Saying Bitcoin is dead is nothing new.
It’s become so common that a website that tracks this bizarre phenomenon has recorded 416 times Bitcoin has been declared dead … and survived. Bitcoin rising from the dead is programmed into its code. Bitcoin will be declared dead many more times because it’s a silent protest that challenges the status quo. 13 years on, Bitcoin is still alive and breathing and roaring back to life.
My own Bitcoin portfolio is down more than $100,000. I am grinning at all the losses.
Here’s what is overwhelmingly misunderstood:
Bitcoin is a religion.
One of the greatest investors of all time, Paul Tudor Jones, snuck a comment into a conversation with another legendary investor, Stan Druckenmiller. This comment changed my understanding of what Bitcoin is.
“Do you know that when Bitcoin went from $17,000 to $3000 that 86% of the people that owned it at $17,000, never sold it?”
John Street Capital on Twitter summed it up beautifully: “86% of the [Bitcoin] owners are religious zealots.” That’s why hedge funds and Wall Street are loving the huge crash in the Bitcoin price and buying more, not selling like retail investors.
The network effects of a technology are huge and explain a lot of the enormous growth we’ve seen in stocks such as Amazon, Netflix, and Facebook. Bitcoin has even greater network effects than Web 2.0 tech companies. But Bitcoin also has a fiercely loyal user base that won’t disappear, even when 50% of the value of their investment drops. Bitcoin isn’t dead.
The power of religious user loyalty is misunderstood.
Bitcoin doesn’t need influencers to market itself.
The adult babies saying Bitcoin is dead are influencers looking for clicks. You can’t be angry at adults trying to buy food and pay their bills. I get it.
But Bitcoin is an unconventional technology. It has no payroll, no office, and no marketing team. Bitcoin relies solely on word of mouth to survive and grow. There’s another thing that is missed.
Bitcoin is now a brand.
The Bitcoin car in the Indy 500 shows quietly what Bitcoin is becoming. Bitcoin is more than a brand, though. Bitcoin is a movement. The movement has one message to share… Stop creating money out of thin air and giving it to the elites and institutions.
Bitcoin users are saying nicely, “Give us free markets again.” When the stock market needs to dip because of high unemployment or a global health crisis, let it. As long as markets are propped up with money created out of thin air, inequality will rise.
I figured out why Americans are angry about money.
You can’t blame America. See the problem Bitcoin solves is hard to see when you measure everything (including inflation) in U.S. dollars. The product that is U.S. dollars blinds us from the truth: the poor are getting much poorer.
Don’t believe me?
Check this out. Well-known investor Raoul Pal measured the net worth of average American households. Instead of measuring their wealth in U.S. dollars, he simply changed the denominator to the Fed Balance Sheet. Now, let’s not get into finance talk because that’s boring. The outcome is this.
U.S. households are 130.95% poorer than they used to be.
Guess when two-thirds of the drop in wealth occurred: 2008–2009 during the Great Recession. This is the same time the U.S. government and other major economies all around the world started creating money out of thin air and slapping the label bailout on it to create the illusion. Guess what else happened at this exact same time? Satoshi Nakamoto, the creator of Bitcoin, launched a silent protest against creating money out of thin air.
So when you see Americans angry about anything money-related, now you know why. The answer isn’t to say Bitcoin is dead. Bitcoin is trying to (successfully, so far) solve the problem. The solution is to reinvent the global financial system so that everybody has access to a bank account via their phone and can transfer the hard-earned currency they created with their time into value they can use to live. Let’s put away the Bitcoin anger.
Let’s fix inequality with financial inclusion. Maybe it’s with Bitcoin as Jack Dorsey says. Or maybe it’s with another technology.
But sitting around with our heads buried in the sand calling Bitcoin dead for the 417th time does nobody any good. “There has never been a statue erected to a critic,” says Jean Sibelius and that’s timely advice.
Bitcoin is the start (not the finished version) of a new financial system.
