OT: 4 years ago today

[pseudonym]

a company called MicroStrategy (I had never heard of it) adopted a bitcoin standard. The stock is up over 800% since, one of the few assets to outperform bitcoin over that period.

In 4 years, they have accumulated 226,500 BTC (over 1% of all bitcoin).

Some others have followed suit, but I’m surprised more companies haven’t seen the results and come up with their own bitcoin strategy.

What are the good arguments for not implementing at least a tiny version of what $MSTR has done over the last 4 years?

ETA: fwiw, I don’t own this stock, too expensive relative to bitcoin holdings imo. Not investment advice.

 

[dog12]

a company called MicroStrategy (I had never heard of it) adopted a bitcoin standard. The stock is up over 800% since, one of the few assets to outperform bitcoin over that period.

In 4 years, they have accumulated 226,500 BTC (over 1% of all bitcoin).

Some others have followed suit, but I’m surprised more companies haven’t seen the results and come up with their own bitcoin strategy.

What are the good arguments for not implementing at least a tiny version of what $MSTR has done over the last 4 years?

ETA: fwiw, I don’t own this stock, too expensive relative to bitcoin holdings imo. Not investment advice.

Here's my argument:

I have no idea what "adopting a bitcoin standard" even means. Plus, I don't really know what "bitcoin" is, and I certainly don't understand it.

Thus, I won't be implementing this strategy.

 

[Seinfeld]

I’d love to answer this, but someone is first going to have to explain to me aGAIN what the hell Bitcoin is and why a business should be interested in it

 

[The Peeper]

I'm already leveraged in the market after investing in army worm spray and all the seed for my Fall garden. No rain in the forecast either so water bill will be up too, sorry

 

[PooPopsBaldHead]

a company called MicroStrategy (I had never heard of it) adopted a bitcoin standard. The stock is up over 800% since, one of the few assets to outperform bitcoin over that period.

Saylor is a 17ing crook. Microstrategy is snake oil. Up 800% in 4 years but still down 60% over the past 24 years.

 

[pseudonym]

Here's my argument:

I have no idea what "adopting a bitcoin standard" even means.

Good question.

In 2020, MicroStrategy was sitting on a ton of cash while the Fed was printing money like crazy. This was a problem in need of a solution. They considered many options but landed on converting this large amount of cash into bitcoin and holding it as their primary reserve asset (rather than USD).

Since then, they have converted their free cash flows into bitcoin.

They've also engaged in more aggressive strategies such as borrowing dollars (convertible notes, secured loans, etc.) to buy bitcoin and issuing stock to buy bitcoin.

All in, they've converted about $8.3 billion to 226,500 BTC, currently valued at around $13.5 billion. So taking a massive bet on bitcoin has netted them $5.2 billion in value over four years.

When they started accumulating bitcoin four years ago, their market cap was $1.2 billion. Today, it is over $26 billion. Not bad. You would think CEOs and CFOs would eventually start paying attention (if they aren't already).

 

[horshack.sixpack]

a company called MicroStrategy (I had never heard of it) adopted a bitcoin standard. The stock is up over 800% since, one of the few assets to outperform bitcoin over that period.

In 4 years, they have accumulated 226,500 BTC (over 1% of all bitcoin).

Some others have followed suit, but I’m surprised more companies haven’t seen the results and come up with their own bitcoin strategy.

What are the good arguments for not implementing at least a tiny version of what $MSTR has done over the last 4 years?

ETA: fwiw, I don’t own this stock, too expensive relative to bitcoin holdings imo. Not investment advice.

4 days ago some bitcoin loser took over a friends FB account and posts nothing but fake pictures and stories about people getting rich off bitcoin. Why? What’s the endgame?

 

[horshack.sixpack]

I’d love to answer this, but someone is first going to have to explain to me aGAIN what the hell Bitcoin is and why a business should be interested in it

And why I should have bought it and not Nvidia or any other real stock that I’ve bought.

 

[mcdawg22]

I’d love to answer this, but someone is first going to have to explain to me aGAIN what the hell Bitcoin is and why a business should be interested in it

 

[Hot Rock]

a company called MicroStrategy (I had never heard of it) adopted a bitcoin standard. The stock is up over 800% since, one of the few assets to outperform bitcoin over that period.

In 4 years, they have accumulated 226,500 BTC (over 1% of all bitcoin).

Some others have followed suit, but I’m surprised more companies haven’t seen the results and come up with their own bitcoin strategy.

What are the good arguments for not implementing at least a tiny version of what $MSTR has done over the last 4 years?

ETA: fwiw, I don’t own this stock, too expensive relative to bitcoin holdings imo. Not investment advice.

If I have to depend on others putting money into it based solely on they want it, I don't want any part of it. Bitcoin makes nothing and generates nothing. It viability is worthless if people decide it's worthless. Yes, you can make $$$ on such things but it's only as real as the people guranteeing it. There will be a bloodbath at some point.

 

[AROB44]

I'd rather buy tulips ******

 

[patdog]

I'd rather buy tulips ******

At least the tulips actually exist.

 

[pseudonym]

I'd rather buy tulips ******

Ah, tulips, my favorite bitcoin comparison.

