Cryptocurrencies

[Sweet]

I know this model has been mentioned here before:

https://www.marketwatch.com/story/bitcoin-is-close-to-being-fairly-valued-and-its-long-term-prospects-arent-great-11675975553?mod=home-page

[Dave86ch]

15 hours ago, wachtwoord said:

 

Ah that's a big gemeinde then. The capital of Tessin (Ticino in your language). Cool!

 

I like how politics is organized in Switzerland. Better than anywhere else at this point in time as far as I can tell.

 

To be honest, it may be true that we are better than many others, but in my opinion, we are the money launderers of the world and enjoy an undeserved wealth which allows us to act as if we are the best of the class.

[Dave86ch]

15 hours ago, wachtwoord said:

 

Then how can you be agnostic? A almighty being existing within the universe its almighty in automatically leads to (internal) contradiction.

 

Wrt determinism: the current theory of super-determinism is a fun theory (far from the most "popular" one though).

 

I prefer to keep an open mind

[Dave86ch]

14 hours ago, TwoCitiesCapital said:

 

This is what most people from the Western perspective are missing. 

 

4 years ago it was almost laughable for them to consider that anyone would use BTC as a currency. Now they're having to dilute the argument by saying it's only "shit-hole" countries. Of course it is! They'll be the first! They have the most to gain and the least to lose.

 

Today their options predominantly are to use their own depreciating fiat currencies or peg to the USD. 

 

But pegging to the USD comes with its own form of enslavement - we load them up with debt, use the IMF and the World Bank loan incentives to reorganize their economies until they are exporters of raw materials and reliant on imports of food, and we never forgive the debt when they can't repay - we just extend more financing to keep them financially enslaved. 

 

And let's not forget that we threaten them with sanctions or military invasions when they fail to toe the line. What's not to love about the USD system for them? Why seek alternatives?!?!

 

BTC works as a long-term store of wealth which is the first precondition to becoming a transactional currency and unit of account. Technological innovations that allow BTC to scale transactions and speed have already been developed and are gaining traction. That plus some stabilization of it's price at a sufficiently high market cap may allow it to compete as a currency in day-to-day transactions. That is the next test that we'll see unfold as more and more countries do adopt concurrently with their own fiat. 

 

Well said!

[wachtwoord]

54 minutes ago, Dave86ch said:

 

To be honest, it may be true that we are better than many others, but in my opinion, we are the money launderers of the world and enjoy an undeserved wealth which allows us to act as if we are the best of the class.

 

Switzerland IS the best in class because of the way it's run. The US was run like this too a long time ago a time when it was still great.

 

Btw: if any country hosts the most money laundering it's the US (and whether that's bad thing is a story for another day as it really depends).

[wachtwoord]

55 minutes ago, Dave86ch said:

 

I prefer to keep an open mind

It just contradicted with the statement I quoted. Nothing to do with open/closed mindedness.

[SharperDingaan]

11 hours ago, Sweet said:

I know this model has been mentioned here before:

https://www.marketwatch.com/story/bitcoin-is-close-to-being-fairly-valued-and-its-long-term-prospects-arent-great-11675975553?mod=home-page

 

Metcalfe speaks to JUST the network value, and it is very limited. Unstated, is that Metcalfe means the square of the  number of users who can afford to pay .... and not the absolute number of users. Intrinsic value(s) are conveniently ignored, as well as the very different number of total users.

 

The reality is that the far better valuation methods are not going to become public until BTC trades at well above the calculated values. There is a reason why trade secrets make you rich! 

 

SD

 

 

[rkbabang]

3 hours ago, SharperDingaan said:

 

Metcalfe speaks to JUST the network value, and it is very limited. Unstated, is that Metcalfe means the square of the  number of users who can afford to pay .... and not the absolute number of users. Intrinsic value(s) are conveniently ignored, as well as the very different number of total users.

 

The reality is that the far better valuation methods are not going to become public until BTC trades at well above the calculated values. There is a reason why trade secrets make you rich! 

 

SD

 

 

I agree. Metcalfe has something to do with it, but not only isn’t it the whole story, but using the number of Bitcoins as the nodes in the calculation rather than the number of users is a mistake. By this method Dogecoin with its unlimited supply should be worth far more than Bitcoin.  Bitcoin is, among other things, like a digital gold. Gold doesn’t become more valuable every time a new ounce of it is mined.  Scarcity creates value in a money or store of value, adding more doesn’t create more value, rather it does the opposite.    The network is the humans (or companies, governments, smart contracts, etc) using it, not the number of units in existence.  

