Jun 15, 2021 3 min read

Opportunity Cost: You Can't Have it Both Ways

Every decision is a trade-off with your future self. Despite the politically popular narratives currently being sold, you cannot have it all. Bitcoin makes this abundantly clear on long timescales.

Every decision is a trade-off with your future self.

Despite the politically popular narratives currently being sold, you cannot have it all.

Bitcoin makes this abundantly clear on long timescales.

The New Sheriff in Town

By offering the world a superior method for long-term value storage, a new benchmark is born.

Bitcoin is systematically engraving this overlooked truth in traditional portfolios everywhere. It has penalized the incurious.

Even when accounting for the recent ~50% peak-to-trough decline, Bitcoin out-performs when zoomed out.

The Cost of Inaction

Fiat money managed on a national scale is an experiment that's getting increasingly out of hand.

Continuing to save in a money that society is being incentivized to flee means a) having your purchasing power gradually eroded by those at the helms of the fiat printers and b) bearing the cost for those who've already left.

There is now a visible price for being late and it's significant.

Case Study: Hodling Amazon

Wishing you'd bought Amazon stock 20 years ago is not the same as buying Amazon stock 20 years ago. Those are two completely different people operating from different mindsets.

Holding an asset long-term doesn't come from blind faith, it comes from doing your homework, building conviction in a thesis and then constatntly looking for holes in your logic.

If you smooth over some of the initial volatility, the chart above looks pretty rosy. However, it's in that early period that the most significant returns would be later realized.

Let's zoom in.

After the bursting of the dotcom bubble, Amazon took TEN YEARS to exceed its previous high. For an entire decade, Amazon investors were ridiculed and likely faced internal conflict over their decision. The ones who successfully tuned out the noise had independently developed a long-term thesis from first principles.

Be Early, Be Right & Hold On

What early Amazon investors and bitcoiners have in common is recognizing a structural shift in the external environment- a trend that will play out over decades.

By understanding the asymmetric payoffs of being early, if correct, this strategy recognizes the folly of trying to time such a shift and accepting the volatility that comes with nascency.

Being right when it's already consensus thinking is largely useless for seizing opportunity as the upside has already been captured.

"The real money in this business is made by being non-consensus and right: being correct when everybody else disbelieves. You have to work as much as possible from first principles. You have to ignore the herd. If you go with the consensus and average thinking, you will get average returns." -Naval Ravikant

Low Time Preference Lifestyles

When someone adopts a Bitcoin standard they start to operate from a different logic, informed by an incentive structure that contradicts the fiat system.

Their behaviour will seem alien to outsiders, rational to those who understand the new asymmetry in everyday choices.

Bitcoin’s annualized returns over the past decade have been eye-catching. However, they’ve only been captured by the holders have willingly foregone using that capital for other needs or opportunities.