Is Naval's belief in Bitcoin rational?

Okay, let's talk about this topic. Is Naval's belief in Bitcoin rational? That's a great question because the term "rational" itself has many layers.

I think judging the rationality of his belief isn't simply a "yes" or "no" answer. We need to see him as a top-tier investor and thinker, look at things from his perspective, and dissect his logic.

Overall, I believe from his standpoint and investment philosophy, his belief is highly rational, but that doesn't mean ordinary people can accept it wholesale without critical thought.

Here’s why I say that, broken down into several aspects:

## Why is his belief considered "rational"?

Naval views Bitcoin not like we ordinary folks look at stocks, concerned only with whether the price rises or falls next week. He sees a much grander picture and a possibility.

1. Bitcoin is an "Asymmetric Bet"

This is core to Naval's investment philosophy. What is an asymmetric bet?

Analogy: You spend $1 to buy a lottery ticket. What's the worst outcome? Losing $1 (limited downside risk). And the best outcome? Winning a $5 million jackpot (massive upside potential).

Naval sees Bitcoin as this kind of asset. He believes that allocating a small portion (say 1%-5%) of an individual's investment portfolio to Bitcoin presents:

If the bet loses: Bitcoin goes to zero, you lose at most that 1%-5% of your assets, having little impact on your overall life.
If the bet wins: Bitcoin becomes a global store of value (like "digital gold"), its value could multiply 10x, 50x, or even 100x. This 1%-5% allocation could lead to a massive leap in your total wealth.

From this purely probability and payout perspective, it’s a highly rational bet. He isn't going all-in, but risking a tiny, controllable amount to pursue an enormously transformative potential return.

2. Hedging against risks in the existing financial system

Our money today, whether dollars, renminbi, or other national currencies, faces a common problem: inflation. In simple terms, governments can "print money," causing the money in your hand to become worth less.

Bitcoin's characteristic: Its total supply is fixed at only 21 million coins; no one can create more. This rule is written into its code, open and transparent.

From this perspective, Naval sees Bitcoin as an excellent tool to hedge against this risk of "fi at currency debasement." Just as people bought gold when worried about currency devaluation in the past, Bitcoin now offers a digital, more portable and tradable alternative. When the world's "money printers" are raging off, holding an asset that cannot be controlled by anyone and has a limited supply is a rational act of risk aversion.

3. A Decentralized, Censorship-Resistant Value Network

This is Bitcoin's most core, yet hardest-to-grasp value.

Essentially: Your bank deposit can be frozen by the bank; your Alipay balance can be restricted by the platform. But within the Bitcoin network, as long as you safeguard your private key (like a password), no one, no institution can seize or transfer your assets. It belongs to no nation and is controlled by no company.

Naval sees the value in this freedom and sovereignty. In an increasingly centralized, surveilled world, possessing a value transfer network that cannot be censored or confiscated is, in itself, an extremely valuable form of insurance. This isn't merely an investment; it's also a philosophical bet on potential future extreme scenarios.

## Why might ordinary people find this "irrational"?

Of course, we must consider the other side. Why do many people, including smart economists, consider investing in Bitcoin irrational?

1. Staggering Volatility

Bitcoin's price volatility is extreme. Daily fluctuations of 10% are common; halving or multiplying several times within a year is normal. For someone seeking stability and wanting to use their money as a "store of value," this is a nightmare. You might deposit $100,000 today and find it worth only $50,000 next month. From this angle, calling it a stable "digital gold" clearly doesn't hold up.

2. Lack of "Intrinsic Value"

This is the classic criticism. A company's stock has the company's profits, assets, and cash flow supporting it. A house provides shelter or can be rented out for income. And Bitcoin? It generates no cash flow and has no inherent use value (you can't eat or drink it). Its value stems entirely from collective belief — meaning "I believe it has value, and I believe others believe it has value." This purely belief-based value, critics argue, resembles the "Tulip Mania" bubble, destined to become worthless once the belief collapses.

3. Massive Uncertainty

Regulatory Risk: Governments worldwide have an inconsistent stance on Bitcoin. If major powers coordinate a crackdown, what happens to its future? Nobody knows for sure.
Technical Risk: While the Bitcoin network itself is secure, could technology emerge that cracks it? Or could a superior competitor arise? This is also unknown.

## Conclusion: Rationality depends on your frame of reference

So, returning to the original question: Is Naval's belief in Bitcoin rational?

If you see him as an ordinary investor seeking short-term, stable returns, his belief indeed seems crazy and irrational.
But if you see him as a venture investor and thinker focused on a ten-to-twenty-year horizon, he is using an extremely small cost to capture a massive, potentially transformative opportunity for the future financial landscape, while simultaneously hedging against the collapse risk of the existing system. From this frame of reference — focused on portfolio allocation, probabilistic payoffs, and long-term perspective — his choice is deeply considered and highly rational.

For ordinary people:

We can learn Naval's way of thinking, but shouldn't blindly mimic his actions. Ask yourself these questions:

Do I truly understand Bitcoin's underlying logic and risks?
Can I withstand the consequences if this investment goes entirely to zero?
Is the capital I'm putting in a very small part of my portfolio, such that losing it completely wouldn't affect my normal life?

If the answers are "yes," then allocating a tiny amount of speculative capital towards Bitcoin as a "lottery ticket for the future financial world" could also be a rational choice. Conversely, if you don't understand it or can't stomach the risk, steering clear is equally rational.