Edited February 12, 2023 by rkbabang

[TwoCitiesCapital]

42 minutes ago, rkbabang said:

I agree. Metcalfe has something to do with it, but not only isn’t it the whole story, but using the number of Bitcoins as the nodes in the calculation rather than the number of users is a mistake. By this method Dogecoin with its unlimited supply should be worth far more than Bitcoin.  Bitcoin is, among other things, like a digital gold. Gold doesn’t become more valuable every time a new ounce of it is mined.  Scarcity creates value in a money or store of value, adding more doesn’t create more value, rather it does the opposite.    The network is the humans (or companies, governments, smart contracts, etc) using it, not the number of units in existence.  

 

+1

 

I tend to use the Metcalfe value as a lower bound of fair value - but it obviously fluctuates day to day with the sentiment in the market moving from euphoria to panic so it's of limited use as a market timer unless you have estimates of future network growth. 

 

Timothy Peterson calculates the Metcalfe value as of present day AND a price curve using supposed long term adoption trends. 

 

BTC price is basically right on top of it's Metcalfe value estimate. He expects ~40-50% annual returns this year and next year based on historical trading, adoption trends, and the growth in the Metcalfe value. 

[rkbabang]

5 hours ago, TwoCitiesCapital said:

 

+1

 

I tend to use the Metcalfe value as a lower bound of fair value - but it obviously fluctuates day to day with the sentiment in the market moving from euphoria to panic so it's of limited use as a market timer unless you have estimates of future network growth. 

 

Timothy Peterson calculates the Metcalfe value as of present day AND a price curve using supposed long term adoption trends. 

 

BTC price is basically right on top of its Metcalfe value estimate. He expects ~40-50% annual returns this year and next year based on historical trading, adoption trends, and the growth in the Metcalfe value. 

His analysis is done based on the number of wallets with >0.01 BTC in them ($220 at $22K/BTC), which makes much more sense to me than using the total number of BTC which is arbitrary.

 

 

[TwoCitiesCapital]

https://www.reuters.com/technology/celsius-network-chooses-novawulf-bid-bankruptcy-exit-2023-02-15/

 

Thoughts? 

 

Im surprised

1) that "big" depositors are being treated differently than "small" depositors and

 

2) that the limit for the differentiation between "big" and "small" was 5k and

 

3) that small depositors are expected to recover ~70% of assets

 

What's does that leave for "big" depositors? What is their recovery rate excluding the new ownership? How is that ownership to be distributed - via a new token? Or an illiquid equity stake that I can't sell? How is the 5k limit determined - at the time of bankruptcy declaration or as the assets are valued today? 

 

Too many questions left unanswered but this is still way better than I was expecting. I figured a 50% haircut on my deposits at least. 

Edited February 15, 2023 by TwoCitiesCapital

[Parsad]

Munger on cryptocurrencies.  Agree or disagree, but he has such a wonderful way of just saying what he's thinking!  Cheers!

 

https://finance.yahoo.com/news/charlie-munger-im-not-proud-of-my-country-for-allowing-crypto-sh-t-202109158.html

 

 

[Dave86ch]

Imprecations aside, what is Munger's thesis? 

It always been in this way then it has to be like it forever?

 

I'm trying to follow a more rational approach through my Diary

 

https://dscompounding.com/2022/12/16/bitcoin-diary/

[rkbabang]

[Fly]

3 hours ago, Dave86ch said:

Imprecations aside, what is Munger's thesis? 

It always been in this way then it has to be like it forever?

 

I'm trying to follow a more rational approach through my Diary

 

https://dscompounding.com/2022/12/16/bitcoin-diary/

 

It is hard to understand what his case is against BTC, but seems to be along the lines of fiat currency has allowed great innovation that BTC somehow can't replicate? 

 

[rkbabang]

Yes, when you are praising The People's Republic of China for cracking down on the freedom of individuals to transact freely and wish your government would do the same, you really should examine your thinking a little more.  

[Castanza]

Old people don't like new things. His entire life's work has been constrained to a specific framework and he was extremely successful within that framework. He is too old to engage in the new so it's simply easier to shit on it. Only 1% of Americans owned publicly traded stock in 1900. Less than 25% of Americans had indirect ownership through pension plans prior to 1950. 401k's didn't come around till 1978. 4%~ of people owned common stock in the 1950's up to 11%~ in the mid 1970's. 

 

Not sure why anyone cares what he says about crypto. His view of the financial industry is constrained to a specific time and period which he clearly greatly benefited from. When Buffett and Munger got their start, individual stock ownership was relatively low for the general populace. I'm sure there were plenty of respectable old people during their day (born between 1880-1900) who thought investing was a fools errand and that it was better to just hold cash under your mattress. 

[TwoCitiesCapital]

2 hours ago, Fly said:

 

It is hard to understand what his case is against BTC, but seems to be along the lines of fiat currency has allowed great innovation that BTC somehow can't replicate? 

 

 

From the little I've listened to him, it seems to me he doesn't like BTC precisely because of it's censorship resistance and inability to be controlled by the government. 

 

He's called it unpatriotic and anti-social in many interviews. 

