The Death Knell of Crypto!

[Xerxes]

55 minutes ago, crs223 said:

 

What does that mean?  Paid cash?  Diluted shareholders?  Took out a loan?

 

"I purchased X using balance sheet capital"

 

"I purchased X using Enterprise Value"

It is all the same. If you use cash on hand from balance sheet, if you raise cash via equity issuance or take more debt to put cash on balance sheet. All three results in using cash from the company own balance sheet and resources to invest in that Luna venture. 
 

in contrast to using client money (not on your balance sheet) to seed investment 

[crs223]

58 minutes ago, Xerxes said:

Citigroup must be managing several trillions dollars of assets. They do not appear on its balance sheet. It is not Citigroup money. 
 

I think same concept. 

 

TY.  TDAmeritrade does not consider my cash/stock balance as an asset (or my ability to liquidate it as a liability).

 

Maybe banks do something different... I thought a bank considered my checking account balance as a liability.  Probably because they lend out my money to create an asset.

 

Edited May 19, 2022 by crs223

[Xerxes]

1 minute ago, crs223 said:

 

TY.  TDAmeritrade does not consider my cash/stock balance as an asset (or my ability to liquidate it as a liability).

 

Maybe banks do something different... I thought a bank considered my checking account balance as a liability.  Probably because they lend out my money to create an asset.

 

i wasn’t talking about the deposits in the banks. That is clearly on the balance sheet as a source of funding 
 

Was talking about the stocks, bonds that the client owns that belong to the client. Those do not belong on the bank balance sheet. BUT the bank capture the management fees of that asset under management through its income statement.  

[SharperDingaan]

It is the Galaxy BS only. Basically Galaxy Debt + Equity - Cash. 

Not entirely Galaxy money though - If a margin client puts up $100 of collateral against $60 of margin, Galaxy gets to add the $40 collateral difference to its capital. Hence include all the client margin loan overcollateralization.

 

If the $100 MV of the collateral falls to $60, the $40 difference reduces Galaxy capital, and forces Galaxy to sell the collateral to repay the margin loan. Hence, the first 'run on the bank' is a run on the Galaxy BS to force the margin calls that wipe out investors. The second 'run on the bank' is a run on the Galaxy BS to force mass collateral liquidation, proceeds < margin value, and the losses against Galaxy shareholder equity. 

 

The letter suggests the first run has wiped out most investors.

The hope is no second run, resulting in Galaxy shareholders either putting up more equity, or being forced to  invite a new partner in. 

 

SD 

 

 

Edited May 19, 2022 by SharperDingaan

[Xerxes]

Sometimes you have a blackhole in the middle of a Galaxy. 

 

[Xerxes]

[JRM]

I listened to that podcast.  The guy is a bull market legend, but the dude seriously said "technicals work really well because there is no fundamental value" when talking about Bitcoin.  lol

[Longnose]

I am still a bitcoin bull. Ive been buying weekly under the 30K mark and feeling great about it. 

 

Id rather own BTC than gold. 

[Parsad]

7 minutes ago, Longnose said:

I am still a bitcoin bull. Ive been buying weekly under the 30K mark and feeling great about it. 

 

Id rather own BTC than gold. 

 

Why?  Personally, I wouldn't buy either, but why BTC over gold?  Cheers!

[Longnose]

I cant take my gold to overstock.com and buy something. But I can buy stuff on overstock.com with BTC. 

 

Moving my gold from my saftey deposit box to another location is risky and expensive. Sending my BTC to any other wallet anywhere in the world is quick and safe. 

 

If the government tries to seize my assets (god forbid) they may find my gold unless its buried somewhere. Only I know the key to my BTC wallet. 

 

While there are only a few places i can spend BTC right now this is expanding. Think of how many small vendors use SQ. Eventually Dorsey will roll out BTC transactions on the lightning network to SQ vendors. Youll be able to spend your BTC at every SQ vendor.  Facebook is building it into Venmo. 

 

The old days we traded gold because we needed money. Eventually we went to paper currency backed by gold because it was a pain to carry gold. now we carry digital bank balances backed by gold. but is it really backed by gold anymore? when we print trillions of dollars overnight we expand the disconnect. 

