Just about a year agoi, in those first few sleepless weeks of Bitcoin mania, I decided that my mission was to “Make Bitcoin Accessible”. Where this came from specifically, I couldn’t say. Perhaps the indelible impression that Bitcoin was quickly leaving on me, practically branding my soul, needed to be shared. Perhaps I needed external validation that I wasn’t losing my fucking mind. Perhaps I just needed something to do.
Within the first month, I created a website with the best videos and explanations of Bitcoin I could find. On bitconomy.ca, I explained Bitcoin, how one goes about acquiring it, and what one can do with it. Later last summer, after persuading the first merchants in the city to accept it, I added an “Edmonton Merchants” tab to the site, followed soon after by a “Media Coverage” tabii as the local “journalists” awoke from their collective slumber. In addition to the website and merchant set-up, I also started the local meet-up group, facilitated the events, and in doing do became the de facto figurehead for Bitcoin in Edmonton. My goal throughout my freshman year was always to “build the community” and “make Bitcoin accessible.”
But why? Seriously? What was I thinking? And, since I was hardly alone with this idea, what the fuck is/was everyone else thinking?
Rocks on the sidewalk are worth less than rocks at Birks, food at McDonald’s is worth less than food at Sukiyabashi Jiro, etc. “More accessible” means making something less valuable. Not more.
But what do I know? Recently on #bitcoin-assets, Mircea Popescu linked to the following Warren Buffetiii quote, which really hits home the accessibility idea. I’ll let WB take it from here (emphasis added):
We often are asked why Berkshire does not split its stock. The assumption behind this question usually appears to be that a split would be a pro-shareholder action. We disagree. Let me tell you why.
One of our goals is to have Berkshire Hathaway stock sell at a price rationally related to its intrinsic business value. (But note “rationally related”, not “identical”: if well-regarded companies are generally selling in the market at large discounts from value, Berkshire might well be priced similarly.) The key to a rational stock price is rational shareholders, both current and prospective.
If the holders of a company’s stock and/or the prospective buyers attracted to it are prone to make irrational or emotion-based decisions, some pretty silly stock prices are going to appear periodically. Manic-depressive personalities produce manic-depressive valuations. Such aberrations may help us in buying and selling the stocks of other companies. But we think it is in both your interest and ours to minimize their occurrence in the market for Berkshire.
To obtain only high quality shareholders is no cinch. Mrs. Astor could select her 400, but anyone can buy any stock. Entering members of a shareholder “club” cannot be screened for intellectual capacity, emotional stability, moral sensitivity or acceptable dress. Shareholder eugenics, therefore, might appear to be a hopeless undertaking.
In large part, however, we feel that high quality ownership can be attracted and maintained if we consistently communicate our business and ownership philosophy – along with no other conflicting messages – and then let self selection follow its course. For example, self selection will draw a far different crowd to a musical event advertised as an opera than one advertised as a rock concert even though anyone can buy a ticket to either.
Through our policies and communications – our “advertisements” – we try to attract investors who will understand our operations, attitudes and expectations. (And, fully as important, we try to dissuade those who won’t.) We want those who think of themselves as business owners and invest in companies with the intention of staying a long time. And, we want those who keep their eyes focused on business results, not market prices.
Investors possessing those characteristics are in a small minority, but we have an exceptional collection of them. I believe well over 90% – probably over 95% – of our shares are held by those who were shareholders of Berkshire or Blue Chip five years ago. And I would guess that over 95% of our shares are held by investors for whom the holding is at least double the size of their next largest. Among companies with at least several thousand public shareholders and more than $1 billion of market value, we are almost certainly the leader in the degree to which our shareholders think and act like owners. Upgrading a shareholder group that possesses these characteristics is not easy.
Were we to split the stock or take other actions focusing on stock price rather than business value, we would attract an entering class of buyers inferior to the exiting class of sellers. At $1300, there are very few investors who can’t afford a Berkshire share. Would a potential one-share purchaser be better off if we split 100 for 1 so he could buy 100 shares? Those who think so and who would buy the stock because of the split or in anticipation of one would definitely downgrade the quality of our present shareholder group. (Could we really improve our shareholder group by trading some of our present clear-thinking members for impressionable new ones who, preferring paper to value, feel wealthier with nine $10 bills than with one $100 bill?) People who buy for non-value reasons are likely to sell for non-value reasons. Their presence in the picture will accentuate erratic price swings unrelated to underlying business developments.
We will try to avoid policies that attract buyers with a short-term focus on our stock price and try to follow policies that attract informed long-term investors focusing on business values. just as you purchased your Berkshire shares in a market populated by rational informed investors, you deserve a chance to sell – should you ever want to – in the same kind of market. We will work to keep it in existence.
One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as “marketability” and “liquidity”, sing the praises of companies with high share turnover (those who cannot fill your pocket will confidently fill your ear). But investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pickpocket of enterprise.[3. s/stock/bitcoin]
After reading that, go tell Warren Buffett that “hoarding” is “bad”. Hell, tell Satoshi while you’re at it. Do you see the Genesis Block moving anywhere? The only people who benefit from you tossing your coins around are the exchanges and merchant processors. They’re the stock brokers of bitcoin, encouraging us to play musical chairs lest the music stop. These are also the same people who tell us that “Bitcoin needs to go mainstream”, that it needs to become a “real currency”, and that we’re entitled to whine and cry every time a central bank declares that “Bitcoin isn’t a currency”iv or that it’s “dangerous”.v
Bitcoin is growing up fast. Only 5-years-old and getting ready for the spotlightvi. They grow up so fast.
And if we don’t grow up even faster, Bitcoin will leave us in the dust. Bitcoin is a world-eater and it sleeps for no man. So we can waste our time trying to convince retro-doge-rockers why Bitcoin is world-changing, or we can take on the ruthless world of finance head-on.
To start with, if we actually want to have wealth in 5 years, we’d be well served to spend 10 minutes on wallet security for every 1 minute we spend on “re-investing”, “donating” and “ideas”.vii
This is finance. It’s time to man up.viii
- I’m just entering my sophomore year on campus [↩]
- For posterity, and in-law brownie points. [↩]
- From his 1983 letter to shareholders. Y’know, before he was senile. [↩]
- Just because you can trade something, doesn’t make it a currency. Bitcoin is far more cryptocommodity than cryptocurrency. [↩]
- Bitcoin is crazy dangerous. Seriously. Wallet security is a bitch and scammers are a dime a dozen. It’s a jungle out there and most people would far prefer spending their Sundays in shopping malls rather than hashing high-entropy private keys and setting up PGP keychains. Why do you want to jam your ideas down their throat? They’re better off bargain hunting and we’re better off going for gold. That’s just the way it is. [↩]
- Goldman Sachs just published a research report entitled “All About Bitcoin“. It’s well worth a read. [↩]
- Auroracoin, etc. [↩]
- Book of Mormom, Track 9 [↩]