Three Rules Of Bitcoin

Unlike Jamie Dimon (here) I think that Bitcoin and Cryptocurrencies can fit into your portfolio – but only as a highly speculative allocation (here).  I currently do not own any crytpocurrency and would be selling some as I think the next move is further downside, but there may be a time when I choose to add again.

Rules to think about when weighing your decisions on digital currencies.

In any case, I find these three rules to be useful in terms of thinking about how and when to buy and sell Bitcoin and other cryptocurrencies.  I believe they are important things that you need to factor into your thinking and analysis on the subject.


Rule #1: Bitcoin Is Smarter Than Me

This is the first and most important rule about Bitcoin.

I cannot speak for everyone who reads my reports, but Bitcoin is definitely smarter than me.  I do not say that lightly.  I have a Bachelor of Mathematics in Computer Science and Combinatorics and Optimization, worked as a software engineer at Microsoft, and have taken several PhD level courses in math and finance, but from what I can tell, I do not have the intelligence that the people who really know Bitcoin do. I might be able to muddle my way through setting up a mining operation, but the reality is that I have to accept that the people who know blockchain and cryptocurrencies intimately are smarter than me.

To put that in perspective, in my ordinary course of business I deal with a lot of economists, many with PhD’s.  They are very smart people and some have specific knowledge that I lack, but I don’t feel overly intimadated by their knowledge.  With crypto I think I am orders of magnitude behind in terms of the knowledge the best and the brightest have in the field – it is both humbling and useful to understand that.

There are lots of things that I don’t fully understand.  I don’t really know how my cell phone works, but if there is a problem I can call the maker of the cell phone and try and get it resolved.  Or I can call my cell phone service provider and get them to help.  Products like that come with a group of people there to help make it work.  They are in the business of making it work when it breaks.

Disclaimer: Any opinions expressed are those of Peter Tchir. This info is for educational and/or entertainment purposes only, so use at your own risk. He’s not a broker-dealer or advisor of any kind.

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