Thread by @paraschopra

Been looking at my historical chats and emails to understand how I thought about #bitcoin.

I think it’s a great way to adjust mental models for the future.

1/ In a 2011 chat, someone said they’re buying $5k worth of bitcoins (when it was $30 per bitcoin).

I told them I think it’s a bubble :)

2/ As per the emails, I and friends were pretty excited about it in 2013.

Understood the technology properly.

We were even cooking up ideas to make bitcoin transactions simple, like a PayPal for bitcoins.

But at $600 per bitcoin, I decided it was overhyped.

3/ Multiple times opportunity arose and I passed up because I believed that even though the technology was really beautiful, the value was hard to pin down and hence at all prices, it seems over-valued.

4/ I think the massive (90% or more) crashes in price eventually hardened the skepticism and I stopped paying attention.

5/ My conclusion is that it’s easy to know something is breakthrough but what’s harder is:

- to know how big it’s going to
- whether that potential is already priced in today in the valuation

I knew bitcoin was big but not whether at $30/bitcoin, it justified itself.

6/ My engineer’s point of view was sharp but investor’s point of view was blunt.

(Another evidence of it is that at parent’s insistence, I had bought real estate, something I now know to be a stupid investment decision)

7/ What’s my current view?

I’m agnostic to whether bitcoin overvalued or undervalued because I haven’t done enough analysis.

My main concern for it is in its contribution to carbon emissions, something that’s counter acted by it’s benefit to people in oppressed nations.

8/ As for the investor’s hat, I think I’m getting better at being able to recognise big breakthroughs early on.

It’s an intellectual challenge too: understanding the curve of technology and how society changes with it.

9/ I expect this drive to assess potential early will help avoid the cognitive bias that over-values the past that has happened (in which a tech is a toy) but under-values the future that’s yet to happen (in which tech is the incumbent).

10/ I recommend everyone to regularly recalibrate their mental models by reflecting on their past.

Ask yourself:

- What did you predict that turn put to be not true?

- How should you adjust to be less wrong in future?

11/ Although remember: in retrospect, everyone is a billionaire :)