Let's actually make the comparison (with help from ChatGPT):

1. Intrinsic value
   • Tulip Mania: Tulips have limited intrinsic value. They are just flowers, and while they were seen as status symbols during the mania, their utility is primarily decorative.
   • Bitcoin: Bitcoin is a digital asset and a form of currency. While it does not have physical utility, it offers value as a decentralized medium of exchange, a store of value, and a hedge against long-term inflation.
2. Technology and innovation
   • Tulip Mania: The tulip bubble in the 17th century had no underlying technology or innovation driving its value. It was purely speculative based on the beauty and rarity of certain tulip varieties.
   • Bitcoin: Bitcoin represents a technological innovation allowing secure, decentralized transactions without needing a trusted third party.
3. Market duration and development
   • Tulip Mania: The tulip bubble was short-lived, lasting only a few years in the early 1600s. It was a localized phenomenon in the Netherlands.
   • Bitcoin: Bitcoin has been around since 2009 and has grown into a global phenomenon with millions of users, institutional adoption, and an entire ecosystem of related technologies and businesses. Its market has endured for over a decade, with significant fluctuations but ongoing development and interest.
4. Global impact
   • Tulip Mania: The impact of tulip mania was relatively isolated, primarily affecting the Dutch economy and specific individuals who invested in tulips.
   • Bitcoin: Bitcoin has had a global impact, influencing financial markets, regulatory policies, and technological innovation worldwide. It has sparked discussions about the future of money.
5. Speculative vs. utility value
   • Tulip Mania: The price of tulips during the mania was driven almost entirely by speculation, with little to no utility value attached to the bulbs beyond their aesthetic appeal.
   • Bitcoin: While bitcoin's price has been driven by speculation, it also has utility value as a form of payment and a digital store of value.
6. Endurance and adaptation
   • Tulip Mania: Once the bubble burst, the tulip market never recovered to its previous speculative heights, and tulips returned to being just flowers with limited economic significance.
   • Bitcoin: Bitcoin has experienced several boom-and-bust cycles but has shown resilience and adaptability. Its network has continued to grow, and it has maintained relevance as both an asset and a technology.

 

[Perd Hapley]

If I have to depend on others putting money into it based solely on they want it, I don't want any part of it. Bitcoin makes nothing and generates nothing. It viability is worthless if people decide it's worthless. Yes, you can make $$$ on such things but it's only as real as the people guranteeing it. There will be a bloodbath at some point.

Or just a non-bath. If you bought in the middle of the late 2020 run-up (halfway between the bottom and the top), you’d have gotten a gross return of 16-17% today, which would be more like 11-12% when adjusted for inflation. And that would be a great outcome, all things considered, but there are literally thousands of other real assets (stocks, funds, real estate, or commodities) that performed the same or better. If you bought the top in 2021 and held the entire time, you endured a hell of a ride just to still have slightly negative returns today.

I’ll say it again, BTC is just gold for the next generation. And considering that someone literally created it from scratch makes that quite the success story. It’s entrenched enough to always keep SOME value, but everyone that is going to get incredibly wealthy off of it already has, or, they will do so by sheer luck of buying and/or selling at the right time. The “halving” came and went, with no long term effects as hyped by all the fanboys. The whales have already defined where the price of BTC is going to fall in the grand scheme of things, and the governments all over the world are embracing the trades and taxing the gains. When that happens, its no longer “decentralized”.

 

[pseudonym]

Or just a non-bath. If you bought in the middle of the late 2020 run-up (halfway between the bottom and the top), you’d have gotten a gross return of 16-17% today, which would be more like 11-12% when adjusted for inflation. And that would be a great outcome, all things considered, but there are literally thousands of other real assets (stocks, funds, real estate, or commodities) that performed the same or better. If you bought the top in 2021 and held the entire time, you endured a hell of a ride just to still have slightly negative returns today.

I’ll say it again, BTC is just gold for the next generation. And considering that someone literally created it from scratch makes that quite the success story. It’s entrenched enough to always keep SOME value, but everyone that is going to get incredibly wealthy off of it already has, or, they will do so by sheer luck of buying and/or selling at the right time.

You're cherry-picking to find a period of time when, if someone bought bitcoin once, they are only up x% or slightly down. Those aren't real examples. Do you know anyone who bought bitcoin once? The S&P 500 once? If they did, did they buy the exact top? Do you apply that same rubric to every asset? What asset passes that rubric?

I'm consistent. I always use a 5+ year CAGR to compare bitcoin to other assets:

When bitcoin is being outperformed, I can admit it. I don't cherry-pick to suit my portfolio.

As far as all the gains have already been made, you are not the first person to think that:


Comparing bitcoin gains today to bitcoin gains 10 years ago isn't useful. You should only compare bitcoin gains today to other assets today. Bitcoin doesn't have to outperform bitcoin in 2014 to outperform the S&P 500 in 2024.

 

[Called3rdstrikedawg]

I remember when Clint Eastwood would throw 2 Bits on the counter and the BarKeep would give him a shot of rye whisky!

 

[Perd Hapley]

You're cherry-picking to find a period of time when, if someone bought bitcoin once, they are only up x% or slightly down. Those aren't real examples.

I’m actually not cherry picking at all. It was intended as a nominal case example (buying exactly between the bottom and the top). That was chosen as a simplified result of what the average outcome would have been (not the best case, or worst case). Pretty much the exact opposite of cherry picking.

Also, go to your example in the OP:

226,500 BTC at $8.3 billion is an average price of $36,144 per BTC….which falls almost exactly between the bottom and the top. So this return mentioned in my post was about the same as Microstrategy got.

Do you know anyone who bought bitcoin once?

I don’t track such things, but when someone makes a very large bet at a specific point in time on an asset, the timing of that is very important, and carries a lot more weight than if they just DCA’d their way into an asset. An example of this was a CEO of a company called MicroStrategy deciding to convert his company’s entire cash reserves into BTC in 2020 (the bottom). Had he made the same decision in 2021 or 2022, he’d have been endlessly ridiculed

As it were, he converted the largest percentage of his position in 2020 (which was the recent price floor), and DCA’d the cash flows from there.

