Cryptocurrencies

[Gregmal]

All I know is that while you guys were arguing, one of you made ~7%...

[TwoCitiesCapital]

All I know is that while you guys were arguing, one of you made ~7%...

 

Lolz

[JRM]

Can anybody help me understand what happens after the last bitcoin is mined in 2140 or whatever?

 

I assume the transaction cost will have to be equal to the cost of "mining".

[SharperDingaan]

Lot more than 7%  ;)

 

Most recognize that the global QE (current & future) is devaluing currencies. So long as the horses ahead/behind you on the carousel devalue at the same rate that you do, nothing changes - but to those NOT on the carousel (BTC, Gold, etc.) the devaluation is obvious. Institutional/fund money is flowing in as a hedge against devaluation, and precious metal prices are not really changing as almost all the incremental flow is going into BTC.

 

SD

 

 

 

[TwoCitiesCapital]

Can anybody help me understand what happens after the last bitcoin is mined in 2140 or whatever?

 

I assume the transaction cost will have to be equal to the cost of "mining".

 

Yes. Transaction fees can be charged to compensate miners. It will likely be less lucrative than the bitcoin awards, but maybe more like utility type returns.

 

Definitely will be cheaper than comparable swipe fees on credit cards to support their networks and etc.

[TwoCitiesCapital]

The premium on GBTC surpassed 35% early this morning. 30-35% has signalled short-term tops in sentiment in recent months, but that doesn't mean it couldn't go higher in a frenzy like 2017 OR that you'd lose money buying it today if BTC keeps on keeping on.

 

Just the first indicator I watch for overly bullish sentiment. I noted back around ~18k that even after the 80% rally we'd seen, that its NAV was still within reasonable bounds of recent history and not bubbly - now we're getting there.

 

Mayer multiple is 1.88 (multiple to 200 day moving average). 2.4 is the typical sell signal in a euphoric rise - though it has gone much higher (like 3x+ in 2017) before they bust. Keeping in mind that the 200 day moving average is rising every day, 2.4x sell signal will likely be triggered around ~30-35k if it happens in the next 2-3 months.

 

It's better for all of us if it takes its sweet time in getting there though - makes the stock to flow forecast of 100k by the end of 2021 a more reasonable topping point if the 200 DMA is given time to rise to 25-30k instead of trying to make it there when its currently at 12k.

 

Happy trading all

[rkbabang]

Can anybody help me understand what happens after the last bitcoin is mined in 2140 or whatever?

 

I assume the transaction cost will have to be equal to the cost of "mining".

 

Yes. Transaction fees can be charged to compensate miners. It will likely be less lucrative than the bitcoin awards, but maybe more like utility type returns.

 

Definitely will be cheaper than comparable swipe fees on credit cards to support their networks and etc.

 

Also, unless there are some serious advancements in life extension technologies, most of us will not be around to see it.

 

[rkbabang]

Problem is the bulls seem to become more bullish as the price goes up. Seems fishy to me, but it's not my money so do as you please. I wish you the best of luck.

 

Hmm, I don't know if you've ever visited a stock discussion board, but people tend to talk about investments more when they go way up or way down.  I've been buying through some of the ups and all of the downs since 2014 or so even if I haven't posted here every time.

[widenthemoat]

Lot more than 7%  ;)

 

Most recognize that the global QE (current & future) is devaluing currencies. So long as the horses ahead/behind you on the carousel devalue at the same rate that you do, nothing changes - but to those NOT on the carousel (BTC, Gold, etc.) the devaluation is obvious. Institutional/fund money is flowing in as a hedge against devaluation, and precious metal prices are not really changing as almost all the incremental flow is going into BTC.

 

SD

 

 

 

 

The hedge against devaluation is interesting to me as well. These dollar price increases are not increasing purchasing power in real terms I suppose. I recently bet a substantial sum of money with a friend (who is an ardent BTC bull) that BRK will outperform BTC over the next fifteen years.

 

The most ironic part of the bet...it was made in USD. His entire thesis rests on the dollar becoming worthless, yet he wants to be paid out in USD...

[SnarkyPuppy]

Lot more than 7%  ;)

 

Most recognize that the global QE (current & future) is devaluing currencies. So long as the horses ahead/behind you on the carousel devalue at the same rate that you do, nothing changes - but to those NOT on the carousel (BTC, Gold, etc.) the devaluation is obvious. Institutional/fund money is flowing in as a hedge against devaluation, and precious metal prices are not really changing as almost all the incremental flow is going into BTC.

