 This particular thing is called unit bias. It's a well-known cognitive bias and is studied in psychology from a number of different perspectives. It's not just the I want to own one Bitcoin. It's also the if you give me a 24 ounce cup of soda, I'm going to drink the whole thing just because it comes in that size. Bitcoin is hot stuff. Amidst this current bull market, we've seen a rush of new users who, like most new users, sort of have no clue what's going on. And one question in particular comes up a whole lot that I wanted to talk about today. What do I do if I can't afford one Bitcoin? I'm Adam Elavine, and this is Speaking of Bitcoin. Today as always, I'm joined by the other host of the show, Andreas M. Antonopoulos. Hello, Stephanie Murphy. Hi. And Jonathan Mohan. Hey, hey. Thanks to all the hosts and to you, the listener for sitting in on today's session. So I was talking to some people new to the cryptocurrency space last week, and they were talking about what they were looking at making their first coins. And they said that Bitcoin just cost too much, that it was too expensive, that even if they agreed with all of the fundamental values, the changes that'll happen in the world, how Bitcoin is a hedge for that, and that Bitcoin was going to, let's say, 3X or 5X in the next 10 years. And that they saw all of that is real, that they just didn't feel like transferring their wealth into something that they would never have one of, that they would never have one Bitcoin, that even if they spent a decade doing everything they could, they would only ever have less than one Bitcoin as a failure state, as something that emotionally they couldn't get past. And I started thinking about myself when I was in college, first learning about Bitcoin. And honestly, I don't know if Bitcoin had hit $30,000 or $40,000 instead of $1, if I could have seen it as something that I wanted to get into just because of that mountain cliff of believing in something, but then feeling like a failure because you don't even have quote unquote one of it. What do you guys think about that? What do you think people should be thinking about when it comes to that? I think that's an important psychological marker that people check in with when they're thinking about, do I want to buy this? How much does it cost to buy one of this thing? And I mean, the real solution to that is to reframe your thinking. There's other units to measure Bitcoin in. Lots of wallets to nominate their balances in millibits now, which is a 1,000th of a Bitcoin. And you can change that in the settings. And so if you could afford one millibit coin, would you buy that? What about one Satoshi? The units are actually quite arbitrary and it doesn't help that the news and everything reports the price in terms of one Bitcoin, but that is also helpful for a very long-term perspective to see that it went from being worth nothing up to nearly $50,000. Well, there's other things that exhibit similar behavior. For example, some stocks have extremely high unit prices. And of course, you can buy fractions of them. Berkshire Hathaway is a famous example of that. Other things that have this kind of tendency are things like precious metals. You don't say, well, I'm not going to invest in gold because I can't afford a whole kilogram bar. Well, yeah, I mean, you can't. But that doesn't mean that you can't get an earring. It's still gold. It's just a different value. And the unit bias works both ways. So for example, instead of saying, well, I can't afford a Bitcoin, but I can afford a bit, which is a millionth of a Bitcoin. You can afford a bit. And that has a nice name. It's not millibit coin, which kind of makes it sound like a Bitcoin with too many feet. That's a bad Greek joke. It's not a unit that has no relationship. You could also just measure in satoshis because we all know, of course, satoshis are the standard as I keep getting reminded. And you could choose any arbitrary unit, but you could also go the other way, right? You could redefine, for example, 10 Bitcoin as a Chad. You're like, well, very few people can really afford to buy a whole Chad. But could I buy one tenth of a Chad, a Bitcoin or a Desi Chad, as I prefer to call it? All of these things are completely arbitrary. And you can torment yourself one way or rejoice the other in a completely arbitrary way. And this is the key here, arbitrary. It's not rational to focus on any specific unit. And we have a word for things that humans do that deviate from rationality or norm. And those are called cognitive biases. And this particular thing is called unit bias. It's a well-known cognitive bias. And it's studied in psychology from a number of different perspectives. It's not just the I want to own one Bitcoin. It's also if you give me a 24 ounce cup of soda, I'm going to drink the whole thing just because it comes in that size, even though I maybe only wanted half of it. Or if you create a heaping plate of french fries, or if you give me a giant bag of Doritos, I'm going to finish everything. Unit bias has me studied a lot in terms of portions for eating, because it's actually one of the things that drives a number of eating disorders. Because it's a cognitive bias, it's a bug in your ability to think rationally about certain situations. And that bug can lead to behavior that is against your own self-interest. And so this is a normal thing to have unit bias. And sometimes it expresses itself in hilarious ways. Like, for example, to Jonathan's example of people saying, well, I can't buy a whole Bitcoin, you get the opposite, which is people who bought into Doge and are looking at it at six cents and going, yeah, we can get it to a dollar. What's a dollar? Well, allow me to answer that. What's a dollar? What you don't understand, dear sir, is that there are 129 billion Doge, and they are produced at a rate