Live from Miami, it's the Bitcoin cult!
I wish to have gone to the Miami Bitcoin conference, but I lost all my savings investing in Bitcoin... Leaders in crypto are brilliant, but their dynamic with average Bitcoiners feels like a religion.
This was my investment strategy in April when Bitcoin was at its historical high of $64k: bet all my savings on it, then use the profits to buy myself a graduation vacation to Miami for the annual Bitcoin Conference in early June. “If Bitcoin actually does go to the MOON, I could even pay for my friends’ trip with me!”
But Bitcoin had lost ~50% of its value to $36k when the Conference took place; it has not recovered since then; and just last week on 6/22 it plunged below $30k for the first time in months after China announced additional crackdown on cryptocurrencies & mining.
I’m obviously being a bit facetious here – I didn’t make the trip to Miami but honestly would’ve loved to check out what was going on there. I imagine it is this – a select number of highly intelligent entrepreneurs leading a large group of unsophisticated investors into something that is promising but certainly not worth the risk…
Bitcoin feels deeply like a religion (or cult)…
I use the word “cult” in a way that is not entirely negative. Financial columnist Matt Levine has a cult-like following, and I’ve met many thoughtful people who gladly proclaim to be in that cult. Likewise with “idealogues” in Silicon Valley and the “Intellectual Dark Web”…
People joke about these things and are usually very self-aware that they’re in a “cult” – so it’s not always bad and often kinda cute. But whether it’s an asset class, a public intellectual, a media outlet, a political party – it’s nice to broaden the scope of idea exploration and support those that you believe in, but you feel that something is off when one makes it a key part of their core identity.
There are Bitcoin believers, and there are the Bitcoin-Conference-going Bitcoin believers… It’s like there are Silicon Valley entrepreneurs, and there are the talking-on-Clubhouse-for-6hrs-a-day Silicon Valley entrepreneurs… There are Joe Rogan followers, and there are the I-think-I-know-more-than-scientists-cuz-Joe-mentioned-an-article-about-UFO Joe Rogan followers…
This seems to be what’s happening with those that so fervishly support Bitcoin. It feels deeply like a religion. Nobody satirizes all this better than comedian Tim Dillon:
Selling Bitcoin on Clubhouse seems… illegal?
Back in Feburary when I first got on Clubhouse, I joined many discussions related to crypto. In some way the Bitcoin Clubhouse dynamic perfectly captures the core elements of this movement. Remember the scene in Wolf of Wall Street when Jordan Belfort sold his trash penny stock to an innocent investor? I feel like that’s kinda what happens in these Clubhouse rooms:
Attendee X: Why should I buy Bitcoin?
Moderator A: [Gives reasons like “Federal Reserve is screwing you” and “Bitcoin has fixed supply”]
Attendeen Y: Oh I just want to say I bought $500 of Bitcoin a few months ago and I’m not gonna sell. I really feel like I can’t trust the Fed.
Moderator A: Great for you, Y! That’s awesome man. You’re gaining control of your financial future.
Attendee Z: Yeah I had a few hundred bucks in Bitcoin back in 2018, and I held strong when the market dipped.
Moderator B: Diamond Hands HODL 💎 – amazing. I’m so glad to hear that you stuck with your judgment and independent analyses.
Attendee X: I guess I’ll buy some Bitcoin then. How do I do that?
Moderator B: Just use our platform. The link is xxx and follow me on Twitter @xxx so that I can DM you with more information.
I was kind of amazed how easy it was to sell your financial products on Clubhouse. You get to establish a direct-to-consumer relationship on the spot, in front of hundreds of other potential buyers. If you convince someone on the spot, chances are many others listening will also be convinced eventually.
Unlike a recorded webinar/podcast where you’d have to give disclaimers like “this is not investment advice,” the Clubhouse hosts were quite explicit in saying “we are giving you investment advice…” The nature of live, non-recorded audio discussions means you can kinda say whatever you want without being held accountable.
Clubhouse and crypto both seem to be the wild west of their respective domains. Both are largely unregulated spaces. Just like there’s no formal censorship mechanism on Clubhouse like on YouTube & Twitter, there aren’t many formal regulations for crypto transactions from the SEC or CFTC. Now you can just do a lot of stuff with Clubhouse & crypto that you really aren’t supposed to do in real life. (I’ll write about the regulatory concerns another time.)
