Isn't this just the way the unregulated crypto market operates? Volatility like crazy? I think there were other seismic shifts (e.g. Bitcoin) with 50% losses from peaks before.
I always see this argument peddled, but I can't recall the notion in the earlier crypto days of it being a "stable store of value". We saw it as a means to bypass payment middlemen, such as PayPal.
It was only when Bitcoin could no longer function well for payments (due to the high fees), that bagholders changed the narrative from "medium of exchange" to "store of value".
What percent of Bitcoin owners has made a single commercial transaction in Bitcoin? Or really done anything other than buy/sell it in a commercial brokerage account?
Now lets compare how much gold a dollar bought a year after it departed from gold standard to dollar today. Then compare how much gold 1 bitcoin would buy a year after bitcoin was created, to how much gold 1 bitcoin would buy today.
I'm more concerned about the Y/Y and decade to decade change of my wealth than week to week. That's fine if others aren't. There are at least a hundred currencies in common use of both fiat and crypto variety, overall the dollar is looking to be a horrible choice as a long term store of value.
I was intending to prompt someone to finally admit they don't care about store of value. I agree the bashing of BTC is fundamental misunderstanding. If you don't worry about store of value, dollar or BTC will work just fine for many transactions.
>The Dollar is not and never has been a long-term store of value
Depends on what you mean by long-term. If you held the dollar from 1813 to 1913 it was an excellent store of value. If you hold it from 1971 to 2071, with our current target of 2% inflation, you'll be lucky if 13% of your value is left. The systemic intentional destruction of value of the dollar has accelerated rapidly since at least the early 70s.
Edit: My original response totally misunderstood your post, below is an updated response:
When Bitcoin's fiat-denominated value drops, the claim that the price of everything actually increased while Bitcoin remains stable — becomes a clearly silly argument when you realize we can make the exact same argument for literally any other asset of your choice (which will in some cases yield completely contradictory conclusions about whether the price of everything else is going up, or down).
To make this argument, you are essentially axiomatically proclaiming that the value of X is fixed, and so when its value appears to drop relative to other things, this therefore is actually just a case of everything else getting more expensive.
The problem is you actually have to justify why you believe the value of X is fixed; otherwise, the conclusion is tautological. Without justification, you will find endless logical contradictions by applying the same logic simultaneously to multiple assets, yielding stark disagreement/contradiction on whether "everything else" went up or down in value, depending on which asset you chose as your denomination reference point :)
If you bought a Tesla in BTC in November and bought another one with BTC today you'd have to spend twice as much bitcoin to buy the Tesla today. That's price inflation in relation to BTC is it not?
Only if it’s denominated in USD. The purchasing power of bitcoin to teslas might not have dropped at all. That is the problem though, price discovery is impossible because no one buys things denominated in bitcoin. It’s never actually used as a currency.
You're right, I initially completely misinterpreted your point -- sorry about that. I edited my response accordingly.
My new point is simply this: You can make this argument about anything whose value declines relative to other things; it doesn't make it a useful interpretation of the actual market trends.
For example, I could say that the price of computational resources hasn't been falling over the past few decades due to advances in computer efficiency an speed; no, rather I claim that this is just an illusion -- the cost of computation has actually remained fixed, while the price of literally everything else in the world has been rising, as long as we denominate them in terms of computational resources! But this is silly and doesn't reflect what's actually happening, because I'm subtly making an axiomatic/unfalsifiable assertion here (that the 'true cost' of computational resources is fixed).
It might be easy to misconstrue as reflective of truth because many things do rise in cost, so it intuitively might seem like a profound alternate viewpoint on reality that logically checks out. But, in reality, the viewpoint is simply wrong / not useful -- a reflection merely of an axiomatic assertion yielding a tautological claim, with no external evidence to back it up.
I don't think your link shows perspective, it's just huuurah from the crypto gang.
It's well known that bitcoin, and crypto as a whole, have and will likely continue to demonstrate a boom/bust cycle that will likely continue to excite the get-rich-fast-crew for some time to come. But people are mostly pointing out that bitcoin is not the equity hedge many hoped it would be, it's not an independent thing apart from the vagaries of the market.
To me, perspective on bitcoin would mean seeing that it isn't the revolutionary thing it's sold as. It's not freedom money, it's not the way to stick it to the financial industrial complex, and it's not a safe harbor asset. It's only really good for one (legal) thing: speculation. It seems like the vast majority of bitcoin transactions are either people speculating on it or criminal in nature. And it uses more power than the entire country of Sweden. Maybe another coin in the future will address cryptos problems, but I haven't seen it yet, eth isn't it.
