How to value Bitcoin

[krugman25]

The ultimate result of Bitcoin and other cryptocurrencies will be a transfer of wealth from many poor, late adopters to a few wealthy, early adopters. A substantial amount of Bitcoin is in industry hands.

Several upcoming Bitcoin ETFs and increasing acceptance of Bitcoin as payment will likely supportive of prices for a while, allowing some big players to reduce their holdings into new liquidity.

India and Turkey, or it may have been another country in the Middle East, have banned Bitcoin, which might be considered as an early warning, like “Dead canaries in a coal mine”, so to speak. Throughout human monetary history, competing forms of payment against established forms of currency have had a rocky road. This history even includes gold. The more popular Bitcoin becomes, the quicker its demise, as Governments realize the effectiveness of their monetary and economic policies are reduced against a competing form of payment.

If, or when, Bitcoin and other cryptocurrencies are ultimately outlawed or otherwise substantially hobbled by Government action, the fantasy that a viable black market in cryptocurrency can be maintained would soon be broken, as all computer operating systems and communications are vulnerable to Government action.

Cryptocurrencies, especially Bitcoin, are being professionally marketed as an investment for “Suave, smart, sophisticates”. This marketing effort shows there are big players talking their book. Would this not be considered a solid sign these big players are wanting to reduce their exposure into liquidity? While the near term price outlook of Bitcoin seems positive, Bitcoin is not the sort of “Asset class” you want to plan on leaving to your kids.

This is all about narratives. You describe this market as wealthy early adopters taking money for poor later adopters. You also describe saavy marketing from big players to pump exit liquidity.

Let's break this down. Early adopters and investors make more money than late. Isn't that true for any market? If you invested in Apple, Microsoft, Google, etc. early, you likely made significantly more than someone who invested later on. Marketing? You're telling me nobody markets gold? Nobody markets Apple? Nobody markets Microsoft? Nobody markets Tesla?

Looking at objectively, Bitcoin is following the same path as many other emerging technologies that came before it. The only difference is the narrative people use to describe it.

There are a lot of solid criticisms that can be hurled at Bitcoin. Those criticisms require a technical knowledge of Bitcoin and getting past these lazy, regurgitated talking points.

 

[DiceAreCast]

So you buying a bitcoin with a push of your mouse button makes you an expert, however?

Lot's of expert opinions here from people that all share 3 characteristics -

1. They've never bought Bitcoin
2. They in turn have never tested it out, seen how the tech works, taken the time to understand the mempool and fees etc
3. And ultimately have been thoroughly wrong since 2009

Just the sort of people we should listen to...

 

[DiceAreCast]

Other innovations and technology provided an inherent advance and solved specific problems. What problems does blockchain solve? Everything I read and heard of does not sound like it really addresses any specific need. Why do you think we still settle many assets at T+1 or T+2? Because we did not see the need for DECADES to speed up settlements of assets or transfer of money. What's the need now?

This is all about narratives. You describe this market as wealthy early adopters taking money for poor later adopters. You also describe saavy marketing from big players to pump exit liquidity.

Let's break this down. Early adopters and investors make more money than late. Isn't that true for any market? If you invested in Apple, Microsoft, Google, etc. early, you likely made significantly more than someone who invested later on. Marketing? You're telling me nobody markets gold? Nobody markets Apple? Nobody markets Microsoft? Nobody markets Tesla?

Looking at objectively, Bitcoin is following the same path as many other emerging technologies that came before it. The only difference is the narrative people use to describe it.

There are a lot of solid criticisms that can be hurled at Bitcoin. Those criticisms require a technical knowledge of Bitcoin and getting past these lazy, regurgitated talking points.

 

[BeautifulStranger]

This is all about narratives. You describe this market as wealthy early adopters taking money for poor later adopters. You also describe saavy marketing from big players to pump exit liquidity.

Let's break this down. Early adopters and investors make more money than late. Isn't that true for any market? If you invested in Apple, Microsoft, Google, etc. early, you likely made significantly more than someone who invested later on. Marketing? You're telling me nobody markets gold? Nobody markets Apple? Nobody markets Microsoft? Nobody markets Tesla?

Looking at objectively, Bitcoin is following the same path as many other emerging technologies that came before it. The only difference is the narrative people use to describe it.

There are a lot of solid criticisms that can be hurled at Bitcoin. Those criticisms require a technical knowledge of Bitcoin and getting past these lazy, regurgitated talking points.

There are long term fatal structural issues with cryptocurrencies in a world made up of centralized governments. No matter how we may frame our arguments or try to characterize the opposite side’s opinions, these structural issues will remain. This is without going into the multiple competitive disadvantages cryptocurrencies have against other, more widely accepted forms of payment that have lower cost, purchase related benefits, and provide protection in case of a compromised account.

By the way, while my post was overall negative on Cryptocurrencies, especially their long term outlook, I will make money on a Bitcoin price increase. It is important to know when a trade idea has weak foundations so one avoids becoming over committed to it.

