Think Bitcoin™ Issue #16
Thanksgiving Edition: A Guide to Connecting with Your Family Over Bitcoin
Hey friends, welcome back to Think Bitcoin™. This is a special, mid-week edition of the newsletter in lieu of the normal Sunday publication. Thanksgiving is upon us, which, for many of us, means family gatherings, a big meal, and the unavoidable potential for awkward conversations with relatives you haven’t seen in a long time.
For Bitcoiners, these holiday gatherings are also opportunities to orange-pill family and friends.
“Orange-pilling” is a Bitcoin term that refers to the scene in the Matrix in which Neo is offered a choice between the red pill and the blue pill, which is really the choice between seeing the truth or remaining ignorant. Taking the “orange pill” means arriving at an understanding, through research and work, of how Bitcoin seeks to transform the world by reintroducing sound, unmanipulable, uninflate-able money. “Orange-pilling” someone means showing them the truth about Bitcoin, as Morpheus showed Neo the truth about the Matrix.
Anyway, family gatherings are replete with opportunities for orange-pilling relatives. And this Thanksgiving, with Bitcoin’s price sitting above $50,000, it may even come up at the dinner table.
In this issue I’m going to offer different ways to connect with family and friends about Bitcoin. Orange-pilling is not about shoving dogma down someone’s throat, nor is it about haranguing a loved one until he or she walks out of the room. It’s about meeting people where they are, demonstrating how Bitcoin is for everyone, explaining how it addresses different problems in the world, and highlighting the ways in which it can unite us.
This is your cheat sheet for the weekend.
In this issue:
You will find responses to four common questions, which, if you decide to bring up Bitcoin, will undoubtedly be lobbed in your direction:
Isn’t Bitcoin extremely risky?
Isn’t it a bubble?
Isn’t it too volatile?
Isn’t it only used by criminals?
You will then find resources to connect over Bitcoin with different family members and friends (some of whom perhaps resemble the fictional persons below) and in different conversational scenarios:
Your sibling’s significant other who works at an environmental nonprofit
Your progressive Gen Z cousin who is passionate about human rights across the globe
Your patriotic uncle who believes the dollar’s reserve status must be preserved and defended at all costs
Your high school best friend who is now an investment professional
The person who comments on how expensive the food must have been in this inflationary environment
Your grandparents, who just want to know what the hell Bitcoin is and how it uses computers
When the conversation turns toward the pressing need for racial and economic justice in this country and around the world
Your sports-obsessed nephew or niece while watching football
Your super artsy cousin
Where to send folks who, having connected with you about Bitcoin, are interested in learning more
If you bring Bitcoin up, you are likely to get one of the following questions:
1. Isn’t Bitcoin extremely risky?
Bitcoin has had an average annualized return of more than 100% over the last decade. The New York Digital Investment Group (“NYDIG”) put out a report in July, in which they found that holding Bitcoin for any five-year period resulted in a minimum annualized return of 28.8%, which is considerably more than any other asset class. This means that even if you bought Bitcoin at the worst time, as long as you held it for five years, your minimum average annualized return was 28.8%. That’s the worst you could have done over any five-year period in the last decade. Keep in mind this report was done in July. As I write, Bitcoin’s price is almost double what it was in mid-July.
The highest five-year annualized return (i.e. the best five-year holding period) was 304.5%. As you can see from the two charts below, from NYDIG’s report, the worst five-year holding period in Bitcoin over the last decade is better than the 75th percentile returns of any other asset class.
The moral of the story here is that, over the short-term, Bitcoin can be quite volatile. Over the long-term, it has handily outperformed all other asset classes since its inception. That doesn’t mean there’s no risk. There is certainly risk. It’s still a very young, maturing asset. But, as far as annualized returns go, it has not been as risky as most people think.
2. Isn’t it a bubble?
No. In the words of Morgan Stanley CEO, James Gorman, “It’s not a fad. It’s not going away.”
Bitcoin follows its own halving cycle and continues to accrue more value as fiat currencies become increasingly debased by the expansion of their respective money supplies. Put simply, there will only ever be 21 million bitcoin. In stark contrast, the Fed can and frequently does expand the supply of dollars with a keystroke on a computer. When more dollars are created, the dollars in existence are worth less. This phenomenon makes hard assets, assets with a fixed supply that can’t be altered or inflated, more valuable.