I own some cypto, because it's fun. I watch numbers go up or down, but the money I put into it is already in the written-off-but-will-be-nice-if-pops category. That's perspective. You have people taking out loans to buy bitcoin or even just putting a significant amount of their portfolio in crypto, that is not perspective.
Hopefully this kills "alt gold" ideas for BTC for good. No one can hold it as a hedge vs equities now after the correlated fall.
I feel awful for everyone in El Salvador and Turkey and elsewhere who've been conned into holding this instead of fiat and are now in a mire - a mire that probably involves not eating.
Christ, I decided that I couldnt handle the BTC risk - people who encouraged those folks to take it on should be... well... should be sorry.
Forbidding folks in these countries (Turkey, Lebanon, Argentina, Venezuela) from holding a crypto alternative to their native currency is sentencing them to a guaranteed loss of 90%+ of their purchasing power, versus weathering crypto volatility.
There does need to be a solution for countries that do this - that is to say indulge in radical devaluation; but it is clearly not BTC or ETH. It could be a properly backed and regulated crypto currency, one that also could be used without burning barrels of oil. There is no such crypto currency though, and there may never be one.
In aforementioned countries the established financial system becomes a tool of theft by the government. Just listen to news reports or podcasts from normal folks who have to survive under these conditions. Thought you had a dollar denominated savings account? It's Liras now. Want to withdraw your money? Limited to $40US a day.
Crypto is one compelling alternative. Note, I lump a reputable USD stablecoin in here too. It's all software after all.
Nonesense. The Lira has been massively losing value since 2008 while Bitcoin has been massively gaining value for years, the only Turks that are not eating because of Bitcoin are the ones who bought it the past few months.
Odd, I see a 38% gain for the Lira this year. Do you see something different? Also poor people tend to try to avoid inflation on a time scale of months, they can't hodl because they need to get their kids their dinner.
Falling off a cliff while hodlers hold on for dear life means that BTC is exactly like gold. Gold hit its all-time real-dollar high price in 1980, and never regained that price, but gave birth to the gold bug phenomenon. I imagine it can be the same for crypto: in 2065 the hodlers will still be wistful for that 2021 high price. And let's face it many of the crypto people are the same people who were super into gold, too.
The point about gold is that traditionally it's been seen to be inversely correlated with equities, which means that you hold gold and equities in your portfolio to give you stability. If equities and BTC correlate then that hedge won't work.
Onchain isn’t bad, it’s a few cents however smaller places like EL Salvador use Lightning network, which allows extremely low transfers (on the order of 1 sat). Lightning works better than a credit card.
What really scares me is the TV ads. People like Big Papi and Matt Damon advertising Crypto buying platforms to people during football games is HORRIFYING. Once I saw those ads, I knew the end was near, and that these crypto platforms had literally pivoted to selling these things to completely clueless greedy people.
Like the old adage said, when your shoe shine boy has a stock tip, it's time to sell. And when your aunt has an opinion about crypto, it's time to sell, as well.
"So ... the blockchain is basically just a linked list with each item holding a cryptographically signed copy of the content of the previous item. Each item additionally holds a collection of transactions that happened in the last ten minutes. That way everybody is able to check if somebody who claims to own something really owns the item/coin/NFT of interest."
Honestly ... your hairdresser will have doubts that you are not messing with him.
It's funny how Bitcoin advocates say "widen the chart" to point to the rise since 2012, like that's the slope it will keep rising at. Sure, if my great-grandfather bought General Motors in 1908 I might be filthy rich now, but does that make GM a good investment today?
No need to go until 2012, Bitcoin price has been above current price for only like 6 months in it's whole existence. So if you bought at anytime outside of those 6 months, you're in the green.
There are plenty of investors who believe dumping your money into a stable company like GM would be better than speculative startups like Tesla or Rivian...isn't this typical risk-averse advice? The status quo is that GM is a good investment. They're probably not going bankrupt tomorrow.
I guess I'll rephrase and say that they're probably not ending tomorrow, because of the historical precedent the Fed set when they bailed them out. What's a few hundred billion dollars between friends?
The Fed did not bail them, Congress did. As did the Canadian government (and not the Bank of Canada).
Politicians decided that GM going bankrupt would be too disruptive, especially since it occurred during the already turmoil-filled 2008-2009 timeframe.
The funny thing is that if there really is anything revolutionary to be done with crypto currency it will happen when they are cheap.
Ethereum's "world computer" vision for example, might actually lead to some neat stuff if it was dramatically cheaper to run smart contracts.
