Why I Am Bearish On Bitcoin (But Not Blockchains)

In all of this crpyto craze, I have a few questions for Bitcoin Bulls. These questions are just for Bitcoin, not all crypto, not the Blockchain. Just Bitcoin. Because I believe there is tremendous value in the Blockchain. In fact I believe real estate transactions and even voting will eventually be done on blockchain technology and people will wonder how they ever did things any other way.

When it comes to Bitcoin I have a few questions I would just like a simple answer to. It amazes me that whenever I see a Bitcoin “expert” discuss Bitcoin, they never provide answers to the simple questions below:

  • Why should anyone own Bitcoin versus any other cryptocurrency? (“Because everyone is going to own Bitcoin in the future” is not an intellectual answer yet that is the #1 answer I hear to this question.)
  • What is Bitcoin‘s number one, two and three utility advantage over any other form of digital “asset”?
  • Who invented Bitcoin and how can I contact them? (Clearly Bitcoin Bulls know that the inventor is anonymous, which begs the question, ‘if you were the head of a nation state would you recommend backing an asset or currency of unknown origin by an unknown author?’
  • Is it possible that there is a back door or trap door within Bitcoin’s code that would wipe wealth off the board? How can anyone know for sure?
  • What happens if you keep your Bitcoin offline and lose your password/phrase to your wallet containing your Bitcoin? (Not your keys, not your coin!)
Source: Author

Here we see a chart comparing a few different asset classes. In my first draft of this post I listed Gold as non-speculative. A friend playing the part of the Bitcoin Blinder (I just made that term up!) created a straw man and argued that Gold is speculative. This is what BTC Blinders do. They straw man. They create a new argument and then argue against that. So let us say we change Gold to YES for speculative. That does not change any of the facts about the BTC column. But the Blinders do this all day – they just try to argue against the other columns without defending theirs. I am all in on Blockchain – but the intentional conflating of Bitcoin = Blockchain is laughable and just plain wrong.

I had a great conversation at a recent dinner with two intellectuals, neither of whom could offer up a rational explanation as to why Bitcoin is a worthwhile asset class in terms of store of value. And both are super smart individuals who think the chance it will ever be adopted as a worldwide currency is literally zero.

This does not mean that many people will not build and lose tons of wealth trading Bitcoin. That is true of every speculative investment. It has to be. Anyone making millions is coming off the backs of others losing millions. It is literally a zero sum. BUT…it is clearly not a 50-50 split. Like we learned long ago, it is most likely closer to a 97-3 split. So if you are going to speculate with your wealth building (which is not necessarily a bad thing depending on age,) just make sure you are in the 3% of people who are actually profiting from the crypto craze!

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