BITCOIN

RolandFlagg

I just want to give an example of how adding 2% of BTC in the past can produce big upside in the years it does well, but doesn't give much more downside on the years it does badly with this chart:

https://snipboard.io/9hVOFR.jpg

The boxes to look at are the White AA box. This is standard 60% stocks, 40% bonds portfolio.

And the Grey box that says AAw/2.0%. This is 58% stocks, 40% bonds, 2% bitcoin.

For example:

Bitcoin good year 2017:
Standard 60/40 (white box) up 14.6%
58/40/2 allocation (grey box) up 40.6%

Bitcoin bad year 2018:
Standard 60/40 (white box) down 5.6%
58/40/2 allocation (grey box) down 6.8%

When Bitcoin goes up in a year, it often goes parabolic.

But yet in 2018 when it crashed 72%, it would have given you only a 1.2% extra loss to a standard 60/40 portfolio.

tebbins

RolandFlagg said:

I just want to give an example of how adding 2% of BTC in the past can produce big upside in the years it does well, but doesn't give much more downside on the years it does badly with this chart:

https://snipboard.io/9hVOFR.jpg

The boxes to look at are the White AA box. This is standard 60% stocks, 40% bonds portfolio.

And the Grey box that says AAw/2.0%. This is 58% stocks, 40% bonds, 2% bitcoin.

For example:

Bitcoin good year 2017:
Standard 60/40 (white box) up 14.6%
58/40/2 allocation (grey box) up 40.6%

Bitcoin bad year 2018:
Standard 60/40 (white box) down 5.6%
58/40/2 allocation (grey box) down 6.8%

Past performance and all that, which is utterly unknowable for crypto but at least with stocks and bonds you can make somewhat educated guesses based on valuations and yields.

RolandFlagg

tebbins said:

RolandFlagg said:

I just want to give an example of how adding 2% of BTC in the past can produce big upside in the years it does well, but doesn't give much more downside on the years it does badly with this chart:

https://snipboard.io/9hVOFR.jpg

The boxes to look at are the White AA box. This is standard 60% stocks, 40% bonds portfolio.

And the Grey box that says AAw/2.0%. This is 58% stocks, 40% bonds, 2% bitcoin.

For example:

Bitcoin good year 2017:
Standard 60/40 (white box) up 14.6%
58/40/2 allocation (grey box) up 40.6%

Bitcoin bad year 2018:
Standard 60/40 (white box) down 5.6%
58/40/2 allocation (grey box) down 6.8%

Past performance and all that, which is utterly unknowable for crypto but at least with stocks and bonds you can make somewhat educated guesses based on valuations and yields.

Small risk, large reward.

tebbins

RolandFlagg said:

tebbins said:

RolandFlagg said:

I just want to give an example of how adding 2% of BTC in the past can produce big upside in the years it does well, but doesn't give much more downside on the years it does badly with this chart:

https://snipboard.io/9hVOFR.jpg

The boxes to look at are the White AA box. This is standard 60% stocks, 40% bonds portfolio.

And the Grey box that says AAw/2.0%. This is 58% stocks, 40% bonds, 2% bitcoin.

For example:

Bitcoin good year 2017:
Standard 60/40 (white box) up 14.6%
58/40/2 allocation (grey box) up 40.6%

Bitcoin bad year 2018:
Standard 60/40 (white box) down 5.6%
58/40/2 allocation (grey box) down 6.8%

Past performance and all that, which is utterly unknowable for crypto but at least with stocks and bonds you can make somewhat educated guesses based on valuations and yields.

Small risk, large reward.

>.................... > The point > .................... >


                                 You

User232002

tebbins said:

Past performance and all that, which is utterly unknowable for crypto but at least with stocks and bonds you can make somewhat educated guesses based on valuations and yields.

Not really. 

'Valuations and yields,' eh? Compare the valuation of Bitcoin to Gold. Then compare metrics and inflows. As I have continually pointed out in several threads, Bitcoin can have a yield. Other assets have an even easier yield (such as Ethereum). Other tokens can be evaluated using metrics such as P/E ratios just as you would a normal stock. 

Just because you lack the knowledge of these aspects in the crypto world doesn't mean they don't exist. 

Linton

darren232002 said:

tebbins said:

Past performance and all that, which is utterly unknowable for crypto but at least with stocks and bonds you can make somewhat educated guesses based on valuations and yields.

Not really. 

'Valuations and yields,' eh? Compare the valuation of Bitcoin to Gold. Then compare metrics and inflows. As I have continually pointed out in several threads, Bitcoin can have a yield. Other assets have an even easier yield (such as Ethereum). Other tokens can be evaluated using metrics such as P/E ratios just as you would a normal stock. 

