Please Stop Asking Him About Bitcoin

I came across an opinion piece about bitcoin today, and it inspired me to write a response in the hopes that it might save at least one pre-coiner from the fate of unduly delaying their first BTC purchase.

The author of the article, Jesse Felder, began his career at an Investment bank that went bust, and then founded a multi-billion dollar hedge fund firm which he may or may not have blown up. Either way I really do hope that people stop asking him about Bitcoin because he’s clearly out of his depth.

I’ve clipped the bulk of his arguments and have attempted to address them individually:

Inadequate Return?

“The reason I don’t view Bitcoin as a legitimate investment is that I use an old school definition provided by Ben Graham. Because bitcoin provides neither “safety of principal” nor “an adequate return” it therefore can only be considered speculative.”

Annual returns for BTC:

2015 = 19%

2016 = 125%

2017 = 1329%

2018 = -73%

2019 = 94%

2020 YTD = 150%

5 year return = 4,872%

I’m not sure what sort of returns Jesse was generating at his hedge fund, but I think we can assume they were less adequate than 4,872% on a trailing 5 year basis. Stanley Drunkenmiller, who is arguably the greatest fund manager of all time, only returned 30% a year which would equate to a 271% return over 5 years. Oh, and by the way Stan Drunkenmiller owns BTC. Other renowned hedge fund manager have also publicly announced investments in BTC including Paul Tudor Jones and Bill Miller.

Not used as a medium of exchange?

“Furthermore, because bitcoin is not used as a medium of exchange nor provides any store of value, I can’t view it as a currency alternative either.”

Yesterday, 160,285 BTC ($2.6 Billion USD) were exchanged within a single block. These transactions, like all BTC transactions since the networks inception, were seizure resistant, censorship resistant, had final settlement within ~10 minutes, and were p2p with zero counter-party risk.

To say that Bitcoin is not used as a medium of exchange is simply untrue.

Not a store of value?

“As a store of value it has failed miserably countless times for countless cryptocurrency aficionados. Millions of dollars worth of bitcoin has been hacked even though crypto believers claim this is not possible.”

Any “crypto believers” claiming that it’s impossible to be hacked, or to have your BTC stolen, are as ill informed as Jesse. This isn’t even a criticism of BTC as a store of value, it’s an object lesson in sloppy thinking. In July of last year, armed robbers stole $40 million worth of gold from an airport cargo terminal in Brazil. Oops, there goes the thesis for Gold as a store of value. Just when you thought things couldn’t get any worse for Peter Schiff. Somebody better go check in on him.


“There’s also the problem with hard forks. Bitcoin believers rely entirely on the idea that bitcoin is limited in supply making it far more attractive than fiat currencies that are being printed like mad by central bankers around the world. However, bitcoin has already hard forked several times, multiplying the number and type of bitcoins in circulation. In fact, if you put together all the hard forks Bitcoin has undergone since it was first created, the number of total bitcoins has actually grown faster than the number of dollars. That’s a fact.”

Facts are not like fiat currency. You cannot issue new facts by decree. They are objective and verifiable just like BTC.

Jesse’s criticism of forks is challenging to refute in detail because a technical rebuttal would be overly wordy and so I‘ll simply suggest that he attempt to send BCH to a BTC wallet. Bcash has big empty blocks and low fees and a crashing exchange rate vs BTC though so it won’t be all that expensive of a lesson.


“Then there is also the fact that new cryptocurrencies are being created all the time, many of which may be technologically superior to bitcoin, in all of its derivative forms. Fiat currencies have value because the powers that be declare they have value; that’s what “fiat” means. How can we know that, without this sort of support, bitcoin will not be supplanted by a better cryptocurrency, perhaps one that has yet to be invented (or one created by the powers that be and vested with full fiat support)? We can’t”

We can’t know for certain that BTC will not be supplanted by a better, yet to be invented, open source, decentralized, free market, and fairly distributed monetary network. What we do know for certain is that no superior alternative exists today, competing against BTC has been going poorly for everyone who has tried, and BIPs (Bitcoin Improvement Proposals) offer Bitcoin developers a path to incorporate innovations (even from competing networks) into the Bitcoin protocol. When VC’s talk about their portfolio companies having a competitive moat, they wish they had a moat like BTC’s.

As for a fiat supported alternative created by the powers that be, I think I’ll let Nassim take that one:

“Bitcoin has no owner, no authority that can decide on its fate. It is owned by the crowd, its users. And it now has a track record of several years, enough for it to be an animal in its own right. Its mere existence is an insurance policy that will remind governments that the last object the establishment could control, namely, the currency, is no longer their monopoly. This gives us, the crowd, an insurance policy against an Orwellian future.”

―From the Foreword by Nassim Nicholas Taleb for The Bitcoin Standard by Saifedean Ammous

Late to the Game:

“Again, bitcoin may make a great deal of sense as a speculation. Ponzi schemes can work out great for early adopters. But that doesn’t make bitcoin, in any shape or form, a good investment or even a store of value, especially for those late to the game.”

I wish I had bought the top at $32 in 2011

I wish I had bought the top at $1200 in 2013

I’d be proud to have bought the top at $20k in 2017 and held it until today.

Today I bought BTC above $18000 in 2020

I will continue buying BTC at whatever its exchange rate is whenever I have fiat currency that I can afford to put into BTC for long term saving.

BTC’s current market cap is ~$330 billion. The estimated* (unlike BTC, its very difficult to run the numbers) market cap of gold is 7.3 trillion. That is ~22x larger than BTC. If BTC’s market cap were to reach parity with Gold’s current USD market cap, each BTC would cost ~$400k. The worlds negative yielding debt recently swelled to a record $17 trillion. The 10 companies in the world with the most cash and short term investments collectively hold ~$717 billion worth of fiat currency that is being foretasted to lose anywhere from 10–20% of its purchasing power over the next year. Fine art, treasury bonds (those that still have positive albeit minuscule rates of return), the personal portfolios of more than 2,000 billionaires globally, the personal portfolios of roughly 50 million millionaires globally. There will never be enough BTC for every millionaire in the world to own .5 BTC. Need I go on?

Will there be corrections? Yes. Will you have to weather a potential -90% year? Possibly. Will it always go back up? TBD, like any investment there are real risks, but its almost certainly the most asymmetric investment opportunity of our lifetimes.

“Owning bitcoins is one of the few asymmetric bets that people across the entire world can participate in. Much like a call option, an investor’s downside is limited to 1x, while their potential upside is still 100x or more.”

-The Bullish Case for Bitcoin by Vijay Boyapati



“And, for that reason, I can’t get behind it the way I would get behind what I perceive to be uncommon value in the stock market or a true store of value like gold.”

We already established that gold can be stolen and therefore isn’t a store of value, member?




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