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21 Oktober 2019

The case for a small allocation to Bitcoin: Why most portfolios should allocate up to 1% to Bitcoin

Yara Ainsworth

Yara Ainsworth

Head of Marketing und Communications bei Crypto Finance AG

Über den Autor

This article is from our magazine Building Blocks. The article was written by Wences Casares, CEO at Xapo and originally published in March 2019.


The case for a small allocation to Bitcoin: Why most portfolios should allocate up to 1% to Bitcoin

Introduction

Bitcoin is a fascinating experiment, but it is still just that: an experiment. As such, it still has a chance of failing and becoming worthless. In my (subjective) opinion, the chances of Bitcoin failing are at least 20%. But after 10 years of working well without interruption, with more than 60 million holders, adding more than 1 million new holders per month, and moving more than $1 billion per day worldwide, it has a good chance of succeeding. In my (subjective) opinion, the chances of success are at least 50%. If Bitcoin does succeed, 1 Bitcoin may be worth more than $1 million in 7 to 10 years. That is 250 times what it is worth today (at the time of writing, the price of Bitcoin is ~$4,000).

I suggest that a $10 million portfolio should invest at most $100,000 in Bitcoin (up to 1%, but not more, as the risk of losing this investment is high). If Bitcoin fails, this portfolio will lose at most $100,000 or 1% of its value over 3 to 5 years, which most portfolios can bear. But if Bitcoin succeeds, in 7 to 10 years, those $100,000 may be worth more than $25 million, which is more than twice the value of the entire initial portfolio.

In today’s world, every asset seems priced for perfection; it is hard, if not impossible, to find an asset that is so mispriced and possible outcomes are so asymmetrical. Bitcoin offers a unique opportunity for a non-material exposure that produces a material outcome. It would be irresponsible to have an exposure to Bitcoin that one cannot afford to lose because the risk of losing the principal is very real. But it would be almost as irresponsible to not have any exposure at all.

What is interesting about the Bitcoin Blockchain?

Throughout this essay I refer to the „Bitcoin Blockchain“ when I am referring to the Bitcoin platform as a whole, including the Bitcoin Blockchain and the Bitcoin currency. Many different systems for different use cases may one day run on top of the Bitcoin Blockchain. When I refer to „Bitcoin“ I am referring to Bitcoin the currency, which can be bought, sold, sent, received, held, etc. You can think of the Bitcoin currency as the first system to run on top of the Bitcoin Blockchain.

The current state of the Bitcoin Blockchain is similar to the state of the Internet in 1992. Back then the Internet was very nascent and experimental. Just like with the early days of the Internet, many bold claims have been made about how the Bitcoin Blockchain will revolutionise the world and solve many problems. Many of these claims are exaggerated or wrong. Even though, right now, most of us feel like we do not fully understand the Bitcoin Blockchain, over time we will all understand it as well and as intuitively as we understand the Internet today. You do not need to know the technical underbelly of the Internet to understand the Internet, and, similarly, you do not need to know the technical intricacies of the Bitcoin Blockchain to understand it. If the Bitcoin Blockchain succeeds, the investors who develop this understanding and this intuition earlier will have an advantage over the investors that take longer to do so.

Understanding the core principles of the Bitcoin Blockchain will allow you to form your own judgment about its potential applications without having to trust an expert. To understand the core principles of the Bitcoin Blockchain you need to first understand what changed when the Bitcoin Blockchain first started running in January 2009. All of the Bitcoin Blockchain’s separate components (public key cryptography , distributed databases, open databases, tokens, and proof of work) existed many years before Bitcoin went live. What changed when Bitcoin went live? What was new and potentially revolutionary? The only thing that changed, which may have potentially been revolutionary was that all of those components were combined in a new, creative, and intelligent way to create the first potentially sovereign computer platform. Up until that moment, all computer platforms belonged to a person, to a company, or to a government, and those platforms had to obey the will of their owners and the rules of the jurisdiction where they resided. A sovereign only obeys its own rules; no one can impose rules on a sovereign. Kings and queens used to be sovereigns, then nation states became sovereign, and now, for the first time, a humble computer platform has the aspiration of being sovereign. That is potentially revolutionary.

