Cryptocurrencies

[Liberty]

No one is saying bitcoin has intrinsic value (which you are defining as having cash flow), gold has no cash flow either.  We are saying that it makes a good store of value.  Gold has some industrial uses in the electronics industry, but that is a fairly new.  For thousands of years gold was valuable for a number of properties it has. 

 

- It looks pretty (an advantage it has over bitcoin, but equal to other metals).

- It doesn't rot or tarnish or otherwise lose it's physical properties over time (equal to bitcoin, advantage over other metals).

- It is easily divisible into smaller units or combined into larger ones. (bitcoin has advantage here, gold is equal to some metals like silver, advantage over others like platinum)

- It is easily stored or transported (bitcoin has large advantage, gold equal to other metals)

- Impossible to counterfeit, to a knowledgeable buyer anyway. (equal to bitcoin and other metals)

 

Bitcoin is equal to or better at all of those properties with the exception of being shiny and pretty.  Also bitcoin has some properties that are important which gold, nor any other metal, has.

 

- Easy to store/hide huge amounts.

- Easy to carry large, even huge amounts secretly and anonymously. You can easily carry a $Billion worth in your head without anyone else knowing.

- Easy to quickly send any amount large or small to anywhere on Earth.

 

The long thesis is that those properties along with the properties that gold has, but bitcoin is better (like divisibility), will be important enough to make BTC a replacement for gold.

 

My post was about forks being dilutive (if they have value). No sure how any of that answers that.

 

The rest is the usual story. I'm saying it's too early to tell if that'll work out that way. Some new fork or brand new coin could come out in 10 years that has characteristics so much more attractive than bitcoin that it could effectively compete away a lot of demand for bitcoin and make price drop, affecting the "store of value" part and the "supply is limited" part.

 

Of course it is all supply and demand.  Everything is, including your stocks which you think have "intrinsic" value.  It only has that value if the market eventually agrees with you.  The same goes for Bitcoin.

 

Not really. Productive assets can return cashflow to shareholders via dividends, special dividends, or buybacks, or from an outright sale of the company for cash or some other stock, and if the company does well, those streams can increase over time. That's part of why someone else might want to buy it off you. Gold won't ever give you a cent, so it's all relying on someone else buying it.

[rkbabang]

 

My post was about forks being dilutive (if they have value). No sure how any of that answers that.

 

The rest is the usual story. I'm saying it's too early to tell if that'll work out that way. Some new fork or brand new coin could come out in 10 years that has characteristics so much more attractive than bitcoin that it could effectively compete away a lot of demand for bitcoin and make price drop, affecting the "store of value" part and the "supply is limited" part.

 

Yes, that is the bear case.  But without some new thing with some much more attractive properties applicable to being a good store of value, none of the altcoins will have a long term effect on Bitcoin.  They may have small short term dillutive effects for a while, but as they become valueless and disappear those small effects will disappear with them.  Without substantial new properties/benefits, first mover advantage is everything.  Why would you switch from bitcoin if everyone is already using bitcoin and go to a coin almost no one uses that isn't substantially better?  It is like facebook, anyone can create a competing social network, but unless there is some feature that is massively better that FB can't copy, why would you switch when everyone you know (and a few billion people you don't know) are already using FB?  Any dilution will turn out to be minimal and short lived.  I do think there will be an endless number of app coins, which will not dilute BTC because they serve a different purpose altogether.  I don't consider Ether, for example, to be a bitcoin competitor, because ETH will never be a store of value.

 

Of course it is all supply and demand.  Everything is, including your stocks which you think have "intrinsic" value.  It only has that value if the market eventually agrees with you.  The same goes for Bitcoin.

Not really. Productive assets can return cashflow to shareholders via dividends, special dividends, or buybacks, or from an outright sale of the company for cash or some other stock, and if the company does well, those streams can increase over time. That's part of why someone else might want to buy it off you. Gold won't ever give you a cent, so it's all relying on someone else buying it.

 

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

[Spekulatius]

Actually, the stock I hold have value , even if nobody wanted them, at least those that pay dividends.

[spartansaver]

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

The asset creates some form of value for its customer (ex. coke creates value for a person to enjoy a flavored drink over water, SAP allows a major organization the ability to monitor itself using SAP tools, etc.). If you believe that people will value these services long into the future, it does not matter what currency the company accepts. In this scenario you are not betting on what currency people will pay you in, simply that your company produces a value for its customers.

[rkbabang]

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

The asset creates some form of value for its customer (ex. coke creates value for a person to enjoy a flavored drink over water, SAP allows a major organization the ability to monitor itself using SAP tools, etc.). If you believe that people will value these services long into the future, it does not matter what currency the company accepts. In this scenario you are not betting on what currency people will pay you in, simply that your company produces a value for its customers.