 

Who knew he'd skews to the "we need militant leaders as regulators to limit freedoms" side of Republicanism as opposed to the "let free markets work side". 

[rkbabang]

28 minutes ago, TwoCitiesCapital said:

 

From the little I've listened to him, it seems to me he doesn't like BTC precisely because of it's censorship resistance and inability to be controlled by the government. 

 

He's called it unpatriotic and anti-social in many interviews. 

 

Who knew he'd skews to the "we need militant leaders as regulators to limit freedoms" side of Republicanism as opposed to the "let free markets work side". 

 

 

Those on the right can often be more oppressive than even the extreme left.  The book that @Dave86ch recommended somewhere on CoBF explains this quite well and is worth the read.  It's called "The Network State" (https://thenetworkstate.com/) (https://www.amazon.com/Network-State-How-Start-Country-ebook/dp/B09VPKZR3G)

 

Both the left and the right can be broke into two groups, the people of the state, and the people of the network.  On a topic like Bitcoin the people of the network (on both the left and the right) will hold similar views and the people of the state (on the left and the right) will hold similar views.  The people of the network tend to be younger (on average) and the people of the state tend to be older.  The network is the 3rd leviathan (religion being the first and the state being the 2nd).  The transition from the 1st to the 2nd (called the Renaissance, industrial revolution, ...) has been complete for a while in the western world, not so much in other parts of the world.  The transition from the 2nd to the 3rd has barely begun.  The next hundred years or so is going to be an interesting time indeed for humanity as the transition is made.

 

[SharperDingaan]

Both WEB and Munger grew up in privilege and privileged times (in the US during WWII avoiding destruction, the 'go-go' years following WWII, and with little competition at their level). Nothing wrong in that, but his benchmark experience with humanity, hasn't moved on with the times; the 'average Joe' of today, is quite different than he was during WWII times.

 

Scum don't change much! and his benchmark has served him well, but today's 'common sense' is a lot different that it was back in the day, and those differences have been magnified by tech. Today the same scams just look different, and as the experience is largely the same for a great many 75+, we have the annual 'geezerfest' to celebrate another year of breathing!    

 

Had crypto been around last century, when they were young and poor, they would be singing a different song.

 

SD

 

 

 

Edited February 16, 2023 by SharperDingaan

[Parsad]

7 hours ago, rkbabang said:

Yes, when you are praising The People's Republic of China for cracking down on the freedom of individuals to transact freely and wish your government would do the same, you really should examine your thinking a little more.  

 

He's suggesting that it's detrimental for society...that's why he was praising China.  Nothing about cracking down on freedoms.  Cheers!

[Parsad]

4 hours ago, rkbabang said:

 

 

Those on the right can often be more oppressive than even the extreme left. 

 

 

The fact that this wasn't obvious to you, nor that you had this innate bias, is a bit disturbing.  Are you saying you never knew this before reading that book.  Or that you didn't know the right could be as extreme as the left?  Cheers!

[rkbabang]

7 minutes ago, Parsad said:

 

The fact that this wasn't obvious to you, nor that you had this innate bias, is a bit disturbing.  Are you saying you never knew this before reading that book.  Or that you didn't know the right could be as extreme as the left?  Cheers!

No, neither. The right has traditionally been more an enemy of freedom than the left, it is only the last 10-15 years or so that the left has been far worse. So much so that it is easy to forget that the right used to be the main enemy of freedom, especially if you are somewhat young.  (I’m talking about in the US, not Europe or Asia).

 

[Dave86ch]

14 hours ago, rkbabang said:

 

 

Those on the right can often be more oppressive than even the extreme left.  The book that @Dave86ch recommended somewhere on CoBF explains this quite well and is worth the read.  It's called "The Network State" (https://thenetworkstate.com/) (https://www.amazon.com/Network-State-How-Start-Country-ebook/dp/B09VPKZR3G)

 

Both the left and the right can be broke into two groups, the people of the state, and the people of the network.  On a topic like Bitcoin the people of the network (on both the left and the right) will hold similar views and the people of the state (on the left and the right) will hold similar views.  The people of the network tend to be younger (on average) and the people of the state tend to be older.  The network is the 3rd leviathan (religion being the first and the state being the 2nd).  The transition from the 1st to the 2nd (called the Renaissance, industrial revolution, ...) has been complete for a while in the western world, not so much in other parts of the world.  The transition from the 2nd to the 3rd has barely begun.  The next hundred years or so is going to be an interesting time indeed for humanity as the transition is made.

 

 

It is a good book, and the idea of the network state is currently being implemented.

[giulio]

https://www.wsj.com/articles/bitcoin-core-maintainers-crypto-7b93804?mod=itp_wsj&mod=djemITP_h

 

"Bitcoin Core developers are bound by their reputations, Mr. Dobson said. Any maintainer who made harmful or unethical changes would likely suffer reputational damage and have his or her access revoked by other maintainers, he said."

 

Sooo relieved!