BITCOIN

aaj123

bugbyte_2 said:

You call Bitcoin an Asset, but to be an asset it must therefore have something supporting its price other than sentiment. 

Yes, there very clearly is 'something' that causes Bitcoin to be of value. Rigid monetary policy resulting in absolutely defined supply and scarcity characteristic, ability to be transferred peer to peer and ability to be self custodied without storage costs, censorship resistance. 

DannyCarey

aaj123 said:

bugbyte_2 said:

You call Bitcoin an Asset, but to be an asset it must therefore have something supporting its price other than sentiment. 

Yes, there very clearly is 'something' that causes Bitcoin to be of value. Rigid monetary policy resulting in absolutely defined supply and scarcity characteristic, ability to be transferred peer to peer and ability to be self custodied without storage costs, censorship resistance. 

Here are 10 somethings for you @bugbyte_2

1. Decentralisation: No government or central authority controls it. This gives Bitcoin a level of autonomy that many people believe will make it more resistant to inflation and economic crises.

2. Limited Supply: There is a finite amount of Bitcoin that can be mined (21 million), which means that it is scarce and many believe it will hold its value better than fiat currencies, that can be printed at will. The number of new participants and active addresses climbs every day also. 

3. Global Reach: Bitcoin can be sent and received anywhere in the world. This makes it an attractive alternative for people who need to transfer money across borders for next to no fees. 

4. Security: The blockchain that underpins Bitcoin is extremely secure, virtually impossible to hack or counterfeit.

5. Accessibility: Bitcoin can be bought and sold easily online, and it is increasingly being accepted as a form of payment by merchants around the world.

6. Low Transaction Fees: Bitcoin transactions are typically cheaper than traditional payment methods, which make it more attractive to people who want to avoid high fees...

7. Increasing Acceptance: Bitcoin is becoming more widely accepted by businesses and institutions around the world, which will increase its legitimacy as a form of payment and store of value.

8. Store of Value: Some people see Bitcoin as a digital gold, a store of value that can hedge against inflation and economic instability... like what we are seeing now with some Banks failing... again

9. Innovation: The technology behind Bitcoin is constantly evolving, with new features and improvements being added to the blockchain. This could make it more attractive to investors who want to invest in cutting-edge technology. Look at what Jack Dorsey is up to now...

10. Financial Freedom: Bitcoin offers users a level of financial freedom and privacy that is not available with traditional banking systems. This could make it more attractive to people who want to avoid government surveillance or control over their finances.

Frequentlyhere

DannyCarey said:

Here are 10 somethings for you @bugbyte_2...

One could refute each of these 10 as being anything of value, but to be honest it'd be a waste of everyone's time as we can just look to what's actually happening in the real world.

Save for a few marginal cases in developing countries, the only thing people use bitcoin for (and far fewer since the bubble popped) is for speculation.

No-one outside of bubbles like these is talking about it, no-one in the UK is thinking it's the future of money.

No-one thinks "ooh I'll use Bitcoin for that money transfer abroad, that'll be cheap/faster" 

No-one thinks " Oooh, bitcoin, that's how I can keep my money safe" - quite the opposite!

And so on, for each of these points. 

DannyCarey

You sure like to speak on behalf of everyone, don't you? Must be nice to know what's inside everyone's head... 

Frequentlyhere

DannyCarey said:

You sure like to speak on behalf of everyone, don't you? Must be nice to know what's inside everyone's head... 

Oh come on Danny, I mean speculate all you want and who knows, perhaps it will hit $100k and you'll be rich. Could happen, stranger things have.

But I'm not exactly taking liberties here - it's not just my opinion that people in the UK aren't buying groceries with bitcoin or aren't sending money abroad in any numbers that are meaningful.

An overwhelming % of us are using Visa/Mastercard/Amex/Cash for spending and using their bank/FX providers/3rd party txfer sites/Wise/Revolut etc for money transfers.  You know this, it's not something you can have your own personal truth on. 

