BITCOIN

aaj123

Frequentlyhere said:

aaj123 said:

Are people surprised that Bitcoin continues to be buoyant despite supposed bad news of Coinbase getting a Well's notice and Binance being accused of breaking laws and supposed regulatory strangling attempts?

Its actually simple - people who buy Bitcoin during periods of fear like now are not speculators but rather the ones who buy in after research and understand the antifragile nature of Bitcoin and also the distinction between Bitcoin and participants of the crypto ecosystem.

Yup - very few understand.

Were people surprised by the 75% sell off beforehand?

Simple really - people selling who understand the fragile nature of Bitcoin, and the distinction between a highly volatile speculative zero yield token and a productive asset in a world of non-zero interest rates.

The problem is that during bull cycles, a lot of people jump on to the bandwagon of quick gains while honestly not having any idea at all about why the thing they bought should be going up. So when these chaps get caught in a bear, every day they are underwater makes them feel worse as they never had any reasons in the first place to expect it to go up. So capitulate they do in the absence of any conviction and being underwater long.

Will this happen again? Most definitely.

aaj123

Frequentlyhere said:

aaj123 said:

Are people surprised that Bitcoin continues to be buoyant despite supposed bad news of Coinbase getting a Well's notice and Binance being accused of breaking laws and supposed regulatory strangling attempts?

Its actually simple - people who buy Bitcoin during periods of fear like now are not speculators but rather the ones who buy in after research and understand the antifragile nature of Bitcoin and also the distinction between Bitcoin and participants of the crypto ecosystem.

Yup - very few understand.

Were people surprised by the 75% sell off beforehand?

Simple really - people selling who understand the fragile nature of Bitcoin, and the distinction between a highly volatile speculative zero yield token and a productive asset in a world of non-zero interest rates.

It's a highly misused term this - 'productive asset'. Sorry you might feel nice and warm about buying a stock but the reality is that just buying the stock on an exchange in no way made you suddenly contribute to productivity. If you care about being productive, go out and do work but don't pretend that buying a stock made you do something productive. From this perspective, stocks are just something one hopes to make money / preserve wealth through and not fundamentally different to what one buys Bitcoin for. Sugarcoating one as 'productive asset' is just a way for stock owners to feel good about themselves and imply themselves as productive rather than those who do work within the business. 

Frequentlyhere

aaj123 said:

It's a highly misused term this - 'productive asset'. Sorry you might feel nice and warm about buying a stock ...

I don't know if others use the term that way, but I certainly don't mean it like that. All I mean is that the asset itself is productive in terms of it being a share of a company that is producing something of value to people and (hopefully) financial value to its shareholders.

One might buy Bitcoin to make money too, and one might indeed succeed potentially, but:

1)  Bitcoin isn't going out and producing any good or service for people, so isn't generating profits/dividends.
2) It does however generate costs (miners)
3) Therefore one's success (where success is a +ve fiat cashout) is contingent on someone else's failure (-ve cashout).

To be honest though, if people want to play that game and are self-aware that that's what they're doing, then fair play in my book. 

I only really take issue with Bitcoin when people start saying  "future of money" and the like. Especially when it veers towards "It's the one true saviour in economic collapse - oh and that's coming real soon" territory.

aaj123

Frequentlyhere said:

aaj123 said:

It's a highly misused term this - 'productive asset'. Sorry you might feel nice and warm about buying a stock ...

I don't know if others use the term that way, but I certainly don't mean it like that. All I mean is that the asset itself is productive in terms of it being a share of a company that is producing something of value to people and (hopefully) financial value to its shareholders.

One might buy Bitcoin to make money too, and one might indeed succeed potentially, but:

1)  Bitcoin isn't going out and producing any good or service for people, so isn't generating profits/dividends.
2) It does however generate costs (miners)
3) Therefore one's success (where success is a +ve fiat cashout) is contingent on someone else's failure (-ve cashout).

To be honest though, if people want to play that game and are self-aware that that's what they're doing, then fair play in my book. 

I only really take issue with Bitcoin when people start saying  "future of money" and the like. Especially when it veers towards "It's the one true saviour in economic collapse - oh and that's coming real soon" territory.