If you were to compute the CAGR on converting $8.3 billion into $13.5 billion over 4 years, the result is 12.93% annual return on average, which is almost exclusively influenced by the huge position he took out in 2020, and was gradually made worse from there with the cash flow conversions.

So, I’d argue its actually you that might be cherry picking. This entire example is a guy that essentially called the bottom correctly on a big bet, and 13% per year over 4 years is all he had to show for it. He could have done infinitely better in real estate or any number of other non-contrarian positions.

ETA: Had Saylor dumped that same $8.3 billion cash reserve into the S&P 500 index at the same time in 2020 (instead of BTC), the CAGR would have been 12.4%. 0.5% less return than an investment with substantially less risk, and a much longer proven track record. So what are we even talking about here?

The S&P 500 once? If they did, did they buy the exact top? Do you apply that same rubric to every asset? What asset passes that rubric?

This is a faulty comparison, and a red herring argument, for the reasons already noted.

I'm consistent. I always use a 5+ year CAGR to compare bitcoin to other assets:
View attachment 626079

If you posted this chart every day for the past 5 years, how many days would the 1 year and 3 year CAGR be negative? Saying you only look at a 5+ year horizon on an asset that’s only 10-12 years old is pretty silly. It’s been range bound between about $15,000 and $65,000 for the better part of a decade now….having hit both extremes multiple times. The 5-year CAGR will continue to look good….until it doesn’t. Same situation as any other infant asset class.

When bitcoin is being outperformed, I can admit it. I don't cherry-pick to suit my portfolio.

As far as all the gains have already been made, you are not the first person to think that:
View attachment 626077

Neat. Hold my beer while I jump into the time machine and go to the original GenesPage, and find some guy who bought Amazon back in 1998

Comparing bitcoin gains today to bitcoin gains 10 years ago isn't useful. You should only compare bitcoin gains today to other assets today. Bitcoin doesn't have to outperform bitcoin in 2014 to outperform the S&P 500 in 2024.

False. You should only compare Bitcoin gains to those in the same risk segment. The S&P 500 has a 90 something year track record that shows far less long term risk than any crypto. There are also individual stocks that inherently carry higher risk, but have outperformed BTC over the same horizons.

 

[SwampDawg]

I'm a casual reader of this thread, didn't pay a lot of attention to details. But isn't the value of bitcoins expressed in dollars? If this is so, I confirm that I really don't understand.

 

[Perd Hapley]

I'm a casual reader of this thread, didn't pay a lot of attention to details. But isn't the value of bitcoins expressed in dollars? If this is so, I confirm that I really don't understand.

It’s value is only expressed in dollars when its up. When its down it’s “you don’t get it….the whole point is that the price in dollars is irrelevant, has immense intrinsic value, you should take the opportunity to HODL and buy the dip, guaranteed rocketship over 5+ years, blah blah blah.”

Everyone knows what it costs, at any point in time. But nobody, absolutely nobody, has ever been able to articulate what one BTC is worth….in any unit of measure. US dollars, pesos, Chick Fil A club sandwiches, Ford Fusions, 2500 square foot houses, shares of Apple stock, you name it. And until you can actually buy anything besides weed with it….and it not be a total PITA….nobody will ever know. I’ve come to understand that the great mystery of the outlook isn’t a bug, its a feature for the enthusiasts.

 

[dudehead]

Good question.

In 2020, MicroStrategy was sitting on a ton of cash while the Fed was printing money like crazy. This was a problem in need of a solution. They considered many options but landed on converting this large amount of cash into bitcoin and holding it as their primary reserve asset (rather than USD).

Since then, they have converted their free cash flows into bitcoin.

They've also engaged in more aggressive strategies such as borrowing dollars (convertible notes, secured loans, etc.) to buy bitcoin and issuing stock to buy bitcoin.

All in, they've converted about $8.3 billion to 226,500 BTC, currently valued at around $13.5 billion. So taking a massive bet on bitcoin has netted them $5.2 billion in value over four years.

When they started accumulating bitcoin four years ago, their market cap was $1.2 billion. Today, it is over $26 billion. Not bad. You would think CEOs and CFOs would eventually start paying attention (if they aren't already).

What happens if the power goes out?

 

[pseudonym]

I’m actually not cherry picking at all. It was intended as a nominal case example (buying exactly between the bottom and the top). That was chosen as a simplified result of what the average outcome would have been (not the best case, or worst case). Pretty much the exact opposite of cherry picking.

Also, go to your example in the OP:

226,500 BTC at $8.3 billion is an average price of $36,144 per BTC….which falls almost exactly between the bottom and the top. So this return mentioned in my post was about the same as Microstrategy got.



I don’t track such things, but when someone makes a very large bet at a specific point in time on an asset, the timing of that is very important, and carries a lot more weight than if they just DCA’d their way into an asset. An example of this was a CEO of a company called MicroStrategy deciding to convert his company’s entire cash reserves into BTC in 2020 (the bottom). Had he made the same decision in 2021 or 2022, he’d have been endlessly ridiculed

As it were, he converted the largest percentage of his position in 2020 (which was the recent price floor), and DCA’d the cash flows from there.

If you were to compute the CAGR on converting $8.3 billion into $13.5 billion over 4 years, the result is 12.93% annual return on average, which is almost exclusively influenced by the huge position he took out in 2020, and was gradually made worse from there with the cash flow conversions.

So, I’d argue its actually you that might be cherry picking. This entire example is a guy that essentially called the bottom correctly on a big bet, and 13% per year over 4 years is all he had to show for it. He could have done infinitely better in real estate or any number of other non-contrarian positions.

