Originally published November 29, 2020 on substack. I’m transitioning over all my old substack writings to live on Mirror and solely linking to the substack for context of the publish date.

 You might recall the name Michael Burry, even if you don’t know his face. He’s the hedge fund investor behind Scion Capital — Christian Bale immortalized his role in the 2008 economic crisis on screen in the “Big Short.” He recently tweeted the below. 

$TSLA at ~65% of the value of all other auto companies in the world, combined, & addition to the S&P 500 Dec 21 sets the top in motion. What do $TSLA, $BTC, option gamma traders have in common? Rhymes with Rubble. wsj.com/articles/tesla…

Bitcoin has always attracted its fair share of proponents and detractors, and quite honestly I have fallen in and out of love with the ‘magic internet money’ meme several times myself. I do think a negative critique, nonetheless by a legendary trader, of $tsla and $btc with their respective ‘armies’ who continue to buy the dip, warrants some analysis 🧐. Full disclosure: I’m still not selling, and have no plans to. 

My bitcoin thesis has wavered in the years since I first invested. In 2015, it was simple:

• Bitcoin had an incredible name that could easily resonate across cultures
• As a digital native, the internet did not have a ‘currency’ - and deserved one
  • Early video games I loved (queue Spryo the Dragon, and definitely Runescape) had in-game currency (i.e. Gems, Coins) that were redeemable for other digital assets
  • Even my favorite board game was Monopoly, and it never made sense that the bank 🏦 always had more money than the players.. 
• The Silk Road, online gambling, and other nefarious uses of bitcoin in my mind exemplified its value as a true medium of exchange… and while still disputed, proved that ‘free markets’ could regulate themselves better than the regulators
• Personal banking issues (proving my identity when I was under 18, the slow speed of transfers, wires, and ridiculous wait times on mostly-automated telephone calls) generally made me wary of the system and question if there was a better way. On the surface to me, was it actually possible to create a worse financial system than the one that had just levied the Great Depression?
• After Mt. Gox had crashed, the resiliency of the market, and new entrants (Circle, Coinbase, Kraken, etc.) showed steady interest and a somewhat ‘maturing’ moment that made me feel more comfortable to dabble in the mystery 

While much of the narrative is the same, it’s really a different playing-field.

So my 2020 bitcoin thesis…at least that is, for now 😉 

• I would kind of liken the current state of the market to a global game of poker. You would think that means its a gamble - and in many ways, it is gambling - but poker is also a past-time, a community, and a psychological thriller that tests motivation and incentives in a series of high-stakes scenarios
  • Las Vegas, while #rekt during the pandemic, is fun for many reasons. Community can be built around fortunes built and burned, won and lost. And that is exactly what I have experienced with #bitcoin. 
  • Unlike Vegas, one does not need to be in Nevada (or Macau) to participate. You don’t need an airplane ticket, a car, or a fancy hotel room suite to be welcomed into the high-stakes room. The global nature, the game-theoretical economic assumptions, cast a far wider net of participants, with way less barriers to entry. 
  • And while we’re on the subject of Las Vegas, I’ve been thinking about Tony Hsieh a lot this weekend - and if you’re reading this, I hope you know how thankful I am to have a presence in your life. Rest in Paradise, Tony. 
• Institutions and individuals are rapidly losing trust in the socio-economic and government structures that have been omniscient in our lives. While one could comfortably ignore bitcoin at $200, $1000, it becomes less easy to ignore at $20K. Number go up is more than a meme - it’s a form of validation. 

  • Investments in forward looking frontiers such as Tesla and Bitcoin are less about discounted cash flows and total expected returns, and more about hedging for doomsday / preservation of wealth if you’re pessimistic, or investing for a better tomorrow (even if it’s on Mars) if optimistic

    • The fact that bitcoin can occupy both an optimist and pessimist perspective (in addition to that of the neutral speculator) exemplifies the beauty of its principles and mystery of its origins

  • Bitcoin is truly the purest form of ‘fuck you’ money ever invented - see clip 😈

    https://youtu.be/xdfeXqHFmPI

  • Watching that clip amps me up. But bitcoin is not about having a “fuck you” amount of money - it’s about a “fuck you” to the system that continues to fuck up, and working collectively to build something better. The best form of “Fuck you money” is not ever needing to cash out to fiat, and leaving your chips on the table.

• Previously, I used bitcoin in daily life - seriously - buying random things was proof to me that it worked. Instant transfers, viewing transactions on the blockchain, self-custody of assets - were all breakthrough features of what I felt was a new paradigm.
  • I no longer see those as the serendipitous reasons I fell in love with the space… though I remain impressed by the new innovations in the space
  • I see the fact that I’m buying more bitcoin each and every day, with the price per coin up ~100x since my first investment, despite losing my career (and certainly selling 90% of my early holdings way too early) as the best metric at all. Though I know deep down it is still the same gamble, it feels like an even bigger gamble to not have enough exposure now.

I ran into the Winklevoss twins (I can’t remember which one, though both were there) in 2012 in Eataly NYC’s men’s bathroom, and couldn’t help but ask them about the “Social Network” which was still making some waves. I know, this is a weird reflection, and even more odd I still recall that moment when I was 17. 

Their response - along the lines of “don’t believe everything you saw on the screen” showed there was an inherent truth to both sides of the narrative espoused. We like to think of life in black and white terms, but the truth is reality is far more grey. The same is true of bitcoin, the role it plays in our society and how that may pivot and change shape. It’s okay to recognize the narrative has taken new forms over time, but ‘bubble’ is an oversimplification of a game that has a lot of players, both good and bad. 

We don’t know how the future of bitcoin will manifest itself into our economic or social systems, but I’m pretty sure poker is not a bubble.