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The Death Knell of Crypto!


Parsad
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I don’t get why a 72 year old investor would be 50% on BTC. It’s not quite betting the farm, because he can afford to lose 50% and still be fine, but what exactly does he want to accomplish here?

 

FWIW, I do own a little gold ETF and would rather own gold than BTC because of the Lindy principle. It’s more of a cash substitute than an investment for me.

Edited by Spekulatius
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11 hours ago, Spekulatius said:

I don’t get why a 72 year old investor would be 50% on BTC. It’s not quite betting the farm, because he can afford to lose 50% and still be find, but what exactly does he want to accomplish here?

 

 

Probably because he CAN afford to and believes in it. This is the same man who started buying it in 2014 at $400/coin. We're 7-years later and it's $42,000/coin and has been as high as $69,000/coin. 

 

Maybe instead of asking how could he have 50% of his net worth in an investment, maybe we should ask ourselves what we missed that allowed it to go from $400 to $42,000 and why people are still so critical of it today? 

 

10 hours ago, Xerxes said:

If Bitcoin can survive the higher interest rate and a period of quantitative tightening, than it is made.

 

 

It rose the entirety of 2017 into it's last bubble top of 20k the whole time the Fed was tightening. We've been there and done that. 

Edited by TwoCitiesCapital
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Very well said TwoCC on what we should ask ourselves. 

For clarity i dont think he is 50% on BTC directly, i think he has a lot of ecosystem-like plays (MSTR or miners) involving BTC as well as the actual coin as per his comment in this interview. There is another interview he did with author William Green that folks might find it interesting. It is on his website. 

 

On interest rate, i see BTC different today than 2017. Today's it is being marketed as institutional-grade "digital gold" as "inflation hedge" on the back of Covid-induced easy money. 5 years ago it was a "payment alternative", and prior to that it was a "be free from Government" product and i imagine the narrative will switch to something else in 2025. Like someone said, it is solution looking for a problem, and slowly but surely reaching escape velociy.

 

That said, in the short term, I feel that between something like Ether and Bitcoin, the one that has a "inflation hedge" narrative will have more headwinds because its raison d'etre was to be the "sound money" while the Fed was on the rage on the printing press, which no longer will be the case in 2022-23.

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I think what’s missed is the excellent point made earlier about why it’s gone from 400(or $4) to $40k and why people still can’t seem to see the bigger picture. Which is what Miller himself has said for ages and said again recently in this interview.. What are you risking putting 1% into something interesting? People take their 1%s WAYYYYY too seriously. 
 

Some one recently asked me why I was buying call options on gold instead of physical or direct gold. And the answer was simple. Why would I waste a few % on the physical? To make 10% a year if I’m lucky? That translates to a whopping ONE HALF OF ONE PERCENT!!! portfolio gain on a 5% position lol. What’s the point?

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34 minutes ago, Gregmal said:

 What are you risking putting 1% into something interesting? People take their 1%s WAYYYYY too seriously.

 

There might be a bias thing, where folks do not want to think in terms of a possible scenario (however improbable) where everything they built over the years goes out and the only thing remaining would be Bitcoin.

 

The question is: is Miller's outsized position a reflection of his belief that there would be an economic catastrophe, where all he needs is Bitcoin and Amazon Prime deliveries, or just that there is more upside at least in the short term b/c he sees no correlation with the interest rate cycle, which would be putting pressure on other risk-on assets in 2022-23. 

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37 minutes ago, Xerxes said:

 

There might be a bias thing, where folks do not want to think in terms of a possible scenario (however improbable) where everything they built over the years goes out and the only thing remaining would be Bitcoin.

 

The question is: is Miller's outsized position a reflection of his belief that there would be an economic catastrophe, where all he needs is Bitcoin and Amazon Prime deliveries, or just that there is more upside at least in the short term b/c he sees no correlation with the interest rate cycle, which would be putting pressure on other risk-on assets in 2022-23. 

I try not to worry about why individual guys think too much on that type of scale. But I do find value in using guys like Miller to flag potentially interesting ideas. Bill has consistently demonstrated a skill most big managers don’t have in terms of catching early stage themes, and especially impressive is the range of diversity in the areas he can invest. But I never found his macros views important or even his position sizing. If someone owns something I just assume it’s cuz they think it’s going to make money. Then I try to figure out the rest for myself.

