Bitcoin is funny money

[talltexan]

A -20% day is possible on any day for Bitcoin. The minor currencies seem to be much more volatile.

But if you've been in them for any length of time, you're probably up right now. So why not take out your original stake and only leave the profit at risk?

[firemane]

Props to BTC , approaching 50k.  Suddenly the insane calls for the $100k in 5 years are looking much better than the down to $1 calls.  I feel like crap for getting out early...

I had AMD as a penny and sold at around $8 per share.... it happens

[Syonyk]

I'm more interested in Diem, formerly Libra. Facebook is looking bad in the media, so that hurts,  but they still have a massive userbase. (FB, Instagram, Whatsapp). It's dollar-pegged, not to a global currency basket like Libra, which sucks but better than stupid volatile

Ah, they renamed themselves.  I'd seen something about Diem the other day and it sounded exceedingly similar to Libra.

I personally don't think "Facebook having more control and data" is a good idea in any form, though.

[bermudasq]

I have 5% of my holdings in crypto and I'm just as confident in my crypto as I am in any of my other riskier assets, principally stock options.  Just hit $1 mil net worth today (whoohoo) largely based on MMM principals (which is why I'm browsing the forums today), but I'm still in the asset accumulation stage, so I'm keeping my fingers in lots of pies.  I personally think BTC is going to $1 million in ten years, and people will start trading a smaller unit of BTC, but I know I'm in the tiny minority.  If it goes to $0, it's not a big deal.  Diversification is key.

[MustacheAndaHalf]

Bitcoin can go to zero if nobody uses it, and nobody invests in it (like when it's inventor first mined a million Bitcoin).  But the S&P 500 can't go to zero - the companies assets are worth trillions.  I think those are different risk categories.

In the past 5 days, BTC-USD has gone up +26.52%.  The main news story I see is Elon Musk directing Tesla to buy $1.5 billion BTC, and allowing their cars to be purchased with BTC.  It's even the story on crypto websites, so there doesn't seem to be something else driving it - just a purchase that already happened.  The market cap of BTC-USD (according to Yahoo Finance) is $869 billion, which means the 26.5% rise added $180 billion of value.

Tesla had $28 billion in sales last year - will 3% of that be in Bitcoin this year?  Buying less than $1 billion in Teslas, with BTC, means BTC is worth $180 billion more?

[onecoolcat]

A -20% day is possible on any day for Bitcoin. The minor currencies seem to be much more volatile.

But if you've been in them for any length of time, you're probably up right now. So why not take out your original stake and only leave the profit at risk?

There WILL be multiple 30-40% drops before Bitcoin goes to $100k and that is A-OK.  Just put up with a few “IT HAS BEGUN” memes from nocoiners and then laugh your way all the way to bank with the funny money when it averages 200% gains over the next couple years (even if it dumps 70% from the top).

[onecoolcat]

Bitcoin can go to zero if nobody uses it, and nobody invests in it (like when it's inventor first mined a million Bitcoin).  But the S&P 500 can't go to zero - the companies assets are worth trillions.  I think those are different risk categories.

In the past 5 days, BTC-USD has gone up +26.52%.  The main news story I see is Elon Musk directing Tesla to buy $1.5 billion BTC, and allowing their cars to be purchased with BTC.  It's even the story on crypto websites, so there doesn't seem to be something else driving it - just a purchase that already happened.  The market cap of BTC-USD (according to Yahoo Finance) is $869 billion, which means the 26.5% rise added $180 billion of value.

Tesla had $28 billion in sales last year - will 3% of that be in Bitcoin this year?  Buying less than $1 billion in Teslas, with BTC, means BTC is worth $180 billion more?

Make no mistake, an S&P 500 company revealing it invested a portion of its cash reserves into BITCOIN, and also to reveal plans to accept it as a currency, is a MASSIVE story.  It’s a tremendous vote of confidence and just further supports the clear direction of where this thing is going. 

[onecoolcat]

Bitcoin can go to zero if nobody uses it, and nobody invests in it (like when it's inventor first mined a million Bitcoin).  But the S&P 500 can't go to zero - the companies assets are worth trillions.  I think those are different risk categories.

In the past 5 days, BTC-USD has gone up +26.52%.  The main news story I see is Elon Musk directing Tesla to buy $1.5 billion BTC, and allowing their cars to be purchased with BTC.  It's even the story on crypto websites, so there doesn't seem to be something else driving it - just a purchase that already happened.  The market cap of BTC-USD (according to Yahoo Finance) is $869 billion, which means the 26.5% rise added $180 billion of value.

