A Bull Case for Bitcoin – Clay’s Thoughts

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I am a long-term Bitcoin bull. To be fair in an attempt to be unbiased, my opinions up to this point have not been all right, and I have lost some money by having the views that I have. Despite this, I refuse to sell because I think that one day BTC will be worth considerably more than it is worth today. My thesis for this belief is driven by a combination of behavioral economics and macro trends I am observing in the market.

The price of Bitcoin is a derivative of the strength of the network and the strength of the network relies on the opinions of both the current and future participants of that network. Many of studies have shown the difference in opinion about Bitcoin between older and younger generations. I believe these philosophical differences can be attributed to education and investment preferences.

The decision makers that control the flow of money in the capital markets today are of older generations; they are more pragmatic in their evaluation of new assets and ideas, and they are more likely to abandon interest once the asset or idea in question begins to show signs of stress. Bitcoin is not appealing to this category of people because they do not understand it, they have read stories of its flaws, and its price volatility does not align with their own risk appetite.

Younger generations, on the other hand, are the target audience for Bitcoin and crypto. When evaluating investment opportunities, Millennials and Generations Z are less pragmatic and more idealistic in their approach. These investors have considerably longer investment horizons, and the high volatility of speculative assets does not act as a deal breaker for them. These users do not view Bitcoin as an alternative to fiat; rather they view the asset as “digital gold”, and are more likely to hold on through long streaks of volatility. When I put money away today, I am not planning on touching it for 30+ years. This being the case, I have chosen to allocate a majority of my money towards Bitcoin because I believe there is a higher chance of it appreciating considerably rather than going to zero.

Bitcoin’s adoption to date has been remarkable because still very few people actually understand how it works past the surface layer. I am not going to pretend that I know everything there is to know about Bitcoin or the blockchain because there is so much to process and understand before anybody can label themselves an expert. The lack of knowledge about Bitcoin has held back its price appreciation because rational investors cannot put money to work into assets they do not understand.

To address this, we are seeing more and more resources are going towards teaching crypto and addressing the knowledge gap. Andreessen Horowitz recently launched its free Crypto Startup School, and I think it is fair to assume that other notable VCs/accelerator programs/institutions will follow soon. As more is spent on education, more knowledge is retained and passed along, and this in turn will lead to more innovation coming out of the crypto space. Bitcoin’s price is correlated to the strength of the overall crypto environment, and improvements within the sector will drive the price of the asset higher.

Lastly, the talent pool is migrating to work on more and more crypto projects. Many smart people have dubbed crypto as the next frontier of opportunity, and we have seen former engineers at Apple, Facebook, Amazon, Google, and Twitter leave great jobs at some of the most respected companies in the world to pursue new crypto businesses. The talent migration is not just coming from the technical side either, and we are seeing top executives at financial firms join the exodus to work on crypto projects.

Bitcoin remains one of the most polarizing topics in the world, however, I strongly believe that the asset is undervalued today. We must remind ourselves that the asset was introduced to the world only a decade ago, and most of the population only took notice two years ago. The future users of the network have now familiarized themselves with Bitcoin, even if it is only at the surface level. Additional initiatives are being put in place to continue to reduce the knowledge gap. Lastly, the brightest minds are leaving good-paying jobs to pursue crypto projects. I think that collectively these signs should be taken as indicators that Bitcoin will be worth considerably more in ten years than it is today. After all, the internet was also considered speculative once upon a time.

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