cryptocurrency and bitcoin

eskbanker

adamp87 said:

I have crypto currencies but it isn’t without its challenging. Some comments above are correct, it is essentially used currently to store wealth on the promise the returns will be greater than the other options (I.e stocks)

Who is promising this?

Zola.

Linton said:

darren232002 said:

Linton said:

darren232002 said:

...

1. Its not a currency. Its money.

Heard a week ago that the lightning network is also currently working on a way where you can hold Bitcoin in a wallet pegged to any currency you wish. So you could literally click a button and have the bitcoin value be 'stable' in whatever currency you wanted. I think thats pretty cool and will deal with the 'up and down' argument. That said, if you're clever you'll almost never turn it on.
........

But "money" is primarily a standardised means of exchange which removes the hassles of bartering for goods.  Is that what crypto currency is?  Some of the adherents certainly believe that it will replace £s and $s.  Is it your view that instead Bitcoin is purely a store of value like gold? You cant buy groceries at Tesco with gold, it needs to be sold for £s.

Money is a medium of exchange and a store of value. Some forms of money are better at one than the other. Gold is seen as a store of value, but it isn't a good medium of exchange as you pointed out. 

Different crypto currencies (just a name btw) have different value propositions, but BTC is primarily aiming for store of value and I think consensus is that its 'won' this category. There are some small value coins that are aiming to be good 'medium of exchange's and they focus on speed and throughput. Things like XLM or XRP where their idea is that the banking system will use them to send value between banks or will be used by millions to buy their coffee. I don't particularly like either XLM or XRP by the way so that's not an endorsement.

.......

OK making progress.  Your aims for BTC are rather less ambitious than those of other people and perhaps rather more realistic

Let's consider BTC as a store of value.  One of the key features of Gold, which for some people outweighs all its disadvantages, such as volatility,  is that it is difficult to destroy and will survive the worst disasters barring the end of the world.  It is really the one thing that could be exchangeable for the basics of life in the event of a global apocalypse. Can BTC?  What happens if the power or just the communications networks go down?  Are your BTCs of any value? Would you be able to you sell them for a tin of beans?

Out of interest, how do you bequeath your Bitcoins to your favourite grand-daughter? Perhaps it's easy, I dont know.  No problem with gold.

As to whether BTC has won the "store of value prize", dont you think that after only 13 years it is possibly a little early to make that judgement?  Come back in 50, 100 years and we will see.  Gold has millennia of history and is deeply embedded in cultures across the world.

I dont own any gold, but I am finding it difficult to see why BTC has any advantages as a store of value.

- Infinitely divisible 
- Absolute scarcity, with a known fixed supply of 21 million coins which cannot and will not be changed
- Can be sent anywhere in the world in minutes 
- Cannot be counterfeited
- Can be secured for free
- The blockchain is backed by the strongest computer network ever created which only gets stronger with each passing day

Scottex99

Decent discussion here. Darren nailing it as usual.

There’s a myriad of coins to do a myriad of things, BTC is literally the tip of the iceberg. There’s also an insane amount of new protocols popping up and crypto (imo) is sucking up all the young talent and brains into the industry. 

Most of the creativity is currently pointed at DeFi, especially borrowing and lending. For a while in 2017 there was all these fads about random coins partnering with eBay and IBM to do blah blah, revolutionise supply chain or instantly put hospitals on the blockchain etc. Lucky most of that has died out and actual real and cool projects are being built that may just change the world, or at least some of it.

I’ll still always have more BTC and ETH than any other coin though, if you don’t have either you MAY just regret it one day. DYOR

Scottex99

tebbins said:

Bitcoin is, manifestly obviously and categorically, by definition a pyramid scheme. It is mathematically impossible that it is not.
The only way to make profit without "banks" (good luck with that) is some poorer sucker buying yours of you later on.
There is no debate or discussion to be had here, just pure factual observation and common sense.