The Bitcoin Blockchain is sovereign in that no one can change the transactions that already exist in its database, and not a single person can keep the system from accepting new transactions. The main resources securing the sovereignty of the Bitcoin Blockchain are the Bitcoin miners and the Bitcoin nodes. If my laptop was the only computer in the world mining Bitcoin and it was also the only Bitcoin node in the world, the Bitcoin Blockchain would not be a sovereign platform; anyone who used it, would simply be using my platform and trusting me. The Bitcoin miners and the Bitcoin nodes make sure that each transaction is valid, that new Bitcoins are not being created out of thin air, etc. The more miners and the more nodes that join the Bitcoin network, the more sovereign the Bitcoin Blockchain is.

In the world of crypto , you see the word „decentralised“ a lot; often hailed as an end in itself, in reality, decentralisation is the means by which the Bitcoin Blockchain achieves the end goal of sovereignty. Today, the Bitcoin mining network consumes more than 5 GW of electricity a day, which is equal to the total electricity production of the largest hydroelectric dam in the United States. Often this exorbitant electricity consumption is cited as criticism of Bitcoin because of its environmental impact. I believe this kind of criticism is misplaced: the Bitcoin Blockchain’s value to society is proportional to its electricity consumption. If the Bitcoin Blockchain did not consume any electricity it would not be sovereign and it would be worthless. Only if you believe that society does not get any value from having a sovereign platform can you be correct to assume that the Bitcoin Blockchain electricity consumption is an enormous waste.

Bitcoin miners secure the Bitcoin Blockchain because they get paid in Bitcoins to do so. The Bitcoin Blockchain is secured, to an important degree, by the Bitcoins that the miners earn. If you were to remove the Bitcoins, most miners would stop mining, and, therefore, the Bitcoin Blockchain would not be very robust and not very sovereign. In corporate circles, especially in financial institutions, it has become fashionable to say „I am interested in the Blockchain but not in Bitcoin“, which is the same as saying „I am interested in the Web but not interested in the Internet“ (remember Intranets?), not understanding that the Web could not exist without the Internet. The only innovation of the Blockchain is its sovereignty; the only sovereign Blockchain so far is the Bitcoin Blockchain; and the fuel that keeps it sovereign is the Bitcoin currency. It is like a boa eating its own tail.

If a group of people wanted to take away the sovereignty of the Bitcoin Blockchain today they would not only need an extraordinary amount of capital and the capacity to develop specialised mining hardware in very large quantities, but they would also need access to the equivalent of the United States‘ largest hydroelectric dam for an extended period of time. That would be hard to do, but not impossible. Every day that goes by it gets even harder to „break“ the Bitcoin Blockchain sovereignty. The sovereignty of the Bitcoin Blockchain has been attacked in the past (in fact, one of those attacks found me on the wrong side of history and that is how I painfully learned many of these lessons, but that’s another story…), and so far it has always survived intact. We can expect the Bitcoin Blockchain sovereignty to eventually come under attack from more and more resourceful bad actors, coalitions of bad actors, or even from nation states. Only time will tell if Bitcoin is truly sovereign or not.

Where can a sovereign platform add value?

