April 21, 2021

Bitcoin: capitalizing a meme

But the story about bitcoin, which has reached new frontiers, is just a crossbow bolt into an old body. "Smart investment". It's the usual buffetology of the 20th century: investing in value, looking for underestimation, ignoring the whims of Mr. Market, as they call it, etc.

Because - just let's be honest!- The "value" of bitcoin has not changed all this time, and, strictly speaking, is equal to zero. It has no physical utility like commodity, nor does it generate any cash flow like securities. Physically, its blockchain is no different from the blockchain of hundreds of other cryptocurrencies, and, from the position of a "smart investor", there is no reasonable reason why a unit of one crypt costs 50 thousand dollars, and another - 50. Physically, they are one and the same.

But the whim of the market somehow pulled up to look down on it, didn't it?

If it was something in between a pyramid anda venture startup (as I perceived it most of the way), the historical high of the price would have been at the beginning of 2018. By this time, everyone who could find out about the cue ball knew. That is, almost all people, with the exception of children and tribes in the Amazon jungle. All who invest - invested. For a classic pyramid, this is the inflection point and the beginning of the end.

Never counting the crypt as our newmoney ”, I bought my first bitcoin in 2014 at around $ 500. Well, then he quietly sold it off, at prices that would seem ridiculous now, and now it lies a little bit, compared to the former treasure. This is a completely reasonable tactic for dealing with HYIP if there are strong reasons to predict its multiple growth (if anything, for most HYIPs, including tokens, there are no such grounds, it is better to bypass them a mile away). But now Bitcoin looks like something big.

No, he never became new money, and clearly notwill go to the store with such - monstrously long and expensive. But the “new digital gold” is more yes than no. Without a guarantee, but he passed some important tests on the way to this status.

At the same time, prudent investors in "gold"they more or less believe that these are, of course, not stocks, but this is not a void. At least the faction that is leaning towards asset alocation puts gold in its portfolio, without fanaticism, but still.

So why is gold possible, and cue ball - phew?Are they talking about physical utility? Oh no. If gold were just a metal for industrial purposes, the price would, to put it mildly, be very different. It is the symbolic component that keeps the price. In other words, people's belief in other people's beliefs that something is worth more than its immediate apparent utility. And then the belief that in the future this magical property will persist, and why not? That is, gold is also a psychological hype, with the difference that it lasts several millennia, and everyone is used to it.

Roughly speaking, the main value of gold comes down to the self-sustaining of the old narrative. So isn't the value of bitcoin the same, only newer?

That is, all value is only in people's heads, andnowhere else. That's right, the classic "prudent investor" will nod, and he will be completely right. Therefore, there is no real value, he will summarize, and will be completely mistaken.

The market is the magic of the summation of subjectiverepresentations in objective reality, what he eventually says - that is, is not subject to appeal. You can, of course, sit in the middle of Siberia (just like me) and argue that minus thirty degrees is bad and unreasonable. But I think it's wiser to sell insulated jackets, or at least buy one.

They don't argue with the weather. With the market too.

About the fact that the whole value of the cryptexclusively in the head, seen by the rates of different crypto "currencies". As a rule, there is no utility there, and the cue ball occupies the lion's share of the market solely because it occupies a large share in the heads. As crazy as it sounds, this is the main reason for his dominance.

It can be explained with an example.Managers make up a corporate program for a cool corporation. Suppose they have no musical taste at all, their own preferences, too, but they know which performers to call. Of those that all already know as much as possible - if the budget allows. Hence the process of self-maintenance of price tags and places in the charts, if you accidentally entered the top, you will definitely be in it for some time - it is no coincidence.

So if the value of bitcoin is proportionalto anything measurable in our world, it is the frequency of its mention. If the star ceases to shine, they will stop calling for corporate parties. Will Bitcoin stop shining in the foreseeable future?

And by the way, it blows up the whole paradigm of investing.

The Intelligent Investor 2.0.must take into account that he lives in the 21st century with its media, info-viruses, the strength of the hamster flocks and the methods to keep the flocks in good shape. It's time to get used to the fact that if some shit is popular, it's not shit. This is our new gold. To find a place for him in portfolios, you can safely throw out "good value stocks."

Well, this is another example than momentum selection.(buy what grows) be more careful than multiplier selection (buy what is cheap). In a world where a herd of hamsters can sweep away everything in its path, it is wiser to take into account their direction, and not pretend that the wise old owl knows better.


Just in case, my book "Money Without Fools": www.alpinabook.ru/catalog/personal-investments/555670/

or here https://www.ozon.ru/context/detail/id/154836589/

my page in VK: vk.com/dengi_bez_durakov

trading system number 1: smart-lab.ru/blog/568144.php

trading system number 2: smart-lab.ru/blog/572258.php