ValueArb Posted June 23, 2021 Posted June 23, 2021 14 minutes ago, TwoCitiesCapital said: Intrinsic Value: I answered this question in recent weeks and linked to an article. It's value is in its network and thus the value of Bitcoin is no different than the value of a telephone network, and internet network, or a social network and can be estimated accordingly. I linked a white paper that does precisely this. The writer of that paper had estimated BTC's network value to be ~20k/coin at the time that I posted. But, historically BTC has boomed significantly above its network value - for instance, in 2017 when it went to 19k while it's network value was ~3-4k at peak bubble activity. This is why I didn't sell at 65k - 3x network value is a shallow top in a boom AND 3-years later it didn't matter b/c network value is growing so quickly. As far as measuring it in trillions - Apple has a $2 trillion market cap. What is more valuable - a global/permissionless payment network that can also be an investment asset class and a store of wealth or a premium option in a crowded smartphone market? I view BTC's value-add as significantly above Apple's. At $2 trillion, BTC would trade at a minimum of 105k/coin assuming no coins have been lost. Thanks, I'll read that article and hopefully it gives me a better framework for valuing BTC.
Castanza Posted June 23, 2021 Posted June 23, 2021 25 minutes ago, TwoCitiesCapital said: As far as measuring it in trillions - Apple has a $2 trillion market cap. What is more valuable - a global/permissionless payment network that can also be an investment asset class and a store of wealth or a premium option in a crowded smartphone market? I view BTC's value-add as significantly above Apple's. One ahs a barrier to entry and a moat while the other doesn't
JRM Posted June 23, 2021 Posted June 23, 2021 I can't remember which podcast I was listening to, but the discussion around intrinsic value for Bitcoin was around its transactional value. The interviewee stated that there are two primary sources of intrinsic value for something: 1. Discounted cash flows 2. Transactional utility This makes sense to me, and the transactional utility grows with the network.
TwoCitiesCapital Posted June 23, 2021 Posted June 23, 2021 (edited) 6 minutes ago, Castanza said: One ahs a barrier to entry and a moat while the other doesn't I think BTC's barrier to entry is apparent by the fact that there are over 2000+ crypto currencies and BTC still takes up 1/2 of the collective market value. Nobody is seriously talking about accepting DOGE as a store of value for instance and only a handful on the fringed are accepting it as payment. Way less than the support/development that BTC is receiving and the rate of adoption it has. No countries are considering it for their reserves or for state-backed mining. There has been 12 years where competitors have come and gone and the only one that has anything close to what BTC has accomplished is Ethereum - which isn't even a direct competitor IMO but rather a compliment to building out decentralized digital infrastructure. Edited June 23, 2021 by TwoCitiesCapital
TwoCitiesCapital Posted June 23, 2021 Posted June 23, 2021 https://finance.yahoo.com/news/africrypt-bitcoin-disappearance-174636634.html This is why Bitcoin maximalists are so up on the "Not your keys, not your coins" mantra and why it's safest to move assets OFF exchange after purchasing if using a CeFi institution. Hopefully, with increased regulation in the space and established/trusted custodians entering, this type of activity will die down. In the meantime, a private hardware wallet is the ONLY option if you want to avoid wild-west type robberies like this.
