Not one person I've discussed bitcoin over the years bought any...
- Thread starter johnarb
- Start date
Timing is everything.
Fair question. That's very easy, for me the #1 reason is the same as the reason for owning nflx, amzn, gold, or silver, which is for "investment", the high-risk, high-reward kind.
I'm also going to tell you that I believe in the ideology. Bitcoin was created by Satoshi because he did not trust the leaders of all the nations worldwide when they bailed out the financial system that was ruined by the Wall Street bankers. They printed trillion$ upon trillion$. It was coordinated effort worldwide so as not to cause hyperinflation. I'm not saying the bailout was not needed as I can just imagine what kind of world we would have without the bailout but the bankers got rewarded and the rich got even richer.
Bitcoin is a decentralized, trustless, crypto currency, unlike any govt fiat where they can turn on the printing presses 24 hours a day for years...
The first bitcoin transaction cites The Times headline of the 2nd bailout for banks and recorded on the blockchain which cannot be altered forever.
https://www.reddit.com/r/Bitcoin/comments/1s81ua/the_first_bitcoin_transaction_cites_a_newspaper/
@johnarb, have you ever bought anything with it?
See, my idea about Bitcoin or any other coin is that it's main purpose is a means of exchange. Secondary is value storage.
The actual usage of any currency determines the relative value. USD is in high demand, since it's used worldwide, creating a strong currency... high relative value. Similar with Euros.
Uhm... say South African Rand is used less widely... therefore it's a weaker currency.
Now IMO, if any currency is driven up in price compared to other currencies... it's warranted when that demand stems from usage... used to buy good and services. If demand is up mainly for a storage of value, then it will go into bubble territory.
Stocks are bought for investments in the sense that they provide income... dividends, due to companies making a profit.
If stocks are bought in the sense that they will and should go up and only up without the main reason of the company making profits, it's also in bubble territory. If eventually the company never makes money, it's stock should be virtually worthless (excl assets).
In the 1600's there was the Dutch 'Tulip mania', where anyone wanted to buy and hold tulip bulbs because they would simply go up in value, as they have done in the past. 1 bulb could buy a house... but generally bulbs wouldn't be used as a means of exchange for buying goods and services. So eventually, people realized nobody actually bought anything with it and it collapsed... bubble popped.
So, IMO... and I think most bitcoin-fans and the bitcoin-founders would agree... any digital currency stands or falls with the usage. I'm curious how much in $-value is used to buy goods/services... outside the exchange/buying/selling of the coin itself. Basically, what's the GDP of Bitcoin use excl. trading?
A bit of fun for holder of bitcoin regarding my idea of how high can it go???
Hypothetically, if BTC would replace the USD within the US as a means of payment and storage etc... it would have a value.
US GDP is about 19 Trillion. M@ money supply is about 13.5 Trillion... so that's a ratio of 70%. If there's no more USD used for transactions in the USA, but in stead it's BTC... that would mean the market cap of BTC would be about 13.5T in $ to service the GDP.
That would mean 1 BTC = 650.000 USD at maximum capacity of 21 mln BTC float.
If it's not being used... 1 BTC = 0
If it replaces ALL fiat currencies worldwide and it's the only digital coin used...
1 BTC = 6.5 mln USD
But, again... relative value.. it would basically mean USD is worthless... and you should look at how many BTC buys a loaf of bread...
A loaf of bread will probably cost 10k USD by that time.
See, my idea about Bitcoin or any other coin is that it's main purpose is a means of exchange. Secondary is value storage.
The actual usage of any currency determines the relative value. USD is in high demand, since it's used worldwide, creating a strong currency... high relative value. Similar with Euros.
Uhm... say South African Rand is used less widely... therefore it's a weaker currency.
Now IMO, if any currency is driven up in price compared to other currencies... it's warranted when that demand stems from usage... used to buy good and services. If demand is up mainly for a storage of value, then it will go into bubble territory.
Stocks are bought for investments in the sense that they provide income... dividends, due to companies making a profit.
