Bitcoin or Property? It’s All The Same Trade

A few people have asked me recently: ‘RA, should I buy bitcoin or property? Are you bullish on both?’

Let me explain this very simply to you.

It is all the same trade.

The trade is currency debasement.

Bitcoin is a far superior trade to property, however that does not mean property won’t go up when priced in fiat currency.

In fact, calling bitcoin a ‘trade’ doesn’t even do it justice - it’s money.

But we’ll get into that later.

We are betting on Central Banks continuing to fund Nation States that are structurally insolvent in the long term, and those Nation States continuing to be fiscally irresponsible.

Any Nation State that has the power to print its own currency via Central Banks will, in the long-run, print its currency into oblivion to pay for its increasing expenditure and existing debt repayments.

In 1971 Richard Nixon removed the convertibility of the United States dollar into gold, permanently severing the link between the reserve currency and the scarcity of gold.

From that moment onwards, fiat currency became just a digital number on a computer, that could be printed at will.

In other words, nothing more than an infinite supply, centralised shitcoin run by a cabal of old people sitting around a table deciding the cost of money eight times a year based on their ‘infinite wisdom’ of the entire complex system of the world.

It’s a farce.

Bitcoin is the fire alarm in a world that has been in a firestorm since 1971, and arguably all the way since 1913 (the creation of the United States Federal Reserve).

When you look at property, you probably see the price tag.

‘Wow, $1.2m for a dirty derelict dogbox in Blacktown.’

But you know what I see?

I see a number that doesn’t make any sense, because it’s being priced in a currency that is in infinite supply.

Even a 4 year old can grasp the basic concept of supply and demand.

If you allow a 4 year old to eat unlimited lollies, over time eventually each lolly has less and less value to them.

Why?

Because there is no contrast.

There’s no constraint.

If it’s always available, it’s not valuable.

It’s like the reverse psychology of trying to get a ball off a dog.

When you walk away and decide you no longer want it, all of a sudden the dog chases after you and in the process drops the ball.

People want what they can’t have.

Scarcity has value.

And bitcoin is the scarcest, most non-confiscable, decentralised, liquid store of value in existence.

And it always will be.

How does property compare?

Well, if we are talking about land, generally speaking, it is scarce - there’s only so much land available.

People across the world, but even more so in Australia, treat property as a store of value - a hedge against inflation - for this very reason.

They buy houses because they think it will keep going up, but what they don’t realise is that they’re measuring it with a currency that is already worthless.

Dogboxes, however, are not scarce.

You are buying literal space in the sky, and run the risk of the building getting concrete cancer, the roof leaking, or the entire block falling over due to poor build quality.

In other words, dogboxes have reasonably high tail risk - you are tying up a lot of money in an asset that might only marginally go up over the long-term, and you might get stung with huge strata fees out of nowhere.

And yet, despite this, I still believe there is a reasonably good chance that Australian property will continue going up when priced in fiat, not when priced in either bitcoin or gold.

My reasons for this are simple:

The government is intentionally implementing demand-side policies to prop up the market.

We just saw they implemented the First Home Buyers Scheme, allowing first home buyers to use a 5% deposit to purchase a property up to $1.5m (Sydney).

We can say with reasonably high confidence that a future iteration of this scheme will enable first home buyers to buy property that is at an even higher valuation, with an even lower deposit.

We can also say with reasonably high confidence that the government will continue implementing shared equity schemes and negative gearing.

I also think it’s quite likely that superannuation is going to become a honeypot for first home buyers too soon - the government will open it up to allow people to yolo it all in property (this is also one of the reasons my super is all in bitcoin - I’ll likely use that to purchase somewhere to live once it’s past $1m a coin).

Now, I’m not saying that property is going to go up forever (although it might).

Because in the long-run it’s actually quite a risky investment here, because the tail risk is enormous.

We are entering the part of the Big Debt Cycle where stuff like capital controls, higher taxation and confiscation become commonplace.

We are also entering a very unstable political period.

This means you should not rule out the very real possibility of increasing land taxes, and other policies that discourage people from purchasing investment properties.

In a similar vein, it is entirely possible (probable, in my opinion) that within 2 election cycles Australia too will have a rise in nationalism.

This means, eventually, mass immigration will stop.

What I am trying to say is that all of these demand side policies - all of these policies propping up the housing market in Australia - may one day stop.

If they stop the market nukes.

There’s also other tail risks, like the possibility that the Australian government, via the RBA, prints so much money in an attempt to stop the property market from collapsing, that the currency collapses (they lose control of the bond market).

When I weigh up these factors for and against property continuing to rise, over the next few years I side in the ‘number go up’ camp, when priced in fiat, because technically property can go to infinity if you are willing to sacrifice both the currency and social stability.

But I do not think it will be a better trade than bitcoin over this same time period.

In fact I think owning property is a terrible decision when bitcoin is so obviously undervalued.

Sure, you could yolo your entire life savings into a mouldy old dogbox to impress your wife, but how impressed is she going to be when you have to move out because the strata fees are too much or the building crumbles?

How impressed is she going to be in comparison to the version of events where you rent, put all your spare capital in bitcoin, and can do whatever you want within 5 ish years when it’s beyond $1m USD per coin?

This is not financial advice, and you shouldn’t treat it as such.

I am simply trying to lay out how I think about the ‘bitcoin or property’ question, because it’s very common.

A lot of this comes down to your risk tolerance, how you want to live your life, how old you are, your family circumstances, what you do for work, etc. So it’s hard to generalise.

But, objectively, bitcoin is the bet to make.

Not just a bet.

It’s the bet.

It’s the bet that can save young people in particular from a life of debt slavery to a corrupt system of bankers and grifters.

Money is stored energy.

You go to work, you do some stuff in a fake laptop job, and in exchange get given some fiat tokens from your idiot boss.

You exchanged the exertion of your labour - your energy - for fiat.

But that fiat is melting, because Central Banks will print it to infinity.

I mean sure, you could buy a dogbox.

You could nab a $1.2m space in the sky.

Upload a nice picture on Instagram bragging about it.

Get 3 likes from your friends.

But is that what you’re living for?

The validation of others who don’t have to live your life? Who aren’t you?

What’s the point of that?

And besides, from a financial perspective, property is not a pure form of stored energy - it’s inflated just like fiat.

And it’s inflated because of its ‘monetary premium’ - everyone believes property is a hedge against inflation so rather than putting their money in the bank where it will be debased even more, they buy dogboxes.

In the long-run, this monetary premium will be eroded away, because bitcoin is better money - real estate will be demonetised against bitcoin.

Bitcoin is the purest form of stored energy.

No one can debase it.

No one can steal it.

You can send it in an instant to anyone, across the world, without permission.

You can flee your country with it in your head.

It is liquid gold.

The same cannot be said about real estate - you’re effectively just leasing land from the government (even if you ‘own’ it), because they can change the laws tomorrow if they want and tax your ownership out of existence.

Many people have Stockholm syndrome when it comes to property.

Their parents bought it and got rich, their friend’s dog’s mother’s cousin has 20 in a portfolio and brags about it every day, the guy at work is leveraged to the tits and has now accumulated 3.

Everyone thinks it’s the best way to ‘make it’.

But it’s not.

Bitcoin is.

You just have to have the knowledge to understand what I just wrote deeply, and the conviction to do something about it.

So next time someone asks ‘should I buy bitcoin or property?’ you have the answer.

It’s all the same trade, but there is one winner.

Bitcoin.