Shame and Embarrassment
Regulators and Central Bank Reps Are Whack
On Thursday, I spoke with someone who’s been in the crypto industry for about seven years.
He shared a bit about his time working on behalf of the industry in Washington, D.C. in 2017.
Back then, he was telling politicians, bureaucrats, government administrators, etc. that Bitcoin and crypto weren’t going away, and that they should pay attention to it and craft sensible regulation around it.
Did they listen?
Of course they didn’t.
And so the crypto industry soldiered for a few more years without any real guidance from the US government.
But in the last year or so, regulators have come down on Bitcoin/crypto (more so crypto than Bitcoin, but definitely Bitcoin, too) with a heavy hand.
What’s driving them to be so aggressive all of a sudden?
Aside from the implosion FTX and some of the other catastrophes that occurred in the space in 2022 — partially because of a lack of regulation — the gentleman with whom I was speaking attributes government officials springing into action now due primarily to two things: shame and embarrassment.
They’re ashamed of themselves for letting the industry come along as far as it has without proper regulatory guidance. And they’re embarrassed that bitcoin (BTC) is the best performing asset in the world over the course of the last 13 years, completely outshining any asset in the traditional world of finance in terms of returns.
You might think to yourself, “Well, they don’t have to be ashamed and embarrassed anymore if they just do the right thing now to make up for their failure to act in the past.”
But this isn’t often what happens when people feel ashamed and embarrassed.
Many people simply don’t want to come out and say “We were wrong. We should have done our jobs better. Bitcoin really is a bullshit meter, and it’s understandable that people want out of the traditional financial system.”
Some regulators around the world are starting to do that, which is cool, but not many in the US aren’t because…
Instead, we have government officials here digging into their original positions (e.g., “Bitcoin is a bubble,” “Bitcoin is just money people made out of thin air”, etc.) even if they know deep down that they are wrong.
Acting out of shame and embarrassment looks like politicians and bureaucrats doing everything in their power dam up the traditional system and choke people’s access to the digital asset market off because they do not want to be further embarrassed or ashamed next time the Fed loosens financial conditions (prints more dollars) and BTC’s price starts to skyrocket again.
Personally, I don’t think the fight between governments around the world and Bitcoin/crypto holders has even really heated up yet. I’m sure we’ll go through some period where the US government declares it illegal or “unAmerican” to hold BTC or other crypto assets. This will probably happen around the same time the US government start some new war and claim that’s reason they have to print more money — taking attention away from the fact that we need to print more money simply to help us foot the $1 trillion dollar bill to service our debt every year.
And so, for this reason, I believe that broader Bitcoin adoption will take some time. The bigger it gets, the more the entrenched power (e.g., governments, central banks, the traditional finance sector) in the world is going to fight it. It’s a fight they’ll ultimately lose (because they’re whack)…
…but it doesn’t mean they’re not going to give it their all in the meantime.
And if you’re like “Frank, who cares? Do we really need broader Bitcoin adoption?”, I’d say to you “Absolutely.”
If you were to respond “Why?”, I’d say “Read this book if you want learn about some major reasons why”:
So, if you’re into Bitcoin or crypto, strap in and get ready to get comfortable being uncomfortable.
You may have thought that creating wealth for yourself in Bitcoin/crypto was going to be like running a 5k, but, in reality, it’s likely going to be more like participating in an ultra endurance event.
Buffett and Berkshire’s Big Surprise
I wrote the following piece for Nasdaq on behalf of Finder this week: “Will Warren Buffett and Berkshire Hathaway Start to Invest More In Tech?”
In doing my research for the piece, I was super surprised to learn that just one tech stock makes up almost half of Berkshire’s portfolio. (Which one, you ask? I guess you’ll have to read the piece to find out!)
Here’s a little excerpt from the piece:
Buffett’s big misses on tech stocks and technology plays
While Buffett — the “Oracle of Omaha” — surely has an extensive track record of picking the right stocks at the right prices, very few of those stocks have been tech stocks.
The following are a few of Buffett’s big misses when it comes to tech plays:
Microsoft (MSFT): Despite being close friends with Microsoft’s founder Bill Gates, Buffett never took a position in the company. He primarily attributes this to “stupidity,” as he puts it. However, he also acknowledges that his friendship with Gates may have put Gates in a position where he could have been accused of sharing inside information with Buffett, and Buffett didn’t want to create such a scenario.
Amazon (AMZN): Berkshire Hathaway only began buying Amazon stock in 2019 — 22 years after the company IPO’d — and it wasn’t Buffett that called for the purchase; it was one of his deputies. Buffett calls himself an “idiot” (This guy sure is hard on himself, huh?) for not getting in sooner.
Alphabet (GOOGL): Google is another big tech play that Berkshire missed. In reflecting on this miss, though, it was Buffett’s partner Charlie Munger who verbally flogged himself. “I feel like a horse’s ass for not identifying Google,” said Munger back in 2020.
Bitcoin (BTC): Buffett still doesn’t believe in Bitcoin despite its meteoric rise in price over the past 13 years. He actually refers to the asset as “rat poisoned squared.” I guess he’ll just have to have fun staying
poorrich investing in other assets.
(Author’s note: Yes, I know there was no strike through the word “poor” on Nasdaq’s site. Working on getting it fixed.)
And that’s all for this week.
Frank the Tank, signing off, as he needs some beauty sleep.
Hope you’re all alright out there. Big love and big hugs.
Best,
Frank
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