 

SD

 

 

 

 

The hedge against devaluation is interesting to me as well. These dollar price increases are not increasing purchasing power in real terms I suppose. I recently bet a substantial sum of money with a friend (who is an ardent BTC bull) that BRK will outperform BTC over the next fifteen years.

 

The most ironic part of the bet...it was made in USD. His entire thesis rests on the dollar becoming worthless, yet he wants to be paid out in USD...

 

You're making counter-arguments against arguments that nobody is making lol

[rkbabang]

Would you even have taken the bet if you had to pay a certain amount in BTC?  You'd be foolish to.  If you win, that amount of BTC will be worth almost nothing, if you lose that amount of BTC could be so enormous you could never possibly pay unless you buy it now and hold it so that you would have it in case you lost. And you probably don't want to buy that much BTC if you don't think it will be worth anything in 15 years.  The US dollar will not change as much as BTC has the potential to.  Maybe inflation cuts the value of the dollar by 25% or by half, maybe 80% in the worst case or in the best case 10-15%.  It is certain that the dollar will be worth less in 15 years than it is today, so both of you will likely be able to pay up if you lose.

[TwoCitiesCapital]

Would you even have taken the bet if you had to pay a certain amount in BTC?  You'd be foolish to.  If you win, that amount of BTC will be worth almost nothing, if you lose that amount of BTC could be so enormous you could never possibly pay unless you buy it now and hold it so that you would have it in case you lost. And you probably don't want to buy that much BTC if you don't think it will be worth anything in 15 years.  The US dollar will not change as much as BTC has the potential to.  Maybe inflation cuts the value of the dollar by 25% or by half, maybe 80% in the worst case or in the best case 10-15%.  It is certain that the dollar will be worth less in 15 years than it is today, so both of you will likely be able to pay up if you lose.

 

Made this very point, but about 30 seconds after you  ;D went ahead and deleted the redundant comment

 

I'd also add, in addition to making the bet payable to either of you in the event of loss, it's probably not the money that he's making the bet for. If I'm in his shoes, and think the US is going to collapse into nothingness and bet a friend $100 that it's going to happen - it's worth it to me to accept that worthless $100 in 15-years just to say that I was right and that he knows it. Sometimes, it's not about the monetary reward.

[rkbabang]

Would you even have taken the bet if you had to pay a certain amount in BTC?  You'd be foolish to.  If you win, that amount of BTC will be worth almost nothing, if you lose that amount of BTC could be so enormous you could never possibly pay unless you buy it now and hold it so that you would have it in case you lost. And you probably don't want to buy that much BTC if you don't think it will be worth anything in 15 years.  The US dollar will not change as much as BTC has the potential to.  Maybe inflation cuts the value of the dollar by 25% or by half, maybe 80% in the worst case or in the best case 10-15%.  It is certain that the dollar will be worth less in 15 years than it is today, so both of you will likely be able to pay up if you lose.

 

Made this very point, but about 30 seconds after you  ;D went ahead and deleted the redundant comment

 

I'd also add, in addition to making the bet payable to either of you in the event of loss, it's probably not the money that he's making the bet for. If I'm in his shoes, and think the US is going to collapse into nothingness and bet a friend $100 that it's going to happen - it's worth it to me to accept that worthless $100 in 15-years just to say that I was right and that he knows it. Sometimes, it's not about the monetary reward.

 

Yep.  And even if your friend is 100% right and the US dollar does way better than you expect, it will only be $85-$90 2020 equivalent dollars that it will cost you at the most.  An easy bet to make.

 

[fareastwarriors]

Cryptocurrency exchange Coinbase files with regulators to go public

 

https://www.reuters.com/article/us-coinbase-ipo-idUSKBN28R303

[thowed]

1) The Gold vs Bitcoin argument is starting to get a bit more interesting.  I really liked Druckenmiller saying he had a little bit of BTC, and talked about how it was growing a brand, but that brand was a lot younger than the brand of gold.  'Brand' seems a good term to discuss these things that are effectively 'faith' investments like fiat currencies.

 

2) What I am still unsure of is the Correlations for hedging.  Looking at this year, March events were the trigger for Gold to go up, and worked as a decent Equity hedge, whereas Bitcoin went down.  The last month or so feels like Bitcoin is more correlated to STONKS.  This seems important as it may be a mistake for those buying Bitcoin as a 'Gold alternative'.

 

3) Twocities, many thanks for the GBTC premium updates - very interesting.

 

4) I know very little about Bitcoin, and am just piggybacking off a few things I've read/observed...

