BITCOIN

bugbyte_2

Might be naivety, but I do worry about the ramifications of any single asset being 'too big' to be allowed fail.

BTC has a market cap of approx. $555B* and HSBC has a market cap of £106B, and we know that HSBC, Lloyds, etc. were and still are too big to fail because it has / would take the entire country down with them. Is BTC too big to go to zero without crashing sections of the economy? Is BTC's slide taking NASDAQ with it? Or would BTC crashing have no material effect on anyone who didn't care less? (not saying it would go to zero - I have no idea, I could equally easily put the house on Liverpool winning tomorrow).


*although if you are reading this at any point after I typed it which is probably a given - although Darren will complete some ropy mental gymnastics to argue otherwise - this figure may well now not be correct.

Zola.

Difference with banks you mentioned is there are businesses and houses built off the back of them and there is years of polished regulation. 

Bitcoin is spread so globally that no i dont think it would have material impact on global markets. Sure there appears to be correlation to the nasdaq right now but maybe those similarities are of speculative nature... Risky tech companies with a lot of potential etc. 

People like me who invest in bitcoin do it as a bit of a hedge, with a main focus in broad based index funds etc. If bitcoin goes to zero, it'll be annoying but it will have very little impact on my future.. The upside is massive though... I suspect most people follow a similar strategy. 

I don't know anyone who is all in on bitcoin.. . I suspect its very few people in western societies. 

In some developing nations though it's all they have invested / stored if they are unbanked.

Bitcoin adoption is large and ever increasing, but its overall market cap value is tiny compared to other asset classes... Look at gold, well over 10 times bigger, although it's had thousands of years as a head start 😉

User232002

Malthusian said:

Anyone specific you had in mind? I didn't answer that question because it didn't apply to me. You addressed that question to people who believed 1) that Bitcoin is a "Ponzi" and a "scam" 2) that the current dump represents the end of it. Those two beliefs would only apply to someone with little interest in Bitcoin, few of whom will be reading p218 of a Bitcoin thread.

Its not always about you, dear.

I'm just a bit bored of people whose entire argumentative strategy is to continually argue against something but not put any definitive statements out there to avoid being shown to be incorrect. There's no point continuing this thread and in 5 years time people still talking about quantum cryptography, environmental impacts, or 'crypto bro money in = crypto bro money out.' I post on a forum thats had a Bitcoin thread since 2012 and thankfully people tend to realise that the predictions made by the anti-BTC crowd have been woefully incorrect time and time again. 

Malthusian said:

Not how interest rates work. Governments were perfectly capable of printing money in 1980 when savings accounts paid 10%pa.

Non-best-buy savings accounts pay 0.1% because that is the going rate for lending someone a stable currency, repayable on demand, backed by an industry insurance scheme and ultimately by the taxpayer, for people who don't bother moving their moeny around.

(1) But they didn't

(2) It isn't. Its the market rate when banks have no reserve requirements and very low capital requirements, backstopped by a money printer. They have no need to pay a market rate to market participants because the market is distorted.

Malthusian said:

A generation uninterested in Bitcoin transferring wealth to the generation that is interested in Bitcoin is not a great thing for hodlers. If more millennials get rich thanks to inheritance bailing them out, this reduces the potential market of people buying Bitcoin in the hope of getting rich.

You continue to create axioms and caricatures and argue against them. You are the literal embodiment of a strawman at this point.

People aren't buying Bitcoin to get rich, they are buying it because its a fairer system.

Frequentlyhere said:

Can I hold you to that? If Tether goes completely TU, are you saying that Bitcoin won't be substantially affected as it's a store of value?  

I'm not going to guarantee Tether; I've literally posted here before of how to create insurance against it going under if you have to hold it. I've also continued to expressly state that BUSD and USDC are safer. I see no reason to accept any additional risk.

But people that think Tether is at anything close to a substantial risk of blow up are incredibly deluded. They were investigated by the NYAG and given little more than a slap on the wrist for some minor violations. Do you think NYAG discovered it was an $80BN ponzi and gave them a $20M fine? 

Tether imploding might impact the price of BTC on a short term basis, but no - it wouldn't change the thesis or the long term outlook of BTC. It would be a great capitulation event to buy to be honest.

Frequentlyhere said:

"People under 40 invest in crypto in equal proportion to those who invest in the stock market"

Where's that from out of interest? If true, I'm not sure it's really relevant as lots of people under 40 have pensions invested in the stock market, so they might have £50 in bitcoin and £50k in their pension (and very few in reverse). Even putting that aside, I'm surprised by that, so would be interested to see the source.

