Do you think Bitcoin is a safe store of value?

[Patmo]

You guys are on drugs

[rkbabang]

You guys are on drugs

 

Only the good ones.

 

[mattee2264]

  What is the truth behind these reports that a lot of the run up has been the result of manipulation on the Asian exchanges through flooding the market with Tether which is falsely treated as being convertible into Bitcoin? Details seem a bit sketchy but the extent of the run up over the last month or two does feel a bit artificial.

 

  And for the long term thesis of bitcoin as a store of value how do you handicap the risk that a better form of digital gold is created? Or is your view that bitcoin is good enough for that purpose and being seasoned and surviving for so long will continue to give it an edge over upstarts?

 

  How constrained by regulations etc are institutions from entering the market in a big way to stem the price fall? I'm guessing there is no issue for hedge funds who you'd imagine might get interested in scooping up coins at the bottom.

 

 

 

 

 

[Jurgis]

Charlie Munger：I think it is perfectly asinine and even pause to think about them. You know it is one thing to think gold has some marvelous store value because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity. Believe me, man is capable of somehow creating more Bitcoin. They tell you they are not going to do it, but they mean they are not gonna do it unless they want to. That is what they mean when they say they are not going to do it. They have  their rules and they cannot do it , don’t believe them. When there is enough incentive, bad things will happen. It’s bad people, crazy bubble, bad idea luring people into the concept of easy wealth without much insight or work. That’s the last thing on earth you should think about. If it worked, it will be bad for you you could try to do it again. It is totally insane and by the way I just laid out a wonderful life lesson for you. Give a whole lot of things a wide birth, they don’t exist, you know. Crooks, crazies, egomaniacs, people full of resentment, people full of self-pity, people who feel like victims, there is a whole lot of things that aren’t gonna work for you, figure out what they are and avoid them like plague and one of them is Bitcoin. And the worst thing would happened if you won because then you do it again. It is totally insanity and it is so easy to simplify life from all these things there beneath you.

 

Charlie Munger? Who is that Charlie Munger fellow? He's an old codger who doesn't know crap. Didn't you hear him diss VRX? And how did that end? Would you trust him after this?

 

 

 

....

 

 

 

....

 

 

 

oh wait...  ::)

[rkbabang]

  What is the truth behind these reports that a lot of the run up has been the result of manipulation on the Asian exchanges through flooding the market with Tether which is falsely treated as being convertible into Bitcoin? Details seem a bit sketchy but the extent of the run up over the last month or two does feel a bit artificial.

 

  And for the long term thesis of bitcoin as a store of value how do you handicap the risk that a better form of digital gold is created? Or is your view that bitcoin is good enough for that purpose and being seasoned and surviving for so long will continue to give it an edge over upstarts?

 

  How constrained by regulations etc are institutions from entering the market in a big way to stem the price fall? I'm guessing there is no issue for hedge funds who you'd imagine might get interested in scooping up coins at the bottom.

 

I've read the Tether fraud theories and I really don't know if there is something there or not, but even in the worst case it will be a short term problem for Bitcoin like MtGox was.

 

I think there is room for more than one crypto in the market used for different purposes.  I see Bitcoin taking the digital gold function.  To serve this purpose it will have to have a huge network effect.  It is like asking what is the chances that a new social network comes along and destroys facebook.  FB is valuable because everyone uses it.  Yes there was myspace, but they never got to the size FB is.  Anything new will have to have something FB doesn't have and can't implement to make a billion people switch.  There is still a chance that something else moves past Bitcoin and serves the gold function leaving Bitcoin valueless (i.e. making bitcoin the myspace of digital gold), this is a winner take all function and in a few years the winner will become clear I think.

 

The other cryptos will be used for other purposes.  I think there will be a popular silver to the Bitcoins gold.  It might serve more of a medium of exchange to replace the dollar.  This is the currency that people will be paid with and used to buy their everyday items, because it will have low fees and be fast. People will regularly convert it to bitcoin for long term savings as this other currency will be POS and much less secure than bitcoin.

 

There will be many single function coins that people use for a single purpose such as buying storage in the cloud (where you can earn the coin by providing storage and you pay the coin if you use storage) or paying for video poker, etc. There will be a lot of these.  I think there is a good chance these run on the Ethereum blockchain so ETH will be very valuable.

 

There will also be coins that represent equity in a company or organization, which will be similar to stocks today and many will pay dividends.  These may even replace the stock market as they can be traded quickly without days of settling time and the ownership is always clear.

 

There will certainly be types of crypto that I can't think of yet because no one has thought of them yet.

