Bitcoin: A HODLer's Perspective
Bitcoin is...
Human's are more emotional than we are rational. I bought my first bitcoin at this point of euphoria. Can you say FOMO? I'm not the wisest of investors...
Of course, I felt like a genius at the time.
Then time happened...
This was the end of 2013 and start of 2014. Now, I'm not a big fan of losing money. But in the grand scheme of things, I was in for ~$550. I pretty much wrote the money off and I self-rationalized the loss as a learning experience. The idea of bitcoin and blockchain were still VERY VERY nascent and I wanted to see what all the hype was about. I wanted a preview of what a world would/could be without a bank.
Throughout all of 2014 and well into 2015, I very passively watched my money slowly dissipate over time. It was quite sad, actually.
Then, in the middle-to-end of 2015, the price of bitcoin stopped declining. Hmmm... maybe my money was all gone after all. Was this a glimmer of hope?
In January of 2014, Overstock started accepting bitcoin as payment. That excitement waned pretty quickly. Patrick Byrne is a strange bird, right? (Actually, it turns out he's a genius and look out for more from him, re: tZero). Over more time, the flow of articles about the blockchain started to increase. I'd read about more investment funds being allocated to companies exploring the blockchain technology. I believe this is what Ben Bernanke calls "Green shoots"
So, I did what every dumb money investor does; I started dollar-cost-averaging. I just put a couple hundred bucks every month, whatever the price was. But I did heed expert advice: not any more that would cause me to lose any sleep if it vanished.
Then 2017 happened:
Holy fuggin' ca'moly! Now I'm a HODLer!!
WTF is a HODLer?!! At first I thought this was a typo for HOLD that went viral (#confefe anyone?). Then I read that it's actually an acronym for Hold On for Dear Life.
Ha! HODL indeed. I went to bed (12/7/2017) and bitcoin was ~$14,200 USD. I woke up at it was at $16,500. I think it went up to $19K+ at some point and now at this exact time (11:49 AM PST), Coinbase says that it is $16,225.01.
So there are 2 questions that everyone is asking now:
- Is Bitcoin a bubble?
- Should I buy Bitcoin now?
My answers are "YES" and "It depends"
Mandatory caveat, don't take investment advice from me. I'm what "the street" refers to as "dumb money".
Is it a bubble? The chart has gone hyper-parabolic. I'd never even heard of that before this week. Hyper-parabolic is when the rate of change is accelerating at a parabolic rate.
Yes, it's a bubble, but a bubble that has the potential to blow up 10x bigger. Some folks, like John McAfee and Mike Novogratz are calling for 1 BTC to equal $1,000,000. The former putting his balls, literally (or close enough), on the line:
So, if it goes up to $1,000,000 and crashes down 90% to $100,000. Oh my god, I will kill myself (that's sarcasm, folks).
Economists and financial pundits are baffled: "Bitcoin has no backing. People are putting a value on nothing."
I'm not smart enough to truly truly understand currency and the psychology of money. But what I do know is that I have 0 friends that own any Bitcoin. ZERO. Not one of the 4 own any Bitcoin! My point is this is a WORLD phenomenon. 7+ billion people? What small percentage of that needs to feel what I felt in Oct 2013 to drive demand?
Zimbabwe. Cypress. Greece. Venezuela. Think those citizens are looking for a hedge (or outright alternative) against government issued fiat currencies? US dollar has decreased ~97% since its inception. The US federal deficit is going parabolic. In the history of man, no single fiat currency has stood the test of time. I dunno, just saying.
Lastly, we all know supply is locked at 21 million BTC. 1M is locked in Satoshi Nakamoto's wallet. I read that experts have estimated ~4M have been lost, never to be recovered again. So that leaves 16 million.
Most of the rest is probably locked up with other HODL accounts, like mine. You see, EVERYONE is saying: "IF IF you do buy Bitcoin at these levels, do NOT NOT NOT buy anymore than you can afford to lose". And this is very sound advice. This makes all future buyers, HODLers. They've already accepted the potential loss. But they're in it for the upside. 10-to-1 risk/reward ratio. That's not bad. Stock traders look for a 3:1 risk/reward setups.
HODL, it is a wild ride. I'm just saying...
This is an article that I wrote in May 2017 advising to buy Bitcoin purely for the educational purposes: https://www.dhirubhai.net/post/edit/blockchain-happening-you-should-start-paying-attention-kerry-hew