From Wall Street to Sats Town: An ex TradFi's Thesis for Betting on Bitcoin

Having been entrenched in the traditional finance industry for over a decade and halfway through my CFA journey, I found myself captivated by Bitcoin and let's say, I never looked back. Despite the increasing adoption and moon boy chants growing louder, I prefer approaching Bitcoin with a sound investment thesis, especially when I explain to my TradFi colleagues why I'm so obsessed with this asset. Here are the five key investment principles that guide my perspective:

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1. Historical Trends with Fiat: Reflecting on history, we can observe that fiat currencies usually have a 50-90 years lifespan. We transitioned to a full fiat currency with the US dollar in 1971, courtesy of the Nixon shock. While history may not always repeat itself, it often rhymes - "this time it's different" are often the last words uttered by a faltering civilization.
2. Unsustainable Debt: Following the 2000 and 2008 financial shocks, instead of allowing the system to collapse and rebuild, we've been artificially inflating it with debt, so much so that raising interest rates without breaking something now seems impossible. We may soon find ourselves resorting to money printing to inflate this debt away, potentially leading to inflation.
3. Hard Assets vs. Fiat: This rampant money printing will likely push the 'smart money' towards hard assets such as gold. However, most people won't be able to own or verify their gold ownership physically; they'll rely on paper claims, which essentially brings us back to square one. While gold has been an excellent store of value for millennia, its physical limitations render it ineffective as money in our digital era.
4. Energy vs. Money Printing: The US' ability to print money might not sit well with energy companies. If you can "print energy" by printing money to pay for goods and services, it fundamentally contradicts the first law of thermodynamics (energy cannot be created or destroyed, only transferred). It also means forcing energy providers to accept an inferior asset for a superior one. It's only logical that they would gravitate towards an asset that's harder (or impossible) to print out of thin air.
5. Real Estate and Store of Value: Traditional store of value, real estate, is being increasingly monetized as large corporations like BlackRock incorporate them into their investment portfolios, driving up prices and making homeownership unaffordable for many. This trend will likely increase the demand for an asset with long-term store-of-value properties.

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If these trends continue, and it seems like they will, Bitcoin presents itself as a compelling solution.

It's the ONLY bearer asset that allows ease of wealth storage and transfer.

It's decentralized, unlike other cryptocurrencies with identifiable founders or teams.

Its supply is capped, making it impossible to create more without expending an equivalent amount of energy.

"Toka Koka", a phrase from the anime "Full Metal Alchemist" resonates here - humankind cannot gain anything without giving something in return, energy for energy. This is echoed in Bitcoin's proof of work concept.

I acknowledge that my thesis may have flaws and that I could be wrong. That's why I still maintain a traditional portfolio (so my wife doesn't think I've gone full tinfoil hat). However, given the unfolding macroeconomic trends and Bitcoin's unique properties, it seems like a once-in-a-lifetime opportunity, and I am willing to accept the downside risk for the potential upside.

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TL;DR: From a traditional finance background, I argue that Bitcoin is a promising investment because: 1) Fiat currencies have limited lifespans; 2) Debt and potential inflation issues loom; 3) Gold isn't practical for everyone; 4) Printing money undermines energy value; 5) Rising real estate prices highlight the need for accessible stores of value. Despite risks, I believe in Bitcoin's upside potential.