TwoCitiesCapital

There is a hard-cap on BTC issuance making is disinflationary-to-neutral in the long-run. Maybe every so slightly deflationary given population growth and lost coins. So your 2nd point isn't terribly valid in the long-run in that mining rewards will trend towards 0.0000 BTC due to the increasing price of BTC and the lower block rewards after each halving until the cap is reached and a fixed fee is paid instead (which still trends towards individual satoshis as BTC price rises). And again, for a global asset class, the dollars you're talking about are a pittance in flows. The biggest PoS token out there will be ETH come January. And ETH is shooting itself in the foot by prioritizing ETH prices as opposed to network value and economic activity. The proposal to make ETH deflationary post-POS transition simply means that you're going to have a major shortage of a necessary input which was done solely to pump the price of ETH. ETH is more like oil in this regard - oil prices spike and economic activity shuts down. ETH prices spike and network activity/value crater because nobody wants to pay $200 to trade $3000 of ETH or to make a loan on Aave or to change stablecoins on Curv. I am personally feeling this as a staker in a few projects - I've not done a single transaction (including claiming rewards) on the ETH network in over 2 months due to how uneconomic it is to pay $100-300 to do anything. So the nearest competitor to BTC is shooting itself in the foot to pump its token price at the expense of its long-term success. The other PoS networks? If they can manager to leapfrog ETH and wrestle away its developer support, then we can discuss them. Until then, they're hyper speculative tokens with multibillion market caps and limited developer support. And until they leapfrog ETH, they also have to make an argument for why there should be more than 2 or 3 globally relevant blockchains - what do we benefit by fracturing the network any more? In this regard, if ETH fails than I think BTC might just take the cake now that it is also programmable for smart contracts. Why even have a 2nd blockchain at all if the entire network of smart contracts can be built on L2 BTC network from the start and avoid all of the scaling issues and input costs that ETH is currently facing?

I don't necessarily disagree with you regarding inflation. I am definitely still in the disinflation/deflation being the threat, but would not be shocked to see inflation averaging slightly higher than the last decade if we successfully navigate this monetary experiment (like 3-4% per annum as opposed to 1-2%). That being said, I only brought up the 70s because it does seem everyone here simultaneously believe that inflation is here to stay and that equities are the best investment to own in that environment. Equities make a terrible inflation hedges when inflation gets above 4ish% - particularly if you're paying 25x earnings that are predicated on margins remaining at all time highs (i.e. no contraction in E as input and labor costs rise). I would think that is also unlikely - as corporations have been big beneficiaries of a larger cut of the economic pie as inflation stagnated, so to they will likely be the bigger losers of economic pie as inflation results in pro-labor policies that bring that pendulum back. Basically, if I'm right, stocks can likely remain elevated for a bit longer solely on momentum. Wouldn't be hard to imagine a blow off top to this bubble another 20-30% higher from here. But if everyone ELSE is right about elevated inflation being sticky...look out below because you likely won't see 4600 on the S&P 500 again for years.

Stocks go up is primarily only true in hyper inflationary scenarios and is only true in nominal terms. Equity returns were very negative during the last inflation of the 70s - particularly on a real basis. If we get +5% inflation consistently going forward, there's no way that we're not near a decade long top.

I may tender some shares just like I did FIH. If the share price remains low relative to where I think the offer could reasonable fill at, I'll buy more shares solely for the purpose of flipping into the tender. If all goes as it did with FIH, I'll fill at the high end of the offer range, get cash, book a quick 10-15% gain, and then be able to roll the cash back into more shares still trading at a discount.

+1 Bitcoin ISN'T great for criminal activity. Also, makes you wonder why these guys don't use hardware wallets? Or were these voluntarily forfeited?

I'd be interested to see how you came to that math, but I also don't think $400 million is terribly much for a 1+ trillion asset class. You're basically saying it needs to collect just 0.03% of it's current market cap in new inflows every week or just 1.5% of its market cap in inflows a year. For a global asset class that is growing in adoption quickly I don't think that is a high bar at all. I am open to being wrong about other Blockchains going to zero and BTC being dominant. BTC could remain the largest and most widely used and still lose dominance. All that requires is that other Blockchains also find some level of success and continue to grow - it doesn't require the demise of BTC. Given that the bulk of the BTC network is operated on cheap renewable energy in areas where it's not needed, or that have excess capacity, it's hard for me to understand the argument against it's energy intensity and why PoW is a bad thing. That's what provides a secure network and makes it insurmountably expensive to try to 51% attack it. Anyone want to take a guess at what the energy intensity of the entire internet and its infrastructure is? Do we even care? No. We've long since determined it's worth it. And it'll be the same for BTC if it continues on this trajectory of becoming a dominant global store of value and settlements network.

