I Was WRONG About Bitcoin...

Today's topic is going to surprise some of you who have been following my work for any length of time at all. Because for the last several years, I have been very publicly bearish on cryptocurrencies and particularly hard on Bitcoin. Now, I've always been curious about the technology that crypto and the blockchain allows for us to create, but I've always been very bearish on, on investing in cryptocurrencies, especially bitcoin. And my primary reason for that for many years was very simply that bitcoin is not backed in anything. And I would get into debates with some of my pro crypto, pro bitcoin degenerates who would say, well, name something that is backed in anything, Ryan. And I would say, companies. Companies are backed in customer bases and cash flows and network effects. And we would get into a debate about what a better investment was, putting money into a new system that might be cryptocurrencies, or putting them into companies that had profits and customers. There were several things that happened in 2020 that started to make me rethink my position on bitcoin and other cryptocurrencies. And the first was obviously the pandemic and shutdown. But the most important piece of that was the government's response to it. Watching the government's response to the economic shutdown made me go, hey, is anybody else seeing this.

Now? I have an economics degree. I was studying economics during the 2007 8, 9 meltdown. It was a fast, fascinating time to be an economics student. And I watched in horror as the government bailed out banks and put money into the economy and stimulated our way through this. When my background and my perspective says you should just let everything crumble and then you pick up the pieces on your way to rebuilding the next layer of society, the next era. But the government didn't do that. We bailed out the banks, we put money into the system. We did all these things in order to inflate the next bubble. And. And so, once again, I've been looking at this recent boom in the economy going, I wonder when we're going to have to pay the piper. I wonder when we're going to have another major meltdown. And we got that. Obviously, with everything that happened in 2020, investing is about protecting the wealth that you've earned through production, through your work, through your business, through the customers that you have served. And when the government can just eat that up by printing more money, there will be demand. On the personal level, you and me will demand There to be some other way for us to control our own wealth, for us to control the purchasing power that we've earned through our previous businesses, our previous professional experience, our previous service of customers. And in a discussion with a friend of mine, and they brought up a point about Bitcoin specifically that I could not refute, they brought up the idea of a shelling point. A shelling point is simply a point of reference. It's a point of reference when there's turmoil, when there's chaos, when there's chaos going on. And you and I are in this situation together. Both of us are looking for some sort of security. We're looking for something to that we can point to and say, let's go there. And the world, especially young people, are starting to agree that bitcoin and cryptocurrencies are that shelling point, meaning, hey, we don't know what's going on here, but let's all go here. And that is what is creating the increase in the price of bitcoin, because more people are demanding buying it because they see it as a hedge against inflation. Now, I think Elon Musk made the most compelling, thoughtful point about Bitcoin. And I know he is now. He's now canceled from the bitcoin community. But he said, I think that crypto and bitcoin is mostly bs. It's just less BS than fiat. That was a very compelling reason to pay attention. Because what he is explaining is that fiat government money has now become less trustworthy. We have now outsourced our purchasing power to the government, and the government is mismanaging it. The government is doing things that create asset bubbles and doing things that make the rich richer and the poor poorer. That is all government policy. That is not capitalism at work. That is the government destroying things as they usually do. And that has created more demand for people like you and me to look for a shelling point, to look for some point of reference, to say, what are we going to do about this? Because we can't rely on politicians and governments to do something about this. Now, I personally am open to anything that satisfies a few requirements. Anything that protects purchasing power, anything that is easy to transact, anything that we agree is money. Unfortunately for me, most of the world seems to be agreeing that that might be bitcoin. Now, I don't want it to be bitcoin because once again, I have the perspective that bitcoin is not backed in anything. But then again, something happened in 2020 that started to change my perspective on this, and that was when companies started holding bitcoin on their balance sheets. Tesla did it, Square did it, PayPal is doing it, other companies are rumored to be doing it, but they're now holding Bitcoin on their balance sheet as an asset and they're holding it as an alternative to cash. They're holding it on their balance sheet because they see that the value of cash is going down while the value of other assets is going up. It makes total logical sense for companies to have a piece of their savings not held in the bank, but held in something that is going to possibly go up in value and protect their purchasing power. There's an argument made in the book the Bitcoin Standard, in which the author talks about societies that have hard money. And in case you're not familiar, hard money is money that can't be printed away. So gold, silver, and some would argue bitcoin. And he makes the argument that in those societies where they have hard money, people tend to work less, they tend to be more creative, they tend not to work such long hours as those who live in fiat based societies. And his argument was that when you live in a society where your money is protected and it even goes up in value over time, there's no reason to work when you don't have to work. There's no need for you to exhaust yourself when you have hard money because your savings is going up naturally your savings just kept in the bank. If it's tied to gold and the price of gold is going up steadily over time, you're not in a hurry to spend that money. You're not in a hurry to get rid of that cash. You're not in a hurry to make investments that can't beat the appreciation of your cash in the bank. That was really interesting to me. Another question that I had to answer when I was coming to grips with the fact that I had been wrong about all of this is what is money anyway? Now, I've done a video on YouTube called Money isn't Real and it argues that money is just a concept, it's just an idea that we have to allow for us to make agreements. Well, if that's true, if I really believe that, then does it matter what money is in the first place? Does it matter if it's seashells or tulips or a bitcoin or USD? Or does it just matter that other people accept it at scale so that we can transact with it? Well, obviously it's the second obviously it's just a way for us to transact with one another. So if the world accepts Bitcoin as being money, then who am I to thumb my nose at that? I trade in US Dollars every day. And that's bs, right? The US Dollar isn't backed in anything. And yes, some people say, well, it's backed by the US military and it's backed by our infrastructure and it's backed by our borders. And that makes sense. But we're seeing, I think, the beginning stages of the end of the government's grip on society. I think we have now destroyed the trust that we have in government, and both parties are to blame. We have destroyed and lost our trust in government, and instead we are now beginning to trust ourselves and our communities and individuals and personal responsibility that requires us to have some sort of private currency. It requires that. So putting all of this together, I had to ask myself if I still held to my belief that bitcoin wasn't backed in anything, that cryptocurrency should be avoided, and that most of the people who were investing this were wasting their time. I had to challenge that assumption because of the changes that I saw happening in the world. And there's one more thing that happened in the year 2020 that made me go, okay, I need to actually take this seriously. And surprisingly, it was Cancel Culture. It was this trend that we saw in society of any time anyone said anything that didn't meet the global narrative that they should be canceled and not allowed to transact anymore. Now, the response to that movement, the response to Cancel Culture was what made my ears perk up. Because now what you are starting to see is figureheads emerge that have no personality. Meaning you're starting to see Twitter accounts written by apparently individuals, but that have no personal identity. Of course, there's a person behind that content. There's a person behind that movement, but you don't know who they are. In fact, even Satoshi doesn't have a person behind them. The creator of bitcoin, no one really knows who it is. Now, that's a very interesting response to Cancel Culture, the idea that most of us may have avatars on the Internet rather than personalities on the Internet. So this anonymous direction that we could be going in response to Cancel Culture made me say, we're also going to need an anonymous way to transact. And those three things, the government's response, the use of bitcoin on balance sheets and Cancel Culture made me say bitcoin is the best that we have to satisfy the demand for a new financial system. Now, I still have concerns about Bitcoin itself, namely the idea that if the price of Bitcoin comes down, there will be less incentive to mine the Bitcoin, which could actually freeze the whole system. If miners are not incentivized to keep doing what they do, then the network doesn't work anymore. And so you have holes, I think, in the Bitcoin network itself. There's also the question about is Bitcoin going to be the long term asset that people trade? I think it's possible that 10 years from now we use Bitcoin as the basis to back most of our transactions and most of our currencies. But there could also be something completely new that emerges five years from now. Already you're starting to see some platforms try to compete with Ethereum like Polygon is trying to do. So we have no idea what's going to happen in the next five or 10 years in the entire crypto space. But I have now made the decision making that I want to become more educated on this topic. I now see the demand and the utility for cryptocurrencies regardless of if Bitcoin is the winner or not. If it's something new, if it's Doge, please don't be Doge, but if it is some other thing that doesn't exist right now, there is absolutely a need and a demand for anonymous currencies that are hard money that can't be tampered with like the US Dollar can be. So the final question remains, what am I going to do about all of this? Now that I have come full circle on this, now that I have changed my mind, now that I have humbly admitted that I was wrong, what do we do from here? I am keeping a small percentage of my portfolio in Bitcoin. I currently have a larger amount in Ethereum because I can wrap my hat around Ethereum and its use long term. But I'm also very compelled by some of the other networks like Polygon, as a possible next Ethereum. So I am still learning about this sector right now, but I am planning on keeping a percentage of my portfolio in cryptocurrency and I intend to build a base of holdings and in Bitcoin specifically that I'll hold for the next 10 years. And the reason for that is because I think that it's reasonable to assume that that could 10x over the next 10 years. I think that the entire sector will definitely 10x over the next 10 years. And so it makes sense for me to put a piece of my portfolio in there. Even though there's also a risk that it could go to 0. It could 10x if I'm right this time, or it could go to zero if I'm wrong yet again. I'm willing to take that bet, but I'm not doing that with money that I can't lose. And I'm keeping a very small percentage of my portfolio reserved for currencies that I'm discovering like Define and Matic and Sushi and other what I would consider organizations that I could see emerging and leading in this next wave of technology. And that's all subject to change. I am learning about this stuff faster than my 18 month old son is learning to talk. So I am drinking from fire hoses right now.