Lastly, Bitcoin has been the best performing asset since its inception:
3. Isn’t it too volatile?
Volatility is often just the price of returns. Bitcoin is still a very young and maturing asset, so volatility is to be expected. More to the point, though, Bitcoin is a free market. There are no circuit breakers that kick in to stop trading if Bitcoin drops 7% the way there are in the stock market. There are no bailouts and no quantitative easing. If the market gets over-leveraged, that leverage gets healthily washed out and the market resets. This is what a free, unmanipulated market looks like. It’s high-speed capitalism, and it’s self-cleansing.
This is in stark contrast to what happens in our traditional markets, where bailouts are not merely expected; they’re priced in. If the stock market drops for any meaningful period of time, the Fed steps in with quantitative easing. Circuit breakers halt trading when it gets too volatile. And unhealthy debt is never washed out or cleansed. Consequently, we get a national debt of almost $30 trillion and a global economy built entirely upon larger and larger amounts of debt.
The artificial suppression of volatility is not to be applauded or desired, and it’s not normal. It only creates larger problems in the future.
Additionally, as a point of comparison, note how volatile Amazon’s stock has been since its founding. Amazon has been a public company since 1997. Every year it’s had a double-digit drawdown. In 16 different years it has had a 20% drawdown. It has fallen 15% in a three-day period 107 times. It fell 95% from December of 1999 to October of 2001. It has lost 6% in a single day 199 times. Apple stock, as another point of comparison, has lost over 70% of its value three times in its history. As Mark Yusko once said in an interview, “when was the right time to sell Amazon or Apple? Never.”
Here are Amazon’s gains and drawdowns, historically.
Again, Amazon’s drawdowns:
For your grandfather, who may say well, gold isn’t volatile, show him this chart of gold’s historical volatility:
4. Isn’t it only used by criminals?
No. Far more crime is done in dollars. Michael Morrell, former acting director of the CIA, undertook an analysis of Bitcoin’s usage in illicit finance and authored a report with his findings. Despite expecting to find that Bitcoin was widely used in illicit finance, he found precisely the opposite:
Here’s a chart from the 2021 Crypto Crime Report from Chainalysis:
Morrell noted that much more crime was conducted using dollars:
Resources to connect with your family over Bitcoin
Families are comprised of different people with different interests, different passions, and different concerns. As I mentioned from the outset, when engaging in conversation with folks about Bitcoin, it’s important to meet them where they are and find common ground.
To that end, here’s a resource guide for talking Bitcoin with a fictional set of family members in whom you may or may not recognize a member of your own family:
1. To connect with your sibling’s significant other who works at an environmental nonprofit:
Resources:
A. “This Machine Greens,” a 38-minute documentary film that explains Bitcoin’s energy use and, most importantly, puts it into historical, anthropological and geopolitical context.
This film explores how the Bitcoin network incentivizes use of the cheapest and most efficient forms of energy, which are renewable forms of energy. Fun fact from the film: 39% (and growing) of the Bitcoin network’s energy usage is from renewable sources, while only 11% of general energy usage in the world is from renewable sources.
The film also asks the question that conveniently gets left out of many mainstream discussions around energy, Bitcoin, and the United States dollar: “Because it ties the interests of the United States to oil, the petrodollar system may well have functioned to preserve not only the dollar, but also oil production itself, one of the most polluting forms of energy. Would we have evolved away from the oil industry faster were its interests not entwined with those of the U.S. dollar?”
As Meltem Demirors, Chief Strategy Officer at CoinShares, points out:
“We have central bankers going on television saying they are concerned about the ESG footprint of the crypto mining ecosystem when they are flying around the world on private jets and using taxpayer dollars to subsidize a highly-developed, multi-trillion dollar oil and gas industry in order to maintain the petrodollar status quo. Those two things are ideologically incompatible.”
As Caitlin Long, CEO of Avanti Bank and Trust, notes:
“More than two thirds of the energy produced in the world is waste energy because it’s produced during the hours of the day when there’s not demand to consume it, and it’s also produced in a place where there’s not transmission to move it across space and time. And so that energy goes unused and wasted. It is a misnomer that Bitcoin is using all the energy of a country like Switzerland, for example. That may be technically true, but that’s not the real story. You have to peel one layer of the onion back and realize that a lot of the energy that the Bitcoin network is consuming is waste energy that otherwise was not available to be consumed.”