 

[Valuebo]

 

I can't give you an exact value, but if Bitcoin becomes what I think it will you will have 7 Billion people who want to own and use those 16M-20M coins (depending on how many you think are lost).  I don't know if the price in 10 years is $500K or $25M, but it won't be $5K unless my thesis on bitcoin is entirely wrong.  If that is the case then you probably shouldn't buy it at all as $0 would be my best guess.  I've been buying on the dips since 2014 and it has served me well building my position.  I think the real runup is going to be in the 2020s.  As we go from way less than 1% of people using/owning bitcoin to 20-40%.  Facebook has over 1 Billion users, what happens when a billion+ people want Bitcoin? I still think that there is plenty of time.  This drop will be one of many along the way.

 

 

 

Why would a billion+ people want to own bitcoin other than pure greed? It can't handle a decent amount of transaction, you have fucked up and unregulated middle men, insane transaction costs, risk of theft and loss, energy consumption issues, it is no store of value due to extreme volatility and worst of all: supply isn't limited at all. Greed driven supply will meet greed driven demand until it reaches a tipping point where supply > demand. Suddenly you will have people realizing unregulated crypto markets are far more inflationary than the centralized monetary system already in place. (A system people don't want but truly need in one way or another to keep some sanity in the financial markets.) Anyway, this dynamic will get really interesting combined with retail speculators taking on margin loans, newly created derivates multiplying the market size, ... Forced selling as sentiment shifts completely will result in a beautiful death spiral for most, if not all, current crypto's IMO. We can only hope this occurs sooner rather than later as the impact on our economy of this crypto K.O. would only increase as crypto popularity increases. Other hits to bitcoin simply weren't fatal because these things take time to mature. The scarcity argument was somewhat valid at the time and structural issues were still under the radar.  To break mania's you need the creation of a entire bullshit industry that offers enough supply to act as a counterweight to stop this pure fucking madness.

 

Looking at some behavioral issues is telling enough. For instance, most people interested in speculating in crypto's seem to be between the age of 18 and 35. Corresponds nicely with the entire adult population that was too young to experience the Dotcom mania. No, it's not that older people aren't capable of understanding Bitcoin because of age or because they lack the technological knowledge. The collective mindset of this group of people is simply more fearful and sensible. They have wised up (a little) and sooner or later an entire new generation is going to receive the same painful lesson they learned too once upon a time.

[rkbabang]

 

I can't give you an exact value, but if Bitcoin becomes what I think it will you will have 7 Billion people who want to own and use those 16M-20M coins (depending on how many you think are lost).  I don't know if the price in 10 years is $500K or $25M, but it won't be $5K unless my thesis on bitcoin is entirely wrong.  If that is the case then you probably shouldn't buy it at all as $0 would be my best guess.  I've been buying on the dips since 2014 and it has served me well building my position.  I think the real runup is going to be in the 2020s.  As we go from way less than 1% of people using/owning bitcoin to 20-40%.  Facebook has over 1 Billion users, what happens when a billion+ people want Bitcoin? I still think that there is plenty of time.  This drop will be one of many along the way.

 

 

 

Why would a billion+ people want to own bitcoin other than pure greed? It can't handle a decent amount of transaction, you have fucked up and unregulated middle men, insane transaction costs, risk of theft and loss, energy consumption issues, it is no store of value due to extreme volatility and worst of all: supply isn't limited at all. Greed driven supply will meet greed driven demand until it reaches a tipping point where supply > demand. Suddenly you will have people realizing unregulated crypto markets are far more inflationary than the centralized monetary system already in place. (A system people don't want but truly need in one way or another to keep some sanity in the financial markets.) Anyway, this dynamic will get really interesting combined with retail speculators taking on margin loans, newly created derivates multiplying the market size, ... Forced selling as sentiment shifts completely will result in a beautiful death spiral for most, if not all, current crypto's IMO. We can only hope this occurs sooner rather than later as the impact on our economy of this crypto K.O. would only increase as crypto popularity increases. Other hits to bitcoin simply weren't fatal because these things take time to mature. The scarcity argument was somewhat valid at the time and structural issues were still under the radar.  To break mania's you need the creation of a entire bullshit industry that offers enough supply to act as a counterweight to stop this pure fucking madness.

 

Looking at some behavioral issues is telling enough. For instance, most people interested in speculating in crypto's seem to be between the age of 18 and 35. Corresponds nicely with the entire adult population that was too young to experience the Dotcom mania. No, it's not that older people aren't capable of understanding Bitcoin because of age or because they lack the technological knowledge. The collective mindset of this group of people is simply more fearful and sensible. They have wised up (a little) and sooner or later an entire new generation is going to receive the same painful lesson they learned too once upon a time.

