2021_02_08 — “₿itcoin-No Heads, No Tails-an opinion piece”


₿itcoin-No Heads, No Tails-an opinion piece


  • Acceptance of Bitcoin[i] has been volatile, which is to be expected of any “new new thing”[ii]
  • We do not view Bitcoin as a currency nor a traditional commodity, but rather as a collectible — closer to a Picasso or Beanie Baby; more akin to diamonds than to gold (both in terms of transportability and rarity)
  • Its best attribute is also its largest detractor — that is, its value is completely faith-based
  • If desired, it can be appropriately sized and coordinated into bespoke investment solutions with tax awareness and financial and estate planning for you, your family, or a charitable donation


[T]he cryptoasset market has gone through all the classic phases of disruptive technology: massive bull markets and crushing pullbacks, periods of euphoria and moments of despair, FOMO (fear of missing out), fear, and everything in between. https://www.cfainstitute.org

  • It is a store of value that no government or corporation controls-no CEO can be called before a Congressional investigative committee or politburo to defend it, be fined for it, or go to prison for running it
  • Easy to transport-millions of dollars can move in minutes versus days with a traditional bank network
  • Very liquid-trades on exchanges 24 hours a day
  • Rarity value-there will only ever be 21,000,000 Bitcoins
  • New buyers continue to come into the market
  • Because Bitcoin is completely faith-based, it is a candidate for the truest store of value
  • Each Bitcoin is an exact replica of every other Bitcoin-perfectly divisible, with minimal storage costs; no tainting, no impurities, no blood Bitcoins
  • There are multiple options available to own, invest, or participate in Bitcoin
  • Exceedingly volatile pricing, although a lot of this is optics-imagine the price volatility that would come from trying to price a Picasso daily. In the real world, no one reprices their home, art, or jewelry every day
  • Huge energy consumption. Bitcoin is not ecologically friendly; mining and registry consumes approximately 0.4% of global electricity, roughly equivalent to the combined annual power consumption of Switzerland and Iceland
  • Easy to lose through theft, loss of digital wallet, forgotten password, or mistake in setting up a hard wallet. Approximately 20% of outstanding Bitcoin supply-$140 billion-”appear to be in lost or otherwise stranded wallets”[x]
  • Used by the black market to fund payments, although sometimes the black market is ahead of the curve-so maybe this could be construed as a positive
  • If governments attempt to oppressively regulate, tax, or restrict Bitcoin, it could dampen values or drive transactions (figuratively) underground. On the other hand, some regulation may help further legitimize Bitcoin
  • Quantum computing technology, still a decade away, may threaten the security of Bitcoin passwords and safety protocols
  • Bitcoin may never be flipped to determine who starts a sport game, i.e., no heads, no tails
  • It is not a currency, yet. Although Bitcoin is technically defined as a cryptocurrency[xiv] (i.e., a decentralized finance (DeFi) digital currency registered on a blockchain ledger), many argue that Bitcoin is not usable as a currency because of its price volatility and lack of acceptance in public as a medium of exchange[xv] or as a unit of accounting-and therefore worthless because it will never be conventional. Large price variations make cryptocurrencies difficult to use for daily transactions and technically, exchanging cryptocurrency for goods or services could subject the purchaser to capital gains taxes and the seller to income taxes[xvi] as pointed out by Running Point’s Tax Manager, Todd Stern, CPA. When was the last time you had to track the cost basis of a $10 bill in your wallet? Nonetheless, these arguments miss the mark. Bitcoin might not be a robust currency, but it does not need to be. Diamonds are not a currency, yet still retain value because of rarity and desirability. Down the road, with more acceptance, Bitcoin may transition to a recognized currency.
  • Understand the network effect. If one person owned all the Bitcoin in the world, it might be worthless. Analogous to a telephone, if there were only one phone in the world, it would be useless; who would one call? If a million other phones were distributed, there would suddenly be a million people to call. If a billion were distributed, there’d be a billion people to call, and they could all call each other too; telephonic value would increase exponentially. Similarly, more ownership, use, or investment in Bitcoin could increase its long-term value through the network effect of acceptance and exchange.
  • Two perspectives. One can view the run-up in Bitcoin prices and say, OH NO!, not again, another bubble, when will we learn, this is tragic, looks like the sharp rising price curves of the tulip mania or the NASDAQ run-up of early 2000! Or one can point out that the run-up in prices looks like the technology adoption curve of the iPhone, Netflix, or emojis-in other words, is Bitcoin “crossing the chasm”[xvii]? Which is it? That story is still to be determined; however, both bubble and mass-adoption forces seem to be alternately taking the driver’s seat.


  • Bitcoin — with capitalization, is used when describing the concept of Bitcoin, or the entire network itself. e.g., “I learned about Bitcoin in this article.”
  • bitcoin — without capitalization, is used to describe bitcoins as a unit of account. e.g., “I bought ten bitcoins today.”; it is also often abbreviated BTC or XBT.
Pablo Picasso, Mickalene Thomas, Tarsila do Amaral, Marilyn Minter, Giorgio de Chirico — collage by Michael Ashley




Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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Michael Ashley Schulman

Michael Ashley Schulman

Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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