Bitcoin is not an investment.

Bitcoin is not an investment. It is not a security. It is not a stock. It is a simple method of storing and exchanging value, with some game-changing properties.

The fact that bitcoin price has constantly been rising since its inception is just a side-effect. It fools people into thinking it is an investment. The explosion in price is happening because Bitcoin is absorbing the value stored in inferior pre-existing stores of value.

As time goes by, it approaches equilibrium with competing stores of value, and that positive effect on price diminishes. We are still a long way from equilibrium.

One of the game-changing properties of bitcoin (the most important one, many agree) arises from the fact that a bitcoin’s percentage of the total fully diluted supply never changes. One bitcoin is always 0.00000476% of the total possible supply. This has an important implication.

It means that a bitcoin is the personal property of the owner. Contrast this to fiat currency, like the US Dollar. That is common property. Why? Because a dollar’s percentage of the whole is not under your control.

Others can decide to (and increasingly do) diminish your dollar’s % of the whole. Which means the value of your dollar, no matter where you hide it, is a function of the whole, it isn’t independent, like bitcoin. Others control the equation. With bitcoin, you control it all, because you don’t ever have to accept the change of total supply if it is ever attempted. Remember, better stores of value absorb value from inferior ones, and changing bitcoin to be like dollars (with their increasing supply) is doomed, as bitcoin is already demonstrating.

When people call bitcoin “a safe haven” to store value, that’s a pretty good description. Stop thinking of it as some kind of investment that will make you rich. It’s not about that. That’s gravy. As are the rest of Bitcoin’s game-changing properties.

From a Tweet storm I posted.

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