112 sats \ 3 replies \ @AncapHodl 1 Jul 2022 \ on: 🟠How do you justify investing in any Bitcoin/Lightning Companies instead of just bitcoin itself? bitcoin
In 2012 this would be a very strong argument. However, I see it as a mildly strong argument now. Bitcoin is practically guaranteed to keep going up, but you're not likely to see crazy growth in the order of 100s in the next decade or so. This is very much a possibility when investing in a company. The way I see it, investing in a company is higher risk and higher reward than simply buying and hodling Bitcoin.
Furthermore, I won't elaborate too much on this point since other replies already have, but it can't be understated how important it is for these Bitcoin companies to start up and continue to exist. There's a solid argument to allocating some of your investment portfolio to them while continuing to allocate another portion of your portfolio to Bitcoin.
Bitcoin is my safe investment in my future, but I have space to invest in other things too.
This makes a lot of sense, thanks for your insight. I think it's that risk/reward ratio I'm still trying to internalize, especially when Bitcoin the asset gets all of the benefits of every company driving forward adoption and innovation in the space, with much less (if any) risk of a single company's failure.
The stock market is a bad example this year with nearly every asset down, but the idea of investing into a traditional cash flow positive 'value' asset and converting any dividends/gains into bitcoin the asset (I guess something like MSTR does) is very interesting. I don't have any model for this stuff, but the correlation among businesses in the bitcoin space vs the asset, vs traditional investments is all very interesting.
And I agree about your point of all these companies driving forward the value and the importance - it just seems to be some unique incentives/game theory at play of who continues to step up for the greater good of everyone hodling and where the value accrues. (and then of course the societal good that comes from bitcoin adoption, etc)
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All in all, I'd be curious if you have some model or even 'back of the napkin' type calculation you use when determining portfolio allocation into traditional assets vs bitcoin companies, vs saving in bitcoin?
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I have a strong mathematical background but I don't really use any calculations. I'm not a trader or anything of the sort, I simply don't have that mentality. I invest in projects I like the sound of because I want to see them do well. I must be clear that I don't invest any significant proportion of my portfolio in things like this, I've only started doing it recently and I haven't seen any meaningful gains from anything like that yet. I'm not confident it'll do better than a simply buy and hodl Bitcoin strategy, but I want to do it anyway.
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