An Open Letter To A Bitcoin-Doubting Friend On Wall Street

Being employed by Wall Street colors how some people view Bitcoin. This letter is an attempt to lead one such person to the Bitcoin rabbit hole.

Dear Wall Street friend, 

I write this letter because I like you. I know we have our differences, especially in terms of how we view the financial institutions that dominated the last century of history, but I understand where you're coming from.

You are a smart and communicative person, banks and managers have identified your potential, offered you a well-paid career and a financial education along the lines of the fiduciary system. Suddenly I appear with an obsessed gaze, telling you that an anonymous individual has created digital money that, in addition to being an unparalleled investment, is a technology that will revolutionize humanity and turn everything you've learned from your successful billionaire employers upside-down.

At first glance, I must seem like a crazy person, but be patient and read this letter until the end. I write it from the bottom of my heart.

This is not a definitive article to convince you that bitcoin is the best investment at your disposal or why it represents the biggest social disruption of this century. My intention is just to give you some warnings and suggestions on how to approach this topic so that you may find your way down the Bitcoin rabbit hole.

This may scare you, but I can't tell you otherwise. Bitcoin is indeed a threat to the entire financial industry. As the adoption of bitcoin increases, the trend is that the entire sector of funds, banks, brokers, investment banking, etc., will decrease in size.

Please don't let this fact keep you from understanding Bitcoin in depth. Those who understand the orange coin today are only a part of the entire population that will adopt the technology in the future. Even with a pessimistic outlook for the investment industry, the opportunity you will see is so massive that you will soon forget about the disruption of the industry that employs you.

Bitcoin is a weird beast, but it's especially weird if you try to understand it through the traditional lens of analyzing income-earning assets like companies, real estate and debt. Bitcoin is difficult to define even for someone obsessed with the subject for years, like myself.

My suggestion is to approach Bitcoin from a network technology perspective. Look for parallels in the development of the internet, decentralized peer-to-peer networks like Tor or BitTorrent and even sea and air routes.

And of course, be sure to study monetary history. Placing bitcoin and fiat money on an evolutionary timeline will make it clear how much more dynamic this story is than central bank proponents would like to admit.

Don't look for the value of bitcoin in the big financial institutions and gurus. Its value lies in the anonymous people who make a conscious decision to participate in maintaining the Bitcoin network by purchasing their own in-home equipment, and saving via small weekly purchases of bitcoin.

This is quite different from what you are used to. In the fiduciary world, names, surnames, positions and institutions are agents of great importance and value. In Bitcoin, the opinions of Jamie Dimon, Warren Buffet and the CFO of BlackRock matter little. What makes this technology inevitable is the existence of an anonymous, uncompromising and unstoppable minority.

Try to understand what this minority thinks, what motivates them, how they interact with Bitcoin and why it is so difficult to stop them. The next time Charlie Munger gives his opinion on the matter, ignore it.

You may not be interested in understanding the difference between asymmetric key cryptography and a hash function, nor the difference between computation and predicate verification. It also may not seem very important to understand the nuances of governance of an open-source project or what a soft fork means and the Bitcoin tendency to avoid investing in hard forks. I understand you, they are specific ideas and are not part of your daily life.

But know that these concepts make a difference, especially when you want to understand why Bitcoin is different from all altcoins, which we Bitcoiners affectionately call “shitcoins.” Take the time to research how Bitcoin works at a deeper level than the articles on financial news portals. Some technical details are essential to understand the guarantees that Bitcoin offers and why they are unique compared to all the projects that exist in the “crypto” world.

I've heard big names in Wall Street claim that bitcoin has no “intrinsic value” more times than is reasonable. After a few years of not understanding this “phenomenon,” I came to learn that many economists who have advanced degrees and work in finance have never read even one essay by Friedrich Hayek or Ludwig von Mises.

It would be of great value to your Bitcoin journey to set aside linear regressions and differential modeling for a while to focus on the ideas of Carl Menger and his disciples. I promise you that you will not become a gold bug overnight, but at the very least you will understand that the term “intrinsic value” does not make sense.

This journey will not be comfortable. Realizing that the investment industry — probably the most powerful sector of the economy in the last 50 years — is about to be shaken up, and understanding that many of the teachings of your status-laden billionaire bosses aren't exactly the best in a post-fiat world will be sore, but it's going to be okay. As I told you at the beginning of this letter, you are an intelligent and communicative person, once your Bitcoin domino, you will be faced with one of the greatest opportunities of your life; and I promise you that after the initial scare, the only thing left is an inexhaustible optimism.

This is a guest post by João Grilo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.