- Bobby Lee poured over a decade’s worth of experience into his new book, “The Promise of Bitcoin.”
- In an exclusive interview, Lee shares his perspective on bitcoin and its latest price swings.
- He believes that the volatility is worth the risk, and that investors need to manage their emotions.
- See more stories on Insider’s business page.
Bobby Lee knew about bitcoin before you did.
In 2011, Lee was living in Shanghai while working as a vice president managing Walmart’s Chinese e-commerce service. One day he got a phone call from his brother, a software engineer at Google, who told Lee about an exciting, esoteric new idea called bitcoin.
Bitcoin had only been around for two years by then, and the circle of people who knew about it was still relatively small. Fascinated, Lee built his own mining rig and began to learn more about the cryptocurrency. By 2012, Lee had quit his job at Walmart and made bitcoin his full-time career, mining bitcoin at home and trading for it on an exchange website called BTCChina.com, later known as BTCC. The site was easy to use but clearly needed a coder’s touch, and Lee, with his background managing consumer-facing e-commerce sites, knew he could help.
Lee contacted the two owners of BTCC and met them for dinner. Dinner turned into late-night coffee as the three exchanged ideas and discussed the future of bitcoin, and it became clear that Lee’s expertise could take the fledgling site to the next level. Over the coming months Lee bought shares of BTCC, took on the mantle of CEO, and helped lead the exchange through half a decade of impressive growth. Eventually, BTCC would become the longest-running cryptocurrency exchange in the world.
At the time Lee became CEO, bitcoin was worth $15.
In January 2018 BTCC was acquired by a Hong Kong-based blockchain investment fund. Only a month earlier bitcoin had reached what was then an all-time high of $19,834 — and considering bitcoin had begun 2017 at barely over $1,000, it was the end to an impressive run for the cryptocurrency.
As it turns out that was indeed the end to bitcoin’s run, and by December 2018 the cryptocurrency was back down to $3,700. Lee was able to sell at the top of the market and walk away, splitting his focus between starting up a crypto wallet company called Ballet and writing his book.
That book, “The Promise of Bitcoin: The Future of Money and How it Can Work for You,” hit shelves this week, and the timing couldn’t be any better. Not only does May 2021 mark Lee’s 10-year anniversary of getting involved in the wild world of bitcoin, but bitcoin itself has found a new place in the financial zeitgeist that even Lee couldn’t have predicted.
Don’t be scared off by volatility
Nowadays bitcoin’s 2017 rise and subsequent fall the following year almost seems antiquated. The past year and a half has seen bitcoin reach shocking highs and plummet to devastating lows that might scare away would-be investors. But Lee believes that’s the exact opposite of what you should do.
“If you have some inklings to buy bitcoin this is certainly a good time, because this is a price correction,” says Lee.
While all eyes are on bitcoin’s price, Lee believes that most people don’t really think about their investments in terms of facts and figures. Instead, they let emotions like fear cloud their judgement and corrode their logic.
“Some people always say, ‘I would have waited for the price to go down a little bit before I buy.’ Well, mathematically and financially, that makes sense. But it doesn’t make sense emotionally because a lot of times when the price goes down, people lose emotional interest.”
Lee told Insider that in conversations with friends last month he was asked if they should buy bitcoin at $60,000. He said yes, but his friends demurred, believing that $60,000 was too expensive. But now that bitcoin costs $38,000 it’s much cheaper, yet those same friends have been scared off by the volatility and are no longer interested in buying.
“The best time to buy Bitcoin is always now, in the sense that whenever you have the most conviction, whenever you have the most willpower to do it. You don’t know what’s going to happen, right? The price could go up, it could go down, you could lose your interest. You could lose your conviction.”
The problem, says Lee, is that people equate volatility with risk. They look at the high volatility of bitcoin over the last month and believe that means the cryptocurrency is a risky investment, but according to Lee that’s the wrong way to look at it.
“People have a bad connotation with risk. But at the same time if the volatility and the expected return is high then it’s worth the risk.” While Lee acknowledges that bitcoin was down by 50% in the last week, he also points out that bitcoin has risen by 10 times over the past year.
Some of the world’s most famous investors, such as Warren Buffett, have decried bitcoin as “risky” and even “worthless” — and his right-hand man Charlie Munger went so far as to call bitcoin “disgusting” and “contrary to the interest of civilization.” Meanwhile, other big-name investors are growing more bullish on bitcoin, with Ray Dalio recently announcing he’d rather own bitcoin than a bond.
Clearly opinions are divided, but Lee believes the key to making a decision about the cryptocurrency is to learn as much about bitcoin as you can. According to Lee, only by better understanding bitcoin can you see what a game changer the cryptocurrency really is, which will in turn give you a longer-term perspective and allow you to ignore the short-term volatility.
“You have to spend time to learn about Bitcoin, the technology, the engineering, the economics aspect of it, the philosophy, the politics aspect of it. When you’ve really learned that, then it starts to all starts to make sense.”
Reading Lee’s book is a great place to start.