October 31st 2008, in a dark unknown corner of the internet. A link to a paper authored by a man named Satoshi Nakamoto is suddenly posted to a cryptography mailing list two months later on January 3rd 2009. The bitcoin network is created when the unknown Nakamoto mines the starting block of the chain better known as the genesis block. Embedded inside is a line that reads quote.
The times January 3rd 2009, chancellor on brink of second bailout for banks. This is a reference to a headline published by a British newspaper while some view it as a time stamp. Others see it as a critique of the fractional reserve banking system. Either way, this magical piece of code goes from being worthless to a trillion dollar asset in just over 10 years. Nakamoto shortly after disappeared and was never heard from again.
It is believed that during the first seven months of bitcoin’s existence, Satoshi mined as many as 1.1 million bitcoin. This fortune now worth in excess of 30 billion dollars remains untouched to this day. Celebrities, CEOs, CNBC and even fortune 500 companies like tesla have endorsed the cryptocurrency as a legitimate form of wealth storage payment apps like Dorsey’s cash app Venmo and Paypal, offer ways to integrate into the bitcoin blockchain. You would think that after more than a decade of success, people skeptical of government afraid of paper money and open-minded to new ideas would flock to an asset like this. But there are plenty who still strongly believe that bitcoin is headed to zero.
A worthless scam that is the result of a super bubble at the top of this list is Dr Michael bury who made it clear that bitcoin is worthless. In his mind, a scam of biblical proportions to review his thoughts in depth. I went over all of his tweets now deleted, starting from February 1st 2021, going over each that mentioned the cryptocurrency. Remember that berry almost never gives interviews. I’ve looked and it’s very hard to find a single video of the guy talking about anything recent. He keeps a very low profile and the only communication we get from him are his firm’s 13 f’s which showcase his positions. Also his twitter which he deletes occasionally.
The good news is that various other websites and twitter accounts, archivist tweets so that we can view them at a later date to begin formulating his thesis on crypto. We start with the first tweet dimensions. Bitcoin a tweet from February 8 2021. His thoughts from this event formulate the base of his entire opinion on bitcoin and offered the audience an alternative view on the entire subject of cryptocurrency. Hurry is a sceptical guy and if you remember earlier in the year, tesla bought a bunch of bitcoin and then sold it quickly after claiming that musk was unaware of the environmental impact. Bitcoin mining causes this was reported as a bizarre event and it sent shockwaves throughout the crypto world.
About Elon Musk
Elon who was previously pro bitcoin had all of a sudden changed his mind. This happened to coincide with Chinese regulators summoning tesla to answer for what they claimed were quality control issues for buried something just didn’t smell right. Elon was the bitcoin bull and his company’s purchase of btc sent the price soaring. Now all of a sudden, they were selling their entire position. From his perspective, tesla’s dabble into crypto raised alarms for Chinese leadership and the CCP had essentially forced musk to sell although he doesn’t claim it right in a tweet it’s implied. If you read it over, this tweet actually sparked a flurry of other bearish thoughts regarding crypto.
Like this one from February 11th which claimed that the worldwide banking elite had every reason to crush bitcoin as it’s mostly mined in sanctioned countries. It implying that bitcoin had many headwinds in its future if it intends to bud heads with organizations like the European central bank, the US fed and the IMF. Then we have this one from February 21st. Bulls like to claim that bitcoin will eventually serve as the worldwide standard and it will solve something. Called tiffin’s dilemma, otherwise known as tiffin’s paradox, an economic conflict that many actually blame as the cause for the 2008 economic meltdown. You can look this up on your own time but in summary, the theory basically says if your currency becomes the worldwide reserve currency the way the dollar is now.
Then there will be added demand for that currency across the planet in short. Skipping all of the details and simplifying this down to a couple of sentences. This basically forces the US government to run ever-growing deficits, indirectly causing all kinds of problems including a serious trade deficit. It is believed by many that bitcoin solves tiffin’s dilemma but burry points out that solving. This requires extreme liquidity and gives the example of the swiss franc as the showcase.
For why you can’t do this with bitcoin? Bitcoin has a scaling problem to serve at that level following this. There are multiple tweets that boil down to headwinds faced by bitcoin via regulatory risk as a mostly unregulated asset governments around the world. In his opinion, will look to impose rules and regulations that may not favors the coin. This is embraced in a February 25th tweet that sums up buries views regarding BTC in essence.
He claims that the investment poses more risk than opportunity. A tweet that caused a massive backlash with many calling him and other bitcoin bears like Charlie Munger quote out of touch. Monger famously had this to say about it now that the crypto market overall is valued at two trillion dollars. Do you still consider cryptos as worthless artificial gold? I knew there’d be a question on bitcoin or and uh. I thought to myself, well I’ve watched these politicians dodge questions all the time. You know and uh, I always find it kind of disgusting when they do it. But the truth is, I’m gonna dodge that question because the we probably got hundreds of thousands of people watching this that own bitcoin. We’ve only got two people that are short so we got a choice of making 400 000 people mad at us and unhappy and or making two people happy.