B. “Bitcoin’s Energy Usage Isn’t a Problem. Here’s Why.” This is a characteristically thorough, meticulously outlined article by Lyn Alden. A common critical narrative of Bitcoin is that it uses an unsustainable amount of energy. This narrative is based on a plethora of misunderstandings about how Bitcoin actually functions and is usually promulgated by those who have not done much meaningful work to understand how Bitcoin uses energy. Alden breaks it all down here.
C. “Bitcoin Net Zero,” a paper published by NYDIG, co-authored by Nic Carter and Ross Stevens. Carter is a General Partner at Castle Island Ventures, and Stevens is the Founder and Executive Chairman of NYDIG. The paper addresses Bitcoin’s energy consumption and contextualizes it by considering its societal importance, the problems it addresses, and the energy consumption of other technological advances. This paper explains how Bitcoin will actually incentivize and accelerate a green energy transition, and, most importantly, explains why Bitcoin’s value proposition for society is worth its energy consumption. For a shorter synopsis of the whole paper, check out “NYDIG Report: Bitcoin Provides Value That Far Outweighs Its Energy Costs,” an article by Namcios.
D. “Bitcoin is Key to an Abundant, Clean Energy Future,” a memo co-authored by Square and Cathie Wood’s ARK Invest about how Bitcoin incentivizes scalability of green energy.
2. To connect with your progressive Gen Z cousin who is passionate about human rights across the globe:
Resources:
A. “The Bitcoin Revolution in Africa: Explained,” a short 16-minute film, based on the article, “Check Your Financial Privilege,” by Alex Gladstein. Too often when we think of Bitcoin, we think primarily of wealthy Silicon Valley bros, computer nerds, or investment firms. We think of wealth-seeking individuals looking to get rich with an exciting new asset.
And this is because we live with and under the financial privilege of a comparatively stable currency in the U.S. dollar and are not ruled by an unelected authoritarian regime. We fail to appreciate the percentage of the world living with extremely unstable, hyper-inflating currencies and under authoritarianism. For people in these situations, Bitcoin serves a much more fundamental, much more important purpose. It allows people to save their money in an undebaseable unit of account and to transfer value without exploitative government intervention (and also without government surveillance).
The film (and the article) examine Bitcoin adoption and use in Nigeria, Sudan, and Ethiopia, respectively.
B. “Finding Financial Freedom in Afghanistan,” an article by Alex Gladstein. This is another riveting piece from Gladstein, who is a human rights journalist and activist.
In this piece, Gladstein follows Roya Mahboob, Afghanistan’s first female tech CEO, who shares how Bitcoin is being used in Afghanistan and why it’s important. Mahboob first learned about Bitcoin in 2013 and began paying her employees with it. It was an upgrade to the hawala system and gave her employees, most of whom were women, the ability to hold their own money without the risk of it being taken by the men in their lives.
The article chronicles Mahboob and Bitcoin from 2013 through the current day in Afghanistan. Living through the fall of Kabul, with the consequent cratering of the currency, the freezing of bank accounts, the halting of remittances, and the suspension of aid, Mahboob wishes she could have educated more people about Bitcoin, which would have allowed more people to preserve their wealth and flee with it.
C. “Bitcoin Fixes This,” a Wolf of All Streets podcast episode with Alex Gladstein. As you know, I’m always trying to foreground Bitcoin’s use and adoption as it relates to the advancement of human rights and economic empowerment. Alex Gladstein is a human rights activist, reporter, and Chief Strategy Officer at the Human Rights Foundation. He speaks at length here on how Bitcoin can be a tool for human rights, why central bank digital currencies will be tools of government control and surveillance, and why Bitcoin is superior to other crypto tokens.
If you’re someone interested in Bitcoin’s promise with respect to human rights and financial access, and how it’s currently being used in various countries to those ends, this is a great podcast. I’d highly recommend following Gladstein’s work and following him on Twitter.
For more on Gladstein, his work, and his background, check out the interview he did for Natalie Brunell’s excellent podcast, “Coin Stories.”
D. “Bitcoin: ‘A Weapon for Us to Fight Oppression,’” a 6-minute video about Fodé Diop, a Senegalese app developer. Diop recounts his own journey to Bitcoin and explains why he thinks Bitcoin is a tool for African nations to throw off the oppressive weight of monetary colonialism.
E. “Is Bitcoin a Game-Changer for Social Impact Investing?” This article, written by Christopher Bendiksen in collaboration with Alex Gladstein, makes the case that investing in Bitcoin is the best social impact investment one can make.
This article makes the case that if you truly believe in global human rights, equal access to financial services, freedom from censorship, and freedom from inflationary currencies, Bitcoin is far more socially impactful than any other investment you can make.