It is a lot easier to see where the Bitcoin Blockchain will NOT add any value. For any Blockchain to add value it has to be the ultimate arbiter of truth: nothing should be able to contest it or change it. For any use case in which the Blockchain information can be contested or changed by a government, by a registrar of deeds, by a court, by the police, by the SEC, or by any other authority, it does not make sense to use a Blockchain. Claims that the Blockchain can solve property titles, securities settlement, supply chain management, the authenticity of works of art, and many other similar cases are misplaced. It is true that the systems that we are using today in all of those cases are old, antiquated, and inefficient. And it is also true that all of those cases involve many stakeholders who use different data formats and transaction protocols that are often proprietary, but all of those problems would be better solved if those stakeholders agreed to use open standards and if they used better technology. More often than not the word „Blockchain“ is waved around frantically by consultants who want to scare their corporate customers into buying into new technology projects, or by executives at those corporations who do not yet understand the Blockchain, but understand that they may get the budget they want if they say their project is using „Blockchain“, or by entrepreneurs who think they are more likely to get the funding or press coverage they want if they add the word „Blockchain“ to whatever they are doing.

So, where does a sovereign platform add value? As an example, an identity system may benefit from a sovereign platform. We would rather not keep all of our identity information (full name, social security number, date of birth, name of our parents, name of our spouses and kids, our address, passport information, and payment information) on our phone, which can easily be hacked, but we also do not want to give all that information to Google or Facebook or to our government. A sovereign system that no one can corrupt or control that will keep our information safe and will ask us every time someone wants a piece of our information may make sense. With this example we are simply trying to be creative and guess one possible use case, I am sure we will be surprised by creative and revolutionary entrepreneurs now.

But there is a use case that makes a lot of sense, and, it is already working quite well. It uses this sovereign platform to run a global system of value and settlement, which is what Bitcoin, the currency, may become. It is similar to what gold was for 2,000 years, and similar to what the US dollar has been for the last 70 years. Bitcoin is potentially superior to gold and to the US dollar as a global non-political standard of value and settlement because there will never be more than 21 million Bitcoins and because Bitcoin is open and uncensorable. There will never be more than 21 million Bitcoins because it runs on a sovereign platform so no one can change or inflate that number. Additionally, Bitcoin is uncensorable because it runs on a sovereign platform so no one can change the transactions that already exist in the system and no one can keep the system from accepting new transactions. This allows for unprecedented economic freedom in the same way the Internet allowed for unprecedented freedom of information. Gold has the advantage that it is tangible, and many people (especially older ones, who tend to have more capital) strongly prefer something that they can touch. Gold also has in its favour that it has been around for over 2,000 years, and it may be impossible for Bitcoin to match that history and reputation. The dollar has the advantage that it is already easily understood and accepted globally, and it is a platform with remarkable network effects. These qualities may be too much for Bitcoin to overcome. Or, it may be that we collectively come to appreciate the advantages of a digital unit that cannot be inflated or censored. Only time will tell.

Bitcoin is not an asset. It does not produce earnings or dividends and it does not generate interest. And Bitcoin has no intrinsic value. Bitcoin is simply money, and most forms of good money have no intrinsic value. Gold, the US dollar, and national currencies do not have any intrinsic value either, but because they have had monetary value for a long time most people perceive them as being intrinsically valuable, which is a big advantage. The main hurdle Bitcoin has to overcome in order to become successful is to develop a similar widespread social perception of value, and achieving that is quite an ambitious goal.

What would a world in which Bitcoin succeeded look like?

If Bitcoin succeeds, it will most likely not replace any national currency. It may be a supranational currency that exists on top of all national currencies. If Bitcoin succeeds, it may be a global non-political standard of value and settlement.

The world already has a global non-political standard of measure in the metre, and a global non-political standard of weight in the kilo. Could you imagine a world in which we changed the length of the metre or the weight of the kilo regularly according to political considerations? Yet that is what we are doing with our standard of value. Today, we use the US dollar as a global standard of value, which is much better than nothing, but quite imperfect; it has lost significant value since inception, it is hard to know how many dollars will be outstanding in the future, and, increasingly, the ability or inability to use it as a platform depends on political considerations. The world would be much better of with a global non-political standard of value.

