New Bitcoin Perspective

In this memo, we describe a new way of thinking about Bitcoin that could help you internalize why it has value.

Listening to most people speak about Bitcoin, there seem to be only two schools of thought—it's worthless or it's the best thing since pockets.

We've been studying the asset class since 2013 when we were exposed to it by engineers in our local video streaming office who used the excess computing power to mine Bitcoin. Back then, the price had spiked from about $100 USD to $1,000 USD, and some engineers made enough to send their kids to college. Today the price is orders of magnitude higher with adoption from consumers to countries.

Most of the narratives you hear about Bitcoin have been poorly regurgitated and repeated. Much like the telephone game, only the repeatable sound bites remain while much of the fundamental analysis is removed.

So, we found a simple thought experiment helpful in understanding this asset class that is shorter and friendlier than trying to read code or spend the thousands of hours necessary to have a deep and true understanding of it.

Part 1: Our World is Chaotic Change

Imagine you are living in the exact world you're living in today, with all of its vagaries, ups, downs, and sideways twists. Shocks are everywhere and happen more frequently. Dot com busts, 9/11, housing busts, COVID, inflation, layoffs, stampedes, school shootings, war. You name it, we humans have a hand it in.

As a result, the world's primary currency, the United States Dollar, fluctuates with these shocks. Businesses raise prices to make money and also stay ahead of the rising costs. The United States Federal Reserve prints money and burns money constantly as a blunt tool to control the value of that money.

You may get a $0.50 per hour pay raise every year. But your grocery bill, school supplies, health care, and movies seem to be going up faster than that.

In essence, you live in a world of change, not in a world of stability. So something that doesn't change would be hard for you to understand. It would be as foreign as an alien landing a spacecraft in your front yard. In fact, you may not even recognize that it is alien or is a spacecraft because it's something you've never seen or experienced before. It is completely unique, different, and hard to wrap your head around.

Part 2: Bitcoin is Foreign Because It's Stable

Now I want you to imagine you've somehow been magically transported to another planet. On this planet, things don't change. They're always the same. It's consistency, safety, and stability. If we were to introduce the human world and its United States Dollar to this world, it would throw it into complete and utter disruption. The reason is because it brings with it constant and chaotic change. The inhabitants of the planet can't understand it or use it because the value is constantly changing.

However, on this planet, people use Bitcoin. There is a set amount of it, and the fundamental rules for how it works are set in stone and can't be changed. As a result, the world has built things on it, both its economic structure and its technologies.

Things don't change. There are 21 million Bitcoin, and each Bitcoin has 100 million Satoshis within it (think about Satoshis like you currently think about United States Dollars). Imagine buying $100M for $65K. You would take that deal all day long and twice on Sunday.

Because everyone on the planet uses Bitcoin, the value of 1 Bitcoin is always worth 1 Bitcoin. And 1 Satoshi is always 1 Satoshi (e.g., dollar). Of course, you can sell your product or service for a different amount. Some T-shirts might be more expensive and cost 500 Satoshis. Some might be less expensive and cost 100 Satoshis.

But because the amount of Bitcoin and Satoshis is stable and always the same, people can use it to compare the value of one good or service to another. There is no exchange rate. There is just this product vs that product. Which one "costs" less means it stops being about price and starts being about value. At that point, the entire planet has a shared and consistent subconscious way to communicate value to each other. From there, a deeper understanding can develop.

So the real question is which planet do you want to live on? The Planet of Constant Change and Chaos, or the Planet of Stability.

People have asked me what it's backed by. It's backed by the Internet (used by 5.4B people and 17B machines) and people's values (i.e., freedom).

We have written an investment analysis paper covering the various asset classes, which we may release to the public at some point. However, we have inserted a screenshot of the current draft below for your consideration, which shows that every asset class on Planet Earth is backed by the Internet.

Part 3: Another Compelling Argument for Bitcoin

Michael Saylor owns a technology company he founded decades ago. It's a public company but people didn't really pay attention to it because it didn't change much. Again, we live in a world of change, so the only thing "exciting" to us is more change.

During COVID, he and some intelligent individuals analyzed all the asset classes and tools available to the company to protect it from these chaotic changes and landed on Bitcoin. They began buying it aggressively and putting all the company's savings into it due to its stability. As a result, the value of his company rose from $500M to $25B and garnered quite a bit of attention.

Then, the SEC approved Bitcoin ETFs, which pushed Bitcoin through the largest investment distribution channel on the planet and enabled corporations and individuals to get access to the price movement of Bitcoin without any of its other features. Eventually, one would assume they will skip the fake ETF wrapper that makes it look more like a stock and go straight to the asset itself.

Here is the video where Michael Saylor provides his argument for Bitcoin. It covers more perspectives and detail about scarce resources on our planet, like time and property.

https://youtu.be/S3T4nhtHxOA?si=8JnHPD1pRPRMnMBL

Feel free to reach out to evergence.team should you have questions or need help.

--Sean