The Open Secret
Anyone - be it me, a well-meaning friend, family member, colleague, financial "advisor", what-have-you - who is telling you to jump into any crypto project at this particular time is a scammer, I repeat - a scammer. Granted, many of these have the most wonderful and lofty intentions in mind and truly want you to "get rich" alongside them but I can assure you they have (1) no idea what they are talking about, (2) are oblivious to what is coming (both to the ultimate upside and down), and (3) are most certainly getting scammed themselves. Some of these individuals are blatant and malicious, however "blind" they might be to their maliciousness. The most malicious place for crypto scams is, of course, social media: YouTube, Instagram, TikTok, and Reddit. The second worst place is the lips of newcomers who have recently gotten lucky off some doggie coin of which they erroneously believe they are "in early" for "the long term". Other scams can be found in most North Star Ventures-like newsletters that you might be subscribed, most of which are written by some of the most "respected" names in the investing world. These scams can be identified by the likes of, "John D. Stockpicker called [the 2008 Financial Crisis] or [the last Bitcoin bull/bear market] and now thinks XYZ technology stock will be 200x better. Sign-up for his *free* webinar to get the inside scoop." I can assure you that virtually no one called the 2008 crash and even fewer the 2018 crypto bear market, fewer still the 2021 crypto mini bear market this past summer. (It should be noted that I did not foresee that last one either, or at least did not call it correctly.) Sure, most altcoins at the tail end of the bull run will perform astonishingly well. But this will only engender more risk-taking and ridiculous forms of speculation, so any paper gains that one might think they have accreted are guaranteed to evaporate faster than they were accumulated. It goes against human nature and our inborn herd-like mentality to sell when the candle is green (going up) and to buy when the candle is red (going down), the same as it is exceedingly rare to witness a world-class athlete retire after a Super Bowl championship, a heavyweight title, or a Master's Tournament victory. No, most end their careers because of injuries and old age, usually in shame to their former glory. The classical Greeks called this inescapable inclination of man "tragedy" and proceeded to build their entire aesthetic conception of the world based upon its unavoidability, whether witnessed in the life of an individual, city-state, nation, or civilization.
Granted, this word "scam", defined colloquially as "a dishonest scheme; a fraud or swindle" might sound a bit harsh, especially if it is coming from a buddy or a nephew, and while they might not intentionally be scamming, the scam that informed their miscalculation is nevertheless speaking through them.
The womb of every scam is "something for [virtually] nothing", i. e. "because you missed [that], invest in [this]", or "follow this advice to 100x your money in a short amount of time" so that you can "live the life you want". I have and will continue to preach that to succeed in "crypto" takes time, patience, contrarianism, and education sprinkled with a bit of obstinate disagreeableness. This is for most people in our short-time horizoned world a considerable cost, one that will take upwards of four years to actually benefit from. But benefit I am assured you will, not least of which because you will be more astute when it comes to this emerging asset class and can thus better navigate our increasingly digitalizing world. Rest assured, scammers aren't looking to part you with your "hard-earned" Cardano or Solana, or Polkadot, or Ethereum, but they are and will continue to try to part you with your bitcoin. Indeed, Bitcoin was offered to retail first, and only now are institutions getting into the game in a significant way. They won't be able to make the moves they want at the price they want unless they are able to take it from you, or else you give it to them, laundered, of course, through SOL or ADA or other such well-meaning miscalculation. As always, turn off, tune out, dollar cost average whether the market is up or down, custody your own funds (not on an exchange but in your own hardware wallet), educate yourself how and when you can, and try not to follow the news or the swings. If bold enough, endeavor to build up a certain amount of fiat on the side with which to buy when the market heads south in 2022. I am convinced that more than 95% of the people getting into the market right now will have considerably less crypto than when they start(ed), and far less fiat as well.
Winning big your first time out of the gate in crypto is the quickest way to ruin. Why? Because you assume, "Wow, that was easy." You didn't learn anything but were instead rewarded for your ignorance. This leads to less sobriety, greater risk-taking, overconfidence, and eventually complete recklessness which is bound to blow up in your face to such an extent that it will most likely turn you off to crypto altogether and therefore cause you to miss the greatest financial opportunity (among much) in any of our lifetimes.
