There Will Be Blood...
I have a competition in me. I want no-one else to succeed. I hate most people. - Daniel Plainview (There Will Be Blood, 2007)
As the days and years progress, I often wonder about my life as an investor. Did I get it all wrong? Should I have paid more attention? Well, I guess it all turned out for the best but seriously, did we all look at this backwards?
That's the real question. I get it, you would rather take the blue pill, after all la la land is pretty good. What are we complaining about? Right there, you see it, like bold Leonidas in the winter cold, like then a beast approaches; yes, a beast, a beast in the form of the SEC, the FED, the US Treasury and yes, the United States federal government and Congress. As I grew my portfolio through years, I remained blind to the obvious, that my wealth is being ripped out from under me, the US Dollar has lost 90% of its purchasing power since 1913, to allow asset prices to inflate. This essentially means as long as an asset is pegged to the US Dollar you are losing store of value on any asset you purchase.
I know what you are saying, well, we have Gold right? Well, wrong! We don't have gold, we lost that in 1971. Gold producers are effectively in league with the financial overlords of banking and pumping more and more gold into the system, that in conjunction with massive gold futures selling, can you really consider gold a reasonable store of value? Okay, let's assume you still think gold is an option for wealth preservation, how many people do you know that have bullion in their houses? And Jay Z doesn't count. At this point you might say, why should I care about all this? Well, here's why...
In 2009 Satoshi Nakamoto wanted to free the world of the savagery that led to the 2008 financial crisis, the dependency on Dollar pegged assets, so he invented Bitcoin, a decentralised digital currency with scarcity inbuilt, with only ever 21 million bitcoin to be created, accessible to all, completely border-less and free of government control. Well, yeah in 2009 that was laughable, I mean funny money that will one day become the new gold standard and to make matters worse it is on the internet. Well, here we are. I am telling you this because right now as we speak the financial overlords are thinking of ways to ultimately do to Bitcoin what they did to gold in 1971.
The SEC and US Treasury have observed that the blockchain lies outside of the scope of both Federal, State and banking regulatory control, effectively what happens in the blockchain stays on the blockchain. Let's face it, if I make millions of Dollars on the blockchain and can't actually convert it to a spendable asset, then there is not much point. So this is how the idea of a stablecoin was born, a decentralised asset that was pegged to the USD at ratio of 1:1, this little innovation allowed for Bitcoin to be liquidated to cash on the blockchain. There was just one problem, what happens on the blockchain stays on the blockchain. So now we have an asset that has scarcity built in as a standard, a decentralised finance ecosystem with stablecoins but no way to bridge this into the real world. Let's talk about central exchanges like Binance and Coinbase, yes somehow a central authority is the missing link. These exchanges take fiat from investors and issue Bitcoin and vice versa, so as long as one party is willing to exchange real fiat money for digital assets on the blockchain, then what happens on the blockchain no longer stays on the blockchain. So now we have a scarce asset, decentralised finance ecosystem and central exchanges willing to facilitate trade between blockchain assets and centralised fiat pegged assets, in this case the United States Dollar.
I don't need to spell out what this means for the FED, the SEC, the Federal government and the US treasury and banking globally. In case you don't get it, here is how badly the US FED took it. The FED chair who has been quoted as calling Bitcoin digital gold and he apparently envisions a world of competing currencies in the United States, is now officially backing a one ring to rule them all style central bank digital currency. That's Jerome Powell guys.
Like in the Lord of the rings epic, there were 3 rings given to the Elves, 7 to the Dwarf lords and 9 to the kings of men but their was only one ring to rule them all. The ring of power.
So we now have all the leaders around the world launching central bank digital currencies on government styled blockchains with one aim and one alone, to destroy wealth. Let's see how bad the SEC took it. Well, Gary Gensler, chairman of the SEC, simply puts it, if you are backed by a security (property of the Federal Reserve), then you are a security and subject to SEC regulatory oversight, so almost every Defi protocol including stablecoins must now pay homage to the SEC, Tether's USDT stablecoin and Circle USDC is wondering whether the SEC will even allow them to exist as there can never be two competing monetary systems,. The SEC has not stopped there both Binance and Coinbase have come under attack for violating aspects of securities law and decentralised peer to peer exchanges like Uniswap are under investigation. Let's see how bad Congress took this. Well, so bad that inside of an infrastructure bill, US politicians put regulatory proposal for the entire Crypto industry affecting Crypto miners and tech developers to discourage blockchain development and stifle innovation. Let's see how badly the US Treasury took it. Well, so bad that Janet Yellen has openly challenged Bitcoin as being extremely inefficient. So now here we stand on this narrow patch of earth.
The only frontier remaining is Bitcoin, fully decentralised, border-less, a digital gold standard, one that will preserve wealth and secure the future of generations to come. We know that they will come for Bitcoin sooner or later, it is the elephant in the room, the SEC has already said, it will approve a Bitcoin futures ETF rather than a Bitcoin ETF because futures are pieces of paper as worthless as the institutions that created and Bitcoin is scarcity and wealth preservation. A Bitcoin ETF would pave the way for investors to gain direct exposure to Bitcoin, while a Bitcoin futures ETF will give investors exposure to nothing and create a volatile Bitcoin market market that will scare many investors away. Grayscale Trust and Microstrategy shares are the only way for regulated funds to access Bitcoin exposure. So consider this, in 2013 the price of 1 Bitcoin was $120 towards the winter, the only non Dollar pegged asset with inbuilt scarcity, created by you and those like you, today Bitcoin is $46,000 in 2021, with a fully ecosystem behind it and adoption rate that can only be compared to the motor vehicle and mobile phones. Did you see this all backwards?
So like the Spartan's on that narrow piece of earth, we are out numbered 10 to 1 but good odds for anyone who understands what scarcity means. So I say let them bring it, there will be blood. So I ask again did we see this all backwards? I sure did because no matter how much I made over the past 15 years, it can't compare to what I would have made had I held Bitcoin from 2013 to 2021.