formthirteen Posted June 24, 2021 Posted June 24, 2021 The Africrypt heist is considered legal robbery: https://finance.yahoo.com/news/africrypt-bitcoin-disappearance-174636634.html I still think there is a lot of "undiscovered" value in cryptocurrencies. I, for example, assign a value to cryptocurrencies based on "how good are the memes" and "is Vitalik still dancing". BTC (is Mr. Novogratz still bullish?) ETH (is Vitalik still dancing?) DOGE (investors are still celebrating)
rkbabang Posted June 24, 2021 Author Posted June 24, 2021 18 hours ago, TwoCitiesCapital said: https://finance.yahoo.com/news/africrypt-bitcoin-disappearance-174636634.html This is why Bitcoin maximalists are so up on the "Not your keys, not your coins" mantra and why it's safest to move assets OFF exchange after purchasing if using a CeFi institution. Hopefully, with increased regulation in the space and established/trusted custodians entering, this type of activity will die down. In the meantime, a private hardware wallet is the ONLY option if you want to avoid wild-west type robberies like this. Just make sure your hardware wallet is genuine A paper wallet stored in a physical safe might be the absolute safest option. Cybercrooks Are Mailing Users Fake Ledger Devices To Steal Their Cryptocurrency
TwoCitiesCapital Posted June 24, 2021 Posted June 24, 2021 (edited) 34 minutes ago, rkbabang said: Just make sure your hardware wallet is genuine A paper wallet stored in a physical safe might be the absolute safest option. Cybercrooks Are Mailing Users Fake Ledger Devices To Steal Their Cryptocurrency I'm not 100% certain with all of the details behind this scam, but still seems like it would require several things to go right for anyone to lose their funds. 1) they attach the "replacement" into their computer without being skeptical of the replacement (could be quite likely) 2) their antivirus misses any malware installed by the fake ledger which likely tracks keystrokes (can't really judge - not a software security expert) And then one of the following: 3) they type their private keys into the computer at some point which is a big NO-NO and unnecessary to complete transactions anyways (highly unlikely) 4) they copy/paste addresses without checking them when sending coin and the malware simply replaces the pasted address with the scammers address so they receive coin transfers. (Could be quite likely - but is still a big NO-NO). While this is sophisticated, my guess is that it still comes down to someone being careless/lazy and not double checking the accuracy of the receiving address which is how most of these scams culminate. There's nothing wrong with the Ledger itself or having a non-paper hardware wallet. But when you self-custody, you have to be aware that you are the weakest link in your security and take appropriate precautions. Edited June 24, 2021 by TwoCitiesCapital
rkbabang Posted June 24, 2021 Author Posted June 24, 2021 1 hour ago, TwoCitiesCapital said: when you self-custody, you have to be aware that you are the weakest link in your security and take appropriate precautions. +1
JRM Posted June 29, 2021 Posted June 29, 2021 https://concoda.substack.com/p/the-coming-crypto-market-crisis
TwoCitiesCapital Posted June 29, 2021 Posted June 29, 2021 (edited) 2 hours ago, JRM said: https://concoda.substack.com/p/the-coming-crypto-market-crisis Quote Their balance sheet has become a fusion of the wildest financial instruments available. Commercial paper, short-term debt instruments issued by corporations, makes up half of Tether’s assets, but there’s no way to tell what company that debt belongs to. Even 3.6% of Tether’s reserves consist of “reverse repo notes”, which shows they have entered the shadow banking layer, doing business with Wall Street’s underworld — something that most crypto fans will regard as heresy. These are the kind of questionable financial assets now backing the most systemically important stablecoin in the crypto ecosystem Why does no one describe money market funds like this? Not a single person has an issue with money market funds doing reverse repos, or owning corporate paper and highly-rated short-term debt instruments. But when Tether does it serves as evidence of fraud and lack of backing? I don't like Tether. I don't use Tether. I think Tether's backing strategy is questionable and would benefit from greater transparency and regulation like our money market system does. But I do not allege fraud because no evidence of fraud has yet been released and those that latch onto this asset statement as evidence simply demonstrate their misunderstanding of "cash equivalents" in the current fiat backed financial system. Also, this paper alleges the fraud will be found out in the "deflationary" environment that is about to be unleashed and then highlights 2018 and early 2020 as deflationary environments. Why wasn't the fraud uncovered in either of those episodes? Are 75+% drawdowns peak to trough insufficient to uncover a ponzi scheme? Why would the next one be any different? Edited June 29, 2021 by TwoCitiesCapital
JRM Posted June 30, 2021 Posted June 30, 2021 ya, I don't necessarily agree with the conclusions but I think the red flags are worth noting.