 

You could be right about the death spiral leading to a mega crash and the generational thing, although I'm old enough to remember 2000.  But I don't see how you think there could be an increase in supply?  How do you see that happening?  Again, if someone or some cartel tries to change bitcoin into something else they will need to fork it and their fork will likely be worthless, or at least worth a lot less.  Look at Bitcoin Gold for an example of something forking off and I believe is going to zero.  There will be so much at stake that people will keep the original Bitcoin blockchain going regardless of who tries to get greedy and fork off a different version which works differently.  Explain how someone gets away with changing it and inflating it, because I just don't see how that's possible.

 

[SharperDingaan]

The 18-35's are going to get burned, and there is not going to be a 'rescue'.

Bitcoin is this generations 'dot com', it will end the same way the dot com era ended, and CB's have an enormous incentive to stay out. CB's have not imposed market 'discipline' since the collapse of LB in 2008 (10 years), and need the bunnies to learn 'moral hazard' the hard way.

 

Too many people have zero experience with what life is like - when there isn't a 'once in a lifetime' CB put on the economy.

Hard to see how they do not get a lesson.

 

SD

 

[Valuehalla]

While the Omaha Vatican is preparing for the ultimate holy St. Elephants day, we shall not forget to salute the outstanding bitcoin investors with a new x-mas song "Burn Bitcoin Burn"

 

 

Pope & Potus, our the dreamteam for 2018 MAGA MAGA MAGA

 

 

 

 

[SnarkyPuppy]

There continues to be a massive disconnect between two (very general) groups of people:

 

- Those who have spent a significant amount of time understanding the benefits of the underlying innovation (simple combination of incentives/game theory and cryptography) and identifying areas where the fact patterns of that innovation (scarcity, reliability, transferability, immutability, and fungibility) provide incremental value in comparison to existing markets/conditions/assets.   

- Those who have spent minimal time analyzing these fact patterns while simultaneously taking definitive stances on the overall implications of these assets based on the fact that: a) the types of people who have bought into bubbles in the past have bought into crypto, b) recent substantial increases in absolute price are consistent with patterns recognized in prior bubbles, c) focusing on the current volatility/market size/transaction speed/cost and not extrapolating where things will be in 10-20 years.  Among others.   

 

My opinion is there is heavy bias involved here - primarily recency bias but many others exist.  When I first learned about crypto, I had the same reaction as everyone else - bubble, stupid, pointless, no intrinsic value, people are going to be taught a lesson - but these opinions were not high conviction opinions resulting from thoughtful analysis.  A large percentage of bitcoin bears are misunderstanding (or haven't bothered to even try to understand) the most basic elements of its structure (e.g. supply).

 

I think we can all agree that when seemingly everyone is playing a game of opinion telephone, there sometimes exists

opportunity.  Not the best example- but everyone is familiar with the odds of Trump becoming president back in mid/late 2015-  most disclaimed any potential favorable outcome of Trump becoming president as "absolutely ridiculous" while a few people took the time to think through why the fact patterns of Trump's disposition and strong persuasive skills ('Influence' anyone?) may be heavily influential in the current political environment.  Things are not always going to play out as they immediately seem, and it's a mistake to dismiss everything based on immediate hunches.  With that said, it's fine to not have an opinion, but I think most are starting from a position of bitcoin=worthless and working backwards from that conclusion.  I think there's some value here, everyone is playing opinion telephone, and there remains great asymmetry between the current price and the eventual bull thesis price. 

 

I have not heard a solid argument as to why bitcoin will not replace gold as a flight-to-safety store-of-value.  Gold's physicality is not what makes it valuable.  Gold is inherently speculative. Bitcoin is volatile today but this is largely irrelevant - the question is would Bitcoin be volatile as a $7tn asset?  People hold gold as a hedge against the current financial system/fiat currency - if you follow this through to it's logical extension, we would have a society where gold is used as a primary payment system through physical barter - this worked hundreds of years ago when societies were localized prior to the innovations of telephones and the internet, but becomes increasingly inefficient (and even a "con") when compared to bitcoin which requires no physical movement.

 

This isn't a 100% home run.  It's probably even < 50% chance of happening.  But it's absolutely >0%.  Betting on asymmetric +EV probabilistic outcomes where there is variant perception against telephone opinions will do well long term.  I'm sure many will continue to post the spot price of bitcoin in 2 months if it drops 80%, but this is no different from the grandma buying bitcoin because it has gone up 15x in a year.    It's a very long term binary outcome (IMO).    No margin of safety though, so it has to be a small position in the designated speculative bucket of a portfolio.   