If stocks are bought in the sense that they will and should go up and only up without the main reason of the company making profits, it's also in bubble territory. If eventually the company never makes money, it's stock should be virtually worthless (excl assets).
In the 1600's there was the Dutch 'Tulip mania', where anyone wanted to buy and hold tulip bulbs because they would simply go up in value, as they have done in the past. 1 bulb could buy a house... but generally bulbs wouldn't be used as a means of exchange for buying goods and services. So eventually, people realized nobody actually bought anything with it and it collapsed... bubble popped.
So, IMO... and I think most bitcoin-fans and the bitcoin-founders would agree... any digital currency stands or falls with the usage. I'm curious how much in $-value is used to buy goods/services... outside the exchange/buying/selling of the coin itself. Basically, what's the GDP of Bitcoin use excl. trading?
A bit of fun for holder of bitcoin regarding my idea of how high can it go???
Hypothetically, if BTC would replace the USD within the US as a means of payment and storage etc... it would have a value.
US GDP is about 19 Trillion. M@ money supply is about 13.5 Trillion... so that's a ratio of 70%. If there's no more USD used for transactions in the USA, but in stead it's BTC... that would mean the market cap of BTC would be about 13.5T in $ to service the GDP.
That would mean 1 BTC = 650.000 USD at maximum capacity of 21 mln BTC float.
If it's not being used... 1 BTC = 0
If it replaces ALL fiat currencies worldwide and it's the only digital coin used...
1 BTC = 6.5 mln USD
But, again... relative value.. it would basically mean USD is worthless... and you should look at how many BTC buys a loaf of bread...
A loaf of bread will probably cost 10k USD by that time.
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I've spent a couple of thousand $ worth of bitcoin on dozens of transactions. I'm about to buy a few tech items worth ~$600 in the next day or two.
I'm sorry I cut you off as we have a difference in opinion. I think bitcoin as a store of value is a much better use case. I do not want to imagine a time that bitcoin will replace any fiat as that would put a very big target on users of cryptos and it will be criminalized for sure.
As for bitcoin being a bubble like the tulip mania, I respectfully disagree with the many who think that it is. They may be proven right, eventually.
I think you misunderstood my analogies. I don't think it's like the Tulip mania (yet), but could get there without day to day use in transactions for goods as it's main purpose, like every currencies main purpose. A means for exchange. That's what money is....
I think bitcoin might replace fiat currencies... but mainly the ones that are less reliable. If you know your Zimbabwe Dollar loses value every day and buys you less and less... you would rather hold or be paid in a different currency. Whether USD, EURO or BTC. So technically it will also weed out the bad seeds. It's also already happening a bit in China I think.
Store of value eventually is senseless without an actual use. A few years from now, why would people want to have BTC instead of USD? In the case of Zimbabwe, I totally understand. But that's likely only a temporary thing. And then... it's like passing the hot potato...
Gold as a store of value is also highly overrated IMO (and in Warren Buffet's opinion). But at least it's a tangible item with a certain use besides value storage. Bitcoin without the use of transaction for goods/services... there's no life in it then. What's the point?
Also, pure store of value is severely diminished as there are lots of digi coins 'invented'. Those all erode that particular purpose. Value storage holds when it's a scarce item, or at least difficult to obtain. That was initially put in place by the limited 21 mln BTC... but now that ship has sailed since almost anyone can create a coin.
And therefore, if everyone is just holding for value... 'knowing' it will go up eventually.... that will be the same as the Tulip bulbs...
For the very reason that Satoshi Nakamoto invented bitcoin as it's not a manipulated by any central authority (it's decentralized). It solves the Byzantines Generals' Problem and the trust is in mathematics not in any central authority. I can post the whitepaper if you're interested.
I have ounces of gold jewelry (all high carat 18k and above), but I can never realize their monetary value as they are heirlooms from my parents. I'd much rather eat 10 cent ramen noodles than sell even one item. As a store of value, gold sucks.
