BITCOIN

Frequentlyhere

aaj123 said:

I feel it all comes from your idea that everyone in Bitcoin is there to ultimately come back to fiat. While people sure diversify back when rising values make Bitcoin a large part of their portfolio, most solidly intend to always keep hold of some that still forms a substantial part of their networth (I even put BTC etf in my SIPP exactly for that). Why would you argue that somehow this process is a zero sum game?

Well, you're right that it does depend entirely on the idea of it coming back to fiat. What would be the point of planning to hold BTC and take it to the grave with you if you're never going to redeem it? Even if you don't and it comes to an inheritor then they then will become the winner/victim of that game - ?

.Not really. Active addresses usually go high during periods of heavy trading and obviously this is during heights of speculative frenzy. The true metric is therefore number of addresses that remain holding Bitcoin

Point taken, but if activity is being dominated by speculation to the point that even with your view of increased use/traction of late, the total activity is still falling, doesn't that suggest it's primarily being used as a tool of speculation?

Also again to the point of what is the net point of just holding bitcoin and doing nothing with it? Unless it's to become redeemable as currency directly, it again is just a battle of wits between you and other holding also trying to time their sale. In the meantime, it's real value depreciates anyway given that real goods/services are priced in £/$.

aaj123

Frequentlyhere said:

aaj123 said:

I feel it all comes from your idea that everyone in Bitcoin is there to ultimately come back to fiat. While people sure diversify back when rising values make Bitcoin a large part of their portfolio, most solidly intend to always keep hold of some that still forms a substantial part of their networth (I even put BTC etf in my SIPP exactly for that). Why would you argue that somehow this process is a zero sum game?

Well, you're right that it does depend entirely on the idea of it coming back to fiat. What would be the point of planning to hold BTC and take it to the grave with you if you're never going to redeem it? Even if you don't and it comes to an inheritor then they then will become the winner/victim of that game - ?

If you die with fiat left in your estate, do you ask what the point of it was? Yeah sure you could have exchanged it for real goods and you did in life but what you didn't exchange you keep in some form of value store. You are just attuned to thinking of fiat as the means to this. Why? That's what I am saying a good allocation goes to Bitcoin as well because you don't want all your stored value to be attached to the traditional system that can inflate it away.

Frequentlyhere

You're too fast for me @aaj123 as I naughtily amended my last post to address another point of yours. Nasty habit of mine, apologies. What I wrote there is also relevant to what I say below: 

That's what I am saying a good allocation goes to Bitcoin as well because you don't want all your stored value to be attached to the traditional system that can inflate it away.

But Bitcoin too is being inflated away. 

We quote the price of bitcoin in US$, and it's not just a custom, it's because that and other fiat currencies is what things are actually priced in.

If a cup of coffee goes up from £3 to £3.30, you're going to need 10% more bitcoin to pay for it too.

It would be ok if Bitcoin neatly went up in value to compensate, but it doesn't  - the last two years of seeing double-digit inflation and falls in the price of Bitcoin show that.

So you'd be dependent on taking a long term view and hoping for long term appreciation, but as there's no profits, dividends or yield of any sort then your only possible source of appreciation is from someone else being willing to pay even more than you did for it.

You might win that game, but it's an uphill battle for various reasons e.g. inflation doesn't help, the market is manipulated by large players, and the miners still need to be paid too (why it's negative rather than zero sum).

HHarry

aaj123 said:

HHarry said:

darren232002 said:

Price up 40% in a fortnight where banks are failing and being bailed out and you think these are unrelated events? Laughable.

 Two banks, dealing in a niche area, have failed.  And one, with a history of problems, has been taken over.  That’s only 3 banks globally.

 If that’s enough to get people flocking to BTC then good luck to them.

Do you think we are talking of people going all-in on Bitcoin? Of course not. We are talking of allocations to Bitcoin being ramped up just like corporates have relationships with multiple banks. Such increased allocations cause enough inflows to be bullish on Bitcoin.

Looked at in this way, it appears downright unreasonable and bad fiduciary duty to not have even one alternative way of keeping hold of value outside the traditional banking system (now don't say you expect corporates to store gold / diamonds / cash under mattress because these are not items one can transact with outside of third party reliance or even transact in digital form). Can there even be a defense against such basic risk management?

 Don’t disagree with your point AAJ.  The bit I had an issue with was the ‘Banks are failing’ comment.  That may be factually correct (just) but it’s a bit doomsmongery. 

