Bitcoin

[multivita-man]

Full disclosure: I have been and remain a crypto-cynic, for all of the reasons that have no doubt been posted here already. I have always felt like the blockchain technology had some potentially legitimate functions and applications, but the vast majority of these 'coins' are modern snake oil.

Having said that, BTC just might be the kinda, sorta exception and middle finger to my skepticism, and I say this because it will probably end up being the survivor of all the crypto. Maybe something like Ethereum or an equivalent survives with it, but I guess my *modified* rethink of crypto is based on its institutional adoption. Crypto *could* have value as hedge against weaker-performing currencies and assets part of a portfolio diversified portfolio.

However, I still don't think it's an investment. Have people made money off of it? Sure, and they will continue to -- you can make money off of art, vinyl records, baseball cards, and cabbage patch kids, and to those who do, more power to 'em. But it's not something I'm interested in.

 

[Jason Warfield]

I see bitcoin continuing to surge in value, well over $10,000. People that put money into this will be happy but I always get a sense its value is destined to fall eventually, perhaps crash under $1,000.

Any thoughts on this cryptocurrency?

Too unstable.

You can find a number of success stories...but most people lose don't have that level of success. What makes crypto-currency attractive is that it can be lucrative if you time it right in buying in and selling out. And because it fluctuates so wildly, you could get a huge return. Or nice little profit. But because it fluctuates so wildly, odds are you won't.

If crypto-currency manages to become more stable and acts more like what cash currency does, then I would be more inclined to use it. Having said that, if you have a couple-three hundred bucks laying around and want to try your hand at it, or learn by doing, go ahead and see what happens (I'm being serious). Worst case is that you would be out that cash, but if you got lucky, it could be nice little chunk of change. You just have to be willing to gamble.

 

[Germinator]

Full disclosure: I have been and remain a crypto-cynic, for all of the reasons that have no doubt been posted here already. I have always felt like the blockchain technology had some potentially legitimate functions and applications, but the vast majority of these 'coins' are modern snake oil.

Having said that, BTC just might be the kinda, sorta exception and middle finger to my skepticism, and I say this because it will probably end up being the survivor of all the crypto. Maybe something like Ethereum or an equivalent survives with it, but I guess my *modified* rethink of crypto is based on its institutional adoption. Crypto *could* have value as hedge against weaker-performing currencies and assets part of a portfolio diversified portfolio.

However, I still don't think it's an investment. Have people made money off of it? Sure, and they will continue to -- you can make money off of art, vinyl records, baseball cards, and cabbage patch kids, and to those who do, more power to 'em. But it's not something I'm interested in.

Everyone including "crypto cynics" should embrace the concept of a non-fungible token (NFT)

FYI NFTs can represent digital or physical items, such as,...

AND an NFT is a unique digital asset that can't be replicated (and is stored on a blockchain)

 

[Rexedgar]

The fact that Trump called it a “scam,” a few years back and now is all aboard, troubles me.
Anybody knows a scam, it’s Trump.


Anyone old enough to remember First Jersey Securities?

 

[cAPSLOCK]

Bitcoin is not a scam. It is an invention/discovery that could be compared to something like gunpowder. But it will take more time for people to begin to realize this. It is a genie that has been let out of a bottle.

"Crypto" IS 99+% scams. And nearly all of it makes tradeoffs that hobble the things that allow bitcoin to be unique. Decentralization, trust minimization, security. Crypto is really just a fully digital copy of the current Fiat system, for the most part. Though it is disguised to look like Bitcoin by doing things like using a "blockchain" (which is entirely not needed if you are going to centralize because of other tradeoffs) it is not the same.

Not sure why I am still here posting lol... whatever.

For what it is worth I am glad to have conversations with people who are interested. I have done nearly a decade and a half of studying Bitcoin, and understand it fairly well. Both in practical ways (like setting up secure self custody) as well as theoretical ways (like how Bitcoin fulfills much of John Nash's Asymptotic Ideal Money theories). Just PM me, though I reserve the right to scramble my password here at any moment. lol.

