All Forum Posts by: Rob Kishi

A large part of why it's difficult for people to understand bitcoin is they don't really understand how money works, thus they are not primed to "get it". 

Here (link) is a podcast introducing bitcoin, and here (link) is another one sharing why it's important for those that would like to learn.

 @Randy Gutierrez The "best" way depends on your individual investment goals and opinions. I'd start with understanding Bitcoin and (if desired, not required) go farther out on the risk curve as you become more comfortable. A simple analogy is to think of bitcoin as digital gold which is regulated in the US as property and everything else as early-stage venture with technology, execution, and regulatory risk. There are some incredibly exciting things going on in the crypto space outside of bitcoin, but similar to the internet boom in the 90s we may see significant consolidation at some point. Bitcoin has solidified its lane in the market while others are still being carved out and its risk:reward ratio is still extremely attractive.

If you don't have any crypto yet, I'd look at it this way: If you invest 10% of your net worth in bitcoin and it goes to zero you lost 10%, which most people can survive. If it does what people believe, you double your net worth in 5-10 years if not sooner. 

You can adjust those parameters depending on your personal tolerance, but the edge here is in the a-symmetry. There is low downside (bitcoin catastrophically goes to zero = $47k loss) with an unbalanced upside (bitcoin goes to $500k = $453k gain). Stated another way, if you entered the market now Bitcoin would only need to double ($94k) to cover the downside weight of the trade. Over the last decade Bitcoin has grown annualized at over 100% a year and this may increase as we reach later points of the adoption cycle. Only 3% of the global population has crypto exposure today...what does that look like in 10 years?

Crypto is the greatest wealth transfer we'll see in our lifetimes.

Feel free to DM me and we can talk more specifics if you want.

Is it like when alcohol, drugs, and _(fill in the blank)_ were made illegal? Prohibition is a better form of marketing than behavior change.

As we're already seeing, most governments don't want to kill crypto just as they didn't kill the computer, mobile phone, or internet. Each of these shifts created extreme amounts of value that would have been overlooked had they denied the technology. 

Digital assets are a thing (and will continue to be) regardless of whether some governments "allow" them or not. The only jurisdiction in cyberspace is code.

@Ken Latchers Well, in option one your collateral is losing 10-20% every year while with option two it is growing at over 100%. After 30 years, if you went with option one you have a house and a cash position that has lost somewhere between 50-90% of its value. With option two you have a house and a bitcoin position that has grown exponentially providing you the ability to get the house (and much, much more).

If you and your future generations were put in a vacuum-sealed room and were told the oxygen was being leeched out at 10-20% a year, would you risk finding another room or would you stay there hoping things work out? How long would you wait?

The lending product is of course for those who believe in bitcoin. If you're not there yet, just buy the house with cash.

@Nick Barlow Bitcoin is the first form of digital scarcity, and possibly the only form of absolute scarcity the world has ever seen. It's provable through open-source code allowing anyone in the world to verify the supply and issuance schedule of the asset. Major governments adopting bitcoin as a currency is doubtful but they may use it as a payment rail or possibly a reserve asset in some capacity. 

For daily transactions, fiat is better. Spend/borrow in the weak asset and save/grow in the strong one.

Gold's over-the-ground supply increases at ~2% annually through gold mining. If the price of gold were to double the rate of extraction would increase due to this incentive. Bitcoin is the first asset with a truly inelastic supply dynamic, meaning no matter how much demand increases or decreases supply does not change. 

The question then becomes, will bitcoin see more or less adoption over the next 5, 10, 20, 50, 100 years? Hint: Every single day bitcoin exists, a little more trust is built.

I agree with @Dave Carter in that Bitcoin differs from the rest of the cryptoverse. Bitcoin is a long-term savings asset stored on the internet while the others are ventures introducing new business and social models. They share many characteristics and today trade with high price correlation but serve different purposes for different means. We'll likely see consolidation as the "winners" find product-market fit and a handful of public chains dominate the majority of transactions. We're in the late 90s of the internet boom with a lot of innovation, experimentation, and of course risk.

There are different ways to play the game and it depends on your goals. The investment thesis for gold, real estate, or even the S&P 500 is not the same as the investment thesis in early-stage equity.

@Lesley Resnick A lot to unpack here. 