 

In the short term, short of some major event (which is definitely probable), wall street is going to flood the spot bitcoin price with liquidity. 

 

I'm not a zealot though - this just continues to be a strong probabilistic bet.  Munger criticizing it gives me pause as he preaches not having an opinion on something until you understand it in great detail.  Either he hasn't done his homework this time, or he has and he's fearful that consensus changes the supply limit if the deflationary aspects of limited supply result in a spiral, causing consensus to agree its in the best interests to modify the 21mm limit.  This only happens at a much higher price than todays. 

 

Last disclaimer:  I'm wrong sometimes, and SD (who is demonstrably more thoughtful than me in general + much more informed on the granular aspects of blockchain than me) is increasingly a bear at current prices.  This also gives me pause. 

[SnarkyPuppy]

The argument is very simple, but you likely won't listen to it.

 

Why bitcoin? Why does bitcoin have a value (to replace gold or otherwise)? Why not LiteCoin, BitCoinCash, BitCoinAnotherForkAnotherCash, EtherCoin, NotACoin, FufuCoin, GoldCoin, PlatinumSelectCoin, Cryptokitties, Cryptobunnies, etc? Is there a Earthwide (Galaxy-wide?) authority that says that Bitcoin is somehow special and should have value and should replace gold/whatever? Or do you believe that somehow the bitcoin is sacred and therefore everyone on Earth will continue to value it because of its limited number? There are tons of things that have limited number. There are and will be tons of crypto-somethings that have limited number. Some of these could have even more limited number than Bitcoin. And they may have better properties than bitcoin. And they might even have cryptokitties attached to them... The fact that bitcoin was first crypto-something and blessed by Satoshi does not make it special... or perhaps it does in the eyes of believers. But it's not.

 

You are relying on first-mover advantage. And it may work (for some time?) because right now it's hard(er) for Joe Dollar or Xi Yuan to buy other cryptosomethings with their real-world money . But if someone seriously pushed AnotherCoin into cryptomarkets with attractive properties, both Jane and Chan will flee to it without a second thought that somehow Bitcoin was sacred just a month ago. Let me give someone entrepreneural an idea. What about a crypto-something that earns interest based on cryptocontract? Ohhh. That would make it attractive to people, no? Why not that instead of Bitcoin? (Yeah, a bunch of ICOs are kinda pushing a tale of possible future returns, so it's not completely new idea).

 

Anyway, this is it. This message will self destruct in .... cause I hate spending time giving arguments to people who likely don't want to listen to arguments.

 

Appreciate the condescending reply - the tone immediately made me realize how everything I wrote is silly and outright stupid.  Can you please send me a list of your investments so I can just clone you?

 

Network effect is probably in the top 3 requirements for a store of value asset.  Bitcoin is currently winning the network effect game.  Once again, I'm not a zealot and my opinions will grow as facts change.  I hold some of the smaller coins in crypto as an effective hedge on bitcoin losing its current network effect status. 

 

And great idea with the interest earning crypto-asset.  Must be nice to be able to just come up with million/billion dollar ideas on the spot and not act on it.    I would advise that you create this - but I hate spending time giving advice to people who don't want to follow it.

[Jurgis]

As expected.

[SnarkyPuppy]

Ditto.

[Gregmal]

The argument is very simple, but you likely won't listen to it.

 

Why bitcoin? Why does bitcoin have a value (to replace gold or otherwise)? Why not LiteCoin, BitCoinCash, BitCoinAnotherForkAnotherCash, EtherCoin, NotACoin, FufuCoin, GoldCoin, PlatinumSelectCoin, Cryptokitties, Cryptobunnies, etc? Is there a Earthwide (Galaxy-wide?) authority that says that Bitcoin is somehow special and should have value and should replace gold/whatever? Or do you believe that somehow the bitcoin is sacred and therefore everyone on Earth will continue to value it because of its limited number? There are tons of things that have limited number. There are and will be tons of crypto-somethings that have limited number. Some of these could have even more limited number than Bitcoin. And they may have better properties than bitcoin. And they might even have cryptokitties attached to them... The fact that bitcoin was first crypto-something and blessed by Satoshi does not make it special... or perhaps it does in the eyes of believers. But it's not.