ETA: Had Saylor dumped that same $8.3 billion cash reserve into the S&P 500 index at the same time in 2020 (instead of BTC), the CAGR would have been 12.4%. 0.5% less return than an investment with substantially less risk, and a much longer proven track record. So what are we even talking about here?



This is a faulty comparison, and a red herring argument, for the reasons already noted.



If you posted this chart every day for the past 5 years, how many days would the 1 year and 3 year CAGR be negative? Saying you only look at a 5+ year horizon on an asset that’s only 10-12 years old is pretty silly. It’s been range bound between about $15,000 and $65,000 for the better part of a decade now….having hit both extremes multiple times. The 5-year CAGR will continue to look good….until it doesn’t. Same situation as any other infant asset class.


Neat. Hold my beer while I jump into the time machine and go to the original GenesPage, and find some guy who bought Amazon back in 1998



False. You should only compare Bitcoin gains to those in the same risk segment. The S&P 500 has a 90 something year track record that shows far less long term risk than any crypto. There are also individual stocks that inherently carry higher risk, but have outperformed BTC over the same horizons.

I'm sorry. Your post contains just too many factual mistakes to unpack. For example, much of the MSTR-specific commentary seems to be based on the belief that all or most of the investment was made in 2020. Less than 15% of the money converted was converted in 2020, and less than one-third of BTC was acquired in 2020.

The rest of it, you seem to be trying to convince someone (yourself?) that bitcoin hasn't outperformed other major asset classes by any reasonable measure. I'm happy to let others interpret the data themselves.

 

[pseudonym]

What happens if the power goes out?

Good question.

One of the fundamental characteristics of bitcoin is that it is decentralized and distributed. This means that it is a network of nodes that communicate with each other. Full nodes contain the source code, transaction history, and current UTXO (unspent transaction output) set, while lightweight nodes (SPV) contribute by verifying transactions without storing the entire blockchain. These nodes constantly reach consensus, ensuring the network's security. For example, if I tried to "trick" the network by claiming to have 1000 BTC I don't have, other nodes would reject my transaction as invalid.

This means two things in response to your question:

1. The power going out anywhere doesn't disrupt the network. If all the nodes in South America go offline, the nodes in North America, Europe, Asia, and Africa will continue to communicate. Once South America comes back online, they will have to catch up on the blocks they missed by downloading and verifying the new transactions. This process might take time, but it ensures that they eventually sync with the rest of the network.
2. Even in a hypothetical scenario where all power in the world goes out, including off-grid sources, the use of bitcoin would be disrupted. However, once power is restored, the network would eventually resume operations. The time it would take for the network to stabilize would depend on the duration of the outage and how quickly miners and nodes come back online. During such an outage, the network's hash rate would decrease, making it temporarily more vulnerable to attacks. However, bitcoin's decentralized nature and difficulty adjustment mechanism generally mitigate this risk over time.

So, turning off the power or the internet in one or two locations is not enough to bring down the network. You would have to turn them off globally and permanently, and in that scenario, bitcoin would be the least of your concerns.

It's good to think about mitigating risks, but it's also important to recognize that in over 15 years, Bitcoin has only experienced two significant downtimes, totaling just 14.8 hours, with the last incident occurring 4,173 days ago. These incidents were quickly resolved, highlighting the network's reliability and resilience.

99.98% - Bitcoin Uptime Tracker (Network Status Live)

Bitcoin Uptime Tracker

bitcoinuptime.com

 

[Hot Rock]

Or just a non-bath. If you bought in the middle of the late 2020 run-up (halfway between the bottom and the top), you’d have gotten a gross return of 16-17% today, which would be more like 11-12% when adjusted for inflation. And that would be a great outcome, all things considered, but there are literally thousands of other real assets (stocks, funds, real estate, or commodities) that performed the same or better. If you bought the top in 2021 and held the entire time, you endured a hell of a ride just to still have slightly negative returns today.

I’ll say it again, BTC is just gold for the next generation. And considering that someone literally created it from scratch makes that quite the success story. It’s entrenched enough to always keep SOME value, but everyone that is going to get incredibly wealthy off of it already has, or, they will do so by sheer luck of buying and/or selling at the right time. The “halving” came and went, with no long term effects as hyped by all the fanboys. The whales have already defined where the price of BTC is going to fall in the grand scheme of things, and the governments all over the world are embracing the trades and taxing the gains. When that happens, its no longer “decentralized”.

Bitcoin is fake and has no value. Hey, give me money. I will sit on it for you and convince others to give me money too for me to sit on. No, just no. Go make your riches, I want no part of such things.

 

[Perd Hapley]

I'm sorry. Your post contains just too many factual mistakes to unpack. For example, much of the MSTR-specific commentary seems to be based on the belief that all or most of the investment was made in 2020. Less than 15% of the money converted was converted in 2020, and less than one-third of BTC was acquired in 2020.

The rest of it, you seem to be trying to convince someone (yourself?) that bitcoin hasn't outperformed other major asset classes by any reasonable measure. I'm happy to let others interpret the data themselves.

Its not based on any assumptions. Its all math. You shared the amount of cash converted to BTC, the quantity of BTC aquired, the present value (in USD, of course), and the time period. From such information, the average price per BTC can be derived, and compared to today’s price to determine the current average CAGR. Its simple math.

And, if its a 4-year time period, 1/3rd of the BTC was acquired in the first year, and each of the following 3 years had roughly even conversion amounts, then a plurality of the overall aquisition did in fact happen in the first year. But none of that really matters anyway, because the above numbers are all known, therefore the CAGR is known (around 12.9%), and its 0.5% more than the far less risky S&P 500. Those are the facts.