Where do you always end up getting point 3) from? Why is one person's gain another's loss in Bitcoin when anyone who is in Bitcoin does get a certain benefit that they otherwise don't? And that's of holding a hard supply capped digital asset that is stored and transported easily. Your point 3) is entirely contingent on you not acknowledging this benefit of bitcoin and isn't some self evident truth like you try to make out. 

Let's try an analogy. How about an argument that all restaurants are negative sum games and they only use resources like space,  labour and power for simply feeding people who otherwise would have eaten anyway. Now you'd be quick to point out this argument is ludicrous but why? What's tangibly different here that isn't in Bitcoin in terms of 'productivity'? Just the fact that a good meal is easy to think of as a benefit but possessing hard money is too fuzzy a concept?

Frequentlyhere

I'm not actually trying to state there that there are no benefits to holding bitcoin, I was only saying that when it comes to redeeming for cash, then it's a (less than) zero sum game. If we're talking about investing, surely making money is overwhelmingly the point? 

In terms of the benefits you've stated, part of the difficulty here in this debate is that you're flipping at will between seeing Bitcoin as a good cash alternative and a lucrative investment depending which seems an easier thing to argue at the time.

You've said Bitcoin offers "holding a hard supply capped digital asset that is stored and transported easily" but why would I need to store and transport my investment asset? I have a share ISA that I've not had any problem with, why do I need to take it with me? I can access it on my phone anyway and take that with me, is that not sufficient?

That it has a fixed supply, as I've pointed out earlier, is not a magic wand to an increased price. You are making an implicit assumption that demand will keep increasing for bitcoin, and that is a highly arguable assumption.  

To cover your restaurant example -  the customers don't have to cook and have a treat, the owners make profits, the staff get wages, the freeholder gets rent and nobody loses unless they ordered the week old mussels. It's the consumer economy in action.

It's really not a great scenario to compare against, but I suppose in this scenario Bitcoin would be the plate of mussels. You can buy it, you can look at it, there's a fixed supply of them, they're portable, no-one wants to eat them and you can only make money from them if you can find someone else who wants to pay more for them than you did.

Malthusian

Restaurant: Inedible and unappetising raw ingredients go in, labour (staff) and capital (ovens and cooking utensils) are used to turn them into tasty food. Onions and meat go in, value is added, an agreeable dining experience comes out. Patrons are happy to exchange more money for the finished article than the restaurant used to buy the ingredients and pay it staff.
Bitcoin: Money and electricity goes in, money comes out. No value is added (but electricity is removed from the grid).

Restaurant shares: Original shareholders put money into the business. Sales on the secondary market allow the first shareholders to liquidate their investment and live off the money without the restaurant having to sell its property. The notion that secondary buyers are "not doing anything productive" is obvious nonsense; they are picking up the baton from the first investors. If there was no secondary market the first shareholder could not access the money in the business without closing down the restaurant and removing its value-added from society.
Bitcoin: Bros invest money which is used for only two things, to pay out exiting bros and to burn electricity for no purpose whatsoever other than keeping the money game running.

aaj123

Malthusian said:

 The notion that secondary buyers are "not doing anything productive" is obvious nonsense; they are picking up the baton from the first investors. If there was no secondary market the first shareholder could not access the money in the business without closing down the restaurant and removing its value-added from society.

You made that up without thinking through, didn't you? What about profits via dividends - no secondary market needed for that. Do you mean to say any company that has not yet gone public and has always been held by founders has not allowed the founders to make any money? Secondary markets only serve to get added liquidity through the speculation use case, they don't add anything 'productively'.

'Passing the baton' is just another sugarcoating for 'finding another buyer' - something which you feel uncomfortable about Bitcoin.

aaj123

Frequentlyhere said:

I'm not actually trying to state there that there are no benefits to holding bitcoin, I was only saying that when it comes to redeeming for cash, then it's a (less than) zero sum game. If we're talking about investing, surely making money is overwhelmingly the point? 

