Time, Bitcoin, and Health

My Portfolio Allocation

In this letter, I will talk about which assets I’ve invested in, how much, and why.

I’ve mentioned in previous letters that people ask me about all manner of cryptocurrencies. Much to my surprise, Bitcoin isn’t the cryptocurrency that people ask about most. This is either because much of Bitcoin is common knowledge, or because people are more interested in other cryptocurrencies.

95% in Bitcoin

I want to cover my position in Bitcoin first. I will tell you up front, that I am a conservative investor. I don’t deal with risk very well as it tends to have a negative mental health impact. I think my position in Bitcoin reflects this. From what I can tell, Bitcoin is the least risky, and the most useful (versatile) asset on the planet. Throughout my journey in cryptocurrency, I tried day trading, and investing in other assets. In the end, I ended up losing a lot of money, and a lot of sleep. To this day, the only investment I am completely at ease with, is Bitcoin. My focus right now, is on growing my business, and figuring out how to have maximum impact on those around me. There is no doubt money to be made investing in other cryptocurrencies, but this is not my core goal. I am currently optimizing my life around three things. Time, Bitcoin, and Health.

100% in Crypto

I cannot call myself a Bitcoin only investor, as I do have a 5% portfolio allocation in other cryptocurrencies. I can however say that I have 100% of my net worth in cryptocurrencies. My plan is definitely to acquire property, or land in the near future, but while the bull market is in full swing, Bitcoin is the right place to be building my monetary net worth.

Time, Bitcoin, and Health

The three most scarce assets in the universe, as far as I can tell, are (my) time, Bitcoin in general, and my health. One thing that I noticed about investing in altcoins is that I inevitably end up with less Bitcoin. It’s true that some people can “time the market” and end up with more Bitcoin. The reason why I am 95% in Bitcoin is because I am thinking about my retirement. Bitcoin is completely unique, and there will never be another asset like it. Therefore it is finite. I cannot say the same thing about any other cryptocurrency. I can conceive a world where there is another Ethereum (Cardano?), or Binance (Crypto.com?). But trying to picture something that has achieved the same network effect, and momentum of Bitcoin is quite difficult.

Diversification of Assets = Diversification of my Time

Wide Diversification is only required when investors do not know what they are doing — Warren Buffet

If I am optimizing my life around Bitcoin, time, and health, then a strategy of anti-diversification makes perfect sense. The more I diversify, the more I am required to spend my time learning about the things I’ve invested in.

Diversification is protection against ignorance. It makes little sense if you know what you’re doing. — Warren Buffet

In hindsight, when I was investing in dozens of altcoins, this is exactly the phrase that rung true for me. I didn’t know what I was doing. I was ignorant. I tricked myself into thinking I understood the technology, and equated that to creating value. I failed to look at what the world really needed, and evaluate whether or not these projects actually fulfilled those needs. It wasn’t until I understood the value proposition of Bitcoin, that I was able to shift my strategy to a 95% Bitcoin strategy. I ended up killing 3 birds with one stone.

1. I converted everything (95%) into Bitcoin (Optimize for Bitcoin)

2. I gained an immensely more amount of time from not looking at and researching other projects (Optimize for Time)

3. I was much less stressed about the volatility of my portfolio and had more time to focus on my health (Optimize for Health)

Warren Buffet quote on Diversification

Cardano (ADA) and ATOM - (2.5%)

I’ve been looking for a project that has a reasonable expectation of dethroning Ethereum as the hub of DeFi. I believe DeFi to describe the broader cryptocurrency ecosystem, but at this time, Ethereum is largely considered to be the epicentre. I do believe that DeFi will eventually be built upon the lightning network, but I don’t see this as a reality in the near term (next 3 years). Cardano is lead by a co-founder of Ethereum, Charles_Hoskinson. It is a project that has placed decentralization and usability at the centre of its focus. ATOM is a project based out of Toronto Canada, that has placed interoperability at the focus of its project. I believe scalability, decentralization, interoperability, and (secure) smart contracts to be the pillars upon which DeFi will manifest in the future. Ethereum either lacks, or has clumsily implemented several of these aspects.

At the time of writing, many Ethereum smart contracts are neither usable or decentralized. Many Ethereum smart contracts have admin keys, and backdoors¹ to override the otherwise decentralized nature of the application. Furthermore (depending on complexity / size of contract) interacting with smart contracts can be extremely costly. If the value proposition of Ethereum is to bank the unbanked, there is no way general users can pay transaction fees of $5, $10, $50, or $100. This is a non-starter for me, and so I divested away from Ethereum, and I don’t plan on ever going back. I don’t plan on owning any ERC-20 tokens any longer.

Crypto.com (CRO) and Binance (BNB) - (2.5%)

As you may have read in my earlier letter, Crypto.com is instrumental in facilitating my passive income strategy. So is Binance. Both of these companies have created thriving ecosystems around their companies and their associated tokens. While ADA and ATOM are tokens that underpin a (theoretically decentralized) cryptocurrency ecosystem, CRO and BNB underpin transparently centralized companies. These tokens are absolutely at the whim of the companies that produce them. I think of these tokens more as stocks than as cryptocurrencies. Let’s be careful with the language here though, both CRO and BNB are NOT STOCKS. They are utility tokens. They are valueless in the absence of the centralized company backing them. I believe these companies to be instrumental for accelerating the adoption of Bitcoin on a worldwide basis, and therefore, I want to share in the success of their respective tokens.

Keep it Stupid Simple

Since consolidating my portfolio after the 2017 bull run, I would say that I’ve largely completed my goal of optimizing along the dimensions of time, health, and Bitcoin. I have adopted a strategy of Never Sell Bitcoin. I’ve created passive income streams from ADA, ATOM, CRO, and BNB that cover my monthly expenses. I’ve had more time than ever to focus on growing my business, and developing my network and personal relationships. My health has never been better because my stress has never been lower. My confidence in Bitcoin to continue along its trajectory well into the future is very high. All of this is to say that I’m keeping my investments extremely simple.

All The Best,

Keegan Francis

P.S. This is the second of my paid newsletters. Subscribe early to continue gaining insider information on how I handle my portfolio.

1. Smart Contracts not Decentralized KuCoin Hack - https://ca.style.yahoo.com/token-projects-not-happy-kucoin-183005541.html