 

You are relying on first-mover advantage. And it may work (for some time?) because right now it's hard(er) for Joe Dollar or Xi Yuan to buy other cryptosomethings with their real-world money . But if someone seriously pushed AnotherCoin into cryptomarkets with attractive properties, both Jane and Chan will flee to it without a second thought that somehow Bitcoin was sacred just a month ago. Let me give someone entrepreneural an idea. What about a crypto-something that earns interest based on cryptocontract? Ohhh. That would make it attractive to people, no? Why not that instead of Bitcoin? (Yeah, a bunch of ICOs are kinda pushing a tale of possible future returns, so it's not completely new idea).

 

Anyway, this is it. This message will self destruct in .... cause I hate spending time giving arguments to people who likely don't want to listen to arguments.

 

Appreciate the condescending reply - the tone immediately made me realize how everything I wrote is silly and outright stupid.  Can you please send me a list of your investments so I can just clone you?

 

Network effect is probably in the top 3 requirements for a store of value asset.  Bitcoin is currently winning the network effect game.  Once again, I'm not a zealot and my opinions will grow as facts change.  I hold some of the smaller coins in crypto as an effective hedge on bitcoin losing its current network effect status. 

 

And great idea with the interest earning crypto-asset.  Must be nice to be able to just come up with million/billion dollar ideas on the spot and not act on it.    I would advise that you create this - but I hate spending time giving advice to people who don't want to follow it.

 

In response to Jurgis, the answer is, I don't know. But I also don't know why gold? vs why silver, vs why palladium, vs why granite? vs why limestone. I don't really need to know or understand to know that they have a value in the market. The internet and tech in general have shown to be a way of the future. Internet real estate, which takes the form of domain names, has shown to be just as valuable as tangible dirt and soil real estate. Why? again I am not an expert and do not know. The only question one should be concerned with, has to do with whether it is sustainable. I have started to believe it might be.

[Spekulatius]

The argument is very simple, but you likely won't listen to it.

 

Why bitcoin? Why does bitcoin have a value (to replace gold or otherwise)? Why not LiteCoin, BitCoinCash, BitCoinAnotherForkAnotherCash, EtherCoin, NotACoin, FufuCoin, GoldCoin, PlatinumSelectCoin, Cryptokitties, Cryptobunnies, etc? Is there a Earthwide (Galaxy-wide?) authority that says that Bitcoin is somehow special and should have value and should replace gold/whatever? Or do you believe that somehow the bitcoin is sacred and therefore everyone on Earth will continue to value it because of its limited number? There are tons of things that have limited number. There are and will be tons of crypto-somethings that have limited number. Some of these could have even more limited number than Bitcoin. And they may have better properties than bitcoin. And they might even have cryptokitties attached to them... The fact that bitcoin was first crypto-something and blessed by Satoshi does not make it special... or perhaps it does in the eyes of believers. But it's not.

 

You are relying on first-mover advantage. And it may work (for some time?) because right now it's hard(er) for Joe Dollar or Xi Yuan to buy other cryptosomethings with their real-world money . But if someone seriously pushed AnotherCoin into cryptomarkets with attractive properties, both Jane and Chan will flee to it without a second thought that somehow Bitcoin was sacred just a month ago. Let me give someone entrepreneural an idea. What about a crypto-something that earns interest based on cryptocontract? Ohhh. That would make it attractive to people, no? Why not that instead of Bitcoin? (Yeah, a bunch of ICOs are kinda pushing a tale of possible future returns, so it's not completely new idea).

 

Anyway, this is it. This message will self destruct in .... cause I hate spending time giving arguments to people who likely don't want to listen to arguments.

 

Appreciate the condescending reply - the tone immediately made me realize how everything I wrote is silly and outright stupid.  Can you please send me a list of your investments so I can just clone you?

 

Network effect is probably in the top 3 requirements for a store of value asset.  Bitcoin is currently winning the network effect game.  Once again, I'm not a zealot and my opinions will grow as facts change.  I hold some of the smaller coins in crypto as an effective hedge on bitcoin losing its current network effect status. 

 

And great idea with the interest earning crypto-asset.  Must be nice to be able to just come up with million/billion dollar ideas on the spot and not act on it.    I would advise that you create this - but I hate spending time giving advice to people who don't want to follow it.

 

In response to Jurgis, the answer is, I don't know. But I also don't know why gold? vs why silver, vs why palladium, vs why granite? vs why limestone. I don't really need to know or understand to know that they have a value in the market. The internet and tech in general have shown to be a way of the future. Internet real estate, which takes the form of domain names, has shown to be just as valuable as tangible dirt and soil real estate. Why? again I am not an expert and do not know. The only question one should be concerned with, has to do with whether it is sustainable. I have started to believe it might be.

 

Palladium and silver are valuable as well, because they are used as a store of value (silver) and have industrial uses (Palladium is a catalysator metal). Platinum also has industrial uses and is also more expensive than Gold. All of the above are rare in the earth crust and expensive to mine.