Whether Bitcoin could evolve to be more useful is open to debate. My understanding (tell me if I'm wrong) is that the people who can change things are reluctant to do so for various reasons.

aaj123

Frequentlyhere said:

An overwhelming % of us are using Visa/Mastercard/Amex/Cash for spending and using their bank/FX providers/3rd party txfer sites/Wise/Revolut etc for money transfers.  You know this, it's not something you can have your own personal truth on. 

Bitcoin doesn't need to be used for this nature of daily spending in order to be valuable. Its a wealth asset not a spending one. It could be used for spending when circumstances demand it but that's not its primary purpose and the driver of its demand. Frankly, whenever there is a choice between being able to pay with fiat vs paying with Bitcoin, its rational to part with the thing that will lose value over time i.e fiat. 

Money is not just stuff one spends or prefers to spend, its also what one prefers to use for storing wealth.

Linton

DannyCarey said:

aaj123 said:

bugbyte_2 said:

You call Bitcoin an Asset, but to be an asset it must therefore have something supporting its price other than sentiment. 

Yes, there very clearly is 'something' that causes Bitcoin to be of value. Rigid monetary policy resulting in absolutely defined supply and scarcity characteristic, ability to be transferred peer to peer and ability to be self custodied without storage costs, censorship resistance. 

Here are 10 somethings for you @bugbyte_2

1. Decentralisation: No government or central authority controls it. This gives Bitcoin a level of autonomy that many people believe will make it more resistant to inflation and economic crises.

2. Limited Supply: There is a finite amount of Bitcoin that can be mined (21 million), which means that it is scarce and many believe it will hold its value better than fiat currencies, that can be printed at will. The number of new participants and active addresses climbs every day also. 

3. Global Reach: Bitcoin can be sent and received anywhere in the world. This makes it an attractive alternative for people who need to transfer money across borders for next to no fees. 

4. Security: The blockchain that underpins Bitcoin is extremely secure, virtually impossible to hack or counterfeit.

5. Accessibility: Bitcoin can be bought and sold easily online, and it is increasingly being accepted as a form of payment by merchants around the world.

6. Low Transaction Fees: Bitcoin transactions are typically cheaper than traditional payment methods, which make it more attractive to people who want to avoid high fees...

7. Increasing Acceptance: Bitcoin is becoming more widely accepted by businesses and institutions around the world, which will increase its legitimacy as a form of payment and store of value.

8. Store of Value: Some people see Bitcoin as a digital gold, a store of value that can hedge against inflation and economic instability... like what we are seeing now with some Banks failing... again

9. Innovation: The technology behind Bitcoin is constantly evolving, with new features and improvements being added to the blockchain. This could make it more attractive to investors who want to invest in cutting-edge technology. Look at what Jack Dorsey is up to now...

10. Financial Freedom: Bitcoin offers users a level of financial freedom and privacy that is not available with traditional banking systems. This could make it more attractive to people who want to avoid government surveillance or control over their finances.

To answer some of those points....
1) Central management of currency is essential for a nation state to manage its own economy.
2) Very limited supply is a problem if you want an economy to grow and invest for the future, and the standard of living to increase. Research the Gold Standard in the 1930s.  Deflation is a far more serious problem than inflation. 
7) I will believe that Bitcoin is becoming more accepted when my local Tesco takes it.
8) Has Bitcoin provided a hedge against inflation and instability in the past few years?
9) I am not sure I want my stored value to be a technology test-bed. It should be simple.  That does not prevent technology and innovation in the use of the currency.  Consider what has happened without Bitcoin in the past 50 years.
10) That is why it is attractive to those stealing money from the rest of us by crime and tax evasion.  I want governments to be able to prevent this. AIUI bitcoin makes it much more difficult.

