If you had a choice, would you choose to take $500,000 today, or $1 that doubles every day for 21 days? Instinctively, we will all go for the big number. $500,000. That’s a huge number, no matter if you’re rich or poor. How much can $1 doubling for 21 days amount to? Bah.
Well, you will be surprised, and this is where our collective puny human minds cannot fathom or grasp exponential growth. We see hockey stick growth and we think “It’s a ponzi” or it’s just not sustainable. But with true network effects, this type of growth is perfectly normal.
So, back to the question in the opening paragraph, which would you choose?
If you said $1 doubling every day for 21 days, then you must have come across this question before.
And yes, that would be the correct answer.
In fact, going for the option of $1 doubling for 21 days will nett you over $1M, more than double the $500,000 offer. Even as the data is sitting right in front of me, my brain cannot fathom the growth into seven figures, starting with $1, in just 21 days.
This is how quickly technology is enabling companies, ideas and things to scale beyond borders and other restrictions that may have been in place in the past.
Technology scales to infinity
It’s easy to think about linear or incremental growth, but as technology improves, scalability improves. Think about how long it took for cars to get to 50M users vs Facebook vs Pokemon Go.
19 days was all it took for Pokemon Go from launch to 50M users. That is just crazy.
Bitcoin’s growth
Admit it, you knew I was going to bring this back to bitcoin didn’t you?
For the first time in our lives, we are seeing the birth of a new type of asset/money/currency. One that is global in nature. Easily portable, yet much more secure. It is also non debase-able. What this means is that no one entity is able to say “hey, we need more money. Let’s print a bunch more money, and inflate the supply by $25 Trillion”.
This means that as more people are coming onto the currency, the purchasing power of the currency increases, because more people believe in it. It becomes a true store of value, and the perfect savings vehicle.
Fiat was conceived as a spending vehicle due to it’s inflationary nature. $100 today is is inarguably worth more than $100 next year. So, we should spend it now, before our value drops, and we can buy less with the same amount.
It is a mindset that has been entrenched ever since we were born, and ever since our parents were born. We have never known another way. This is why it is so hard to wrap our heads around bitcoin. It goes against our very own nature.
But what we’re seeing here is the very early stages of maturation of a new class of asset, and eventually a new unit of account. Yes, it is currently USD$54,000 per Bitcoin.
But each bitcoin has 100,000,000 units called satoshis. Think about it this way. Today, you can get 1,000,000 satoshis for only USD$540.
Do you want to hold on to a currency that has only been known to drop in purchasing power, or do you want to hold on to a currency that, over the last decade, has grown at an average of over 200% in purchasing power? It’s not about getting into bitcoin, it’s about getting out of fiat.
Bitcoin’s market cap is at $1T today. But in the grand scheme of things, when you look at the accumulative value of the world’s wealth, assets, derivatives and debt, $1T is nothing.
Yet, $1T is also the point at which fund managers and other institutional players sit up and take notice, and start to see Bitcoin as something worth considering as an investment or an asset class to allocate against.
If you think Bitcoin’s growth from Q4 of 2020 through Q1 of 2021 was crazy, you haven’t seen anything yet. Don’t let your failure to grasp exponential growth stop you from jumping onto the best asset class in a generation. I didn’t.
The problem is that Bitcoin is like the early days of personal computing. In no case were the earliest providers the survivors. Osborne computers were selling like hotcakes, as were Gateway, Texas Instruments, Hewlett Packard. There are a bunch of cryptocurrencies and their will be more later. Selecting one now as the one that will survive is a long odds prospect. There probably is an Apple or a Dell in the bunch but basing future success over which baby is crawling the fastest right now seems like long odds to me.