Tesla had $28 billion in sales last year - will 3% of that be in Bitcoin this year?  Buying less than $1 billion in Teslas, with BTC, means BTC is worth $180 billion more?

Make no mistake, an S&P 500 company revealing it invested a portion of its cash reserves into BITCOIN, and also to reveal plans to accept it as a currency, is a MASSIVE story.  It’s a tremendous vote of confidence and just further supports the clear direction of where this thing is going.

Well, yeah, except for the fact that it's Elon Musk.   At a certain point, the wizard is going to be seen very differently than he seems to be right now, though admittedly that certain point is not today.

Regardless of what Elon’s legacy will be, which I’m not going to predict, I think TSLA is just the first of many S&P 500 companies that will do the prudent thing and put a portion of their cash reserves into Bitcoin.  In my opinion, it is too risky for these tech companies not to have a small stake in Bitcoin right now. 

[lifeanon269]

Well I guess we should all buy into BTC now because Elon said so. Maybe buy some Dogecoin as well.

No matter how many companies add BTC to their sheets, BTC's fundamental is just its price... in USD. And it's unsustainable unfortunately. Maybe the price increase drags on for a while on "good news", but at some point there will be a big selloff in the -90% numbers. People want profit before it's to late... in USD, not bitcoin. Investors (fans) optimism turns into pessimism and suddenly the future of bitcoin looks dark.

It is funny that people say "all bitcoin supporters ever say is that the critics just don't get it" and yet there are comments like these that continue to be posted and said all over the place that clearly just don't get it. Bitcoin's fundamentals aren't its price. It's price is a result of its fundamentals. Nothing about its price makes bitcoin "unsustainable". That's not to say there isn't speculation taking place, but if you think speculation is bitcoin's "fundamentals", then you're mistaken in that regard.

What makes bitcoin important is that it gives anyone the freedom to receive bitcoin at any time of day without compromising the right to your privacy and without discrimination. What makes bitcoin important is that it gives anyone the freedom to hold bitcoin no matter who your are without anyone else having the ability to dilute the supply of what it is you're holding. Holding bitcoin has vast improvements over many things today, both physical and digital. What makes bitcoin important is that it gives anyone the freedom to send that bitcoin to anyone anywhere in the world across a global decentralized network without interference from any third-party.

The fact that its price is rising doesn't mean that its "fundamentals" is price discovery alone, but that its remarkable price discovery in the market is the greater and greater realization from many across the entire world that having a monetary network with those [real] fundamentals that I mentioned above is incredibly valuable because there is nothing else like it in existence.

[tarheeldan]

All the Altcoins would beg to differ

[lifeanon269]

All the Altcoins would beg to differ

If you understand why pyrite is not gold even though they're both metals but don't understand why altcoins are not bitcoin despite both being "cryptocurrencies", then I suggest you do more research. I've written plenty about that already, in fact, here on these forums.

[bermudasq]

All the Altcoins would beg to differ

In the current cycle, ETH is due to increase at a faster rate than BTC in the near term.  Its price usually increases shortly after a BTC run. Its 'fundamentals' are strong as well.  It's a building block upon which many partners and relationships are stacked. 

[Wrenchturner]

Every investment class seems very expensive right now.  So I hold my nose and buy anyway.  Similarly with crypto although I believe its credibility is rising. 

As long as the supply of paper currency(including the world reserve currency) is accelerating, in a low-interest environment, there is little reason to believe that bitcoin(or any scarce asset class) will drop in price.

It's a matter of relative confidence, and I believe crypto is looking better by the day. 

It may still get neutered through regulation though.  I am holding $BIGG.

[celerystalks]

All the Altcoins would beg to differ

If you understand why pyrite is not gold even though they're both metals but don't understand why altcoins are not bitcoin despite both being "cryptocurrencies", then I suggest you do more research. I've written plenty about that already, in fact, here on these forums.

Pyrite isn’t a metal. It’s a metal sulfide. I suggest you do more research.

[onecoolcat]

Every investment class seems very expensive right now.  So I hold my nose and buy anyway.  Similarly with crypto although I believe its credibility is rising. 

As long as the supply of paper currency(including the world reserve currency) is accelerating, in a low-interest environment, there is little reason to believe that bitcoin(or any scarce asset class) will drop in price.

It's a matter of relative confidence, and I believe crypto is looking better by the day. 

It may still get neutered through regulation though.  I am holding $BIGG.

