Why do 98% of people in the cryptocurrency space refuse to buy Bitcoin? I just found a statistic on the Bitcoin browser: there are 38 million total Bitcoin addresses, but only 810,000 addresses hold more than 1 Bitcoin. This ratio only accounts for about 2% of all holding addresses. Of course, there will be some in centralized exchanges, but there won't be too many people there either, because a person who really understands Bitcoin and is willing to hold it long-term wouldn’t put their Bitcoin in someone else's wallet. So based on this ratio, if there are 100 million users in the global cryptocurrency space, then 2% of that is 2 million. Adding 2 million and 810,000 gives us about 2.8 million users in total.
This ratio may overturn many people's perceptions. You should know that in 2017, the number of domestic players in the cryptocurrency space had already exceeded 10 million, and there were globally 30 to 40 million users. At that time, Bitcoin was only over 10,000 yuan, and the average investment amount per person in the cryptocurrency space was $10,000. So many people could afford it back then. If they could afford it, why didn’t so many people buy Bitcoin?
Let me summarize for you; it’s just these few reasons. The first is the disdain for being late, and the second is the disdain for being expensive.
The third reason is the disdain for Bitcoin's future growth potential. The fourth is the disdain for how easy it is to make money. The fifth is psychological bias; everyone in the cryptocurrency space already knows that Bitcoin is a value currency, and this is a consensus among everyone. The cryptocurrency space has a consensus on Bitcoin's value. Everyone believes that if something is good, others must have already bought it, so if I buy it, I certainly won't make money.
Alright, today let’s go through these points that have been criticized one by one to see if they hold any validity.
Let’s first address the notion of being late. Over the years in the cryptocurrency space, I’ve often heard a voice saying, 'Since you’ve already missed Bitcoin, don’t miss out on this other coin.' The reality is that Bitcoin has been consistently missed, and the names of these other coins keep changing. Even if you compare it with a large number of older coin types, most of them have struggled to outperform Bitcoin over the long term. At least 90% of coins, even if they haven’t died, will not outperform Bitcoin. So, from a probabilistic standpoint, as long as you don’t buy Bitcoin and instead invest your money in other coins, you already have a 90% probability of losing money compared to Bitcoin.
Regarding early and late, it is actually relative; there is no absolute early or late. As long as the investment target is valuable and can grow long-term, it is somewhat early or late. This kind of investment target is very scarce in our cryptocurrency space.
By the end of 2020, there were already over 800,000 coins in the cryptocurrency space. As of today, there are still 11,943 coins trading on exchanges. Among these coins, there are probably fewer than 10 that we can hold for the long term.
In fact, it’s not just in the cryptocurrency space; if you look at the entire global investment market, assets worth holding for the long term are also very scarce. But once you discover one, don’t easily get off the train. Of course, you can sell coins in between and moderately improve your life, but after improving your life, the money you earn should still be invested consistently. Because historical data tells us that good investment targets will rise long-term, and getting off at any point during their rise is a mistake.
Let me give you an example. Coca-Cola is undoubtedly a good company, a stock worth holding for the long term. I believe everyone has used this company’s product, Coca-Cola, which is still my favorite drink to this day, without exception.
This company, founded in 1886, has a history of over 100 years. Its products have brought joy to countless people, and its stocks have made many people money. The company went public in 1919, so if you had bought $100 worth of its stocks on the first day it was listed, how much would you have earned today?
Let me do the math for you: From the time it went public in 1919 until 2019, it was exactly 100 years. During these 100 years, this company has approximately created an annualized compound return of about 15% for investors for 100 consecutive years... Do you know what this means? Just roughly calculate 1.15 to the power of 100, which is about 1,174,000 times! If we multiply your principal of 100 yuan by 1,174,000, that’s 117.4 million. This is the miracle created by good investment targets.
Some say Bitcoin has risen 50 million times in 12 years, which has already surpassed Coca-Cola. Isn’t it too late for us to enter now? In fact, this 50 million times is based on the exchange rate of buying pizza with 10,000 Bitcoins, which is not the publicly available price. The real publicly traded price of Bitcoin is around $1, and today it’s at $47,000.
That’s only a 47,000 times increase, and compared to Coca-Cola, Bitcoin is still a relatively young investment asset.
If you feel that a good investment target is late even after 10 years, you might want to see how Buffett views early and late.
A few years ago, when a reporter interviewed the 88-year-old 'stock god' Buffett, he claimed that he drinks 5 cans of Coke every day. You might have heard in the news media that Buffett is a major shareholder of Coca-Cola. Just from this one company's stock, Buffett has made hundreds of billions of dollars. But do you know when Buffett bought Coca-Cola shares?
You might think that since he is a major shareholder, Buffett must have bought in very early, right? In fact, not at all. He only started buying in the 1960s, and when he first started buying, it wasn’t much. He wasn’t a major shareholder of Coca-Cola at that time. You should know that Coca-Cola went public in 1919, and 45 years passed after that. Buffett only started buying 45 years later. It wasn’t until the summer of 1989 that Buffett became a major shareholder of Coca-Cola when he spent $1.02 billion to buy 7% of Coca-Cola’s stock all at once. Including the stock he had bought previously, it was about 10% of the shares. It was only in this year, exactly 70 years after Coca-Cola went public, that he became a major shareholder.
From the 60s to the 90s, which means Buffett invested for more than 30 years during this period. So, a good investment target does not depend on timing; as long as it is a good investment target, even if you buy it 70 years after it goes public like Buffett, it’s not too late. Those who say it’s too late to buy Bitcoin and Ethereum today should think carefully about it. Bitcoin has just been born for 12 years, and Ethereum has only been around for 6 years. The entire blockchain industry is still in its early stages, and the global cryptocurrency market has about 100 million users. Where does your logic of being late come from?
