Forum Topics Magic Internet Tokens
JohnnyM
Added a month ago

This weekend we celebrated my eldest’s 13th birthday, and so it was time to decide what we should invest in this year. So far, he has some DroneShield shares for his 11th Birthday and some Catapult shares for his 12th. These investments are much more than financial decisions—they're educational experiences, opening conversations about being a proud part-owner of a business, how Mr Market knows the price of everything but sometimes the value of nothing, how his 11th Birthday present went on a roller-coaster from 31 cents per share, up ~22x to $6.70 and then down ~70% in the last 2 months. The questions that have flowed from this are awesome. Did Oleg steal the company’s money?? No son, he didn’t.. he is entitled to sell his shares.. but the way he did it, threw us and all other shareholders under the bus. It’s a huge red flag against the people we trust to run “our business” for us.

This year we had some great conversation about what to invest in next. You can really see how young impressionable minds soak up information and for better or worse adopt much your point of view.

After a long conversation we decided to turn hard left, persuaded by Rampage’s arguments on the MF Podcast and a few YouTube explainers we bought some magic internet tokens!

How do we value Bitcoin, Dad? I don’t know son. I’m almost 50 and have never bought them before. Above my study door we have the Buffet quote, Price is what you pay, Value if what you get. I’ve explained Intrinsic Value with the boys before, but don’t expect them to fully grasp a DCF at this age. So, the only logical explanation I could offer is, that we are the latest in a long line of Greater Fools.

However, I was easily able to help my sons understand @Strawman's key argument, which centres on the devaluation of fiat currencies. I recounted a trip to Ho Chi Minh City, where while exploring the Russian market for war relics, we stumbled upon bags of old Vietnamese Dong notes for sale. My sons vividly remember me telling them that once upon a time a 100 Dong note would have been worth something, however the money has been devalued so much these notes are now worthless. With SG$1 worth just over 20,000 Dong, I told my sons if you dropped a 100 Dong note it is not worth your time to bend over and pick it up. The lesson was clear: the value of government-issued money will erode dramatically over time. Bitcoin is not controlled by any government.

I explained to Zack that for his 13th Birthday we are taking a “research position” as @Solvetheriddle called it, this will force us down the Rabbit hole. Our investment in Bitcoin isn’t just about potential returns; it’s an opportunity to explore new ideas, challenge old beliefs, and prepare my sons for a future where financial literacy is more important than ever. Whether Bitcoin proves to be a wise investment or not, the lessons learned will last a lifetime.

Of course I have massive lingering concerns, mostly stemming from my own ignorance. but also, how can we trust an amazing technology made by an unknown person. 

Cheers

JM

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Strawman
Added a month ago

What a great education you're providing @JohnnyM. Well done!

Btw, I've still got some Vietnamese dong from when I backpacked through the region in the mid 90s. Since then, the cumulative inflation has been 420% internally! And it's lost 58% against the USD. (Which itself has seen a cumulative inflation of 116%).


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BigStrawbs70
Added a month ago

Fantastic post, @JohnnyM

I have posted before that I spend (just in case anyone from the tax office is listening in lol) 6 months less 1 day a year overseas. I have a second home in Cambodia, and my daughters travel a lot with me during holidays and when they want to bludge off the old man to get overseas.

There really isn't anything that tangibly shows how currency debasement/bad money policy works better than when you are buying a beer for 4,000 Riel ($1 USD) to show what happens when monetary policy goes a bit astray. I also take the opportunity to highlight that it is so cheap due to an absence of taxes and that the people serving us are not paid a very good wage, unlike back in Australia. So many life lessons on that as well.

As a side note, my partner is Cambodian, and when I send money to her, we use the wonders of Stablecoins to send and receive money (pretty much) fee-free. Similar to the above, getting outside of our own financial privilege is such a valuable life lesson for our kids, but also shows why these crazy internet tokens are real.

Lastly, in reference to your last paragraph re 'how can we trust': Let's not forget the code is open source, so everyone can read over it and even copy it to create their own coin; many have in fact done the latter. While there is even more to say, I would just suggest that something worth trillions of dollars has had every conceivable known attack chucked at it and it is still going. And, OK, I have one more point: fears around quantum are also laughable. Bitcoin will do just fine in that world, but your bank, and pretty much every other, account is stuffed. I will stop there lol.


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