ARCARO - Hack it till you Make it: Recent Episodes
Giacomo Arcaro
Bitcoin protects your savings against currency devaluation.
In the stories I write about Bitcoin, I usually say that becoming a Bitcoiner develops your critical thinking skills like never before. You are always looking to get to the bottom of things to see for yourself.
Contrary to popular belief, the cryptocurrency market is far from being a day trade. It's more like swing, when the timing issue defines the medium-term price.
In the world of crypto investments, the players who do not take time to identify their investor profile and strategize based on it are bound to lose. Here's why you should pay more attention to what you are doing.
Now what does all this have to do with Bitcoin? If Bitcoin can truly represent the total value of the entire economy — past, present, and future — then it’s the closest thing we’ve ever seen to a real-life St. Petersburg game. Like the St. Petersburg game, the payout itself would be finite (bitcoin will probably always have a quantifiable value attached to it), but its potential approaches infinity.
In one sense, this highlights the asymmetric risk-reward tradeoff of investing in bitcoin. You can only lose what you put in, but the potential reward is much, much higher. In another sense, this thought experiment recommends putting everything you can into bitcoin, without paying any mind to your potential losses. The only thing to keep in mind when you’re deciding whether or not to put an extra $100 of your fiat currency into bitcoin is how you could use that $100 right now. If the money is the difference between paying your utilities or having your water cut off, it’s probably smarter to hold onto it. After all, even the best scenario for bitcoin won’t add as much happiness to your life as forgoing showers for a month would take away. But if you’ve paid off all your credit cards and the rent check is in the mail, then know the extra dollars you put into bitcoin are endorsed by economic theory over the past few hundred years.
Hard to swallow pills for speculators in comfortable liberal democracies: Bitcoin was never meant to be compatible with the legacy finance system. These regulations are but the machinations of the very system Bitcoin seeks to disrupt. The unfortunate correlate is that the legacy system will fail in a non-subtle way before Bitcoin is accepted as the rational choice. This would indicate the process will be anything but smooth, especially in terms of market price discovery. If you believe in the legacy system's sustainability in the long term, you probably shouldn't speculate on Bitcoin. If you see this reaction as inevitable and predicted by the game theory built into the Bitcoin protocol, your conviction has probably increased.