Cheap, less volatile BTC makes it much more useful as an actual underground currency.
I sort of want crypto to crash, not because of some schadenfreude, but because so much more technical experimentation with ideas can happen if it's dramatically cheaper to play with.
My pet theory is that it was the Matt Damon commercial. Not because the commercial was bad ( though it was ) but because the 'mainstreaming' of crypto took away a lot of the appeal. When it was a cool coin that only the the techies understood, owning it felt like FU to the big banks. Now that it's being promoted on commercials shown during football games, it's not as much fun. Next thing you know, boomers will be buying it.
Some year it likely will happen. Followed by a year where it touches 28K again.
But you bring up a very good and often missed point. Highly speculative wagers are, if maybe not rational, understandable when 100X+ or 1000X+ potential gains exist. But that's not where BTC is right now.
If everyone is very lucky maybe BTC does 3x. Maybe even 6x but that's much more tenuous and uncertain. 100X? Very unlikely right now. The downside risk just isn't worth potential 3X gains for me and probably many others, but I'd feel different if there were realistic 100X gains possible.
Eventually all fiat currencies will be worth less than 1 sat. Today there are 4 countries that fit this. They should ditch their garbage money and use BTC.
BTC has 100x left in it, easily. Probably a lot more.
- The market for negative real interest bearing bonds is over $200 Trillion or 200x Bitcoin’s current market cap. Why would anyone store their savings in negative yielding debt?
- The total addressable market for BTC is much larger than most expect, though it will take time for the gains to be realized.
I'm curious in this scenario (total collapse of USD with no .gov structured replacement) how you envision the lights being on and the internet up and running? BTC I guess?
Ah ok that makes more sense. In other words, what BTC will "buy" in terms of goods and services is more or less the same it buys now (maybe more is predicted?).
Just the dollar will drop dramatically in value. This might happen sure.
Couple of points (just my opinions).
If the dollar declines that precipitously in value (in our lifetime), seems it might get slated for replacement. Particularly given what we now know digital currencies can do. Will governments throw in the towel on control of currencies? Seems unlikely, willingly, but maybe they won't have a choice. Would some kind of international monetary standard, agreed to by treaties, replace sovereign currencies with a digital currency? What kind of problems might this solve? (or claim to solve anyway). I don't know. Just don't see nation states giving up control quite yet. I suspect BTC has it's uses for national interests or seems it would have been stomped to death some time ago. If that's even possible, idk.
If the dollar declines that precipitously, that rapidly, it seems like significant social upheaval would accompany the decline. Back to my point about the lights being on and networks up. Were I to chose a store of value in this scenario it would be essential physical goods, water and land. Seems you could pick up a lot of baubles with that during the tough times and have wealth when things smooth out. BTC depends on a number of underlying assumptions about social order, at least to the level of maintaining utilities and production lines so there is something to spend it on.
I suspect the only way to prevent the collapse of all fiat currencies will be nations holding BTC, and probably other fixed issuance coins used for shorter term trade.
There will be a pegged redemption rate, for fiat currencies to the Bitcoin. Because states can keep printing more fiat, there will be some shenanigans with fake Bitcoin. Make sure you always take custody because the banks will try to inflate it!
I believe this because it is the only honest money we have. It was invented to keep us honest.
> Eventually all fiat currencies will be worth less than 1 sat.
The idea that this specifically matters surely arises from the same logic that thinks certain companies are worth more or more performant because their per-share price is higher.
There is a lot of debate about it you would consider BTC a fiat currency. NYFed considers it so. Many Bitcoiners do not agree, rather that term is used for central bank currencies.
It comes down to your definition of fiat currencies. From context, I was referring to central bank issued currencies aka fiat currencies. It has to be issued by a State. As opposed to cryptocurrencies that are issued by either mining, or genesis block issuance.
i don't know if the crypto and meme-stock worlds realize this, but... out here in the real world we have tools to correct for that; you can compute things like a "real rate of return" on your holdings and see it come up positive, because... well, I know this will seem fantastical to crypto-land especially, but imagine having an asset that actually does something useful while you own it, making income, instead of just existing for speculation!!! it's much better than loaning it out through dodgy exchanges for the purposes of speculation.
we actually have nice things like this in the real world, and when we go through routine turbulence (like the last month) our losses are more like 10% of holdings, instead of, like, 50%.
This ain’t my first rodeo. I’ll take the 140% pa for the occasional 50% draw down.
We are playing very different games you and I. As the crypto markets mature, and robust Money markets increase in liquidity, such tradfi metrics can be calculated too. Thing is, eventually you realize it’s all bullshit and just go all in on BTC, the only honest coin in the room.
