I don’t talk about Bitcoin that often.
Last time was in December, 2018, when I made a YouTube video on this topic. I later took my channel down because I fell out of love with Google, but what is interesting about that video is that it marked the exact bottom of the Bitcoin market cycle.
How on earth did that happen?
Maybe I was just lucky
Let’s discuss luck for a minute.
Luck plays a big role in human outcomes but, going forward, it will play an even bigger role. Why? Because humanity’s main antagonist is increasingly going to be bots, algorithms, and AI. If you think that’s science fiction, start to acquaint yourself with Aladdin AI and DALL-E2. Aladdin AI is working tirelessly to relieve you of your home, while DALL-E2 is working tirelessly to relieve you of your job.
Such algos are trained to predict and shape human sentiment and decisions. If your thinking is based on logic, then your decisions can be predicted and therefore foiled by AI-driven algos. That’s especially true in financial markets, but increasingly so in other areas of behavioral control.
What this means is, if you are trying to think like a machine – logically, that is – then you are toast.
On the other hand, if you are not relying on Cartesian reason and linear logic, then your behavior is less predictable and even less programmable. This is where intuition comes in, and other important but less quantifiable factors like luck.
So, no, I’m not discounting luck. In fact, you’re better off relying on luck than any of those “experts”, doctors, and PhDs out there. Information is useful, but you can never know everything. What is more important is the ability to decide based on limited information and even more limited certainty.
Here is how I decide
Decisions are influenced by inputs we receive from other people. After decades of mistakes and fuck-ups, I developed a simple methodology for parsing those inputs.
In as few words as possible, before I act on something, two things need to be true at the same time:
Trust: Do I trust that person enough to align my fate with them? Am I prepared to fail with them?
Confluence: Are more than one trusted parties – people who don’t know each other – adopting the same approach? Is there overlap?
Back in December 2018, the mainstream consensus was that Bitcoin was dying. Against that backdrop, a few people whose ethics and track record I trusted, started talking about Bitcoin all of a sudden. Those people were established in unrelated industries, and the only thing they shared in common was my trust.
Trust: check. Confluence: check. Based on that, I went ahead and called the Bitcoin bottom.
Always look for patterns
I apply the same heuristic in other parts of life, from how I eat, to how I invest, pick locations, and so on. Any mistakes I’ve made over the years (and I’ve made plenty) happened when my decisions did not fulfill both of those criteria.
To be clear, you can have confluence without trust.
When all mainstream media shouts the same AI-generated, NLP-infused headlines at people, you definitely have overlap. The question is, do you have trust? That’s where discernment and intuition comes in. Do not think like a machine, remember?
Conversely, you can have trust without confluence.
Say, you bump into an influencer who says all the right things and everything within you makes you want to trust and follow their example. The question is, does their approach overlap with other people you trust?
Requiring both trust and confluence indicators to flash green, makes for a potent filter and fail-safe.
With that out of the way, let’s get back to Bitcoin.
Is Bitcoin about to die?
No it is not. Enough trusted people from diverse backgrounds have significant skin in the game. We are in good company.
Most of Bitcoin’s detractors happen to be people I don’t have much faith in, which acts as a counter-indicator. But, over the years, some very smart people were on the opposite side of the Bitcoin trade. A few of them changed their mind. Others continue to be against it. I listen closely to what they have to say, but until I see enough opposing confluence, the Bitcoin thesis remains intact.
At this point in time, Bitcoin is the only property you can fully own. Nobody can confiscate or stop you from using it. You cannot say the same about any other asset out there. Home ownership? See what happens if you don’t pay your “property” taxes. Gold? Try to cross borders with it. Stable coins like USDC? Did you know they can be programmatically frozen? The list goes on and on.
Is Bitcoin risk-free? Of course not. There are powerful interests trying to curtail and compromise it as we speak. They curtail it with climate FUD, coordinated institutional shorting, and by targeting prominent industry players. They compromise it by co-opting the Bitcoin culture and eventually the Bitcoin code itself. You heard that right. By sponsoring Bitcoin development, those deep-pocketed entities hope to eventually change the fundamentals of Bitcoin from within. Watch this space closely.
In spite of those risks, I still believe Bitcoin is a solid long term investment. Could the price drop even further? Sure, but at the end of the day I’m not actively looking to time the markets.
Okay, time for some housekeeping.
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Brilliant both in thoughts and in delivery! 🤩