Kris’ note: In today’s Dispatch, we publish a conversation with colleague and investment expert Nick Giambruno. Nick is the chief analyst of Casey Research’s flagship advisory, The Casey Report and its premium Crisis Investing advisory.
In his premium investing service, Nick has helped his readers to take profit gains of 170%, 214%, 406%, 996%, and even 2,123%. Of his current open positions, the best-performing are up 326%, 409%, and 1,122%.
Nick writes about geopolitics, investing in crisis markets, the global cannabis market, international banking, second passports, surviving a financial collapse, and the rise of bitcoin.
He has lived in Europe and worked in the Middle East, including in Beirut and Dubai, where he covered regional banks and other companies for an investment house. Nick is a frequent speaker at investment conferences around the world.
In a recent conversation with Nick, by phone from his home in Argentina, we discussed bitcoin and its place in the financial world. The following is the first of a three-part transcript of that conversation. Read on, and then tune in over the next two days for parts two and three…
Dispatch: Nick, you’ve written a lot about bitcoin, especially from the monetary side of things. In fact, I’d argue that you’re one of the smartest guys around when it comes to understanding bitcoin’s current and future place in the world. But tell our readers, when and how did you first learn about bitcoin?
Nick Giambruno, chief analyst, Crisis Investing: I first heard of it in 2010, so that was early on. The bitcoin white paper was only published in 2008 by Satoshi Nakamoto, with the first block of bitcoins rewarded in January 2009. But like most people, I didn’t fully grasp what it was until years later.
To me, the more relevant question is, “when did you realize what bitcoin really was – a credible technology that renders central banks and fiat money obsolete?”
Once you see bitcoin for what it is, understand exactly how it works the way it does, and the revolutionary implications of it all, it’s impossible to “unsee” it. That’s what Bitcoiners call getting “orange pilled.”
Dispatch: By that you mean it’s about seeing how the system really works – the truth – right?
Nick Giambruno: That’s right. In the early days, it wasn’t easy to understand bitcoin. It required broad knowledge of several different fields to piece it all together, including computer science, cryptography, monetary history, and free-market economics.
So it was roughly about eight years later, in early 2018, that I finally put it all together to see the big picture.
Dispatch: How did that happen? Was there a kind of “Aha!” moment where everything clicked?
Nick Giambruno: In a way, yes. It was a book called The Bitcoin Standard: The Decentralized Alternative to Central Banking. It was the single most important resource that “orange pilled” me – and millions of others worldwide. The author, Saifedean Ammous, writes from a staunch free-market Austrian economics perspective and in a way that anyone can understand.
[Note: Austrian economics, or the Austrian School, is a free market theory of economics that originated in late 19th-century Vienna. Over time, some of the leading thinkers in that school were Carl Menger, Ludwig von Mises, Friedrich Hayek, and Murray Rothbard.]
It was so influential, that after reading the book, MicroStrategy CEO Michael Saylor bought over $2.7 billion worth of bitcoin.
I was fortunate to be an old friend of Saifedean Ammous. We met back in 2009 in Beirut, Lebanon, while I was working for an investment bank there. That was long before he went on to write the most influential bitcoin book in the world.
So I was one of the first people to pick up Saifedean’s book when he released it in early 2018. As I say, finishing that book was my “orange pill” moment. That’s when I realized that bitcoin truly has the potential to be a “central bank killer.”
Dispatch: I think I know the answer to this already, but what was it about bitcoin that first attracted you to it?
Nick Giambruno: [Laughs] Sometimes you can judge people and things by their enemies.
Dispatch: True, true.
Nick Giambruno: The fact that the first reaction of governments, politicians, the mainstream media, Wall Street, and academia was to hate and disparage bitcoin… that was what initially attracted me to it.
I figured (and still do) that if these horrible people with ethical aberrations disliked it so much, there had to be something worthwhile there. So right off the bat, bitcoin attracted me from a philosophical standpoint.