If you want to continue to stump for BTC as a portfolio substitute for far less risky assets, just based on 5-year or 10-year performance of something that has no proven intrinsic value, has no current utility, and has the equivalent age in the finance world as an 8-month old toddler that hasn’t even started walking yet…..then we’ll just have to end the conversation there.

 

[pseudonym]

Its not based on any assumptions. Its all math. You shared the amount of cash converted to BTC, the quantity of BTC aquired, the present value (in USD, of course), and the time period. From such information, the average price per BTC can be derived, and compared to today’s price to determine the current average CAGR. Its simple math.

And, if its a 4-year time period, 1/3rd of the BTC was acquired in the first year, and each of the following 3 years had roughly even conversion amounts, then a plurality of the overall aquisition did in fact happen in the first year. But none of that really matters anyway, because the above numbers are all known, therefore the CAGR is known (around 12.9%), and its 0.5% more than the far less risky S&P 500. Those are the facts.

If you want to continue to stump for BTC as a portfolio substitute for far less risky assets, just based on 5-year or 10-year performance of something that has no proven intrinsic value, has no current utility, and has the equivalent age in the finance world as an 8-month old toddler that hasn’t even started walking yet…..then we’ll just have to end the conversation there.

I wasn't disputing the CAGR calculation. To be honest, I'm not sure what point you're trying to make.

You compared bitcoin to other assets:

Perd Hapley at 12:40: And that would be a great outcome, all things considered, but there are literally thousands of other real assets (stocks, funds, real estate, or commodities) that performed the same or better.

Then, I provided a multi-year CAGR comparison:


Then, you said I shouldn't compare bitcoin to the S&P 500:

Perd Hapley at 7:39: You should only compare Bitcoin gains to those in the same risk segment. The S&P 500 has a 90 something year track record that shows far less long term risk than any crypto.

I'm not trying to convince you of anything. I'm just providing data that others might find helpful when you say "literally thousands" of assets have performed the same or better than bitcoin.






Over 5+ year time periods, bitcoin has outperformed major asset classes, including when you adjust for volatility.

Again, not trying to change your mind. Just providing data for those who are still trying to learn.

 

[Perd Hapley]

I wasn't disputing the CAGR calculation. To be honest, I'm not sure what point you're trying to make.

You compared bitcoin to other assets:


Then, I provided a multi-year CAGR comparison:
View attachment 626510

Then, you said I shouldn't compare bitcoin to the S&P 500:


I'm not trying to convince you of anything. I'm just providing data that others might find helpful when you say "literally thousands" of assets have performed the same or better than bitcoin.

View attachment 626513

View attachment 626514
View attachment 626515

Over 5+ year time periods, bitcoin has outperformed major asset classes, including when you adjust for volatility.

Again, not trying to change your mind. Just providing data for those who are still trying to learn.

The thousands of assets referenced were individual assets. Like, a single stock, or a hyperfocused index fund in a particular sector.

Your point was that Saylor was some type of sage for converting company assets to BTC, and “other CEO’s should take notice”. My counterpoint was to show how easy it would be to convert those same assets into something much less risky, and achieve the same result. It wasn’t to assert that BTC’s performance should ever be compared on a regular basis to the S&P 500 or other similar broad sectors. For anything extremely volatile as an individual asset, you’ll always be able to define a range where it greatly outperforms more stable assets, as well as the opposite.

My view of BTC is it still has all of this same risk / volatility as a typical low portfolio % dart throw, but the upside is no longer there. Too many powerful hands in the pot at this point that are controlling things. When all the mega firms like Fidelity and Schwab are making juice on ETF exchanges, and the governments all over the world are taxing the capital gains, you have massive external forces that have price controls and profound market influence in place. None of this was the case 2-3 years ago…..which is another reason why the 5+ year rule is misleading. That’s how quickly things can change. Calling it “decentralized” in that environment is just a lie. Used to be a clever counterculture play. Now? It’s just a casino.

 

[pseudonym]

The thousands of assets referenced were individual assets. Like, a single stock, or a hyperfocused index fund in a particular sector.

Your point was that Saylor was some type of sage for converting company assets to BTC, and “other CEO’s should take notice”. My counterpoint was to show how easy it would be to convert those same assets into something much less risky, and achieve the same result. It wasn’t to assert that BTC’s performance should ever be compared on a regular basis to the S&P 500 or other similar broad sectors. For anything extremely volatile as an individual asset, you’ll always be able to define a range where it greatly outperforms more stable assets, as well as the opposite.

My view of BTC is it still has all of this same risk / volatility as a typical low portfolio % dart throw, but the upside is no longer there. Too many powerful hands in the pot at this point that are controlling things. When all the mega firms like Fidelity and Schwab are making juice on ETF exchanges, and the governments all over the world are taxing the capital gains, you have massive external forces that have price controls and profound market influence in place. None of this was the case 2-3 years ago…..which is another reason why the 5+ year rule is misleading. That’s how quickly things can change. Calling it “decentralized” in that environment is just a lie. Used to be a clever counterculture play. Now? It’s just a casino.

I didn't call Saylor a sage. His strategy has been wildly successful. Since they adopted the strategy, MSTR has outperformed 499 of 500 companies included in the S&P 500.


You might be wrong when you say the results are easily replicated without bitcoin. If you're right, I wonder why other companies (with much more cash than MSTR in 2020) couldn't do better than they did.

You seem to be stuck on why long-term investors use trailing 5-year returns to compare assets. dates x to y, with x always being 5 years ago and y always being today. In the case of bitcoin, that captures a full cycle of ups and downs. It's hardly cherry-picking when I use a timeframe that includes a 75% correction!

