In a bizarre twist, investors hoarding rare casks of whisky highlights exactly why Bitcoin is among the most valuable assets to ever exist. But why are so many turning to gold, whisky, and Bitcoin even amidst such economic uncertainty?
Supply And Demand Dynamics Make Rare Whisky A Hedge Against Inflation
Some people enjoy the finer things in life: cars, cigars, watches, jewelry, and a good Scotch every now and again. Each cask of whisky is unique, aged to perfection, picking up flavors of the cask itself, and retaining certain characteristics of the initial crop of grains.
Because of how rare the most special batches of whisky are, they are often highly collectible, and not only retain value, but appreciate significantly over the years.
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Take Pappy Van Winkle’s 23-Year Family Reserve, for example. This American whiskey (whiskey with an ‘e’) sells for a $299 MSRP. Yet, bourbon aficionados would pay a small fortune for such a fine bottle of booze.
Retailers mark up the price of the rare find, on “sale” for as much as $3,399. That’s an over 1,000 ROI. And that’s for a brand new bottle.
Older batches of this brand’s “Family Reserve” fetch much higher prices, depending on the year, batch, and how long beyond bottle has been kept.
MSRP: $299 - On Sale: $3,399.99
It’s for these reasons why investors have looked to stock up on rare whisky nearly as much as they are gold and Bitcoin. The comparison actually does a solid job of highlighting exactly why assets like Bitcoin and gold are valuable.
The reason these rare bottles of whiskey earn their massive price tags is not due to their flavor, nose, or mouthfeel. They command such price tags, because supply is so scarce, yet demand so enormously high.
Like whisky, more batches of Bitcoin can’t be made. Sure there are new altcoins popping up promising to beat out Bitcoin in a number of ways, but you can’t beat the original.
Gold is rare, but there’s no telling how much of the precious metal is below the Earth’s surface, or even beyond its atmosphere. Bitcoin is far more comparable to this liquid gold rush trend where investors are buying up whisky.
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There are a set number of bottles made from each cask, and only a certain number of barrels per year. Certain years turn out better than others, increasing the demand, yet the batch remains finite.
After the initial rush of buyers snagging these bottles for sipping or mixing, that’s it, there’s no more of that whisky. Few collectors hold onto these bottles as investments, while others simply are forgotten about until someone lucky stumbles upon it.
This analogy also mimics early BTC lost due to misplaced private keys. The more bottles of whisky downed, or private keys lost, the supply gets even smaller. No more are ever produced.
If and when there’s a sudden surge in interest in assets of any kind – be it Bitcoin, gold, or whisky – when there isn’t enough supply to go around, prices skyrocket.
This is exactly what is happening with rare whisky, and what will soon happen in Bitcoin as more and more investors buy items that appreciate in value in the face of inflation.
by Tony Spilotro on August 28, 2020 at 06:30AM
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