Cryptocurrencies

[constructive]

There are a lot of crypto currencies in the grey area between token and security. This does not seem like one of them. The money was raised for them to spend it on corporate purposes, and they have described exactly how investors will earn a return on capital. Seems like an open and shut case for the SEC.

[roughlyright]

They did not offer investments to any US investors. It explicitly forbade them from investing. Bitfinex did a lot of KYC to screen them out

[Haasje]

Bitcoin is potentially an emerging global currency. It is neutral too as it isn't controlled by any state. There are many interesting features. All the common analogies (that I use as well) that it is digital gold, digital currency, tulip bulbs are all at least a little bit off the mark. I really think this is an interesting innovation that adds a new asset class.

 

It is not guaranteed to be a success. But in success mode (ie sustained global interest) it would need to appreciate meaningfully to satisfy demand as evidenced by total value of gold or the M1 float of large countries. The low interest rate environment is a boon but the low inflation environment is working against it.

 

 

[My Own Personal Hedge Fun]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

[SnarkyPuppy]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

 

Is there a reason you are purposely ignoring the bitcoin = gold thesis?

[Spekulatius]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

 

Is there a reason you are purposely ignoring the bitcoin = gold thesis?

 

Yes, there is. I don’t like gold.

[SnarkyPuppy]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

 

Is there a reason you are purposely ignoring the bitcoin = gold thesis?

 

Yes, there is. I don’t like gold.

 

I don't either.  I do like gold at a 95% discount though. 

[SharperDingaan]

Highly amusing thread so far ....

 

Pick ANY crypto-currency that is NOT Bitcoin, or a CBDC (E-Krone).

Apparently it's way BETTER than holding USD, Euro's etc ? - and at paying for transactions than either a debit/credit card?

Cause that smart money guy says so (insert talking head). He did ....'XYZ' IPO, made repeated killings, & therefore must know his stuff.

Indeed he does! ... how to get idiots to take the junk off his hands at higher prices.

It's quite the skill  ;D

 

Most of this crypto is SOLELY backed by the full faith and credit of the issuer. US Fed if you're using USD ... then down from there.

The credit 'backing' your shiny new crypto is JUNIOR to an unsecured debenture issued by a CCC credit. Yet even that unsecured debenture has an indenture agreement, and a stated interest coupon. The crypto? .... incurs MORE risk .... has no agreement ... and the holder doesn't even get an interest payment for it. No wonder the smart money IPO guy has a jump in his/her step!

 

Why not Bitcoin? Because you can short Bitcoin on the Comex via futures and options. Profit today, not years from today.

Oops, doesn't your shiny new crypto have that? .....

 

End of public service announcement!

 

SD

 

 

 

 

 

[Spekulatius]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

 

Is there a reason you are purposely ignoring the bitcoin = gold thesis?

 

Yes, there is. I don’t like gold.

 

I don't either.  I do like gold at a 95% discount though.

 

To be fair, the fact that I don’t like gold isn’t negating the thesis that crypto = gold. I am sure for some people it is and that may be good enough. I don’t know where the 95% discount is coming from - the market cap of gold vs crypto?

[rkbabang]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

 

Is there a reason you are purposely ignoring the bitcoin = gold thesis?

 

Yes, there is. I don’t like gold.

 

I don't either.  I do like gold at a 95% discount though.

 

To be fair, the fact that I don’t like gold isn’t negating the thesis that crypto = gold. I am sure for some people it is and that may be good enough. I don’t know where the 95% discount is coming from - the market cap of gold vs crypto?

 

No.

Crypto != gold.

 

Bitcoin = gold.

 

There is a big difference. People keep wanting to confabulate "crypto" with "bitcoin" and vice versa. Even the name of this thread itself was changed from "BTC - Bitcoin" to "Cryptocurrencies".  In that fundamental misunderstanding  is where some will profit and others will be left behind.  It's like changing every discussion about Amazon.com to "online shopping" and saying it's all the same.

 

[roughlyright]

Bitcoin isn't capable of handling the transaction volume that's necessary to become a currency or medium of exchange. And to the argument that some holders aren't willing to sell at any price, there is a sizable portion of Bitcoin that cannot be sold at any price because the holders lost access to their private keys.