This is how I'm using it. You're locked for the first 12 months and have a 3 month penalty at any time between that and 5. So using it as a "cash equivalent" for a portion of my cash. Seems to me that taxes are deferred until sale as well which is nice in the event inflation stays high and I can continue to compound that return. Thanks @Spekulatius for bringing these to the board's attention.

You're assuming demand doesn't grow and that these solutions are successful. Demand WILL grow IF thee solutions are successful. And when you're talking about billions of people transacting daily, 6400x means nothing. They might've beaten BTC to punch in smart contracts but operating on that network is painful for anyone with less than 10-20k minimum today - even with recent advancements in L2 scaling. And with the price of Ethereum rising? The costs of transactions is too and the minimums to be worthwhile climb. Ethereum = oil. Too high a price is counterproductive to economic well being and throughput...and yet they just made ETH deflationary for no reason whatsoever which is driving a shortage in ETH and the price is going through roof... killing any and all network activity.

I think at the end of the day only a small percentage are worthwhile. And the longer I spend in the space, the more I trend towards Bitcoin remaining absolutely dominant and the space thinning. But most of them aren't PoW like Bitcoin, so the concept of them wasting electricity is no more valid than us talking on this forum wastes electricity.

Now that smart contracts and L2 solutions are here for Bitcoin, trending that way myself. Ethereum is cool. DAOs are cool. But it will never get mainstream attraction if you're paying $50-$100 to do a transaction.

I don't believe Bitcoin is an asset that increases in perpetuity until it eats the value of everything, no. And that's the only way you could sit on your hands into perpetuity and retain your proportion of global wealth. At some point it will reach the saturation point of its adoption and will be as volatile as any currency is, but on average might appreciate by a similar rate as the global population (new demand) which might become your new risk free rate. And there will be other sectors and technological developments and companies that will be doing much better than. So if they sit on their hands, they'll be slowly diluted in proportion to global wealth. Not to mention this also assumes none of their holdings are sold ever...but what is the point of wealth if you never spend any of it. Also, there will likely continue to be booms and busts and you'll likely continue to see whales speculate on those outcomes. Some will be right. Some will be wrong. And the net decentralization of BTC holdings will continue with smaller wallets making up a larger and larger portion of the network.

Not any different than current billionaires and companies today, no? I mean there are a handful of companies in the S&P that have greater value than the commerce in a number of countries. What about that system is any different than what you expect from crypto? And over the last 12 years, crypto has become increasingly decentralized while traditional finance/fiat has become increasingly concentrated. So crypto is at least moving the right direction where the existing system is not.

I'm not so sure they are anymore. Dumping all of their Treasuries post-Trump's election suggested they'd moved to the inflationary camp awhile back. And they weren't buying Treasuries when the 10-year hit 3.25% in 2018. Id be shocked to see them deploy anything appreciable at rates anything close to today as they haven't really said anything to make me think they've changed their opinion on rates.

Thing is, I think he's liable to be right this time. Sure, hold him accountable for missing the bottom in 2009. But I think history will look upon his bubble research over the last 1-2 years kindly.

If merchant become indifferent between BTC and USD then I think you're right. Whatever fraction of the BTC market cap that is circulating via spending would basically be equivalent to new dollars printed and circulated. But given that BTCs market cap is still small, and only a small fraction of those coins move/get spent in the US, I doubt it has much impact on current inflation statistics - were likely talking tens of millions on a monetary base of trillions. That being said, as more merchants accept it and as the prices rises to, say 1 million a coin, we could be in a scenarios where BTC spend does dramatically impact inflation statistics by having a huge impact on supply of currency in circulation - particularly if inflation is still calculated in $ (would be different if BTC was the new unit of account). There's also the factor of reducing demand for dollars. As of right now, in most cases, if I want to buy a house I have to sell my BTC and demand dollars because the seller demands dollars. So I sell the BTC and put in a bid for $. In the future, if the seller just accepts BTC directly, there's no need for the dollar bid and that demand for dollars decreases.

