If Bitcoin existed during Holocaust, it would have been the best asset for Jews to protect wealth. Charlie Munger's contempt is misplaced.

Originally published on Feb 22, 2022

Charlie Munger is somebody I respect deeply. He is also an elderly man. So, any disagreement with him should be expressed respectfully, especially from younger people like me.

The esteemed Mr Munger has called bitcoin "rat poison" and regard cryptocurrencies as venereal disease beneath his contempt. He wished that cryptocurrencies were never invented and admires China for banning them.

As with any new financial innovation, there will be some unintended evil use cases alongside the useful ones. After the invention of stocks by the Dutch in the 1600s, many people speculated in stocks and lost their pants. Should we ban stocks? If stocks had been banned, many great companies today may not have come into existence without help from the funds raised from the stock market. Charlie Munger and Warren Buffett, being one of the best stock investors on Earth, would not be as rich as they are today.

If bitcoin had existed in Nazi Germany, it would have been the best wealth management asset for Jews. The most effective action for rich Jews to protect their wealth would be to buy bitcoin if it had existed then.

Here are the reasons;

1. Bitcoin cannot be confiscated by rogue governments like the Nazis.

Ownership of bitcoin comes from the knowledge of the private keys that secures your bitcoin on the blockchain. Nobody can take your bitcoin away if they do not know the private keys. If you want to play safe, don't even reveal that you own bitcoin so that nobody can torture that knowledge out of you.
Bitcoin is decentralized. Bitcoin can be stored in places that are out of reach of an all-powerful government. Evil rogue dictators cannot touch your bitcoin.

If you live in a country with a government that cannot be trusted, like Jews in Nazi Germany, do not store your bitcoin in centralized crypto exchanges because governments can access them.

I happen to trust my government as the Singapore government has established a track record that deserves the people's trust. So, I do not mind keeping my crypto assets with centralized crypto exchanges, thanks to the convenience they offer.

2. Easy to store and hide digital bitcoin without fear of physical damage

All that is needed to store your bitcoin is knowledge of the private keys. It is essentially a passphrase. How to go simpler than that?

For gold and paper money, you have to hide it in a carefully chosen physical location and worry whether it will be discovered later.

Bitcoin is digital. It cannot be damaged physically. Paper money can be eaten by termites.
European allies had a hard time transporting their gold out of reach of the Nazis when Nazi forces overran Europe. You do not have to deal with these logistical nightmares with digital bitcoin.

3. Easy to convert hidden bitcoin into fiat currency for political refugees

If you are a political refugee like persecuted Jews in Nazi Germany, you can easily recover your bitcoin asset if you managed to move out to a safe country . Once there, you can convert your liquid bitcoin into fiat currency legally.

This does not apply to scammers on the run because their stolen bitcoin cannot be converted into fiat legally everywhere they go.

Billions worth of bitcoin in USD is traded per day. Most rich people can convert their bitcoin holdings into fiat currency within a day or two.

4. Easy to transfer bitcoin to someone you trust

If a political refugee is having trouble getting out of the country, he can transfer his wealth to someone he trusts for safe-keeping first.

The best part about bitcoin compared to traditional finance is bitcoin can be transferred to ANYONE, ANYWHERE, ANYTIME within minutes as long as both parties have online computing devices installed with the appropriate free software.

The blockchain does not discriminate against anyone. The blockchain can be accessed anywhere with internet access. The blockchain runs all the time, including at weekends. ANYONE, ANYWHERE, ANYTIME.

Try wiring money to someone wanted by a government for political reasons in an economically sanctioned country during the weekend. It can never happen today within minutes.

Transferring digital wealth to someone you trust is so much easier compared to the difficulties Jews had to transfer their wealth out of Nazi Germany. If most of their wealth was in real estate, they can kiss their net-worth goodbye.

I would like to ask the esteemed Charlie Munger if he can think of a better way to protect wealth for politically persecuted people like Jews in Nazi Germany.