I spent most of last week at the Bitcoin2022 conference in Miami. A few notes on the experience:
First, the amount of enthusiasm, energy, capital, and intellectual horsepower behind Bitcoin, cryptocurrencies, the blockchain, and the developing applications of these technologies is incredible. For those of you who haven’t seen it yet, there are enormous resources and a lot of smart people focused on the space. Mining solutions, decentralized finance, sound money, smart contracts, non-fungible tokens, decentralized autonomous organizations, banking access for the unbanked, and general freedom from big government were all discussed and had presenters and vendors present.
We’ve made clear that one of the key reasons for our investment in Bitcoin is the belief that institutional adoption will push the supply/demand curve towards much higher prices. There are now insurance companies focused on providing insurance solutions that will allow large organizations and pension funds to be comfortable investing.
Miami has established itself as a key hub for cryptocurrency and is openly attempting to become what New York is for finance, what Greenwich, CT is for hedge funds, and what San Francisco is for venture capital. Even in an age where technologically capable people don’t need to be in an office, Miami is getting crypto hedge funds and other related businesses to relocate there. It’s a brilliant move for the city.
The Miami Bull statue – a hat-tip to the Wall Street bull statue and a declaration of Miami’s crypto goals. Credit: TradeStation Group.
One of the greatest powers that government has is control of the currency and money supply. Bitcoin is a threat to that control because it offers a transferrable store of value that individuals can access and transfer directly. Governments can’t inflate away the value of Bitcoin. Peter Theil gave an incredible keynote speech castigating and naming the establishment enemies who have tried to stand in the way of Bitcoin.
Theil also made an interesting comparison. Like many, he noted that the market capitalization of Bitcoin is about 10% of the value of gold implying that Bitcoin could rise to 10x its current price. He then compared Bitcoin to the global equity market valuation of $115 trillion implying that Bitcoin could rise by a factor of 100x. We think another comparison is more accurate. We’d compare the value of Bitcoin to fiat currency. The money supply of the US, China, and Japan alone adds up to around the same value as the global equity markets. Worldwide fiat currency is much higher. Theil made grand predictions which could prove to be conservative.
At the conference, I heard about a new cryptocurrency that was buying billions of dollars of Bitcoin to back the new coin. It’s like a digital version of gold-backed fiat currency. If we could get the Federal Reserve to do that, it would put an end to insane levels of government spending and waste, and put a stop to runaway inflation.
I spoke to a financial advisor who had just met with a family office about investing in Bitcoin. The family office declined because they felt like Bitcoin wasn’t something real that they could see. The US delinked the value of gold and the dollar in 1933, and went off the gold standard entirely in 1971.
This family office does have “money” in a bank. Here’s what they actually own: They have a digital leger at a bank which comes with the bank’s promise that if the family requests its money (and the bank determines that the family’s reason for wanting the money is acceptable), the bank will give them paper which is backed by faith in the US government. That bank is reporting transactions of over $600 to the government. That bank could decide to decline the withdrawal request. Finally, 80 percent of all dollars have been created in the last 22 months and the US government can print trillions more devaluing the paper money that this family can request. Bitcoin also exists on a digital ledger, can’t be denied to its owner, and is limited to 21 million coins. The family is entitled to its opinion that Bitcoin isn’t “real” money, but it’s not clear that fiat currency satisfies their needs either. The people at Bitcoin 2022 understand this:
We’ve noted in the past that Bitcoin is being used for daily commerce in El Salvador. Now, millions of people in that country have a bank account for the first time and it’s in Bitcoin, not fiat currency. At the conference, three more countries including Portugal and Mexico talked about progress in adopting Bitcoin as legal tender.
After nearly a week spent with people who are putting capital and energy into the concept of sound money, we’re about to get another huge inflation number tomorrow morning. We can assure you that no matter how high that number is, it will be a lie. The Consumer Price Index (CPI) is understating the cost of food and housing, and contains dozens of other “adjustments” that keep the headline number lower than the reality being experienced by American citizens and residents. The solutions being proposed in Washington DC involve more of the same excessive debt and money printing that created the problem. There are other better solutions, and for almost two years, we’ve been publicly supporting gold, silver, and Bitcoin.
We leave you with our tweet summarizing the conference:
Incredible enthusiasm at #Bitcoin2022. Capitalists who want to make money. Libertarians who want their money freed from govt. Tech people designing new solutions. And welcoming teachers everywhere. “Find your role in the space and bring people to the $BTC tent” @novogratz.
Finally, a few thanks are in order. I’d like to thank TradeZing for hosting me. It’s going to be a great platform for financial education. Thanks to Abra for hosting a fun party and for bringing high-end service to crypto. Thanks to the CEO of Upland for helping me understand the value of virtual real estate. Finally, thanks to the crypto artists who are brave enough to think for themselves and challenge the status quo. Your contribution to the community is moving.
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