Crypto Crash Survivors Could Become Tomorrow’s Amazons, Bank of England Says

NoahA said:
You're honestly hopeless and I will never waste time talking about bitcoin with you again. You appear to want to learn, but then come right back to your firm opinion that is based on a lack of understanding. So I see now that you don't actually want to learn. You have your mind made up and that's final. Luckily you're older I think, so you probably will get by without having to learn about crypto and blockchains, but the younger generation will for sure need to get up to speed if they aren't learning already since they will be forced to use it.
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It's too bad you felt you have wasted your time. I have rather enjoyed our back and forth trying to convince you that bitcoin (not crypto) isn't the end all be all.

It's not that I don't want to learn it's more that your arguements haven't convinced me. You haven't addressed my concerns that bitcoin (not crypto) is not yet widely accepted as a currency. (Are countries where bitcoin is the offical currency pricing merchandise in bitcoin?)

As a store of value bitcoin is too volatile. (If you have 20K and need it to make a payment a couple months from now, where do you keep it? Most would keep it in cash or a savings account)

Bitcoin meets the definition of a bubble. (Google it and find which one you like, bitcoin fits)

Bitcoin has too much hype. "You'll be sorry if you don't buy now." "How will you feel when it gets to the moon?" These are playing on my emotions and over the years I've found that's not a good reason to invest.

FWIW; I agree with you on fiat and inflation. I would truly like to see a global currency that can be easily moved from jurisdiction to jurisdiction. I'm thinking that it will happen one day. At this time I wouldn't bet that it will be bitcoin.

Yes, you are right I'm an old fart but with age comes experience. Without experience you tend to make bad decisions; unfortunately the only way to get experience is by making bad decisions.

Good luck Noah!!
 
To me, it's not a currency. And nor is it a store of value, or a hedge against anything.

It's a speculative thing. Worth a punt with money you can afford to lose.

Stick 1% of your investment portfolio in it, and what's the worse that can happen? It's asymmetric, so the best that can happen is quite good.
 
NoahA said:
But lets face it, if you got into bitcoin even as late as March 2020, and captured a 10x return, you would have done much, much better than anything else. Even now at 20k, you'd be sitting on a 5x from a roughly 4k low.
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False. The best area to be in since March 2020 was energy and in particular Cdn energy. Based on your theme are you personally regretting your lack of participation in Cdn energy mid caps / juniors ?
 
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deaddog said:
What I don't like about bitcoin. Let's address this one by one.

Let's start with the obvious. It's not a currency.
It is not trusted or widely accepted as currency.

I know that more and more merchants are accepting bitcoin as a method of payment but I have yet to see products priced in bitcoin.

I'm assuming that if you want to buy something with bitcoin the merchant will convert to fiat and charge you at the going exchange rate. (maybe someone who has bought a Starbucks coffee can share their experience)

How am I going to give 10 bucks to help out a homeless person or leave a tip for the hotel maid?
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It's intellectual currency, thus the current disconnect. It requires an investment of time and education to grok it's value proposition beyond it's current state of being.
Do you know what the first State (European) sanctioned currency was in the New World?

Look up the history of wampum.

You certainly have valid criticisms, whether they weather the test of time is what the current environment of speculation is all about.
 
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deaddog said:
What is it you expect from a store of value?

It is one of the problems I have with bitcoin. I can't figure out how to value it. So I don't know if bitcoin is a bargain today or if it's going much lower.

As near as I can figure you have to hope that someone will take it off your hands in the future.

Right now my store of value will be cash. If something comes along that seem to be increasing in value faster than cash then I'll speculate. Not saying it won't be bitcoin but whatever it is the risk will be controlled. When the price of stuff starts to decline there is no downside to cash.
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There is a base electricity cost to produce BTC as well as maintaining the infrastructure that supports it. In theory and practice, and we have observed this cycle; when it costs more to have machines mining then the BTC they produce, they get turned off and the network hash rate decreases. When it becomes profitable again due to lowered competition, those machines get turned back on and the network hash rate increases.

Cash is great. It's more an "and/also" future and not so much "either/or"

BTC has had a net positive impact on those whom have taken the time to understand it.
 
Sprout said:
Look up the history of wampum.
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Interesting! As a skeptic I see a few difference and some similarity to bitcoin.

