BITCOIN

aaj123

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?

Frequentlyhere

aaj123 said:

For the 'no traction' folk - see below for the trend in number of BTC and ETH addresses that hold >1 unit of each (do note that 1 unit comprises different proportions of the supply of each coin - BTC supply is around 19 million while ETH is around 120 million so the lines are not comparable with each other):

Wouldn't whether the address is actually active be a better metric of actual usage? (Genuine question) 

That looks to me like it's reached a peak of active use in April 2021 and since fallen back somewhat?

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?

Frequentlyhere

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.

I think it's also worth again pointing people to Molly White's article on this.

No, Bitcoin isn't pumping because it's a "safe haven" from banks

We don't need custom charts to understand the basic points she makes, such as:

Bitcoin isn’t a store of value

“Bitcoin is a safe haven” first requires people to believe that Bitcoin is a good store of value, which is a thoroughly debunked idea for all except those who believe that if you can manage to find two points on a timeline where a Bitcoin is worth roughly the same, then it’s a store of value. Checkmate!

The thing with stores of value is that I should be able to, at some point in the future, liquidate that value for somewhere relatively close to what I put into it. With Bitcoin, you have to hope like hell that that future point doesn’t happen to be during one of the periods where Bitcoin has lost a third of its value over the past year, or half over the last eighteen months (as it is now, even after the recent pump)"

aaj123

Frequentlyhere said:

The thing with stores of value is that I should be able to, at some point in the future, liquidate that value for somewhere relatively close to what I put into it. 

I mean you are free to put in any restricted constraint and that's fine for yourself. For many though, that isn't the sole point - it's also about having a way of storing value that is independent of the traditional system and which can be transacted without third parties. If such is more volatile then okay that's a price many are willing to pay.

aaj123

Frequentlyhere said:

Frequentlyhere said:

Wouldn't whether the address is actually active be a better metric of actual usage? (Genuine question) 

That looks to me like it's reached a peak of active use in April 2021 and since fallen back somewhat?

It's not really something that resonates with me because it can't generate winners overall, only winners at the expense of (more) losers.

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. I you were to really make a case of 'decreasing traction', you should see such keep trending down as more and more people dump their coins and they just get collected by a smaller number of fanatics. But that ain't what the data shows.

As for your last line, no idea where you get your conclusion from about 'negative sum game'. 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. Why would you argue that somehow this process is a zero sum game?

Every holder over time will benefit from Bitcoin regardless of their fiat gains as what they have is a piece of value outside of the traditional system that cannot be inflated away. The genesis of your 'zero sum game' theory is because you are not seeing this value and are just focusing on fiat gains and intention of 'total cash out'.

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.