of what is it, 1.4 million a day. And so to get Doge to a dollar, its total market capitalization would have to reach $135 billion, or basically where Ethereum was last week. Now, I don't know how you measure the utility of Doge. And even if you think Ethereum is a shit coin, well, not that bad. So this unit bias can work in really bizarre ways. It not only causes people to think that Bitcoin is expensive, it also causes them to think that XRP or Doge or other coins that are sub-dollar are not only cheap, but that they have the ability to multiply orders of magnitude when, if you do the market capitalization math, it simply isn't true. And that's something that works against the interests of a lot of new investors who don't do that math. I would also point out that there's a lot of psychology about the number zero. There's actually an entire book called zero, which is fascinating. But like as a monkey lizard brain species, we're deeply uncomfortable with the concept of zero and things that are pre the number one. It's a cultural bias. It goes back forever. We don't even count our children at zero. We say, oh, that child's three months, that child's eight months. We never even say, oh, well, zero years old. So it's funny just the natural inclination to fear the idea of zero. And I'm not saying it's rational. I'm saying I would be a part of that community 10 years ago, where if I looked at Bitcoin and I knew that if I put every dollar I had in it for the next five years, I would only ever see 0.25 that I would just be focusing on the zero and not the 0.25. Okay, pet peeve, people who show off their mathematical skill by continuing to count their baby in months long after its first year. No, I'm sorry, Bob. Your kid is not 57 months old. And I am not going to try to divide that by 12. Hey, folks, Adam Yolivine here. This week, we're trying something a little new I want to talk to you about. If you're paying attention to crypto these days, you've probably seen the growing excitement around collectible tokens known as NFTs. As long time listeners will know, we've been talking about these sorts of collectibles since 2014. And it's super cool to see them begin their long journey towards the mainstream. Okay, so a person like Saipan aside, here's what's up. Over the next several months, the host and I will be creating a series of collectible NFT tokens using pictures, sounds, video, and some exciting new stuff too from our early Bitcoin archives. I'm also pleased to share that today we're releasing our very first collectible NFT. It's set up in a no reserve auction over at the rareable marketplace. You'll find the item link in the show notes of this episode. So you can check it out and place a bid or let us know what you think. And now back to the show. So another side of this whole numbers thing is, I mean, like, let's just take a second to recognize how crazy the price of Bitcoin actually is. It's not to say that it's not deserved. It's not to say that it won't go higher. But it is to say that I'm looking at our old tip wallet. This was not the early, early, early tip wallet, which I think would be just crazy to look at at this point. But we opened up a tip wallet very briefly in late 2018 through early 2019. We got five tips. We have .0059 BTC. So we don't even have .01 BTC in there. And that wallet has $279 in it. So a pass gets to the show. Lamar Wilson has been on Clubhouse a lot talking to new users. And one of the things that he's trying to push people towards is acquiring .01 BTC or 1 million Satoshis or making you a Satoshi millionaire, as they say. And again, at current prices, that's about $400 right now, maybe $450, something like that. And it just feels like a lot of money for not a lot of the Bitcoin. And I know intellectually that that's the cost of Bitcoin right now. But it even feels like that to me. So we've talked about this whole evaluation concept in the past. The idea and these efforts have been underway since the price of Bitcoin hit like $1,000. They're not particularly a lot of people arguing for them publicly anymore. But there was a time when the push towards the millibit or some type of smaller denomination that wouldn't actually change the number of Bitcoin that are out there, but would change what we think of as the normal unit. Because I mean, honestly, again, with Bitcoin at near $50,000, that becomes a little unwieldy. It feels like to think about, and so I kind of only can think about Bitcoin in dollar terms these days. If I need to spend something, I have to think about how much money do I need to spend on how much Bitcoin, right? Then my wallet figures out how much Bitcoin. So I mean, what do you guys think about the possibility of like a redenomination in terms of how we think about it, even if there's no protocol level change? You know what I would suggest for people who feel that it's a lot of money for not a lot of Bitcoin? I would suggest don't expect your Bitcoin to be worth the same amount of money. And one thing that you can do if you want Bitcoin, but you don't necessarily want to put money in it because you're not sure if it will have the same value in some period of time, is to work for it or to get it as part of some kind of reward or for free or something like that. There's a lot of ways you can get $5 worth of Bitcoin by signing up for things or maybe someone will just give it to you at a meetup or something like that. I think a lot of people who got their first Bitcoins that way will pass on the love, and sort of keep the tradition going. Another way is to work for it, right? Like, if you're any kind of freelancer, which a lot of people are these days, you can find clients who are willing to pay you with cryptocurrency. And then it sort of feels like, okay, at least I didn't take an amount of dollars and change it into Bitcoin. And then it's actually