 

[rkbabang]

1) The Gold vs Bitcoin argument is starting to get a bit more interesting.  I really liked Druckenmiller saying he had a little bit of BTC, and talked about how it was growing a brand, but that brand was a lot younger than the brand of gold.  'Brand' seems a good term to discuss these things that are effectively 'faith' investments like fiat currencies.

 

2) What I am still unsure of is the Correlations for hedging.  Looking at this year, March events were the trigger for Gold to go up, and worked as a decent Equity hedge, whereas Bitcoin went down.  The last month or so feels like Bitcoin is more correlated to STONKS.  This seems important as it may be a mistake for those buying Bitcoin as a 'Gold alternative'.

 

3) Twocities, many thanks for the GBTC premium updates - very interesting.

 

4) I know very little about Bitcoin, and am just piggybacking off a few things I've read/observed...

 

 

 

The Bitcoin store of value theory is just a theory at this point.  Relatively speaking, very few people own it and almost no institutions do yet.  There is a huge risk that the theory is wrong.  Also BTC is very concentrated in a relatively few accounts (so called "whales").    If the BTC store of value theory plays out the way I think it will, it will be a bumpy ride.  Institutions trying to get in driving the price up, the occasional whale cashing out driving the price down.  Quite times like most of 2020 where it drifts.  Eventually this will all settle down and be more stable, but not anytime soon.  It is the largest asymmetric opportunity that I know of.  Maybe a once in a century type thing.

[Gregmal]

1) The Gold vs Bitcoin argument is starting to get a bit more interesting.  I really liked Druckenmiller saying he had a little bit of BTC, and talked about how it was growing a brand, but that brand was a lot younger than the brand of gold.  'Brand' seems a good term to discuss these things that are effectively 'faith' investments like fiat currencies.

 

2) What I am still unsure of is the Correlations for hedging.  Looking at this year, March events were the trigger for Gold to go up, and worked as a decent Equity hedge, whereas Bitcoin went down.  The last month or so feels like Bitcoin is more correlated to STONKS.  This seems important as it may be a mistake for those buying Bitcoin as a 'Gold alternative'.

 

3) Twocities, many thanks for the GBTC premium updates - very interesting.

 

4) I know very little about Bitcoin, and am just piggybacking off a few things I've read/observed...

 

 

 

The Bitcoin store of value theory is just a theory at this point.  Relatively speaking, very few people own it and almost no institutions do yet.  There is a huge risk that the theory is wrong.  Also BTC is very concentrated in a relatively few accounts (so called "whales").    If the BTC store of value theory plays out the way I think it will, it will be a bumpy ride.  Institutions trying to get in driving the price up, the occasional whale cashing out driving the price down.  Quite times like most of 2020 where it drifts.  Eventually this will all settle down and be more stable, but not anytime soon.  It is the largest asymmetric opportunity that I know of.  Maybe a once in a century type thing.

 

Exactly. And its clear as day and has been for a while. Which is why its baffling to me how absurd some people behave with respect to what is obviously a speculation but also quite clearly defined...as you touch on above. You really cant risk 1% of your NW for something like that? You have to wonder wtf people are thinking. You play conservative with big bets/investments...sure. Absolutely makes sense. But 1-2% or so?!?! Yea, go nurture that 1% and compound it safely at 5% a year(probably too aggressive a figure TBH). Enjoy having 2% in 15 years lol....

[SnarkyPuppy]

1) The Gold vs Bitcoin argument is starting to get a bit more interesting.  I really liked Druckenmiller saying he had a little bit of BTC, and talked about how it was growing a brand, but that brand was a lot younger than the brand of gold.  'Brand' seems a good term to discuss these things that are effectively 'faith' investments like fiat currencies.

 

2) What I am still unsure of is the Correlations for hedging.  Looking at this year, March events were the trigger for Gold to go up, and worked as a decent Equity hedge, whereas Bitcoin went down.  The last month or so feels like Bitcoin is more correlated to STONKS.  This seems important as it may be a mistake for those buying Bitcoin as a 'Gold alternative'.

 

3) Twocities, many thanks for the GBTC premium updates - very interesting.

 

4) I know very little about Bitcoin, and am just piggybacking off a few things I've read/observed...