Try charting Amazon stock in a similar fashion. It's not a bubble. It's a secular growth trend. Which is why every bottom has been higher and every top has been higher.

If you reinvest the dividend for more shares than it's the same (excluding tax difference). Seems like you're comparing X shares with dividend and X shares with a buyback without considering the dividend is reinvested for more shares. So you have fewer shares worth more (buybacks) or more shares at a lower price (dividend) that are roughly equivalent outcomes.

Eurobank has also been on quite the tear over the last 1-2 months. It's going to be an excellent Q4 for Fairfax if this all holds up through December.

What everyone should keep in mind, particularly with Bitcoin, is much of its life is spent in a "bubble". And yet, even if you bought right at the top of prior bubbles, you always had a positive return within 3 years, and fantastic returns by year 4. That may not continue into perpetuity, but it's new enough with a high enough growth rate that I imagine it will be true in the intermediate term. Just DCA w/ a 3-5 year time horizon and you'll do just fine even if it's a but rich relative to it's current fundamentals (as I feel it is today).

Just go on any crypto related subreddit and you'll see a lot of what you're referencing I think the boom/bust psychology is still in play in crypto, though to a lesser extent than in prior booms. My guess is we'll never see sub-40k BTC again, though we may get close at the bottom of the next bear market. Once KYC protocols are in place at on-ramps and off-ramps crypto becomes way easier to track than the USD. As far as cash being the intermediary, of course! USD is still the unit of account. Before crypto can become a unit of account it needs to be the medium of exchange. And before it's a medium of exchange, it needs to be a trusted store of value. We're still working on trusted store of value step, but I think it's pretty much won out there. Places like El Salvador are pushing it forward as a medium of exchange.

1. I think most people who are in the crypto world acknowledge that there is little, if any, utility to Doge or Shiba or whatever hot shitcoin has taken the market that week. Doge in particular has all of the makings of a hyperinflationary currency seeing as ~14 million are produced daily with no cap on total supply. 2. I think the likelihood of a 51% attack is very remote and becomes less likely as the market cap of BTC moves higher. Also, with as many eyes are on the network, it'd hard for me to imagine anyone would benefit even if they were successful. Why spend all of that money/time acquiring hash rate to attempt to make fraudulent transactions that could be immediately be detected and result in BTC dropping to a small fraction of its current value likely resulting in a loss of investment versus the cost of the hash power. 3. We just witnessed a 50% drop in the crypto market cap in May. Nothing catastrophic occurred. Same could be said for the 80+% correction back in 2018. At some point I agree this will become systemically important and regulation is welcomed. But crypto industry/players/companies have proven themselves to be WAY more resilient to drops in the underlying asset prices than say traditional banks proved themselves to be in 2008. The reason? The vast bulk of the crypto industry isn't levered and the vast bulk of loans/lending are over-collateralized. There is no guarantee that will always work, but it's worked pretty well for the last several 50+% corrections that we've witnessed in recent years. I trust this form of risk management over VaR models that seem to regularly blow-up when something previously unforeseen occurs.

I agree. They didn't buy 10-year treasuries back in 2018 @ 3.25% - nor have they said anything about being 'wrong' about sustainably higher rates....so I'd be shocked if they moved in a big way whole rates still remain sub-2%.

I think we'll see a 6 figure BTC in the next 6 months. That'll be the parabolic rise IMO. Whether the spells the end for equities? It didn't in 2018 - just a minor pull back. Who knows this time around.

Fingers crossed, but given that the dividends are optional and both companies still had large obligations of treasury Sr preferred funding to pay under the original terms, I'm not terribly hopeful for the inclusion of dividend payments in any relief. Than again, maybe the judges will take pity on us and be punitive towards the government for dragging this shit out.

On BITO's first day of trading, they received $570 million of net inflows and over $1.1B in volume traded. Too bad it's not a spot product. That being said, if it keeps growing like that, there will be undoubtedly flows into spot to go long BTC and short the futures to capture the large premium differential. If the SEC thinks that a leveraged product with contango decay is 'safe' for investors, I can't imagine why they wouldn't also approve a spot product that isn't encumbered by those problems