[0242] - Bitcoin: The Biggest Risk is "Zero Exposure"
There are many stories about bitcoin that make your eyes roll. The narrow line of logic presented by the news outlets is face palmingly bad.
The one I love the most is that "bitcoin is a risky investment". An argument backed up by a cursory point at the current charts and a mention of a 400 year old tulip mania just to reinforce the nonsense.
Let's talk about risk.
If you're going to measure the risk of Bitcoin, sure, there is the risk of a massive loss if you buy at the top. Also there's a risk of the asset going to zero if some catastrophic event hits the network. Such as a major hack of 5m Bitcoin from random wallets. Then you'd have a near zero dollar bitcoin.
Worst case scenario is an EMP explodes in the atmosphere and wipes out every computer of the planet. There goes your decentralized ledger. But if that happens, the price of bitcoin is going to be the last thing on your mind. If that happens you better get out your shotgun and your Mad Mad cruiser and hunt for food.
But aside from those risks, the one risk that is never mentioned is the risk of zero exposure. What's called "opportunity cost". The risk of ignoring a massive opportunity and not investing before the price of bitcoin skyrockets. The risk of not having any exposure to the asset class is a risk you have to assess.
All of the major investment houses would be busily doing a risk assessment of cryptocurrencies at the moment and I am betting that they have 2-5% exposure of their total assets. Just in case the thing moons.
But you're average Joe and Jane? What kind of risk assessment do 9-to-5'ers do? Not much, if any. Most people don't think of the risks associated with being out of the market should it go gangbusters.
Personally I'd like the CNBC's of the world to talk about both risks. The risk of owning Bitcoin vs the risk of not owning it. Then you'd have a balanced view and have assessed the risks properly.
The thing is having zero exposure to the Bitcoin market is probably the riskiest investment you can make. Given the fundamentals and the stage of the market, the upside potential far outweighs the downside risk.
Thanks for watching,
Brendan Rohan - Indie developer of 'next gen' natural medicine from Melbourne, Australia
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