Bitcoin Is Officially the Best Performing Asset of the 2010s. Did You Miss the Boat?
Well, there’s no arguing about it now.
December 31st 2019 has passed and the numbers have been entered into the history books for good. It’s official.
Bitcoin was the best performing asset of the decade. Period.
In fact, it may well have been the best performing asset in the history of assets ever over ten years. I can’t say that for sure as I don’t have a definitive list of everything in history to hand, but if we could just agree it would be a serious contender for that title, that would be enough for now.
Before revealing just how well Bitcoin performed in that period, it’s worth making a comparison with the more ‘traditional’ investment vehicles we’re all familiar with — such as stocks, bonds, funds, oil and gold — and remembering just how different the world was in 2010.
The truth is, in tech terms, it already seems like the stone age.
At the start of the decade, all the following things didn’t exist: Instagram, iPads, Snapchat, Alexa, Apple Watches, Whatsapp, Tinder, Pinterest, TikTok, Tesla Model S, Twitch, WeWork, UberEats, CandyCrush and a thousand other apps and systems we now consider essential in our day to day lives. At no other time in human history would this sort of adoption be possible — it is simply incredible. Yet for those of us who just happen to here now at just the right time, it’s all, well, ‘normal’ isn’t it?
How quickly we adapt.
But if you were to teleport yourself back to the morning of the 1st January 2010 and you were allowed to put $100 into just one investment vehicle, where would you put it and what would the results have been?
Let’s take a look at the possible outcomes.
Performance of Traditional Financial Instruments 2010–2020
We all know that leaving money in pure cash ‘under the mattress’ or simply leaving it in a bank account with a paltry interest rate would actually leave us with less than we started with, and that was no different in the decade between 2010 and 2020.
In the US, your $100 would now be worth only $85.96, with an average inflation rate of 1.70% annually. That’s a 14.04% reduction in value.
In the UK, you’d be looking at $77.48 being left of your original $100, a loss of 22.52% as there was a slightly higher inflation rate there in the early part of the decade.
The fact is that fiat currencies are designed to inflate over time for (in my view, ‘questionable’) economic reasons with the adopted ‘golden number’ for many western countries being around 2% per annum. This means these losses in value are considered ‘normal’ and should be expected by the people using them.
Governments often get this wrong through corruption or simple bad management and if you left your $100 in a currency like the Venezuelan Bolivar you’d have pretty much nothing left at all now. If you hadn’t got your funds offshore or in something else, you’d be bankrupt through no fault of your own.
Of course, putting your $100 into a bank account with a typical interest rate would have lowered the effect of inflation, but even with compound interest, you’d still have needed close to 2% monthly to break even in the UK or the US. Most banks have not paid anywhere near this level over the last decade so even that option wouldn’t have worked for you.
The key to just safeguarding your wealth, never mind actually increasing it, has always been to keep as much as possible out of fiat and into some sort of investment vehicle that provides a return higher than the rate of inflationary erosion. The riskier the investment, the higher the return. Or, of course, loss.
You’d have thought, like me, that oil would have been a safe bet at the beginning of 2010, but we’d have been wrong. According to CNN, our $100 would now be worth only $74, a loss of 26% over the period.
But surely gold would have been a great investment? Well, yes, you would have beaten inflation with a return of around 34% over the period taking your $100 to $134, but the final return would be pretty measly once you had factored back in the effect of that inflation.
But there were better performing assets. If you’d bought a 30 year US Treasury bond you’d now have $208, a more decent return of 108% over the period, well and truly reducing the effects of inflation to minimal levels.
Even better, if you’d put your money in the American stock market using a simple tracking fund, you would have boosted your original investment to $346, which is a truly impressive 246% return.
But even these gains pale insignificance when compared to the star performing companies of the decade.
Stock and Company Performance 2010–2020
Here’s what would have happened if you’d put your $100 into the top ten performing American corporations at the beginning of 2010:
As you can see, your $100 would have yielded some major returns if you’d bought and held over that period. Maybe you did and are sitting on a nice little nest egg, thank you very much.
But even Netflix’s stellar returns are totally dwarfed by Bitcoin’s gains in the same period to a degree that it’s actually quite hard for our brains to understand.
