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Grayscale Bitcoin Trust (BTC) (GBTC)
In the past, I've written about Bitcoin and the fact that it has no intrinsic value. Bitcoin itself does not produce anything of value for you and me in our daily lives and if you need another real-life example --- try gold. These types of assets have a value assigned by a marketplace which consists of buyers and sellers but there is not tangible way to tell which direction the asset's value will increase outside of the marketplace of investors increasing or decreasing their interest in Bitcoin. I guess I could get a brick or bullion of gold and use it as a paper weight, but what do I do with a digital currency? Well --- there is one use case that I continue to argue for, and it comes from my previous experience in banking, fund transfers, and the international payments landscape, however, I will save that use case for the blockchain and NOT Bitcoin for another day.
So if I'm hating on Bitcoin, why was I suddenly interested in a Bitcoin Trust a few months ago? This is peculiar because outside of my brief gambling investments in Coinbase, an exchange or place where you can store and trade your coins, I've never tried to invest or own the digital currency. Here is a breakdown of my thoughts and the trade I made over a month ago:
My Research:
I wonder if I call it research if I was listening to business news in my office, which I do on a daily basis. For the past few years, I've heard two warring factions go back and forth about the legitimacy of Bitcoin: 1) The US Federal Government and 2) The Bitcoin Industry (and in particular the CEO of Coinbase, Brian Armstrong). I thought both had compelling arguments so in the end I stuck my original thesis and that's that I can't make or produce anything with Bitcoin. This underlying point always lets me know that I'm speculating or gambling. I simply HOPE any money on a Bitcoin related assets goes up based on luck, timing, news, etc.
My investment:
I know these warring sides were at odds on whether the public should be able to invest in Bitcoin in a fund, called an Exchange Traded Fund (ETF). An ETF is a simple vehicle that gives everyday investors the ability to invest in Bitcoin in their personal and 401K accounts without having to go out and use crypto exchanges. I hope I haven't lost you hear but the risk of crypto exchanges is you have to really be aware of how to store your passwords to your crypto wallet or you will be at risk of losing your funds to simply forgetting, easy hacking, or in some high-profile cases people have become targets of robberies to obtain their passwords. The fight over an ETF means I can log into my investment account and select the ETF and the ETF takes care of the "security" of coins on behalf of all the investors. So what do 2 sides do when they can't agree -- they sue each other. I have been following the lawsuit and the federal government (SEC) lost it's case against Grayscale Investments. This is an important training moment for everyone --- I can gamble if I know that I'm gambling and willing to lose my investment. I learned awhile back that the GBTC was trading for less that the value of the Bitcoin assets it holds. So, my simple thesis is that the ruling in the court case means the value will hopefully appreciate back to par (or what it's worth) because Grayscale won its case and there will be more "gen pop" interest in Bitcoin if ETFs are allowed.
A little over a month ago, I bought GBTC at $20. I watched it drop in the weeks after and got nervous that I was a fool. But I got busy with work and just decided to hold on as I thought my thesis made sense...at least to me it did. And since then it has caught fire. I'm not a believer in Bitcoin but I do believe that I guessed correctly and early. Since the news broke, other companies have declared they want to offer Bitcoin ETFs and I think this gives the digital currency staying power as it will be easier to own. We'll see how long I hold but for now, I'll take the "W".
Disclosure
- I own GBTC and purchased just over a month ago around $20
- I currently trade Coinbase shares via options; my strategy is I like it low when it dips in the $30s and $40s range and in the past have traded out around $140.
Know Your Worth - Henrietta Lacks
Back in August of this year, I read the amazing story of a family that sued a large pharmaceutical company. They claimed the company used their mother's biological cells for research and drug development purposes for profit AND never compensated them properly. This story goes back to the early 60s and seems like a clear slam dunk it today's society where we easily take about brand and profiting from it. So how can something like this happen in America? Well, it could depend on who's cells they were. As a professional in the cybersecurity and privacy space, I found this story sad but also a rallying cry for consent and privacy rights. I would narrate the story here, but I'll post some links for your casual reading. It's a reminder of why I tell everyone to know their worth and what you are consenting to. Remember the name of an African American women, Henrietta Lacks and how her biological cells went on to fuel research, development breakthroughs, and profits for an entire industry. Then think about how so many were enriched by these developments the alpha --- the person who set all this in motion was left behind.
After reading the amazing story of Henrietta Lacks --- think about your brand, your worth, what you sign, and what you give away. While this is a story that has to do with race, we all can learn from it and build generational wealth by ensuring your consent, your brand, and your likeness are used on YOUR terms. I teach my mentees "The Art of Negotiating" and share that many things in life come down to how you negotiate terms with the person or parties across the table. I am sharing a New York Times article because it came across as a neutral party. Even though John Hopkins university is now honoring Henrietta Lacks with a building, the article acknowledges the university took her cells without consent. It goes on to talk about Thermo Fisher Scientific. For the life of me, I can't understand how a company of good conscience can try to sell "her" cells and "her" intellectual property rights without compensating "her" family.
Link to New York Times article: Henrietta Lacks
#knowyourworth #theartofnegotiating
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