Edit: *mic drop*

Edit: HFSP.

mic drop

tebbins

Scottex99 said:

tebbins said:

Bitcoin is, manifestly obviously and categorically, by definition a pyramid scheme. It is mathematically impossible that it is not.
The only way to make profit without "banks" (good luck with that) is some poorer sucker buying yours of you later on.
There is no debate or discussion to be had here, just pure factual observation and common sense.

Edit: *mic drop*

Edit: HFSP.

mic drop

Ah when you assume...

Nifty_Purse

Cryptocurrencies are only as sustainable as the computer systems they rely on especially the energy consumption of the computers/servers. The mining of these currencies uses huge amounts of electric. The safety/security of the currency increases the more computing takes place (more computers/servers and more difficult/complex puzzle/competition) that uses more and more electricity. 

All this has happen in 2021:
At the beginning of the year the University of Cambridge Centre for Alterative Finance reported that Bitcoin alone was consuming the same amount of electric than the Netherlands for the year 2019.
In May, police in Sandwell found a site they originally believed to be a cannabis farm was actually a Bitcoin mining site that was stealing electricity from the grid.
Elon Musk won't now let you buy a Tesla with Bitcoin until its energy consumption is reduced by 50%.
Today, reports of Russia, Belarus, Iran, and Kazakhstan all preparing regulation of cryptocurrency mining due to the burden on their energy grids. China put in place a ban on mining earlier in the year for same reason.

Don't take my word for this, look these and many other news articles up for yourself.

Ultimately, no government is going to support such an energy intensive industry if it's impacting their power grid. 
So the question is: is it possible to reduce this energy consumption quickly?
Since Google, Facebook, Amazon, and Microsoft have been saying for years that they will change their data centres to renewable energy and have changed very little it doesn't look likely.

What happens when these currency mines cannot access sufficient electricity?


  

Zola.

Nifty_Purse said:

Cryptocurrencies are only as sustainable as the computer systems they rely on especially the energy consumption of the computers/servers. The mining of these currencies uses huge amounts of electric. The safety/security of the currency increases the more computing takes place (more computers/servers and more difficult/complex puzzle/competition) that uses more and more electricity. 

All this has happen in 2021:
At the beginning of the year the University of Cambridge Centre for Alterative Finance reported that Bitcoin alone was consuming the same amount of electric than the Netherlands for the year 2019.
In May, police in Sandwell found a site they originally believed to be a cannabis farm was actually a Bitcoin mining site that was stealing electricity from the grid.
Elon Musk won't now let you buy a Tesla with Bitcoin until its energy consumption is reduced by 50%.
Today, reports of Russia, Belarus, Iran, and Kazakhstan all preparing regulation of cryptocurrency mining due to the burden on their energy grids. China put in place a ban on mining earlier in the year for same reason.

Don't take my word for this, look these and many other news articles up for yourself.

Ultimately, no government is going to support such an energy intensive industry if it's impacting their power grid. 
So the question is: is it possible to reduce this energy consumption quickly?
Since Google, Facebook, Amazon, and Microsoft have been saying for years that they will change their data centres to renewable energy and have changed very little it doesn't look likely.

What happens when these currency mines cannot access sufficient electricity?


  

https://youtu.be/b-7dMVcVWgc

tebbins

The problem with cultists and conspiracy theorists is that their ego is tied into their commitment to the cause. Especially for men this makes admitting you're believing in something silly very difficult, and it's easier to believe in the minority of analogous success stories, the same way gamblers keep believing they can win - everyone needs a hobby but some people need healthier addictions.

I think the technology behind bitcoin, and maybe the thing itself probably has some utility over the coming decades. I don't expect it to change my life in the same way I have seen mobile phones change over my life. There is no way to calculate the value of bitcoin without wild speculation, e.g. we're at 18.5m coins and about $1tn of mkt cap out of global wealth of $418tn (Credit Suisse World Wealth Report 2021), if everyone in the world in 2050 owns $1,000 of BTC the market cap will be $8-$10tn and at most 21 million coins, so I don't see BTC having much more than another 10x return left in it over the next 3 decades - this is average for stocks.