 Sure people may think it’s prudent to store some wealth elsewhere in the current financial climate as a whole, but sensationalised comments like that are a bit Daily Mail.

aaj123

Frequentlyhere said:

Also again to the point of what is the net point of just holding bitcoin and doing nothing with it? Unless it's to become redeemable as currency directly, it again is just a battle of wits between you and other holding also trying to time their sale. In the meantime, it's real value depreciates anyway given that real goods/services are priced in £/$.

What is the net point of ever holding fiat cash? To serve as a way to hold value when you didn't want to exchange it for other real goods. Same for BTC. Its just an alternate way to hold value and needn't be the only way either. For example, your estate could hold value in both fiat and Bitcoin. Your last sentence is the wrong direction. Bitcoin's purchasing power has no reason to go down over time as its supply is near fixed. You should rather expect your Bitcoin holding to retain purchasing power over time while any fiat left in your estate will certainly lose its purchasing power over time.

silvercue

Frequentlyhere said:

silvercue
Best performing asset class in last 10 years.  And this year... only up 60% already with another halving next year.   How are the non crypto markets doing?  Not as well.  Which is usually pretty standard. 

Well,  if you just want to boast that you're speculating successfully on bitcoin to the overall detriment of others trying to do so too, then whatever floats your boat. It's not really something that resonates with me because it can't generate winners overall, only winners at the expense of (more) losers.

I also find it rather odd in any case for an investor to be crowing about any asset that's still down 57% from its high and more like 70% in real terms. 

But even if it goes back to $69k or reaches $1m it doesn't really matter from an overall point of view, as it's still a negative sum game. But who cares if you're considering that from your lambo, right?

I was referring to Bitcoin performance history, not boasting about my personal gains.  

Your constant reference to silly memes is not really helping you come across very well.  Make your points, which I am certain you can do very well, without the constant little snipes and jabs.  They really are not necessary.

If you don't like Bitcoin, great, avoid it.  No one really cares.  Invest in what works for you.  

Frequentlyhere

aaj123 said:

What is the net point of ever holding fiat cash? To serve as a way to hold value when you didn't want to exchange it for other real goods. 

Agreed. It's good for that in the short term (and bad to hold in the long term due to inflation, yes)

 Same for BTC

Disagree. BTC can and will rise and fall in value by double digit percentages over the course of a day or two. If you were trying to hold a store of value for a short term purchase, you'd have to be lucky with your timing, so how is that a good store of value?

Your last sentence is the wrong direction. Bitcoin's purchasing power has no reason to go down over time as its supply is near fixed. 

A fixed supply of anything is not sufficient fundamental reason for it to hold value. Don't some other crypto coins have fixed supplies too, do they also have no reason to go down in $ value over time?

Frequentlyhere

Your constant reference to silly memes is not really helping you come across very well.  Make your points, which I am certain you can do very well, without the constant little snipes and jabs.  They really are not necessary.

Oh come on Silvercue, I've been debating BTC at great length and in good faith all afternoon here. Can't you let me have just one little lambo reference?

But anyway, aside from that, I did still make my points to you in my reply. I shall endeavour to de-lambo my remarks going forward.

silvercue

Frequentlyhere said:

Your constant reference to silly memes is not really helping you come across very well.  Make your points, which I am certain you can do very well, without the constant little snipes and jabs.  They really are not necessary.

Oh come on Silvercue, I've been debating BTC at great length and in good faith all afternoon here. Can't you let me have just one little lambo reference?

But anyway, aside from that, I did still make my points to you in my reply. I shall endeavour to de-lambo my remarks going forward.

Wonderful - we can argue in peace now!

aaj123

Frequentlyhere said:

 Same for BTC

Disagree. BTC can and will rise and fall in value by double digit percentages over the course of a day or two. If you were trying to hold a store of value for a short term purchase, you'd have to be lucky with your timing, so how is that a good store of value?

If you are trying to save value for a purchase in short term, yes you hold fiat and Bitcoin doesn't serve your purpose - I agree on that. But when it comes to storing value for any long term, Bitcoin serves your purpose better as it has a limited supply and so will retain value against increasing fiat money supply. Now you mention that many other coins also have controlled supply but there you are losing nuance of how certain one can be of the governance involved for those coins. Most of these shitcoins are VC or dev controlled so why would you just trust their supply schedule not to change to general detriment at the cost of some benefit for few? In some cases like ETH, I am indeed bullish as the PoS switch has indeed yielded tight supply constraints alongwith sufficient governance on the ETH protocol. So yeah I do agree that both BTC and ETH serve the inflation hedge purpose over longer term though the view is that PoW is somewhat more antifragile in a scenario of sovereign attack - yet to be tested though against PoS in this matter.