Yes. One is investing, and the other is speculative grift. And if you're not utterly ruined then you may very well end up with substantially more money than I have.
In the event that this happens, I hope you find that the money is its own reward, because that will be the full extent of your reward. Certainly there will be no special plaudits from society in general.
Clear misunderstanding of the economics in this article. Bitcoin is a stable store of value. Every other Currency just deflated 100% simultaneously and the cost of all goods as represented by bitcoin also went up 100%!
Since the end of the Gold Standard, the value of ANY currency is only based how much other people accept to give you in exchange. That's why you see half of the thirld world countries currencies dropping, in particular, faster than bitcoin drops. And this is why it is so popular in these countries.
Is bitcoin "to big to fail" at this point?
I think the thing this points to the most is that Bitcoin is no immune to market movement and it is a speculative asset (since right now speculative assets are the places where the market is getting hit the hardest).
That only works if you can convince those in the government that it is "too big to fail". This is why there has been a push to get politicians involved.
When bitcoin fails (and it will), those who mine will be the first to move their value out to whatever BitCoin2.0 is. Then they will be able to charge whatever they want to the suckers left who want to exit, because you literally will have to pay the miners transaction fees to let you do this, and there will be no cap on what they can charge.
The final appeal will be to the government, saying "you bailed out the banks, homeowners, students, the auto industry, the airline industry, why not those who lost money in bitcoin?"
Unfortunately, the US politicians are largely incompetent in technology and currently have market holdings across a lot of different sources (possibly including Bitcoin). So the question becomes: Will the politicians let it fail, or will there be a bailout/support purely on economical reasons.
We can't look at Bitcoin as a purely economical issue. There are a lot of facets that need to be understood.
DeFi COULD be useful for people in under-developed or generally economically limited countries but I believe that the implementation needs to go back to phase-0 and solve many of the speculative issues that are inherent in DeFi today.
Everything is down though and this just lets people who’d like to bash crypto a reason to bash crypto. Etsy stock is also down more than 50% from its high but nobody is bashing Etsy. What does it all mean????
I wonder if it is a rehash of March 2020, when Covid started for real. Except now in reverse - nobody knows what to expect, everybody is extremely nervous.
No, but they are saying that bitcoin losing 50% from its high is saying something about it. But Etsy dropped the same amount in the same time period. Which is causation and which is correlation?
Edit: re correlation v causation. That’s the problem, people having been pumping Bitcoin as an alternative to gold, it’s supposed to be uncorrelated to the stock market…
By definition anyone who is trying to get you to buy stock of any kind is trying to get you to believe in the benefits of stock holding over saving fiat currency, so I think it is fair to say people are evangelizing Etsy stock the same way they evangelize Bitcoin.
This isn't the first or the last time that'll happen. There are multiple 50-80% drops in Bitcoin history and we famously went from 20k to 3k in 2017 cycle.
For reference, sp500 also dropped like 10% since december. Since it's market cap is like 40 trillion, that 10% drop is worth like 7-8 times the market cap of all Bitcoin. Smaller markets with lower liquidity moves more.
> Smaller markets with lower liquidity moves more.
Above a certain level of liquidity the difference is marginal to nonexistent. Bitcoin certainly exceeded that level. This was not a small, illiquid market.
Just pull up some order books from exchanges, 10-100M$ worth of market orders would move the market in a meaningful way, you can't do the same in a more established market 40x the size.
Bitcoin gets a lot of press, but in the grand scheme of things it's still very tiny.
I discovered it around 2012 and at that time people were really excited. Not because they thought about "getting rich". But because people were finally learning about how money works and how corrupt and fragile the whole system is. Bitcoin showed us at once both what money really is, how it works and gave us a solution to the problem. Very exciting times. Many of us dreamed of being free from the heartless leeches in private banks.
But before long people did start to think about "getting rich". That's the really sad thing about finance. It has attracted some of the smartest people in the world who use their brains not to help others or do anything useful, but to essentially just leech off the real economy.
So Bitcoin just became like everything else. Clever people "getting rich" doing nothing of value, and people like me just giving up trying to explain what the real problems with money are.
Now I feel like the old world financial system is stronger than ever. People are singing its praises because now there is a failed alternative to compare it with.
It didn't really give a solution to the problem, as "the problem" is more of a human nature issue and not something solved by a few lines of code. People will commit fraud and be leaches with an economy in dollars or bitcoins or dog money or sea shells or 1,000lb stone wheels.
In absolute terms the number of good people working on bitcoin went up since 2012.
