August 29, 2023

Understanding and Overcoming FOTU

four bitcoins
3 educational tips that helped me get comfortable with Bitcoin.

When I was in high school, a friend told me a story about his father, who had been approached on his front porch by a salesman sometime back in the 1980s.

“Sir, I’ll make this brief… my company is interested in making you an incredible offer.  We’d like to install something called a ‘cell tower’ on your land.  You’ll be compensated in several—”

“Get off my property.”

The salesman had no problem moving on—short-lived pain and rejection in between sales is quite the normal occurrence.

For my friend’s father, the pain wouldn’t begin for many years, but would last a lot longer.  He wasn’t yet aware that he’d missed his chance to be in on the ground floor with AT&T during the cell phone revolution.

I think about this story a lot when I talk to first-time bitcoin investors.

Fear of the unknown (FOTU) is a natural human reaction based on thousands of years of survival instincts imprinted in our DNA.  But those instincts can also blind us to hidden perspectives and opportunities.

Oliver L. Velez (@olvelez007 on X) recently posted two charts of Apple stock.  To many investors, Apple has been one of the best performing stocks of the last 20 years. Chart 1 shows the appreciation of the company relative to dollars.

Chart 2 gives a different perspective.  In terms of the ability to trade shares of Apple stock for Bitcoin, Apple has lost 99.99% of its purchasing power since Bitcoin came about in 2009.

With only around 1% of the world’s population using Bitcoin in 2023, according to research by @satoshimoneybtc on X, we’re still early in the adoption cycle.  So how should you approach dipping your toe in the water to understand if Bitcoin is something that should be a meaningful part of your financial plan?

Here are 3 tips that personally helped me overcome FOTU when it came to Bitcoin education:

Read a Book on the Topic

The book I started with was “The Bitcoin Standard” by Saifedean Ammous.  The first 70% of the book teaches the evolution of money throughout human history.  As a financial advisor, I had a lot of previous assumptions about how and why money works the way it does today.  This book turned that upside down and totally reshaped my line of thinking.  The final 30% of the book helps Bitcoin beginners understand how Bitcoin works and why it is a breakthrough technology that overcomes the various shortcomings of previous (and current) monetary systems.

Take an Online Class

There are a lot of online courses with various costs and commitments.  Some are free and might only take an hour or two of your time.  If you’re busy and strapped for cash, that might be perfect!  For me, I was looking to take my expertise to the next level, so I enrolled in Wharton’s Blockchain Analytics and Digital Assets program.  $4,000 and 80 hours later, I’m going to be DANGEROUS when it comes to educating my clients.

Start to Dip Your Toe in the Water

I believe that the best way to learn anything is to dive in headfirst.  When it comes to investing in something new, start small.

Small amounts are relative to each investor’s total pool of money, but if you have $100,000 in investable assets, I think it’s reasonable to say that investing $100 to get yourself comfortable with the process is a reasonable approach.

Dollar cost averaging small amounts over a longer period to help minimize timing risk is also advisable.  My personal rule of thumb: don’t invest more than 2.5% of your investable assets in something outside of your comfort zone until you’ve done enough research to feel like you’re very well versed in the space and on your way to becoming an expert—or until you’ve discussed in depth with your financial advisor.

If you missed AT&T, Apple, or Bitcoin as investment opportunities, you’re not alone.  The fastest way to get out in front of the next opportunity is to develop a system and habit for learning new things.  10 pages of a book per day, an hour a week of an online course, or learning-by-doing can change the trajectory of your life.  I hope this provides you the inspiration you need to get started!

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