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Getting Into Bed With Bitcoin

Bitcoin for us represents more than just “magic internet money”. With this article, I invite you to take a peek down the Bitcoin rabbit hole, as you might be (pleasantly) surprised…

Opinion article written by Daniel – Managing Director at Quokka Beds

Table of Contents

Why Do We Accept Bitcoin?

Although we believe Bitcoin is still extremely cheap, if we wanted more Bitcoin, we would simply buy it. We don’t offer Bitcoin to get more Bitcoin.

Instead, it is a shame that it is still so hugely misunderstood and like many others, we simply want to educate and raise awareness as much as we can. For a start, Bitcoin is vastly different to literally any other cryptocurrency, and the fact that it is generally clumped together as the same thing, is an injustice.

I believe the more people understand Bitcoin, the better chance we have of a better world. From simple things like the cost and speed of transactions, all the way to improving some of the world’s biggest inequality and economic tyranny problems, Bitcoin has a huge potential. And hopefully, by the end of this article, that won’t sound so crazy…

Bitcoin As Money

Firstly, it would allow all business and personal transactions worldwide to cost under 0.1%, compared to 1-3% for transactions with VISA or Mastercard. Wait, isn’t Bitcoin slow and expensive? No, a relatively new innovation (in 2017) called Bitcoin ‘Lightning’ runs as a layer on top of the main super-secure Bitcoin protocol, allowing instant and almost-free transactions between anyone worldwide. Already today, there are companies like Strike allowing users to exchange from USD, over to Bitcoin Lightning, then over to anyone worldwide in any other currency, instantly and at basically no cost. This is an insane improvement on the current expensive and slow international transfers system.

For example, now that Bitcoin is legal tender in El Salvador, especially for the 70% of people who didn’t have a bank account, they now have a way of receiving money from family members overseas without travelling hours to line up at a Western Union branch, and being charged a 10%+ fee. The money is now safely sent straight to their mobile phone, for a fee that is 100x less. This point alone is world-changing stuff.

Once there are more apps and software integrating with Bitcoin Lightning, it has the very good potential to wipe out almost all financial middle-men, to be replaced by a super-secure, efficient and digitally-native system that doesn’t require the trust of any government or agent. You don’t need to ask a bank to transfer your money, you just need a mobile phone. The extra value this would unlock for society, especially in war-torn or authoritarian countries, is huge.

 Bitcoin represents the fastest, cheapest and most global form of money ever invented

Bitcoin As Much More…

But what’s more important, is that it offers a credible alternative to the ever-failing system of government-controlled money. In 2008, Satoshi Nakamoto (whose identity is still unknown) created Bitcoin in direct response to the crazy ‘money-printing’ during the global financial crisis. Bitcoin is a true innovation, where Satoshi solved a long-standing problem to create “digital scarcity” through “decentralisation”.

If there’s one thing to understand, it is that Bitcoin is genuinely hard-capped at 21 millionThere are currently around 19 million in circulation, with the remaining 2 million to be mined up until the year 2140. The hard cap will never change because the Bitcoin code is distributed (decentralised) among 1000’s of computers worldwide, who will all continue to run the same code because it is the only way they gain value from the network (incentive alignment). And this is further protected by the energy needed to ‘mine’ bitcoin, meaning a huge/impossible cost for anyone who wanted to try to change it.

Firstly, in contrast to all other cryptocurrencies, of which none are meaningfully decentralised and all can still be changed by a small group of people who created the coin (and who get rich in doing so), Bitcoin stands alone as a trustworthy, secure and never-changing foundation for the new digital age.

And in contrast to the current financial system, where there is a similar small group of powerful people who decide how much money to print and who to give it to, your share of the total Bitcoin pie would never change. For the general population, central banks and governments around the world have poor short-term incentives like making sure they get re-elected in 4 years time, and deciding where to hand out newly-printed money (which mainly just makes rich people richer). Satoshi even mentioned this in the anonymous release of the Bitcoin Whitepaper: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

It is now becoming obvious the huge wealth inequality the current system brings, and the mathematically unsustainable levels of debt this leaves our kids. Did you know over 50% of the entire Australian dollar supply, in all of history, was printed in the 2 years since Covid? And this same figure in the US is over 80%? No matter how politicians or journalists spin it, this inevitably leads to high inflation over time, which slowly but surely eats away at your hard-earned dollars. You can’t buy as many things, housing prices get out of reach, wages don’t grow as fast, all the while the interest rate in your savings account is not even close to keeping up with inflation. Not fair, hey? Oh, but at least the assets of the super rich real estate and stock-owners outpace inflation…

However, this is nothing new. Every single government-controlled currency has eventually failed. Inevitably, the short-term incentives to print money take over, the currency continues to lose value, people start to lose faith, and something else takes its place. Governments have proven they can’t be trusted to control the money supply.

Further, as renowned analyst Lyn Alden outlined, “Over the past two centuries, 51 out of 52 countries that reached sovereign debt levels of 130% of GDP ended up “defaulting” [within 0 to 15 years], either through devaluation, inflation, restructuring, or outright nominal default”. Japan is the only country to avoid default (so far), but they hit 260% last year, and will probably follow the same pattern.

So, where are we now? Well, the US hit sovereign debt levels of 130% last year, and they currently hold the world’s reserve currency. But this status has never lasted forever…

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For now, Bitcoin will likely increasingly be used as an “escape valve” to the current system. Because Bitcoin is hard capped at 21 million, its value cannot be inflated away, and its host of other attributes will continue to provide value to millions.