Doesn't matter too much that there are so much more jerk investors now.
The narrative did change though, passionate people or not.
Bitcoin was about permissionless digital cash initially, and then it shifted into a digital store of value. That's much less compelling to me and many of the early passionate people.
I know several early BTC people who are sitting on the sidelines now. If it were still about permissionless digital cash, they'd be more engaged. Maybe a bubble burst will help.
This price drop indicates too much faith in Fed's tapering efforts.
Markets are underestimating the rate of inflation, and the price will bounce back like it always does.
On another note, what's the update on the proof of stake?
It's insane that we're using 0.55% of global electricity production for a decentralized spreadsheet.
Phasing out coal power might be detrimental to lives of millions of people who depend on coal to power their dwellings, but shutting down coal power plants used for crypto mining sounds like a reasonable compromise.
If the markets are underestimating inflation, then the Fed will need to be even more aggressive with the interest rate increases, meaning the price of speculative assets like BTC will drop even more.
Too many people are invested in the speculative stock market, so I'm skeptical on whether the Fed has the courage to ruin American worker's 401k.
If the supply chain issues persist, there's also a chance that raising interest rates will fail to deflate commodity and product prices, in which case we might be overestimating Fed's ability to control inflation.
Let's hope China decides to stick with dollar as the reserve currency and doesn't decide to suddenly cut off the flow of goods, or things might turn very ugly.
A global digital ledger of record which nobody controls and everybody agrees has never existed. It just might be worth all the electricity.
Win/win cooperative deals are being made between cities and miners to establish predictable baseload and to turn off under prearranged conditions. BTC mining is becoming integrated with society at the municipal level.
Reminds me of the video where the guy is like you should sell your Bitcoin because it crashed to 50c, then he repeats that every crash, oh it crashed to $2, then $50, then $300, etc etc.
Meh, i've been into crypto for a long time and it's always like this. Cryptos fall of value for a week or two, and haters do parties, state how cryptos are a failure and how dead they are.
They tend to shut up when they grow in value again, to values they never reached before.
Agreed. I invested in Bitcoin in 2014. If you still don't see the inherent patterns in this market (extreme volatility rollercoaster) given the 8 years during which it's happened on a near monthly basis, you have no business telling crypto investors what they ought to do. It has literally always been like this and there is no reason to believe it won't be like that again.
So has the rest of the market. Interestingly, Bitcoin is often touted as a store of value and a hedge against market downturns/inflation, but in the recent past it has been tracking the overall stock market pretty closely.
It isn't necessarily a good assumption that someone is taking someone else's profit. More often it's simply people realizing that projected profits won't happen; many of them never existed in the first place.
Crops fail. Promising biotech turns out to be impossible; new drugs are shown to be ineffective. The housing market turns out not-to-go-up-for-ever. A drought in Taiwan stifles semiconductor manufacturing and good chips are hard to find for years; ASML's factory catches fire. Oil spills, and must be cleaned up; Union Carbide leaks gas all over Bhopal. COVID-19 kills people, makes others (rationally) fear for their health, and far less gets done.
Sure. And maybe some events triggered this current downturn. Legislation, another big pwnage causing loss of faith, some failed IPO, scarcity of gear.
TBH, if these things were rational, I would have guessed most "bad" news would have pumped bitcoin's value; but I clearly have no clue what's going on, which is why I'm asking.
I'm also open to explanations that complex adaptive systems have intermitent booms and busts.
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[ 5.3 ms ] story [ 214 ms ] threadThat which is in locomotion must arrive at the half-way stage before it arrives at the goal.
— as recounted by Aristotle, Physics VI:9, 239b10
Bitcoin has thus far failed as a currency, so people have been pushing the “store of value” line for quite some time.
It was only when Bitcoin could no longer function well for payments (due to the high fees), that bagholders changed the narrative from "medium of exchange" to "store of value".
The Dollar is not and never has been a long-term store of value. That is a fundamental misunderstanding of what a currency is.
>The Dollar is not and never has been a long-term store of value
Depends on what you mean by long-term. If you held the dollar from 1813 to 1913 it was an excellent store of value. If you hold it from 1971 to 2071, with our current target of 2% inflation, you'll be lucky if 13% of your value is left. The systemic intentional destruction of value of the dollar has accelerated rapidly since at least the early 70s.
When Bitcoin's fiat-denominated value drops, the claim that the price of everything actually increased while Bitcoin remains stable — becomes a clearly silly argument when you realize we can make the exact same argument for literally any other asset of your choice (which will in some cases yield completely contradictory conclusions about whether the price of everything else is going up, or down).
