Bitcoin is back. Too early?

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Just when you thought it was safe to consign cryptocurrencies to a corner of your mind inhabited by videotapes and sub-2% mortgage rates, Bitcoin came back.

The ancestor of digital currencies was on the floor and looked absent for the count at the end of 2022.

Its price had fallen from $65,000 in November 2021 to less than $16,000 a year later.

And with crypto exchanges going bust left and right and the industry (allegedly) getting its own Bernie Madoff in the form of one Sam Bankman-Fried, the fallen founder of the mega-cryptocurrency exchange FTX, currently residing with his parents on $250 million bond after being arrested for various flavors of fraud, all the excited talk about going to the moon was over.

Heading for a donut, a big fat 0 seemed just as likely.

Nobody but the diehards had a good say about Bitcoin.

Which, not for the first time, seems to have been the buy signal.

Thrills, spills and stomach aches

As I write, Bitcoin price has just broken through the $23,000 mark.

Which, while still nearly two-thirds below its all-time high of $65,000, has also risen nearly 50% in a month.

Suddenly, the Great Crash of 2022 feels like another Big Dipper on a roller coaster that took Bitcoin from costing pennies to hitting billionaires, in just 14 years.

All of this puts the bold predictions made by Bitcoin’s biggest fans back on the table.

You know the kind of thing.

Famous American fund manager Cathie Woods predicts that Bitcoin will reach $1 million by 2030.

Talk about that Bitcoin could move gold into (virtual) central bank vaults.

The asset ends up being woven into the fabric of the financial system.

Or, alternatively, that it will parallel provide a vast network of payments without authorization, without hindrances of the government.

Just retyping it again makes me exhausted from all the hype to come.

Do not mistake yourself ! I have been exposed to bitcoin one way or another for years and am now.

Certainly, I do not see the brutal overhaul of the financial system that its evangelists consider inevitable. But I see a lot of potential and above all only surmountable obstacles.

However, I am weary and suspicious of what Bitcoin stands for, regardless of this theoretical view.

Which is, in short, a giant technology-enabled Get Rich Quick program.

Billion dollar babies

Now, many Bitcoin proponents would say this is not so much a feature as a bug of their revolution.

Of course, they concede, the limited supply of Bitcoin means its price will inevitably rise as more people take their place in the future of humanity’s financial infrastructure and ultimately our economic salvation. .

(Seriously, that’s how they would put it. Bitcoin maximalists are nothing if not messianic.)

But no, they add, making millions is not the point of owning Bitcoin. It’s just a by-product. If anything, a distraction.

Fair enough, but that’s orthogonal to how the other 99.9% of the world understands the history of Bitcoin or even why they heard about it.

For almost everyone, Bitcoin is about roommates who behaved like bandits by getting involved from the early days. And who have since proclaimed such things as having fun while remaining poor! while fighting turf battles with a thousand other digital competitors vying for what Bitcoin offers.

Which, again, is the quickest way for them to turn a hundred dollars into two.

Not to mention the whole thing with JPEGs of rocks and monkeys worth millions at the height of the last bubble that we all had to pretend to have an opinion on.

The truth is, there are tens of thousands of cool IT projects going on right now. And most people don’t care less about one of them. At all.

We care about Bitcoin because of what the price has done in the past and what it could do again.

Take stock

And it’s that hunger, that hype, and that hysteria that I dread making a comeback.

Not even so much because the huge losses suffered by the greedy and/or the gullible in the last round are still so fresh, whether they lost their wealth due to falling prices or seeing their savings stuck on trading platforms. faulty cryptography.

It’s unfortunate, and on a human level, I’m sympathetic. But if someone wants to bet get-rich-quick, then for me, they are implicitly accepting the possibility of getting-poor-quick as well.

No, it’s the distraction that crypto mania represents from what I consider real-world investing that bothers me the most.

A good investment is trying to find good or at least undervalued companies and supporting them with our hard earned money.

Watch these companies grow. Reinvest the dividends they pay.

Hold their management accountable not only for profits, but also for how they treat other stakeholders and the environment.

Or even just buy into an index fund or trust a fund manager as a way to own your share of our economic future.

To me, it’s the meat and bones of investing and healthy shareholder democracy too.

give us a break

I have nothing inherently against speculative positions where a huge range of outcomes are possible – be it bitcoin or a blue sky biotech stock.

But, I believe they should only be a small proportion of someone who invests in life. An outlier in a diversified portfolio, not a punt on one crypto tribe over another.

This is what pains me about Bitcoins sudden reversal of fortune.

Yes, I have already taken advantage of the turnaround. Yes, I believe that in 10 years, there is a good chance that the price of Bitcoin will be much higher, that it has been able to gain a legitimate role within the economic system, and that even disadvantages such as its high consumption of energy can be improved.

But I would much prefer it if the price took a break for a year or three along the way.

Perhaps then tens of millions of potential equity investors who might otherwise be distracted by another boom and bust cycle for Bitcoin might instead fall in love with the stock market, as I did.

Does it make me old fashioned? So maybe I’ll never go to the moon or climb higher than the nearest ivory tower.

But honestly, I believe that in the long run it would be better for more people’s financial futures than another crazy and distracting crypto craze. And maybe even better for Bitcoin too.

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