 

Gold is pretty to look at (shiny yellow color) is non corrosive and easily malleable,which made it the metal of choice for precious things since many thousand years ago. One can argue about the value to store wealth in it, but the above will always make it worth something. In a time of crisis, it has proven to be an enduring way for means of exchange (also in WW2 for example, cigarettes in Germany worked better).

 

I don’t think that crypto currencies, which can easily be replaced with another crypto currency's,  have the same durable aspects to it than the above. It is not even clear to me that in the time of a real crisis, you will have access to internet or a computer. What would a crypto currency be worth in such a case? I think this aspect to important for those that want to have a vehicle to store wealth. Right now, it seems to me that Crypocurrencies is just a bet that more suckers will be drawn into it in the near term future, just like buying internet stocks in Y1999 or even gold in Y1980.

 

[SharperDingaan]

The vast majority of people have no idea what Bitcoin is; but know that you can bet on it, make a lot of money, and look really cool. Just as you don't need to know how a calculator works, in order to use it - the same thing applies to Bitcoin. Simply be able to cite a few buzzwords, pull up a price (at any time) on your smart phone, think quick, and possess the 'gift of the gab'.

 

Most more knowledgeable crypto investors see only the mining process, because it is the source of new coin. To them there is only one way, it is the distributed ledger, and it allows you to create and sell your own 'money' through an ICO. The reality is that we have always been able to create and sell our own 'money' - we just call it loyalty points; and almost all crypto applications would run a lot more effectively on a database versus a distributed ledger.

 

To many, a Bitcoin is an asset class - because the taxman says it will be taxed as though it were an asset; the same way that a bond is rated as 'investment grade' because the rating agency says it is. A bond produces a cash flow of interest, a property produces a rental cash flow, a patent produces a royalty stream, a project or piece of machinery produces a future benefit, a bitcoin - produces squat. It's the 'magic' asset.

 

As Gekko (Wall Street) likes to say ....

You're walking around blind without a cane, pal. A fool and his money are lucky enough to get together in the first place.

 

SD

 

 

 

[SnarkyPuppy]

The argument is very simple, but you likely won't listen to it.

 

Why bitcoin? Why does bitcoin have a value (to replace gold or otherwise)? Why not LiteCoin, BitCoinCash, BitCoinAnotherForkAnotherCash, EtherCoin, NotACoin, FufuCoin, GoldCoin, PlatinumSelectCoin, Cryptokitties, Cryptobunnies, etc? Is there a Earthwide (Galaxy-wide?) authority that says that Bitcoin is somehow special and should have value and should replace gold/whatever? Or do you believe that somehow the bitcoin is sacred and therefore everyone on Earth will continue to value it because of its limited number? There are tons of things that have limited number. There are and will be tons of crypto-somethings that have limited number. Some of these could have even more limited number than Bitcoin. And they may have better properties than bitcoin. And they might even have cryptokitties attached to them... The fact that bitcoin was first crypto-something and blessed by Satoshi does not make it special... or perhaps it does in the eyes of believers. But it's not.

 

You are relying on first-mover advantage. And it may work (for some time?) because right now it's hard(er) for Joe Dollar or Xi Yuan to buy other cryptosomethings with their real-world money . But if someone seriously pushed AnotherCoin into cryptomarkets with attractive properties, both Jane and Chan will flee to it without a second thought that somehow Bitcoin was sacred just a month ago. Let me give someone entrepreneural an idea. What about a crypto-something that earns interest based on cryptocontract? Ohhh. That would make it attractive to people, no? Why not that instead of Bitcoin? (Yeah, a bunch of ICOs are kinda pushing a tale of possible future returns, so it's not completely new idea).

 

Anyway, this is it. This message will self destruct in .... cause I hate spending time giving arguments to people who likely don't want to listen to arguments.

 

Appreciate the condescending reply - the tone immediately made me realize how everything I wrote is silly and outright stupid.  Can you please send me a list of your investments so I can just clone you?

 

Network effect is probably in the top 3 requirements for a store of value asset.  Bitcoin is currently winning the network effect game.  Once again, I'm not a zealot and my opinions will grow as facts change.  I hold some of the smaller coins in crypto as an effective hedge on bitcoin losing its current network effect status. 

 

And great idea with the interest earning crypto-asset.  Must be nice to be able to just come up with million/billion dollar ideas on the spot and not act on it.    I would advise that you create this - but I hate spending time giving advice to people who don't want to follow it.