 

 

 

The Bitcoin store of value theory is just a theory at this point.  Relatively speaking, very few people own it and almost no institutions do yet.  There is a huge risk that the theory is wrong.  Also BTC is very concentrated in a relatively few accounts (so called "whales").    If the BTC store of value theory plays out the way I think it will, it will be a bumpy ride.  Institutions trying to get in driving the price up, the occasional whale cashing out driving the price down.  Quite times like most of 2020 where it drifts.  Eventually this will all settle down and be more stable, but not anytime soon.  It is the largest asymmetric opportunity that I know of.  Maybe a once in a century type thing.

 

Exactly. And its clear as day and has been for a while. Which is why its baffling to me how absurd some people behave with respect to what is obviously a speculation but also quite clearly defined...as you touch on above. You really cant risk 1% of your NW for something like that? You have to wonder wtf people are thinking. You play conservative with big bets/investments...sure. Absolutely makes sense. But 1-2% or so?!?! Yea, go nurture that 1% and compound it safely at 5% a year(probably too aggressive a figure TBH). Enjoy having 2% in 15 years lol....

 

The reality is most people heard Buffett dismiss it and others call it tulips - and that is enough to stop thinking. 

[clutch]

One important note about the store of value thesis. It's considered a gold alternative because BTC could be another store of value, not because the price of BTC will follow the price of gold. The prices of many stores of value went down in March -- such as real estate or collectibles.

[Libs]

<Exactly. And its clear as day and has been for a while. Which is why its baffling to me how absurd some people behave with respect to what is obviously a speculation but also quite clearly defined...as you touch on above. You really cant risk 1% of your NW for something like that? You have to wonder wtf people are thinking. You play conservative with big bets/investments...sure. Absolutely makes sense. But 1-2% or so?!?! Yea, go nurture that 1% and compound it safely at 5% a year(probably too aggressive a figure TBH). Enjoy having 2% in 15 years lol....>

 

Exactly.

 

A few years ago BTC dropped from $1,000 to ~$200. When I learned that Bitcoin had already rallied massively to new highs three times from such declines, that was stunning; and IMO set bitcoin apart from other 'bubbles'. PI wish I'd put 1% into it then, instead of buying just a handful.

Even though I figured there was a 95% chance it went to zero, the upside was so insane it was irresistible. I'm sure the poker players on this site get this.

 

 

[SnarkyPuppy]

<Exactly. And its clear as day and has been for a while. Which is why its baffling to me how absurd some people behave with respect to what is obviously a speculation but also quite clearly defined...as you touch on above. You really cant risk 1% of your NW for something like that? You have to wonder wtf people are thinking. You play conservative with big bets/investments...sure. Absolutely makes sense. But 1-2% or so?!?! Yea, go nurture that 1% and compound it safely at 5% a year(probably too aggressive a figure TBH). Enjoy having 2% in 15 years lol....>

 

Exactly.

 

A few years ago BTC dropped from $1,000 to ~$200. When I learned that Bitcoin had already rallied massively to new highs three times from such declines, that was stunning; and IMO set bitcoin apart from other 'bubbles'. PI wish I'd put 1% into it then, instead of buying just a handful.

Even though I figured there was a 95% chance it went to zero, the upside was so insane it was irresistible. I'm sure the poker players on this site get this.

 

Right.  It's really always been an expected value calculation.  BTC = Gold = ~$350k per coin.  At $3k this implied < 1% chance of success.  Apply your own odds

[deadspace]

“The reality is most people heard Buffett dismiss it and others call it tulips - and that is enough to stop thinking.“

 

Buffett dismissing bitcoin reminds me of Einstein dismissing quantum mechanics

[JRM]

It's ironic that gold is now more anonymous than Bitcoin.  Originally that was another 'feature'.

 

Advantages of Bitcoin:

-easy verification

-easy to purchase in quantity

 

Advantages of Gold:

-anonymous

-doesn't require massive network of servers

 

I don't think central banks will ever buy Bitcoin in place of gold.  I could be wrong. 

 

I think there will be plenty of room in the world for both.

[clutch]

It's ironic that gold is now more anonymous than Bitcoin.  Originally that was another 'feature'.

 

Advantages of Bitcoin:

-easy verification

-easy to purchase in quantity

 

Advantages of Gold:

-anonymous

-doesn't require massive network of servers

 

I don't think central banks will ever buy Bitcoin in place of gold.  I could be wrong. 

 

I think there will be plenty of room in the world for both.

 

Gold requires a whole industry (mining) to produce it and the physical security/storage to keep it safe. In contrast to the network and compute power for BTC.

[JRM]

that's true. 

 

one thing I don't understand about gold and bitcoin is how the price can be so much higher than the cost to mine.  shouldn't the two converge over time?