Bitcoin is extremely rare as you cannot make one at will and very very difficult to obtain through mining. If you want to purchase one, Coinbase will sell you one (or buy one from you) for around $4,388 /each (+- fees). The other coins are not bitcoin and the market decides they are not worth the same.
[Bitcoin is not very good to be used as money as it's a completely transparent blockchain and not fungible. Say you order a pizza and the place accepts bitcoin, so you send payment for $20 and the blockchain says you got $10,000 worth left. You think the cashier may have an incentive to tell some of his buddies to corner you somewhere and pry the private keys from you using a crowbar on your kneecaps? Anywhere you spend your bitcoin, they will have same visibility so you don't know where the threats are coming from. Say you accepted bitcoin on your online store selling flowers but you didn't know the coin was used in the darknet, now you try to cash it at Coinbase and they shutdown your account and contact the feds as a bunch of people died of overdose of fentanyl laced drugs, now you're in the middle of a big investigation, welcome to the bitcoin blockchain where coins may be "tainted". Say you buy a bible, but it is illegal for such items where you reside, now you're going to jail, my friend. All coins based on the bitcoin code have this same problem.
There is only one truly private cryptocurrency that is not based on the bitcoin blockchain and is truly fungible and that is Monero. It truly is money. Even bitcoin early adopters silently support it because I suspect it will be their way to cash out and cannot be detected.]
@johnarb, did I just read that correct, you think bitcoin has no value as currency.. not to be used as money? Because of the transparency?
That tells me it's basically useless and should be at zero... In that case I honestly don't know why anyone would want or need them, if not for the speculative reason of 'it's going to go up'.
I very much disagree with that it's rare... yes, maybe that particular coin is... but the concept isn't anymore.
I read that some guys 'made' coins/tokens for Ether... called FUCK... that's literally meant as a joke... and it's now worth a million in market cap... created out of thin air, meant as a joke... so you could give FUCKS to friends...
That's the sign for me that digital coins are not rare at all....
That tells me it's basically useless and should be at zero... In that case I honestly don't know why anyone would want or need them, if not for the speculative reason of 'it's going to go up'.
I very much disagree with that it's rare... yes, maybe that particular coin is... but the concept isn't anymore.
I read that some guys 'made' coins/tokens for Ether... called FUCK... that's literally meant as a joke... and it's now worth a million in market cap... created out of thin air, meant as a joke... so you could give FUCKS to friends...
That's the sign for me that digital coins are not rare at all....
It's kinda funny... because I thought I had a base for calculating the true value of Bitcoin by using it as a measure like M2 in the money supply and compare it to output like GDP for usability and true demand... and I still think that might be a correct way to look at it... trying to give it meaning, at least to me.. (and I'm very much a sceptic).
But then you, as a bitcoin enthusiast, basically torpedo it by saying it's not to be used as money, therefore it's useless to me....
That's like me preaching to the choir, and the choir singing in full "the Lord is a hoax, He does not exist! Jesus was a madman, and the bible is a cartoon..."
(doesn't rhyme... basically a shitty song, my bad..)
But then you, as a bitcoin enthusiast, basically torpedo it by saying it's not to be used as money, therefore it's useless to me....
That's like me preaching to the choir, and the choir singing in full "the Lord is a hoax, He does not exist! Jesus was a madman, and the bible is a cartoon..."
(doesn't rhyme... basically a shitty song, my bad..)
You're doing selective reading and interpreting it the way you want to. I said it's not very good as money, but I believe it's a very good store of value. Do I think it's good for purchasing pizza? No. Do I think it's good for purchase of a car or a house? Yes. Store of value.
By the way, I'm one guy who already said I don't have much bitcoin holdings and is clearly biased, and you want to judge bitcoin as a worthless currency because of what I say? You should rethink that, man.
Get over the other coins. Anyone can make a coin. You can fork bitcoin and create JackOffCoin tomorrow. That's how Litecoin was started literally overnight. Now getting someone to pay you $4K per coin? How you going to do that?
We're going in circles. It's late. Goodnight. Let's agree to disagree, as I said earlier...