+1 386-243-9402 MON – FRI : 09:00 AM – 05:00 PM

In November 2008, Satoshi Nakamoto, the presumed pseudonymous creator, posted a paper on the Internet called, “Bitcoin: A Peer-to-Peer Electronic Cash System”.  The paper described a system where a digital currency, called Bitcoin, could be used to buy and sell goods and services, transfer Bitcoin to others, or just buy and hold Bitcoin as an investment. Currencies such as the U.S. dollar, the Canadian dollar, or the German Deutschmark are called fiat currencies. Fiat money is currency for which a government has declared it to be legal tender for buying and selling. The government also puts its full faith and credit behind the currency. Some people buy foreign currency and hold on to it as an investment, just like stocks, bonds, or commodities. It now appears investors are eyeing Bitcoin similarly.

For Bitcoin, there is no government standing behind it. It is backed by the strength of cryptography and the mathematical algorithm described in Satoshi Nakamoto’s eight-page paper. The use of cryptography led to digital currencies being called cryptocurrencies. The Satoshi paper was published openly so all could read it. If you are interested, you can see the paper at johnpatrick.com/satoshi.pdf. I read the paper in 2013, multiple times. I cannot say I completely understand it, but I understand it well enough to be a believer. 

To buy, sell, or transfer Bitcoin requires having a digital wallet. I acquired mine in 2013 from Coinbase, a San Francisco startup with more than $500 million of venture capital behind it. Late last year, Coinbase announced it would be going public in 2021. I connected my Coinbase digital wallet to my bank account and purchased 2 BTC for $1,125. Disclosure: I am an investor in Coinbase.

Now that I had some cryptocurrency, I was curious about how a Bitcoin transaction would actually work. I found a list of merchants which accepted Bitcoin for payment. The only name on the list I recognized was Overstock.com. The unusually cold weather in Florida in early 2014 gave me reason to look for a long-sleeved shirt. Overstock offered a nice steel blue canvas thermal shirt for $22.99, and I got a 10% discount for opening the Overstock account.

At checkout, I was presented with a number of payment options including the normal credit cards plus PayPal and several other newer payment methods including BillMeLater, RewardsPay, V.me, and Bitcoin. Overstock clearly did not want to lose a sale for a buyer’s lack of ability to pay. The only thing they don’t take is fiat currency. I selected Bitcoin and clicked the Submit Order Now button. I opened the Coinbase app on my iPhone and then scanned the QR code Overstock presented on my Mac. A dialog presented the details: $23.64 purchase price after discount and shipping, which would result in a debit to my digital wallet at Coinbase of .02862804 BTC. One Bitcoin at the time was worth $825.76, and .02862804 X $825.76 is $23.64. I was not sure of the exact timing used to lock in the BTC price and convert the payment to U.S. dollars for Overstock, but I am sure it works for them or they wouldn’t accept BTC.

Now that I could see exactly how it worked, I was convinced Bitcoin was the future of money. I began to purchase Bitcoin every Monday morning for the next three years with no intention to spend any of it.

There are inhibitors to the transition to a digital economy. Not many merchants accept Bitcoin because of the volatility and fees involved. There are also some technical performance issues. Numerous FinTech startups are focused on this. I believe the issues will be resolved.

A little less than seven years after my Overstock experience, Elon Musk announced Tesla would invest $1.5 billion of its idle cash in Bitcoin. More importantly, he announced Tesla would accept Bitcoin as payment for Tesla products and services. I did not think it would take this long to catch on, but it is clear to me others will follow Tesla. The WSJ today reported CFOs are skeptical. Same as 1995 when most CEOs were skeptical of the Internet.

There are millions of digital wallets out there, and I believe there will be many more merchants willing to accept Bitcoin. In 2019, I wrote wallets and merchants would grow dramatically. 2021 is the beginning of the growth. Gemini, an alternative to Coinbase, has announced a new credit card which will give you back 3% on all purchases. The 3% credit will be in Bitcoin. Bitcoin is one of thousands of cryptocurrencies. Most of them will disappear over time, in my opinion. As of this week, Bitcoin represents 62% of the market cap of all the cryptocurrencies. The current value of all Bitcoin is almost $900 billion. This is about 10% of the market cap of gold. The 10% will continue to grow, in my opinion. I hold several other cryptocurrencies in a digital wallet at Gemini including Ethereum (ETH), which is similar to Bitcoin and also appreciating rapidly.

In the summer of 2019, Facebook announced its new Libra cryptocurrency. Some pundits said  Libra would be the end of Bitcoin. I said it was the beginning, a booster. The Facebook initiative could potentially lead to many new digital currency options for consumers. However, the political winds currently blowing make it unlikely to me.

The billions in fees charged to merchants become part of their cost of business and are passed on to the consumer. For highly competitive consumer products, the credit card fee can be more than the gross profit on the merchandise. The inefficiency of credit cards for online commerce provides a strong motivation for the adoption of BTC.

I think of Bitcoin as the Internet in 1995. Is it any wonder that Jamie Dimon, CEO at JPMorgan Chase said the question isn’t whether the bank accepts Bitcoin, but rather “The question is do we even participate [with] people who facilitate Bitcoin?” Sound familiar? Music companies 15 years ago decided not to participate with downloadable music. Publishers at the time decided not to participate in digital books. The Internet creates disintermediation industry by industry. Look at what Internet streaming is doing to Cable TV. Do you think people will continue to pay $150 per month for 500 channels of content, only a handful of which they watch? Healthcare is not excluded from disintermediation either. I now get my medications from Amazon Pharmacy. It is way more convenient than traditional pharmacies.


  1. Bitcoin operates over the Internet with a secure distributed database called a blockchain. I did not discuss blockchain in this article. There are 54 articles on johnpatrick.com I have written since 2013. Some are just mentions in the weekly news blurbs, but there are a number which explain blockchain and how it works. You can find them here. Another source of information is Election Attitude – How Internet Voting Leads to a Stronger Democracy. In this book I described how a Bitcoin Blockchain could be used for mobile voting and other civic applications.
  2. I did not comment on the rise of the price of Bitcoin from less than $100 to nearly $50,000. Pundits have various forecasts. The Crypto Research Report has predicted Bitcoin will be worth $397,000 in 2030. A major Tesla investor has predicted Bitcoin could be worth more than $1 trillion in under 10 years. Other pundits forecast Bitcoin will be worth zero. Poof. I have no doubt a financial revolution is underway. What is my forecast for the price of Bitcoin? I don’t have one. When asked by friends whether they should invest in Bitcoin, I say only if you are prepared to lose it all.
  3. Related areas of investment include DeFi and FinTech (decentralized finance and financial technology). I expect these two areas to lead the way to more modern banking, payment, and insurance technology.