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15 hours ago, Parsad said:

https://finance.yahoo.com/news/billionaire-investor-bill-miller-now-182721089.html

 

Is this the death knell of the current batch of crypto?  Bill Miller has gone all in!  Yikes! 

 

The ARKK is sinking...is Miller Part Duh (deux) next?  Cheers!

 

 

You keep saying "current batch of crypto", but I don't think you realize that they can fork and and add functionality if the consensus is there to do so.  Bitcoin was just upgraded to add functionality a few months ago.  This isn't like a company that has stubborn management that will resist change and let a competitor eat its lunch.  New ideas are tried in new blockchains and good ones can be adopted by the old blockchains.  My guess is that Bitcoin and Ethereum (which serves different purposes and always will) will evolve into whatever is next in crypto.  This first batch of crypto will keep evolving while people are on the sidelines waiting for the second coming. 

 

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41 minutes ago, rkbabang said:

 

 

You keep saying "current batch of crypto", but I don't think you realize that they can fork and and add functionality if the consensus is there to do so.  Bitcoin was just upgraded to add functionality a few months ago.  This isn't like a company that has stubborn management that will resist change and let a competitor eat its lunch.  New ideas are tried in new blockchains and good ones can be adopted by the old blockchains.  My guess is that Bitcoin and Ethereum (which serves different purposes and always will) will evolve into whatever is next in crypto.  This first batch of crypto will keep evolving while people are on the sidelines waiting for the second coming. 

 

At this point it feels like the proverbial "wheel" of crypto is userbase and not tech. Trying to kill BTC and get everyone to adopt an entirely new coin is unlikely and probably would be very detrimental to trust and future growth of crypto in general.  So I agree that it's likely just new tech being added onto existing ETH and BTC. 

 

However, doesn't this also pose a major risk factor? I'm not super well versed in the fork process so bear with me.....But don't the miners decide which future chain to follow? Miners of 2021 are very different than 2011 and it's hard for me to look past the monopolistic structure they have on BTC direction. If you're an individual holder you carry about as much weight as someone who holds a single share of class A $F. What prevents miners from doing what's in their own best interest from here on out? It's a majority decides but having a large player disagree certainly would cause problems no? It seems like one big disagreement could cause permanent impairment. That being said, I don't understand the process fully so I'll defer to the resident experts :classic_biggrin:

 

 

0.1% of all miners control half of BTC mining capacity

https://fortune.com/2021/10/26/bitcoin-mining-capacity-ownership-concentration-top-investors-nber-study/

 

Edited by Castanza
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2 minutes ago, Castanza said:

At this point it feels like the proverbial "wheel" of crypto is userbase and not tech. Trying to kill BTC and get everyone to adopt an entirely new coin is unlikely and probably would be very detrimental to trust and future growth of crypto in general.  So I agree that it's likely just new tech being added onto existing ETH and BTC. 

 

However, doesn't this also pose a major risk factor? I'm not super well versed in the fork process so bear with me.....But don't the miners decide which future chain to follow? Miners of 2021 are very different than 2011 and it's hard for me to look past the monopolistic structure they have on BTC direction. If you're an individual holder you carry about as much weight as someone who holds a single share of class A $F. What prevents miners from doing what's in their own best interest from here on out? It's a majority decides but having a large player disagree certainly would cause problems no? It seems like one big disagreement could cause permanent impairment. That being said, I don't understand the process fully so I'll defer to the resident experts :classic_biggrin:

 

 

 

 

If you own Bitcoin but don't mine you have no say at all.  Anyone can run a node and mine, but your vote is proportional to the computing power you put in compared to the total computing power of the entire pool of miners.   The idea is that you need over 50% of the computing power to make a change.  So yes, if an idea is controversial and you can't get miners representing >50% of the computing power to agree on the change, then the change simply doesn't happen and things go on as they have without the change.   This is a feature though. It should be hard to change the code.  As Bitcoin becomes more and more valuable it is less and less likely that any one miner or even small group of miners will control over 50%.  This stabilizes the network, makes it safe, makes it difficult to change, but at the same time it doesn't allow any 1 miner to stand in the way of a change that almost everyone wants.  If you can't get consensus for a change, then maybe it isn't as much of a no-brainer as you thought and maybe it shouldn't be implemented. You are free to start your own blockchain to prove the features worth, but there is no guarantee anyone will participate.  Bitcoin represents hundreds of billions of dollars in value and will someday represent many trillions.  Changes should never be taken lightly and it certainly shouldn't be changed on a whim by a small group.