This isn't a particularly controversial stat and there are lots of sources that show that broadly younger people make up the majority of crypto market participants. I'll just use this;



"Very few in reverse" is just an example of your bias. As are the numbers given; since given wages have been stagnant for over a decade, there really aren't many people under 40 with £50k in their pension pot.

Pensions use the 60/40 rule so are basically all underfunded because their bonds have underperformed for at least a decade now in real rates. Can't wait until we get to that conversation in 10 - 20 years time and the answer is to print more more to recapitalise these pension funds. 

Frequentlyhere said:

Re: yield/dividends/profit/cash, as per @Thrugelmir 's point, I think the bottom line is that you can't sit on currency and watch it appreciate without some other currency losing out. You can't do it with £, or with $, and if we give Bitcoin the dubious right as a currency you can't with that either. Its gains come from greater fools, of which there seems to be a dwindling supply at present.

Not a currency; its money. 

You are correct that Bitcoin's gains have to come from another currency (in the monetary sense) losing out. In an environment with competing money, a person is incentivised to spend the one that diminishes in value and hold the one that retains or appreciates in value. So yes, Bitcoins gains will come from the erosion of faith in fiat currencies as a mechanism for transporting value over time (store of value).

China and India continued on with the silver standard when Europe switched to gold. Their wealth evaporated as gold took the monetary premium of silver. You can't opt out of monetary competition.

User232002

lozzy1965 said:

"store of wealth" so far not so good.

On what basis? I think its doing just fine...

Malthusian said:

When people have been running around for 13 years trying to find a use case, with a lottery win as the incentive for finding it, and they don't find it, absence of evidence is evidence of absence.

I don't know how many times we've posted the actual use case in this thread. You just continue to shout about 'money in = money out' and add 'bro' to everything whilst restating arguments from 2017.

mattywallace121 said:

Its certainly going to be interesting coming back to this thread in 10 years time.....

I post on a forum that has had a Bitcoin thread since 2012. There is definitely one side that comes out better from reading comments from 2012 - 2018.

Frequentlyhere said:

Frankly though, I think this misses the point. Bitcoin has already lost in so many senses. Ben Hunt caught it exactly spot on.

That the value of Bitcoin now is being discussed in terms of interest rates, NASDAQ correlation, stablecoin regulation etc  rather than as a libertarian scream of freedom unleashing us all from the chains of Government money just shows that Bitcoin is very much becoming Bitcoin TM! A cartoon simile of Bitcoin managed neatly under the auspices of the FED + co. It's just another poker chip to play with in the Wall Street casino.

It only took 221 pages but finally someone has articulated a coherent and valid negative point about Bitcoin. Congratulations Sir. Not so much the talk of correlations, its a stretch to speculate on how true or untrue that is, but the idea that the principles of Bitcoin could be lost or missed would considerably constrain the utility of Bitcoin. 

bugbyte_2 said:

Might be naivety, but I do worry about the ramifications of any single asset being 'too big' to be allowed fail.

BTC has a market cap of approx. $555B* and HSBC has a market cap of £106B, and we know that HSBC, Lloyds, etc. were and still are too big to fail because it has / would take the entire country down with them. Is BTC too big to go to zero without crashing sections of the economy? Is BTC's slide taking NASDAQ with it? Or would BTC crashing have no material effect on anyone who didn't care less? (not saying it would go to zero - I have no idea, I could equally easily put the house on Liverpool winning tomorrow).


*although if you are reading this at any point after I typed it which is probably a given - although Darren will complete some ropy mental gymnastics to argue otherwise - this figure may well now not be correct.

Seems like a silly point scoring exercise to state that I'm going to 'complete some ropey mental gymnastics' about a market cap figure. I literally posted a few pages back that I fully expect Bitcoin to be 'down only' for the next few months 'at least.' Your comment and the caricature it contains says more about you than me.

To the point, it is literally written in to the first block of Bitcoin; "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." Bitcoin was created to be a robust financial system that expressly did not require bailout from a government. Bailouts create moral hazard and anyone arguing for one for Bitcoin isn't someone who understands what Bitcoin is meant to represent in the first place.

Reaper

OK here's my predication for the future though its a mugs game on an investment where sentiment is king.

Bitcoin has become a "risk on" asset, which was not its intention. As such for a while it will look like a leveraged version of the stock market.

If rival Ethereum successfully converts to Proof of Stake in August then Bitcoin will suddenly look old, slow, and dirty while Ethereum looks new, fast and green. There is a limit on how long the advantage of being first to market can continue and at that point it will go into long term decline.

The Bitcoin price depends heavily on "fear of missing out". As Bitcoin starts to look past its best that fear will decline and with it Bitcoin's price. It will be volatile as always but looking back we will see it's best days are behind it.