 

The ultimate problem with holding any cryptocurrency like Bitcoin or Ethereum with the expectation that this technology is the future medium for financial transactions is that a new cryptocurrencies are being created for commercial use. Just like Facebook created Libra, credit card companies, the Fed, banks, etc. can all build their own cryptocurrencies that work for their specific needs. The technology definitely can make transactions like international wires and real estate closing which currently take several days (or weeks) to complete and make them as quick running a credit card. Ultimately, that's a boon to the banking industry, bank customers, regular people sending money across borders, etc. but it's tough to see how that translates to a higher value for Bitcoin specifically.

 

Is there a reason you are purposely ignoring the bitcoin = gold thesis?

 

Yes, there is. I don’t like gold.

 

I don't either.  I do like gold at a 95% discount though.

 

To be fair, the fact that I don’t like gold isn’t negating the thesis that crypto = gold. I am sure for some people it is and that may be good enough. I don’t know where the 95% discount is coming from - the market cap of gold vs crypto?

 

No.

Crypto != gold.

 

Bitcoin = gold.

 

There is a big difference. People keep wanting to confabulate "crypto" with "bitcoin" and vice versa. Even the name of this thread itself was changed from "BTC - Bitcoin" to "Cryptocurrencies".  In that fundamental misunderstanding  is where some will profit and others will be left behind.  It's like changing every discussion about Amazon.com to "online shopping" and saying it's all the same.

 

Exactly! you made a great point. I see this happening all the time.

[writser]

I don't either.  I do like gold at a 95% discount though.

Discount to what?

[SnarkyPuppy]

I don't either.  I do like gold at a 95% discount though.

Discount to what?

 

The closest comp to a depreciation resistant non-sovereign store of value that exists today

[bizaro86]

Is there any logical reason why bitcoin as a store of value should have the same total value as gold though?

 

Land ownership is a store of value, as are diamonds and rare baseball cards. None of those things have the same market cap.

 

That seems like a logical fallacy where total addressable market is assumed to be already captured.

 

If you think bitcoin and gold compete in the "durable store of value, non govt intervention" market, is there any reason to think BTC will take 100% market share?

[writser]

I don't either.  I do like gold at a 95% discount though.

Discount to what?

 

The closest comp to a depreciation resistant non-sovereign store of value that exists today

 

By that measure platinum is a far better investment, right?

[SnarkyPuppy]

I don't either.  I do like gold at a 95% discount though.

Discount to what?

 

The closest comp to a depreciation resistant non-sovereign store of value that exists today

 

By that measure platinum is a far better investment, right?

 

No - the qualities of bitcoin are superior to gold and platinum for similar reasons

[writser]

But the market cap of all platinum bullion is much smaller. Palladium even smaller still. Wouldn’t that be a better value pick by your reasoning? Buying palladium is like buying bitcoin at a 80% discount. Surely that makes up for the quality issues.

 

Why are idiots still buying gold if they can buy platinum at a 99% discount?

[Guest ajc]

But the market cap of all platinum bullion is much smaller. Palladium even smaller still. Wouldn’t that be a better value pick by your reasoning? Buying palladium is like buying bitcoin at a 80% discount. Surely that makes up for the quality issues.

 

Why are idiots still buying gold if they can buy platinum at a 99% discount?

 

 

I have access to some small amounts of unobtainium. Far rarer than anything else. Palladium doesn't even come close. Would probably be willing to listen to offers at the right price.

 

 

 

[SnarkyPuppy]

But the market cap of all platinum bullion is much smaller. Palladium even smaller still. Wouldn’t that be a better value pick by your reasoning? Buying palladium is like buying bitcoin at a 80% discount. Surely that makes up for the quality issues.

 

Why are idiots still buying gold if they can buy platinum at a 99% discount?

