400 Days of Surrender — Day 37: On why to own Bitcoin
New to this series? You can find Day 1 and why I’m writing this here.
The following post is no financial advise. As with this whole journey, I am simply sharing my insights and truths. Do you own research. Every investment carries risk and Bitcoin can be classified as a high risk asset.
With that out of the way, early this morning European time Bitcoin crossed the long anticipated $12k mark and appreciated by 7% today as of this writing.
Many of you are likely to look at Bitcoin suspiciously as just another casino where the foolish play. I want to use this opportunity of Bitcoin’s new recent high to make the case for Bitcoin and why everyone should have at least a little invested in it.
Yes, Bitcoin has been worth much more and I’d argue that the 2017 ATM >$19k was driven by a complete speculative frenzy and that today is very different. Bitcoin has since proven its continued resilience and — 11 years into the making — it keeps being never successfully compromised and attacked despite it having a current “market capitalisation” of nearly $240 billion.
Bitcoin is secured by cryptology and it’s ability to withstand an attack is a function of the computing (hash) power that stands behind it. Despite it’s price being a lot lower than it’s 2017 peak, its hash rate (how many key computations it can make per second) has increased 14 times in three years from 10 Tera hash (Oct 2017) to 140 TH right now (1 TH/sec = 1,000,000,000,000 hashes/second). It is thereby the most powerful computer on earth which is what keeps it secure because you would need a computer network that is just as powerful to compromise Bitcoin’s integrity.
And even if you had a budget of 10’s of billions of dollar to compromise its security you would not be able to acquire all the hardware that is necessarily to build that attack network. It is therefore literally the most secure way to hold your money. Bitcoin can’t be attacked, can’t be censored, can’t be compromised no matter your resources. And with it’s increasing price and adoption, the hash rate and therefore its security are continuing to increase.
No other asses or place of holding an asset is more secure. Not your bank, not your safe, not your mattress, not anything. And you can send it anywhere anytime without an intermediary.
And the third just as important feature is that its supply is limited meaning there will never ever be more than 21 million Bitcoins. Different than to your dollar, euro, shares, even gold, everything else — except for time — we can create more of which deflates the of value of holding one unit. Not so for Bitcoin. It’s hardcoded into its code that is secured by millions of computers that there will never be more than 21 MM.
So as people and more recently institutions and even companies realise the power of this, let’s call it the trifecta of Bitcoin (security/censorship resistance, ease of transferability and absolute! scarcity), especially in a time where governments have seemingly started to believe you can print money without consequences, more and more people are pilling into Bitcoin. And as demand increases its value is increasing.
Yes, it’s a highly volatile asset and yes, it’s future is not guaranteed (but neither is the one of the US dollar — history has shown us that currencies collapse as unlikely as it seems from today’s perspective — if you want to read up on the fascinating history of money and what it can teach you about Bitcoin, drop me a message and I’ll be happy to send you some books and links), the case for not holding Bitcoin becomes increasingly untenable.
Not holding any Bitcoin will probably go down in history as one of the biggest mistakes, just after not having invested in Google, Apple, Facebook, Amazon in the last years (unfortunately, I missed that train despite having followed these stocks for a decade — but that’s another story). Different to an investment in FAANG or stocks in general, as Bitcoin becomes a more dominant force as a financial asset, specifically a store of value, it will likely be the best and safest way to keep your money as in to maintain its value.
Stocks go up and down, companies fail and no matter how dominant a company seems today, there will be a day when it is being disrupted. The half-life of companies is getting shorter every year as the speed of innovation destroys the weak ones that don’t adjust their business model continuously.
Bitcoin on the other hand is an asset that is really good at doing what it does: Storing and maintaining your value. Especially as money is being printed like crazy. And it will become even better at it as the world gets more crazy/unstable and therefore recognises this.
Over the past year, Bitcoin has really seen the beginning of mainstream adoption with first Paul Tudor Jones piling some of his fund’s assets into Bitcoin ($100 MM, he’s one of the most successful hedge fund managers in the world), the first public company (MicroStrategy) investing 80% or $400M of their cash balance into Bitcoin (here its CEO explains his rationale further 0 highly recommended), other companies will now look at this as well and, most recently, today, PayPal enabling its 420MM users to buy and sell crypto.
It really is the dawn of mainstream adoption and we are likely to see the whole financial world moving onto the Blockchain — crypto won’t be the answer for everything but it will be the answer for everything money (why that is goes beyond this post but I’m happy to shed more light on this — just message me).
So the question is, when will you start believing in Bitcoin? If you wait until it’s obvious, the upside will be a lot smaller. So if the before mentioned made any sense, start understanding Bitcoin for yourself. Read the book The Bitcoin Standard for a deep dive of the history of money and why Bitcoin is the biggest financial innovation possibly ever — in a way bigger than money itself.
And then, when you understand why it is so revolutionary, put some money into it. You might be conservative and only put a few % or your assets that’s fine but don’t miss out on the biggest network innovation since the invention of the internet. This might be the most important investment you ever made.
Last but not least, again, do your own research before investing into a high risk asset. This post is no financial advise to invest into Bitcoin or anything else. 🚀
If you want to now more about Bitcoin, check out my past tweets from this year with lots of relevant insights and resources.