If by Bitcoin

By Johann Colloredo-Mansfeld of VERDAD

If, when you say Bitcoin, you mean the currency of hackers and scammers, the environmental scourge that pollutes our air and water, the greedy monster that dethrones reason, promotes speculation and gambling, yea, literally takes the bread from the mouths of little children, then certainly we are against it.

But if, when you say Bitcoin, you mean the foundation for a new financial system that is impartial, equitable, and universally accessible, a model for property rights on the internet, a miraculous combination of game theory and cryptography that will bring to an end the rent-seeking behavior of financial middlemen, then certainly we are for it.

Noah “Soggy” Sweat, Jr. originally delivered the “If-by-whiskey” speech in 1952 on the subject of whether Mississippi should continue to prohibit or finally legalize alcoholic beverages. Today, the speech offers a humorous parallel to the world of Bitcoin, where it would seem that the value of the technology often seems contingent on the listener’s opinion. Depending on who you follow and listen to, Bitcoin is either a brilliant invention or an outright scam.

Fortunately, as quantitative investors, we can dispense with the controversy of narrative-based perspectives and consider Bitcoin as we would any other asset: does Bitcoin offer attractive returns and diversification for investors, and, if so, can these returns be forecast? Read More