Bitcoin: A Revolutionary Investment
We are all Monetary Protestants Now
Special thanks to Des Devlin, Daniel Lambert, Emily Kuhn and Samuel Kuhn
Dedicated to Priscilla and Joseph as well as the courage and creativity of the revolutionary spirit.
About the Author
With a background in financial markets and having completed the prestigious Chartered Financial Analyst (CFA) program, Thomas Kuhn has positioned himself to act as translator for Bitcoin and cryptocurrencies to traditional finance while working for the Mine Digital cryptocurrency exchange.
With pieces featured in the Asia-Pacific Research Exchange of the Chartered Financial Analyst Institute, Quantum Economics, Hackernoon and Medium, and being sought for analysis by industry publications such as Forbes, Decrypt and Coindesk, Kuhns writing focuses on a forward-looking macro-economic picture as well as the social and cultural events surrounding the Bitcoin universe.
His investment view is informed by a background trading financial markets in conditions such as the Global Financial Crisis, European Debt Crisis, Japanese currency interventions and monetarist policy responses while a deep understanding of qualitative changes at the socio-cultural level were developed in a career that included self-exile from the traditional financial institutions due to fundamental differences in worldview.
Contents
Introduction
Since inception in 2008, Bitcoin has led a blockchain revolution in the digital universe with the asset valued at over $500 billion US (United States) dollars late 2020, placing the asset in the top 10 largest public institutions in the world, recently overtaking Warren Buffets Berkshire Hathaway.
It began with Satoshi Nakamoto, the technologist(s) who created the asset and found a way to capture energy through the digital Bitcoin protocol and convert it into money.
The protocol that allows this conversion begins with a revolutionary philosophy of money, as well as a mechanism to realise this philosophy in a digital format. The piece de resistance is the Bitcoin whitepaper, representing both philosophy and mechanism in a stable but open digital system that organises external physical resources - computer hardware and electricity - to work for the system.
In this, Bitcoin is an example of pure creative expression capable of manifesting a previously impossible to understand social phenomenon - money.
Bitcoin was highly successful. In late 2020 it used 76.87 terawatt of electricity annualised, enough for 15.2 million homes and more than many countries to create between $9 and 10 billion US dollars of the asset at current prices for the year.
Also, in 2020, Bitcoin attracted the attention of legends of institutional macro-investing including Paul Tudor-Jones, Stanley Druckenmiller and Bill Miller. Tudor-Jones called it the fastest horse in the race in comparison to gold, Treasury Inflation Protected Securities and other investments in a paper comparing ways to preserve portfolio value.
Additionally, NASDAQ listed company Microstrategy invested their entire treasury of $425 million US dollars into the asset, doubling that amount when Bitcoin doubled in price and then raising $650 million USD to further purchase the asset.
Insitutitional interest in Bitcoin includes Mexican billionaire Ricardo Pliego revealing that 10% of his net wealth was in Bitcoin, JP Morgan sees $600 billion USD of demand and Scott Minerd, Guggenheim CIO said that their fundamental models suggested a valuation of $400,000. The Grayscale Bitcoin Investment trust - a key investment vehicle for institutional investors - now holds over $13.1 billion US dollars of the asset.
In 2020, Bitcoin was being realised as a fully accepted institutional asset - as digital gold.
As an investment, Bitcoin has unique characteristics - including being essentially uncorrelated to other asset classes. It has traded as a risk asset, as a technology asset and as a store of value at different times, although this may change with broad institutional acceptance.
Developed as a response to the Global Financial Crisis, we believe that it is essential to understand the full history of Bitcoin given that the irregularities and moral hazards in the global financial system are coming to a head. To prepare readers the text covers the history of money as well as long-term effects of monetary policy on the US dollar and global financial system.
If we want to understand a rapidly changing world, we cannot underestimate the breadth and depth of the impact of Bitcoin across legal, social, cultural, political, philosophical, digital and material realms.
Bitcoin is a 4-dimensional, fundamental change in reality. We can describe each face of this revolution in different, subjective ways. At the heart of it is the one thing that Karl Marx agrees upon with Milton Friedman, as well as neo-liberals and the materialist culture of science - that money is the prime source of power in human civilisation.
While creating money in this revolutionary way, Bitcoin is also a Trojan horse to the social, cultural and political idolisation of money. Bitcoin presents as this important social concept (money) but then ushers in foundational critiques of the way we construct society, and reality. Bitcoin paradoxically undermines the power of money through its principle of de-centralisation, disempowering the materialist obsession with money while simultaneously being a better form of monetary value than we have seen before.
Bitcoin is deeply self-aware of this. It is not merely providence that Satoshi Nakamoto released the Bitcoin whitepaper on October 31st, the same day as Martin Luther released his Ninety-Five Theses in 1517 to suggest a hard line between the power of the Pope and God. Satoshi suggests a hard line between authoritative institutions such as government (politics)/ central banks and capital.
There is a depth behind the ideological environment that allows the development of Bitcoin. Created in the environment of the early internet by self-described cypherpunks, Satoshi shares an origin with Julian Assange as a cypherpunk, the same cultural phenomenon that also bred Edward Snowden and Neo from the Matrix movies. A vague heroic archetype emerges for the digital environment that promotes de-centralisation, trustless transactions and opposes material power. With Bitcoin comes a mastery of the physical world by the digital universe and the masters of this digital universe are a fundamentally new type of individual.
We believe that it is essential to understand Bitcoin as an investment in the full history of its revolutionary context. To understand why it is so revolutionary, we must understand why it is special as an investment, and as an investment why it is so revolutionary.
For humanity, we must understand the implications for the world around us, for centralised authority, trust-less transactions, the sovereign individual and perhaps most of all, as the most powerful form of material power developed, existing in the digital universe . The impact of this point alone cannot be fully understood at present but is essential to keep considering, especially in the context of big data, artificial intelligence and the relationships between the expanding digital universe and our physical material existence.
Bitcoin is both investment and revolution. We hope that in this text as well as in our accompanying pieces, we help communicate the idea to maximise the influence of this pure creative force.