To make this argument, you are essentially axiomatically proclaiming that the value of X is fixed, and so when its value appears to drop relative to other things, this therefore is actually just a case of everything else getting more expensive.
The problem is you actually have to justify why you believe the value of X is fixed; otherwise, the conclusion is tautological. Without justification, you will find endless logical contradictions by applying the same logic simultaneously to multiple assets, yielding stark disagreement/contradiction on whether "everything else" went up or down in value, depending on which asset you chose as your denomination reference point :)
My new point is simply this: You can make this argument about anything whose value declines relative to other things; it doesn't make it a useful interpretation of the actual market trends.
For example, I could say that the price of computational resources hasn't been falling over the past few decades due to advances in computer efficiency an speed; no, rather I claim that this is just an illusion -- the cost of computation has actually remained fixed, while the price of literally everything else in the world has been rising, as long as we denominate them in terms of computational resources! But this is silly and doesn't reflect what's actually happening, because I'm subtly making an axiomatic/unfalsifiable assertion here (that the 'true cost' of computational resources is fixed).
It might be easy to misconstrue as reflective of truth because many things do rise in cost, so it intuitively might seem like a profound alternate viewpoint on reality that logically checks out. But, in reality, the viewpoint is simply wrong / not useful -- a reflection merely of an axiomatic assertion yielding a tautological claim, with no external evidence to back it up.
It's well known that bitcoin, and crypto as a whole, have and will likely continue to demonstrate a boom/bust cycle that will likely continue to excite the get-rich-fast-crew for some time to come. But people are mostly pointing out that bitcoin is not the equity hedge many hoped it would be, it's not an independent thing apart from the vagaries of the market.
To me, perspective on bitcoin would mean seeing that it isn't the revolutionary thing it's sold as. It's not freedom money, it's not the way to stick it to the financial industrial complex, and it's not a safe harbor asset. It's only really good for one (legal) thing: speculation. It seems like the vast majority of bitcoin transactions are either people speculating on it or criminal in nature. And it uses more power than the entire country of Sweden. Maybe another coin in the future will address cryptos problems, but I haven't seen it yet, eth isn't it.
I own some cypto, because it's fun. I watch numbers go up or down, but the money I put into it is already in the written-off-but-will-be-nice-if-pops category. That's perspective. You have people taking out loans to buy bitcoin or even just putting a significant amount of their portfolio in crypto, that is not perspective.
I feel awful for everyone in El Salvador and Turkey and elsewhere who've been conned into holding this instead of fiat and are now in a mire - a mire that probably involves not eating.
Christ, I decided that I couldnt handle the BTC risk - people who encouraged those folks to take it on should be... well... should be sorry.
Crypto is one compelling alternative. Note, I lump a reputable USD stablecoin in here too. It's all software after all.
How is theft by grifters (whatever we're calling crypto-bros) better?
Like the old adage said, when your shoe shine boy has a stock tip, it's time to sell. And when your aunt has an opinion about crypto, it's time to sell, as well.
Him : "NFT's are going to revolutionize the art market"
Me : "I don't know much about that, I just laugh whenever one of those bored monkeys gets right clicked and they all go mad about it".
Him : "What do you mean"
Me : "Someone copies the jpeg and uses it and they can't stop them"
Him : "nahhh you can't steal them"
Me : "It's only the meta data that's on a blockchain"
Him : "I have a question, right"
Me : "I dunno"
Him : "But do you know what a blockchain really is?"
Me : "Ahh, well, ahh... yes, I think I do, I'm a bit hazy on some of the maths, but errrm yeah"
Him : "I don't, noone can ever explain it, but everyone seems to want to buy into it so ...."
So - it's not evidence but still I think that almost all investors in crypto have little to no idea of what they are investing in. This is not good.
Honestly ... your hairdresser will have doubts that you are not messing with him.
From 2 days ago: El Salvador Buys $15 Million Worth Of Bitcoin ‘Really Cheap,’
https://www.forbes.com/sites/zacharysmith/2022/01/21/el-salv...
Well:
* https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor...
* https://www.reuters.com/article/us-autos-gm-treasury-idUSBRE...
* https://www.cbc.ca/news/politics/loans-canada-account-financ...
Politicians decided that GM going bankrupt would be too disruptive, especially since it occurred during the already turmoil-filled 2008-2009 timeframe.
Heh, you'd actually have been wiped out in 2009.
Ethereum's "world computer" vision for example, might actually lead to some neat stuff if it was dramatically cheaper to run smart contracts.
