Based on recent posts, my belief is as follows:
@Eric Carr is a fan of Bitcoin. :)
Jokes aside, I think that Bitcoin and Crypto is a great concept and totally admire the spirit behind them. I just think that there are a lot of reasons why Bitcoin is good. And a lot of reasons why Ethereum is good. And a lot of reasons why a whole host of other cryptocurrencies are good. There are also a lot of reasons to doubt Bitcoin's Proof of work model. And plenty contradictory reasons to believe in it. There are good reasons to like other cryptos, and good reasons to think they won't work out. Assuming that you can pick the "right" crytpocurrency that "wins" long-term, there are good reasons to think that a cryptocurrency won't in the end actually replace major national currencies. And finally, even if you do pick the "winner", there are good reasons to doubt whether"investing" in bitcoin or the winning crypto will actually produce long-term returns that outpace those of alternative assets like businesses and real estate.
Point 1: A strong crypto might emerge to challenge national currencies and be taken as a serious currency for daily use by a major percentage of the world's population. But, guessing which coin that will be is still, as of now a gamble, despite those who just know that it will be Bitcoin. Or Ethereum. Or Dogecoin. Even if Bitcoin "wins" (and there are certainly a lot of reasons for it to be a frontrunner at this time), we know it only has a lifespan of ~150 years or so until no more can be mined. So best case, it is the "winner" for 150 years. A Deflationary currency (which it certainly will be if population growth continues and no more coins are mined, and it is in fact the long-term "winner" in being widely adopted as the world's primary store of value) will not be tolerated by most.
I think that it is more likely that future innovators solve the key problems with proof of work (computing power, expensive transactions, the still possible but low likelihood of a single massive processor taking over the network) and proof of stake (risk of centralizing power over the currency in few or a single entity's hands). After all, the founding fathers of the US had to solve for a parallel set of problems and did so with the separation of powers into three branches of government.
Point 2: Even if a winner does emerge, true power comes from the barrel of a gun, and the United States government has a legal monopoly on power. I pay my taxes in whatever currency Uncle Sam requires, and I will charge my customers and/or employer in that same currency, even if a better one exists. If the US government, or a future world superpower does not like Bitcoin, it can require individuals to use its primary currency. Economics are powerful until they aren't. The world's most powerful military is paid in dollars. And payment of taxes is enforced in dollars by that government. This trumps all theoretical arguments about Bitcoin until this power dynamic changes.
Point 3: Even if a winner does emerge, and powerful nations are forced to accept it as a form of payment to rival or replace their own currencies, as an investor I have to understand how "investing" in bitcoin helps me generate returns that are lower risk or greater than alternative assets. Does $1 invested in Bitcoin (because let's be real, we compute our returns in terms of DOLLARS invested and then returned in a future state, not in terms of Bitcoins invested now and returned in a future state) return MORE than $1 invested in real estate, stocks, bonds etc? To me, the entire rationale behind a currency like Bitcoin is for it to be a stable store of value that is not subject to the whimsy of overamped central bankers.
For these reasons, I do not invest in bitcoin.
The use case I see for bitcoin right now is in the case of an individual who for whatever reason has a large amount of cash, and does not trust the dollar or their country's currency. In this case, I can see diversifying one's "cash" position across their home country's currency, gold, commodoties, and a few cryptos to reduce the risk of inflation on their portfolio. Everything else, I'd invest in assets that have the potential to appreciate in value (can be improved, are inherently scarce, etc) or generate strong future cash flows. To this effect, I did hold bitcoin for a period of time, with this lens (I had a moderate cash position and diversified across equal parts bitcoin, gold, and dollars as an inflation hedge). But I exited that position and now stick with dollars and gold for my "cash" position to keep things simple. I just feel that I can't pick a winner in this space confidently right now.
