Bitcoin in the Doldrums? Sherlock Holmes to the Rescue!

I was listening to an interview with investment legend Bill Miller. It's a long interview, but well worth a listen. Miller is very good at explaining complex issues in clear, easy to understand terms. I'll link to the interview at the bottom of this article.

One thing I like about Bill Miller is his use of metaphor and analogies to put points across. He likens Bitcoin to the wheel. Once you have invented the wheel, and perfected it, no-one needs to re-invent it.

Silver Blaze

The thing that especially caught my interest was an analogy he made between Sherlock Holmes and Bitcoin. In the short story 'Silver Blaze', Sir Arthur Conan Doyle's fictitious detective is called in by Scotland Yard to investigate the disappearance of a champion race horse. Holmes conducts his investigation, and declares that the key to solving the mystery lies in the behavior of the dog that was guarding the stable the night the horse disappeared. The dog did not bark. This means the dog knew the thief.

Okay, that's all well and good, but what does any of this have to do with Bitcoin?

Venture Capitalists

Bill Miller said there is a group of guard dogs who are conspicuously not barking at Bitcoin. These are the Venture Capitalists. Their job is to look at new technology. To understand it. To assess its strengths and weaknesses. The potential risks of investing in it. Venture Capitalists have a thorough understanding of the way Bitcoin works, its proof of work consensus mechanism, how the blockchain functions, why and how the supply is capped, and so on. To the best of Bill Miller's knowledge, not one Venture Capitalist has ever publicly said or published anything critical of the way Bitcoin works.

He was talking in the wider context of the common misconception that Bitcoin is flawed, is based on old technology, and has been improved on by subsequent blockchains and cryptocurrencies. This misconception is propagated by people who have a vested interest in seeing Bitcoin fail, or who want to get rich promoting their own centralized, Proof of Stake altcoins. Then it gets repeated by people who listen to them and have no understanding of how Bitcoin works. Warren Buffett and Charlie Munger, staunch critics of Bitcoin, are old. They're not used to new things. Marc Andreessen once said the record of old men, who don't understand technology, crapping on new technologies they don't understand, is 100%.

Bitcoin is the great equalizer. The great leveler. It's a threat to the privileged financial position of the 'rich'. With Proof of Stake, the rich have the most money to stake and can maintain control. With Proof of Work, you have to work for your rewards.

Here is the interview: Betting Big On Bitcoin & Amazon w/ Legendary Investor Bill Miller