Obi Nwosu is the CEO and co-founder of Coinfloor, the UK's longest-running Bitcoin exchange. He has over 20 years’ experience building online marketplaces and bringing virtual currencies to tens of millions of people.
They say that once we’re out of this coronavirus crisis, nothing will ever be the same again. But I can guarantee that at least one thing won’t change in the PC (post-corona) future: people will continue to act against their own financial interests.
That’s not meant to mock anyone. It’s just how the system is set up. We all know it’s difficult to get rich, but not many people realize how economic actors - like certain businesses - have an active interest in keeping people poor. They don’t want people to experience grinding poverty (how else would we afford to buy their goods and services?), but they do benefit from us spending our money on items that don’t hold value.
While the world’s governments have reacted to Covid-19 with pseudo-socialist policies that would have made Marx and Lenin blush, the goal of every country is to return their economies to the status quo. And that means going back to limitless opportunities for ordinary people to lose money. Unless, of course, they discover the secret that every wealthy person knows.
Western society is practically defined by hyperconsumption and ultra-materialism. Turn on the TV or walk down the street and you’re assaulted by ads for everything from hamburgers to dishwashers. But of all crony capitalism’s insidious tricks, perhaps the biggest one is to make us believe that corporations want us to own things. In fact, most businesses couldn’t care less what we have; they just want us to spend.
And spending is what keeps us poor. Or, rather, it is spending on liabilities - things that don’t store value. From the car that loses half its value the moment you drive off the forecourt, to the disposable items with which we fill our shopping trolleys: the constant cycle of earn-spend-consume-repeat is designed to take money out of your pocket and put it in businesses’ bank accounts.
The flipside is that you get rich by eschewing frivolous spending and instead investing in things that store value most effectively. That’s hardly a seismic revelation: economists from Adam Smith to Thomas Picketty have all made the same point. But how can ordinary consumers identify those stores of value that will prove winners in the long run?
When it comes to the financial world, it’s easy to succumb to cynicism. But the truth is that a little idealism, a bit of belief, is crucial for developing a sound investment philosophy.
Take stocks and shares. People don’t get rich by playing the stock market; they treat it like a full-time job, analyzing trends not just in the market but in politics, society, and even sociology to identify the next great growth opportunity. Successful long-term investors don’t make bets: they take finely judged risks based on in-depth research and - yes - on belief in those businesses or assets.
That’s why I’m not going to sell you on the benefits of Bitcoin. Not that it isn’t an incredible store of value - one I believe in so much, I based my entire business upon it. It’s because people don’t get rich by following someone else’s stock picks or investment guidance, but rather by developing their own philosophy that’s guided by knowledge and passion.
The more I’ve studied Bitcoin, the more passionate I’ve become. I learned how the world’s first cryptocurrency emerged in response to people’s distrust of central banks in the wake of the 2008 financial crisis. I noticed how society and communities are trending away from centralisation and remote control towards the multiplication of communities and self determination.
Moreover, I discovered that for every one of Bitcoin’s supposed flaws - like its incredible volatility - there’s a solution. (In the case of volatility, the simple and elegant response is to buy regular, small amounts so that your investment tracks long-term trends, not the market’s day-to-day peaks and troughs.)
But do I recommend you choose Bitcoin as your store of value? Absolutely not. This article isn’t a guide to getting rich quick - or even slowly. Instead, I hope it’ll impart something infinitely more precious: an understanding of the importance of developing an investment philosophy; in particular, one that’s based on thorough and independent research.
It may be that you’ll make your first million in any number of ways: through Bitcoin, perhaps, or by buying gold, or investing in online grocers or hand sanitizer manufacturers. But if you succeed, it won’t be because you followed a tip - it’ll be because you developed an intimate understanding of, belief in, and passion for your investment. Get your philosophy right, and there’s no reason why your financial life need ever be the same again.