 

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2 hours ago, rkbabang said:

 

 

You keep saying "current batch of crypto", but I don't think you realize that they can fork and and add functionality if the consensus is there to do so.  Bitcoin was just upgraded to add functionality a few months ago.  This isn't like a company that has stubborn management that will resist change and let a competitor eat its lunch.  New ideas are tried in new blockchains and good ones can be adopted by the old blockchains.  My guess is that Bitcoin and Ethereum (which serves different purposes and always will) will evolve into whatever is next in crypto.  This first batch of crypto will keep evolving while people are on the sidelines waiting for the second coming. 

 

 

My reference to the "current" batch of crypto is aimed at all of the coins not backed by anything tangible or cash flow, provide zero utility, and are based solely on supply/demand.  I expect the next batch to be digital currencies tied to tax revenues or corporate cash flows, which will make the current batch impotent.  Cheers! 

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4 hours ago, TwoCitiesCapital said:

 

Probably because he CAN afford to and believes in it. This is the same man who started buying it in 2014 at $400/coin. We're 7-years later and it's $42,000/coin and has been as high as $69,000/coin. 

 

Maybe instead of asking how could he have 50% of his net worth in an investment, maybe we should ask ourselves what we missed that allowed it to go from $400 to $42,000 and why people are still so critical of it today? 

 

 

It rose the entirety of 2017 into it's last bubble top of 20k the whole time the Fed was tightening. We've been there and done that. 

 

Miller's whole argument for investing in crypto is because it is a supply/demand issue like artwork or collectibles.  Accordingly, the argument is it's worth what people want to pay.  This is the best argument for crypto and the worst argument for it at the same time! 

 

Artwork/collectibles can be sold or bartered, but ultimately are useless as currency.  They are a store of value because of their utility as a collectible...investors can look at it/sell tickets to view it/donate it and receive tax receipts.  But it can never really be used as a replacement for currency.

 

Ultimately, this current batch of crypto will be viewed as collectibles...whatever people want to pay for it.  What that value is is anyone's guess.  Cheers!

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57 minutes ago, Parsad said:

 

My reference to the "current" batch of crypto is aimed at all of the coins not backed by anything tangible or cash flow, provide zero utility, and are based solely on supply/demand.  I expect the next batch to be digital currencies tied to tax revenues or corporate cash flows, which will make the current batch impotent.  Cheers! 

All of today's chains that use PoS and burn transaction fees are already backed by cash flow. There's zero difference between burning tokens and buying back shares. These chains should be viewed as tech equities

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2 hours ago, rkbabang said:

If you own Bitcoin but don't mine you have no say at all.  Anyone can run a node and mine, but your vote is proportional to the computing power you put in compared to the total computing power of the entire pool of miners.   The idea is that you need over 50% of the computing power to make a change.  So yes, if an idea is controversial and you can't get miners representing >50% of the computing power to agree on the change, then the change simply doesn't happen and things go on as they have without the change.   This is a feature though. It should be hard to change the code.  As Bitcoin becomes more and more valuable it is less and less likely that any one miner or even small group of miners will control over 50%.  This stabilizes the network, makes it safe, makes it difficult to change, but at the same time it doesn't allow any 1 miner to stand in the way of a change that almost everyone wants.  If you can't get consensus for a change, then maybe it isn't as much of a no-brainer as you thought and maybe it shouldn't be implemented. You are free to start your own blockchain to prove the features worth, but there is no guarantee anyone will participate.  Bitcoin represents hundreds of billions of dollars in value and will someday represent many trillions.  Changes should never be taken lightly and it certainly shouldn't be changed on a whim by a small group.

