This is a message I've wanted to share for a long time with the people holding Bitcoin. I bought my first Bitcoin back in 2014, and to each of you who is holding Bitcoin today, I genuinely care about you and I want you to be successful with your crypto investing. That said, this is not financial advice. I'm not a financial advisor. I want to be completely transparent about my own position before I say anything else: I don't hold any Bitcoin anymore, and I do hold tens of thousands of ICP, which is Internet Computer Protocol. So you know exactly where I stand.
I hear endless talk about Bitcoin's ups and downs: game over, here we go, 1000x. To me, almost nobody is talking about the things that really matter when it comes to Bitcoin.
Almost Every Bitcoin Transaction Goes Through a Third Party
The thing that really matters, the thing I never hear anyone else mention, is that almost everything that happens with Bitcoin, in terms of people buying and selling, goes through a third party. For example, if you go on a crypto exchange like Coinbase and you place an order to buy Bitcoin, you didn't actually do anything on the blockchain. All of that is happening on Coinbase's servers, on their website, and in their databases. And if somebody else then sells you their Bitcoin, very often the Bitcoin itself does not move on the blockchain at all.
This is a huge problem because, from what I see, more than 99 percent of Bitcoin transactions are done through a third party, which means the blockchain itself is almost irrelevant.
Two Paths for the Future of Crypto
What I see playing out in crypto right now is one of two basic paths we can go down. And yes, there can certainly be overlap between them. Path number one is the path we seem to mostly be on today: a future where centralized entities hold everything for you. I believe this is very bad, because of what can happen when centralized entities are handling 99 percent of Bitcoin transactions. They can sell fake Bitcoin. And it seems to me this is already happening a lot. It keeps the price suppressed and keeps the price manipulated.
Let me walk through how this works. Say I have one Bitcoin on the blockchain and I send it to a crypto exchange. If they're an honest exchange, they will not have any sell orders placed for that one Bitcoin until I place a sell order myself. Then, when somebody else buys that one Bitcoin, in an ideal scenario they would immediately take it off the exchange, and the exchange would simply make a tiny transaction fee of one percent or less from the whole thing. You can see how little money that is for them.
Now let's look at a parallel scenario. Even if nine out of ten exchanges are honest and only one is dishonest, let's look at that dishonest one. Realistically, I suspect it's more like two out of ten, or maybe five or six out of ten. I put one Bitcoin on the dishonest exchange. As soon as I deposit it, they put a sell order in themselves. Maybe they put two or three sell orders in. I don't even sell mine immediately, because I'm just holding it on the exchange. But they sell $300,000 of Bitcoin the moment I deposit one Bitcoin. Now you've got three people holding fake Bitcoin. Then I place a sell order for mine, and a fourth person buys it. The exchange has now collected $400,000. I take my $100,000 out and get it back in the bank.
So far, everybody thinks everything is fine. But now you have four people who all believe they each own one Bitcoin, when really there's only one actual Bitcoin on the exchange. As long as none of them withdraw it, there's no problem. Even if one person withdraws the real Bitcoin, you've still got three stooges holding fake Bitcoin. As long as the exchange can manage its crypto balances, suspend withdrawals when they run out, and avoid getting caught, they can get away with selling fake Bitcoin.
That means when prices are high, they can sell massive amounts of fake Bitcoin, then intentionally dump the price in order to rebuy it cheaper, and then hand people actual Bitcoin when they want to withdraw. Best-case scenario for them: they sell a bunch of people fake Bitcoin when it's high, then buy that fake Bitcoin back from those same people when the price is low. They literally never even had the Bitcoin, but they make huge profits trading something they don't actually have.
Why the Bitcoin Blockchain Itself Has Become Almost Irrelevant
This is the state of Bitcoin today as I see it. I've spent these minutes on it because the core of my message to Bitcoin holders is this: the actual Bitcoin blockchain has become almost irrelevant, because the technology that powers it requires you to interact with third parties. Whether it's downloading the Bitcoin Core wallet and trying to interact with the blockchain using it, which is a hot wallet that can be hacked, or whether you're using a Ledger, which is a third-party device that interacts with the Bitcoin for you, a device that you didn't build and that could have backdoors. All the other devices basically have the same kinds of problems.