 

+1.  And the bull case for bitcoin is that people will choose it to store value.  That thesis could be correct or not.

 

[Liberty]

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

The asset creates some form of value for its customer (ex. coke creates value for a person to enjoy a flavored drink over water, SAP allows a major organization the ability to monitor itself using SAP tools, etc.). If you believe that people will value these services long into the future, it does not matter what currency the company accepts. In this scenario you are not betting on what currency people will pay you in, simply that your company produces a value for its customers.

 

+1.  And the bull case for bitcoin is that people will choose it to store value.  That thesis could be correct or not.

 

Yes, and for the N'th time, that's totally speculative at this point. I'm not saying it can't happen, I'm saying you guys are gambling rather than having found known digital gold or having divined the IV of a bitcoin and buying it when it's undervalued.

 

Why would someone pick something else rather than bitcoin? There can be lots of reasons. This is all digital, so if the goal is to send money, abstraction layers could be created that make it as easy to use any of the coins, and the one with the lowest fees/lowest latency/highest security/funkiest brand/etc can be used. If the goal is to store value, maybe other coins with characteristics that make them more stable or better can be picked, or excitment picks up for the brand new shiny thing taking lots of demand away from BTC, cratering the price, creating a self-reinforcing panic, reducing the network effect, etc. If somehow weaknesses are found in the crypto math, or sophisticated attackers succeed in putting very well obfuscated backdoors in the code, or if some black swan event scares away miners except for a large state-controlled presence that gets above 50%, etc. The idea isn't even that BTC doesn't stay the biggest one, just that it's not true that crypto supply is limited as long as there are a bunch of small challengers sucking up some of the demand that would otherwise go to BTC.

 

Why do my dollars have value? Because I can spend them to buy the things I need or productive assets, because I got paid in them and pay my taxes in them, and because they aren't changing in value by 20% a day up and down so I can predict pretty well their purchasing power to be able to run my affairs. But I'm not storing value in dollars, I'm using them for transactions.

[Liberty]

https://www.cnbc.com/2018/11/21/hacker-lifts-1-million-in-cryptocurrency-using-mans-phone-number.html

[rkbabang]

https://www.cnbc.com/2018/11/21/hacker-lifts-1-million-in-cryptocurrency-using-mans-phone-number.html

 

"$500,000 from two separate accounts he had at Coinbase and Gemini"

 

Yeah. I think I've said about a thousand times: don't hold your bitcoin in an exchange, it simply isn't safe. Everyone should know this by now.

 

Part of what is great about Bitcoin is that trusted 3rd parties are no longer necessary, why are people still trusting 3rd parties?

[Dalal.Holdings]

I find it interesting that even though this is supposed to be a value-focused board, the interest in idea threads drops sharply when the price drops, which is a bit counterintuitive. Bitcoin is just an extreme case of this.

 

That’s because crypto is the antithesis of true value investing.

[Spekulatius]

https://www.cnbc.com/2018/11/21/hacker-lifts-1-million-in-cryptocurrency-using-mans-phone-number.html

 

"$500,000 from two separate accounts he had at Coinbase and Gemini"

 

Yeah. I think I've said about a thousand times: don't hold your bitcoin in an exchange, it simply isn't safe. Everyone should know this by now.

 

Part of what is great about Bitcoin is that trusted 3rd parties are no longer necessary, why are people still trusting 3rd parties?

 

For convenience and because they don’t trust themselves to keep the key safe.

[no_free_lunch]

I was just looking at some graphs of bitcoin transactions.  You can find them quickly via a google search so I'm not going to post the link.  What you see in the data is that bitcoin transaction fees, while quite volatile, are essentially flat from early 2017.  There was a massive spike in the fees earlier this year when crypto went crazy, up to over $20 per tx, and that is now down to $0.50 or so.  This is despite the price being up 4x.  I realize there is more to it than transaction fee but it seems to offer decent insight into demand.

 

Doesn't flat transaction fees imply no real growth in demand for the service?  To me that is a real issue since the only real reason to hold this thing is if it is growing in popularity.  While certainly not a perfect argument, it's technology so flat demand will likely be replaced by another service.  In general, these trends would seem to weaken the store of value argument.

[Liberty]

$3.7k now. Small hiccup.

[clutch]

$3.7k now. Small hiccup.

 

Lol, acting like Trump on Twitter!

[SharperDingaan]

But it's such a lovely day on the Chicago Echange  ;D

https://www.cmegroup.com/trading/bitcoin-futures.html

 

... and at LedgerX

https://ledgerx.com/

http://data.ledgerx.com/top100

 

Just as futures (& options) can be used to infuence the market price of the underlying reference (ie: oil, gas, etc.), the same thing can be done with the underlying reference Bitcoin. Then how much would you like to wager ..... that bitcoin buyers are not too 'up' on how that works?