 

[Ahlevah]

Bitcoin is not a scam. It is an invention/discovery that could be compared to something like gunpowder. But it will take more time for people to begin to realize this. It is a genie that has been let out of a bottle.

But it is a risk asset, and, like all risk assets of late, it seems to follow the availability of financial liquidity. It’s never been baptized by fire through an extended business cycle. Back in March. 2020, when it looked like the world was ending, Bitcoin got hit like everything else. In fact, it lost half its value in two days! Have people forgotten that? As I already mentioned, hedge fund manager David Einhorn thinks we’ve entered the “Fartcoin” stage of the business cycle, where speculative excess reaches its pinnacle preceding an economic contraction.

What no one knows is how much debt can the American economy tolerate and how high can long rates go before the financial markets begin to take notice and question record-level asset prices? Long-dated Treasuries are getting pounded again today. Can the Fed just add liquidity like it’s done in the past and keep the party going if there is some sort of banking or financial crisis? Some intelligent, knowledgeable wealth managers, mainly people who analyze the credit and debt markets and have tens or hundreds of billions of dollars in assets under management, have an interesting theory as to why that may not be the case this time around. They therefore argue that some measure of prudence is justified at this point.

I’ll admit that I honestly don’t know where this is all headed, but I’m not buying an asset like Bitcoin that has no rational basis for valuing it other than what someone else will pay for it. At least with a traditional asset such as a stock or bond I can analyze it and conclude it’s worth some multiple of profit or rate of interest. Bitcoin has no cash flow. In fact, speculators often borrow money to buy it. It costs money to own it! It has some of these attributes in common with gold, but at least gold has a 5,000-year monetary history and intrinsic value as an industrial metal and jewelry. Bitcoin’s turned out to be a fantastic speculation, and some people who got in years ago or who have been skillful traders made a lot of money on its price rise and volatility. But I don’t see how anyone can justify it as an “investment.” Talk of a U.S. Treasury “Bitcoin strategic reserve” strikes me as lunacy, and perhaps is a sign, like a market cap in the billions of dollars for “FARTCOIN,” that speculative fever in crypto is near its zenith.

 

[cAPSLOCK]

I appreciate the reasoned input Ahlevah. All good points.

To the point that Bitcoin has not been battle tested. I would agree. And it is currently in the boss fight of it's existence. If it CAN be broken, or beaten or shown to be useless this will be the cycle. It is being centralized (in holdings at least) by the ETFs mostly. Blackrock in particular. And the very big holders are having their bitcoin custodied by very few custodians. I think Coinbase is the biggest by far (and I am not much of a fan of that company for several reasons). This makes Coinbase both a honeypot for attackers, as well as a vector of attack from the powers that be. Does Coinbase actually hold all the reserves? Have they lost any? Are they artificially manipulating the price through rehypothecation?

On the other hand the CEO of Coinbase (an arch shitcoinner) talked expressly about Bitcoin at Davos (of all places) just recently. Even those who are naturally VERY opposed to bitcoin are finally having to take notice. At a certain point the game theory might just completely take over. I actually think we are well past the tipping point. But we are not all on the same page. Some just see it as the biggest "crypto".

And lastly about your first point, what would a new reserve asset bootstrapping from 0 look like at the very beginning of its existence? I would argue very much like Bitcoin has for 15 years. It is also arguably the most open free market good to ever exist. Always traded, with no need of permission, 100% portable. 100% a capped supply. All of this leading to volatile swings in price as more and more people (like Larry Fink among MANY others) convert from seeing it as a worthless digital casino to a (potential) uncorrelated reserve asset that is also custom designed to be the hardest, more easily exchanged, and difficult to control asset ever created. These things have made it EXTREMELY volatile. As well as difficult to understand as it is truly a set of new variables.

