The Case for Crypto: Bitcoin + Etherium

Bitcoin and Ethereum are often considered a poor investment because it is a non-productive asset; an asset that does not generate income such as interest or dividends.  The list of reasons typically given by investors against Bitcoin and Ethereum invariably involves some version of:

1. Speculative - limited industrial or practical uses, producing no earnings or interest.

2. Not a guaranteed inflation hedge - crypto price may not keep up with inflation in all situations.

3. Storage and security costs - your device holding your off-chain crypto may fail, preventing you from accessing the asset for future sale or the exchange-held crypto may be hacked and stolen.

4. Opportunity cost - stocks and debt instruments offer potentially higher returns.

5. Volatile prices - prices go up and down significantly, making its value unpredictable in the short term.

Now that we understand some of the negative aspects of crypto, why would we want to own Bitcoin and Ethereum and how can we go about it?

The image below from Luke Gromen starts to paint the picture of why you would want to hold Bitcoin.

In simple terms, we must be mindful of not only the asset we invest in, but also the currency and relative currency exchange rate. The illustration above explains to me the fact that a fiat currency, when factored into the returns, causes very different results and in fact may not reflect what I may have thought in nominal terms without comparison.  Said more plainly, the big gains you thought you made in equities, are really losses when things like currency are factored into the equation.  

In conclusion, I like Bitcoin as a store of value with a limited, finite supply. There is no capability of infinite printing of fiat with Bitcoin; that was by design. And Ethereum, I like as a digital freeway by which fast transactions can be made and stable-coin issuance backed by US Treasury bills can be enabled.