Cheap, less volatile BTC makes it much more useful as an actual underground currency.
I sort of want crypto to crash, not because of some schadenfreude, but because so much more technical experimentation with ideas can happen if it's dramatically cheaper to play with.
But you bring up a very good and often missed point. Highly speculative wagers are, if maybe not rational, understandable when 100X+ or 1000X+ potential gains exist. But that's not where BTC is right now.
If everyone is very lucky maybe BTC does 3x. Maybe even 6x but that's much more tenuous and uncertain. 100X? Very unlikely right now. The downside risk just isn't worth potential 3X gains for me and probably many others, but I'd feel different if there were realistic 100X gains possible.
BTC has 100x left in it, easily. Probably a lot more.
3 million x 21 million = (probably more money then is in circulation worldwide?)
I guess anything is possible but it seems highly improbable to me.
(edit) Just for fun I checked with quick and dirty math/2 second Google lookups.
Say BTC does 100X and attains 3 million. 3million/BTC x 21 million BTC = six hundred thirty trillion!
Right now there is around 40 trillion worldwide in the form of "money".
So they are going to have to print a lot more money and BTC is going to have to represent all of it near as I can tell for 100X to happen.
- The market for negative real interest bearing bonds is over $200 Trillion or 200x Bitcoin’s current market cap. Why would anyone store their savings in negative yielding debt?
- The total addressable market for BTC is much larger than most expect, though it will take time for the gains to be realized.
Just the dollar will drop dramatically in value. This might happen sure.
Couple of points (just my opinions).
If the dollar declines that precipitously in value (in our lifetime), seems it might get slated for replacement. Particularly given what we now know digital currencies can do. Will governments throw in the towel on control of currencies? Seems unlikely, willingly, but maybe they won't have a choice. Would some kind of international monetary standard, agreed to by treaties, replace sovereign currencies with a digital currency? What kind of problems might this solve? (or claim to solve anyway). I don't know. Just don't see nation states giving up control quite yet. I suspect BTC has it's uses for national interests or seems it would have been stomped to death some time ago. If that's even possible, idk.
If the dollar declines that precipitously, that rapidly, it seems like significant social upheaval would accompany the decline. Back to my point about the lights being on and networks up. Were I to chose a store of value in this scenario it would be essential physical goods, water and land. Seems you could pick up a lot of baubles with that during the tough times and have wealth when things smooth out. BTC depends on a number of underlying assumptions about social order, at least to the level of maintaining utilities and production lines so there is something to spend it on.
There will be a pegged redemption rate, for fiat currencies to the Bitcoin. Because states can keep printing more fiat, there will be some shenanigans with fake Bitcoin. Make sure you always take custody because the banks will try to inflate it!
I believe this because it is the only honest money we have. It was invented to keep us honest.
Seems like it has more utility with the smart contracts.
The idea that this specifically matters surely arises from the same logic that thinks certain companies are worth more or more performant because their per-share price is higher.
Your confusion is the share price is denominated in fiat, which is decreasing.
It comes down to your definition of fiat currencies. From context, I was referring to central bank issued currencies aka fiat currencies. It has to be issued by a State. As opposed to cryptocurrencies that are issued by either mining, or genesis block issuance.
i don't know if the crypto and meme-stock worlds realize this, but... out here in the real world we have tools to correct for that; you can compute things like a "real rate of return" on your holdings and see it come up positive, because... well, I know this will seem fantastical to crypto-land especially, but imagine having an asset that actually does something useful while you own it, making income, instead of just existing for speculation!!! it's much better than loaning it out through dodgy exchanges for the purposes of speculation.
we actually have nice things like this in the real world, and when we go through routine turbulence (like the last month) our losses are more like 10% of holdings, instead of, like, 50%.
We are playing very different games you and I. As the crypto markets mature, and robust Money markets increase in liquidity, such tradfi metrics can be calculated too. Thing is, eventually you realize it’s all bullshit and just go all in on BTC, the only honest coin in the room.
Yes. One is investing, and the other is speculative grift. And if you're not utterly ruined then you may very well end up with substantially more money than I have.
In the event that this happens, I hope you find that the money is its own reward, because that will be the full extent of your reward. Certainly there will be no special plaudits from society in general.
https://henvic.dev/posts/bitcoin
Wasn't that mostly true for gold as well? (Unless you wanted to make jewelry out of it, low utility high status signaling)
I like it. I'm going to use that.
When bitcoin fails (and it will), those who mine will be the first to move their value out to whatever BitCoin2.0 is. Then they will be able to charge whatever they want to the suckers left who want to exit, because you literally will have to pay the miners transaction fees to let you do this, and there will be no cap on what they can charge.
