Youtuber and financial educator Thiago Nigro, creator of Primo Rico channel, recorded a new video about Bitcoin (BTC). Despite opening the video talking about volatility, Nigro brought up five “fundamentalist” reasons for acquiring the cryptocurrency.
Entitled “5 reasons (not obvious) to buy Bitcoin“, the educator brings the following reasons to acquire cryptocurrency. Within each point, Nigro brings a series of explanations that support his thesis of buying the cryptocurrency:
- Exercise of humility and self-forgiveness;
- Big investors.
open to anyone
First, Nigro highlights the democratic character of the BTC, that is, the cryptocurrency does not distinguish between investors. In this sense, anyone can simply create their wallet and own a completed BTC or fractions of a BTC.
Such facility contrasts with the bureaucracy and documents required to open accounts at brokerages and banks, for example. At the same time, investing in BTC does not require a high investment either.
Within this aspect, Nigro highlights that one of the most important points of the BTC is its resistance to confiscations. With emphasis, Nigro emphasizes that whoever owns BTC is truly the owner of their own money.
“You can say, ‘Oh, but I have money, it’s mine.’ Yeah, but what about Collor’s confiscation? And in a war? At that time, the money is not yours. But Bitcoin is yours, someone can only take it by force. So, this is one of the most powerful arguments in Bitcoin,” he explained.
However, shortly thereafter, Nigro mentioned forms of exposure to the BTC that are not direct purchase, such as ETFs and investment funds. He highlighted, however, the differences between these forms and direct purchase – the only one that, in fact, makes BTC really in the hands of its owner.
Humility in the face of uncertainty
This is perhaps the most philosophical of the reasons given in the video. Here, Nigro highlights that investing in BTC tends to prepare investors for uncertainties. According to him, risks will always exist, no matter how prepared the investor is.
In this sense, uncertainty can affect both up and down. That is, an investor may be afraid not to buy and lose a large valuation or buy, suffer a loss and sell for fear of falling further.
For both scenarios, it is ideal to have a strategy to avoid suffering big losses while allowing you to take advantage of the gains that BTC can offer.
BTC’s limited offering is perhaps its best-known positive feature. At this point, Nigro contrasted this scarcity with the limitlessness of fiat currencies. After all, since 2020 the United States has printed more dollars than in the previous 200 years.
BTC, on the other hand, has great similarities with other scarce goods. For example, having a finite amount (21 million) and not being able to create new cryptocurrencies after that. With a restricted supply and an increasing demand, the price tends to increase.
Nigro compared the cryptocurrency to rare wines and even a Game Boy video game tape that is part of his personal collection. “What is the value of something that is impossible to be duplicated, is unique, is it practically a work of art?”, asked Nigro.
The concept of convexity in investments became popular in the work Antifragile: things that benefit from chaos, by Nassim Taleb. Once a BTC enthusiast, Taleb switched sides and is now a scathing critic of cryptocurrency. However, the concept of convexity has not lost its relevance.
A convex investment is one that has limited potential for losses but can bring unlimited gains. This is the case of the direct purchase of BTC, as the cryptocurrency does not have limits for its price to evolve. On the other hand, the most that the investor can lose is 100% of the invested capital.
This is the inverse of concave (or fragile) investment, whose returns are limited but losses can be enormous. For example, the options market, especially with leverage, is a type of concave investment.
Finally, being exposed to BTC means following in the footsteps of some of the biggest investors in the world. As well as scarcity, this is one of the most prominent points in the market, especially from 2020 onwards.
Unlike other bullish cycles (2013 and 2017), this time large investors and companies are slowly acquiring BTC. In his video, Nigro cites examples of Robert Kiyosaki (author of Rich Dad Poor Dad) and Ray Dalio, big names who claim to own BTC as an investment.
As they have large sums of money, these investors are able to acquire large amounts of the cryptocurrency, further reducing the already scarce supply. Consequently, prices tend to remain high, especially given the long-term profile of these investors, who tend not to sell in early declines.
Thiago Nigro himself invests in the cryptocurrency market in various ways, either with direct purchase or with investment in companies in the sector. Regarding humility, the educator also admitted to having sold BTC back in 2014, something he classified as his biggest investment mistake.
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