worth less dollars. So it feels like some of my money went away. So what you were describing just now, Adam, I think I want to dive in a tiny bit more to that. The idea that $47,000 or whatever it is right now is a lot, is expensive, right? So we talked about unit bias, which is a cognitive bias. But another really interesting psychological phenomenon is anchoring. And anchoring is really, really important in business negotiations, but also in individual negotiations. So if you're trying to place a bet with your friend, or you're trying to buy a bicycle or sell a house or whatever, if you blurt out a number, the other person will anchor on that number. And then if you offer them substantially less, they will feel that they've lost or missed out. And if you offer them substantially more, they'll feel that they've gained or won something. Whereas in fact, ultimately, the price is the price that you actually paid, not the number you blurted out the first time, which is why one of the first things you learn in business is don't blurt out the number. Because what you do is you anchor the negotiation and then that can end very, very badly. Or if you're going to do that, do so in a way that's going to anchor it very nicely for your benefit. So you're like, oh, this burrito? Yeah. I mean, I wouldn't take anything less than $50,000. $50,000 for a burrito? Are you kidding me? Listen, you're my good friend. I'll give it for you for $500 instead and like, oh man, what a deal. Just a second ago, that was worth $50,000. You're telling me you'll give it to me for just $500. You must be a really good friend. So the bottom line is anchoring is really powerful. So just as much as looking at this current price of Bitcoin and going, oh, that's really expensive, what it also does is it reanchors your perception of value because if, at this point, I was to tell you, hey, what would you think if you could buy Bitcoin at $12,000? She'd be like, oh man, that's really cheap. But if I said that to you eight months ago, you wouldn't think so. And so what's happened over this time is that when price appreciation happens rapidly, your anchor drags behind. The price is so much higher than where you were anchored before that it seems very big. But as it goes up, your anchor does drag. And so then it gradually increases far beyond where it used to be. And so then when it moves in the opposite direction, you see it in the opposite way as well. And this is a really interesting phenomenon that relates to unit bias but is a completely different psychological bias that occurs. It's sort of like the Bitcoin reverse of a very old grandparent who still thinks $5 is a lot of money. I remember once when I was 16, I was shoveling snow and I learned the hard way, always negotiate before you shovel rather than after. So this very old lady, and she said, I'll take care of you. And I said, okay. So I shoveled two feet of snow, her entire sidewalk. After about 40 minutes of shoveling, I get back to her and she says, here you go. And she gave me $10. I don't think she was that cheap. I don't think she was a bad person. I just think she was that old that she's that type of person who believes that $10 was still 1970s, $10. I mean, you got your money's worth, Jonathan. It was a valuable lesson for you about negotiating unit bias. It's doubled the life later and I still remember this lady's life lesson finance. I love imagining a scenario where a couple of decades have passed and many of us Bitcoin OGs, the old fogies of Bitcoin are now grandparents and we let our grandchildren run a chore or errand of some kind. And the kid comes to us like, look, grandpa, I mowed the entire lawn and I'm like, okay, kid, here's a millibit. Go enjoy a soda or something. And the kid comes back with a Lambo. Okay, keep this in perspective. You might be saying right now, oh, it's too expensive to buy a whole Bitcoin. So why try? See if you can overcome that because if you can buy one millibit or even a few satoshis, in the future, people are going to be saying, oh my gosh, a millibit is too expensive. It's all in how you look at it and it's in your perspective. And so if you can put $10 and turn it into Bitcoin, if you can take 10 cents or $1 turn it into Bitcoin, that's great. Maybe you won't be able to move it with transaction fees for 10 cents, but maybe you can do it on the Lightning Network. The point is, if you can just put a little bit into Bitcoin, I remember the days when Bitcoin was hovering around $6 to $12 or something like that and it went up to $12 or $13 and people were saying, oh, it's too expensive. Now I should have bought it when it was $6. That kind of stuff is always going to happen. The best way to invest into something is dollar cost averaging just over time, every so often put a little bit more money into it and then you don't need to worry about the fluctuations in the volatility. You're just doing it on a fixed schedule and not worrying about it. And that is never a failure if you're able to consistently invest over time a little bit. Not that we're giving investment advice or anything like that, but if you're able to just do something consistently over time, if your goal is to acquire Bitcoin, that's a success. That's not a failure if you don't have one whole Bitcoin. As long as you're doing it consistently and increasing your holdings, you're succeeding. The other thing that I would recommend is that in the early days, when Stephanie was saying Bitcoin was $5, $10, people were saying, look, buy 21 Bitcoin because to the extent that you think Bitcoin will ever succeed, there will only ever be a million of people like you. Then now Bitcoin is so expensive, back when it was at $1,000, $2,000, they say, buy one Bitcoin. There will only ever be 21 million of you. Well, Adam's talking about buying a tenth of a Bitcoin. Yeah, .01 of a Bitcoin