It is important to challenge convention. I have had countless questions from people on bitcoin and crypto lately. Sort of reminded me of the above. Perhaps the golden rule of investing doesn’t lie in complex models and sci-fi scenario analysis but the simple question of whenever an overwhelming majority think something is great, it is time to take the opposing view and vice versa. I haven’t been in a taxi yet to confirm Bitcoin is overdone. As I put it – gold needs to be dug out of the ground with effort. The thing that spooks me about crypto (without trying to sound conspiracy theorist) is that state actors (most top end computer science grads in China end up working in the country’s cyber warfare teams), hackers or criminal minds (did you know 70% of top end computer science grads in Russia end up working for the mob (directly or indirectly) the value of coins in the system could be instantaneously wiped out at the stroke of a key. We’ve had small hiccups ($280m) only last week. So as much as the ‘security’ of these crypto currencies is often sold as bulletproof, none of them are ‘cyberproof’.
Think of why your Norton, Kaspersky or Trend Micro anti-virus software requires constant upgrading to prevent new threats trying to exploit new vulnerabilities in systems. We need only go back to the Stuxnet virus of 2010 which was installed inside computers controlling uranium centrifuges in Iran. The operators had no idea. The software told the brain of the centrifuges to spin at multiples faster than design spec could handle all the while the computer interface of the operators showed everything normal. After a while the machines melted down causing the complete destruction of the centrifuges which were controlled from a remote location.
So much in life is simple. Yet we have lawyers writing confusing sentences that carry on for pages and pages, politicians complicating simple tasks, oil companies trying to convince us their additives are superior to others and so on. The reality is we just have to ask ourselves that one question from Mark Twain,
”It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”