 

IMO bitcoin has the potential to become global online currency. Its hard to mine, there is a finite amount of it, and it functions as a digital currency across borders. 

 

EDIT: The reason im a buyer of BTC is not because i believe BTC to be producing value but because we are so early in the BTC adoption and spread. The amount of people with bitcoin wallets is a fraction of the population. So as BTC adoption spreads and more people start buying demand will drive price up. BTC is a digital commodity there will only ever be 21M bitcoin and we got a lot of people who own no bitcoin. As the younger generation and world wide populations realize that BTC is a better store of value than rubles, yaun, euros, pesos, dollars.  The influx of people will drive its prices up. 

 

To note i still believe equities are better from the sense of income producing assets. But shit I would rather have bitcoin than dollars if I could spend my bitcoin everywhere I can spend a dollar. Because then its mine, and not the banks promise that its there. 

Edited May 25, 2022 by Longnose

[rkbabang]

 

49 minutes ago, Parsad said:

why BTC over gold? 

 

Excellent episode with Saifedean Ammous, author of "The Bitcoin Standard" and his new book (which I haven't read yet) "The Fiat Standard".  He talks about why Bitcoin over gold.  And Lex does a good job of challenging him on a lot of what he says, it isn't a completely friendly interview.  Excellent listen.  Also, I've said this before if you actually do want to understand Bitcoin and not just hate it because WEB and Munger hate it, read The Bitcoin Standard.

 

 

[Parsad]

5 hours ago, Longnose said:

I cant take my gold to overstock.com and buy something. But I can buy stuff on overstock.com with BTC. 

 

Moving my gold from my saftey deposit box to another location is risky and expensive. Sending my BTC to any other wallet anywhere in the world is quick and safe. 

 

If the government tries to seize my assets (god forbid) they may find my gold unless its buried somewhere. Only I know the key to my BTC wallet. 

 

While there are only a few places i can spend BTC right now this is expanding. Think of how many small vendors use SQ. Eventually Dorsey will roll out BTC transactions on the lightning network to SQ vendors. Youll be able to spend your BTC at every SQ vendor.  Facebook is building it into Venmo. 

 

The old days we traded gold because we needed money. Eventually we went to paper currency backed by gold because it was a pain to carry gold. now we carry digital bank balances backed by gold. but is it really backed by gold anymore? when we print trillions of dollars overnight we expand the disconnect. 

 

IMO bitcoin has the potential to become global online currency. Its hard to mine, there is a finite amount of it, and it functions as a digital currency across borders. 

 

EDIT: The reason im a buyer of BTC is not because i believe BTC to be producing value but because we are so early in the BTC adoption and spread. The amount of people with bitcoin wallets is a fraction of the population. So as BTC adoption spreads and more people start buying demand will drive price up. BTC is a digital commodity there will only ever be 21M bitcoin and we got a lot of people who own no bitcoin. As the younger generation and world wide populations realize that BTC is a better store of value than rubles, yaun, euros, pesos, dollars.  The influx of people will drive its prices up. 

 

To note i still believe equities are better from the sense of income producing assets. But shit I would rather have bitcoin than dollars if I could spend my bitcoin everywhere I can spend a dollar. Because then its mine, and not the banks promise that its there. 

 

This is all great, but when you go to spend your bitcoin next week at Overstock.com, and it's at $15K, how are you ahead of the game?

 

And then Overstock.com sells you a Rolex this week for one BTC, but then next week they are adding to their inventory and BTC is now at $15K...suddenly they are paying twice as much for the same Rolexes they were selling last week!

 

Luna is a perfect example of why this won't work.  It was backed by BTC, and then we saw what happened.  If they had pegged it to fiat currencies or gold, it would be around still.

 

Again, I'm not against blockchain based crypto...I've been following it longer than 99% of people...but all I'm saying is that the stuff we have today is shit!  It's AOL, not Google.  Properly designed crypto will be extremely disruptive, stable and functional as a replacement for fiat currency.

 

Cheers!

[Xerxes]

56 minutes ago, Parsad said:

 

This is all great, but when you go to spend your bitcoin next week at Overstock.com, and it's at $15K, how are you ahead of the game?

