I changed my mind on Bitcoin a few weeks ago. A bunch of smart people had made public comments on it, generating buzz. I was going to write up a short summary for our investment team with pros and cons, ultimately concluding that Bitcoin was garbage. But then I did some research.
I read this Letter to Jamie Dimon which is the best tutorial on crypto-currencies (maybe more accurately crypto-assets) out there.
I’m convinced that Bitcoin is a real thing that has value. Is it worth $7,500? I have no idea and neither does anyone else. Crypto-assets are an uncharted territory, basically a new paradigm along the lines of the invention of the internet. Like the internet’s early days, nobody knows where the value lies yet. The hip thing to say now is “I’m short Bitcoin, but long blockchain.” In other words, these people feel like Bitcoin is a fad, but the technology underlying it is a big deal.
I think both Bitcoin and blockchain are important. As an American citizen, I don’t have much actual use for Bitcoin. The United States isn’t going to declare large denominations of cash forfeit like India essentially did. The US isn’t going to devalue its currency overnight like China did in 2015. Hyperinflation along the lines of Zimbabwe or Venezuela are fever dreams only found in the financial-horror genre of investment newsletters. The citizens of these countries do have a use for Bitcoin. Yes, it’s volatile, but a volatile something is better than getting your wealth confiscated by the state. Like the internet, blockchain has created a new market for exchange.
Am I investing in crypto-assets? Not investing so much as playing. I did buy a little bit of a few different flavors with some mad money. It’s more to say I was there at the beginning than any expectation of a financial gain. This is just really neat stuff and I encourage you to read about what crypto really is before making a snap judgement like I did.