Will we need more than one "bitcoin"?  Are you proposing a world where any person, company, or country can create a new currency?  If so you will need to duplicate the current trading currency infrastructure with exchange rates continuously changing and vast quantities of money being moved from one to currency to another.  Wuuld the situation be any different than currently? If you are not proposing that who will police the  system across the world to ensure there is only one "true" bitcoin?

Frequentlyhere

aaj123 said:

Bitcoin doesn't need to be used for this nature of daily spending in order to be valuable. Its a wealth asset not a spending one.

That though just takes us back to @bugbyte_2 's point: "You call Bitcoin an asset, but to be an asset it must therefore have something supporting its price other than sentiment"

I'm actually less firm/technical in my view than bugbyte as to what can consitute an asset. Sentiment moves a lot of things beyond fundamentals. When a fine art painting valuation doubles from sale to sale, did it fundamentally become twice as attractive? 

If for the sake of argument we say yes Bitcoin is a wealth asset, then ok, but in my opinion it's a poor risk-adjusted investment because it has so few positives about it.

If I had to make a good faith case for investing in it, the only thing I can really see is that it's the focus of much speculation and so potentially could recapture people's imaginations and boost up in value for a short term trade. If I squint really hard perhaps I could imagine the bitcoin community improving the code further to expand use cases for it.

On the other side though:

- As discussed, there's nothing productive there. It's not generating cash/yield in any form.
- The utility of the thing is very low, it's not practical to use mostly, and people prefer to hold it for appreciation as you've said. So there's no reason for people to hold it unless they want to play the speculation game.
- It has been tainted by the perception of scams/lack of security that crypto entails - rightly or wrongly, it's tainted.
- It's had several rounds of speculation already and as above, it has something of a reputation now. Does it have enough traction to sustain another significant round? 
- It's a manipulated market currently, part of the reason a bitcoin spot ETF keeps beng denied.
- Regulation is making it far more difficult for people to speculate on it, even if they want to. If we're dependent on speculation for appreciation, that's a problem.
- Holding it safely is, if not impossible, then not straightforward - learning curve. To be honest, you can mock, but if I thought the upsides outweighed all the rest of the downsides, I'd still probably be too scared of doing something wrong to drop £100k in it.

Would you disagree with any of the above?

aaj123

Frequentlyhere said:

- Holding it safely is, if not impossible, then not straightforward - learning curve. To be honest, you can mock, but if I thought the upsides outweighed all the rest of the downsides, I'd still probably be too scared of doing something wrong to drop £100k in it.

Would you disagree with any of the above?

Let's get one thing out of the way - a common misconception. 1 BTC is just an arbitrary unit. There is nothing that requires one to stump up a minimum amount to be able to own some BTC. Most user friendly platforms allow buying even £10 of BTC. If everyone suddenly decided on a convention to quote BTC price in say mBTC (milliBTC), would it give you comfort to say that its priced only £20 a pop?

Frequentlyhere

aaj123 said:

Frequentlyhere said:

- Holding it safely is, if not impossible, then not straightforward - learning curve. To be honest, you can mock, but if I thought the upsides outweighed all the rest of the downsides, I'd still probably be too scared of doing something wrong to drop £100k in it.

Would you disagree with any of the above?

Let's get one thing out of the way - a common misconception. 1 BTC is just an arbitrary unit. There is nothing that requires one to stump up a minimum amount to be able to own some BTC. Most user friendly platforms allow buying even £10 of BTC. If everyone suddenly decided on a convention to quote BTC price in say mBTC (milliBTC), would it give you comfort to say that its priced only £20 a pop?

No, sorry, I didn't mean to imply that one couldn't.

All I meant was that to treat it as an investment it probably has to be a reasonably substantial sum to be worth doing. Perhaps £100k is unnecessarily high. Let's call it the S+S ISA limit of £20k. I'd still be very wary personally about safely storing that amount of BTC, unless it was in the form of the long sought after BTC ETF.  

(ignoring the point that to me it would seem somewhat ironic to be investing in bitcoin via a financially regulated ETF under the purview of the monetary authorities)