Bitcoin will absolute sustain big drops in the short term.  It happens multiple times every bull run so you have to expect it.  It’s a natural part of Bitcoins growth; it comes with the volatility.  As such, I fully expect we will experience drops of 30-40% again in 2021.  Does that mean you shouldn’t buy?  Absolutely not.  You should follow the same advise as you do with your Ira/401k/brokerage accounts - DCA in through the highs and lows.

[Wrenchturner]

Every investment class seems very expensive right now.  So I hold my nose and buy anyway.  Similarly with crypto although I believe its credibility is rising. 

As long as the supply of paper currency(including the world reserve currency) is accelerating, in a low-interest environment, there is little reason to believe that bitcoin(or any scarce asset class) will drop in price.

It's a matter of relative confidence, and I believe crypto is looking better by the day. 

It may still get neutered through regulation though.  I am holding $BIGG.

Bitcoin will absolute sustain big drops in the short term.  It happens multiple times every bull run so you have to expect it.  It’s a natural part of Bitcoins growth; it comes with the volatility.  As such, I fully expect we will experience drops of 30-40% again in 2021.  Does that mean you shouldn’t buy?  Absolutely not.  You should follow the same advise as you do with your Ira/401k/brokerage accounts - DCA in through the highs and lows.

Interesting, we shall see.  I would be surprised by a 30% drop in anything right now, except some non-USD currencies I guess.

[lifeanon269]

Pyrite isn’t a metal. It’s a metal sulfide. I suggest you do more research.

I stand corrected, but that's beside the point I was making. Looks like it is a sulfide mineral. But I don't claim to be an expert geologist and would not dare debate such things that I don't know anything about. So that's about as far as I would take it and would yield to just about anyone on geological matters since just about anyone would have more expertise than I. But again, that doesn't change the point I was making which was more a half attempt at an analogy to illustrate the greater point even if I missed on the specifics on the geology side of said analogy.

[effigy98]

Thank you FUNNY MONEY for hitting my FI number today.

[bermudasq]

Thank you FUNNY MONEY for hitting my FI number today.

Congratulations!  The surge in my crypto portfolio took me over the $1 million mark yesterday.  But, I'm not selling.  ETH could hit $5k or more in this bull cycle.  Same price structure as BTC when BTC had the same number of active addresses.  And BTC is heading to the moon in the next ten years.

[talltexan]

I remember early 2018 when Ether was worth about 0.1 Bitcoin. Since then it's been outrun by Bitcoin to the tune 3x. Do you expect it to close that gap?

[Wrenchturner]

I remember early 2018 when Ether was worth about 0.1 Bitcoin. Since then it's been outrun by Bitcoin to the tune 3x. Do you expect it to close that gap?

Ethereum doesn't have a fixed quantity iirc. 

[onecoolcat]

I remember early 2018 when Ether was worth about 0.1 Bitcoin. Since then it's been outrun by Bitcoin to the tune 3x. Do you expect it to close that gap?

I do.  So much is built on Ethereum and once people really realize it it could surpass Bitcoin.

I remember early 2018 when Ether was worth about 0.1 Bitcoin. Since then it's been outrun by Bitcoin to the tune 3x. Do you expect it to close that gap?

Ethereum doesn't have a fixed quantity iirc.

Ethereum may become deflationary in the future.  Wouldn't that be something?

[Dgmp]

Can someone explain the eth prospect to me.

I was trying to play with Stablecoins to switch across exchanges, and omg the network fees coinbase said i had to pay to send USDC was unreasonable.

I’m assuming the fees tie to the price of eth, and therefore the eth value proposition goes down as the eth price goes up?  Am I understanding this right?

Long bitcoin 💎 🙌

[onecoolcat]

Can someone explain the eth prospect to me.

I was trying to play with Stablecoins to switch across exchanges, and omg the network fees coinbase said i had to pay to send USDC was unreasonable.

I’m assuming the fees tie to the price of eth, and therefore the eth value proposition goes down as the eth price goes up?  Am I understanding this right?

Long bitcoin 💎 🙌

It is very expensive to send Eth right now.  A transaction cost the equivalent of $5.  Eth has solutions to its scalability problem in development/testing (Eth2).  Eth2 will make transfers quicker and cheaper.  It also converts it to a POS coin which means it uses significantly less energy to maintain the network (no more miners).  Eth2 is already live if you opt in but your coins are effectively locked up until they hit the switch and make it the main chain (I don't know if this is the correct terminology for what they are doing).  The only reason anyone would opt in right now is that you can stake Ether on it right now; you get a headstart on staking.  The switch will be hit within the next 1-2 years.  Until then, Eth will continue to have scalability problems.  That said, I expect it to outperform Bitcoin this bullrun.