 

SD

[FiveSigma]

$3.7k now. Small hiccup.

 

‘Tis but a flesh wound  ;D

[rkbabang]

Why do my dollars have value? Because I can spend them to buy the things I need or productive assets, because I got paid in them and pay my taxes in them,

 

Ohio becomes the first state to accept bitcoin for tax payments

https://techcrunch.com/2018/11/25/ohio-becomes-the-first-state-to-accept-bitcoin-for-tax-payments/

[Liberty]

Why do my dollars have value? Because I can spend them to buy the things I need or productive assets, because I got paid in them and pay my taxes in them,

 

Ohio becomes the first state to accept bitcoin for tax payments

https://techcrunch.com/2018/11/25/ohio-becomes-the-first-state-to-accept-bitcoin-for-tax-payments/

 

"Ohio filers will technically send their tax payments to an Atlanta-based payments processor called BitPay, which will then convert the bitcoin to dollars for the state treasurer’s office."

 

They still are asking for dollars and the amount is denominated in dollars, they're just making it more convenient to convert.

 

Not nothing, but not quite what the headline makes it seem.

[wachtwoord]

Why do my dollars have value? Because I can spend them to buy the things I need or productive assets, because I got paid in them and pay my taxes in them,

 

Ohio becomes the first state to accept bitcoin for tax payments

https://techcrunch.com/2018/11/25/ohio-becomes-the-first-state-to-accept-bitcoin-for-tax-payments/

 

"Ohio filers will technically send their tax payments to an Atlanta-based payments processor called BitPay, which will then convert the bitcoin to dollars for the state treasurer’s office."

 

They still are asking for dollars and the amount is denominated in dollars, they're just making it more convenient to convert.

 

Not nothing, but not quite what the headline makes it seem.

 

It's silly, who would make use of this? Who'd want to pay taxes with their gold or their BRK shares?

[Liberty]

It's silly, who would make use of this? Who'd want to pay taxes with their gold or their BRK shares?

 

Exactly. BRK shares and gold aren't currency, and BTC isn't recognized as such by the government yet despite how some people are interpreting that headline.

 

You can't pay your taxes in BTC, you can sell BTC to pay taxes in USD. But that's not a headline that will get clicks...

[SnarkyPuppy]

It's silly, who would make use of this? Who'd want to pay taxes with their gold or their BRK shares?

 

Exactly. BRK shares and gold aren't currency, and BTC isn't recognized as such by the government yet despite how some people are interpreting that headline.

 

You can't pay your taxes in BTC, you can sell BTC to pay taxes in USD. But that's not a headline that will get clicks...

 

Nor is it inconsistent with the thesis that's been articulated here multiple times.

[Sportgamma]

Found this talk on Crypto by Hyun Song Shin from the Bank of International Settlements quite informative:

• 
  

 

[wachtwoord]

Found this talk on Crypto by Hyun Song Shin from the Bank of International Settlements quite informative:

• 
  

 

Wow, that wasn't very good. His main research question is the wrong one (store of value is the right topic here). His first limitation is both irrelevant (doesn't matter if not solved) and very likely solved or at least mitigated by second layer solutions. His second limitation is actually a much stronger limitation of the current monetary system.

[DeepSouth]

 

My post was about forks being dilutive (if they have value). No sure how any of that answers that.

 

The rest is the usual story. I'm saying it's too early to tell if that'll work out that way. Some new fork or brand new coin could come out in 10 years that has characteristics so much more attractive than bitcoin that it could effectively compete away a lot of demand for bitcoin and make price drop, affecting the "store of value" part and the "supply is limited" part.

 

Yes, that is the bear case.  But without some new thing with some much more attractive properties applicable to being a good store of value, none of the altcoins will have a long term effect on Bitcoin.  They may have small short term dillutive effects for a while, but as they become valueless and disappear those small effects will disappear with them.  Without substantial new properties/benefits, first mover advantage is everything.  Why would you switch from bitcoin if everyone is already using bitcoin and go to a coin almost no one uses that isn't substantially better?  It is like facebook, anyone can create a competing social network, but unless there is some feature that is massively better that FB can't copy, why would you switch when everyone you know (and a few billion people you don't know) are already using FB?  Any dilution will turn out to be minimal and short lived.  I do think there will be an endless number of app coins, which will not dilute BTC because they serve a different purpose altogether.  I don't consider Ether, for example, to be a bitcoin competitor, because ETH will never be a store of value.

 

Of course it is all supply and demand.  Everything is, including your stocks which you think have "intrinsic" value.  It only has that value if the market eventually agrees with you.  The same goes for Bitcoin.

Not really. Productive assets can return cashflow to shareholders via dividends, special dividends, or buybacks, or from an outright sale of the company for cash or some other stock, and if the company does well, those streams can increase over time. That's part of why someone else might want to buy it off you. Gold won't ever give you a cent, so it's all relying on someone else buying it.