Dispatch: Okay, that was your first impression of it. Has your view about it changed since then? For instance, are there things you now appreciate about it that you perhaps overlooked at first?
Nick Giambruno: Yes, of course. I’ve become much more enthusiastic about bitcoin. At first, I thought it was an interesting new technology that appeared to annoy the right kinds of people. Later, I realized that bitcoin is a credible alternative to central banking and fiat money, arguably the most destructive institutions on the planet…
Dispatch: That’s a big statement, “the most destructive institutions on the planet,” can you explain that more?
Nick Giambruno: Central banking and fiat money only exist to steal time and money from the people and redirect it to the politically connected. Time and money represent life, so they are in fact stealing your life.
Any honest assessment of the situation would reveal that fiat money and central banking are tyrannies of historic proportions, like feudalism and slavery.
Bitcoin can give monetary sovereignty to the individual and render central banks and their colossal frauds obsolete. That’s no small accomplishment. That’s why they are so threatened by it. It’s a historical development that profoundly alters the status quo between the rulers and the ruled. It’s similar to the inventions of gunpowder, the printing press, and the internet.
That’s why bitcoin is the most political of all assets.
Dispatch: What do you mean by “political”? You don’t mean as an election issue, right?
Nick Giambruno: No. By “political,” I don’t mean an inconsequential wedge issue that partisan hacks bicker over. I mean that bitcoin goes straight to the heart of the issue of who gets to control whom and on what terms. It has the potential to usher in a revolution in money and human freedom.
Looking at bitcoin through the prism of gold was also helpful.
Dispatch: I’m glad you’ve mentioned gold. Because there are many gold investors who have also become bitcoin investors. Many others who have ditched gold entirely and now only invest in bitcoin. And others who steadfastly refuse to accept bitcoin as comparable to gold. It sounds like you’re in the former camp, right?
Nick Giambruno: Right. I was – and am still – a huge fan of gold because I’m interested in money. Money is a good, just like any other in an economy. And it isn’t a complex notion to grasp.
It doesn’t require you to understand convoluted math formulas and complicated theories – as the gatekeepers in academia, media, and government mislead a lot of folks into believing.
Understanding money is intuitive and straightforward. Money is simply something useful for storing and exchanging value. That’s it.
For over 2,500 years, gold has been mankind’s most enduring form of money. Gold didn’t become money by accident or because some politicians decreed it. It became money because countless individuals throughout history and across many different civilizations subjectively came to the same conclusion: gold is money.
It resulted from a market process of people looking for the best way to store and exchange value.
So now I know your next question: why did they go to gold? What makes gold attractive as money?
Dispatch: [Laughs] Hah! You got it. Go on, explain.
Nick Giambruno: Here’s why. Gold has a set of unique characteristics that make it suitable as money.
Gold is durable, divisible, consistent, convenient, scarce, and most important, it’s the “hardest” of all commodities – in other words, the one that is most resistant to inflation. Hardness is arguably the most important characteristic of a good money.
It means something is hard to produce and therefore cannot be easily inflated by anyone, which helps make it a good store of value – an essential function of money.
Bitcoin shares many of gold’s monetary characteristics – especially its resistance to inflation. That is what initially attracted me to it. Like gold, bitcoin does not have counterparty risk. Bitcoin and gold are the only primarily monetary assets that aren’t simultaneously someone else’s liabilities.
Here’s the bottom line.
Bitcoin is a hard money monetary system that is accessible to anybody and controlled by nobody. It works in the real world, and it solves one of mankind’s biggest problems: storing and exchanging value reliably. That’s why I find bitcoin interesting and recommend everyone hold some.
Kris’ note: Tune in tomorrow where Nick explains bitcoin’s path to becoming a mainstream asset, and where we challenge Nick’s assertion that there will be an increase in major U.S. companies adding bitcoin to their balance sheets. We won’t reveal his response here… but just know that he set your editor straight to explain why it would happen.