Systems of old are crumbling.
In 2020, I went into financial prepper mode (I also bought lots and lots of rice, honey, and sugar).
My financial strategy for 2020 went like this:
Buy physical gold and silver and Bitcoin. My split was something like 25% bitcoin with gold and silver making up the rest of my portfolio.
I had cash and needed to park it somewhere. I didn't want to lose my purchasing power to inflation, which accelerated after the government's massive injection of new fiat dollars into the system via the pandemic bill.
And now, as I write this, Congress just approved another 1.9 trillion bill.
Where is this going to come from?
How can they do that?
They can't... not without repercussions.
The bill always comes due.
And when it does, it's going to DESTROY most American's wealth.
We don't know when this is going to happen, but it certainly is.
So I bought gold and silver. I'm now rethinking this strategy.
I still like silver because of its industrial uses, which are used in electronics, cell phones, and solar technology, to name only a few of the thousands of industrial applications. So silver, for me, is a good store of value.
The problem is, silver doesn't have the growth potential to keep up with bitcoin. It also has mining inflation risk and price manipulation risk.
As I write this, Bitcoin is hovering around $50,000.
I don't like telling myself things like, "I should have bought more."
That is results-oriented and short-term thinking.
And since I believe Bitcoin is the future of money, I plan to hold it forever and use it as an asset to leverage like real estate. A topic for another day.
I'm doing my best to think clearly about my strategy moving forward.
I'm considering moving the majority of my wealth into bitcoin.
And I'm doing my best not to delude myself.
As Richard Feynman said, "The first principle is that you must not fool yourself, and you are the easiest person to fool."
So the question becomes: Do I really believe what I believe, or am I being persuaded by the massive price action and hype of bitcoin in 2021?
As I've been absorbing more bitcoin-related content, especially this series that you must listen to, I feel like I'm coming closer to a rational decision.
But it's still not an easy thing to do since so few are doing it—putting most of their wealth in bitcoin.
The institutions adding bitcoin to their balance sheet are doing it as a hedge and only as a small % of their portfolio.
Very few are looking at bitcoin as a place to park a lot, or most, of their wealth.
Part of me feels like this is risky. The other part thinks it's not at all and that holding it in fiat, gold, or silver is riskier.
So can I think for myself? Can I critically think about all the variables and decide for myself?
If I'm wrong and bItcoin goes to zero, I'll likely get out long before.
Then there's the part where I want to be able to say "I was right" later on when bitcoin reaches $500,000 or $1,000,000. There's def some ego there.
That all said, here's how I'm thinking about bitcoin.
1. There is no form of wealth storage that can compare to bitcoin
Bitcoin is the only form of money ever created that is not subject to inflation. Gold, silver, and fiat all have inflation risks.
2. There is no other form of wealth storage that is resistant to manipulation
Gold is manipulated. So is silver. And the big banks like JP Morgan pay their billion dollar fine and get right back to doing it again. No one goes to jail, and no one is named as culpable from what I've seen—such a farce.
Stocks are manipulated. Corporations are incentivized to buy back shares, eroding long-term economic value. On and on, the various risks, manipulations, and absurdities go. Most people ignore these because millions of investors ignore them and have for years, until now.
Bitcoin has created a new paradigm by which we will forever judge all other assets and money itself.
3. Other risks
Gold and silver are expensive to move and not practical for most commerce.
There is custodian risk—like a vault or bank holding your metals going under or being corrupt or the government failing.
If I need to flee the country, getting my physical metals across borders is a risky proposition. (Jewelry comes in as a star here btw)
With Bitcoin, I can go anywhere, and no one can take it from me or even know I have it. The transportability and security of it are unprecedented in human history.
As Michael Saylor says, "Bitcoin is the best mechanism for transferring energy the world has ever seen."
4. All-time highs in traditional assets
Real estate prices are at all-time highs. We are def in bubble territory.
The same is true for stocks, with valuations wholly detached from economic reality.
And bonds, ya right, don't even get me started.
Here's the thing: I DO want to own good companies, and I DO want to own income-producing real estate.But buying these now doesn't compute.
In the case of real estate, the price you pay can be the difference between building wealth and losing it, so it's not something you can ignore.
With stocks, you can overpay a bit as long as you own it long enough to compensate. But as I write this, the valuations are far beyond "overpaying a little bit," so it's still not an option (and why Warren Buffet is sitting on 125+ billion dollars and nowhere to put it).
Now let's talk about bitcoin.
Bitcoin is the world's first money that can't be manipulated or stolen through government inflation (or mining inflation).
It also gives us the model for future decentralized models that will revolutionize many things, including governments themselves.
Bitcoin has true scarcity, true decentralization, and true security.
It is one of the greatest inventions of mankind and will go down in history as a spark that paved the way for the next evolution of the human species.
It is that important.
It is that amazing.
It is divine.
And it is the best representation of natural law ever created by humanity.
I believe all of this.
I know the problems of fiat and the risks of governments. These are well-understood. There is little debate about these risks other than WHEN it will all come crashing down and how.
As Newtown said, "I can calculate the motion of heavenly bodies, but not the madness of people."
This is my primary concern around Bitcoin; that there will be some black swan fear-based event that might overtake enough bitcoin holders to create a downward spiral on price and adoption.
Looking at the joke people called "science" in 2020 around mask-wearing and social distancing nonsense, it leads me to have a healthy respect for the madness of crowds.
I think the counterpoint to this risk is the large number of smart money that can move the market in an exponentially larger way than the general public. There may be 10,000 or so individual humans on Earth that can add billions of dollars of value to the network with a single buy decision.
So the question becomes: "If we have a downward spiral of fear-based selling, will a few of these market-movers come in at low prices to accumulate and protect adoption and price?
The more I think about it, and as I write that sentence, that seems like a much more likely scenario.
Last year I bought two bitcoin at $4000.
Since we recently reached $56,000 high, it seems like we have hit a kind of escape velocity in which the public perception is now anchored to this price.
I know I'm already thinking this way—hoping Bitcoin dips into $20-30k territory so I can buy more.
Now imagine how some of the individuals representing billions of dollars are thinking about it?