There are significant risks to invest in Bitcoin, but, there is still a significant asymmetric payoff for owing bitcoin. Bitcoin is path-breaking both from economics and computer science prespective.
From computer science prespective it solves ‘Byzantine general’s problem’. And Bitcoin is a good Store of value from economic point of view. As it is has all properties of SOV like durability, portability, verifiable, divisible, scarce and censorship resistance.
System designed against you:
Like it or not, the system is rigged. If you look at the price change (see below) in the last ten years from Housing, Food, Education to Healthcare the price has increased dramatically. Only exception are the consumer products like software, electronics and clothing. Unfortunately, you can’t eat iPads.
You give more to the system than what the system gives back to you. Bitcoin doesn’t just give you an alternative investment to the existing system. Bitcoin is your EXIT from the existing system to build something new and experimental.
Bitcoin is one of the those investment like derivative option where the potential downside is limited and the upside is unlimited.
It makes sense mathematically to own Bitcoin.
Some basic math first. What is Excepted value? The definition of expected value is: the sum of all possible values for a random variable, each value multiplied by its probability of occurrence.
Suppose you are planning to invest $500 in Bitcoin. Let’s say, just for the sake of argument, the probability of bitcoin turning to $5 is 50% and there is 50% chance that the pay off is asymmetric, say 2x (x is the amount you invested).
50% * $450 = 225 (50% probability of losing $450)
50% * $1000 = 500 (50% probability of making 2x)
The net expected value is positive. +EV is good indicator to HODL bitcoins.
If you are a Nocoiner, I hope the above the article helped you to be more open to HODL Bitcoin.
If you’re a HODLER, HODL on tight and enjoy the ride.