is what a million Zatoshi says. I think another way to reframe it is thinking about how many people on earth do you believe there will ever be who own Bitcoin? And then what ring of ownership of the real estate of the plot of land called Bitcoin, are you aiming to be a part of? If that ring of ownership called there will only be 21 million of people like me called one Bitcoin is too far, we'll think about how much Bitcoin is growing and think in terms of people using it and say, well, maybe I want to be part of the 100 million or the 200. There will only ever be 200 million people like me. Why? Because I own 200 millions of all Bitcoin that there is. So one of the things that this shows and demonstrates really, really strongly is that Bitcoin does not have the third property of money. So we talk about money having three fundamental properties, store value, medium of exchange, a unit of account. And a lot of people who are new to this space will levy the criticism of the Bitcoins to volatile and that it's impossible to measure anything in Bitcoin because it's disinflating so fast because of the volatility because it cannot serve as a unit of account. You always have to convert it into dollars in order to understand what its value is. And that's very true. It is not serving as a unit of account. And that's a good thing. It's a good thing because given how volatile it is and given the existence of both unit bias and anchoring effects in human psychology, Bitcoin would be a terrible unit of account right now. And in fact, the better it is at being a long-term store value, the worse it is at being a unit of account in the short term. I think the thing I'd like to end on here, and I appreciate everyone's comments on this, is that we're living in a world where you are not allowed to make no bets. You have to make bets. It's just a question of what bets you're making, but there is no scenario where you're not taking some sort of meaningful risk. And for a long time, I was entirely in cryptocurrency at a time when I had not very much to lose. And that was a good thing for me at that point, because I was looking for ways to elevate my situation. But as you get older, you come to realize and you come into situations where you do have something to lose. And so the kind of thing that I'd like to leave us on is that whatever amount of Bitcoin you are comfortable with, that you can just be a squirrel with, stick away in a hardware wallet, and then just forget about all the people who have been most successful at turning their very small investments into very large investments within Bitcoin, that's the strategy that they've taken. The more you pay attention to it, at least the more I pay attention to it, the more I've always been encouraged to do things with it, to build projects and do things that were very exciting to me that I was really interested in, but which in hindsight, and I think this is true for a lot of people in crypto, wound up basically waving goodbye to fortunes that would have been there otherwise. So it's not to say that you shouldn't do projects, but it is to say that the most effective strategy to actually use Bitcoin as a way to increase your personal situation seems to just be to just get it and then just wait and not worry about it, not think about it. Hodel, like they say. Is it hodl or hodl? I always say hodl. I say hodl because it sounds more like hold. And for people who don't know the history of this meme, it comes from a forum post where a guy was getting drunk and lamenting the price drop in Bitcoin, but saying he's still hodling. He mistyped hold. I don't think you can be a pronunciation Nazi if you've already failed to be a spelling Nazi. Okay, so anything goes with hodl, hodl, whatever. The point is, just hang on to it and wait and you will be rewarded. And pick an amount that's small enough that you don't feel that tension, because I know so many people in this space and certainly it's afflicted me lots of the time, so much tension because of the importance of it to you, right? When you're all in on this stuff, it's very, very hard to disconnect emotionally from it. And again, I always wanted to work entirely in Bitcoin. I'm glad I have all that stuff. But at the same time, it is a totally valid path to just, again, take a little bit of money that you frankly don't need for anything else and use that as the way that you essentially hitch your wagon to this thing, right? Because ultimately, if Bitcoin does what at this point it looks like it is in the process of doing, then even having incredibly small amounts, even having 0.01 of a Bitcoin or a million Satoshis, will wind up being a substantial amount at the point that this thing is done. Now, it may never happen, right? There's lots of scenarios where this does not wind up like that and Bitcoin winds up as a failed experiment. But if you are a person who is thinking about this, you're new to the space, you're thinking, what is a reasonable expectation? And that, again, the 0.01 Bitcoin, the million Satoshis, I actually think that's a really good goal that is very achievable for most people in the kind of modern era, while at the same time, giving them a ticket such that if this thing does continue to do what it's doing, that you are part of it. But the comfort, I think that's, again, the important part that I want to emphasize. So you definitely don't need one Bitcoin. You need whatever amount of Bitcoin you are comfortable with. And that's a wrap on another episode of Speaking of Bitcoin. Today's show featured Stephanie Murphy, Andreas M. Antonopoulos, Jonathan Mohan, and Adam B. Levine. This episode is edited by Jonas and featured music by Jared Rubens. Do you have any questions or comments? Send us an email, and this is a new email address, adamatspeakingofbitcoin.show or adamatsobshow.com. We'll see you next time.