Just because you lack the knowledge of these aspects in the crypto world doesn't mean they don't exist. 

I am very confused.  Please unconfuse me.....

P/E = Price/Earnings.  In share world Earnings are the profit per share of the underlying company. Please could you explain how a crypto can have Earnings?  Yield is dividend/price.    The dividend comes from the profits of the underlying .company.  Where do the dividends come from for Bitcoin? 

User232002

Linton said:

I am very confused.  Please unconfuse me.....

P/E = Price/Earnings.  In share world Earnings are the profit per share of the underlying company. Please could you explain how a crypto can have Earnings?  Yield is dividend/price.    The dividend comes from the profits of the underlying .company.  Where do the dividends come from for Bitcoin? 

Haven't we literally already had this discussion in another thread?

I pointed out SUSHI which charges a fee on transactions and distributes that back proportionally to token holders. At the time I distinctly remember telling you that its current payment (dividend) per single token (share) was running at 12% APY. I told you that there is essentially no difference between SUSHI's business model and your typical high street FX shop. You want others?

AAVE is a decentralised lending solution where you can deposit crypto assets and the protocol will lend them out to other users. The protocol charges the other users interest and distributes these revenues back to the depositers and, in some ways, to token holders. Kinda looks like the business model of a bank (well, before the CBs gave them unlimited money and they didn't need depositers anymore) right? It currently has nearly $20B locked inside its protocol.

ETH burns transaction fees for any network use which increases the scarcity and therefore value of the remaining tokens. Since July, $2.5B worth of ETH has been burnt. That's network usage from people willingly paying to interact with contracts on the network and that value has directly accrued to holders of the asset. In other words, by holding the token you own a share of the underlying network, and the fees of the network are equivalent to profits of a company. This gets even better when you consider that ETH is moving to PoS and so by staking your ETH and securing the network you can earn a yield of ~6% APY (in addition to any price increase caused by the aforementioned fee burn).

Plenty of others too: https://cryptofees.info/

As for Bitcoin, its harder to generate a yield from it and it involves arbitrage, but last time I went down that rabbit hole was tedious so I'd rather just ignore it. 

tebbins

darren232002 said:

tebbins said:

Past performance and all that, which is utterly unknowable for crypto but at least with stocks and bonds you can make somewhat educated guesses based on valuations and yields.

Not really. 

'Valuations and yields,' eh? Compare the valuation of Bitcoin to Gold.
There is no objective way to value either, all you can do is guess about the remaining mine-able gold content of Earth, future industrial demand, utility/uptake, how long until gold is made redundant as a store of wealth because of space mining... They are so different that the means of attempting to value either are incomparable.
Then compare metrics and inflows. As I have continually pointed out in several threads, Bitcoin can have a yield. Other assets have an even easier yield (such as Ethereum). Other tokens can be evaluated using metrics such as P/E ratios just as you would a normal stock.
I assume by metrics and inflows you mean how much is left, roughly 50,000 tons of gold, 2.5m BTC (plus however much in other crypto assets) and how much fiat money is flowing into Crypto & gold - this information is not how valuations are arrived at.

Crypto coins have no intrinsic yield, and no earnings in the same way companies, bonds, real estate and cash do.
I understand that crypto assets can have a yield via lending or crypto "banks", which is very risky.
I also understand that there are businesses in the crypto space you can invest in, again, risky.

However, I am not aware of how a digital currency can generate a yield or earnings passively in the same way that a bond or company does, on its own, without anything else needing doing.

Just because you lack the knowledge of these aspects in the crypto world doesn't mean they don't exist. 

Which is why I'm asking you, since you are claiming these facts to be true, to explain how these facts are true, to a lay/beginner audience, in plain English, and provide your sources.

All I see so far is someone with little to no understanding of investing, parading as someone with @bowlhead99 levels of knowledge.

User232002

tebbins said:
There is no objective way to value either, all you can do is guess about the remaining mine-able gold content of Earth, future industrial demand, utility/uptake, how long until gold is made redundant as a store of wealth because of space mining... They are so different that the means of attempting to value either are incomparable. 

(1) There is plenty of literature written as to the reasons why gold has been valued the way it has. Durability, Fungibility, Divisibility, Scarcity etc.. These are objective metrics we can compare Gold and Bitcoin on. I'd suggest scrolling down to the handy colour coded table: https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-6ecc8bdecc1

(2) "So different that the means of attempting to value either are incomparable.' You clearly lack the intellect to model a situation. You seem to believe that models must be exact in order to be useful. All models are broken; but they can still be useful.

tebbins said:

I assume by metrics and inflows you mean how much is left, roughly 50,000 tons of gold, 2.5m BTC (plus however much in other crypto assets) and how much fiat money is flowing into Crypto & gold - this information is not how valuations are arrived at.