 

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

Try paying your federal taxes in bitcoins. You will find out why cash is valuable.

[rkbabang]

 

My post was about forks being dilutive (if they have value). No sure how any of that answers that.

 

The rest is the usual story. I'm saying it's too early to tell if that'll work out that way. Some new fork or brand new coin could come out in 10 years that has characteristics so much more attractive than bitcoin that it could effectively compete away a lot of demand for bitcoin and make price drop, affecting the "store of value" part and the "supply is limited" part.

 

Yes, that is the bear case.  But without some new thing with some much more attractive properties applicable to being a good store of value, none of the altcoins will have a long term effect on Bitcoin.  They may have small short term dillutive effects for a while, but as they become valueless and disappear those small effects will disappear with them.  Without substantial new properties/benefits, first mover advantage is everything.  Why would you switch from bitcoin if everyone is already using bitcoin and go to a coin almost no one uses that isn't substantially better?  It is like facebook, anyone can create a competing social network, but unless there is some feature that is massively better that FB can't copy, why would you switch when everyone you know (and a few billion people you don't know) are already using FB?  Any dilution will turn out to be minimal and short lived.  I do think there will be an endless number of app coins, which will not dilute BTC because they serve a different purpose altogether.  I don't consider Ether, for example, to be a bitcoin competitor, because ETH will never be a store of value.

 

Of course it is all supply and demand.  Everything is, including your stocks which you think have "intrinsic" value.  It only has that value if the market eventually agrees with you.  The same goes for Bitcoin.

Not really. Productive assets can return cashflow to shareholders via dividends, special dividends, or buybacks, or from an outright sale of the company for cash or some other stock, and if the company does well, those streams can increase over time. That's part of why someone else might want to buy it off you. Gold won't ever give you a cent, so it's all relying on someone else buying it.

 

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

Try paying your federal taxes in bitcoins. You will find out why cash is valuable.

 

Taxation is theft.  I don't value things simply because violent thieves prefer them.  As a matter of fact, holding your wealth in something the worlds most powerful and organized thieves do not want is a benefit.

[DeepSouth]

 

My post was about forks being dilutive (if they have value). No sure how any of that answers that.

 

The rest is the usual story. I'm saying it's too early to tell if that'll work out that way. Some new fork or brand new coin could come out in 10 years that has characteristics so much more attractive than bitcoin that it could effectively compete away a lot of demand for bitcoin and make price drop, affecting the "store of value" part and the "supply is limited" part.

 

Yes, that is the bear case.  But without some new thing with some much more attractive properties applicable to being a good store of value, none of the altcoins will have a long term effect on Bitcoin.  They may have small short term dillutive effects for a while, but as they become valueless and disappear those small effects will disappear with them.  Without substantial new properties/benefits, first mover advantage is everything.  Why would you switch from bitcoin if everyone is already using bitcoin and go to a coin almost no one uses that isn't substantially better?  It is like facebook, anyone can create a competing social network, but unless there is some feature that is massively better that FB can't copy, why would you switch when everyone you know (and a few billion people you don't know) are already using FB?  Any dilution will turn out to be minimal and short lived.  I do think there will be an endless number of app coins, which will not dilute BTC because they serve a different purpose altogether.  I don't consider Ether, for example, to be a bitcoin competitor, because ETH will never be a store of value.

 

Of course it is all supply and demand.  Everything is, including your stocks which you think have "intrinsic" value.  It only has that value if the market eventually agrees with you.  The same goes for Bitcoin.

Not really. Productive assets can return cashflow to shareholders via dividends, special dividends, or buybacks, or from an outright sale of the company for cash or some other stock, and if the company does well, those streams can increase over time. That's part of why someone else might want to buy it off you. Gold won't ever give you a cent, so it's all relying on someone else buying it.

 

And you value this "cash" why?  It doesn't have intrinsic value and is only "valuable" because other people value it and will give you stuff for it.

Maybe in the future you will be saying that companies have intrinsic value because they have coinflow.

 

Try paying your federal taxes in bitcoins. You will find out why cash is valuable.

 

Taxation is theft.  I don't value things simply because violent thieves prefer them.  As a matter of fact, holding your wealth in something the worlds most powerful and organized thieves do not want is a benefit.

 

Wow man very edgy; I was a libertarian in high school too. You may not value freedom from prison, but the vast majority of people do. Extrapolating your extreme ideology onto the rest of the world is a laughably naive behavioral bias. It's like the miser who thinks AAPL is worthless because he uses a $50 Android smartphone.

 

I don't want to pay taxes, but I value my freedom, hence I pay taxes and value dollars. Dread Pirate Roberts similarly believed taxation was theft and that bitcoin was a way to fight the man from behind a computer screen.