Charlie Morris, the investment director of the Fleet Street Letter, is buying bitcoin. He sees it as a cheap stock with an opportunity to grow in value because of the halving. Morris gave his reasons for being bullish on bitcoin in a column in the Fleet Street Letter, a MoneyWeek Research Publication in London, U.K.

Morris compares the bitcoin halving to gold miners or oil producers cutting their production in half. He asks his readers if they would be more bullish on gold and oil if gold and oil supplies were cut in half. “That’s exactly what’s about to happen to bitcoin, the digital currency,” he noted.

Bitcoin: Limited Supply

Morris wrote that 25 bitcoins are now created every 10 minutes. On July 11, this number drops to 12.5. Four years later, it halves again.

There are currently 15.5 million bitcoins at present and the halving process, which is written into the the cryptocurrency’s software’s code, restricts the supply of bitcoins to 21 million. The supply is expected to reach this limit in about a century.

Scarcity is a feature of bitcoin’s design. It is a feature that distinguishes the cryptocurrency from fiat currency, which can be produced in unlimited amounts.

A Social Media Stock?

While many people buy bitcoin for speculation, their bets will only prove advantageous if other people buy it for its utility. Hence, bitcoin can be viewed as a social media stock in that the more people use it, the greater its value.

Morris described bitcoin as a digital asset that can move across the Internet. It differs from a traditional database in some important ways. With a traditional database, the user goes into the database, opens a file, changes the data and closes the file. Both the seller and the buyer have to do this, along with intermediaries. Because of all the parties involved, there is room for error in settlement.

With a blockchain, the transaction gets recorded onto a new layer of data called a block. That block never changes. A new block comes into existence every 10 minutes. The data stores in a chain of blocks known as a “blockchain.”

Bitcoin, contrary to what many people think, does not have a serial number. Instead, it has provenance.

Also read: Investment firm pegs BTC value at $655

How The Blockchain Works

In a bitcoin transaction, the system checks to make sure the bitcoin being spent hasn’t already been spent. The system checks this by examining the blockchain, where the transaction history records. There are more than 5,000 identical copies of the blockchain that can be downloaded and examined by anyone. “It’s truly open source.”

Each day bitcoin survives, it quashes its doubters, Morris noted. There are already more than 200,000 daily transactions.

Bitcoin has experienced one boom and bust cycle already. The price rose from under $1 to $1,000 in late 2013, then fell to below $200 in the summer of 2015.

“But the bear has now turned and the price is challenging $500.” This time, there is less hype, and there is also a lot of capital investment. “The network is growing and the supply is falling.”

If the cryptocurrency goes mainstream, it will give Facebook Netflix, Amazon and Google a run for their money, Morris noted.

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