The same is true for a global non-political standard of settlement. Only banks can participate in most settlement networks (e.g. SWIFT, Fedwire, ACH in the US, CHAPS in the UK, SEPA in Europe, Visa and Mastercard, etc). Individuals, corporations, and governments can only access these settlement networks through banks. Using these settlement networks takes time (sometimes days), the process is opaque and costly and, increasingly, the ability to use them is determined by political considerations. Imagine an open platform where any individual, corporation, or  government could settle with any other individual, corporation, or government anywhere in the world, in real time and for free, 24/7 and 365 days of the year. This would do for money what the Internet did for information.

In a world in which Bitcoin succeeds all currencies may be quoted in Satoshis (the smallest fraction of a Bitcoin). When your granddaughter asks what the price of the New Zealand dollar is she may receive an answer in Satoshis: the New Zealand dollar is 72 Satoshis today. And the price of the Turkish lira? 21 Satoshis today. The US dollar? 107 Satoshis today. A barrel of oil? 5,600 Satoshis today. Global GDP? 97,356,765 Bitcoins. The GDP of Indonesia? 1,417,007 Bitcoins. The reserves of the South African Reserve Bank? 53,230 Bitcoins. You get the idea. It would mean that all of these values would be easily comparable across time and across geographies.

When your granddaughter asks „Grandpa, how did you guys keep track of all these things when you did not have Bitcoin?“ your answer will be „We used the US dollar“. Then she may ask „Really? But isn’t that the currency of the United States?“ And after you say „Yes“ she may ask „And how did you keep track of the US dollar?“ to which you will say „Well… mostly in euros, sometimes in Japanese yen, Swiss francs, or other currencies, depending on what we were talking about.“ She may think we were weird.

Why not another cryptocurrency instead of Bitcoin?

There are roughly 1,000 cryptocurrencies out there that have at least one transaction a day. So why Bitcoin and not any one of those other ones? Over 60 million people own Bitcoin and over 1 million people become new owners every month. The other 1,000 cryptocurrencies have less than 5 million owners combined, so Bitcoin will add more users in the next five months than those 1,000 cryptocurrencies added in their combined history.

Bitcoin is moving over $1 billion a day, which is also more than all the other cryptocurrencies combined.

The most important metric of all, though, is how much in trust we can place in these platforms and how sovereign they are. The measure of how sovereign these platforms are is the square of the computing power they have. If we use electricity consumption as a proxy of the computing power each of these platforms have, all of those 1,000 cryptocurrencies combined have less than 1% of the Bitcoin Blockchain processing (mining) power so none of them are (yet) truly sovereign, and in many cases, their code is controlled by a person or a small group of people. New technologies may achieve sovereignty without relying on processing power and that may seriously challenge the Bitcoin Blockchain. But if those technologies do not get developed, or it takes too long, it may be difficult to unseat the Bitcoin Blockchain.

The Bitcoin Blockchain is an open protocol, not a company. The history of protocols is very different from the history of companies. In the history of companies, there is a lot of change, disruption, and churn (Microsoft-Apple, eBay-Amazon, Altavista-Google, MySpace-Facebook, etc.). However, the history of protocols is very different. Once a protocol gets established it almost never changes. Eg, we use IP (Internet Protocol, or just „the Internet“, colloquially) for almost all transport of data (until the late 90s Cisco routers used to route dozens of protocols; today they only route IP). We only use one web protocol and only one email protocol. The email protocol, for example, is quite lousy. At the protocol level, there is no way for me to know if you received my email, much less if you read it; there is no way for you to verify my identity when you receive my email, and there is no way to handle spam. There are also many, many other things that could be fixed at the protocol level. I am sure some people have already developed much better email protocols, but we have never heard about them and most likely we never will: once a protocol gets established, it becomes the only protocol for that use case, and it is not possible to displace it with a better protocol. Right now, it looks like the standard protocol for a sovereign platform will be the Bitcoin Blockchain.