[Dgmp]

But...won’t that drive the price of eth down then?  Is not price of eth tied to fundamentally the fees people are willing to pay to transact?

[onecoolcat]

But...won’t that drive the price of eth down then?  Is not price of eth tied to fundamentally the fees people are willing to pay to transact?

It doesn't help the price but the thing about Ethereum is that it was never really intended to be used to pay and transact in the traditional sense.  Coins like Bitcoin (which has its own scalability problems) or Litecoin are more suitable for that.  Ethereum introduced "smart contracts" which opened the doors to all kinds of "decentralized applications", or dapps, that could be built on top of it.  For this reason Ethereum is more of a valuable business/financial tool.  Ethereum was the first to do what it does but it now has real solid competition from Cardano and Polkadot, both of which are top altcoins that were founded by influential Ethereum developers.  The thing is, if Ethereum/Cardano/Polkadot can do a fraction of what everyone is sure they will do then there is more than enough space for each of these projects to see near limitless growth. 

[lifeanon269]

But...won’t that drive the price of eth down then?  Is not price of eth tied to fundamentally the fees people are willing to pay to transact?

It doesn't help the price but the thing about Ethereum is that it was never really intended to be used to pay and transact in the traditional sense.  Coins like Bitcoin (which has its own scalability problems) or Litecoin are more suitable for that.  Ethereum introduced "smart contracts" which opened the doors to all kinds of "decentralized applications", or dapps, that could be built on top of it.  For this reason Ethereum is more of a valuable business/financial tool.  Ethereum was the first to do what it does but it now has real solid competition from Cardano and Polkadot, both of which are top altcoins that were founded by influential Ethereum developers.  The thing is, if Ethereum/Cardano/Polkadot can do a fraction of what everyone is sure they will do then there is more than enough space for each of these projects to see near limitless growth. 

I just don't see the value in Ethereum. It is just an inherently bad design decision to try and create a "world computer" where script processing for every manner of dapp is done by a global network. There is no need for the processing of an application for say a collectible to be performed in the same capacity as a decentralized exchange.

Bitcoin's approach to decentralized applications just makes way more sense. Take for example the Bisq decentralized exchange. It is one of the best decentralized exchanges out there and it runs its DAO secured by the bitcoin network using the op_return opcode and all other Bisq specific data is contained, processed and stored by the Bisq peer-to-peer network. This is a much more scalable design to a decentralized application as well as being much more secure (it is backed by the most secure blockchain). The op_return data can also be pruned from bitcoin nodes which keeps the blockchain data minimal and scalable. There just simply isn't any need to have separate applications' data be stored and processed by the same database and network. It isn't a scalable design decision and there will always be inherent problems with that decision. Anchor your data for the security and then run your own P2P network for the decentralization. You get the security of the most secure blockchain on the planet while maintaining scalability and functionality of whatever your application requires on its own P2P network.

Also, Bisq exchange is amazing if anyone hasn't used it yet. You keep all your personal data confidential and safe and you can buy/sell bitcoin directly P2P. I've been using it a lot lately and it has been working great. Definitely the ideal way to buy and sell bitcoin without giving up your personal data to a centralized company.

[MustacheAndaHalf]

Bitcoin can go to zero if nobody uses it, and nobody invests in it (like when it's inventor first mined a million Bitcoin).  But the S&P 500 can't go to zero - the companies assets are worth trillions.  I think those are different risk categories.

In the past 5 days, BTC-USD has gone up +26.52%.  The main news story I see is Elon Musk directing Tesla to buy $1.5 billion BTC, and allowing their cars to be purchased with BTC.  It's even the story on crypto websites, so there doesn't seem to be something else driving it - just a purchase that already happened.  The market cap of BTC-USD (according to Yahoo Finance) is $869 billion, which means the 26.5% rise added $180 billion of value.

Tesla had $28 billion in sales last year - will 3% of that be in Bitcoin this year?  Buying less than $1 billion in Teslas, with BTC, means BTC is worth $180 billion more?

Make no mistake, an S&P 500 company revealing it invested a portion of its cash reserves into BITCOIN, and also to reveal plans to accept it as a currency, is a MASSIVE story.  It’s a tremendous vote of confidence and just further supports the clear direction of where this thing is going.

Well, yeah, except for the fact that it's Elon Musk.   At a certain point, the wizard is going to be seen very differently than he seems to be right now, though admittedly that certain point is not today.