SharperDingaan Posted June 30, 2021 Posted June 30, 2021 The tech folks have lost a lot of money - and need someone to blame. Developers are nervous because no stable coin = no ability to convert sh1tcoin holdings into cash/loans to fund ongoing development. The off-shore folks are nervous in case stable coin scrutiny, spills over into the asset backed token market; those disguised securizations/mutual funds aren't backed quite the way you thought they were! Banks are nervous as a crypto blowup will accelerate CBDC implementation, and disrupt the banking business both more and sooner than intended. Most CB's would also prefer a blowup after their covid economies recover, and not before. Lot of chaff to burn, but nobody wants an uncontrollable fire as 'moral hazard' comes back into play. We might not like it, but this is the environment BTC was designed for, chaos and zero tust. And we even have CME guaranteed counterparty settlement, to ensure we get paid the M2M on our BTC puts Hard to be concerned, when the world is actively proving the proof of concept. SD
rkbabang Posted July 1, 2021 Author Posted July 1, 2021 23 hours ago, SharperDingaan said: The tech folks have lost a lot of money - and need someone to blame. Developers are nervous because no stable coin = no ability to convert sh1tcoin holdings into cash/loans to fund ongoing development. The off-shore folks are nervous in case stable coin scrutiny, spills over into the asset backed token market; those disguised securizations/mutual funds aren't backed quite the way you thought they were! Banks are nervous as a crypto blowup will accelerate CBDC implementation, and disrupt the banking business both more and sooner than intended. Most CB's would also prefer a blowup after their covid economies recover, and not before. Lot of chaff to burn, but nobody wants an uncontrollable fire as 'moral hazard' comes back into play. We might not like it, but this is the environment BTC was designed for, chaos and zero tust. And we even have CME guaranteed counterparty settlement, to ensure we get paid the M2M on our BTC puts Hard to be concerned, when the world is actively proving the proof of concept. SD Well said SD. Tether May be a fraud. People have suspected as much for years. I don’t use tether, I don’t hold tether. If and/or when it collapses people who are holding it will lose a lot of money, but I will still have my Bitcoin along with maybe a nice opportunity to buy more cheap.
rainman Posted July 1, 2021 Posted July 1, 2021 3 hours ago, rkbabang said: Well said SD. Tether May be a fraud. People have suspected as much for years. I don’t use tether, I don’t hold tether. If and/or when it collapses people who are holding it will lose a lot of money, but I will still have my Bitcoin along with maybe a nice opportunity to buy more cheap. Are USDC and GUSD safe? Thanks
SharperDingaan Posted July 1, 2021 Posted July 1, 2021 (edited) 10 hours ago, rainman said: Are USDC and GUSD safe? Thanks No - at best they are stable coin trying to imititate a digital US dollar. The 'real' digital US dollar is a CBDC backed by the US Federal Reserve ... whole lot different. As soon as the collateraliization of these stable coin is challenged, it threatens to 'break the buck', and collapse the coin. Simply putting up a bigger pile of sh1t as collateral - doesn't help. We used to think that a MM fund, backed with high quality treasuries and short-term notes, could not fall below its guaranteed minimum value. Then we discovered that they can ... and what happens when they do. https://www.thebalance.com/reserve-primary-fund-3305671 SD Edited July 1, 2021 by SharperDingaan
TwoCitiesCapital Posted July 1, 2021 Posted July 1, 2021 10 hours ago, rainman said: Are USDC and GUSD safe? Thanks I don't know what "safe" implies, but both are backed by cash reserves and are audited regularly so you should have confidence that they'll maintain a dollar peg. Both are also backed by of the two of the largest, more established players in the space and have massive reputational damage to their main business models if these fail.