Current. Its not how current valuations are arrived at. If Gold is worth $10T and Bitcoin is worth $1T but their inflows are perpendicular to each other in Bitcoins favour, what do you think happens in time? 

Oh and by metrics I was referring to the table in the article above.

tebbins said:

Crypto coins have no intrinsic yield, and no earnings in the same way companies, bonds, real estate and cash do.

I disagree. But its another strawman anyway. Bitcoin isn't trying to be a company, bond or RE. Does gold have an intrinsic yield? By the way, would you like to define an 'intrinsic yield' please? Sounds like something you've just made up, which as usual only includes things you like.

tebbins said:

I understand that crypto assets can have a yield via lending or crypto "banks", which is very risky.
I also understand that there are businesses in the crypto space you can invest in, again, risky.

Can you please point to an example of a 'crypto bank' (as you describe them) that has ever defaulted or been unable to return funds or yield payments to its customers? If you can't, on what basis are you asserting that these banks are 'very risky'? Why is a business operating in the crypto space any more risky than a business operating in a brick and mortar space? Do you have any background in modelling risk? I suspect the answers are 'no' and 'because I don't like them.'

The bank protocol I referenced earlier that lends out funds to its customers has strict LTV limits. If they breach these, they get liquidated. This means you can't end up with a Bill Hwang situation where there is a load of unpaid debt and nobody knows who owns what because credit was given. In May/July this year, over $1T was wiped off the crypto market in a 60% drawdown. There were no bailouts, no contagion and no systemic risk. If I remember correctly thats about half the drawdown of the 2008 financial crisis and about 5 times Evergrande. Our system is more secure and robust.

tebbins said:

However, I am not aware of how a digital currency can generate a yield or earnings passively in the same way that a bond or company does, on its own, without anything else needing doing.

Well, we've been over this in the other thread and it was unbelievably tedious so I'm not going over it again. Besides, as I've already stated, Bitcoin isn't a bond or a company. Interesting to note you've changed the definition now to 'without anything else needing doing.' This seems to pretty much be your MO.

tebbins said:

Which is why I'm asking you, since you are claiming these facts to be true, to explain how these facts are true, to a lay/beginner audience, in plain English, and provide your sources.

All I see so far is someone with little to no understanding of investing, parading as someone with @bowlhead99 levels of knowledge.

What facts specifically are you referring to?

Look, bottom line here is that you aren't interested in having an intellectually honest debate. If you defined 'intrinsic value,' I'd rip that definition to shreds because (spoiler alert) there isn't a coherent definition of such a thing. Its a phrase used by people to describe something they think they know but that they can't define.

And this is the crux of all I see from you. You are so desperate to define Bitcoin as a 'bad investment,' you will change your definitions and arguments at will in order to arrive at the end goal. I've already shown you, at great pain, how you can use certain markets to capture a spread on your Bitcoin. Does it matter if it is called an 'arbitrage' or a 'dividend'? Why does it matter that you 'have to do something extra'? Does that somehow preclude it being a yield because I've had to click a few buttons or use a bit of knowledge? Before you say yes, can we consider that you stated cash has an 'intrinsic yield,' but cash under my mattress doesn't generate a return. Would you like to  amend your definition again?

Bitcoin is an abstract concept, and only people who can think abstractly will get it.

adamp87

RolandFlagg said:

Today's news (stolen from Coin Bureau newsletter):

American supermarket giant, Walmart has announced plans to install a full 8,000 Bitcoin ATMs in its stores and has recently completed the introduction of an initial 200, as a pilot project.

These ATMs will allow customers to purchase and claim BTC via a redemption code but will not, for the time being, facilitate the withdrawal of BTC based funds.

Although some users have voiced concern over the transaction fees involved in utilizing these ATMs, I see this as a great step toward mass adoption. Even those who spend little-to-no time on the web, will now be exposed to cryptocurrency…

https://www.bloomberg.com/news/articles/2021-10-21/walmart-shoppers-can-now-buy-bitcoin-at-200-kiosks-in-its-stores?srnd=cryptocurrencies

I honestly just don't understand this idea, or how likely it is that someone rocks up to a vending machine and decides to buy BTC. Surely there's not a market for that, and the fees must be insane to make it worthwhile, when you can literally do it via an app on your phone much easier.