Then, when you actually look into the Bitcoin blockchain itself, there's a handful of mining pools and companies that own two thirds or more of all Bitcoin mining. All the narratives I see about how decentralized the Bitcoin blockchain is just don't hold up when you research the hash rate yourself. It looks totally centralized to me. If you combine Foundry USA, Antpool, F2Pool, and one or two others, you'd have total control of Bitcoin mining. You could censor transactions. You could block by country or by address. You could do almost anything. Only five or so people would have to collude across these pools and companies to gain total control of the Bitcoin blockchain.
On top of that, if you look at the Bitcoin supply on the blockchain itself, it's incredibly centralized. A tiny, tiny number of addresses, less than one percent, hold the majority of Bitcoin today.
Bitcoin Can't Be a World Currency Built on the Old System
What I'm saying to everybody holding Bitcoin today is that I think there are better opportunities. I honestly can't see how we go forward and have Bitcoin succeed in the reality of today's environment. People talk about Bitcoin becoming a new world currency, but that's not going to work if it operates on the same basic principle as the existing financial system: centralized third parties holding everything for you. It doesn't really matter whether those centralized third parties are holding US dollars, Bitcoin, Ethereum, or stocks, because you don't have control of it yourself.
So the second alternative future I see is one where we get technology that lets you actually interact with the blockchain yourself, participate in governance yourself, and self-custody everything yourself, where you truly don't need any middle people between you and the blockchain. With Bitcoin, you have to have people between you and the blockchain. And in my experience, every other crypto besides Internet Computer Protocol has the same problem.
There's an alternate future where Internet Computer Protocol actually serves as the best Bitcoin layer too. The only way I see Bitcoin getting used directly on-chain, without totally relying on centralized third parties, is through the Chain Key Bitcoin technology that's on Internet Computer Protocol right now. And why do you think there hasn't been much hype or support for that? Because the centralized entities holding all the Bitcoin don't want you to find a decentralized version of it, one where you could send instant transactions for almost no fee.
Earlier this year I gave away $1,000 of Bitcoin to 1,000 people. I had a guy at an AA meeting recently ask me, "Can you make something showing how I could send $10 of Bitcoin from one person to another?" And honestly, that's shockingly difficult to do with Bitcoin. But you can do it easily on ICP.
So the second way I see things playing out is where we get technology that truly cuts out crypto exchanges, banks, and third-party wallets like Ledger, MetaMask, and Coinbase Wallet. It doesn't matter which one, they're all third-party wallets that sit between you and the blockchain. The original vision for Bitcoin was amazing: to cut out the middle person, whether that's a government or a bank getting in between you and me in a transaction. But the reality today is that Bitcoin has been relegated entirely to the realm of third parties taking it over.
Why I Personally Don't Hold Bitcoin Anymore
The way I see Bitcoin today, it's almost totally controlled by centralized third parties: banks, institutions like ETFs, and third-party wallets that have backdoors and could potentially transact your Bitcoin without your permission. If you lose their device, you're totally beholden to them, because you need their device to interact with the Bitcoin blockchain. You don't even really have control of the coins yourself.
So I have a serious concern about whether Bitcoin is viable long term. I don't personally see any reason I would hold Bitcoin right now, because it's become driven purely by narratives. It's become almost like a meme coin. And the problem is it's already too valuable. If Bitcoin had a $100 billion market cap, that would be one thing, and I was in it back then. But the price is far too high now. This is not financial advice. Bitcoin is already worth as much as some of the most valuable companies on earth.
To me, there are so many risks and so many ways things can go wrong: crypto exchanges manipulating prices, more and more institutions selling potentially fake Bitcoin and then going bankrupt again and again. Then there's quantum computing. It looks like the Bitcoin blockchain will have to be upgraded, and some of the old wallets will be very vulnerable to quantum computing, and I don't see a clear way to upgrade them.
So in my view there are tons of risks with Bitcoin, and I see very little upside. The more upside there is, the more lucrative it becomes to sell fake Bitcoin. When the price is low, it's not as lucrative. When the price goes higher, more fake Bitcoin can be sold, and the more the price will have to come back down so these third parties can rebuy the fake Bitcoin from their own customers. To me, this is a no-win scenario at this point.