In terms of the benefits you've stated, part of the difficulty here in this debate is that you're flipping at will between seeing Bitcoin as a good cash alternative and a lucrative investment depending which seems an easier thing to argue at the time.

You've said Bitcoin offers "holding a hard supply capped digital asset that is stored and transported easily" but why would I need to store and transport my investment asset? I have a share ISA that I've not had any problem with, why do I need to take it with me? I can access it on my phone anyway and take that with me, is that not sufficient?

That it has a fixed supply, as I've pointed out earlier, is not a magic wand to an increased price. You are making an implicit assumption that demand will keep increasing for bitcoin, and that is a highly arguable assumption.  

To cover your restaurant example -  the customers don't have to cook and have a treat, the owners make profits, the staff get wages, the freeholder gets rent and nobody loses unless they ordered the week old mussels. It's the consumer economy in action.

It's really not a great scenario to compare against, but I suppose in this scenario Bitcoin would be the plate of mussels. You can buy it, you can look at it, there's a fixed supply of them, they're portable, no-one wants to eat them and you can only make money from them if you can find someone else who wants to pay more for them than you did.

Bitcoin won't always be a great 'investment' once it reaches its full mature state of having captured the 'money printer hedge' usecase. At that point, it will be a seemingly boring high valued asset where people hold bitcoin to preserve value rather than to grow wealth. A good analogy is like what gold is now.

There is no contradiction in parallely saying that Bitcoin IS a great investment now because the thesis being that it will grow from current value to the above state.

Also, just because you don't find it valuable to be able to store easily transportable wealth doesn't mean the rest of the world doesn't. Think many authoritarian countries where Bitcoin could be seen as a haven of safety and away from the clutches of tyranny.

I'd also add that I do invest in ETH too being aware that there are pros and cons between BTC and ETH and acknowledge that it may be a bad idea to put all my crypto eggs into one basket. But I do believe that the use case I am referring to is almost certain to get captured across these two Schelling points in some or the other proportion.

User232002

Frequentlyhere said:

Oh come on Silvercue, I've been debating BTC at great length and in good faith all afternoon here. 

Are you?

I went back and looked at the last 10 pages. In that time, you have made 24 posts. The only two pieces of data/evidence you have cited in the entirety of those posts, other than some simple percentages, are;

1. An article from Molly White stating that Bitcoin liquidity was low. When I eviscerated this by showing you actual data from an actual exchange, I never heard anything back.

2. In support of something that was 'so obvious' you cited a YouGov poll of a few hundred people. Again, when it was pointed out that this evidence was flimsy, plus it actually showed the opposite of your claim, I never heard anything back.

You continue to post here and regurgitate ideas that have been addressed again and again with no evidence to support them. That is not debating in good faith. You throw silly and contradictory ideas out there that have to be dismantled one by one and when that is done, you just create new arguments before eventually recycling back to the original ones to have them discussed again.

Society needs to move away from this idea that lay people can 'debate' ideas without providing data; its nonsense. If your points are valid, cite the data to support it please. This is a fundamentally quantitative issue and I am confident that your posting history shows that you do not have the capability, nor the inclination, to accurately assess this.

User232002

Frequentlyhere said:

1)  Bitcoin isn't going out and producing any good or service for people, so isn't generating profits/dividends.

Good money is an economic good which allows you to send overproduction in the present to the future to be consumed. That is valuable. Its a quality that humans have sought out approximations for in the past (salt, gold). We can add permissionless, trustless, transportable and easily verifiable too. 

Frequentlyhere said:

2) It does however generate costs (miners)

Ah, you mean the people that generally take waste energy (because its the cheapest), create jobs, use some expertise and turn it in to something that millions of people clearly want and sell it a profit?

Malthusian said:

Restaurant: Inedible and unappetising raw ingredients go in, labour (staff) and capital (ovens and cooking utensils) are used to turn them into tasty food. Onions and meat go in, value is added, an agreeable dining experience comes out. Patrons are happy to exchange more money for the finished article than the restaurant used to buy the ingredients and pay it staff.

How are these two scenarios any different from each other? Why are miners bad in Bitcoin, but chefs in a restaurant are 'productive.'