 

The discussion is not Gold vs Platinum vs Silver.  The discussion is bitcoin vs Gold/Platinum/Silver.  The thesis is that bitcoin has attributes which achieve the objective of non-sovereign depreciation and censorship resistance in a materially superior manner.  In the short term, while conviction on this is much lower, there's arguments to be made that the odds of a significant increase in price (relative to a significant drop in price) is likely simply due to increases in liquidity (institutional ownership) and sovereign/institutional game theory (every country outside of the US would benefit from a non-USD reserve currency;  pension funds will be asked why they missed bitcoin again).

 

Let's be perfectly clear - this is not investing; it is speculation.  But there is such a thing as intelligent speculation.  If someone offers you a gamble- put $1k with a 50% chance of winning $1mm and a 50% chance of losing the $1k, if you don't take the bet then you can claim Warren Buffett disciple status but you'll still be an idiot.

 

Gold's market cap ($7tn) is a simple proxy for a non-sovereign depreciation and censorship resistant store of value.  Should bitcoin be worth $1tn, $3tn, $5tn, $7tn - I don't know.  You don't need a scale to know a man is fat.

[coc]

  If someone offers you a gamble- put $1k with a 50% chance of winning $1mm and a 50% chance of losing the $1k, if you don't take the bet then you can claim Warren Buffett disciple status but you'll still be an idiot.

 

Gold's market cap ($7tn) is a simple proxy for a non-sovereign depreciation and censorship resistant store of value.  Should bitcoin be worth $1tn, $3tn, $5tn, $7tn - I don't know.  You don't need a scale to know a man is fat.

 

The problem with this reasoning is that you can:

 

A. Attach it to anything

B. It has no upper or lower bounds.

 

Which is how speculative bubbles start and end. Under this reasoning, there’s almost no upper limit to pay for bitcoin - and no way to even determine a price that makes sense or not.

 

It’s easy to say “the upside is infinite and the downside is capped”, but the truth is you’re picking statistics at random. Why should there be a 50% chance of 1000-1 odds on bitcoin? How do you know it’s not a 1% chance of 10-1 odds - how would you do this in a rigorous way?

 

It seems too easy to fool yourself with these number games.

[DooDiligence]

Too hard pile.

[bizaro86]

I feel like there should be a rule about coin flip analogies on this board. Between this and the PWE thread I feel like I've stepped through the looking glass.

 

Maybe it's just me.

[SnarkyPuppy]

  If someone offers you a gamble- put $1k with a 50% chance of winning $1mm and a 50% chance of losing the $1k, if you don't take the bet then you can claim Warren Buffett disciple status but you'll still be an idiot.

 

Gold's market cap ($7tn) is a simple proxy for a non-sovereign depreciation and censorship resistant store of value.  Should bitcoin be worth $1tn, $3tn, $5tn, $7tn - I don't know.  You don't need a scale to know a man is fat.

 

The problem with this reasoning is that you can:

 

A. Attach it to anything

B. It has no upper or lower bounds.

 

Which is how speculative bubbles start and end. Under this reasoning, there’s almost no upper limit to pay for bitcoin - and no way to even determine a price that makes sense or not.

 

It’s easy to say “the upside is infinite and the downside is capped”, but the truth is you’re picking statistics at random. Why should there be a 50% chance of 1000-1 odds on bitcoin? How do you know it’s not a 1% chance of 10-1 odds - how would you do this in a rigorous way?

 

It seems too easy to fool yourself with these number games.

 

That's fair on probabilities.  But I would argue that bitcoin has a greater chance than anything (your point on "you can attach it to anything").  Bitcoin is the first value transfer mechanism that exists without counterparty risk... I don't think you can say that's equivalent to trading beanie babies. 

[SharperDingaan]

  If someone offers you a gamble- put $1k with a 50% chance of winning $1mm and a 50% chance of losing the $1k, if you don't take the bet then you can claim Warren Buffett disciple status but you'll still be an idiot.

 

Gold's market cap ($7tn) is a simple proxy for a non-sovereign depreciation and censorship resistant store of value.  Should bitcoin be worth $1tn, $3tn, $5tn, $7tn - I don't know.  You don't need a scale to know a man is fat.