My Clubhouse fight with the Bitcoiners
So one time the moderators of this very popular Bitcoin Clubhouse room pulled me up to ask a question. I said something like “I like Bitcoin, but to be honest most of your arguments about Bitcoin being the next global reserve currency all sound kinda wrong…” And when they realized I study economics at Princeton, they seized the opportunity to rant about the ignorance of academic economists (who, to be fair, don’t have the best track record). It triggered an hour-long debate between me and them.
They cited a lot of pretty wacky facts, drew many simple correlations between quite unrelated events, and didn’t seem to be too open to reach compromises.
When I asked very foundational, first-principle questions (such as the terrible history of “hard money” or Bitcoin’s struggle with centralization), they got extra mad. I get why Bitcoiners react so viciously when people challenge them. At some level it’s just because they’re tired when people ask them questions that they feel are too basic to answer.
Imagine you go up to a Princeton student and ask why transgender rights need to be improved or why we need a more progressive tax system, how do you think they will react? They will tell you to go educate yourself or publicly expose you for your despicable opinion (in their eyes).
When people have so deeply immersed themselves into studying something yet still keep getting asked the same narratives that they see as being hostile and ignorant, they naturally get furious.
I don’t think this dynamic is new for the Bitcoiners per se, but their deep knowledge and passion for Bitcoin seem to be precisely the reason why they spend hours attacking Bitcoin-doubters like Elon Musk, Eric Weinstein, Nassim Nicholas Taleb and so on…
The leaders of the Bitcoiners are really quite brilliant
I’ve followed Bitcoin for a long time now and have pretty much familiarized myself with the main factions:
The Bitcoin maximalists who think Bitcoin is the real deal, whose careers revolve around Bitcoin or other cryptocurrencies, and who put like 90% of their assets in Bitcoin: the Winklevoss twins, Mike Novogratz, Pomp, Nic Carter, Robert Breedlove, Michael Saylor, and all the people talking about Bitcoin on Clubhouse…
The tech/VC people who see a promising future in Bitcoin and are there for the ride: Elon Musk, Jack Dorsey, Chamath, Naval Ravikant, Balaji, a16z, etc.
The skeptics who think Bitcoin is a speculative bubble and get trolled on Twitter by the Bitcoin maximalists: Nassim Nicholas Taleb, Eric Weinstein, Peter Schiff…
These are obviously very generic and over-simplifying categorizations. But looking at the lineup of Miami Bitcoin Conference speakers – there are some seriously brilliant people leading the nerd, just to name a couple:
Jack Dorsey – one of the best entrepreneurs of this generation
The Winkelvoss twins – whatever qualm you have with them about the FB saga, they did catch the crypto train early on and became billionaires
Allen Farrington – extremely sharp at analyzing Bitcoin and someone I learned a lot from
But the dynamic of the relationship between those at the top and the average Conference attendee is seriously questionable… I imagine it’s pretty much like what I witnessed on Clubhouse. Hence my early categorization: the Miami Bitcoin Conference was “a select number of highly intelligent entrepreneurs leading a large group of unsophisticated investors into something that is promising but certainly not worth the risk…”
What do you do when you spot a cult from afar? Invest in it?
Everyone would look at the Bitcoin Conference attendees very differently if Bitcoin’s price is at $70k instead of $30k right now. The crash right before their annual party seems to have delivered a fatal blow, but there didn’t seem to be any pessimism at the Conference.
You could look at their confidence and think “There is just no humility with these people…” Or you may think “It’s great that there are such fervent devotees; I’m gonna take advantage of them and invest in Bitcoin!” To which I would cautiou that you may get burned trying to play the crowd that you think is dumb.
I really don’t know what to make of all this – when you have such a large group of people firmly believing in a vision no matter what, while also having a small group of highly intelligent people leading them (and some exploiting them).
I like the product the smart leaders are selling, but I just don’t feel quite comfortable with the way they’re selling it and the reason why the people are buying it… There is just a lot of noise, and things always get messy when faith gets involved.
The saga of Bitcoin is to be continued…
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