The final appeal will be to the government, saying "you bailed out the banks, homeowners, students, the auto industry, the airline industry, why not those who lost money in bitcoin?"
We can't look at Bitcoin as a purely economical issue. There are a lot of facets that need to be understood.
DeFi COULD be useful for people in under-developed or generally economically limited countries but I believe that the implementation needs to go back to phase-0 and solve many of the speculative issues that are inherent in DeFi today.
So you would be against crypto getting bailed out by the government?
Is it really that hard to figure out?
Edit: re correlation v causation. That’s the problem, people having been pumping Bitcoin as an alternative to gold, it’s supposed to be uncorrelated to the stock market…
For reference, sp500 also dropped like 10% since december. Since it's market cap is like 40 trillion, that 10% drop is worth like 7-8 times the market cap of all Bitcoin. Smaller markets with lower liquidity moves more.
Above a certain level of liquidity the difference is marginal to nonexistent. Bitcoin certainly exceeded that level. This was not a small, illiquid market.
Bitcoin gets a lot of press, but in the grand scheme of things it's still very tiny.
Not the price. That doesn't matter.
I discovered it around 2012 and at that time people were really excited. Not because they thought about "getting rich". But because people were finally learning about how money works and how corrupt and fragile the whole system is. Bitcoin showed us at once both what money really is, how it works and gave us a solution to the problem. Very exciting times. Many of us dreamed of being free from the heartless leeches in private banks.
But before long people did start to think about "getting rich". That's the really sad thing about finance. It has attracted some of the smartest people in the world who use their brains not to help others or do anything useful, but to essentially just leech off the real economy.
So Bitcoin just became like everything else. Clever people "getting rich" doing nothing of value, and people like me just giving up trying to explain what the real problems with money are.
Now I feel like the old world financial system is stronger than ever. People are singing its praises because now there is a failed alternative to compare it with.
> So Bitcoin just became like everything else
It didn't really give a solution to the problem, as "the problem" is more of a human nature issue and not something solved by a few lines of code. People will commit fraud and be leaches with an economy in dollars or bitcoins or dog money or sea shells or 1,000lb stone wheels.
Bitcoin was about permissionless digital cash initially, and then it shifted into a digital store of value. That's much less compelling to me and many of the early passionate people.
I know several early BTC people who are sitting on the sidelines now. If it were still about permissionless digital cash, they'd be more engaged. Maybe a bubble burst will help.
On another note, what's the update on the proof of stake?
It's insane that we're using 0.55% of global electricity production for a decentralized spreadsheet.
Phasing out coal power might be detrimental to lives of millions of people who depend on coal to power their dwellings, but shutting down coal power plants used for crypto mining sounds like a reasonable compromise.
But Ethereum is still on schedule for Q2 this year. It already uses far less electricity than Bitcoin does, but will do so much better as PoS.
I've been hearing about Ethereum POS for many years, and almost started losing hope at this point.
If the supply chain issues persist, there's also a chance that raising interest rates will fail to deflate commodity and product prices, in which case we might be overestimating Fed's ability to control inflation.
Let's hope China decides to stick with dollar as the reserve currency and doesn't decide to suddenly cut off the flow of goods, or things might turn very ugly.
Win/win cooperative deals are being made between cities and miners to establish predictable baseload and to turn off under prearranged conditions. BTC mining is becoming integrated with society at the municipal level.
They tend to shut up when they grow in value again, to values they never reached before.
In some months it will spike again, and then it will fall like this or less, again. It's like that.
> (extreme volatility rollercoaster)
You do have some stable coins like USDT, BUSD, which follow the value of the dollar.
When cryptos fall, everyone speaks about it and says cryptos are dead, when it grows nobody speaks anything about it.
Cryptos are here to stay that's the truth wether you like it or not. Its already moving wayy to much money to stop.
Like bike racing's game of chicken in the velodrome.
Crops fail. Promising biotech turns out to be impossible; new drugs are shown to be ineffective. The housing market turns out not-to-go-up-for-ever. A drought in Taiwan stifles semiconductor manufacturing and good chips are hard to find for years; ASML's factory catches fire. Oil spills, and must be cleaned up; Union Carbide leaks gas all over Bhopal. COVID-19 kills people, makes others (rationally) fear for their health, and far less gets done.
TBH, if these things were rational, I would have guessed most "bad" news would have pumped bitcoin's value; but I clearly have no clue what's going on, which is why I'm asking.
I'm also open to explanations that complex adaptive systems have intermitent booms and busts.