As Gladstein notes, and as we often forget or don’t think about, “only 13% of humans live in a liberal democracy with a reserve currency. That means 87% of the world's population either lives under a weaker currency or an authoritarian regime.”
From the article:
In Gladstein’s words: “At the end of the day, all the other impact investing efforts we make are negotiations with human rights abusers.” Bitcoin changes that. An investment in Bitcoin deepens its network effect, improves its ability to function as a monetary alternative for those who need it the most, and directly contributes to improving their situation on the ground, no matter what their ruling elites may think about it.
Bitcoin exists entirely outside the control of any regime. An authoritarian government cannot restrict the use of Bitcoin any more than they can restrict file sharing or illegal streaming of football games—it is just not realistically feasible to prevent motivated people from using apps on the Internet.
Practically for the first time then, investors are presented with an investment that offers a real possibility to positively impact billions of people living under authoritarian oppression. Bitcoin does this in an entirely automated fashion through native enforcement of property rights, built-in privacy, an inability to discriminate based on gender, race, religion or any other characteristic, and its ability to offer full monetary sovereignty for end users, regardless of where they happened to be born. And it does it without the need for anyone’s permission.”
3. To connect with your patriotic uncle who thinks the dollar’s reserve currency status must be defended at all costs, engage with him about the negative effects of this system:
Resources:
A. Petrodollars – This is a 33-minute documentary film, made by Richard James and narrated by prominent Bitcoin thinkers Nic Carter and Alex Gladstein, with additional narration by Guy Swann. The film is about the petrodollar system, which is essentially a set of agreements between the United States and Saudi Arabia (as well as other oil-producing countries in the Middle East) in which the Saudis agreed to price oil transactions in dollars and buy U.S. debt with those dollars. In exchange, we promised to protect them and sell them arms. They get rich and stay protected, and the U.S. dollar remains the global reserve currency. This has been a central organizing force of the global economy since the 1970s, when Nixon ended the gold conversion window.
But at what cost? This is the question posed by the film. The petrodollar system has been catastrophic for the working, manufacturing class in America, catastrophic for the environment (it’s based on oil, obviously), and catastrophic for third-world economies. It has also played a part in multiple wars and military interventions.
B. “Uncovering the Hidden Costs of the Petrodollar,” an article by Alex Gladstein.
C. “50 Years After Going Off Gold, the Dollar Must Go for Crypto,” an article by Niall Ferguson in Bloomberg. Marking the 50th anniversary of President Nixon “temporarily” closing the gold conversion window, Ferguson argues that the U.S. should embrace Bitcoin and crypto.
4. To connect with your high school best friend who’s now an investment professional:
Resources:
“Bitcoin and the U.S. Fiscal Reckoning,” an article in National Affairs by Avik Roy. This is one of the best summations of the macroeconomic case for Bitcoin I’ve encountered. Roy discusses the inevitable and sobering choice the United States will eventually have to make as it continues to expand the money supply and the federal debt. In Roy’s words:
“In time, policymakers will face a Solomonic choice: either protect Americans from inflation, or protect the government's ability to engage in deficit spending. It will become impossible to do both. Over time, this compounding problem will escalate the importance of Bitcoin.”
If you want to listen to Avik Roy discuss this piece on a podcast, check out his appearance on the What Bitcoin Did Podcast. The first 30 minutes or so is about healthcare and can be skipped if you want to get right to the main discussion.
If he or she doesn’t get it, read “Why the Yuppie Elite Dismiss Bitcoin,” an article by Croesus. You’ll know why.
5. To connect with the person who comments on how expensive the food must have been in this inflationary environment:
Resources:
“As Your Other Assets Inflate, Bitcoin Can Protect Your Savings,” an article by Dylan LeClair. LeClair explores the macroeconomic corner into which the United States has painted itself. He discusses how a nation with ballooning twin deficits (“twin” meaning a both a balance of trade deficit and a fiscal deficit) is seemingly faced with two options, neither of which is optimal.
Option #1 is defending the integrity of the dollar by halting quantitative easing and raising interest rates. However, this would crush asset prices and wreck the debt-filled global economy, which would also have downstream social effects, as unemployment would increase, asset values would decrease, and people would be pissed.
Option #2 is keep pumping the markets with QE and money printing, thereby devaluing the dollar further. This would keep asset prices nominally high, making folks happy (at least in the short-term), because they’ll think they’re getting rich. Meanwhile, the unit of account (the dollar) is debased at an accelerating pace until eventually trust erodes and we have larger problems on our hands.