(BTW I'm not saying Ethereum will be all roses. The public is largely unaware of the horrors of MEV and the way Ethereum developers are legalising theft instead of tackling it.)

bugbyte_2

darren232002 said:

lozzy1965 said:

"store of wealth" so far not so good.

On what basis? I think its doing just fine...

On the basis that if you brought in at any time after the start of 2021 you will be up to 50% down. This weirdly matters to a lot of investors. If you think it is doing fine, by extension you must also believe BTC is currently undervalued (based on what?) and therefore a price correction will take place bringing it back to whatever you brought in at. You may well be right, but the market doesn't agree - it is the price it is because that is what the market is prepared to pay - and unlike everything else that's based purely on sentiment. You cant keep on pointing to a rally from March 2020 to March 2021 as some future prediction. What about the three years from Dec 17 where the price bottom fed? 

To be a store of wealth it would need to be stable and have roughly the same value in ten years time as it has today. BTC clearly and demonstrably is not in any way stable and its value in 10 years time would be a guess at best. Whats really interesting is if BTC was stable the 'I'm in it to get rich quick' group would disappear overnight. So what do you want? Stability and a store of value or current volatility with a possible go to the moon moment? You cant have both. 

Yes a few companies have it in their balance sheets, but don't equate that with any altruistic idealism. All PLC's have one goal only - and that is to make profits for their shareholders. Money has to be parked somewhere and if BTC fulfills that criteria, then so be it. If and when the  moment it does not money will shift elsewhere. Similarly, just because there is a Bitcoin mine running on Chicken Poo does not mean bit miners are green hippies. They will and can move to any location that provides cheap energy. If this is coal powered then the miners would not blink.

mooneysaver

Zola. said:

Why do you keep insisting on trying to derail a Bitcoin thread by talking about scam coins? Start your own Safe Moon thread please. 

Keep it on topic at least. This thread is for Bitcoin only. 

Right so building windmills in Gambia and releasing actual products (see Safemoon energy drinks: https://shop.helloenhance.com/products/safemoon-energy-drink-case) = scamcoin

Digital gold / inflation hedge which goes down in value when inflation rises = blue chip cryptocurrency?

Okay sir, I'll  take your word for it 

bugbyte_2

mooneysaver said:

Zola. said:

Why do you keep insisting on trying to derail a Bitcoin thread by talking about scam coins? Start your own Safe Moon thread please. 

Keep it on topic at least. This thread is for Bitcoin only. 

Right so building windmills in Gambia and releasing actual products (see Safemoon energy drinks: https://shop.helloenhance.com/products/safemoon-energy-drink-case) = scamcoin

Digital gold / inflation hedge which goes down in value when inflation rises = blue chip cryptocurrency?

Okay sir, I'll  take your word for it 

Thank you for the link, fascinating 'company' - no contact details and no company number, etc. Just give them money and it will all be good I am sure.

Favourite bit is their "collection of 10,000 Enhanced Apes NFTs—unique digital collectibles residing on the BSC blockchain.", complete with laser eyes (no passing off there then) available for only £242 each. 

BTW there is no Safemoon Energy Drink. That's what pre order means. If they get enough orders they will white label an existing product, or more likely just keep your money. Similarly there is no wind turbine in Gambia. If you can prove otherwise then brilliant!

User232002

bugbyte_2 said:

On the basis that if you brought in at any time after the start of 2021 you will be up to 50% down. 

This is an investing forum. I think its safe to say that measuring returns over a one year period for any asset or investment would be incredibly naive. The fact you want to compare returns over 12 months, but not over 2, 3, 4 or more is misguided at best and, more likely, just bias to fit your desired conclusion.

bugbyte_2 said:

This weirdly matters to a lot of investors.

Because they are weak, and this is what has got us in to this mess in the first place. The majority of people want to put their money in to a tracker and watch 'number go up.' The inability of participants, and probably the economy, to survive a drawdown due to the debt within the system has forced the feds hand. 

In 2018, Bitcoin went down 85% and a large number of market participants just went 'Nah, we ain't selling.' No bailouts using taxpayer funds were needed. That's what a robust system looks like.

bugbyte_2 said:

If you think it is doing fine, by extension you must also believe BTC is currently undervalued (based on what?) and therefore a price correction will take place bringing it back to whatever you brought in at. You may well be right, but the market doesn't agree - it is the price it is because that is what the market is prepared to pay - and unlike everything else that's based purely on sentiment. You cant keep on pointing to a rally from March 2020 to March 2021 as some future prediction. What about the three years from Dec 17 where the price bottom fed? 

