[zman]

Bitcoin is far from a scam. I don't blame those who don't understand. It's not difficult to understand at a high level but putting together the pieces of the puzzle is extraordinarily complex. It requires deep understanding of certain aspects of mathematics, statistics (probability and regression models), computer science (cryptography), finance, economics and history (of money) to fully understand what it is, how it works and why it works. Most people who are into bitcoin don't understand these aspects very well, they're just lucky because they work in technology or knew someone who somehow convinced them.

To understand the historical aspect of it watch the 1 hour video posted by Zeeshan. Most of the information in that video is accurate. The only part that is incorrect is the claim that bitcoin will replace traditional money. I don't think bitcoin will do that, sovereign digital currencies will. Bitcoin doesn't need to do that to survive or even thrive. It'll co-exist with traditional currencies as a store of value just like gold and silver did with fiat for hundreds of years. It's a store of value in the digital world just like gold is in the physical world.

20 years ago if you told someone FB would completely transform the way most people socially interact with each other they'd think you're crazy and yet it happened. Just like FB transformed many traditional social norms that existed 20 years ago bitcoin is doing that before our very eyes in the store of asset value space.

Bitcoin is a novel asset class and unique in many ways. Just like any other new industry a new asset class goes through price discovery. It goes through extreme highs and lows before its true value is discovered. That's why you notice such volatility. 5 years from now it probably won't be any more volatile than the price of gold.

Truth be told nobody knows where the price of bitcoin is going, I don't either but I can tell you the strategy that worked for me. You must expect 33-50% volatility with bitcoin at any given time. Since 2017 I knew that once BTC crossed 20k madness would ensue. Humans are just wired that way. At 19,999 it's no big deal, at 20k it's all time high and suddenly captures everyone's imagination and makes everyone's wishlist.

When the market crashed in March, BTC hit 3800 and bounced back to 5200 the same day. I thought the price action was amazingly bullish. This happened at a time when TSLA, AAPL, AMZN were still struggling to find a bottom. I started buying the next day and bought most of mine over the next couple of months between 6-9k knowing full well I could easily lose 2-4k on any given day. If you want to get into bitcoin embrace this risk. Unfortunately there's just no way of avoiding the 33-50% downside risk whether its trading at 5k or 50k. If you can accept that downside risk you'll do ok otherwise you'll keep buying and selling until you lose 80% even if BTC is down only 20%.