Bitcoin’s performance 2010–2020
The fact is if you’d have put $100 into Bitcoin in 2010, it would now be worth close to $9,000,000. That’s not a typo, that actually says NINE MILLION dollars. That’s a return so large it doesn’t even make sense writing it down as a percentage.
And, as divisive as Bitcoin continues to be, this chapter at least is now closed and confirmed. If you were one of the lucky few (and it really was ‘a few’) who had the opportunity, foresight and the means to invest at that time, you have my sincerest congratulations, admittedly tinged slightly with envy.
But for the rest of us, does that mean the boat has sailed and we have missed this once in a lifetime investment opportunity?
Well, let’s look at one key point that might give us a way to answer that question.
The Future of Bitcoin
No-one knows for certain of course, but there is, in my view, a very clear precedent that may give us a clue here.
Let’s look again at the list of things we didn’t have ten years ago. How many of them exist, or were at least enabled, because of the innovation of the internet? The answer is, of course, all of them.
We now take the internet for granted and each new technological enhancement that it throws up is adopted quickly and easily by the masses. This happens because our horizons have broadened and we have a basic understanding of most of the tech.
Or at least how to swipe and click on stuff.
But back in the 1990s as the internet itself was fighting for adoption, this was not the case as the concept of this new invention itself was one that many people struggled with. I know this because not only was I there, I was right on the cutting edge of driving that adoption through my role at Microsoft.
In my view, history doesn’t record enough of the objections and worries that people raised at the time. Many people couldn’t even see the point of the internet, utterly unshakable in their belief that no-one would ever order something online without seeing it like you could in a real shop. Some retailers even considered their own websites as competitors and wouldn't properly support them.
Those who were neutral or slightly positive thought it was an interesting thing that could come in handy if you liked looking up information or were doing research. Even people like me, as utterly convinced as I was that it would be a global world changer, could never have foreseen the third generation apps that we now use routinely, build on this technological backbone. I’m not sure anyone did. It was the simple act of innovation inspiring and driving more innovation.
The fact is that while the early adopters were getting used to dial-up services and this new email concept, companies and individuals were already working on the future in the background, paving the way for the tech that now surrounds us. They developed new code, back-end systems, better human interfaces, faster networks and all manner of other tech that I am probably not qualified to comment on. And that work accelerated as more and more people started using the internet.
It continues to accelerate today where new products and services grow global acceptance in mere months, where it would have taken years or decades before. And Bitcoin itself is almost an exact carbon copy of this process.
Bitcoin is still in the dial-up of its existence. It’s a concept that few people properly understand in relative terms. There are only a few tens of millions of users globally playing with it, making small transactions, testing, learning, promoting and even arguing about it.
But behind the scenes, communities and companies all over the world are building on the tech. Second layer scaling solutions are coming, native code level wallets are coming to mobile devices, better user interfaces, new apps and new on and off-ramps are being revealed and built every day. Most of this the average person won’t see for some time yet when it will suddenly become ‘normal’ very quickly.
If that happens, demand and use will go from millions to billions. Owning a whole Bitcoin will be impossible for all but the super-rich or those who were there early. The financial world will be forever changed in the same way that information and commerce already has been. And it will happen fast.
So, still, think you missed the boat?
Frankly, I’m not sure they’ve even finished building it yet.
Want articles and up to the minute analysis and opinion in your inbox? Why not subscribe to the ‘Bitcoin and Global Finance’ newsletter? Receive special offers and insider info, unsubscribe at any time.
If you found this article useful, you’d probably like these too:
The question about Bitcoin I am asked most often:
Is It Too Late to Buy Bitcoin?
The answer to the question I’ve been most consistently asked since 2016
If you haven’t bought any Bitcoin yet, here’s why a tiny amount might is not only easily affordable (at the moment), but may give you a huge advantage in the future:
And if you’re wondering if this Bitcoin thing is actually happening or not, here’s what the numbers say:
Disclosure: The author of this opinion piece has been heavily involved with Bitcoin for several years and holds a substantial cryptocurrency portfolio, including Bitcoin. He also has a mining operation running the SHA 256 algorithm based in Siberia and is a published author on the subject of promoting the understanding of cryptocurrency.
Disclaimer: Investing in any cryptocurrency is very risky. The above should not be taken as financial advice. Do your own research before investing.