I bought Bitcoin for the first time 12 months ago

Within weeks I was all-in: everything I owned and everything I had access to!

When I revealed this in a tweet last night it elicited some confused reactions, and also questions that I will answer in this post.

I knew about Bitcoin quite early on, probably around 2012, but definitely by 2013, as I found some posts I made about Bitcoin on a deprecated private forum. Surprisingly, they're not that embarrassing but there's definitely an air of naivety about them.

Questioning the concept of money:

27-10-2013 - What I don't understand is when people claim the concept of money is a scam as it's no longer backed by gold. What is gold backed by?

I also did in-depth market commentary back then LOL :

15-02-2014 - Bitcoin getting smashed!

Mt Gox crash, growing confidence and comment on bail-outs:

01-03-2014 - I haven't waded into the bitcoin pool just yet. It's interesting to see the bitcoin value hold up on the other exchanges. MtGox crumbled to below 150 while the other exchanges were trading at ~600USD. It shows confidence in the system is building. You'd love this; no bailout!

Bitcoin mining:

01-03-2014 - You need a differentiated rig to give you an advantage over the over rigs wrt cost of power*consumption<value of bitcoin mined.

As the price of bitcoin increases, more rigs come on board to take advantage of the arbitrage opportunity, however the bitcoin protocol is designed to reduce the mining payoff as this occurs (in bitcoin terms).

So...you've got to be ahead of the curve wrt computing power

Satoshi's wealth:

07-03-2014 - The guy is rumoured to own about 10% of all bitcoins.

@ $1000 bitcoin had a market cap of 12b.

@ today's prices (600?), he is sitting on about 650m

Bitcoin's growing legitimacy:

20-07-2014 - I don't truly understand the technology, but the legitimacy of it is growing. A lot of very smart people have checked it out and have backed it up with cash.

It's very early days but the infrastructure and acceptance is growing.

I haven't bought any and probably won't unless it crashes.

Narrator: It crashed; he didn't buy.

So why didn't you buy?!

Fair question - at one point I did intend to buy a handful of Bitcoin if it dropped back to 200 dollars - which it never did, so I didn't buy. That lesson stayed with me when I did start buying in 2020.

Here's why I didn't buy in 2013/14:

  1. Bitcoin was little more than an idea at the time - "magic internet money" with a protocol that had yet to mature into what it is now. Literally "dubious speculation".

  2. User experience was horrible.

  3. Bitcoin was interesting, but I had zero conviction. I was still focused on losing money on stocks :)

  4. Bitcoin faced many existential crises.

  5. I didn't feel any urgency to the problems Bitcoin was addressing.

The last point is what interests me most. I have a business education & commercial background. I followed the 2008 financial crisis very closely as it was unfolding, and read extensively on the post-mortem. I knew the economy was deliberately driven off a cliff and hated the bank bail-outs!

But I didn't buy.

This is why I disagree with those who claim Bitcoin is a test of intelligence. It is not! I am not any more intelligent now, with total conviction, than I was back then, with zero conviction.

Does anybody want to argue that Michael Saylor was not smart back then?

Bitcoin is a test of values. It is a test of your understanding of the world and Bitcoin.

2017 Bull Market

The 2017 bull market took me by surprise, mainly because I wasn't following Bitcoin at all by then. So the first I heard of the rising price was from my barista friend when it broke new all-time highs. I was fascinated by this resurgence.

Once could be written off as a fluke, but that second bull market at 20x the previous all-time high? I watched in disbelief and marvelled at what was emerging, but didn't want to take the risk of buying until the market cooled or crashed, as it had done twice in 2013-14. I decided in 2017 that if Bitcoin survived another cycle - that was proof enough of its resilience and I wouldn't miss out next time.

2020-21

Covid hits and the markets crash. I wasn't reading macro at this point, but I started following Bitcoin more closely, though still of the mind that the next bull market would happen in 2021. It's fair to say the coin had not yet dropped in my thinking. I was still thinking we would get a second crash in late-2020, so I waited. And waited...

Then the coin did drop: Ooh shit! They're not going to allow a second crash!

I had been a lurker on twitter since 2018 and began following some of the popular Bitcoin accounts. They were still debating whether the halving was priced in. Then I saw the "Bart Simpson" manipulative chart pattern and that put me on edge - costing me an extra 30% on my eventual entry price.

Bitcoin started climbing, and climbing...so I jumped in with about 25%, then another 25% in the next few days. Then 50% in the weeks after, leaving aside some money to live off...but I quickly realised that you never have enough Bitcoin and ploughed 80% of my living allowance for 6 months into Bitcoin. Then I started getting paid in Bitcoin! I literally sell a little every month or so for bills (and coffee!). So far it has worked out tremendously well.

I didn't read the white paper before investing.

I didn't look into the code.

12 years of existence, exchange hacks, frauds, imposters, booms, busts, ever increasing prices - Bitcoin had proven itself to be not just resilient, but anti-fragile.

Bitcoin had a bounty of hundreds of billions of dollars on its head - incentive enough for the most capable of malicious actors - yet it kept getting stronger and more popular. That logic was my due diligence.

Those early years shaped Bitcoin. Now it is time for Bitcoin to shape the world.

I know that many of you were interested in my history on twitter. Despite my account being created in 2018, I was only using it to follow journalists and public figures for news and commentary etc. On the 2nd of January, 2021 I started @BTC_Archive

In my next post I will tell you more about why I started Bitcoin Archive and how it has grown so fast since then.

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