The fact that Bitcoin is so obviously (at least to me) both the greatest hedge against a horrific probable future and the best opportunity for life-liberating wealth and yet is so often overlooked by the general public perplexes me. Peter Thiel recently lamented that he feels underinvested in Bitcoin, going on to say that he thought "everyone already knew the secret [to bitcoin]" but that "maybe it is still secret enough." I am assuming he is talking about the undervalued nature of Bitcoin's price, which he also said, despite its suppressed nominal value, is an indicator that the "decrepit regime" is about to blow up
Indeed, the open secret is that in addition to the obvious room Bitcoin has to run in terms of price, functionality, global adoption, and user experience, it will be the most secure and immutable place to store your wealth through the drastic and quite possibly inalterable changes that are soon to be witnessed in our modern world and society. All things being equal, "equal" here meaning "our society will continue to progress along the same trajectory and in the same general direction that it has for the past twenty-plus years", Bitcoin is a peerless financial "investment". As I've written about extensively, the digitalization of humanity is well underway. Money is simply the next iteration of this process, and a big one. If this was reason alone to invest in Bitcoin, I think the price would be substantially higher because the market would treat it as yet another "financial instrument" among a sea of alternative investment opportunities. But Bitcoin is also a proxy for the quickly collapsing fiat regime that is starting to make itself felt each passing day. Higher food, fuel, commodity, energy, and housing prices might abate here and there and be worse in some parts of the world/country than others, but I don't see this general upward pattern changing until the dollar's demise (which will no doubt come "like a thief in the night" when the great bulk of society is least prepared for it and not looking for it). The threat that Bitcoin poses to our late-stage nation-states is a real one, because as long as they can prop up the nominal value of the dollar in the minds of its citizens and the rest of the world, the longer they can keep the fiat charade going. Bitcoin is calling the dollar's bluff, however, declaring emphatically "something is wrong here." Bitcoin and US Treasuries tend to have an inverse relationship on the charts. I believe this is where the battle can most presciently be witnessed. Bitcoin is transcending the "e-gold" or "gold 2.0" narrative to become, in my opinion, a digital bond or digital treasury. Indeed, Bitcoin will eventually emerge as something wholly unlike anything yet devised by the financial alchemists. I believe it will resemble part yielding bond and part digital real estate within the next 6 years. A new definition for what bitcoin "is" will have to be elucidated because, in the aftermath of the fiat collapse, new asset classes, risk categories, and securities will emerge, of which Bitcoin will play a significant role.
Nevertheless, the natural cognitive dissonance that arises in the mind as to the grim uncertainty of the future is in many ways the mind's way of protecting our emotions from the potential reality of the difficult times that lie ahead. Consequently, this dissonance also prevents us also from envisioning Bitcoin's potential role therein, be tomorrow good or bad, especially in the developed world where things "aren't too bad yet". Either way, we can all agree the future will be different, thus whatever position one takes requires a certain "grand vision" of which the vast majority are incapable of painting for themselves. In short, many are subconsciously reluctant to embrace Bitcoin because to do so would be to embrace not merely an "investment opportunity" but the whole narrative of a potentially difficult future that may be waiting for us in wake of the global fiat collapse. If Bitcoin was only considered a hedge against a traumatic future, I think the price would be much lower because, again, few have the ability to envision a traumatic future, and if ability, fewer still the will to do so.
As such, the Bitcoin price seems, to me, an uncertain mix of cognitive dissonance and a lack of proper vision, resulting in a price far lower than its likely eventuality and thus a good investment opportunity at this time, not to go "all-in" of course but to prudently begin your 4-year journey.
The collapse of fiat might, at the same time, be amazing. I, for one, look forward to the potential artistic renaissance that awaits when the denominator of value, at last, finds stability, as well as the truly entrepreneurial revolution that is bound to occur. I have little spoken about Bitcoin's ability to potentially lift the underdeveloped world out of extreme poverty, but it is considerable. After fiat, we will regain the ability to purposefully "save" again which will allow us to teach our children how and why to save so as to build with a generational perspective in mind. The reduction or outright elimination of wars and mass-scale geopolitical conflict might be possible while state-sponsored coercion will have to give way to financially-sovereign individuals who will not be beholden to transacting in worthless fiat simply because their government decrees it so. These individuals will demand sobriety and frugality from their politicians who will no longer be able to bait them with "bread and circuses".
This open secret is still very much a secret to most people, or at least it's whispered very quietly among a diminishingly small number of market participants at this time. As such, Bitcoin is, as stated, still highly undervalued, no matter your vision of the future. This is one of the main reasons I prefer Bitcoin over any other financial investment: (1) it's a "technology play" that, if all goes well, will perform amazingly well as global adoption and network infrastructure increases; (2) it is also a hedge against a collapsing dollar and, by extension, every financial instrument dominated in the dollar, be it stocks, bonds, real estate, insurance, pension funds, and so on. I don't know of any other asset that has so much upside whether the future is bright and happy, or stormy and gloomy.
Good luck,
NSV