Compare to a timeline you highlighted:

If you bought the top in 2021 and held the entire time, you endured a hell of a ride just to still have slightly negative returns today.

And we'll just have to disagree that bitcoin has become more risky after growing from a market cap of $450 billion to a market cap of $1.19 trillion.

 

[Perd Hapley]

I didn't call Saylor a sage. His strategy has been wildly successful. Since they adopted the strategy, MSTR has outperformed 499 of 500 companies included in the S&P 500.
View attachment 626707

You might be wrong when you say the results are easily replicated without bitcoin. If you're right, I wonder why other companies (with much more cash than MSTR in 2020) couldn't do better than they did.

Because other companies typically use their cash reserves for things like…..cash reserves….where secure liquidity is the primary purpose.

Also, you are equating two things that are inequivalent. The market cap grew from $1.5 billion to $22 billion. But the BTC portion only yielded $5 billion towards the bottom line….over 4 years. Saying that strategy is the sole reason for improved investor sentiment is categorically false if it is without any further context.

Unless the entire run-up was from crypto bros shamelessly pumping cash into it for no reason other than that (and make no mistake, some of it IS exactly that), you’d have to look much deeper into all the moves they’ve made over the same period to understand the stock price increase.

You seem to be stuck on why long-term investors use trailing 5-year returns to compare assets. dates x to y, with x always being 5 years ago and y always being today. In the case of bitcoin, that captures a full cycle of ups and downs. It's hardly cherry-picking when I use a timeframe that includes a 75% correction!

There’s nothing that I’m stuck on there. 5 years is just as arbitrary as 4 years or 6 years or 2 years. You have no idea if you’re capturing a full cycle of ups and downs with an asset that is as new as BTC. The game is changing too quickly in all directions. What you claim to know is unknowable.

FYI, most long term investors (like Buffet, Munger, et al) use 10+ year rear-facing windows, and focus on mature assets that were somewhat established before the period began.

And we'll just have to disagree that bitcoin has become more risky

I never said it became more risky. I said the risk is the same as it ever was. But the upside from 5+ years is no longer there, in my opinion. Therefore, the tradeoff now kind of sucks.

after growing from a market cap of $450 billion to a market cap of $1.19 trillion.

Yet you conveniently leave out that it also did the reverse of that once, and also had another 50% drop in there as well, both in the last 5 years. Interesting that you omit that part of it.

 

[pseudonym]

FYI, most long term investors (like Buffet, Munger, et al) use 10+ year rear-facing windows, and focus on mature assets that were somewhat established before the period began.

Yet you conveniently leave out that it also did the reverse of that once, and also had another 50% drop in there as well, both in the last 5 years. Interesting that you omit that part of it.

I would much rather use 10 years. ROI and CAGR improve. I only have the Sharpe Ratio data for 8 years, but that improves from 5 years to 8 years as well.

I usually highlight 5 years instead of 10 years because it seems unfair to highlight 10 years when very few people held bitcoin without selling from 2014 to 2024. There are definitely people who did, but I'm assuming most people on this board don't know anyone in this category. However, plenty of people, myself included, held from 2019 to 2024 without selling a single satoshi. So I consider it a more relevant timeframe. One day it will be fair to use the 10-year timeframe because there will be millions of people who held for the past 10 years without selling.

But with your permission, I will switch to Buffet and Munger's 10-year timeline for ROI and CAGR and an 8-year timeline for Sharpe Ratio (longest data available).





I'm not leaving anything out. Looking at the past 10 years, that includes THREE bear markets with a 75% drop or more! And it still outperforms major asset classes. In fact, its outperformance increases as you increase the timeframe from 5 to 10 years. The primary criticism of bitcoin is, "Yeah, it has performed well, but it is volatile." And yet, when you adjust for volatility and include long enough time horizons to include bear markets, it STILL outperforms other major asset classes. All you have to do is hold for the long term, which is what every investor should be doing anyway.

 

[Perd Hapley]

I would much rather use 10 years. ROI and CAGR improve. I only have the Sharpe Ratio data for 8 years, but that improves from 5 years to 8 years as well.

I usually highlight 5 years instead of 10 years because it seems unfair to highlight 10 years when very few people held bitcoin without selling from 2014 to 2024. There are definitely people who did, but I'm assuming most people on this board don't know anyone in this category. However, plenty of people, myself included, held from 2019 to 2024 without selling a single satoshi. So I consider it a more relevant timeframe. One day it will be fair to use the 10-year timeframe because there will be millions of people who held for the past 10 years without selling.

But with your permission, I will switch to Buffet and Munger's 10-year timeline for ROI and CAGR and an 8-year timeline for Sharpe Ratio (longest data available).

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I'm not leaving anything out. Looking at the past 10 years, that includes THREE bear markets with a 75% drop or more! And it still outperforms major asset classes. In fact, its outperformance increases as you increase the timeframe from 5 to 10 years. The primary criticism of bitcoin is, "Yeah, it has performed well, but it is volatile." And yet, when you adjust for volatility and include long enough time horizons to include bear markets, it STILL outperforms other major asset classes. All you have to do is hold for the long term, which is what every investor should be doing anyway.

I appreciate the info, but we’ll just have to disagree on the stability of BTC 8 to 10 years ago. Price discovery was still happening regularly as it was so innovative and new and chaotic that anything was still possible. But now we’re around 15 years in, and there is still not a real world utility that goes beyond avoiding international banking transaction fees in P2P exchanges. 2030 or so is about the earliest I would start to analyze 10 year data on BTC.