You ask how much debt the American economy can tolerate. I would add all the Fiat currencies of the world. At least the biggys. And here is the thing. There seems to be little holding it back. And the more money supply there is in circulation the higher the prices of fixed goods, and valuable services will climb. We see it in Homes, land, cars, education, and healthcare for example. Indeed there are many other factors involved in these assets rise in price. But the number of dollars is first, in my opinion. There can ONLY BE 21 million Bitcoin. There are over 50MM millionaires. So they cannot all have even ONE. Forever. And yet you can still buy ONE for about 100k USD.

Amazingly... It's still on sale. It's still early.

OR it is the biggest ponzi in the history of the planet.

It is rare for there to be a binary bet like this with STILL so much possible upside.

Then, only SOME of Bitcoin;s price increase over time, and volitility is beccause of it. Much is also that is is being measured by an ever inflating unit of account. Bitcoin is not just going up. 1btc=1btc. The USD is also going down.

Sadly... it DOES seem we are once again going to go through a "shitcoin" phase with garbage like TRUPcoin, and Fartcoin, etc etc etc. I have watched this happen with EVERY new influx of new bitcoinners. Basically in each 4 year cycles. They see Bitcoin... see it as a gamble to make more dollars, but think buying it at the current (now AND then) astronomical price is stupid... but what if Trumpcoin could win? Or Doge? After all Elon?!?!?!

Then most of those people lose thjeir asses with the latest shitcoin or even a new one... and a few... actually come to see Bitcoin not as an "investment" or gamble, but as a way to store value that is unlike anything mankind has ever discovered or created. And they learn to embrace the volitility, ride it, and zoom out enough to realize that if they put x in there now, and it keeps doing what it has done (no one knows the future) then they only have to wait 4 years before X is bigger than it was at the start. EVEN if they got in at the very top of the last wave.

To me bitcoin is not something I am investing in. It is a shelter from the biggest economic storm our world has ever seen. One so, so many are nearly fully blind to.

 

[Ahlevah]

To me bitcoin is not something I am investing in. It is a shelter from the biggest economic storm our world has ever seen. One so, so many are nearly fully blind to.

Okay, so you basically view Bitcoin as a form of digital gold, correct? A way to preserve wealth? And that’s the way some financial advisors present it to their clients. Or they describe it as a hedge against inflation or a means of diversifying an investment portfolio. But what I suspect will happen at some point, especially during a financial or banking crisis, is it will drop quickly and people will get panicked out of it. There is a lot of hot, momentum-based speculative money in it that will likely flee af the first sign of trouble. I’m not predicting a panic will happen, but it could be the sort of event that gets people to swear they never want to see another cryptocurrency for as long as they live. Just like the 1929 Great Crash set the stock market back a quarter century, the same thing could happen with cryptocurrency. Never say never.

During the GFC, people thought they’d find shelter in dividend stocks or corporate bonds, but those sold off as well and people lost a lot of money. Gold initially took a hit, but soon recovered as a safe-haven bet. Treasury debt also performed well as a flight to quality. What crypto will do in the next banking or financial crisis is anyone’s guess, but I don’t like guessing. As insurance or ballast in a diversified portfolio, I’d rather stick to the fried and true: gold, T-bills, and short-term Treasury notes. That’s just me because I’m old and stubborn. But you may be right. Just make sure you can stomach a major loss of principal and tough out a possibly lengthy bear market.

 

[cAPSLOCK]

I do see it as digital gold, yes.. And currently it is definitely fulfilling that role and mostly only that role. But I think in the future payment will be built on layers on top of it.

As to it crashing magnificently. it is certainly done that many times in the past, and I have lived through several of them 80% at a time sometimes.

However, it is possible this time it could be dampened somewhat by the amount of money that is now involved. I think that'll give it a little bit more resiliency than it had in the past when it was so thinly traded.

 

[Ahlevah]

However, it is possible this time it could be dampened somewhat by the amount of money that is now involved. I think that'll give it a little bit more resiliency than it had in the past when it was so thinly traded.