Bitcoin, LeClair argues, is the insurance policy for these outcomes.
6. To connect with your grandparents, who may just want to know what the hell Bitcoin is and how it uses computers:
Resources:
This is a fantastic video from the amazing folks over at Hello Bitcoin that sums up, in about 13 minutes, how Bitcoin works. It uses a lot of helpful visual aides, too.
7. When the conversation turns to racial and economic justice:
Resources:
A. “Inside the World of Black Bitcoin, Where Crypto Is About Making More Than Just Money,” an article in Time Magazine by Janell Ross. This piece chronicles the author’s coverage of the Black Blockchain Summit, which was held in September of this year. Ross spoke to several prominent Black Bitcoiners about the history of financial oppression in this country, the opportunities that Bitcoin offers for transcending the historically exclusionary system of traditional finance, and the challenges that remain. Among those mentioned in or interviewed for the piece are Sinclair Skinner, Najah Roberts, Hill Harper, Charlene Fadirepo, Cleve Mesidor, and Isaiah Jackson, all of whom you should follow.
B. “The rich get richer the poor get Bitcoin,” an article by Bradley Rettler, a philosophy professor at the University of Wyoming. This one’s a classic.
C. “The Black Case For Bitcoin,” an article by Ian Gaines, media director of Black Bitcoin Billionaires. Gaines discusses the importance of a money that is divorced from the state and uncontrolled by centralized intermediaries, which historically have discriminated against and exploited the black community. In his words:
“For the first time in history, Black Americans have direct access to generational wealth without needing to rely on the permission of an incumbent authority. Bitcoin and Black America are writing parallel stories, fated to complete the hero’s journey on its highest difficulty level.”
Gaines emphasizes the opportunity to “peacefully opt-out of a suboptimal, predatory legacy system” and highlights how black entrepreneurs, scholars, artists, and athletes are propelling cultural adoption.
D. You could also bring a copy of Bitcoin and Black America, Isaiah Jackson’s seminal book, to the dinner and get the conversation rolling.
E. “Closing the Wealth Gap: Black America and Bitcoin Adoption,” an article by Dawdu M. Amantanah. Amantanah highlights the social implications of Bitcoin’s decentralization: “the lack of centrality removes the fundamental flaw of bias. Bitcoin does not care what you look like, what culture you come from, your gender or your religious background.”
8. To connect with the sports-obsessed nephew or niece while watching football:
The following NFL players are taking some or all of their respective salaries or endorsement money in bitcoin:
Odell Beckham, Jr.
Aaron Rodgers
Trevor Lawrence
Saquon Barkley
Russell Okung
Additionally, Tom Brady is a Bitcoin holder and enthusiast.
9. To connect with your super-artsy cousin:
“Bitcoin and Music: A Symphony of Code,” an article by Mark Mulvey in Citadel 21. Viewing Bitcoin through the metaphor of music, Mulvey is able to highlight the network’s beauty and artistic genius, which doesn’t get talked about enough, in my opinion.
An excerpt:
“As a former music student and lifelong lover of the arts, it’s become increasingly apparent to me that those most inclined to pursue a life surrounded by music are uniquely suited to appreciate how profound an invention Bitcoin really is.
It’s a symphony of code — the harmony of disparate elements composed into a single work of staggering genius.
It’s not just that Bitcoin is an elegant creation akin to a song: Bitcoin is also the harmonic framework itself. In a single free and open source code base it harmonizes completely separate aspects of culture and society — deeply foundational ones — and leverages our own human nature (especially our flaws) to make the network richer, stronger, and ever more effective.”
10. When a relative or friend is interested in learning more and engaging with the Bitcoin space:
Tell that relative or friend to subscribe to Think Bitcoin™! And tell them to spread the word.
As always, thanks for reading! If you enjoyed it or found it useful, share this newsletter widely and freely!
“Civilization is in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.” -H.G. Wells
Have a wonderful holiday weekend and see you on December 5,
Logan
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DISCLAIMER: I am not investment advisor and this is not investment advice. This is not, nor is it intended to be, a recommendation to buy or sell any security or digital asset. Nothing in this newsletter should be interpreted as a solicitation, a recommendation, or advice to buy or sell any security or digital asset. Nothing in this newsletter should be considered legal advice of any kind. This newsletter exists for educational and informational purposes only. Do your own research before making any investment decisions.
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