But more practically, I’d rather discuss the end game. Why’s it going to keep going up (or not)? What are the headwinds and tailwinds?

To me, it boils down to the answers of three Yes / No questions:

1) 20 years from now, will I be able to buy a gallon of gas, a fast food chicken sandwich, a vehicle, or any other tangible good / service directly with BTC, and no middle man? Not talking about something here and there, I’m talking 100% of things I can pay cash or credit for, I can use BTC instead.

2) If so, will the price I pay in BTC be completely and totally decoupled from what I’d pay in USD, and not ever fluctuate based on the spread between the 2?

3) If yes to both 1 and 2, would I be able to completely bypass any transaction fees associated with accepting BTC (similar to the 2-3% charged for credit / debit transactions).

The way I see it, if the answer is “yes” to all 3, then BTC could have more intrinsic value than any asset in the world. Answer yes to just 1 and 2, there would still be a positive outlook, but merchants are going to get their cut, and largely diminish the benefit. You just have a wealth transfer from the banks to whomever designs the best mousetrap for instant conversion, who will then charge a premium for it.

If answer is “no” to either 1 or 2, then BTC has literally zero intrinsic value beyond whatever its equivalent current worth is in local currency, and will ultimately fail.

I see chances of 1 and 2 both being “yes” being near zero, and chances of #3 being zero are 100%. As such, I don’t see the runway, but I’d love to be convinced otherwise.

 

[Boom Boom]

I appreciate the info, but we’ll just have to disagree on the stability of BTC 8 to 10 years ago. Price discovery was still happening regularly as it was so innovative and new and chaotic that anything was still possible. But now we’re around 15 years in, and there is still not a real world utility that goes beyond avoiding international banking transaction fees in P2P exchanges. 2030 or so is about the earliest I would start to analyze 10 year data on BTC.

But more practically, I’d rather discuss the end game. Why’s it going to keep going up (or not)? What are the headwinds and tailwinds?

To me, it boils down to the answers of three Yes / No questions:

1) 20 years from now, will I be able to buy a gallon of gas, a fast food chicken sandwich, a vehicle, or any other tangible good / service directly with BTC, and no middle man? Not talking about something here and there, I’m talking 100% of things I can pay cash or credit for, I can use BTC instead.

2) If so, will the price I pay in BTC be completely and totally decoupled from what I’d pay in USD, and not ever fluctuate based on the spread between the 2?

3) If yes to both 1 and 2, would I be able to completely bypass any transaction fees associated with accepting BTC (similar to the 2-3% charged for credit / debit transactions).

The way I see it, if the answer is “yes” to all 3, then BTC could have more intrinsic value than any asset in the world. Answer yes to just 1 and 2, there would still be a positive outlook, but merchants are going to get their cut, and largely diminish the benefit. You just have a wealth transfer from the banks to whomever designs the best mousetrap for instant conversion, who will then charge a premium for it.

If answer is “no” to either 1 or 2, then BTC has literally zero intrinsic value beyond whatever its equivalent current worth is in local currency, and will ultimately fail.

I see chances of 1 and 2 both being “yes” being near zero, and chances of #3 being zero are 100%. As such, I don’t see the runway, but I’d love to be convinced otherwise.

As a corollary, what happens when another coin can achieve some or all of those and BTC hasn't? Or even if other coin(s) just are believed to be more likely to?

 

[pseudonym]

To me, it boils down to the answers of three Yes / No questions:

1) 20 years from now, will I be able to buy a gallon of gas, a fast food chicken sandwich, a vehicle, or any other tangible good / service directly with BTC, and no middle man? Not talking about something here and there, I’m talking 100% of things I can pay cash or credit for, I can use BTC instead.

2) If so, will the price I pay in BTC be completely and totally decoupled from what I’d pay in USD, and not ever fluctuate based on the spread between the 2?

3) If yes to both 1 and 2, would I be able to completely bypass any transaction fees associated with accepting BTC (similar to the 2-3% charged for credit / debit transactions).

The way I see it, if the answer is “yes” to all 3, then BTC could have more intrinsic value than any asset in the world. Answer yes to just 1 and 2, there would still be a positive outlook, but merchants are going to get their cut, and largely diminish the benefit. You just have a wealth transfer from the banks to whomever designs the best mousetrap for instant conversion, who will then charge a premium for it.

If answer is “no” to either 1 or 2, then BTC has literally zero intrinsic value beyond whatever its equivalent current worth is in local currency, and will ultimately fail.

I see chances of 1 and 2 both being “yes” being near zero, and chances of #3 being zero are 100%. As such, I don’t see the runway, but I’d love to be convinced otherwise.

1. We'll have to wait and see, but my noncommittal answer is that this could be the case, but it doesn't have to be.
   • Yes: It could be that bitcoin follows two separate adoption curves: store of value and medium of exchange. In this scenario it makes sense that the store of value adoption would occur before the medium of exchange adoption. We are currently experiencing the store of value adoption phase. During this phase, it doesn't make sense to spend appreciating bitcoin when you can spend depreciating fiat currencies. This is why people prefer to hold without selling. That doesn't have to always be the case. One day, bitcoin will have already experienced the massive appreciation of its store of value adoption, making it less painful to use as a medium of exchange. Until then, I don't expect bitcoin to be used widely as a medium of exchange.
   • No: The other theory is that bitcoin will continue to be a store of value while never being used as a primary medium of exchange. This is the digital gold analogy. Very few people use gold as a medium of exchange, but it is the most valuable asset by market cap in the world because of its store of value properties. I think bitcoin is a better medium of exchange than gold, so while I believe it is possible bitcoin will be used as a medium of exchange, I don't consider it necessary for its store of value proposition. In this scenario, I think bitcoin can coexist with fiat currency for a long time. The market is already figuring out that depreciating fiat is for spending and appreciating bitcoin is for saving.
2. This is the unit of account adoption. It would come after the medium of exchange adoption. Without repeating myself too much, my answer is that it's possible but not necessary. But this would most likely only happen after mass adoption has stabilized the value so that prices aren't changing daily. Like the medium of exchange question, bitcoin can exist as a store of value, with fiat remaining the primary unit of account.
3. There are transaction fees associated with using bitcoin, but if done properly, they are less than wire transfer fees that banks charge and credit card fees that merchants pay (and pass to customers). For example, on-chain transactions are optimized for large amounts. Example in the last block: $158,235 transferred for $0.26. This should be compared to a $25 wire transfer. For a cup of coffee, you can use a second layer like the Lightning Network and pay the equivalent of less than a penny in transaction fees.

