Relai Bitcoin Session #1 with Pascal Hügli

We were pleased to have Pascal Hügli, Swiss Economist and Journalist covering Bitcoin & Crypto related topics, as an interview guest for our Relai Bitcoin Session. It was a very fun & insightful conversation you definitely should not miss!

You can watch it on youtube

…or listen to it on podbean.

Summary

Pascal Hügli works as a journalist and loves his job because of the diversity of topics he gets to deal with. He got into Bitcoin in 2014 when he was still studying at the University. Pascal sees a new financial world emerging out of and around Bitcoin and loves writing and thinking about it because of its stimulating, questioning, and open ethos.

The real value of Bitcoin lies, in Pascal’s opinion, in its digital scarcity and its potential to deinstitutionalize money. Finally, money and state can be separated. Long-term, Bitcoin could be a good and needed solution for the problems of our current financial system. The most important differences between the traditional financial system and Bitcoin in his opinion are:

  • Bitcoin is a decentralized alternative to the centralized fiat currency system
  • Bitcoin is software & maths based and doesn’t rely on human judgement
  • Bitcoin is limited in its supply, unlike fiat money as we know it
  • Bitcoin is a deflationary system (Austrian Economics) as opposed to the inflationary one (Keynesian Economics) we live in today
  • Bitcoin can be used privately and KYC-less, which means more financial freedom and less surveillance

The Halving or Halvening is the process of issuing new Bitcoin. Not a group of people or central banks, but the Bitcoin protocol executed by the Bitcoin miners issue new coins in the Bitcoin network. Every ten minutes, there is a new block added to the blockchain, and at the same time some new Bitcoin are released. The amount of those freshly released Bitcoin is halved every four years, that’s how Satoshi Nakamoto conceptualized it. Because of this decrease in supply, the Bitcoin system is deflationary, and with a potential increase of demand in the future, this could have a positive impact on price.

Bitcoin is sustainable in Pascal’s opinion, both from a systematic point of view (block rewards will be replaced by transaction fees as a revenue source for miners to secure the network) as well as from an ecological point of view (mining is mostly being done where energy is abundant and green). Bitcoin, in the long run, can be seen as a trustless global source of truth and settlement, not only for financial but for all sorts of transactions, and that’s what legitimizes the high amounts of energy flowing into it.

In Pascal Hügli’s book with the title Ignore at your own Risk – The New Decentralized World of Bitcoin and Blockchain, he tries to bring the concept of Bitcoin closer to the broad masses. The main reason why Bitcoin is still being widely ignored, according to Pascal, is lack of knowledge. He had interaction with many people out of the traditional financial system already and he’s still surprised by how little most of them know about Bitcoin. He thinks Bitcoin mass adoption will come through it being seen as a solution to real problems like cross border payments and long-term saving.

Bitcoin makes, according to Pascal, most sense for investing and saving purposes. Other cryptocurrencies are making different trade-offs and exploring different use cases, which may be interesting from a technological perspective, but very risky from an investment perspective. Nothing is as censorship- and inflation-resistant as Bitcoin, and therefore it still is and will stay the hottest contender for the “digital money” use case.

The main reason why Bitcoin could be a good buy is differentiation. Don’t put all your eggs in one basket. It might be a good idea to diversify one’s portfolio with some Bitcoin as an alternative asset class. Inflation, banking fees, and negative interest rates are eating savings in fiat currencies away, owning some Bitcoin can work against that. Pascal would never go all in into Bitcoin though, as it’s still only an experiment.

Between 30-40% of Pascal Hügli’s assets are allocated into Bitcoin. He’s not planning to sell any in the near future. He’s not rebalancing because he still believes in the long-term value and potential of Bitcoin.

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