Many interesting technologies and applications are being tested with other cryptocurrencies and other Blockchains, and, if they are successful, they may be implemented on top of the Bitcoin Blockchain. It is not efficient to invest massive amounts of new hardware and electricity to replicate sovereignty when we already have a most solid and robust sovereign Bitcoin Blockchain. It is more efficient to simply build on top of it. For example, the Bitcoin Blockchain is limited in that it can only process approximately 3,000 transactions every 10 minutes: you have to wait 10 minutes for the transaction to be recorded in the Blockchain, and up to 1 hour if you want to make sure it is irreversible. And you have to pay anywhere from 5 cents to 50 cents in transaction fees for the miners to process your transaction. The Lightning Network takes advantage of the robustness of the Bitcoin Blockchain and it works as a „Layer 2“ solution on top of the Bitcoin Blockchain, enabling thousands of transactions per second of as little as 1 Satoshi ($0.00004), for free and in real time. Similarly, other early examples of Layer 2 solutions that work on top of the Bitcoin Blockchain include RSK, which enables the full functionality of Ethereum but on top of the much more robust Bitcoin Blockchain. Liquid is an open source wholesale settlement network developed by Blockstream that operates on top of the Bitcoin Blockchain. There are many more examples of technologies being developed to take advantage of the sovereignty and robustness of the Bitcoin Blockchain and to enhance its capabilities by building on top of it.

How can Bitcoin fail?

Bitcoin can fail in many different ways. It could be taken over by a bad actor. It could be displaced by a better platform. It could be hacked. And Bitcoin can probably also fail in many ways that we cannot imagine yet. This is because Bitcoin does not have any intrinsic value, and because its value depends on social consensus, which in my opinion is a kind of collective delusion. The most likely way in which Bitcoin could fail is due to a price panic. If we all decide at the same time that we think Bitcoin is worthless, then it will be worthless. It is a self-fulfilling prophecy. If the price of Bitcoin were to plummet to zero or near zero, even if the platform remained intact, its reputation would suffer immensely and it could take a generation to rebuild that credibility. This could happen if people buy amounts of Bitcoin they cannot afford to lose, eg if people invest their retirement funds or their kids‘ college funds into Bitcoin, and as the price goes down, they are forced to sell, pushing the price further down, and forcing others to sell. So, in my opinion, the biggest risk for Bitcoin is people investing amounts they cannot afford to lose.

Most of the capital invested in Bitcoin today seems to be capital that people can afford to lose. This is not because people are wise, or because the regulators have been very effective, or that the industry has been prudent. The only reason why most people today do not have an amount of Bitcoin they cannot afford to lose is because of Bitcoin’s price volatility. Ironically, Bitcoin’s price volatility is the best insurance against Bitcoin’s biggest risk. If Bitcoin ever begins to be perceived as a safe asset before it has matured and people begin to allocate capital they cannot afford to lose, we should be concerned. This happens to some degree during every Bitcoin price rally but, fortunately, so far each rally has corrected without destroying Bitcoin. One day, however, this may not be the case.

After 10 years of Bitcoin working well without interruption, more concerning than a complete failure is a scenario where Bitcoin does not fail, but instead becomes irrelevant. Something similar to what happened to the BitTorrent protocol, which still exists but is less and less relevant as the real revolution in digital file sharing and entertainment happened through Dropbox, Spotify, Netflix, and many others. Similarly, there is a chance that Bitcoin will not fail, but that it never goes mainstream, that it is only used by a group of believers and fanatics, but not much more beyond that. This could happen if financial institutions, governments, and regulators manage to keep Bitcoin separated and ostracised from the rest of the financial world, like a non-convertible currency, but it could also happen even if financial institutions, governments, and regulators continue down their current path of enabling Bitcoin to be fully connected to the financial world. If Bitcoin never becomes mainstream, Bitcoins will still have a price, but most likely lower than today. In my (subjective) opinion, the chance of this happening is 30%.