Now, I think Bitcoin was an exceptional buy at $170 when I first bought it. I stacked it all the way up to $17,000, sold, and made hundreds of thousands in 2017 and 2018 in crypto. I didn't hold any Bitcoin for a while after that. Then I started stacking it again around $16,000 and made more money on the way up. But where it's at today, I just think Internet Computer Protocol is so far superior in almost every way. With Bitcoin, you don't make any money unless the price of Bitcoin goes up.
Why I moved my money to Internet Computer Protocol
On Internet Computer Protocol, in my experience you can earn around 13% APR, either by staking it directly in the Network Nervous System or by running it through something like Water Neuron, which I have tutorials on. So I understand the hesitation. Someone will say, "I have a thousand ICP, but I'm not ready to sell my BTC." And then the Bitcoiners will argue that ICP isn't decentralized and that DFINITY has too much control of the network. Those are valid points, and I want to acknowledge them honestly.
But here's the thing. Did you hear what I just said about how things are actually happening with Bitcoin today? Whatever you think of the decentralization of the Bitcoin blockchain, I don't personally see any meaningful decentralization of it today. The mining is not at all decentralized. It is massively energy wasteful. By my own calculations, Bitcoin mining uses about a million times as much energy as Internet Computer Protocol does to perform the same amount of productive computation. It is incredibly wasteful in terms of computer equipment too. And despite all of that energy, it still isn't decentralized.
As I said, there are roughly five mining companies and pools that control around two thirds of Bitcoin mining, which is enough to take it over completely. The Bitcoin supply itself is not meaningfully decentralized either. Almost all of it is held by centralized third parties, and almost everybody transacting it is holding it with centralized third parties, which brings back every problem I just described.
What Bitcoin really has going for it
So while you can argue there are issues with Internet Computer, the technology is so far advanced past Bitcoin that, to me, the only thing Bitcoin really has going for it today is the marketing, and essentially the meme or the cult of Bitcoin. That, to me, is the number one thing it has going for it. The reality of the Bitcoin blockchain and how it's being used today is ugly, as I see it. The decentralization of the blockchain is meaningless and barely seems to exist, and everybody is just going through third parties and letting their coins sit in third-party wallets. This is not a new world currency. It's more of the same of what we already had.
I hope that if you're holding Bitcoin, you can let this message sink in and really think about it. I'm not telling you what you should buy or what you should sell. That's not my role. But I do believe you should be very aware of the realities of anything you are holding. If I've said something here you didn't already know about Bitcoin, I'd encourage you to look it up right now. Verify it. Is it true that there are only about five mining pools and companies that own the majority of the hash rate? Search "Bitcoin rich list" and see whether it's true that less than 1% of holders own the majority of the supply. Is it true that the vast majority of Bitcoin transactions don't even touch the blockchain because they go through third parties? In my view, you should know that information before you decide where your money sits.
Why I sold all my Bitcoin
For me, all of that means I don't want any Bitcoin. I don't want to invest my money in this, and I don't want to support it anymore. I've come to believe its time has passed. That's why I sold all my Bitcoin a year and a half ago and moved into Internet Computer Protocol, because in my view Bitcoin's time has come and gone. The time to buy Bitcoin was ten or eleven years ago, when I bought it. Today, I'd go so far as to say it has become a centralized system, almost a Ponzi-like dynamic where a whole crowd of people are simply holding it and, in many cases, selling fake or paper Bitcoin. There's almost no useful technology there for humanity, and almost nothing the regular person can actually benefit from.
I share this message because I'd genuinely love to offer constructive feedback if Bitcoin is in your crypto portfolio. I'd encourage you to take the time to digest it. Think about it. Don't take any impulsive actions. And consider honestly: is Bitcoin the best place I could possibly have my money invested, both in terms of making the world a better place and in terms of getting a return on my investment? Would you be happy holding Bitcoin if the price didn't move for ten years? At this point, the way I see it, that is a very real possibility, or that it only moves a little.
With Internet Computer, if the price doesn't move for ten years, I'll still earn 13% every year. With Bitcoin, if the price doesn't move, you're literally sitting there earning nothing, and boredom and fatigue will eventually push people to sell. If you want to go deeper on how I think about all of this, I put together my Money playlist where I walk through these ideas in more detail. I appreciate you taking the time to read this and to think it through with me.