Perhaps later, I will repost some of johnarb’s articles showing the state of the art marketing effort in support of cryptocurrencies. Such marketing to the public does not come free. Guess who might be paying for that marketing?

 

[krugman25]

There are long term fatal structural issues with cryptocurrencies in a world made up of centralized governments. No matter how we may frame our arguments or try to characterize the opposite side’s opinions, these structural issues will remain. This is without going into the multiple competitive disadvantages cryptocurrencies have against other, more widely accepted forms of payment that have lower cost, purchase related benefits, and provide protection in case of a compromised account.

By the way, while my post was overall negative on Cryptocurrencies, especially their long term outlook, I will make money on a Bitcoin price increase. It is important to know when a trade idea has weak foundations so one avoids becoming over committed to it.

Perhaps later, I will repost some of johnarb’s articles showing the state of the art marketing effort in support of cryptocurrencies. Such marketing to the public does not come free. Guess who might be paying for that marketing?

A lot of the arguments against cryptocurrency I see from people that know very little about it usually involve talking about crypto attempting to be money or a store of value. Those are old 2016-2017 arguments. The vast majority of tokens today are not at all trying to be money or a SoV or a MoE. There are also differences between L1 blockchain tokens and protocol tokens. The only L1 token I hold is Ether. Outside of that all of the tokens I hold are protocol tokens. These tokens act similar to shares of a company. Some of them give me voting rights. Some of them give me profit sharing from the revenue generated by the protocol.

A lot of nocoiners are stuck in a time period from 4 years ago and really have no idea how the space has moved forward since then. They get their information from other people who themselves have no idea what's going on in this space. What's the saying about the blind leading the blind? There are a lot of very solid arguments against a vast number of tokens. Those arguments come from a place of knowledge and understanding of this space. None of the talking points I've seen here come from knowledge or experience. If someone wants to bash on crypto today they really need to take the time to update their knowledge and update their talking points. To people that are investing and building in this space, these old, rehashed talking points are laughable and have little or nothing to do with the majority of what's being developed today.

 

[RedDuke]

This is all about narratives. You describe this market as wealthy early adopters taking money for poor later adopters. You also describe saavy marketing from big players to pump exit liquidity.

Let's break this down. Early adopters and investors make more money than late. Isn't that true for any market? If you invested in Apple, Microsoft, Google, etc. early, you likely made significantly more than someone who invested later on. Marketing? You're telling me nobody markets gold? Nobody markets Apple? Nobody markets Microsoft? Nobody markets Tesla?

Looking at objectively, Bitcoin is following the same path as many other emerging technologies that came before it. The only difference is the narrative people use to describe it.

There are a lot of solid criticisms that can be hurled at Bitcoin. Those criticisms require a technical knowledge of Bitcoin and getting past these lazy, regurgitated talking points.

the one major difference that all of the example above gained value via fiat. BTC was pumped by Tethers. Only 25% is traded in fiat the rest in fake money. Disappearance of any of the above would have been detrimental once they got big. If BTC disappears tomorrow most of the world would not care.

 

[krugman25]

the one major difference that all of the example above gained value via fiat. BTC was pumped by Tethers. Only 25% is traded in fiat the rest in fake money. Disappearance of any of the above would have been detrimental once they got big. If BTC disappears tomorrow most of the world would not care.

Have you ever held Tether? Do you know how you get Tether? That's right, you swap it 1:1 with fiat. I almost exclusively use USDC for my stablecoin of choice. Nobody gives me USDC for free. I don't mine it. I transfer my fiat and swap into it.

Whatever you're posting here doesn't mean anything.

 

[RedDuke]

Have you ever held Tether? Do you know how you get Tether? That's right, you swap it 1:1 with fiat. I almost exclusively use USDC for my stablecoin of choice. Nobody gives me USDC for free. I don't mine it. I transfer my fiat and swap into it.

Whatever you're posting here doesn't mean anything.

yes if you want tethers you need to swap. But BitFinex just creates them out of thin air. Did you see the auditor they finally hired??? Tiny 3 people firm in Maldives. You just can not make this shit up.

the spike over last 1.5 years in BTC corresponded with insane amount of Tethers printed. Charts looks almost identical. This is what making this bubble unlike any other. I was too stubborn and stupid not to acknowledge what Tethers be able to accomplish.

 

[NoahA]

Did you see the auditor they finally hired??? Tiny 3 people firm in Maldives. You just can not make this shit up.

I too am eagerly waiting for this. After all the bitcoin bulls cheered that the legal case turned out well, the date of the first audit seemed like a good time to revisit this issue. But if the auditing firm in a joke, well, it won't solve anything. Will the courts really accept a joke firm?

 

[krugman25]

the spike over last 1.5 years in BTC corresponded with insane amount of Tethers printed. Charts looks almost identical. This is what making this bubble unlike any other. I was too stubborn and stupid not to acknowledge what Tethers be able to accomplish.

Wait, you mean if the MC of Bitcoin goes up the MC of stablecoins trading said Bitcoin will go up as well? Shocker.

Difficult to believe people missed out on generational wealth because of Tether conspiracy theories.