 

In response to Jurgis, the answer is, I don't know. But I also don't know why gold? vs why silver, vs why palladium, vs why granite? vs why limestone. I don't really need to know or understand to know that they have a value in the market. The internet and tech in general have shown to be a way of the future. Internet real estate, which takes the form of domain names, has shown to be just as valuable as tangible dirt and soil real estate. Why? again I am not an expert and do not know. The only question one should be concerned with, has to do with whether it is sustainable. I have started to believe it might be.

 

Palladium and silver are valuable as well, because they are used as a store of value (silver) and have industrial uses (Palladium is a catalysator metal). Platinum also has industrial uses and is also more expensive than Gold. All of the above are rare in the earth crust and expensive to mine.

 

Gold is pretty to look at (shiny yellow color) is non corrosive and easily malleable,which made it the metal of choice for precious things since many thousand years ago. One can argue about the value to store wealth in it, but the above will always make it worth something. In a time of crisis, it has proven to be an enduring way for means of exchange (also in WW2 for example, cigarettes in Germany worked better).

 

I don’t think that crypto currencies, which can easily be replaced with another crypto currency's,  have the same durable aspects to it than the above. It is not even clear to me that in the time of a real crisis, you will have access to internet or a computer. What would a crypto currency be worth in such a case? I think this aspect to important for those that want to have a vehicle to store wealth. Right now, it seems to me that Crypocurrencies is just a bet that more suckers will be drawn into it in the near term future, just like buying internet stocks in Y1999 or even gold in Y1980.

 

This is the consensus view.  Money is made by having a variant view on consensus (and being right, of course).  Price has gone up tremendously, but <1% of the world uses bitcoin and the liquidity pales in comparison to what it will be if even a 100bps of wall street/pensions start buying it. 

[Cardboard]

I find interesting the comparison to gold and that somehow it will be a competitor. So it should be mostly a zero sum game amongst people who already fear the collapse of the dollar and the government taking over, no?

 

By the way, how many of you who own bitcoins have ever held physical gold?

 

As one who did, I can tell you that I never felt the frustration of not being able to access my account. You do fear at time being stolen but, that is it. My brokerage account is down currently or the same kind of crap that some bitcoins owners have experienced recently. This is not how you build a sense of security around an asset that should be there when you need it most.

 

Nah. The real reason that people talk about bitcoins right now is that returns have been phenomenal this year and nothing else. Go back to 2015 or 2016 and try to look up how many posts on bitcoins on this website during that time period? How many trying to justify bitcoins as a new asset, certain to become a store of value? Where were these thesis that we hear now?

 

Cardboard

[rkbabang]

I find interesting the comparison to gold and that somehow it will be a competitor. So it should be mostly a zero sum game amongst people who already fear the collapse of the dollar and the government taking over, no?

 

By the way, how many of you who own bitcoins have ever held physical gold?

 

As one who did, I can tell you that I never felt the frustration of not being able to access my account. You do fear at time being stolen but, that is it. My brokerage account is down currently or the same kind of crap that some bitcoins owners have experienced recently. This is not how you build a sense of security around an asset that should be there when you need it most.

 

Nah. The real reason that people talk about bitcoins right now is that returns have been phenomenal this year and nothing else. Go back to 2015 or 2016 and try to look up how many posts on bitcoins on this website during that time period? How many trying to justify bitcoins as a new asset, certain to become a store of value? Where were these thesis that we hear now?

 

Cardboard

 

2014-2016 is when I formed all of my opinions on crypto and also when I bought the vast majority of my holdings. I purchased very little in 2017 as I kept waiting for it to come back down.

[Libs]

<This isn't a 100% home run.  It's probably even < 50% chance of happening.  But it's absolutely >0%.  Betting on asymmetric +EV probabilistic outcomes where there is variant perception against telephone opinions will do well long term.>

 

This is the core of the issue. The bears, if they've even thought about it this way, must be assigning virtually zero chance of BTC becoming embedded in the financial system.

 

I disagree, and am actually heartened by the bears' outnumbering bulls so vastly ( and by their general vitriol).

 

This boils down to your gambling sense, IMO.

 

Nice posts Snarky.

[Cardboard]

"I disagree, and am actually heartened by the bears' outnumbering bulls so vastly ( and by their general vitriol)."

 

Another fine piece of logic: if more people are skeptical then it must be a good investment.

 

Gotta love it!

 

Cardboard

[SnarkyPuppy]

"I disagree, and am actually heartened by the bears' outnumbering bulls so vastly ( and by their general vitriol)."

 

Another fine piece of logic: if more people are skeptical then it must be a good investment.

 

Gotta love it!

