All the keys Bitcoin hit🔑. There is only a limited amount of Bitcoin in circulation, the desirability of decentralized finance gaining the ability to receive and send money at any time. Able to buy at any size and DCA with zero cost of investment, on top of that, all the leading tech leaders are heading towards Web3 such as Mark Zuckerberg and Tik Tok’s former head of gaming. 

The big picture 📸

If put on cold storage, you can give it to your children, who can give it theirs, with complete control over your money. This is what makes Bitcoin unique. If you hold gold or cash in any bank, they have the power to take your money whenever they want, even if they find a reason as small as a parking ticket. 

And because there is only a limited supply, the more it ages, the more valuable it will become. Simple supply and demand it's the same reason why companies like Rolex and Ferrari are trusted as assets. They keep supply low and demand high. 

🦍New buy now, pay later service by Teller

The famous DeFi lending platform Teller has launched their new buy now, pay later service for NFTs, supporting over ten notable projects, including the Bored Ape Yacht club. 

The Ape Now, Pay Later service runs on Ethereum scaling platform Polygon. Ryan Berkun, founder and CEO at Teller Finance, says the platform helps fill a need in the market to enable prospective buyers to access pricier NFT assets by paying over time.

Here's how it works.🛠

If a Bored Ape Yacht Club NFT that a user wants is listed on the OpenSea marketplace, they can use Teller's platform to specify that they wish to purchase that asset. Depending on the project, the user is required to pay a minimum down payment of as much as 50%, and then the platform attempts to match the prospective borrower to a lender.

If the match is successful and a lender accepts the terms, then the down payment is pooled with the rest of the funds from the lender, the NFT is purchased from OpenSea, and it's placed in an escrow wallet during the repayment cycle. If all payments are made on time, the borrower receives the purchased NFT from the escrow wallet.

There's risk involved here, of course. The NFT market is infamously volatile, and lenders take a gamble that a particular NFT project could lose significant value during the loan window. But if the buyer defaults and does not pay back the loan, then the lender can claim the NFT and attempt to sell it to regain losses.

Berkun believes that this buy now, pay later feature will become all the more valuable as NFT use cases grow, with things like music NFTs, virtual land in metaverse games, and real-life real estate gaining more traction.

"This is core infrastructure, I believe, of where Web3 goes," he said, "especially as we start thinking about the intersection of DeFi and the NFT space."

First steps to bridging DeFi and NFTs 🛣

Of course, everything has pros and cons, but we think the bigger picture will be worth it. Inevitably, people will abuse the system by leveraging trading and using inside information to maximize profits. But if no one steps up to do anything, then regulation can never happen to adopt Defi and NFTs into the mainstream markets.

🌴Plating Plays

They aren't out yet, but Reddit plans to release new NFT-like avatars. All are made by independent artists, and the proceeds go back to them. 

This collection is released at a fixed price between $9.99 and $99.99. They say they won't release it on secondary markets unless the demand is really high for it, and more details will be released in the coming weeks. This is something we could watch for! 👀

⏮Weekly Recap!

This is what you missed this week in case you were a little too busy! 

🚀From viral protest to successful NFT launch. Sitting at 0.45Ξ, these are the plays you go in and out of. 

🔪The Collapse of Voyager. Woin woin woin b**** I’m lil baby

🌱NewSeeds 

Jim Cramer is officially a top signal! The only technical analysis you need. 😴

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See you Monday! ✌️ 

Meme of the Day 

None of this is financial advice. This newsletter is strictly educational and is not investment advice or solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research! 

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