Some Clear Thinking On $50,000+ Bitcoin
Some Clear Thinking On $50,000+ Bitcoin
Notes From The Field By Simon Black February 22, 2021 Bahia Beach, Puerto Rico
There are famous stories that come out of the Great Depression in which very astute financiers sold all of their stocks just before the big crash of 1929. Joseph Kennedy famously dumped his portfolio after receiving stock tips from a shoeshine boy. And Bernard Baruch, one of the wealthiest financiers on Wall Street, said after the crash, “Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me [stock] tips. . .”
Now, these comments make it seem like taxi drivers and shoeshine boys don’t have financial sense. And that’s wrong.
Someone’s profession and their level of financial sophistication don’t necessarily go hand in hand; there are plenty of astute janitors, and plenty of idiot fund managers. But I did think about Baruch’s remarks recently when an Uber driver started talking to me about cryptocurrency.
Again, his opinions are just as valid as anyone else’s. But what I found remarkable is that the only thing he knew about his portfolio was how much he’s ‘up’. He told me about how he’d invested in a few small tokens, and that’s he’s up 3x on this, and 5x on that, and 2x on another.
There was zero discussion about the technological merits of any particular coin. He didn’t talk to me about what made their software better, or the unique proposition that any of them offers to the financial system.
He didn’t even know the basics of what he had purchased. All he knew was how much he was ‘up’, and that his portfolio was going to keep going up.
And that’s the thing about crypto: there’s a level of fanaticism that we’ve not seen before in modern history with regards to a single asset class.
There are pro-crypto people who are self-avowed “HODLers”, which is crypto-speak for “I will never sell ever… regardless of technological competition or radical changes to the marketplace.”
This is a completely emotional position to take.
But the fanaticism is on both sides. Equally, there are anti-crypto people who still claim that it’s a scam, or ‘worthless’.
Just this morning in the Wall Street Journal, in fact, some reporter wrote that Bitcoin’s “fundamental value is zero.”
This just screams ignorance. Bitcoin is software. Software is technology. And any technology that (a) serves a real purpose, and (b) has a large number of users, is by definition NOT worthless.
Bitcoin has tens of millions of users and provides actual utility, i.e. transferring value from one user to another.
Bitcoin is no more ‘worthless’ than SWIFT-- the organization whose completely outdated technology facilitates international wire transfers.
Yet with Bitcoin at $50,000+, the fanaticism has reached epic levels, and people on all sides are screaming about it. One group insists that it’s going to zero. The other insists that it’s only going up.
It’s hard to make sense of the market with so much noise, so I wanted to make a few rational comments.
[EDITOR's NOTE: Bizarrely, Sovereign Man's email service provider is refusing to send out this email in its entirety because it focuses on cryptocurrency. So, click here to see the rest of Simon's remarks on our website.]
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Simon Black, Founder, SovereignMan.com