I made the below client presentation back in March to explain why I'm no longer bullish bitcoin even though I like crypto.
Today morning, my wife asked me why I'm hating on an asset that has made money for us. This is the long form answer. Also, to clarify, I don't hate anything. There are good trades, bad trades, trades that make money and trades that lose money. Sometimes bad trades - like Michael Saylor and his Martingale strategy - make money, and good trades - wheat and corn for the 1000th time - lose money. That's the way of the markets, and I don't pretend otherwise.
I'm also overtly negative on Bitcoin Core right now in an emotional way because of turds like Max Keiser and Jameson Lopp who are taking victory laps over Roger Ver going to prison. I think bitcoin maxis have replaced their ideals with 'number go up' and I feel upset to have been a part of that community and made it a part of my identity. If Mephistopheles showed up in real life, I imagine 99% of the bitcoin maxi community would have no qualms selling their soul. We're already seeing it happen - from peer to peer electronic cash to digital gold to whatever sticks, bitcoiners are embracing every new narrative for their asset. As long as "number go up", bitcoiners have no problem owning a centralized shitcoin while hypocritically bashing other centralized cryptos.
Couching capital appreciation created by your own buying on a cornered market as "BTC Yield" is downright disingenuous and is being rewarded by the Nasdaq 100 with inclusion in the QQQ ETF. I suppose replacing an actual accounting fraud Super Micro Computer (SMCI) with a snake oil salesman's company MicroStrategy (MSTR) counts as a step in the right direction for the Nasdaq but I don't think any rational investor would look kindly on this deal (but I do applaud the deletion of Murderna MRNA).
These are two reasons to stay away from bitcoin: firstly, it being a network asset where the value of the network is deteriorating; secondly, I have philosophical differences with the community.
'Number go up' is not sufficient incentive - I can get that from my current stock portfolio. My Twilio (TWLO) position is up 72%, Kenorland Minerals (KLD), a company I love and is doing great work, is up 69%.
Heck, if 'number go up' is the only reason to own bitcoin, then it has already lost to Fartcoin.
End of rant. Below is my Client Presentation from March 2024, reproduced in full:
Crypto, not bitcoin.
Why not bitcoin?
6 million bitcoin (30%) of bitcoin in circulation lost forever. 70% of $1.26T market cap = $882 billion. Adjust bitcoin dominance to reflect this.
Evolving narratives: Peer to peer electronic cash => digital gold => magic internet money. Before 2018, all altcoins were traded vs. bitcoin. The growth of tether forever altered the crypto landscape, making bitcoin irrelevant to crypto trading.
Privacy on bitcoin is dead. BitMex and Binance have made nice with US govt. Mixers have been shut down, including pseudo-KYC compliant Tornado Cash on the ETH ecosystem.
Heavily centralized mining. Marathon (MARA) tried to launch an OFAC compliant mining pool in 2021 and failed. Only a matter of time before such ideas succeed.
OG bitcoiners have already seen the writing on the wall:
“As we stand today, Bitcoin is not a censorship resistant network, rather it just happens to be a network that is not currently being censored… Today, pools operate like custodial bank accounts and have the ability to decide who can and who can't use Bitcoin. The so-called "51%" attack vector is already a reality because it only actually takes 20-30% of network hashrate to have a good probability of getting away with an attack. As for censorship, it is no longer a matter of actual resistance but merely if and when the pools choose to do it there are 11 entities who decide what transactions go in (or stay out) of almost every block, and simply the 2 largest can impose censorship on everyone else with 100% success. This is not some future risk but a present reality, and it's not sustainable if Bitcoin is to remain a permissionless currency.”
- bitcoin core developer Luke Dashjr
It is impossible to turn the tide of history but we can mark ourselves safe.
Fungibility of bitcoin is already dead. The rise of ordinals will only accelerate this.
Bitcoin maxis have already pivoted to Monero and Kaspa, the only two crypto-currencies capable of fulfilling Satoshi’s vision of a peer-to-peer electronic cash.
Bitcoin will not die – Thomas Kuhn’s Structure of Scientific Revolutions offers a clue. Maxis will slowly fade into irrelevance.
Why crypto?