But in the future, it could even replace many weaker currencies, and eventually, the US dollar too. Not with force – but probably as a slowly-then-suddenly shift by society.

In this system, your share of the total Bitcoin pie could never be diluted by a small group of powerful people, and your hard-earned income and work would always be preserved over time. People in authoritarian countries couldn’t have their money seized, but could even memorise their Bitcoin passphrase and leave with all of it (although even Canada recently froze bank accounts for simply donating to a protest!). In the long-run, the best form of money will win – and compared to other alternatives like Gold or privacy-intrusive “digital dollars” (i.e. Central Bank Digital Currencies or CBDCs), Bitcoin is a better form of money on almost all fronts.

As Bitcoin spreads, the world would become more equitable, less manipulated by people in power, a lower potential for governments to print money to fund wars, and in turn, likely more peaceful and happy. A stretch I know, but very possible.

 Bitcoin represents freedom and equality as an answer to the current manipulated system

Bitcoin Misconceptions Answered In One Sentence…

It has no intrinsic value? Neither do dollars – their value simply comes from the trust people have in it over time.

It’s too slow and expensive? The secure ‘base’ layer is, but the Bitcoin Lightning network is instant and almost-free.

It’s too volatile? Volatility will decrease as it grows but once it becomes currency, 1 bitcoin will simply be worth 1 bitcoin, just like today 1 dollar is simply worth 1 dollar – you won’t feel any volatility.

Why not other cryptos? Bitcoin is the only fully-decentralised one (i.e. uncontrollable), is already the perfect answer to ‘digital money’, and way too far in front for people to somehow start preferring something else (i.e. the network effect).

Governments won’t allow it? No one controls it, so governments can’t stop it anyway – but with 30%+ of US adults owning it, what politician would want to try to ban it now?

Governments could launch their own? Ignoring that a ‘digital dollar’ would increase the government’s ability to surveil and restrict your finances, it still solves none of the current systemic problems, and people would still switch to and prefer Bitcoin.

It uses too much energy? Not only is it the best natural incentive for renewable energy investment (because the cheapest form of energy wins), its current energy mix is one of the greenest of all industries (often only using energy that would otherwise be excess/wasted).

It’s a waste of energy? It is much more efficient than what is holding up the current system (think banks, or even printing money to fund wars, etc.) and if it does become global money, its benefits would far outweigh its relatively small energy cost.

Why Should I Buy A Bed With Bitcoin?

You shouldn’t.

Well, more specifically, at this stage you probably shouldn’t sell any of your long-term Bitcoin holdings to buy anything (disclaimer: this is not financial advice – everyone’s situation is different!).

But if you don’t currently hold any Bitcoin, I’d encourage you to take this as a learning experience, buy some of it, and use some of that to buy a bed. Then maybe hold the remaining Bitcoin for the long-term (5+ years)…

Basically, the adoption of Bitcoin is still very young, and still growing very fast. Even if you don’t fully agree with what I’ve said, if you think there will be more demand for Bitcoin in the future, and you understand there will only ever be 21 million Bitcoins, basic economics tells us that higher demand and a limited supply will eventually lead to a higher price over time. I’d even say a Bitcoin price of $1 million is inevitable, it’s just a matter of when.

But to take it a step further, in the year 2022, I believe not holding any Bitcoin at all is far more risky than holding a small amount. What if the current “everything bubble” we hear about crashes, and takes the entire financial system with it? And what if Bitcoin rises as the obvious #1 alternative to hold everyone’s wealth? Even just 1% of your long-term savings could be enough to hedge the risk of this happening, and you’d have a better chance of jumping ahead in the new digitally-native financial world.

Where do I buy Bitcoin?

  1. Sign up with a crypto exchange app (like Kraken*)
  2. Deposit AUD from your bank account to the app
  3. Trade your AUD for Bitcoin

*Kraken is one of the only Australian exchanges to currently offer free Bitcoin Lightning withdrawals

How do I buy a bed with Bitcoin?

  • Using your crypto exchange app, withdraw it directly to the Bitcoin address given to you at checkout (copy/paste it or scan the QR code)

But my exchange charges a withdrawal fee?

  • Option 1: Trade the required amount into Litecoin, and pay with Litecoin instead (Litecoin usually has a much lower withdrawal fee than standard Bitcoin, saving you fees)
  • Option 2: Withdraw* your Bitcoin to a Bitcoin Lightning wallet app (like Muun), and now you can use the Lightning network to pay instantly at no cost
*either way, it is strongly recommended to withdraw your Bitcoin to your own mobile or hardware wallet so that you physically own your own Bitcoin (make sure to write down the backup phrase), because if your chosen crypto exchange app goes bankrupt or acts maliciously, you could lose everything (i.e. “not your keys, not your coins“).
 
Where Can I Learn More?

There are plenty of people who have done a much better job of explaining Bitcoin than this article. Here’s a few of my favourite starting points:

Any Questions?

Any Questions?

Daniel is one of the owners at Quokka Beds and a keen Bitcoiner. If you have any questions or feedback, he would love to hear from you!

SEND A MESSAGE

You can also view Daniel mentioned in the The West Australian’s Business Insider Magazine on page 3 and 4 here.

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