Bitcoin’s price action

Bitcoin launched in January 2009, but it did not have a price until July 2010 when it began to to change hands informally at $0.05 per Bitcoin. In November 2010, Bitcoin had its first price rally that took the price to a peak of $0.39 to then „crash“ down to $0.19. The price was only very briefly at its peak of $0.39 cents and the volume on prices near $0.39 was negligible. For most casual observers, the rally simply took the price of Bitcoin from $0.05 to $0.19, an increase of 280%, but most of the commentary at the time focused on the Bitcoin „crash“ of over 50% from $0.39 to $0.19. This exact same story has repeated itself six times in Bitcoin’s history so far. There have been six of these rallies in Bitcoin’s 10-year history, and in-between the rallies, the price of Bitcoin has traded sideways or downward for months or even years at a time. During most of Bitcoin’s 10-year history, the press has been commenting and worrying about Bitcoin’s latest „crash“.

How can something that constantly crashes go from $0.05 to $4,000 you ask? If you want something to go from $0.05 to $4,000 and fool everybody into believing that it is failing, do it with as much volatility as possible.

The second Bitcoin price rally happened in February 2011, and it took the price of Bitcoin over $1.00 for the first time to then „crash“ to $0 .68. The third rally happened in August 2011, and it took the price of Bitcoin to $29 to then „crash“ to $2. The fourth rally happened in April 2013, and it took the price to $230 to then „crash“ to $66. The fifth rally happened in December 2013, and it took the price to $1,147 to then „crash“ to $177 . The 6th (and currently last) rally happened in December 2017, and it took the price of Bitcoin to $19,783 to then „crash“ below $3,200 (and until this bear market is over, we won’t know how low it may go).

The Bitcoin price rallies are the most important feature of how Bitcoin propagates, how people spread the word, and how more people want to own it. It is a risky mechanism, and so far it has worked well, but it could lead to a disaster one day. The Bitcoin price rallies are Bitcoin’s best moments, but they are also its most dangerous and vulnerable moments.

Every Bitcoin bear market is about working out the excesses of the rally. During the rally, too many people buy too many Bitcoins, thinking that they will be able to sell them for a big gain very soon, and that usually does not happen. Imagine a fruit tree that has some good fruit and some rotten fruit. The Bitcoin bear markets resemble a period in which the tree is shaken until all the rotten fruit has fallen to the ground. Every time the tree is shaken some rotten fruit falls to the ground. The Bitcoin tree is shaken by the price going down and by letting time pass. The more the price goes down and the more time passes without another rally, the more people give up their original expectations: they sell, and they adjust their exposure and their expectations. Eventually, no matter how much you shake the tree, there is no more fruit to fall to the ground and the market may be getting ready for another rally.

If Bitcoin succeeds, it is likely that the price will do another six of these rallies over the next seven to 10 years. Anyone who tells you that they know what the price of Bitcoin will be next week, much less next year is either ignorant or outright lying to you. It is not possible to know when the price will hit bottom or when the next rally will come, and the penalty for trying to time the bottom or the top and getting it wrong can be much higher than the money you were trying to save. If you decide to buy Bitcoin, simply decide what the amount of money you can afford to lose is (ideally less than 1% of your net worth), deploy it at market, and then forget about it for seven to 10 years. I have been giving this advice for six years, and by watching what people do with this advice, I can tell you that „Forget about it for seven to 10 years“ is the most difficult part of the simple recipe I am proposing. This lack of discipline destroys a lot more value than you would think. The price volatility rattles people and makes them trade. If the price goes down a lot, they want to buy more to reduce their average cost; they buy more and now they have more than they can afford to lose, so they care even more about the price volatility. Even worse: when the price goes up 10 times, they decide to sell to rebalance because now Bitcoin represents too much of their net worth and it is too risky (it is hard to double your portfolio with a 1% exposure if you rebalance it every time it multiplies by 10). If you think this may happen to you, I suggest you invest in two buckets: keep one bucket that you will not trade for seven to 10 years, and another bucket that you will use to trade as much as you want (but be responsible and be sure that both buckets combined add up to an amount that you can afford to lose).

