A Letter To Our Oh-So-Dearest Family And/Or Friends Seeking To Talk Crypto At Our Holiday Dinner

I have anticipated your inquiry regarding my thoughts on Bitcoin this holiday, and have done you the favor of preparing you a written response. Happy holidays.

To my dearest, and inquisitively minded financially focused family member and/or closest and kindest friend on this joyous _______________ (insert holiday here) holiday:

I don’t know when it will be. Perhaps during the sacred tradition of opening gifts or whilst serving up portions of the plump and succulent Christmas ham we’ve so carefully prepared, but at some point this holiday you, my dearest _______________ (insert name of family and/or friend) will broach the subject of cryptocurrency with me.

It might be because I have somewhat of a background in finance and because you want to know my opinion accordingly, or it may just be because you’re looking for an iota of confirmation bias that the speculative “investment” you just plunged balls deep into isn’t going to evaporate into thin air faster than the U.S. dollar has this year.

Or, perhaps you have a lucrative and one-of-a-kind referral code that you have saved for only the worthiest of family members/friends (circle one), and you’d like to extend to me an exclusive invitation to join your newly discovered crypto exchange that pays a totally normal 24% yield on your Dogecoin. Or, maybe it’s simply the good ole’ fashioned American tradition of wanting to sell me your shitcoin 50% higher than the price you bought it at. It’s a tradition as American as apple pie.

Regardless, the reason isn’t important. It’s the fact that you (along with my barber, my barista and my waiter last night) have taken the time to carefully think of me when discussing such a delicate and oft-sought after topic that really warms my heart. And I’d like to inform you that, on this oh-so-momentous and special holiday, I have anticipated this topic of discussion and have prepared in advance for you this response:

Hello, and thank you for dabbling into the world of cryptocurrency and perhaps even dipping your feet into the idea of being critical of central banking. There’s plenty of room for you here on the skeptical side of the economy. But first, some housekeeping.

Unfortunately, _______________ (insert name of family and/or friend), despite your unmatched investing prowess and long track record of alpha, I regret to inform you that I do not share your enthusiasm for _______________ (insert name of shit- and/or alt-coin here), as I have consulted with industry experts, tax accountants, actuaries, engineers, CFAs, auditors and have myself taken a close look at the potential risks and rewards of such an investment in a nascent asset class. Ergo, I have decided to err on the side of caution and pass on what will obviously be a momentous and generational investing opportunity that I will come to regret next _______________ (insert holiday here) when you roll up in a Ferrari and I am begging for just a small thimble of rice to eat for dinner because inflation has me buying my meals one molecule at a time.

I also deeply regret to inform you that my pre-adopted stance also means that I cannot, in good faith, recommend that you purchase, sell, and/or otherwise transact or hold (hereinafter referred to as: “hodl”) any cryptocurrency and I must once again emphasize - as I would with a total stranger - that despite our deepest and most sacred bond of blood/best friends/close friends/seasonal acquaintances (circle one), I cannot give you financial advice.

What I will volunteer is that I have spent the last few years looking at crypto/bitcoin/altcoins/shitcoins (circle one or all) and while I think their cause is noble, there is unfortunately also a greater than 0% chance that cryptocurrency in general will turn out to be a multi-trillion dollar air pocket worth precisely nothing.

Yikes, right?

This statement holds extra true for many of the altcoins more so than bitcoin and ethereum. Regardless, this investment is not “digital gold”, as you may have referred to it as after imbibing numerous glasses of egg nog and/or red wine. Gold is tangible, is a commodity and isn’t digital: that’s one of the things that makes it gold. Bitcoin is a spot on a computerized digital ledger that ceases to exist without a power supply and an Internet connection. That makes bitcoin very different from gold.

(Casually pause and sip your drink for between 20 and 40 seconds if you are reading this letter to someone, in order to allow this thought to sink in.)