Bitcoin merely the first implementation of blockchain technology
Google was not the first search engine
Microsoft Excel was not the first spreadsheet software
Google Chrome wasn’t the first web browser
You see where I’m going with this
Bitcoin started a revolution and ignited innovation in proof-of-work blockchains. Now we have proof-of-stake, proof-of-history, etc. Faster, more scalable, less energy consumption – and chief of all, they offer an actual use case or potential use case unlike bitcoin
The cost of minting a Solana NFT is practically zero. Most users don’t mind putting up with network congestion/downtime. Users requiring 100% uptime and stability pay for the privilege on Ethereum. ETH brings down fees on Layer 2 and protects capital/ projects on Layer 1 with eigenlayer re-staking.
USDT on ETH L2/SOL/TRX etc. is replacing wires and credit cards for cross-border payments. Small merchants don’t have to put up with PayPal or other TradFi intermediaries freezing their funds for 30 days. Anyone with a smart phone can download the Binance app and accept international payments, cashing out via p2p. Runs circles around the ossified KYC/AML banking system that cares more about compliance than individuals.
Tokenization of real world assets on Ethereum. If GME were ERC-20, short interest could never have grown to 220% of shares outstanding.
Register tokens as securities, follow the IPO process, use ETH instead of the Nasdaq. INX Digital (INXDF) is working on this
Cross-chain swaps make sure issuers aren’t at the mercy of a single blockchain. Tether Foundation already swaps dollars between chains.
Any value assigned to a crypto coin/token is speculative and contingent on vision becoming reality.
No intrinsic value – not true. Value is not apparent yet but can partly be assessed via traditional metrics. For the first time, investors can put a monetary value on protocols and own a piece of it. Tokenisation of IP like never before. If a smart contract can disintermediate aggregators like Uber/Craigslist, does it not have value?
Permissioned blockchains, similar to Silvergate’s SEN or Signature Bank’s Signet will be adopted by TradFi to lower costs. Other obvious use cases for permissioned blockchains: timeshare swaps, inventory swaps, disk space swaps. Bullish Avalanche
Note that the bitcoin network doesn’t support any of these use cases. It is a legacy asset being sold to Boomers via a false narrative. Like Unix, bitcoin gave birth to a whole array of technologies and made the blockchain revolution possible. Like Unix, bitcoin also out-innovated early competitors but has now faded in relevance in the crypto world.
This is the inevitable march of progress.
Which crypto?
Ethereum is the obvious winner, the Microsoft of the crypto world
Solana is the runner-up, the cheaper but less proven blockchain that constantly crashes for no reason (Windows with BSoD as a feature, not a bug) [Note: this is no longer true]
ETH layer 2 scaling solutions Polygon, Optimism, Arbitrum. Take your pick.
DeFi loans Aave TVL of $15.7 billion
Monero - actual privacy coin that can be used as a peer-to-peer digital cash. Up 30% since Binance de-listing. The privacy coin that refuses to die.
Kaspa - offers a solution to mining centralization, an improvement on bitcoin’s protocol but minimal adoption after 2+ years. A wild card that can 100x or slow burn to zero.
Ordinal - Ordinals on bitcoin are cool. Like collecting baseball cards or pandora charms. The purebloods hate it – but can’t censor it, which makes the hypocrites mad.
Injective - Mark Cuban, Pantera Capital, Jump Crypto, Binance backed blockchain focused on smart contracts.
Tron - 50% of USDT is sent via Tron network.
Pyth Network and Chainlink - data feeds for Solana and Ethereum ecosystem.
I have nothing against other cryptos. These are just the ones I like right now.
I don’t hold bitcoin because it is overvalued and too much in the news. Sentiment among bitcoin bulls is at an extreme, the marketing is too aggressive, and the behavior of the Bitcoiners’ guru Michael Saylor is downright reckless.
Bitcoiners represent old money in the crypto world. They don’t have the same drive or entrepreneurialism as the noveau riche. My bet is on the innovators.
Personal theory: Like me, I suspect other bitcoin maxis have grown disillusioned with the BlackRock and Saylor worshippers and are moving away from bitcoin. The purpose of bitcoin isn’t to stick it in an ETF and sell it to retirees. 70% of bitcoin hasn’t moved in a year – nobody sells on the way up – but that’s going to change.
Crypto is for the cypherpunks. Bitcoin is for the boomers.
To conclude – choose crypto, not bitcoin.
Good Trading!
Kashyap