However, over the same period, bitcoin’s performance was 158,382.362%. More than 200% per annum. We’ve all heard the phrase that past performance is no indicator of future results. That may be true, but that is not the case with bitcoin. The higher a stock goes the riskier it becomes, because of the P/E ratio. Not bitcoin. When bitcoin increases in price, it becomes less risky to allocate to because of liquidity, size and global dominance. The Bitcoin network has now reached a size where it will last, due to the Lindy effect . We can therefore conclude that bitcoin is likely to continue to outperform ETFs going forward.
Bitcoin has other advantages over an ETF. First, it has a lower cost structure. Second, ETFs are a basket of securities held by a third party. You are not free to dispose of your ETFs. If for whatever reason, your bank decides to close your account, your ETFs are gone too, but bitcoin cannot be taken away from you so easily. Additionally, bitcoin can be moved across the internet at will at the speed of light, making confiscation nearly impossible.
Conclusion
Bitcoin is the best wealth preservation technology for the digital age. It is an absolutely scarce, digitally native bearer asset with no counterparty risk, it cannot be inflated and it is easily transportable. A digital store of value, transferable on the world’s most powerful computer network. Considering that the Bitcoin network could theoretically store all of the world’s $530 trillion of wealth , it may well be the most efficient way we humans have ever found to store value. By holding bitcoin your wealth is going to be protected, and likely increased during this early monetization process — if you hold out for the next few decades.
In closing, I’d like to revisit Jack Bogle, who had a huge influence on me. As described by Eric Balchunas , Bogle’s lifework is addition by subtraction: getting rid of the management fees, getting rid of the turnover, getting rid of the brokers, getting rid of the human emotion and the bias. I think bitcoin fits well with his investment ethos. Bogle’s primary philosophy was “common sense” investing. In 2012 he told Reuters , “Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don’t save, then you’re guaranteed to end up with nothing.”
Bitcoin is very similar to what Bogle envisioned with passive mutual funds: a long-term savings vehicle for investors to place their disposable income with low cost and little risk. Don’t be distracted by bitcoin’s volatility or negative press; Jack Bogle says to “stay the course .” We’re just getting started. Stay humble and stack sats. Your future self will thank you.
This is a guest post by Leon Wankum. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
