Delivered November 22 @ 5:00pm ET

Table of Contents

• Earlier this week, I posted this on LinkedIN:

  • TLDR:

  • First, some definitions:

  • Second, let’s address legitimate questions/concern …

  • Quick History

  • Bitcoin’s birth into mainstream, marked by volatil …

  • Bitcoin gains a prophet

  • Unlocking the Bitcoin Economy

  • So what’s happening today?

  • What are the Risks?

  • How can you purchase Bitcoin?

Happy Friday everyone! My name is Gerry Hays, Founder of Doriot (pronounced with a soft “t”). At Doriot, we believe venture should be innovation-driven and permissionless.

More specifically, given the uncertainty artificial intelligence creates around how we spend our time and earn a living, it’s crucial to equip future generations with a venture mindset and provide platforms that allow them to activate their imagination, talent, and capital to bring new ideas and value to the world. Right now, only the wealthy and well-connected have this privilege.

Thus, in addition to launching a venture empowerment platform through Doriot, the weekly 'Democratize Venture' Insider is offered as an free tool for anyone ready to embrace the future and start down this path.

And I’ve elected to share net subscriber numbers on a weekly basis because, if you’re reading this, you are what’s considered an innovator on the innovation adoption curve. So, to you, in the words of Margaret Mead, “Never doubt that a small group of thoughtful, committed individuals can change the world. In fact, it's the only thing that ever has.”

Earlier this week, I posted this on LinkedIN:

There are very specific reasons for this advice. I have been following Bitcoin for several years. My first purchase was in 2013, and I have observed its progression not just from a pricing standpoint but from a political one. I believe we have now reached a critical inflection point coming off the recent election, and everyone should have the same information to make their own decision about whether or not they should own Bitcoin. My analysis is outlined below.

TLDR:

Bitcoin is the fastest-growing and most promising venture in history because it’s built on meritocracy, not influence. This is in line with the principles of Doriot.

Owning Bitcoin means you are playing the same game as the wealthiest people on Earth with no special favors and no insider advantages, sharing the exact same risks and rewards. In other words, there are no counterparty risks. Its blockchain is so secure that it would be almost impossible to harness enough computing power to hack and change the ledger.

With a fixed supply of 21 million, Bitcoin is inherently deflationary. And, if it becomes the world’s “Reserve Capital Infrastructure,” relied upon by individuals, corporations, and nations to preserve and grow their capital, demand will permanently outstrip supply.

Today, $330 trillion of global capital is locked in assets that are degrading over time (through taxes, upkeep, etc), giving Bitcoin the potential to grow 100x from where it stands (as holders migrate more of their capital from inflationary assets into Bitcoin, a deflationary asset expected to increase over time). 

For example, moving $1,000 of your capital reserves into Bitcoin today has the potential to grow into $100,000 in reserve capital in the coming decades, all without the traditional counterparty risks that most capital preservation strategies carry. Below, I will explain why and how this extraordinary opportunity is unfolding.

First, some definitions:

Money is a universal medium of exchange, used to purchase goods and services. It’s a tool for transactions, not a store of long-term value.

Currency is a system of money in general use within a specific country or economic region. For example, the US Dollar is a form of currency.

Capital is the foundational resource for creating and sustaining wealth, often invested to drive economic activity. It represents assets that generate value over time, unlike money, which primarily facilitates short-term exchange.

All of us hold a portion of our net worth in the form of money - typically in the world’s reserve currency, the U.S. Dollar. But money not needed immediately for purchases becomes capital. Capital is preserved in assets like property, businesses, stocks, art, luxury items, etc. and there’s an entire wealth management industry built around preserving and growing capital.

Second, let’s address legitimate questions/concerns:

Quick History

Bitcoin was created in 2008 by an anonymous figure or group using the pseudonym Satoshi Nakamoto and was introduced to the world in a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." Its goal was to provide a decentralized form of currency that operates independently of central banks or governments, relying instead on a technology called blockchain - a distributed ledger that records transactions securely and transparently.

Bitcoin’s first block, known as the “genesis block,” was mined on January 3, 2009, marking the launch of the Bitcoin network. Over time, it gained traction as a store of value and medium of exchange, particularly appealing for its resistance to censorship, limited supply of 21 million coins, and promise of financial sovereignty.