TwoCitiesCapital Posted July 1, 2021 Posted July 1, 2021 (edited) https://cointelegraph-com.cdn.ampproject.org/v/s/cointelegraph.com/news/1inch-to-launch-dollar-pegged-stablecoin-with-ichi/amp?amp_gsa=1&_js_v=a6&usqp=mq331AQIKAGwASCAAgM%3D#amp_tf=From %1%24s&aoh=16251810307580&csi=0&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fcointelegraph.com%2Fnews%2F1inch-to-launch-dollar-pegged-stablecoin-with-ichi Pretty certain this is a very similar, if not the same, design as the Iron Finance coin that just failed. Partially collateralizing a stable coin with a single, volatile crypto is a recipe for disaster. I'm not yet convinced DAO's approach with a basket of cryptos that over-collateralize works just yet, but that's a better design than this. Edited July 1, 2021 by TwoCitiesCapital
Liberty Posted July 15, 2021 Posted July 15, 2021 This podcast on Tether is very interesting: https://www.grant-williams.com/podcast/the-grant-williams-podcast-bennett-tomlin-george-noble/
TwoCitiesCapital Posted July 16, 2021 Posted July 16, 2021 https://news.bitcoin.com/university-of-cambridge-bitcoin-mining-map-shows-chinas-hashrate-dropped-to-46/ Data suggests China was below 50% of hash power BEFORE recent bans. I don't think China will ever be the majority of hash power again. Their loss.
TwoCitiesCapital Posted July 16, 2021 Posted July 16, 2021 (edited) 16 hours ago, Liberty said: This podcast on Tether is very interesting: https://www.grant-williams.com/podcast/the-grant-williams-podcast-bennett-tomlin-george-noble/ Definitely a good history here. Shady dudes and it's shocking that Tether retains such a large market share amongst stablecoins. Who uses this stuff?!? That being said, it is losing market share (from 82% a year ago to 58% today) and I hope that continues. Despite all of the shady stuff, there is no definitive proof of a Ponzi scheme. It's possible all of this points to implicit backing as opposed to explicit i.e. Tether lends cash to Bitfinex for more productive uses and then Bitfinex implicitly backs Tether cash claims. This wouldn't be a Ponzi scheme - just far more risky than your traditional stablecoins. What makes me skeptical of the Ponzi narrative is we've seen a crypto winter and multiple large drawdowns following without the 'fraud' being exposed. How can people be so sure it's actually a Ponzi if it survived all of that? If 50-80% isn't enough, what would it take? The most obvious answer to me is that it's probably NOT a Ponzi scheme, but also does not operate in a way that passes the smell test. As such, I don't use it, but am skeptical it'll by the catalyst for a crypto collapse. Edited July 16, 2021 by TwoCitiesCapital
JRM Posted July 16, 2021 Posted July 16, 2021 https://www.cnbc.com/2021/07/16/crypto-exchange-binance-halts-stock-tokens-as-regulators-circle.html A surprising number of hodlers rely on tether whether they realize it or not. could cause a shock to the system in the short-medium term.
SharperDingaan Posted July 17, 2021 Posted July 17, 2021 (edited) If you have a ‘clean’ security, margining it for cash is a straight-forward transaction. If you are margining for stable coin to re-margin/resell for cash, you are trying to money launder. If you are putting up BTC as stable coin collateral, vs just selling for cash - it is because the BTC wallet is ‘impaired’ in some way. One must wonder why? It appears that Bifinance is failing, and that founders have turned to the illegal market. It would also seem that regulators have become concerned enough to begin ‘ring fencing’ potential contagion. Should there be a temporary ‘market discontinuity’ in the crypto market, it could really make your day … God bless the CME SD Edited July 17, 2021 by SharperDingaan
Fly Posted July 17, 2021 Posted July 17, 2021 (edited) It will be interesting to watch for another Bitfinex premium to develop like we have seen in past years whenever there was Tether trouble: https://news.bitcoin.com/crypto-community-monitors-bitfinex-wallets-and-the-strange-6-btc-premium/ Or is it being arbitraged away now by Alameda and other big players. Binance is another one to watch. Their BTCUSD and USDT pairings are starting to wander from the rest of the pack. With all of the regulators around the world shutting down their operations we could see a gray swan of sorts. Edited July 17, 2021 by Fly
SharperDingaan Posted July 18, 2021 Posted July 18, 2021 Agreed, should ANY stablecoin tied to either BTC and/or USD experience an 'issue' - it will immediately affect ALL stable coin and crypto. Hence, it is not unreasonable to think of it a grey swan event; the question is what is the probability? and is it rising? Our own view is that in the ongoing climate, crypto exposure is not warranted - and we now hold T-Bills. We're still fans of crypto as an asset class, but just think we can better double our exposure by staying out. Different POV. SD
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now