Every month I put aside some money
into a portfolio aimed at big bets over the next 20 years. I will be gifting this portfolio to my future kids someday- in the hopes of using it as an educational tool alongside the memos I write to teach them about the world and to have a shared activity to work on together as they grow up.
Here is the performance so far from the first three months:
Month #1, July 2020: $ARKK
Month #2 August 2020: $ARKG
Month #3 Sept. 2020: $BTC.X
As I've been searching over the past month for the next addition, I keep coming back to this question:
If this portfolio is for my future kids (who aren't even born yet) I need an investment that will become more relevant as time goes on. Companies go out of business all the time. What will hold its value for the next 15-20 years?
And to be honest, I keep coming back to Bitcoin.
Bitcoin has five critical properties that make me think it will still be around in 20 years:
#2 and #5 are what I keep coming back to.
Durable: It will persist over time.
Scarce: It's purchasing power can't be eroded by inflation of its supply.
There's a class on Coursera through Princeton
that I audited in 2017 that convinced me of the durability of bitcoin. The computer science behind hashing functions and the game theory behind mining leads me to believe that this is a tool that won't just disappear in the next 20 years. The question is, will it be a tool that has increasing adoption?
And I think it will because it is scarce.
The U.S. Federal reserve has monopoly power on the most influential currency in the world. The temptation to create more dollars out of thin air when there is economic trouble is just too great. Over the next 20 years, I have high conviction that there will be many more dollars created.
But there is a fixed supply of Bitcoin.
And so, for month #4, I'll be buying bitcoin again, at much higher prices than I did last month. Not because I'm excited about speculative price movements in the short term, but because I think it's got a high probability of retaining its value while my kids grow up.