Based on the fact that you are now making a face that looks like you are passing a kidney stone the size of a can of Pringles™, I can already see that you are thinking of numerous logical fallacies and arguments to issue to me as a retort, but I assure you, I have heard them all and my mind cannot be changed.

Certainly, the mood has soured by this point.

“What do you think about it?”, you undoubtedly asked me moments ago about your new investment, hope glistening in your eyes, anticipating my sought after confirmation that you would soon overtake Elon Musk on the list of the world’s richest people.

But now, you are crestfallen, as truthfully, I cannot subject myself to adding to the enthusiasm of an already historical batshit-crazy mania and euphoria our financial markets are experiencing as a result of the Fed and the Treasury collectively defiling the corpse of our economy (hereinafter referred to as: “the financial necrophilia”).

The truth is that your crypto/bitcoin/altcoins/shitcoins (circle one or all) are part of a brand new asset class that almost anything can happen to that also may or may not be worth nothing at all. I don’t like those odds, especially in an environment where they trade like risk assets.

And trust me, I know your next question: what is a risk asset?

A risk asset is something that people invest in when the climate for investing suggests that people can take on more risk. This happens in booms and euphorias, like the ones we are seeing now in the stock market and real estate market. These have been helped along by extraordinarily damaging monetary policy, which is now coming back to bite the entire country in the collective ass, the likes of which you may be familiar with from when you opened your $62 1 oz. box of Frosted Flakes™ this morning and saw 22.6% less frosting and 58.3% less total product than last year.

Alas, my dearest _______________ (insert name here), I regret to inform you that because your crypto/bitcoin/altcoins/shitcoins (circle one or all) trades like a risk asset, this kneecaps your next inane argument that you will soon be hurling across the Christmas dinner table with the same “expertise” Rep. Maxine Waters puts on display while questioning banking CEOs in Congress: that your product is a “safe haven”.

But nothing that has only been around for a decade - and may or may not tangibly exist, while routinely moving 20% over the course of an hour or two - is a safe haven. End of story. A “safe haven” is somewhere that you place your money to preserve your wealth. And while you might be right in wanting to address your newfound discovery of the dollar losing its purchasing power as a result of inflation, there are far better choices, in my opinion, than putting it into something as speculative as bitcoin.

Now, please past the mashed potatoes and the red wine. I swear I am almost done.

Next, you’ll likely ask me about crypto as an asset class: what do I think?

The unpopular answer that you definitely don’t want to hear while daytrading on your Robinhood account in the middle of Christmas Eve dinner is that I think it could be a $3 trillion bubble that eventually catalyzes a financial crisis if it grows to be any larger. I believe it is rife with, and based on, fraud and leverage. The two of those things don’t go well together.

Now, to address your next question, leverage is when you borrow money to take on even more risk. While this increases your potential for upside, it also hastens the speed with which things can go horrifyingly wrong. This remains a major concern of mine about crypto.

At this point, I’ll pause so that you can inevitably mutter under your breath that I have no idea what I’m talking about while taking a bathroom break so you can access your Robinhood account and buy more Shiba Inu.

“He doesn’t know anything about buying the dip,” you will say to yourself, or have already said to yourself.

But let me assure you: I know everything about buying the dip, and more importantly I know what system needs to be in place for that strategy to function properly.

As some of your favorite acclaimed investors like Cathie Wood are recently finding out, you can’t just buy the dip on anything willy-nilly for no reason at all, just because the price goes down, and expect to outperform the markets.

With that all being said, I’d like to thank you for thinking about me and asking me these questions while we gather here today as family/friends/acquaintances/seasonally obligatory carbon based life forms we are forced to tolerate annually (circle one).

This will be my only comment on the matter and I would ask you to kindly reference this letter anytime the mood strikes you to bring up such a topic throughout the holiday season, and also for the next 39 years.

Kindly yours with warmest possible human seasonal regards,

(Insert your name here)

Please feel free to share, print out and use at your own holiday dinner.

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