Why do I believe 1 Bitcoin may be worth $1 million in 7 to 10 years?

How much a Bitcoin may be worth if Bitcoin succeeds is pure speculation. Today, Bitcoin is worth a total of ~$70 billion (~17.5 million Bitcoins in circulation x ~$4,000 per Bitcoin). If Bitcoin ever becomes the world’s standard of value and settlement, it may have to be worth more than gold and less than the world’s narrow supply of money. All the gold that has ever been mined is worth ~$7 trillion; the world’s narrow supply of money is ~$40 trillion. If Bitcoin is ever worth as much as gold, each Bitcoin would be worth ~$300,000, and if Bitcoin is ever worth as much as the world’s narrow supply of money, it would be worth ~$2 million.

My preferred way of guessing how the price of Bitcoin may evolve is much more prosaic. I have noticed over time that the price of Bitcoin fluctuates around ~$7,000 x how many people own Bitcoins. So if that constant is maintained and if 3 billion people ever own Bitcoin, it would be worth ~$21 trillion (~$7,000 x 3 billion) or $1 million per Bitcoin.

Conclusion

This essay focused on making the case for a small allocation to Bitcoin, and therefore, it focused on the possible financial gain to be had if Bitcoin succeeds. But if Bitcoin does for money what the Internet did for information, the prospect of unprecedented economic freedom is much more ex citing than any possible financial gain.

I grew up in Patagonia, Argentina, where my parents are sheep ranchers. Growing up I saw my family lose their entire savings three times: the first time because of an enormous devaluation, the second time because of hyperinflation, and the last time because the government confiscated all bank deposits. It seemed like every time we were recovering, a new and different economic storm would wipe us out again. My memory of these events is not economic or financial but very emotional. I remember my parents fighting about money, I remember being scared, I remember everybody around us being scared and returning to desperate, almost animal like behaviour. I also remember thinking how unfair it was that these crises hit the poor the hardest. People who had enough money to get some US dollars protected themselves that way; people who had even more money and could afford to buy a house or apartment protected themselves that way; and people who had even more money and could have a bank account abroad protected themselves that way. But the poor could not do any of those things and got hit the hardest. When I saw the emergence of the Internet, I was young and idealistic, and I sincerely thought the Internet was going to democratise money and fix money forever. But it has been 30 years since the Internet was created and it has fixed many problems, but increasing economic freedom is not one of them. I was about to give up hope for the Internet to fix this problem when I ran into Bitcoin by accident. At first I was very cynical, but the more I learned about it, the more curious I became. After six months of studying and using Bitcoin, I decided to dedicate the rest of my career, my capital, and my reputation to help Bitcoin succeed. Nothing would make me prouder than to be able to tell my grandkids that I was part one of a very large community who helped Bitcoin succeed. And that because Bitcoin succeeded, now billions of people can safely send, receive, and store any form of money they want as easily as they can send or store a picture. So that what I saw happen to my parents and countless others can never happen again.


Further reading:

„Shelling Out: The Origins of Money“ – Essay by Nick Szabo. Essential background on the nature of money.

„An (Institutional) Investor’s Take on Cryptoassets“ – Essay by John Pfeffer. Bitcoin analysis from an investor’s perspective.

„The Bitcoin Standard“ – Book by Saifedean Ammous. Non-technical explanation of Bitcoin and what it may become.

„Mastering Bitcoin“ – Book by Andreas Antonopoulos. Technical explanation of Bitcoin for non-technical people.

„Programming Bitcoin“ – Book by Jimmy Song. Technical explanation of Bitcoin for technical people and programming guide.

„Bitcoin bites the bullet“ – Essay by Nic Carter about Bitcoin’s design trade-offs.

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