Frequentlyhere said:

3) Therefore one's success (where success is a +ve fiat cashout) is contingent on someone else's failure (-ve cashout).

Good money is a positive sum game. Robust economies are built on good money because it enables citizens to over produce and know that they will be able to consume that a later date. Over production creates benefits for the entirety of society. It is well accepted by economists that (open and free) trade is a positive sum game and not a zero sum one. There are plenty of examples throughout history of economies that were prosperous because they had local good money, but when exposed to a globalised world collapsed because their money was not hard enough (African communities using glass beads, SEA islanders using hand quarried limestone, Roman coin clipping etc).

Frequentlyhere said:

I only really take issue with Bitcoin when people start saying  "future of money" and the like. Especially when it veers towards "It's the one true saviour in economic collapse - oh and that's coming real soon" territory.

Nobody has argued this. The Argentinian Peso, Turkish Lira and Venezuelan Bolivar still exist as currencies, and the countries haven't collapsed, even though they are complete basket case currencies. This is concern trolling.

Frequentlyhere said:

I'm not actually trying to state there that there are no benefits to holding bitcoin, I was only saying that when it comes to redeeming for cash, then it's a (less than) zero sum game. If we're talking about investing, surely making money is overwhelmingly the point? 

You simultaneously argue that making money is the point but also, 5 days ago no less, posted this;

Frequentlyhere said:

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?

Which is it? Can we please stick to one viewpoint rather than being contradictory all the damn time.

Frequentlyhere said:

In terms of the benefits you've stated, part of the difficulty here in this debate is that you're flipping at will between seeing Bitcoin as a good cash alternative and a lucrative investment depending which seems an easier thing to argue at the time.

AAJ123 has articulated this, but there is no flip flop here. It is an investment now because it needs to become that SoV asset for the world. Eventually, it will be base layer money that increases by 1% or 2% a year depending on money creation. I have articulated this before in this thread and this is yet another example of having to go back over the same repeated points.

Frequentlyhere said:

You've said Bitcoin offers "holding a hard supply capped digital asset that is stored and transported easily" but why would I need to store and transport my investment asset? I have a share ISA that I've not had any problem with, why do I need to take it with me? I can access it on my phone anyway and take that with me, is that not sufficient?

https://en.wikipedia.org/wiki/Executive_Order_6102

Frequentlyhere said:

That it has a fixed supply, as I've pointed out earlier, is not a magic wand to an increased price. You are making an implicit assumption that demand will keep increasing for bitcoin, and that is a highly arguable assumption.  

Actually, the base assumption is that governments will continue to be fiscally irresponsible, run deficits and inflate away their currencies without controlling their spending. The CBO currently forsees the deficit and interest payments increasing for the next 10 years. The US is estimated (again, by their own Congressional Budget Office) to be at 195% debt to GDP in 10 years. Given that this data is provided by the government, its likely to be a rose tinted view. UK/EU in the same boat too.



I've been over the reasons why this happens time and time again, but the important point is that people will gradually continue to become disillusioned with the financial system. What happens when we get to 2030/2035 and the populace becomes aware that our pension systems (particularly NI / SSI) are projected to run out? Whats the political discourse around that? Yes, we know that the Boomers have been the richest generation in history and the Millennials are the first generation to be poorer than their parents - but we have to print a load of money to give the last of the Boomers their promised pensions and the Millennials will be the ones around to deal with the inflationary fall out again... NI / SSI is a literal ponzi scheme that is projected to run out because the demographics are such that there just won't be enough workers to contribute to the ones taking out from the system.

This is why my generation are opting out. We see an unsustainable system creaking under its own weight and want an alternative. I'm rich, I'm numerate and I'm educated; I was always going to get here first. But eventually, your random workers will come to the same conclusions as will everyone else in my generation.There is a reason crypto adoption is highest amongst the young; its partly because we are more digital native, but its also because we are precisely the ones most disenfranchised by the current financial system.

So all I need for Bitcoin price to go up is for governments to continue to be fiscally irresponsible and for the financial system to continue to repress the young and the workers - that seems the safest bet I'll ever make.