 

I will admit that my knowledge of BTC and the PoW (proof of work) is a little more limited than the alternate projects on the PoS (proof of stake) side. But from what I thought i understood about BTC is that anyone can run a node and you dont need to mine BTC to run a node. The node is still becomes a validation point when the blockchain goes to validate the PoW. I listened to a podcast that talked about how a majority group tried to diverge or change the network back in I think it was 2017? (Ill need to see if I can find the podcast again.) but essentially the blockchain said this vote wasn't unanimous against all the nodes and rejected the changes. Essentially showing that majority players cant bully changes onto a small time holder. This is the real value of the decentralization. The fact that I can run a node housing the blockchain in my basement and it requires a nearly unanimous vote to change the ledger. I could be wrong. ill need to see if I can find the source on this again. 

 

1 hour ago, Parsad said:

 

My reference to the "current" batch of crypto is aimed at all of the coins not backed by anything tangible or cash flow, provide zero utility, and are based solely on supply/demand.  I expect the next batch to be digital currencies tied to tax revenues or corporate cash flows, which will make the current batch impotent.  Cheers! 

 

I would love it if they made actual crypto's tied to equities. Then allow me to trade them on a decentralized exchange.  Hot damn now were talkin.

 

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8 minutes ago, Longnose said:

 

I will admit that my knowledge of BTC and the PoW (proof of work) is a little more limited than the alternate projects on the PoS (proof of stake) side. But from what I thought i understood about BTC is that anyone can run a node and you dont need to mine BTC to run a node. The node is still becomes a validation point when the blockchain goes to validate the PoW. I listened to a podcast that talked about how a majority group tried to diverge or change the network back in I think it was 2017? (Ill need to see if I can find the podcast again.) but essentially the blockchain said this vote wasn't unanimous against all the nodes and rejected the changes. Essentially showing that majority players cant bully changes onto a small time holder. This is the real value of the decentralization. The fact that I can run a node housing the blockchain in my basement and it requires a nearly unanimous vote to change the ledger. I could be wrong. ill need to see if I can find the source on this again. 

 

 

I would love it if they made actual crypto's tied to equities. Then allow me to trade them on a decentralized exchange.  Hot damn now were talkin.

 

 

https://mirrorprotocol.app/#/trade

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2 minutes ago, Longnose said:

Friday Nod GIF - Friday Nod Oh Yeah GIFs

What problem does this solve? The centralized exchanges seem to work quite well and are very fast. If this would run on a decentralized exchange the trades would be much slower and you likely get killed on gas fees like when you try simple transactions in Ethereum. I think Coinbase charges 3% for transactions? 

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9 minutes ago, Spekulatius said:

What problem does this solve? The centralized exchanges seem to work quite well and are very fast. If this would run on a decentralized exchange the trades would be much slower and you likely get killed on gas fees like when you try simple transactions in Ethereum. I think Coinbase charges 3% for transactions? 

 

It doesn't solve anything and I likely wont use it. But i will take a look. (ETH is way to cost prohibitive currently) 

 

But realistically when you start playing with these decentralized exchanges. I connect my wallet to mirrorprotocol then when i swap my ($$, BTC, whatever) for tokens representing the shares of these companies. Then what is the purpose of Fidelity, or TD Ameritrade, or IB? why do i need them to do it for me? the token then becomes the equivalent of the stock certificate. I can trade or transfer my stocks to you directly to your wallet without anyone in the middle. Whats the purpose of the middle man?  or why you would want someone in the middle balancing a bunch of ledgers based on the transaction when it can be done without them?

 

 

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17 minutes ago, Longnose said:

 

It doesn't solve anything and I likely wont use it. But i will take a look. (ETH is way to cost prohibitive currently) 

 

But realistically when you start playing with these decentralized exchanges. I connect my wallet to mirrorprotocol then when i swap my ($$, BTC, whatever) for tokens representing the shares of these companies. Then what is the purpose of Fidelity, or TD Ameritrade, or IB? why do i need them to do it for me? the token then becomes the equivalent of the stock certificate. I can trade or transfer my stocks to you directly to your wallet without anyone in the middle. Whats the purpose of the middle man?  or why you would want someone in the middle balancing a bunch of ledgers based on the transaction when it can be done without them?

 

 

https://forum.mirror.finance/t/liquidations-caused-by-unrepresentative-oracle-pricing-of-mspy-on-jan-3-2022/2569

 

When I go to the development forum and read stuff like this I know that the project hasn't been vetted enough for me to put any real money into it. But It is still the direction I want things to go. 