That’s just a dumb equation. So I’m all right on that one and maybe we’ll see how Charlie is. Well, those who know me well are just waving the red flag of the bowl. Of course, I hate the bitcoin success and I don’t welcome a currency that’s so useful and to kidnappers and extortionists and so forth. Nor do i like just shuffling out a few extra billions and billions and hate crypto. Would ask why these people are not shorting it. If they believe it’s worth zero and the answer is because in the short term, bitcoin can go anywhere asking that question will be like asking a hedge fund why they’re not shorting any of these dot coms in 1999.
What others means
It’s very possible that bitcoin goes up to 100k or even more as the momentum builds up. But after doing the research, i tend to think more like this. It’s a long answer by Warren Buffett. But it’s well worth the listen. Charlie said bitcoins like rat poison, you were asked about that comment and you said well it’s probably more like rat poison squared. Charlie went on in the meeting to then basically call bitcoin turds um. He is an expressive sword maybe when he gets a little older. He’ll mature. I just want to ask you about that because it sparked so much controversy and particularly on twitter. Some of the places where you might expect people who are trading in cryptocurrency uh to be pretty um loud about what they heard.
What is it about bitcoin that gets you guys so fired up well? When you buy a farm, you look at the crop every year and what prices are and you decide whether it was satisfactory investment. I mean you look to the asset itself and what it produces for you when we buy a business. We look at what the business earns and decide how we feel about it in terms of what we paid. But we are buying something that at the end of the period we not only have what we bought in the first place. But we have something that the asset produced and when you buy non-productive assets, all you’re counting on is whether the next person is going to pay you more because they’re even more excited about. Another next person coming along but the asset itself is creating nothing. One of the interesting things for example is gold. If you go back to the time of Christ and you look at how many hours of liver you had to give up in order to buy an ounce of gold and you take it forward to now, you’ll find the compound right.
Maybe a tenth or two tenths of one percent you know and then you have to insure it during that time. Make sure you know somebody doesn’t steal it from you. Everything, but it doesn’t produce anything and productive assets you may have. You can pay too much for a productive asset but i bought a farm in the 1980s and every year look at how much it produced away soybeans and corn.
At the end of that period, i’ve still got the farm and i’ve gotten some significant income off apartment house operating business. If you and I buy various cryptocurrencies, they’re not they’re not going to mobilize. They’re going to be a bunch of rabbits sitting there in front of us. They’re just gonna sit there and i gotta hope next time you get more excited after i bought it from you. Then maybe i’ll get more excited and buy it from you. We could sit in the house by ourselves and we could keep running up the price between the two of us. But at the end of the time, there’s one bitcoin sitting there and now we’ve got to find somebody else.
They come to an end, I mean that’s a greater fool theory that’s what you’re saying well. Yeah, it’s buying something because you expect the pool of people who want to buy it because they want to sell it to somebody else. It will grow and people love to speculate. He loves to gamble and that’s what bitcoin is as an owner. You have to ask yourself do you even understand what you’re holding? Can you explain bitcoin to a five-year-old? I wouldn’t hesitate to guess that you likely can’t. In fact, i invite you to watch this 26 minute video by youtube creator-three blue one brown. It’s probably the best attempt to explain how bitcoin actually works and even after watching it twice I’m nowhere near close enough to say I’m fully understand.
I went back and forth on crypto since 2017 but I think it’s finally clicked the reason. I’m attracted to it isn’t because I believe in its future or I understand its possibilities. Or I think that crypto technology is going to revolutionize the world. But rather, I’m only hoping to sell it for more than what I’ve paid. It’s a mysterious magic box of sorts that I don’t get and when you own it, you tend to look away from the tweets and videos that criticize and call out all the negative aspects. You begin to live in an echo chamber, hearing only the good to me.
The comparison is simple, this is no different than all the other speculative bubbles throughout history. At one point, humans were paying top dollar for tulips only because rising prices attract more buyers- a loop that can last for quite a long time bringing in more and more people via greed and FOMO until finally the rug is pulled for those of you that watch my stories. You will know that I often include a link to my block by code below as of today I’m removing the code and I’m selling off my bitcoin position which for full disclosure has increased about 21 for a total profit of around four thousand dollars.
I have nothing bad to say about my experience at Blockfi. The product is amazing if you believe in the future of crypto but the entire infrastructure of the company is based around a financial instrument that is a mystery to me. After some thinking, i’m done getting into investments where I don’t understand. The mechanisms driving profits, I’m sure I’m going to get a lot of hate for doing this and I will admit to you that exiting the position was much easier considering that I was up around 20.
But I don’t want to promote crypto or anything else unless I’m actually using the product or firmly believe in it. I was never paid to sponsor anything. Since i began promoting, I can safely assume that the vast majority of you who used it to deposit are also in the green. If you are using the service, i would just rethink and analysed your position and look over the bear case on crypto. Charlie Monger, Warren Buffett and Bury are incredibly smart businessmen who have observed many different things in the finance world. While they may seem washed or boomers to the crypto crowd, I do think they make a lot of valid points that are worth considering especially if you’re investing thousands of dollars in this space