 

And then Overstock.com sells you a Rolex this week for one BTC, but then next week they are adding to their inventory and BTC is now at $15K...suddenly they are paying twice as much for the same Rolexes they were selling last week!

 

Luna is a perfect example of why this won't work.  It was backed by BTC, and then we saw what happened.  If they had pegged it to fiat currencies or gold, it would be around still.

 

Again, I'm not against blockchain based crypto...I've been following it longer than 99% of people...but all I'm saying is that the stuff we have today is shit!  It's AOL, not Google.  Properly designed crypto will be extremely disruptive, stable and functional as a replacement for fiat currency.

 

Cheers!

[Longnose]

56 minutes ago, Parsad said:

 

This is all great, but when you go to spend your bitcoin next week at Overstock.com, and it's at $15K, how are you ahead of the game?

 

And then Overstock.com sells you a Rolex this week for one BTC, but then next week they are adding to their inventory and BTC is now at $15K...suddenly they are paying twice as much for the same Rolexes they were selling last week!

 

Luna is a perfect example of why this won't work.  It was backed by BTC, and then we saw what happened.  If they had pegged it to fiat currencies or gold, it would be around still.

 

Again, I'm not against blockchain based crypto...I've been following it longer than 99% of people...but all I'm saying is that the stuff we have today is shit!  It's AOL, not Google.  Properly designed crypto will be extremely disruptive, stable and functional as a replacement for fiat currency.

 

Cheers!

 

I still think BTC is the winner for digital currency (gold). 

 

All the other cryptos in the ETH world slash proof of stake are up in the air. I think that whole world serves a different purpose (smart contract land) that has lots to be proven. I like to play in this space because i find it crazy fascinating but 99.9% of that space is shitcoins. 

[Ross812]

I think digital currency in its current iteration would threaten the power of government if it was too widely adopted. Those with the power make the rules and those with guns (military) have the power. BTC and the like can be traded around as long as the sandbox remains small, but its value is determined by a relatively small number of people trading it back and forth at ever higher prices. Lasting digital currency will be backed with guns.  

[Dave86ch]

11 hours ago, Parsad said:

 

This is all great, but when you go to spend your bitcoin next week at Overstock.com, and it's at $15K, how are you ahead of the game?

 

And then Overstock.com sells you a Rolex this week for one BTC, but then next week they are adding to their inventory and BTC is now at $15K...suddenly they are paying twice as much for the same Rolexes they were selling last week!

 

Luna is a perfect example of why this won't work.  It was backed by BTC, and then we saw what happened.  If they had pegged it to fiat currencies or gold, it would be around still.

 

Again, I'm not against blockchain based crypto...I've been following it longer than 99% of people...but all I'm saying is that the stuff we have today is shit!  It's AOL, not Google.  Properly designed crypto will be extremely disruptive, stable and functional as a replacement for fiat currency.

 

Cheers!

 

Bitcoin has a good chance to become the layer 1 of a series of financial services on top of it.

 

Bitcoin can't be threatened because there is nobody to threat.

Edited May 26, 2022 by Dave86ch

[SharperDingaan]

13 hours ago, Parsad said:

 

This is all great, but when you go to spend your bitcoin next week at Overstock.com, and it's at $15K, how are you ahead of the game?

 

And then Overstock.com sells you a Rolex this week for one BTC, but then next week they are adding to their inventory and BTC is now at $15K...suddenly they are paying twice as much for the same Rolexes they were selling last week!

 

Luna is a perfect example of why this won't work.  It was backed by BTC, and then we saw what happened.  If they had pegged it to fiat currencies or gold, it would be around still.

 

Again, I'm not against blockchain based crypto...I've been following it longer than 99% of people...but all I'm saying is that the stuff we have today is shit!  It's AOL, not Google.  Properly designed crypto will be extremely disruptive, stable and functional as a replacement for fiat currency.

 

Cheers!

 

You don't buy something with BTC, you sell BTC for a block of fiat and use that fiat to buy the Rolex. You buy/sell BTC maybe once/quarter; it's just another place to store some of your wealth, and like Gold or Real Estate - its value moves up and down.

