SPECIAL REPORT
bitcoin is gone forever. Thomas’ saga has led to a brand-new crypto-related phobia, which I like to call “fear of missing password” (“FOMP”). Thomas and Howells are not alone. In early January, the New York Times reported that 20% of the 18.5 million bitcoin in existence have suffered the same fate as their lost cryptos. I am 100% certain any bitcoin I buy would end up in the bottom of a dump or lost on some scrap of paper along with my Walgreens-prescription password. And I don’t think I’m alone... That’s why I think 2021 will be the year of the “Backdoor Bitcoin.” Folks are desperate for ways to get in on the bitcoin action without weird wallets, passwords, and priceless hard drives. Wouldn’t it be great if there was a way to buy bitcoin with one click, right there in your online brokerage account? Last October, I gave a presentation on the various backdoor options for those of us blockchain-averse folks suffering from FOMO and FOMP. A company called Grayscale has a few funds that may help us out. There’s the Grayscale Digital Large Cap Fund (GDLC) which offers shares, each backed by a basket of five of the top cryptos on the market. The Grayscale Bitcoin Trust (GBTC) provides the same service for those who want to focus on bitcoin exposure. Grayscale also has a menu of “single asset” products for those of you looking to invest big-time money, and are willing to pay 2% to 3% annual fees.
There’s also a company called MicroStrategy (MSTR), a moderately profitable software company whose eccentric founder – a guy named Michael Saylor – is a bit of a crypto crazy. Over 30-plus years, MicroStrategy’s software business had built up a cash hoard of $500 million. Throughout the fall of 2020, Saylor converted MicroStrategy’s entire cash hoard into bitcoin. In December, MicroStrategy actually borrowed $650 million, with the express intent of turning that cash into bitcoin. To date, Michael Saylor has spent $1.1 billion of MicroStrategy’s money buying up bitcoin. Today... that bitcoin is worth nearly $3 billion. And MSTR shares are up 300% since my October presentation. To my knowledge, MSTR is the only one-click, fee-free way to get access to bitcoin. (Oh, and you also get a piece of a cash-generating, if somewhat stagnant, software company.) But before logging in and clicking “buy” on one of these backdoor bitcoins... there’s one more thing to consider. Make sure you understand what you’re getting for your money. Would you ever put up $100,000 to buy a 50% share of a house worth $150,000? No... that doesn’t make sense. You would be paying $100,000 for something worth $75,000... that’s a $25,000 asset premium. I’m not about to give you a tulip-bulb lecture or articulate all the reasons bitcoin believers are crazy.
American Consequences
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