I do know that over the long term, i.e. the rest of my life I have a vested interest in the UK continuing to be a strong economy (as in strong regulations, employee and consumer rights, strong institutions, rule of law, business friendly, environmentally and politically stable) and as a result a nice place to live. I know that UK equity indices (I'm talking about the FTSE 100, 250 and All Share mainly) are correlated with and grow at similar rates to UK GDP over the long term (covered in previous posts, too lazy to find links, it's easy to work out on your own just use ONS and Barclays Equity gilts Study data), they are resilient dividend payers and dividends usually at least keep up with inflation. I know how to make an educated guess about future returns. I do not know how to make educated guesses about the future returns of an asset with no intrinsic value, no reliable method of determining value, that relies entirely on the internet, other people being willing to buy it for me in future, and huge amounts of power, for an activity of no net economic utility to anyone.

Linton

Zola. said:

Linton said:

darren232002 said:

Linton said:

darren232002 said:

...

1. Its not a currency. Its money.

Heard a week ago that the lightning network is also currently working on a way where you can hold Bitcoin in a wallet pegged to any currency you wish. So you could literally click a button and have the bitcoin value be 'stable' in whatever currency you wanted. I think thats pretty cool and will deal with the 'up and down' argument. That said, if you're clever you'll almost never turn it on.
........

But "money" is primarily a standardised means of exchange which removes the hassles of bartering for goods.  Is that what crypto currency is?  Some of the adherents certainly believe that it will replace £s and $s.  Is it your view that instead Bitcoin is purely a store of value like gold? You cant buy groceries at Tesco with gold, it needs to be sold for £s.

Money is a medium of exchange and a store of value. Some forms of money are better at one than the other. Gold is seen as a store of value, but it isn't a good medium of exchange as you pointed out. 

Different crypto currencies (just a name btw) have different value propositions, but BTC is primarily aiming for store of value and I think consensus is that its 'won' this category. There are some small value coins that are aiming to be good 'medium of exchange's and they focus on speed and throughput. Things like XLM or XRP where their idea is that the banking system will use them to send value between banks or will be used by millions to buy their coffee. I don't particularly like either XLM or XRP by the way so that's not an endorsement.

.......

OK making progress.  Your aims for BTC are rather less ambitious than those of other people and perhaps rather more realistic

Let's consider BTC as a store of value.  One of the key features of Gold, which for some people outweighs all its disadvantages, such as volatility,  is that it is difficult to destroy and will survive the worst disasters barring the end of the world.  It is really the one thing that could be exchangeable for the basics of life in the event of a global apocalypse. Can BTC?  What happens if the power or just the communications networks go down?  Are your BTCs of any value? Would you be able to you sell them for a tin of beans?

Out of interest, how do you bequeath your Bitcoins to your favourite grand-daughter? Perhaps it's easy, I dont know.  No problem with gold.

As to whether BTC has won the "store of value prize", dont you think that after only 13 years it is possibly a little early to make that judgement?  Come back in 50, 100 years and we will see.  Gold has millennia of history and is deeply embedded in cultures across the world.

I dont own any gold, but I am finding it difficult to see why BTC has any advantages as a store of value.

- Infinitely divisible 
- Absolute scarcity, with a known fixed supply of 21 million coins which cannot and will not be changed
- Can be sent anywhere in the world in minutes 
- Cannot be counterfeited
- Can be secured for free
- The blockchain is backed by the strongest computer network ever created which only gets stronger with each passing day

Why would I weant to send my stored wealth anywhere in the world in minutes?

Zola.

The power to do so. 
International wire transfers take days.

You don't need a third party to manage your money. That's one of the main tenets.