A tough week for crypto. Two weeks of slow gains were wiped away in one day with this week’s dump. The current low prices provide a good opportunity to accumulate quality crypto assets and for me that’s Bitcoin.
Bitcoin provides investors with rare access to asymmetry. When an investment has a return that limits the amount you can lose while offering an outsized potential return, it is considered asymmetric. Crypto markets have given retail investors access to these types of returns i.e. if you had invested $1000 in Bitcoin in January 2017, it would have been worth $19,000 in December 2017. Your potential loss was $1000, but your potential return was $18,000.
Buying Bitcoin providies asymmetric exposure to the world’s transition to an increasingly digital, private and global economy. I think Bitcoin has a place in that world. It might takes years, but from my perspective, it’s a bet worth taking.
In my part of the world it's Friday afternoon and a very big work week is drawing to an end. This morning I read a tweet-thread-storm (call it what you like) by Naval Ravikant. Naval is best known for his angel investing, but he's also one of the smartest macro thinkers on subjects as diverse as meditation, reading, history and blockchain. With apologies to Naval, I've copied and pasted his entire thread below. Even if you read it slowly, you can read the whole thread in a few minutes. And yet, it contains more insight than most books on business, financial planning, and personal development. Anyways, happy Friday, wherever you may be in the world. And do have a read, it most likely contains some relevant information that you didn’t know you were looking for....
Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
Ignore people playing status games. They gain status by attacking people playing wealth creation games.
You’re not going to get rich renting out your time. You must own equity — a piece of a business — to gain your financial freedom.
You will get rich by giving society what it wants but does not yet know how to get. At scale.
Pick an industry where you can play long term games with long term people.
The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.
Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
Pick business partners with high intelligence, energy, and, above all, integrity.
Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.
Learn to sell. Learn to build. If you can do both, you will be unstoppable.
Arm yourself with specific knowledge, accountability, and leverage.
Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.
Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
Building specific knowledge will feel like play to you but will look like work to others.
When specific knowledge is taught, it’s through apprenticeships, not schools.
Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.
“Give me a lever long enough, and a place to stand, and I will move the earth.” - Archimedes
Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
Labor means people working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.
Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.
An army of robots is freely available — it’s just packed in data centers for heat and space efficiency. Use it.
If you can’t code, write books and blogs, record videos and podcasts.
Leverage is a force multiplier for your judgement.
Judgement requires experience, but can be built faster by learning foundational skills.
There is no skill called “business.” Avoid business magazines and business classes.
Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
Reading is faster than listening. Doing is faster than watching.
You should be too busy to “do coffee,” while still keeping an uncluttered calendar.
Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
Become the best in the world at what you do. Keep redefining what you do until this is true.
There are no get rich quick schemes. That’s just someone else getting rich off you.
Apply specific knowledge, with leverage, and eventually you will get what you deserve.
When you’re finally wealthy, you’ll realize that it wasn’t what you were seeking in the first place. But that’s for another day.
This week you may have seen billionaire investors Warren Buffett and Charlie Munger indulging themselves with another round of FUDing Bitcoin. They used some unusually colourful language, describing Bitcoin as “rat poison” and crypto trading as being the moral equivalent of “trading harvested baby brains.” Now Charlie Munger is old. Dude is 94, so perhaps we can forgive him for using such an unfortunate turn of phrase. Baby brains? Really? The pure luridness of the phrase bothered me and it got me thinking. Buffet and Munger are obviously two of the smartest investors on the planet. They’re strategists who don’t make public statements without having a reason to do so. This thinking leads to two conclusions. Either we’re dealing with two old men who simply don’t understand the tech or more intriguingly, Buffett and Munger understand Bitcoin very well. In this scenario they have concluded that Bitcoin represents an existential risk to the portfolio of investments they have spent decades building.
Turns out of some of Berkshire Hathaway’s largest long term investments are in old school financial companies. You know, the ones most at risk of being disrupted by Bitcoin. They also own 5% of Apple. My friend MichelleWakefield mentioned yesterday that crypto is a threat to Apple Pay. Talk about things that make you go hhmmmm 🤔
They own: 9.5% of Wells Fargo 6.7% of Bank of America 17.8% of American Express 5.3% of US Bancorp 13.1% of Moody’s Corporation 6.1% of Bank of NY Mellon Corp 5% of Apple
Is it possible that the reason Buffett and Munger are using such lurid language to attack bitcoin is because they know they’ll get headlines? Is their real objective to slowly turn the mainstream against Bitcoin to protect their investments?
Either way, they’re in for a rude awakening. If there’s one thing they should know about Bitcoin, it’s simply this: Honey Badger Don't Care
Like I said in my last post, Crypto is full of FUD. We got some spectacular FUD today from Warren Buffett and his business partner Charlie Munger. Not content with being two of the richest old white men on the planet, these two bright billionaires have decided to FUD Bitcoin. Again. Buffet has memorably described Bitcoin as “rat poison” but Munger, not to be out done, today compared cryptocurrency trading to dealing in “freshly harvested baby brains.” WTF? Read more about Freshly harvested baby brains here 🤯
FUD. FUD stands for Fear Uncertainty & Doubt. It’s the opposite of FOMO. FUD = Fake News and in crypto it is everywhere and it often drives the market down. In crypto rumours spread like wildfire. “China will ban crypto!” “This random exchange was hacked!” “ETH will be classified as a Security!” FUD, FUD, FUD. The crypto market is new and very volatile and one of the reasons for the volatility is that humans are highly emotional. We read a rumour and the FUD sets in. You give in to the fear. Then someone else gives in to doubt… people begin to sell and the price falls… All markets are really just a chart of human emotions and that’s especially true in crypto. Last week crypto twitter was all abuzz with rumours that today the SEC would meet and a decision would be announced on ETH. It would either be declared a Security (bad) or it wouldn’t (good). Top publications including the Wall Street Journal covered this. But guess what? Today is the date and there is no hearing. And no official decision. It’s possible talks are happening behind the scenes but if so, this is not an official hearing and no official decision will be made today. In the meantime, some investors have given in to FUD and the market has dropped. That gives us a nice dip, so if you were looking for an entry on an alt coin… FUD will often provide that opportunity. Even now, nobody has clear information on the status of the SEC. Here’s a twitter thread that might provide some context: THREAD
Always good to wake up to a move up across the market. ETH is leading the move, and that's interesting because the US SEC are due to meet next week to discuss whether to classify ETH as a security (this would be bearish for crypto). With the market showing this much strength, sentiment suggests the SEC won't classify ETH as a security. Interesting times....
Human Nature Is Pro-Cyclical, Go Against The Urge. This is April's newsletter from Pantera, one of the leading blockchain investment funds. There are some real gems of knowledge in here. Worth the read.
The Bullish Case for Bitcoin. In crypto, for now, everything revolves around Bitcoin. When Bitcoin is strong, crypto is strong, and the reverse is also true. This article was written by a former Google Engineer (not Charlie Lee) and does a good job at making the macro case for Bitcoin. To understand Bitcoin, it helps to know a little bit about the history of money and how Bitcoin compares to and improves on the dollar and gold. Long read ;) https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1
A tough week for crypto. Two weeks of slow gains were wiped away in one day with this week’s dump. The current low prices provide a good opportunity to accumulate quality crypto assets and for me that’s Bitcoin. Bitcoin provides...
In my part of the world it's Friday afternoon and a very big work week is drawing to an end. This morning I read a tweet-thread-storm (call it what you like) by Naval Ravikant. Naval is best known for his angel investing, but he's also...