It’s not just the amount of money involved, but the evolving investor profiles of the people putting money into it. Even retires are putting record portions of their financial wealth into so-called risk assets like stocks and crypto. The question is do these people possess your level of risk tolerance? Some do. Most probably don’t even if they’ve talked themselves into believing that they do.

Crypto in Your Retirement Account? It's Not a Crazy Question

Time was, including crypto in your retirement account seemed far too risky. Some financial experts now recommend it for diversification. But buyer beware.

www.kiplinger.com

 

[cAPSLOCK]

It’s not just the amount of money involved, but the evolving investor profiles of the people putting money into it. Even retires are putting record portions of their financial wealth into so-called risk assets like stocks and crypto. The question is do these people possess your level of risk tolerance? Some do. Most probably don’t even if they’ve talked themselves into believing that they do.

Crypto in Your Retirement Account? It's Not a Crazy Question

Time was, including crypto in your retirement account seemed far too risky. Some financial experts now recommend it for diversification. But buyer beware.

www.kiplinger.com

If people make foolish investment decisions is that because of the asset? Or the "investor"?

Do not make the error of classing Bitcoin with "crypto".

"Crypto" is a losing bet. Over, and over and over and over and over and over. Did I mention I have been a bitcoinner since 2011?

I have seen it. The first altcoin (shitcoin) I learned about was something called "Solidcoin". Since then I have seen hundreds of altcoins come and go. A tiny number of them have done something that is novel enough to be notable. But all the rest? Rugpulls. All the way down.

Same thing with Solana, and Ethereum, and Trumpcoin (lol).

Garbage.

Bitcoin is something different. But it will still take a little while for the majority to realize it. But this means we are still early.

YOU can still buy an ENTIRE bitcoin for about 100kUSD.

There are >50 million millionaires in the world. Less than half of them will ever have a chance at owning an entire bitcoin. Think about that a second.

Many will say I am looking for the "greater fool". But no... I am not selling. I will borrow against my bitcoin hoard, but i will not sell. I am already secure. I am just trying to wake up anyone else who might be able to see...

 

[Econ4every1]

AND an NFT is a unique digital asset that can't be replicated (and is stored on a blockchain)

An NFT is basically a digital certificate of ownership that proves you are the real owner of that specific digital item.

The actual code might look something like this:

The code above might contain details about the item and the purchase. In some cases the transfer could require that the original owner or creator is given a percentage of the proceeds.

It's not a copy of the item, it is not a legal document. It's just a digital receipt recorded using a decentralized ledger.

All in all, I think NFTs could be useful as a technology. Specifically, whatever the value of a technology that allows the decentralized recoding of a certificate of ownership or receipt.

 

[Econ4every1]

If people make foolish investment decisions is that because of the asset? Or the "investor"?

It really doesn't matter if the market for whatever it is results in destabilizing the society it's implemented in.

Bitcoin is something different.

No, it's not, it's simply the best established of the 'garbage' and has taken hold in the minds of a sufficient number of people.

YOU can still buy an ENTIRE bitcoin for about 100kUSD.

What I will never understand is, if Bitcoin is sooooooo valuable, why would anyone sell it for dollars?

There are >50 million millionaires in the world. Less than half of them will ever have a chance at owning an entire bitcoin. Think about that a second.

Chance? Or not dumb enough?

Many will say I am looking for the "greater fool".

You are.


Here is my prediction for whatever Crypto moves to the top, be it BTC or whatever.....

1. Eventually the world will run out of fools and the rate of return will plateau. Investors, no longer seeing the high rate of return will abandon and the whole thing will crash.

2. Before #1 can happen, a handful of wealthy people will promote it on a huge scale, the lemmings will invest, and the ultra wealthy will bail out for dollars or other national currencies. The 100's of millions of losers will end up transferring their hard earned currency to a handful of wealthy millionaires and billionaires. If BTC is allowed to get large enough, the economy will crash and people will wonder how they were so stupid. If we're lucky, the thieves will be American, so at least the currency will be here in the US, if we're unlucky, the wealth transfer will end up shifting to other nations, specifically those that are not friendly with the US.