Err... I do believe that BTC is undervalued and I believe I've made about a hundred posts here describing exactly why. I'm currently up multiples on what I put in to BTC whilst the market is at something like + 40% over that time span, so yes; I would consider it a fairly comfy store of value and not something I plan on selling any time soon. The original plan was to buy and not touch it for at least 5 years. I have yet to see anything to make me want to deviate from that thesis.

Why is it that market price/action is relevant when its down, but irrelevant or speculation when its up? Seems hypocritical and irrational. If you want to believe market price is indicative of value, then this logic works both ways; so were BTC to get to a new ATH you would probably have to revisit your thesis. Of course, when that happens most will handwave it away to protect their own ego - which is why I continue to ask for actual meaningful predictions of things that you think BTC will never achieve. That way we can point and laugh when they come to pass.

Also, you can't say market price matters and then cherry pick and exclude certain time periods because you don't like the results of what the market did during that time. At least not if you want to come to rational conclusions. 

bugbyte_2 said:

To be a store of wealth it would need to be stable and have roughly the same value in ten years time as it has today. BTC clearly and demonstrably is not in any way stable and its value in 10 years time would be a guess at best. Whats really interesting is if BTC was stable the 'I'm in it to get rich quick' group would disappear overnight. So what do you want? Stability and a store of value or current volatility with a possible go to the moon moment? You cant have both. 

Nobody gets rich quick in Bitcoin. This is a silly trope. Those that think they will inevitably puke their position in times like this and only those that have a long time preference succeed. Which, again, is kinda the point. The bitcoin ecosystem should be more robust because it has longer term thinking.

And you absolutely can have both. Going from nothing to a ten, twenty or more trillion dollar asset class necessarily involves volatility. As an asset class matures and gets bigger, its moves will become less pronounced - this is borne out by data that shows BTC's volatility is decreasing over its lifetime. When Bitcoin gets to its end state, the volatility will be less than the S&P, but by that point it will simply be a pure SoV and not an investment. 

bugbyte_2 said:

Yes a few companies have it in their balance sheets, but don't equate that with any altruistic idealism. All PLC's have one goal only - and that is to make profits for their shareholders. Money has to be parked somewhere and if BTC fulfills that criteria, then so be it. If and when the  moment it does not money will shift elsewhere. Similarly, just because there is a Bitcoin mine running on Chicken Poo does not mean bit miners are green hippies. They will and can move to any location that provides cheap energy. If this is coal powered then the miners would not blink.

Thanks for making the exact point I have made many many times in this thread already; people are driven by their own incentives. Show me the incentives and I will show you the outcome.

The cheapest source of energy is the excess of renewable energy in places or times where it can not be consumed (ie. solar during the day or wind energy in the antarctic). Given that this is an undeniable truth of renewable energy, how do you think a Bitcoin miner is going to respond? Coal is expensive, which is why very few miners use it. What are the knock on affects of this for both the renewable energy usage of the network as a whole and the resources made available to build out renewable energy networks?

Meanwhile, in the fiat system, the fed is run by a group of people that printed stupendous amounts of money whilst denying inflation would occur, pumped the market to Everest, sold their shares at the absolute top due to 'conflict of interest' and then turned on the tightening. Whilst put in place by politicians who only care about promising X group Y amount of money to get re-elected every 4 years.

Incentives of one system promote sustainability, the incentives of the other...

[Deleted User]

darren232002 said:

bugbyte_2 said:

To be a store of wealth it would need to be stable and have roughly the same value in ten years time as it has today. BTC clearly and demonstrably is not in any way stable and its value in 10 years time would be a guess at best. Whats really interesting is if BTC was stable the 'I'm in it to get rich quick' group would disappear overnight. So what do you want? Stability and a store of value or current volatility with a possible go to the moon moment? You cant have both. 

Nobody gets rich quick in Bitcoin. This is a silly trope. Those that think they will inevitably puke their position in times like this and only those that have a long time preference succeed. Which, again, is kinda the point. The bitcoin ecosystem should be more robust because it has longer term thinking.

And you absolutely can have both. Going from nothing to a ten, twenty or more trillion dollar asset class necessarily involves volatility. As an asset class matures and gets bigger, its moves will become less pronounced - this is borne out by data that shows BTC's volatility is decreasing over its lifetime. When Bitcoin gets to its end state, the volatility will be less than the S&P, but by that point it will simply be a pure SoV and not an investment. 

The only reason most people are interested in Bitcoin is that the price spiked and it made hundreds of thousands of people exceptionally rich very quickly, which in turn generated a wave of interest from other people who also wanted to get rich quickly. Suggesting that nobody gets rich quickly from Bitcoin and that only those with a long term strategy succeed is just incredibly odd given that context.