It’s really hard for me to write about anything else than Bitcoin today.
As of this AM, the asset has reached a new all-time high market capitalization (price x total number of bitcoin outstanding).
The good news is that if you’re still learning about Bitcoin, you are not too late! We are still early on this one. There are many narratives surrounding Bitcoin, but for me the strongest is the Store of Value narrative. If Bitcoin can achieve status as a global digital store of value or more simply put, digital gold, there is tremendous upside potential from here.
However, DISCLAIMER: THIS IS NOT INVESTMENT ADVICE. I do not want you to read this and go out to immediately FOMO buy your first bitcoin. I write because I believe it is responsible for me to share more about this asset. I hope that you will study it and learn why it makes sense. If it all starts to click for you, then you might begin to dollar cost average into the asset by setting up weekly or monthly purchases on a platform like Swan Bitcoin (DISCLAIMER 2: I am an investor in Swan) or Coinbase.
There are PLENTY of resources available to you if you are interested in learning more about Bitcoin. I’ve posted quite a few in previous newsletters, but here are two great places to start:
Otherwise, here are some helpful lessons I’ve learned along the way:
Never invest more than you are able to afford to lose (for young people maybe that is 1-5% of your liquid net worth - cash and other assets you can quickly sell into cash). Be sure that you don’t NEED to sell your bitcoin to fund cash expenses in the near future because the price can drop precipitously and you’ll be left at a loss.
This is a long game, so have a low time preference. This means that you should expect to hold bitcoin for years rather than to trade/flip it for a quick profit in days, weeks, or even months
Prepare for volatility. What goes up, can also go down. While Bitcoin has survived the last 12 years, and been the best performing asset of the last decade, investors have experienced periods of 80% price decline. Earlier this year, on March 12, the price of 1 bitcoin declined >60% in a single day! This rollercoaster can be hard for any investor to stomach, which is why it’s important to do your research, build conviction, and invest for the long run.
Yes, you can buy less than 1 bitcoin! Many people are confused by this; they believe they need to purchase 1 whole bitcoin and that at current prices it is already out of their reach. This contributes to the “i’m too late” narrative. As a result, people often purchase seemingly “cheaper” cryptocurrencies (note: lower price does not signal better value) that they do not understand. All cryptocurrencies were not created equal - so caveat emptor. Bitcoin is actually broken into smaller units called Satoshis (named after Bitcoin’s pseudonymous creator Satoshi Nakomoto). There are 100,000,000 sats in 1 bitcoin. You can “stack sats” by dollar-cost averaging to grow your investment towards 1 bitcoin over time.
Feel free to reach out if you want more resources or have questions. Otherwise, enjoy the ride!
This Week’s Podcast:
Empowering Artists with NFTs & Digital Collectibles with 3LAU, Independent Artists, DJ, & Technologist
“The purpose of a record label historically is first liquidity, to provide an artist enough capital up-front, so that they have room to create, and second, distribution. Now an artist can get both of these directly from their fans on the Internet”
In this episode, I sat down with my friend and world renowned recording artist Justin Blau (aka 3LAU). Justin and I first connected through our mutual friend and my partner on a number of festivals, Adam Lynn. But it wasn’t until we both fell deep down the cryptocurrency rabbit hole in 2017 that our connection really took off. I was an advisor to 3LAU’s first crypto project, Our Music Festival. We discuss the problems with the music industry and why 3LAU decided to remain an independent artist. We then dive into how cryptocurrency and specifically digital collectibles (aka NFTs) might help solve these problems.
Crypto was designed to cut out value-extracting middlemen who take more than they give, and NFTs do just that by creating a direct link between the artists and their fans. Virtual goods are expected to be a $250 billion market by 2025, so any artists who are struggling right now with low recording revenue and declining touring revenue due to COVID19 should explore this path!
What I’m Reading
Ideas
With Charisma to Spare, Franz Brentano, by Sam Dresser
The Next Decade Could be Even Worse by Graeme Wood for the Atlantic
Markets
The American Consumer is Flush with Cash after Paying Down Debt, Bloomberg
7 Misconceptions About Bitcoin and Where to Buy by Lyn Alden
Election 2020
The Weimarization of the American Republic by Aaron Sibarium
Going from Bad to Worse from Internet Voting to Blockchain Voting, MIT Research
Crypto
Feedback Control as a New Primitive for DeFi by Hsien-Tang Kao, Gauntlet
A Vision for Empty Set Dollar by Scott Lewis & Will Price
Ape Tax System Design by Ivangbi
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