Bitcoin’s birth into mainstream, marked by volatility and scams

It took five years after Bitcoin’s launch for people to begin truly understanding its principles and promise. As the conversation reached the mainstream, it attracted early adopters, followed by speculators, which in turn triggered the creation of thousands of cryptocurrencies - and many crypto scams - on a newly formed (and competing blockchain to Bitcoin): Ethereum.

This explosion of “cryptocurrencies” on the Ethereum blockchain muddled Bitcoin’s identity, conflating it with the broader cryptocurrency market and drawing regulatory scrutiny from the SEC.

While the SEC long ago concluded that Bitcoin is not a security but a commodity, scams and unregistered securities flourished on Ethereum, and Bitcoin’s reputation took a hit, fueled by critics like Jamie Dimon, CEO of Chase. The resulting volatility - visible in the charts below - was extreme. But volatility is a natural part of the process of birthing something new into the world.

Time to make a crucial point: Bitcoin will continue to experience significant volatility. If you choose to own Bitcoin, you need to think like a long-term holder, remaining steady through the inevitable peaks and valleys.

Bitcoin gains a prophet

In August 2020, Michael Saylor, Founder & CEO of MicroStrategy, a publicly traded business software company, made a decision that cemented his role in accelerating Bitcoin’s legitimacy: he purchased it as a way to preserve MicroStrategy’s capital. After conducting extensive due diligence and understanding Bitcoin’s immense potential, Saylor pivoted his entire business to focus on becoming a Bitcoin holding company. He’s utilized excess cash, corporate debt, and convertible bonds to acquire Bitcoin, amassing an incredible 312,000 Bitcoin worth $31.2 billion.

Saylor has since become a leading advocate for Bitcoin’s role as the world’s reserve capital infrastructure. He now advises companies worldwide on how to gain exposure to Bitcoin through their treasuries. In fact, he is scheduled to meet with Microsoft’s Board of Directors in the coming weeks to discuss converting part of their $80 billion in USD reserves into Bitcoin.

Today, every corporate treasury is considering Bitcoin exposure. And, in a stroke of genius, Saylor has positioned MicroStrategy as a vehicle for companies whose charters prevent direct ownership of Bitcoin. They can simply buy MicroStrategy stock to gain indirect exposure. Over the pat year, MicroStrategy’s stock has outperformed giants like Nvidia, Apple, Google, and Meta.

Unlocking the Bitcoin Economy

If Bitcoin realizes its potential as the global reserve capital infrastructure, a trusted store of wealth for individuals, corporations, and nations, an entirely new system of decentralized finance will emerge. This system will look nothing like what we have today. It flips the script by encouraging cultivation rather than consumption, an empowerment position for humans.

Bitcoin’s deflationary nature will encourage savings because its value will continue to grow year after year. Yet, people will still need to make purchases, invest in ventures, and engage in commerce. In today’s world, where so much capital is tied up in financial institutions that operate with the U.S. Dollar, the question becomes: how can Bitcoin’s potential to facilitate global economic activity be unlocked while allowing its participants to keep increasing their capital reserves?

The answer lies in Layer 2 Protocols. Companies like Stacks (formerly Blockstack) are building smart contract platforms on top of Bitcoin, raising capital from the sharpest minds in venture capital to activate Bitcoin’s potential. While these systems are still developing - slow and clunky at times - they are laying the groundwork for a transformational infrastructure. Unlike Ethereum, which has tried to implement a “Wrapped Bitcoin” solution with limited success, Stacks is purpose-built to aggregate multiple transactions and secure them on Bitcoin’s immutable blockchain, which remains virtually unhackable.

This innovation could eventually unlock trillions of dollars, backed by Bitcoin, for new economic activity. For example, let’s say you invested $1,000 in Bitcoin, and over a decade or so it has grown to $100,000 as Bitcoin becomes the world’s reserve capital infrastructure. You now want to invest $5,000 in a promising project - a promising startup with its own equity token that sits on top of Bitcoin - but you don’t want to sell your Bitcoin to make the investment.