And my opinion on all of this is subject to change. But that's what I'm doing in response. As of right now, this is the next wave of society. It scares me, to be honest with you. I don't want to be my grandparents who swore that they would never get the Internet. I do have a 102-year-old grandmother who still does not own a computer. I don't want to be that. I don't want to be afraid of technology. And right now this is all still super intimidating to me. So over the coming weeks and months, I'm going to be interviewing a few people on capitalism.com that can add some context and some color to this. I'm going to be tracking and documenting me learning about this world. I'm intimidated by this. I know more than my uncle who is really scared about this whole world. I'm playing from behind here, but I'm catching up as fast as possible because as the leader of capitalism.com I don't want to be the old guy that doesn't know how this works. It's part of my job to be ahead of these trends and I've been behind on this one. So over the next coming weeks and months, I'm going to be sharing more about what I've learned and the people that I'm following who are talking about this. So please make sure that you are subscribed to the channel so that you see all of those updates. I'm Ryan Daniel Moran with capitalism.com and I was wrong about Bitcoin. I still don't know if Bitcoin is going to be the winner. I don't know where this is going to go over the next five to 10 years. But I was wrong about the technology, I was wrong about its value and most importantly, I was wrong about the need for some sort of hard money that is anonymous and scalable. We don't know how this is going to play out, but we know that it's the next wave of society. Thanks for watching and listening and I'll see you on the next episode. Take care.