 

Gold and Real Estate (even when tokenized) are not really portable, and can be seized anytime - harder to do with Bitcoin. Your BTC evades capital controls, and is just another way of stashing capital 'elsewhere' - in the event that you ever have to flee in the night. Sure, there's a cost to that; but it's less than the commission you would pay to buy/sell that 'safe house' abroad (and leaves less trace), and a lot less than the haircut you will take to dispose of the transportable Rolex, silk carpets, artwork, etc. that you used to store your wealth. Apples to apples, at the practical level - BTC volatility is not the deterrent most think it is.           

 

Most retail BTC is stored as a Crypto ETF, and professionally managed. The ETF sold down, and proceeds converted into BTC as/when the need to 'exit' is getting close. Once 'out', the BTC is sold for local proceeds to enable 're-establishment'. Most often, very little practical naked exposure to the volatility of BTC. 

 

Needless to say, the more volatile your home is, the more value this has to you. Lot of value in a Russia/China/ME, not so much in a US/Canada. Peace and good governance has its advantages.

 

SD  

[Parsad]

4 hours ago, SharperDingaan said:

 

You don't buy something with BTC, you sell BTC for a block of fiat and use that fiat to buy the Rolex. You buy/sell BTC maybe once/quarter; it's just another place to store some of your wealth, and like Gold or Real Estate - its value moves up and down.

 

Gold and Real Estate (even when tokenized) are not really portable, and can be seized anytime - harder to do with Bitcoin. Your BTC evades capital controls, and is just another way of stashing capital 'elsewhere' - in the event that you ever have to flee in the night. Sure, there's a cost to that; but it's less than the commission you would pay to buy/sell that 'safe house' abroad (and leaves less trace), and a lot less than the haircut you will take to dispose of the transportable Rolex, silk carpets, artwork, etc. that you used to store your wealth. Apples to apples, at the practical level - BTC volatility is not the deterrent most think it is.           

 

Most retail BTC is stored as a Crypto ETF, and professionally managed. The ETF sold down, and proceeds converted into BTC as/when the need to 'exit' is getting close. Once 'out', the BTC is sold for local proceeds to enable 're-establishment'. Most often, very little practical naked exposure to the volatility of BTC. 

 

Needless to say, the more volatile your home is, the more value this has to you. Lot of value in a Russia/China/ME, not so much in a US/Canada. Peace and good governance has its advantages.

 

SD  

 

Hi SD, I know all that.  But it is almost inevitable that governments will crack down on crypto in current form, purely to deter the underground economy that has grown enormously and money laundering.  Governments are always late to the party, but they eventually get to the party and ruin it once they realize that too many people are having fun.  

 

At some point, fiat currencies backed by tax revenues or gold, will create their own digital currencies using blockchain.  More stable, easily convertible, trackable for tax purposes and a deterrent to the current base of crypto.  Cheers!

[Longnose]

2 hours ago, Parsad said:

 

Hi SD, I know all that.  But it is almost inevitable that governments will crack down on crypto in current form, purely to deter the underground economy that has grown enormously and money laundering.  Governments are always late to the party, but they eventually get to the party and ruin it once they realize that too many people are having fun.  

 

At some point, fiat currencies backed by tax revenues or gold, will create their own digital currencies using blockchain.  More stable, easily convertible, trackable for tax purposes and a deterrent to the current base of crypto.  Cheers!

 

Or supply demand will continue to play out as demand grows from adoption of small countries like Venezuela who made it their national currency. Fixed supply and lots of people who can benefit from a commodity like BTC. 

[Parsad]

22 minutes ago, Longnose said:

 

Or supply demand will continue to play out as demand grows from adoption of small countries like Venezuela who made it their national currency. Fixed supply and lots of people who can benefit from a commodity like BTC. 

 

They've adopted BTC solely for the purpose of bypassing fiat based currency.  If you are a country that nationalizes foreign corporations, you want to relieve yourself of being dependent on fiat currencies when you eventually get sanctioned.  I'm sure Russia wishes they had adopted BTC more readily in the present circumstances.  

 

But, most of the world will want to be able to transact through stable fiat currencies.  Many of those looking to BTC will find more durable, stable variants later on as cryptocurrencies develop.  Can you make a calculated bet on BTC right now without the possibility of losing significant capital long-term?  Remember, rule #1...don't lose money!  Cheers!

