Open Letter to Vivek Kaul on his Misconception on Bitcoin Fundamentals

Vivek Kaul is a learnt man, but it is unfortunate to see his article on Bitcoin without any artifacts or metrics to prove that Bitcoin is in a bubble territory. If number goes up doesn't mean that an asset class is in bubble. I would like to prove his points are not true with data. Also it is unfortunate to call the people who believe in particular asset class as bhakts. We don't call Stock market traders as “Bhakts”, nor we call gold bugs as “Bhakts”. Everybody invests in something that they believe has value. We also believe that Bitcoin has value and so we invest in it and we have all rights to do it.

The article written by Vivek Kaul was not backed by any data. If you want to prove something then it should be backed by data and metric. You cannot call an asset class as a bubble without proving it with real time data.

Below are the 10 points negating his view on Bitcoin with data :

1. Bitcoin is never god, religion or parents to its believers. Bitcoin doesn't have any central authority or gold-like cult image sitting at the center to worship. It is a decentralized movement like our Freedom fight. Here anybody can join this movement and this movement is against the mismanagement of central government monetary policy. It is against “Money Printing”. Nobody is forcing you to invest, it is only sad to see people ignore to understand the fundamentals of Bitcoin even in 2021 after it has passed 3 halvening cycles. We don't call Bitcoin to be the best, there will be other technologies that will take over, but it is more transparent and anyone can audit its code and monitory policy. It is immutable and censorship resistant. These qualities makes it the best for now. If any of these fundamentals change then it is worthless.
2. Even after two decades in finance, you are not able to assess if a particular asset class is in Bubble or not. Your understanding on Real Estate is also wrong. Every asset class will go through its own market cycle. Real estate will also go through bull cycle in coming years and currently it is in bear market or accumulation stage. There is no believers in Bitcoin, since everything in Bitcoin can be audited. There is difference in Believing and Accepting. We accept it due to its strong fundamental values after analyzing its code ourselves. In Bitcoin world we call it “Don't trust, Verify”. It means that don't blindly believe or trust something just verify it with code.
3. Nobody said that fiat money is going away anytime soon. Fiat money will co-exist with Bitcoin. Also note that money is people believe in something that has value, fiat is in existence only last 100 years and it can change. People used Copper coins,Sea shells, Gold as currency before fiat’s existance. Fiat is embedded in our minds because in our lifetime we have seen only fiat and nothing else. We are just choosing censorship resistant,Immutable,unconfiscatable and deflationary currency so that our hard earned money doesn't loss its value over time due to insane money printing. We use day to day payments in fiat and save our money in Bitcoin. Bitcoin encourages us to save due to its limited supply over infinite fiat currency. Bitcoin and Gold are good options to preserve our values over time. We never said Bitcoin will take over the world, it is just another asset class, in which people should have some exposure. That's all.US Dollar is not going away for now, but it will export inflation to other developing nations. So people in developing nations should adopt Bitcoin to save their hard earned money.
4. You don't have to buy from centralized exchanges, you can buy from P2P exchanges without giving away your identity. There are techniques like Bitcoin mixing where the users mix their coins to remove their identity attached to their coins. So privacy is restored and your coins cannot be back tracked to your identity. But why do you need to worry about privacy when you are good citizen paying your taxes properly and using only legit money. Also you mentioned that Bitcoin is used for drugs,money laundering and other illicit activities. Only fools use Bitcoin to expose themself in public blockchain about themselves. The ledger is public and anyone can track the coins where it is moving. So it is not good for illicit activities since it is transparent.
5. Here only your understanding on Bitcoin is totally wrong. Bitcoin is not payment method like paytm,paypal etc. Blockchain is slowest and inefficient payment network in the world, it take 10 minutes for one block to be discovered. If you want faster payments then it will centralized but for decentralized and cenzorship restant qualities you can only use inefficient blockchain technology. For faster payments you can use paypal,paytm and netbanking. All those use central databases to process, so it would be much faster. Bitcoin is a currency that is immutable,deflationary,cenzorshop resistant with finite supply. Bitcoin is slow and it can only handle few transactions, it is not used for payment but it is final settlement layer to move billions in dollars across the globe. It is a currency that promotes savings and cannot be confiscated by government unlike fiat where overnight you money can be made worthless like our demonetization. It is used to protect against banks which can put negative interest rates to erode your hard earner money. Bitcoin is used to protect yourself from hyperinflation caused by insane money printing. Bitcoin is not medium of exchange but “Store of Value”.
6. Bitcoin is not used as payments, it is used as “Store of Value”. Many corporates and family offices allocate some % of their portfolio in Bitcoin since they feel that US dollar is losing its value faster and they have to protect their wealth against inflation. Bitcoin is volatile because it is new asset and it in price discovery mode. Many stocks are volatile and even crude oil went negative, all assets are volatile in nature and nothing is static. Bitcoin volatility will come down when its marketcap is in several trillions.
7. “Have Fun Staying Poor” is used to enlighten people that what they hold will lose its value very fast due to inflation and so they have to protect their holding by investing in deflationary asset like Bitcoin. Bitcoin is used to preserve your capital and also protect your wealth. If you have understood “Stock to Flow” ratio then you will understand that the price rise after every halvening cycle is not speculative but driven by supply-demand metrics. It is supply-demand that is driving up the prices and not mere speculation. You can follow PlanB to understand stock to flow ratio.
8. Nobody asked people to put all their eggs in one basket. You should not allocate more than 5–10% of your portfolio in Bitcoin. Even hedge fund managers are allocation only 5–10% of their portfolio so they wont take their money out, since they will only lose 5–10% if the price goes down.
9. Bitcoin is money, not mobile phones. It doesn't change. It is immutable and it is “Digital Gold”. There are other blockchains for other purpose or functionalities, but none has properties like Bitcoin as currency. Bitcoin is the hardest money man has ever created. It also can be moved across borders so easily by just memorizing your seed phrase.
10. Bitcoin was not intended to replace fiat currency. It is only “Store of Value” used to preserve your wealth. You cannot categorize an asset class as “Bubble” only because its value is going up. Even real estate and stock prices 10X or 100X and we don't call it a bubble. Also every new asset class or innovation starts with being speculation and then moves into mainstream to become day to day commodity. Same happened to Television,Internt,Mobile phones etc. You need to read the book “Bitcoin Standard” by Saifedeen to understand the fundamentals of Bitcoin better. Bubble/Tulip mania pop only once, it doesn't pop every 4 years.