 

The problem with this reasoning is that you can:

 

A. Attach it to anything

B. It has no upper or lower bounds.

 

Which is how speculative bubbles start and end. Under this reasoning, there’s almost no upper limit to pay for bitcoin - and no way to even determine a price that makes sense or not.

 

It’s easy to say “the upside is infinite and the downside is capped”, but the truth is you’re picking statistics at random. Why should there be a 50% chance of 1000-1 odds on bitcoin? How do you know it’s not a 1% chance of 10-1 odds - how would you do this in a rigorous way?

 

It seems too easy to fool yourself with these number games.

 

As we're the idiots on probalility, and have material expertise in blockchain; a few comments.

 

Ultimately investor X is forecasting an expected value, at time X, over a range of possibilites, and acting on it. If the forecast for XYZ is $7.50, after Q2 earnings are released, and investor X can buy XYZ today for $6.00; investor X should buy XYZ today and sell on the Q2 earnings release in expectation of a $1.50/share profit. Investor X could actually make more/less on the day, but expects to make $1.50.

 

The coin flip is just a simplification of the same thing; 50% x $1payoff +50% x $1loss = $0.00 EMV = unbiased coinflip. It doesn't matter how many times one flips the coin, to make a profit - we just need a payoff>cost. We just differ on how it might be achieved - tossing bones works for us  ;)

 

The premise of the Bitcoin/Gold equivalency is that Bitcoin displaces a % of the existing gold market interested in store of value. Take the $ displaced, divide by the max possible 21M Bitcoin, and there's your value. Maybe this is valid 80 years from now, but TODAY, if you need to run from your homeland - are you putting your money primarily in gold, or Bitcoin? History has repeatedly demonstrated the utility of gold, Bitcoin ... not so much.

 

SD

 

 

 

 

[rkbabang]

  If someone offers you a gamble- put $1k with a 50% chance of winning $1mm and a 50% chance of losing the $1k, if you don't take the bet then you can claim Warren Buffett disciple status but you'll still be an idiot.

 

Gold's market cap ($7tn) is a simple proxy for a non-sovereign depreciation and censorship resistant store of value.  Should bitcoin be worth $1tn, $3tn, $5tn, $7tn - I don't know.  You don't need a scale to know a man is fat.

 

The problem with this reasoning is that you can:

 

A. Attach it to anything

B. It has no upper or lower bounds.

 

Which is how speculative bubbles start and end. Under this reasoning, there’s almost no upper limit to pay for bitcoin - and no way to even determine a price that makes sense or not.

 

It’s easy to say “the upside is infinite and the downside is capped”, but the truth is you’re picking statistics at random. Why should there be a 50% chance of 1000-1 odds on bitcoin? How do you know it’s not a 1% chance of 10-1 odds - how would you do this in a rigorous way?

 

It seems too easy to fool yourself with these number games.

 

As we're the idiots on probalility, and have material expertise in blockchain; a few comments.

 

Ultimately investor X is forecasting an expected value, at time X, over a range of possibilites, and acting on it. If the forecast for XYZ is $7.50, after Q2 earnings are released, and investor X can buy XYZ today for $6.00; investor X should buy XYZ today and sell on the Q2 earnings release in expectation of a $1.50/share profit. Investor X could actually make more/less on the day, but expects to make $1.50.

 

The coin flip is just a simplification of the same thing; 50% x $1payoff +50% x $1loss = $0.00 EMV = unbiased coinflip. It doesn't matter how many times one flips the coin, to make a profit - we just need a payoff>cost. We just differ on how it might be achieved - tossing bones works for us  ;)

 

The premise of the Bitcoin/Gold equivalency is that Bitcoin displaces a % of the existing gold market interested in store of value. Take the $ displaced, divide by the max possible 21M Bitcoin, and there's your value. Maybe this is valid 80 years from now, but TODAY, if you need to run from your homeland - are you putting your money primarily in gold, or Bitcoin? History has repeatedly demonstrated the utility of gold, Bitcoin ... not so much.

 

SD

 

 

 

 

 

If you need to run from your homeland and take your entire net worth with you and you know there is a good chance that you may be stopped and searched at any number of borders that you will be crossing, you would be insane to take gold.