[Longnose]

5 minutes ago, Parsad said:

 

They've adopted BTC solely for the purpose of bypassing fiat based currency.  If you are a country that nationalizes foreign corporations, you want to relieve yourself of being dependent on fiat currencies when you eventually get sanctioned.  I'm sure Russia wishes they had adopted BTC more readily in the present circumstances.  

 

But, most of the world will want to be able to transact through stable fiat currencies.  Many of those looking to BTC will find more durable, stable variants later on as cryptocurrencies develop.  Can you make a calculated bet on BTC right now without the possibility of losing significant capital long-term?  Remember, rule #1...don't lose money!  Cheers!

 

Your statement just made me more bullish.

 

I havent sold any BTC. Net buyer here. 

[jfan]

Pardon the long and rambling post. Just trying to reason in my own head about the value? of BTC.

 

1) BTC is too volatile to store value. But as value investing disciples, we all believe that asset volatility does not eliminate the fact that it can potentially still preserve purchasing power over a "long term". Just because BTC was $60K last year and $30K this year, doesn't necessary mean that it will not serve this function 10-20 years from now. Volatility and price discovery should go hand-in-hand. A stable currency like the USD may just be an illusion and could be particularly fragile to unknown unknowns.

 

2) BTC is valueless because it does not generate free cash flows and not amendable to a discounted cash flow model of intrinsic value. But at the same time, governments are threatened by BTC's ability to challenge its authority and monetary control, and people in low trust environments find BTC a better way to protect their savings than their local currencies. How can something be completely valueless if there are population subsets that find it useful or very threatened by it?

 

3) BTC is used for illegal activities, money laundering, tax avoidance and gambling. But these activities all preceded the invention of BTC. These activities will occur whether money is in the form of fiat, gold, BTC or seashells. Swiss bank accounts, counterfeit bills, shell corporations, stock market speculation are all elements of our financial system. Does this mean that dollars and stock markets should be banned too?

 

4)  If the reason why investing in stock xyz is a good idea is because its money generating capabilities is predictable and growing over time. What happen if the money it generates is not trustworthy at scale to store the value of the work this business performs? Money, being a social construct, can change over time from one form to another. It would also be hubris to believe that only 1 type of money (or monetary technology) would be valuable at any point in time. Why does the USD have to have a monopoly over the world?

 

Metcalfe's law, Lindy effect, utilization of market forces, very low probability event of a coordinated global ban,  and lack of a centralized decision-making body in my mind makes BTC an interesting form of insurance. However, that said, I'm still worried about the incentives for developers to maintain and update the code base, the ability of the general populace that run nodes to understand the value of various upgrades and adopt appropriately, the centralization of mining activity, and the transition from block rewards to transaction fees to maintain network security. 

 

 

 

[JRM]

Bitcoins value is as a transfer mechanism.  Maybe the best one created so far.  It is not a currency (too volatile), and so far not digital gold.  

[SharperDingaan]

"Hi SD, I know all that.  But it is almost inevitable that governments will crack down on crypto in current form, purely to deter the underground economy that has grown enormously and money laundering.  Governments are always late to the party, but they eventually get to the party and ruin it once they realize that too many people are having fun. "

 

Governments already have (China), and the solution is CBDC (Digital Yuan). CBDC reducing underground activity as it reduces the quantity of physical bills in the economy (can't buy/sell drugs anonymously if you cant get the bills to transact with!). However, the reality in the digital currency world is that BTC and CBDC are Yin/Yang, and they need each other to co-exist. Statecraft requires the ability to make use of anonymous bribes, and you can't do that with CBDC!

 

Theoretically fiat is backed by the nations assets and security force. In practice? nations got rid of the gold standard decades ago, and the bill cannot be exchanged for the 'supporting' assets. The bill is backed solely by a 'promise', worth squat!

 

Different POV

 

SD 

Edited May 27, 2022 by SharperDingaan

[Dave86ch]

A fundamental approach to tokeconomy (an embryonic stage)

 

https://twitter.com/shivsakhuja/status/1530712622374342658?t=1CeGro7l1h_hU0ctucje8w&s=19

 

https://tokenterminal.com/terminal

Edited May 30, 2022 by Dave86ch