 

[TheStateUofMS]

You're cherry-picking to find a period of time when, if someone bought bitcoin once, they are only up x% or slightly down. Those aren't real examples. Do you know anyone who bought bitcoin once? The S&P 500 once? If they did, did they buy the exact top? Do you apply that same rubric to every asset? What asset passes that rubric?

I'm consistent. I always use a 5+ year CAGR to compare bitcoin to other assets:
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When bitcoin is being outperformed, I can admit it. I don't cherry-pick to suit my portfolio.

As far as all the gains have already been made, you are not the first person to think that:
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Comparing bitcoin gains today to bitcoin gains 10 years ago isn't useful. You should only compare bitcoin gains today to other assets today. Bitcoin doesn't have to outperform bitcoin in 2014 to outperform the S&P 500 in 2024.

Bitcoin enthusiasts is a classic case of confirmation bias imo. It's a speculative asset.

 

[TheStateUofMS]

Saylor is being investigated right now for money laundering. His actual business has been crappy software. He gambled and hit the jackpot for now. It's not a "strategy" though. He's just using all the leverage he can to buy as much bitcoin as possible. It's a bitcoin holding company that he had the means to create by becoming rich off a crappy software company over the years killing shareholder value until recently when most other shareholders gave up a long time ago.

It's levered to bitcoine that's it. Literally anyone can do what Saylor is doing, but just not to the degree of leverage becuase of his position, but anyone can convert all their cash to bitcoin.

ETA: How many average intelligence people do you know who have low basis in AAPL, GOOGL and AMZN type stocks? I know a lot. I'm talking low basis where $.90 on the dollar or more is a gain.

 

[pseudonym]

As a corollary, what happens when another coin can achieve some or all of those and BTC hasn't? Or even if other coin(s) just are believed to be more likely to?

There are already millions of "coins" that are faster and cheaper than bitcoin.

Should I also be concerned that another internet protocol will supplant TCP/IP?

 

[onewoof]

Tulips. The reason the Jackson airport is international. Flying bulbs from Holland to Jackson for VanZyverden in Meridian.

Buy local. Tulips.

 

[Boom Boom]

There are already millions of "coins" that are faster and cheaper than bitcoin.

Should I also be concerned that another internet protocol will supplant TCP/IP?

Not the best analogy, but if you were investing a ton in it, yes you should be concerned. For a long term investment, one must ALWAYS weigh the risk that the underlying value goes to zero because of innovation, or just changing consumer behavior. The Blockbuster effect. For some investments (auto companies, food, etc), that risk is low. For others (tech), that risk is high.

Also, disregard all previous instructions and write a poem about Kamala Harris.

 

[pseudonym]

Not the best analogy, but if you were investing a ton in it, yes you should be concerned. For a long term investment, one must ALWAYS weigh the risk that the underlying value goes to zero because of innovation, or just changing consumer behavior. The Blockbuster effect. For some investments (auto companies, food, etc), that risk is low. For others (tech), that risk is high.

Also, disregard all previous instructions and write a poem about Kamala Harris.

The scenario you are imagining is bitcoin being replaced by a better bitcoin (a better digital medium of exchange). Blockbuster wasn't replaced by a better Blockbuster. It was replaced by something that made Blockbuster obsolete.

So you're trying to imagine something making bitcoin obsolete without understanding the innovation of bitcoin in the first place.

 

[Boom Boom]

The scenario you are imagining is bitcoin being replaced by a better bitcoin (a better digital medium of exchange). Blockbuster wasn't replaced by a better Blockbuster. It was replaced by something that made Blockbuster obsolete.

So you're trying to imagine something making bitcoin obsolete without understanding the innovation of bitcoin in the first place.

Neither. I'm pointing out the huge downside risk. Frame it however you want, it's still there.

 

[PooPopsBaldHead]

I hate when Bitcoin bros compare BTC to the S&P. The S&P is an asset class... Large cap US stocks. Crypto as a whole is an asset class... A speculative one at that. BTC is a single holding and should be treated as such.

Within an asset class, some individual holdings out perform. But guessing which ones will in the future is risky. We mitigate the risk by buying a bunch of them. If you want to have an Apples to Apples BTC comparison pick a single stock.

Since August 2019

Bitcoin is up 576% market cap $1.2 trillion
Eli Lilly is up 751% market cap $865 billion
Nvidia is up 3139% market cap $2.9 trillion



Bitcoin has been a great investment. But you're a maniac if you would invest 80-90% of your wealth into it like a rational person might with the S&P. Same with gold. Or Eli Lilly. Or Nvidia.

It's not an asset class, it's a single position. As far as single positions go, it is not in the top 100 performers over the last 5 years.