Yesterday morning my wife and I had "the talk."
I was a bit caught off guard. Not really ready to talk about it. Not sure how to handle all the questions that would arise. Just not positive we were prepared for this.
That's right, she asked me what Bitcoin was.
Questions that seemed so simple, such as, "So it's a currency, right?" actually weren't so simple to answer.
Three highlights of the conversation that I'll share with you...
First, I explained how the debate about Bitcoin, from the euphoria to the panic, is just flat out exciting. In the words of Yale economist Stephen Roach, "This is a dangerous speculative bubble by any shadow or stretch of the imagination."
I showed how the volatility is off the charts in a time when volatility is nonexistent. Here is a chart of Bitcoin over two trading days last week. Note the intraday moves of 15-20% up and down.
And I shared how after 17 years in the financial industry, this whole thing basically came out of nowhere. I'm trying to figure it out real-time along with people right out of college, as well as people like Lloyd Blankfein and Jeremy Siegel.
“Bitcoin is the most vertical of any pattern I’ve ever seen in my career.”
Second, I shared how with the lack of any sort of fundamental data, this is a purely behavioral phenomenon. The only thing left to analyze is the price itself. It's about a relatively stable supply and a rapidly increasing demand. This is Fear of Missing Out (FOMO) to the millionth degree.
We're left to read primers on Bitcoin, delve into the original white paper that launched the concept of Bitcoin and popularized the concept of the blockchain, and for the most part, just sit back and observe the value going vertical.
Finally, the best moment was after I explained how Bitcoins were created through mining. My wife immediately responded, "Oh I get it. It's like the WOPR from WarGames."
Completely wrong. But solid 1980's movie reference, Mrs. Keller. Solid.
RR#6,
Dave
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