Wampum had value because it had other uses. It was ornimental and used as jewelry. Bitcoin has no other uses.

Wampum had value because it was hard to manufacure at the time with the tools available to the natives. Much like bitcoin today, but as time and technology move on the tools improved. Today bitcoin is secure but it's a software and who knows what the future will bring.

Wampum is also a great analogy in that the Europeans took something of little value (beads and trinkets) and traded them for something of great value. (Furs). Not unlike the trades going on to day where bitcoin (virtual) is being traded for fiat currency. (universally accepted)
 
Sprout said:
There is a base electricity cost to produce BTC as well as maintaining the infrastructure that supports it. In theory and practice, and we have observed this cycle; when it costs more to have machines mining then the BTC they produce, they get turned off and the network hash rate decreases. When it becomes profitable again due to lowered competition, those machines get turned back on and the network hash rate increases.
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I could understand if bitcoin was valued at the cost of production. I know what is involved to aquire an ounce of gold and can value it based on that cost.

Now when all the bitcoin has been mined, the system requires that miners still operate in order for transactions to be posted. If the miners can't make ends meet collecting fees, what happens to the system?
BTC has had a net positive impact on those whom have taken the time to understand it.
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I doubt that anyone who bought bitcoin in the last year and a half agrees with that statement.

I'm a skeptic. I see bitcoin as a pump and dump operation. Someone is marketing this.
Bitcoin is in reality a bunch of 1s and 0s on a computer. It's shown as a shiny gold coin with a "B" stamped on it. Why is that?

The ads for bitcoin are "Fortune favors the brave" "Don't miss this opportunity of a lifetime" "Don't be a Larry" Playing with your emotions. Why is that?

Who is making money during these crypto winters? Someone is selling.
 
NoahA said:
Only because you need to get to a new equilibrium. Eventually people need to buy clothes, and food you of course need to buy consistently. Yes, many purchases will be delayed, but we will arrive at a price that seems fair value to buy something you need even if you know it might be cheaper in the future. Sure, most useless garbage that is bought will not be, and so lots of industries and retail will fail, but that is a part of a normal cycle. If a fat person decides to change their life around and become healthy, its not that they need to just slow down overeating (ie. smaller inflation), they need to be in a caloric deficit (ie. deflation) until they arrive at a healthy weight and then maintain this weight.

It will of course be maybe worse than the depression, going through deflation, a debt burst, and a changing monetary system, but there really is no way out. To maintain this system, it needs constant printing. The FED hasn't even started QT yet. Who is gonna buy all those junk bonds when they stop? If the FED just lets them roll off and companies can't expect the FED to buy their garbage anymore, many companies go under. Its inevitable now really. The only question is does it happen in 1 year or 5 or 10.
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I don't know how long you've been around, but gold bugs have been making identical arguments for literally fifty years - yet the fiat dollar-reserve system just keeps on trucking. I flirted with such arguments myself back in 2008 when it seemed a distinct possibility that the Big One had arrived, and that we were careening either towards a deflationary depression worse than the first time around, or else a global hyperinflationary collapse. Obviously, neither happened.

Speaking for myself, this taught me that while the monetary & economic system seems like an existentially magical force of nature operating beyond the power of mere mortals to understand or control, the reality is that concepts like "debt" are just arbitrary legal fictions, and the system as a whole is vastly more robust than doomers claim. E.g. the financial crisis was ended overnight when the SEC stopped forcing banks to mark junk mortgage debt to market; the 2020 pandemic and lockdowns caused a blip of a few weeks rather than a great debt crash and century-long Dark Age; a few months ago Russia was blackballed from the Western financial system, but this caused only a very slight impact in day-to-day life there.

While your sentiments about inequality etc. are admirable, and Fed policy certainly does greatly benefit elites, the fact is that a hard-money deflationary system does nothing to address these problems; just the opposite, as the major raison d'etre of the crypto system is goading hordes of mom & pop investors, pension funds and so forth into buying digital scrip so that a few VCs, early-adopting hodlers, and tech-bro corporate bosses can become stupendously rich and powerful within their own walled gardens, ideally immune from any kind of oversight, regulation, or accountability.

To the extent inequality is an issue, the actual answer is redistributive taxation.
 
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