Baron's Crypto Trading Journal

It's the easiest calculation in the world. Think of the Bitcoin system as a global savings account that anyone on the planet can securely deposit money into. The value of one Bitcoin equals the sum of all deposits divided by the number of Bitcoins in circulation. That's it.
Why is the value so different from month to month?
There will ever only be 21 million made but estimates are looking like it's really going to end up being 14 - 15 million because the remainder will end up being lost forever due to certain bitcoin holders forgetting their private keys or dying suddenly without leaving anyone access to their keys. In fact, a lot of that remainder has already been lost just from stories we've heard about people with significant bitcoin holdings dying suddenly. And that's one of the reasons why Bitcoin is deflationary by nature.

Let's pretend that the entire system stopped allowing deposits and withdrawals for a few years. Your Bitcoins would still go up in value over that time period because people are still going to lose their keys, die unexpectedly, etc. which will have the effect of making your bitcoins more scarce and therefore be worth more. And since nobody can increase the supply by saying "let's create some more Bitcoins to replace all those that were lost", the money supply can't be tampered with.
So you are saying that 30% or so is lost in the system and can never be recovered?
But isn't bitcoin mining a bit like trying to find a private key. I know the odds of finding a private key are astronomical but if someone manages to guess your key, then what?
So unlike fiat currency, there's no Central Bank required to constantly monitor and modify the money supply by printing more currency, raising interest rates, etc. The supply of BTC is hard coded and deflation is part of the system design.
The value will depend on supply and demand. Bitcoin is first to market so to speak but look at the competitors out there. What happens if the demand drops.
 
Yes, but again, when you say "guessing the solution" it almost implies that to solve the required problem, just have your computer throw out some guesses and you'll be rewarded in no time. That's just not the case.

Here's an easy way to imagine what it takes. If I ask you, "I have a one-letter word in my mind, and if you guess it, I will give you a reward." In the English language, there's only a couple of guesses, such as "a" and the letter "i" that can actually be one-letter words.

But what if I said, I have a 7-letter word in my mind, can you guess what it is? Because if so, I will give you a reward for doing that.

It would take you a long, long time to guess (or mine) that word because the number of choices is way more than a one-letter word. You would literally have to guess millions of times to eventually stumble across the right word. And then what if I said the solution would be a mix of letters and numbers? Clearly, that just made it even harder. But what if you were persistent and eventually guessed that mixed combo of 7 characters made up of numbers and letters? You would definitely expect your reward to be more than just solving a simple problem like guessing a one-letter word.

So the reason why the solution to that problem is significant is that it takes "energy and time" to solve the problem.

And that's really all that money is, which is an exchange of value for someone else's time and energy. Do you want to build your own pickup truck, lawnmower, and yard rake from scratch to take care of your lawn? Or do you just want to pay the landscaping company the money to just use their people and equipment to take care of it all?

Since bitcoin has a predefined amount that can ever be created, and since the creation process takes significant time and effort to create just one, it gives Bitcoin value just like the mining process gives gold value. Somewhere on this earth there are people that have to get off their asses and buy the necessary equipment, hire the right people, and secure the right land leases, and then actually DO THE WORK of stripping and sifting the land in order to mine just a single ounce of gold. Likewise, in order to mine bitcoin, you have to invest in the right equipment, pay for the energy used by that equipment, hire the right people to manage that equipment, and then properly use that equipment to DO THE WORK required to create a new bitcoin. And that's why gold and bitcoin are backed by the same thing.... Proof of Work, because neither are going to happen otherwise without the work required for the mining process.

So in summary, this creating bitcoin "out of thin air" statement you've made is like saying you can sit on your couch tonight and rub your fingers together to quickly create an ounce of gold. You and I both know that's never going to happen. In reality, significant time and effort will always be required to mine both gold and Bitcoin, hence the term "Time is Money".

One of the best metaphors and explanations I've come across, props.
 
Crypto is not an “asset”, it’s more of a bank with no balance sheet, fdic insurance or regulations. It will get smacked as the market doesn’t look to show returns this year it will be the first thing thrown off of the boat by large holders. The only thing that can stabilize crypto is reserves of some kind, ideally US dollars.
 
