I came into this business in 1993. If any of you remember the term “GIC refugee”, you know what that era was like. People had spent their entire lives putting money into GICs at the bank. The yields were predictable, the principal was safe, and there was no reason to think about anything else. Then the yields started disappearing. And when they did, an entire generation of savers had to confront an unfamiliar question: if safety no longer pays, where does the money go?
Some people stayed put. They kept rolling GICs even as the rates fell from double digits to single digits, and eventually to near zero. Others became curious. There was nowhere else for the money to be. They moved into mutual funds, then equities, then managed portfolios. Thirty years later, the comparison is striking. Someone who made that leap in 1993 and stayed invested has seen their wealth compound at roughly 10% annually. Someone who stuck with GICs has seen their purchasing power eroded by inflation and their returns compressed into near-zero territory. The difference in lifetime wealth between curiosity and caution is measured in multiples.
I think about that comparison often, because I see the same pattern playing out again. The world I learned in, and the world we are in now, are not the same world. The thirty-year cycle of declining rates, cheap borrowing, and rising real estate prices is over. The next cycle, in my view, is going to be defined by hard assets and by the slow recognition that scarcity matters in a way it has not had to matter for a very long time. And the most important hard asset emerging in that cycle is one most people still do not fully understand: Bitcoin.
Let me start with the basics, because I think most people have heard the word but do not really know what it is.
Bitcoin is digital money that lets people send value directly to one another online, without needing a bank in the middle. It was created in 2009 as an alternative to traditional currencies, which are controlled by governments and central banks. It is sometimes called digital gold, and that is a useful comparison. Like gold, it is scarce, durable, and divisible. Unlike gold, it lives entirely on computers, and it can be sent anywhere in the world in minutes.
Here is where most people struggle. We live in a universe of things we can define by touching them, seeing them, tasting them, and feeling them. A Bitcoin is none of those things. You cannot hold it. You cannot see it. You cannot put it in your pocket. And that creates what I would call a psychological barrier. Bitcoin has been around for almost twenty years now, and yet it is still in its infancy in terms of adoption and understanding. That newness, combined with our inability to physically interact with it, makes many people view it with doubt and skepticism. That is not stupidity. That is human nature. We trust what we can sense.
Think of all Bitcoin like a giant notebook with exactly twenty-one million pages. You can own a full page, or you can own a fraction of a page, a paragraph, a sentence, or even a single word. Whatever page or part of a page you own in that notebook, your ownership is recorded permanently in real time, visible to everyone, and impossible to erase or fake. That ownership record cannot be cracked, cannot be altered, and cannot be taken from you without your consent. That is what Bitcoin is. It is like a page in a shared, permanent, tamper-proof notebook.
Bitcoin works because of a technology called blockchain. Blockchain is the mechanism that keeps that notebook honest. Thousands of computers around the world each hold an identical copy. Once something is written, it cannot be erased or changed. Everyone can see what is recorded, but nobody can fake an entry or rewrite history. Blockchain is the technology, the shared notebook system. Bitcoin is what is recorded inside that notebook, the digital money itself.
There is no boss in charge. There is no central authority that can secretly change the rules. There will only ever be twenty-one million Bitcoin, ever, mathematically enforced by the network itself. The supply is fixed, the record is permanent, and the relationship between you and your Bitcoin is direct. That is the entire innovation: money with a fixed supply, secured by mathematics, owned directly by you with no intermediary.
Think about what that means in the world we actually live in.
Every currency you own is ultimately a claim against the balance sheet of the government that issues it. The US dollar is backed by the full faith and credit of the United States. The Canadian dollar is backed by the full faith and credit of Canada. Both governments are running deficits that strain the imagination. Both have accumulated debt levels that, by historical standards, are unsustainable. And both, like every government in the world, will eventually solve that problem the way governments always have - by printing more money. The currency in your pocket is, at its core, a vote of confidence in fiscal management you have no real control over.
Bitcoin is different. Bitcoin has no issuer. It cannot be printed. The supply is fixed. The relationship between you and your Bitcoin is direct, not mediated by a bank or controlled by a central authority. You own it. Period. That is sovereignty. And in a world where every currency is being debased by deficit spending, sovereignty over your own money is becoming the most valuable thing you can own.
This is why Bitcoin should be understood as a hard asset, in the same category as gold and real estate, but with mathematical scarcity that neither of those possesses. The smartest money in the world has already figured this out. Sovereign wealth funds, the wealthiest families, and major institutions are rotating out of traditional investments and increasing their exposure to alternatives. Hard assets are the destination. Bitcoin, though still a small percentage of those portfolios, is increasingly part of the strategy.
Here is where the math becomes interesting. Real estate is the largest hard asset class in the world. Wealthy investors hold the majority of their hard asset allocation in property. Gold is the second major hard asset. Bitcoin is emerging as the third. Now consider what happens as more capital allocators come to the same conclusion I have. Even a small percentage of capital rotating from real estate into Bitcoin would create enormous demand against a fixed supply of twenty-one million coins. As institutional investors move capital into Bitcoin and hold it for the long term as a hedge against currency debasement, the coins they purchase come out of circulation. Fewer coins available to trade. More demand chasing a shrinking supply. That dynamic creates persistent upward pressure on price, and that pressure will only increase as adoption grows. More broadly, Bitcoin has emerged during a period where trust in traditional systems is gradually being questioned.
