Dear Wall Street Friend,
I am writing this letter because I like you. I know we have our differences, especially when it comes to how we view the financial institutions that have dominated the last century of history, but I understand your point.
You are an intelligent and communicative person, banks and managers have identified your potential, offered you a well-paid career and a financial education in the image of the fiduciary system. Suddenly I appear with an obsessed look, telling you that an anonymous individual has created digital money which, in addition to being an unprecedented investment, is a technology that will revolutionize humanity and upset everything you learned from your successful billionaire employers. .
At first glance, I must look like a madman, but be patient and read this letter to the end. I write it from the bottom of my heart.
This is not a definitive article to convince you that bitcoin is the best investment available to you or why it represents the greatest social disruption of this century. My intention is simply to give you some warnings and suggestions on how to approach this topic so that you can find your way down the Bitcoin rabbit hole.
Bitcoin is a threat to the financial industry
It may scare you, but I can’t tell you otherwise. Bitcoin is indeed a threat to the entire financial sector. As bitcoin adoption increases, the trend is for the entire industry of funds, banks, brokers, investment banking, etc. to shrink in size.
Please don’t let this fact prevent you from understanding Bitcoin in depth. Those who understand the orange coin today are only part of the larger population that will embrace the technology in the future. Even with a pessimistic outlook for the investment industry, the opportunity you will see is so huge that you will soon forget the disruption to the industry that employs you.
Bitcoin is not a business
Bitcoin is a weird beast, but it’s especially weird if you try to understand it through the traditional prism of analyzing income-generating assets like businesses, real estate, and debt. Bitcoin is hard to define even for someone who has been obsessed with it for years, like me.
My suggestion is to approach Bitcoin from a network technology perspective. Look for parallels in the development of the Internet, decentralized peer-to-peer networks like Tor or BitTorrent, and even sea and air routes.
And of course, be sure to study monetary history. Placing bitcoin and fiat currency on an evolutionary timeline will make it clear how much more dynamic this history is than central bank supporters would like to admit.
Bitcoin is a revolution of individuals, not institutions
Don’t look for the value of bitcoin in big financial institutions and gurus. Its value lies in the anonymous people who make the conscious decision to help maintain the bitcoin network by purchasing their own home equipment and saving through small weekly bitcoin purchases.
It’s quite different from what you’re used to. In the fiduciary world, surnames, first names, functions and institutions are agents of great importance and value. In Bitcoin, the opinions of Jamie Dimon, Warren Buffet and the CFO of BlackRock do not matter. What makes this technology inevitable is the existence of an anonymous, uncompromising and unstoppable minority.
Try to understand what this minority thinks, what motivates it, how it interacts with Bitcoin and why it is so difficult to stop it. The next time Charlie Munger gives his opinion on the matter, ignore him.
The Technical Nuances of Bitcoin Matter
You may not be interested in understanding the difference between asymmetric key cryptography and a hash function, or the difference between predicate computation and verification. It may also not seem very important to understand the nuances of governance of an open source project or what a soft fork means and Bitcoin’s tendency to avoid investing in hard forks. I understand you, these are specific ideas and are not part of your daily life.
But know that these concepts make a difference, especially when you want to understand why Bitcoin is different from all altcoins, which we Bitcoiners affectionately call “shitcoins”. Take the time to research how Bitcoin works on a deeper level than articles on financial news portals. A few technical details are essential to understand the guarantees that Bitcoin offers and why they are unique compared to all the projects that exist in the “crypto” world.
Study Austrian Economics
I’ve heard big names on Wall Street claim that bitcoin has no “intrinsic value” more times than is reasonable. After a few years of not understanding this “phenomenon”, I learned that many economists with degrees and working in finance had never read a single essay by Friedrich Hayek or Ludwig von Mises.
It would be very helpful for your Bitcoin journey if you put linear regressions and differential modeling aside for a while to focus on the insights of Carl Menger and his followers. I promise you won’t become a gold bug overnight, but at the very least you will understand that the term “intrinsic value” is meaningless.
Everything will be alright
This journey will not be comfortable. Realizing that the investment industry – probably the most powerful sector of the economy for the past 50 years – is about to be shaken up, and understanding that many of the teachings of your status-laden billionaire bosses don’t are not exactly the best in a post -Fiat world will be painful, but it will be ok. As I told you at the beginning of this letter, you are an intelligent and communicative person, once you have your Bitcoin domino, you will be faced with one of the greatest opportunities of your life; and I promise you that after the initial scare, there is nothing but endless optimism.
This is a guest post by João Grilo. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.