 

 

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14 hours ago, Longnose said:

 

It doesn't solve anything and I likely wont use it. But i will take a look. (ETH is way to cost prohibitive currently) 

 

But realistically when you start playing with these decentralized exchanges. I connect my wallet to mirrorprotocol then when i swap my ($$, BTC, whatever) for tokens representing the shares of these companies. Then what is the purpose of Fidelity, or TD Ameritrade, or IB? why do i need them to do it for me? the token then becomes the equivalent of the stock certificate. I can trade or transfer my stocks to you directly to your wallet without anyone in the middle. Whats the purpose of the middle man?  or why you would want someone in the middle balancing a bunch of ledgers based on the transaction when it can be done without them?

 

 

What does it cost you to have an account with Fidelity? Trades are free. They don't charge you to keep assets there. You can call somebody if there is a problem. They sent you statements, you get goodies like a credit card with 2% cash back, per affiliation.

 

Who are you going to call when there is a problem with a decentralized exchange? Who pays for trading costs.? Who sent statements? What problem are you trying to solve to begin with?

 

Defi and crypto looks more like solution in search of a problem than the other way around.

Edited by Spekulatius
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52 minutes ago, Spekulatius said:

Defi and crypto looks more like solution in search of a problem than the other way around.

 

I took a look at the Mirror white paper.  In Section C.2.4 on page 9, the creators listed six advantages to asset tokenization:  https://docs.mirror.finance/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MLRzugf7mxc4ryNhTuq%2Fuploads%2F0t3znySsjF6CiLrcT0mI%2FMirror_Protocol_V2.pdf?alt=media&token=b5728c7d-7f12-4f41-8ce6-8347da02b9ff

 

Very few, if any, of them apply to US investors trading in liquid securities listed on US exchanges.  But you could see the value for someone who lives in a geography in which it is very difficult to access US exchanges.   

 

I'm also skeptical of the mechanics of applying the Mirror model to physical world assets like an apartment building, the example used on page 8 of the white paper.  How do you connect the physical world operation and management of the apartment building to a self-contained blockchain smart contract?

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1 hour ago, Spekulatius said:

What does it cost you to have an account with Fidelity? Trades are free. They don't charge you to keep assets there. You can call somebody if there is a problem. They sent you statements, you get goodies like a credit card with 2% cash back, per affiliation.

 

Who are you going to call when there is a problem with a decentralized exchange? Who pays for trading costs.? Who sent statements? What problem are you trying to solve to begin with?

 

Defi and crypto looks more like solution in search of a problem than the other way around.

 

Honestly, its probably more me fighting against "The Man" than anything. 

 

What problem am I trying to solve? - I don't actually own my money. I can't actually buy the securities. Wells Fargo holds my money. I have to ask WF to send my money to Fidelity to buy and hold securities in my name. At the same time WF & Fidelity are using my money to make more money for themselves. 

So I'm trying to solve 2 things. 1. Actual ownership of money and securities. 2. Screw the middle man. 

 

Now granted your points are all valid. Currently I don't have to pay anything any trading fees and I get little bonuses. cool?

 

Who are you going to call when there is a problem with a decentralized exchange? (valid - currently it would be emailing a developer who set up the exchange. But even if the decentralized exchange goes down I can go connect to another one because the assets are still in my wallet not on the exchange)  Who pays for trading costs.? (me, but if I'm not transacting on ETH i dont really care. Networks like AVAX, SOL, Polygon all have fraction of cents transaction fees and I believe these will only come down over time)  Who sent statements? the blockchain ledger of my wallet. 

 

Typing this out made me thing of stories from the great depression and the runs on the banks. God forbid it ever happen again but what if you went to WF and said I need my money and they said well... see the markets are down so actually you cant have it or whatever their excuse is. But don't worry you can file an FDIC claim and maybe get some money back in the next 10 years... So this is what I am trying to solve. I own my money and I don't need a broker to buy my stocks because I can purchase them on a decentralized exchange and hold them in my wallet. 

 

Are we anywhere near this point right now? No, we are not. But the world will get there and I will welcome it. Also, I wont be an early adopter with a significant portion of my money. But i will be dabbling in it and looking for opportunities that will be exploiting the power of this technology. I am a value investor at heart. 90% of my portfolio is tied up in equities via a broker and that wont change anytime soon. 

 

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