From Skeptic to Believer: Embracing Bitcoin as a Store of Value

By Alvin Voon, CIO

19 September 2019. This was a few days after reading the Bitcoin white paper. This was the day I put on my very first buy order for BTC.

I had a certain curiosity about Bitcoin a few years earlier but was never really intrigued by it.

How could anyone invent something that could threaten the entire foundation of macroeconomics? Fiat money, having abandoned the gold standard in 1971, looked flawless.

The US dollar, which became the global standard of value, propelled economic growth to unprecedented heights and generated immense wealth for nations and individuals.

It fuelled technological advancements and provided much-needed capital to channel economic wealth towards the creation of more wealth through technological innovation.

However, like all good things, there are caveats. Like sugar or glucose, too much of a good thing can make you sick, but slowly.  

The ability to print money and to circulate it into the capital markets unrestrained at an increasing rate imposes great cost to societies that they seek to help.

As a global economy, we collectively onboarded the inflationary escalator without a stop button.

While we can produce more food than ever before with advanced farming techniques, many are unable to avoid starvation.

At the same time, enormous amounts of food are discarded daily.  

We can scale and build the best houses quickly for the masses and yet homelessness in developed economies is on the rise.  

While many new jobs are being created, many more old jobs are being destroyed.  

We have embarked on an unsustainable trajectory into the abyss and a path that reinforces the divide between the rich and the poor.

Yet, until the last decade or so, all the advocates against the ills of the fiat based financial system could only suggest that we buy gold as a hedge against dollar debasement. 

Is the gold currency of the ancients the best we could offer?  

How about real estate?   Well, find me one that I can bring along to another country and find me one that cannot be bombed or will never go out of style and cannot be regulated away to nothingness and I will gladly store all my purchasing power there.

Reading the Bitcoin white paper in June or July 2019 ignited a spark of hope.

As a student of macro-economics and an options trader for the past 20 something years, I saw a potential gamma trade where there is a chance of an outsized return against the risk taken.

Bitcoin, based on blockchain technology is pure gamma.  

Yes, it could plummet to zero, yes, it could be volatile, and yes, it seemed too good to be true.

But isn’t that how all good trades look like before their true value is realised?

It’s a big topic and I will talk more about the properties of Bitcoin that intrigue me.  

For now, I just want to look back on the fateful day when I bought Bitcoin for the first time at about USD 10,000.  

I celebrate this not because Bitcoin has appreciated 4X in value today but because it is gaining wide acceptance as a genuine preserver of purchasing power.

Until we can get off the inflation escalator by controlling the rate at which we print fiat money, we need to pull together to find the cure. Bitcoin is our best chance, but there will be challenges.