1. If you borrowed 2 bitcoin using $100k of borrowed money and it doubled in price, you would have $400k in bitcoin and owe $100k + interest. This would be leveraging a weak asset (USD) into a strong one (BTC) which is exactly what every prudent investor should be thinking about. Bitcoin and other assets will go up FOREVER denominated in dollars because the money supply has no limit. Try charting the stock, housing, or commodities market in bitcoin or gold and see what you get. It's quite the inverse of what most people see in dollar terms.

Hate to break it to you, but the reason your house, sports cards, used car, gas, etc. went up 40% last year isn't that they got 40% better, USD got 40% worse. Looking at purchasing power rather than price when compared to the dollar is a more accurate indicator.

2. What defines a fiat currency is the way it's governed. It's the principles of bitcoin which make it valuable, not the numbers, or even the price. The real value of bitcoin goes far beyond making a bunch of 1st world people rich. I've touched on this a bit in previous posts in this thread if you'd like to review it but I'd recommend diving deeper here. This is really the meat and potatoes of the Bitcoin thesis.

3. The concept that bitcoin can be hacked is a common misconception that keeps coming up. THE BITCOIN NETWORK HAS NEVER BEEN HACKED. Every clickbait media article claiming it has is referring to user error, not issues with the system. How many times has Visa's, Mastercard's, Venmo's, and world govt's centralized servers been hacked? Bitcoin and public blockchains are secure because the goal isn't to keep the information safe, it's to keep it true. Information is shared and spread so thin across so many different parties, there's no consolidated attack vector.

Please see my post from yesterday about bitcoin's security, but it ultimately comes down to responsibility. If you don't trust yourself pay a professional custodian and trust them.

4. DING! Going to call a fact check on this one. The biggest winners in digital currency are not criminals. There's actually a lot of evidence showing an extremely low percentage of transactions on the bitcoin blockchain (0.15%) are related to illicit activities. Bitcoin like most public blockchains is fully transparent meaning anyone can see every transaction all the way back from the genesis block in 2009. Criminals are smarter than you think.

5. Bitcoin is immutable and uncensorable. Bitcoin has and needs no kings, leaders, or governments to operate, just the internet, electricity and a collective group of actors participating in the incentive structure. Governments cannot "take over" bitcoin. They can make it difficult to engage with but cannot shut it down. Many have been trying over the past several years and they will continue to do so at least for the moderate future.  

Governments will surely make their own digital dollar but this comes back to the underlying principles of money. A dollar in digital form is still a dollar losing its value to inflation over time. A central bank digital currency (CBDC) also opens the door for serious privacy concerns for citizens. Everyone (including governments) is better off with a decentralized form of value that is immune to corruption, coercion, and manipulation. 

6. The people who have confidence in bitcoin (most of them anyway) are those who have done the work and spent the time understanding it and its relation to the existing financial ecosystem. I don't think I've met anyone who is anti-bitcoin after spending at least 40 hours really diving down the rabbit hole. 

You're well on your way!

@Brian Plajer Bitcoin is divisible up to one hundred million times, doesn't require more than $1 to buy, and is accessible by every country and anyone in the world with an internet connection. This is for everyone, not just the rich. 

@Axel Meierhoefer I agree, the debt is much better structured the traditional way, but it opens the door for new products down the road and offers a solution to a growing niche.

Great point Tanner.

Had to do it :)

@Account Closed Bitcoin is a decentralized ledger run and constantly updated across hundreds of thousands of distributed unidentified actors in real-time all around the globe. Each node on the blockchain is essentially "checking the work" of others to ensure validity, and anyone with an internet connection can participate (with or without bitcoin). The greatest hack risk to the bitcoin network would require gaining control of at least 51% of the computers managing the ledger and having them all carry out malicious actions at the same time (double spend, 51% attack, sybil attack, etc.). 

This is not impossible but it's highly impractical, improbable and illogical as the nodes/miners wouldn't crash their own network and the cost of executing something like that from outside parties would far outweigh the gain. It's secure because of the decentralization and incentive models, not magic. It's a cryptographic proof called the byzantine general's problem (byzantine fault tolerance) that bitcoin solved with proof-of-work consensus (mining).

There is a lot of content online if you'd like to learn more. A google search "can bitcoin be hacked?" or "what makes bitcoin secure?" should point you in the right direction.