S49: Bitcoin is not an investment

Nov 26, 2023 | Talk the Talk (episode 1)

THE PURGE (Ep 2)

https://twitter.com/i/spaces/1nAJEaNQLaZJL?s=20twitter.com

In today's series, I have one poll for you to engage with & i have one question for you to engage with.

Many times when i talk about Bitcoin to people, many people reply with "when i buy my bitcoin investment, i loss money". so Today, i am telling you that Bitcoin is not an investment.

if you want to share your experience on bitcoin investment or you want to contribute, please raise your hand. i will give you the speaker to speak. also, use the comment section to share your experience if you dont want to come up.

Remember the rules

1. engage the polls, engage the comment section, show reactions so we can all have a wonderful experience today.

2. Today's series is sponsored by Osagie?. he's a state of heart graphics design, and a web3 explorer, he is an NFT expert

Icebreaker:

To kick things off, let's start with an icebreaker. Share a GIF or emoji that represents your initial feelings or thoughts about gambling. 🎲🤔

At the end of today's series, we will understand

1. that bitcoin is not an investment

2. How Bitcoin becomes an investment

3. How to identify what an investment is.

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News

1. Ronaldo was sued for pushing

Let's get started

I ran a poll in the middle of the week, i wanted to know the insight of people to bitcoin, so i asked "is bitcoin an investment": 80% of the people that participated in the poll said, Bitcoin is an investment

80% of people said Bitcoin is an investment

in the comment of that Poll,

David Kolawole said "Bitcoin is decentralized, meaning that it is not controlled by any single entity.Bitcoin has appreciation over time, making it a potentially lucrative investment. Of course, there are also risks associated with investing in Bitcoin. But in general it's an investment."

Rufai Yakubu said "Bitcoin offers the potential for growth and diversification in a portfolio. While there are risks associated with investing in Bitcoin, there are also opportunities for those who are willing to take a chance on this emerging technology. So I feel it's an investment sir"

Shamex, Nawaz and Yoruba Nationalist also made wonderful comments

then, a day after, i asked again "is Naira an investment"

85.7% said Naira is not an investment.

shamex said "The Nigerian naira is the official currency of Nigeria, and it's not typically thought of as an investment. That said, it's important to consider the currency exchange rate when doing any financial transactions involving the naira."

what did satoshi say Bitcoin is

in the first 3 lines of Bitcoin whitepaper, Satoshi defined Bitcoin.

he said "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution"

in the second paragraph of Bitcoin whitepaper. he defined it again, this time he said "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party"

so if Satoshi said Bitcoin is a digital cash, what then qualifies as an investment?

Howey's Test

Howey's Test was established in 1946 as the legal standard of what qualifies as an investment, from a court case between SEC vs W.J Howey in the United State of America.

it has 4 component that defines an asset an investment.

1. investment of money: there must be an investment of money

2. Common Enterprise: it must be in a common enterprise

3. Expectation of Profit: their must be expectation of profit

4. Effort of Others:

Bitcoin & Howey's Test

1. Investment of Money: even though buying Bitcoin actually involve an investment of money, this criterion alone isn't enough to classify it as a security.

2. In a common enterprise: Bitcoin operates on a decentralized network, with no central authority or entity controlling it. Unlike traditional common enterprises where the profits of individual investors are interlinked, Bitcoin's decentralized nature means that an individual's investment in Bitcoin is not tied to the investments of others in the same way as it would be in a common enterprise. Each investor's gains or losses are independent of those of other Bitcoin holders, differing from the typical structure of a common enterprise as contemplated by Howey's Test.

3. Expectation of Profit: Although investors may buy Bitcoin with the expectation of profit (in the form of appreciation of the asset), this expectation alone isn't enough to meet the Howey Test’s criteria. The key question is, where do these expected profits come from?"

4. Effort of Others: This is the most crucial aspect where Bitcoin differs significantly from the criteria of Howey's Test. For an investment to be considered a security under the Howey Test, the profits must be expected to result from the managerial efforts of others. In Bitcoin's case, its value isn't derived from the efforts of a central issuer, promoter, or third party. Instead, Bitcoin's value is influenced by factors like market demand, adoption rates, regulatory news, technological developments in the blockchain space, and broader economic factors. These are not the efforts of a specific party or group responsible for the success of a venture, as would be the case with a typical security.

POLL

Will you buy bitcoin as an investment

1. Yes

2. No

3. No money

How bitcoin can be viewed as Investment.

1. Store of Value and Asset Appreciation: Many people buy Bitcoin hoping that it will increase in value over time, similar to how someone might invest in gold or real estate. They see it as a store of value or a digital asset that could appreciate.

2. Speculative Investment: Bitcoin is often seen as a speculative investment. This means that people invest in it not for dividends or interest payments (like stocks or bonds) but betting on the price going up in the future so they can sell it for a profit.

3. Alternative Investment: Bitcoin represents a form of alternative investment, different from traditional stocks, bonds, and real estate. Its value is driven by factors like supply and demand, market sentiment, technological advancements, and broader economic factors.

4. Diversification: Some investors include Bitcoin in their portfolios for diversification, as its price movement is not directly correlated with traditional financial markets. This means when stocks or bonds are not performing well, Bitcoin might still do well, and vice versa.

5. Technological Investment: Investing in Bitcoin is also seen by some as an investment in the underlying blockchain technology and the potential future applications of this technology.

6. Personal Finance Perspective: From a personal finance standpoint, any asset purchased with the intention of realizing a future return can be considered an investment, regardless of whether it meets specific legal definitions.

lulu's impact.

understand the difference between currency and money

currency is a medium of exchange while money is a store of labour.

libitarians