 

Cardboard

 

I know right-  it almost reminds me of those who look at the recent price moves and immediately conclude bubble.

[rkbabang]

"I disagree, and am actually heartened by the bears' outnumbering bulls so vastly ( and by their general vitriol)."

 

Another fine piece of logic: if more people are skeptical then it must be a good investment.

 

Gotta love it!

 

Cardboard

 

I know right-  it almost reminds me of those who look at the recent price moves and immediately conclude bubble.

 

Everyone knows it’s a bubble, so it must be one.  Right?

[DeepSouth]

 

Very good stuff in this blogpost.

Thanks for posting.

 

SD

 

You're welcome.

 

@DeepSouth can you understand you're a masochist from my point of view? Anyway, let's just all vote with our wallets and things will work out at some point :)

 

I honestly don't understand your point of view. I'd say the empirical end result of your policy desires leads to decade long depressions and wild and violent swings in inflation and deflation. It's not masochism to desire an entity with the power to smooth out economic cycles and encourage growth. The federal reserve is one of the few things the US government gets mostly right. If you're terrified of your savings being withered away by low single digit inflation but don't want principal risk for your savings buy TIPS.

 

I own bitcoin because I think the risk/reward is fair from here even though I think most bullish arguments for bitcoin are very stupid.

 

The policy of the last ~120 years led to huge bubbles and (long! 20+ years at times) subsequent recesions while an organic market won't have recesions lasting longer than a few years. I concider loving that ewuivalent with loving pain.

 

On top of that an organic market rewards its participants more fairly in the sense that good decisions lead to financial reward while the current system rewards having the right contacts at the policy maker for the most part.

 

There have been no recessions that lasted 20 years this century, and I just pointed out an example of a decade long depression that occurred in the final decades leading up to the creation of the federal reserve. Per capita real GDP fell 10% over a decade in the US in the latter part of the 1800s. There were massive bubbles before the Federal Reserve (see canals, railroads). These are the facts, you are empirically incorrect, it's not up for debate. Is your persona/feelings so tied up in libertarianism ideology that you are unwilling to use reason and view the world through a historic and empirical prism?

 

Lastly, the idea that most successful people achieved success through inside contacts at the Federal Reserve is a wildly bizarre conspiracy theory that makes no sense.

 

Sept. 3, 1929 until Nov. 23, 1954 is not more than 20 years. Okay, I guess I must suck at math......

 

https://fred.stlouisfed.org/series/GDPCA

 

Real US GDP more than doubled between 1929 and 1954. What kind of insane garbage are you stuffing your head with?

[wachtwoord]

 

Very good stuff in this blogpost.

Thanks for posting.

 

SD

 

You're welcome.

 

@DeepSouth can you understand you're a masochist from my point of view? Anyway, let's just all vote with our wallets and things will work out at some point :)

 

I honestly don't understand your point of view. I'd say the empirical end result of your policy desires leads to decade long depressions and wild and violent swings in inflation and deflation. It's not masochism to desire an entity with the power to smooth out economic cycles and encourage growth. The federal reserve is one of the few things the US government gets mostly right. If you're terrified of your savings being withered away by low single digit inflation but don't want principal risk for your savings buy TIPS.

 

I own bitcoin because I think the risk/reward is fair from here even though I think most bullish arguments for bitcoin are very stupid.

 

The policy of the last ~120 years led to huge bubbles and (long! 20+ years at times) subsequent recesions while an organic market won't have recesions lasting longer than a few years. I concider loving that ewuivalent with loving pain.

 

On top of that an organic market rewards its participants more fairly in the sense that good decisions lead to financial reward while the current system rewards having the right contacts at the policy maker for the most part.

 

There have been no recessions that lasted 20 years this century, and I just pointed out an example of a decade long depression that occurred in the final decades leading up to the creation of the federal reserve. Per capita real GDP fell 10% over a decade in the US in the latter part of the 1800s. There were massive bubbles before the Federal Reserve (see canals, railroads). These are the facts, you are empirically incorrect, it's not up for debate. Is your persona/feelings so tied up in libertarianism ideology that you are unwilling to use reason and view the world through a historic and empirical prism?

 

Lastly, the idea that most successful people achieved success through inside contacts at the Federal Reserve is a wildly bizarre conspiracy theory that makes no sense.

 

Sept. 3, 1929 until Nov. 23, 1954 is not more than 20 years. Okay, I guess I must suck at math......

 

https://fred.stlouisfed.org/series/GDPCA

 

Real US GDP more than doubled between 1929 and 1954. What kind of insane garbage are you stuffing your head with?

 

That's how long it took the market to recover. That's not healthy.