Bitcoin!
Bitcoin has gotten a lot of attention lately (again), so I figured I’d write something down to try and get my own thoughts in order. Whenever I write, I tend to find that I don’t understand things half as well as I thought I did, so it kind of forces me to re-examine my assumptions and confront my half-baked conclusions.
This does not constitute investment advice, obviously (sell it all*). You are on your own here. These are just the late evening musings of a person trapped in their own 650 square foot apartment, having their cardamom tea and chocolate chip cookies, in the midst of a pandemic, with nothing better to do.
Most articles I have read about bitcoin (the two articles I have read about bitcoin) have either done a terrible job of explaining what it is, or have done a terrible job of why it matters. Let’s go through both of these, and maybe we can all come out having actually learned something.
To understand Bitcoin, we first need to take a step back and talk about money. Cash is fairly obvious — the government prints some notes and mints some coins, and distributes these into the economy. We use them to buy and sell things. With cash-based transactions, other than the direct people involved, there is no record of the sale. It can be anonymous.
Then you have bank deposits. Although deposits feel very much like cash, they are fundamentally…