Governments are running persistent deficits. Central banks are expanding balance sheets. Financial systems are becoming more complex and less transparent to the average investor. Bitcoin does not solve all of these issues. But it reflects a growing desire for financial systems that are more transparent, more rules-based, and less dependent on discretionary decision-making.
I held every standard objection myself longer than I should have. Let me address a few briefly.
The worry about hacking or quantum computing breaking Bitcoin’s encryption is one of the most frequent. The people who raise it usually keep their savings in a bank that runs on legacy code maintained by a bureaucracy still learning how to use modern technology. Bitcoin was built from the ground up on cryptography, and the people maintaining it are some of the most capable engineers in the world, actively designing for a quantum future. Bitcoin’s development community is actively migrating toward quantum-resistant cryptographic standards (NIST post-quantum standards), which is more than most legacy banking infrastructure can say.
The worry that Bitcoin is used by criminals applies, with vastly more force, to cash and to the international banking system. The objection does not distinguish Bitcoin from any other store of value that has ever existed.
The worry that it has no intrinsic value misunderstands what monetary assets are. Gold has no intrinsic value in the strict economic sense. Monetary assets derive their value from scarcity, security, and adoption. Bitcoin has all three.
If you had invested $1,000 dollars in the S&P 500 with dividends reinvested in 1995, you would have roughly $25,000 dollars today. That same $1,000 dollars in gold would be worth something north of $10,000. In US real estate terms, tracked by Case-Shiller, roughly $4,000 dollars in price appreciation. Held as currency and rolled into GICs, perhaps $3,000 dollars in nominal terms but with purchasing power cut roughly in half.
Bitcoin did not exist in 1995, but in 2011, it traded at roughly $0.30 per coin. A $1,000 investment at that time would have purchased over 3,000 Bitcoin. At today’s price of roughly $82,000 dollars per coin, that investment would be worth approximately $273M dollars.
That is not a forecast, and it should not be extrapolated. But it is a real-world example of what can happen when a new monetary asset gains adoption, and of what an open mind, paired with the willingness to do the work, has been worth.
People often assume Bitcoin is risky because of its volatility, but risk, properly understood, is not the same thing as volatility. Risk is the permanent loss of purchasing power. Volatility is short-term price movement, and it is uncomfortable, but it is not the same thing. After studying Bitcoin carefully, I have come to believe the conventional framing of its risk deserves a second look. Short-term volatility is real and well documented. The question worth sitting with is which asset, over the next twenty years, is more likely to permanently lose purchasing power - the currency, whose supply will be expanded as needed by political necessity, or the network whose supply cannot be expanded by anyone, ever.
It is also worth noting that Bitcoin is becoming less volatile as it matures. As adoption deepens and the holder base expands from speculators to long-term institutional allocators, the price swings that defined its early years are gradually compressing. This is the natural progression of any new asset class as it transitions from emerging to established. The volatility is not disappearing, but it is moderating, and that trend should continue as institutional ownership grows.
You can tolerate volatility if you have conviction and a long-time horizon. Permanent loss of purchasing power is the risk you cannot recover from.
Most portfolio managers in Canada work for banks or large institutions, and those institutions have, for good reasons, restrictive compliance frameworks that limit what can be researched, said, and owned. The portfolios produced inside those firms tend to look remarkably similar to one another.
We are different. Unlike the banks and large brokerage firms, we have no pressure to recommend proprietary products because we do not have proprietary products to sell. Our only job is to find the best investments for our clients, wherever they happen to be. That is the privilege of being independent. It does not mean we take risks others avoid. It means we have the time and freedom to do the homework, study things that look complex or unfamiliar, and reach our own conclusions on behalf of the people we serve.
Sometimes those conclusions take us to places that look unconventional. Bitcoin is one of those places. We get there not by being contrarian for its own sake, but by being curious, by doing the work, and by trusting the evidence over the comfort of consensus. Thirty years ago, people had to become curious about equities because GICs no longer paid. Today, we are choosing to be curious about hard assets and about Bitcoin specifically, because the macro environment demands it and because the math supports it.
If this piece resonated with you, or if you have questions about Bitcoin or about how we think about hard assets at Seven Hills, I would welcome a conversation. Reach out to me or anyone on the Seven Hills team.
We are built on curiosity and on the willingness to do the work that others won’t. And if you know people in your network who would benefit from reading this, please share it with them. That is how ideas spread, and that is how people find their way to better decisions.
Warmly,
Patrick Keeley
Seven Hills Capital Corp.
2 St. Clair Avenue W. | Toronto | Canada
Wealth is not just about what you have, but how you live.
This material is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Please consult with your Seven Hills advisor before making investment decisions.
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