Enter a Bitcoin intermediary leveraging smart contracts to allow you to borrow against your Bitcoin holdings as collateral. This enables you to participate in new investments without selling your Bitcoin, which continues to grow at an estimated 10 to 12 percent per year. If the investment fails, you lose the portion of your collateral tied to it. But if the project succeeds, it generates additional returns on top of your Bitcoin’s growth. Those returns can then be sold and reinvested back into Bitcoin, further expanding your capital reserves.

Now apply this concept to everyday scenarios - using Bitcoin-backed loans for a down payment on a house or purchasing a luxury item. The possibilities are endless, and the infrastructure being built today has the potential to make Bitcoin the foundation of a global financial system that rewards ingenuity, preserves capital, and drives innovation.

So what’s happening today?

What’s different today is the political landscape. We now have a Bitcoin-friendly Congress and a Bitcoin-friendly administration. Regardless of your political views, the situation is like a hand you’ve been dealt in a game of hold’m. You need to decide whether you’re in or out.

This year, both Robert F. Kennedy Jr. and President-elect Trump attended the Bitcoin Conference in Nashville, TN, and unequivocally declared their intent, if elected, for the U.S. government to begin amassing capital reserves in Bitcoin. And the tech overlords, including Elon Musk and Marc Andreessen, have plowed millions into activating this agenda. And this is why Bitcoin is nearing $100,000, up nearly 100%.

This could mean a strategy in which the Treasury borrows from the Federal Reserve (expanding the supply of U.S. dollars and Fed’s balance sheet) to purchase trillions in Bitcoin, held by the US Government. This policy would have two significant effects:

1. The price of Bitcoin will grow: Holders of Bitcoin could see their capital reserves increase dramatically.

2. The USD will be further debased: As the U.S. government continues to outspend its revenue while purchasing Bitcoin, the value of the dollar will erode.

Given the possibility above, let’s revisit the $1,000 example. Suppose global capital reserves held in Bitcoin grow to $30 trillion by 2030, with the U.S. Treasury holding 25% of that total. If the U.S. dollar is being debased by 6% annually to fund this transition, here’s what your $1,000 looks like depending on whether you hold USD or Bitcoin:

Thus, if you’re on the wrong side of this trade, holding your capital reserves in U.S. dollars, you could see your purchasing power diminish rapidly. Which is why I believe everyone should have some exposure to Bitcoin.

What are the Risks?

Whether or not the U.S. government seizes this opportunity, the reality remains: as more corporations and wealthy individuals recognize Bitcoin as the ultimate solution for preserving their capital reserves, demand for Bitcoin will continue to outstrip supply.

In my view, the greatest risk isn’t Bitcoin’s volatility or competition - it’s that the U.S. government could attempt to seize Bitcoin as a strategic asset, compensating holders with a fraction of its true value, much like they did with gold in the 1930s.

The other potential risk is that Bitcoin simply fails to live up to its promise. However, if one studies the charts and the adoption trends, that’s a difficult argument to make.

Yes, volatility will persist, but as Bitcoin’s market cap grows, it will stabilize. At a certain scale, no single trade will be able to send the price soaring or plummeting by 20%, leading to greater confidence and even more demand.

This brings us to the key point: Bitcoin isn’t designed to be a speculative bet - it’s a long-term wealth strategy. If you’re a speculator chasing quick profits, you could lose everything. But if you’re thinking long-term, Bitcoin represents a paradigm shift in how we preserve and grow wealth in an increasingly uncertain economic landscape.

How can you purchase Bitcoin?

Getting your hands on actual Bitcoin takes a bit of effort. I recommend starting by setting up an account on Coinbase and completing their onboarding process. Once that’s done, you can buy and hold actual Bitcoin in your wallet, securing your share of the Bitcoin network. And you don’t have to purchase a Bitcoin, just a fraction of one.

From there, you can move your Bitcoin into cold storage for added security - but that’s a conversation for another time.

If you’re looking for exposure to Bitcoin without owning it directly, you have a few solid options: you can purchase a Bitcoin ETF.

Owning MicroStrategy stock is a third strategy, but keep in mind that its market cap is about 3x the value of its Bitcoin holdings. And, unlike Bitcoin, MicroStrategy stock is vulnerable to manipulation by hedge funds, as evidenced by an incident that occurred just yesterday.

I hope this was educational.

Have a great weekend, everyone!

Sincerely, -gerry ([email protected])