If anything you said was true, there would be virtually no uptake in Bitcoin usage by Europeans. But on the contrary, the adoption of Bitcoin in Europe has exploded to the upside over the last few years.

99% are just gamblers. Nobody uses BTC for payments. I am sure you even have no clue about the payment system that are used in Europe.
I live there so I think I have a better view on that than you. Globalarbtrader mentioned already that less than 2% of businesses accept BTC in the UK, so 98% does not.
I also have never seen any proof that Europe is massive investing in BTC for payments. Fake information without any proof.

Post from globalarbtrader:The reason bitcoin isn't attractive to professional investors isn't because they're large investors; it's because they're not stupid. There are a significant number of reasons why trading bitcoin makes almost no sense whatsoever.

But I know you are far more smarter than Globalarbtrader. That's the typical crypto believer profile.
The only thing you are not good at is timing your buy orders. From the 32 orders, 28 are at loss. Only 4 are not losing money.
 
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To me, Bitcoin is no different than any other instrument, chart it and trade it. The U.S. Dollar was once backed by Gold till 1933, it flourishes because of trust.

https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp

Tulips was once unbelievably expensive, people paying unheard of sums, 10 years of normal salaries. BTC might be this way as well.

I use to love to trade Pork Bellies, T-Bills and Enron, they were all "Hot" markets once, now delisted.

So long as there are charts and options, let's make some bucks.
 
It's the easiest calculation in the world. Think of the Bitcoin system as a global savings account that anyone on the planet can securely deposit money into. The value of one Bitcoin equals the sum of all deposits divided by the number of Bitcoins in circulation. That's it.

There will ever only be 21 million made but estimates are looking like it's really going to end up being 14 - 15 million because the remainder will end up being lost forever due to certain bitcoin holders forgetting their private keys or dying suddenly without leaving anyone access to their keys. In fact, a lot of that remainder has already been lost just from stories we've heard about people with significant bitcoin holdings dying suddenly. And that's one of the reasons why Bitcoin is deflationary by nature.

Let's pretend that the entire system stopped allowing deposits and withdrawals for a few years. Your Bitcoins would still go up in value over that time period because people are still going to lose their keys, die unexpectedly, etc. which will have the effect of making your bitcoins more scarce and therefore be worth more. And since nobody can increase the supply by saying "let's create some more Bitcoins to replace all those that were lost", the money supply can't be tampered with.

So unlike fiat currency, there's no Central Bank required to constantly monitor and modify the money supply by printing more currency, raising interest rates, etc. The supply of BTC is hard coded and deflation is part of the system design.
I see it as deflationary as well, but I do also see a flaw in that with a finite amount of any currency, or anything of value, it all ends up eventually in the hands of one entity or a small group. Wouldn't the amount of Bitcoin need to continue to grow to be viable and further the velocity of money?
 
I see it as deflationary as well, but I do also see a flaw in that with a finite amount of any currency, or anything of value, it all ends up eventually in the hands of one entity or a small group. Wouldn't the amount of Bitcoin need to continue to grow to be viable and further the velocity of money?
The supply hasn't been mined yet, so it is definitely growing and will continue to do until the year 2140. That's a lot of time for other people to get in and distribute the wealth, especially at a time like this when Bitcoin is trading at a significant discount to its highest price and pretty much everybody on the planet has heard about it.
 
I also have never seen any proof that Europe is massive investing in BTC for payments. Fake information without any proof.

Within the last few years, 1,391 Bitcoin ATM machines have been installed in Europe to facilitate Bitcoin payments and transactions. That's a lot of machines so there's obviously a strong demand for the service they provide.
 
Q: But if that did happen, then what would you do?
A: Move to another geographical location where Bitcoin is not banned. (Preferably tropical)

You'll have to pay an exit tax, but this is an excellent QA otherwise.

Q: What do you think about the other Alt coins?
A: Mostly worthless, but some will be superstars. Most of them beyond the top 30 are akin to casino gambling. Sure, you can put some entertainment money into them, and you may get a hit occasionally. It's not likely you will be a net winner over time with them, but they are definitely fun to gamble with if that's your thing.

Why does Bitcoin have to be the winner?
 
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