Bitcoin’s Future as Currency

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 day-to-day payments, like buying coffee, are not a great use for bitcoin, the future is one where there is robust economic activity denominated in bitcoin. Bitcoin will shine at storing value, settling large payments, conducting financial services, and more.

At least 57 countries in the world had inflation rates over 10% last year. The United Kingdom’s was more than 9%, and the United States’ was over 8%. For residents of countries with a history of inflation, regime, or currency risk, the day-to-day volatility of the exchange rate of bitcoin to fiat may seem a lower danger than the decade-to-decade fiscal and monetary mismanagement of countries all over the world.

For this future to exist, though, companies and institutions have to be built within the Bitcoin economy. Meanwhile has built one of the first: a fully-fledged, regulated life insurance company denominated in bitcoin. We conduct all our business in bitcoin. We are regulated by the Bermuda Monetary Authority, which lets us operate on a modified accounting basis with bitcoin as the unit of currency.

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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.