Regardless of what Elon’s legacy will be, which I’m not going to predict, I think TSLA is just the first of many S&P 500 companies that will do the prudent thing and put a portion of their cash reserves into Bitcoin.  In my opinion, it is too risky for these tech companies not to have a small stake in Bitcoin right now.

Elon Musk ordered workers back to work during lockdowns, in violation of a government mandate.  Other S&P 500 companies did not follow his lead.  He tweeted "Gamestonk" to cheer on buying GameStop, which was probably a factor in the stock rising $200 overnight.  Anyone who bought that day, near $350, has lost up to 87% of their investment... is this the person to follow for investing advice?

Putting "cash reserves into Bitcoin" is the very opposite of being prudent.  Cash reserves must be there for anticipated short term spending.  Will you grant that Bitcoin is highly volatile?  It's the very opposite of what is desired in cash reserves.

Although we disagree, I am curious about why you say "it is too risky for these tech companies not to have a small stake in Bitcoin right now".  What risk do Google and Apple take if they don't buy Bitcoin?

[lifeanon269]

Ignoring the anecdotes over Musk's behavior since I don't think that's pertinent here, I think it mostly comes down to game theory.

I would probably disagree with the idea that cash reserves are for short term spending as that is rarely the case, especially with large cap corporations. Apple has been sitting on hundreds of billions of cash for almost a decade now. Short term spending usually comes from revenue generated and cash reserves are purposed for acquisitions, strategic market pivots, and things like that. Most of those things are rarely short-term spending ventures and more larger strategic goals for the company that takes years to develop.

I don't think anyone argues against the fact that bitcoin is volatile.

So it really comes down to game theory. Is it a risk for Google or Apple to put some of their reserves into bitcoin? Absolutely. But, if one of them does take the risk, then it lowers the competitive risk for other competing companies to do the same. Mass Mutual put $100 million into bitcoin and by doing so lowered the risk for other insurance companies to do the same. After doing so, there was growing interest from other insurance companies to make the same play.

A recent survey of CFOs found that about 5% plan to buy bitcoin in 2021 with about 11% claiming to do so by 2024. That means that as more and more companies put a portion of their reserves into bitcoin, it lowers the risk for other companies in their competing market to make the same play. Then it becomes a risk against NOT putting a portion of reserves into bitcoin if this trend continues because such a trend would result in an unavoidable rise in price. So that means now your competition is gaining dominance in your market by such a move and as CFO you'd have to recognize that risk. Shareholders would also be questioning the reluctance to do so against a growing back drop of companies purchasing bitcoin. So again, it isn't so much about what the initial risk of putting money into bitcoin is but against the game theory risk of your competitors gaining a market growth advantage through such a move.

Tesla's purchase has already gained about $700 million on their purchase. Microstrategy's gains are even more absurd. The competitive advantage gained by growing your cash reserves to such an extend over such a short period of time can't be understated and from a game theory perspective, that's what masks such a move "too risky not to do." It isn't that bitcoin isn't a risk, but that by not doing so against your competitor's move to do so, puts you at a competitive disadvantage.

The same goes for simply just moving into the bitcoin market in general. Originally when Square moved into the space, it forced PayPal's hand at doing the same after seeing Square's profits. Look at all the banks now jumping in. It is a cascade of capitulation from once stout critics of the technology now making moves to enter the market.

Game theory is a hell of a drug.

[effigy98]

We have something like -15% real interest rates on that cash (due to inflation).

It makes no sense for these companies to hold cash.

They see these choices

• Hold it let it deflate away
• Invest in research that is high risk and lots of hard work
• Buy back stock and reduce your available funds that may be needed in the future
• Buy inflation protected asset like bitcoin or commodities. Commodities are heavily manipulated due to derivatives so those do not have as much asymmetric upside. The more adoption from other companies, the more pressure there will be to join the bitcoin network.

[talltexan]

One other option for companies holding cash: pay a dividend to their share-holders.

[ChpBstrd]

Ignoring the anecdotes over Musk's behavior since I don't think that's pertinent here, I think it mostly comes down to game theory.

I would probably disagree with the idea that cash reserves are for short term spending as that is rarely the case, especially with large cap corporations. Apple has been sitting on hundreds of billions of cash for almost a decade now. Short term spending usually comes from revenue generated and cash reserves are purposed for acquisitions, strategic market pivots, and things like that. Most of those things are rarely short-term spending ventures and more larger strategic goals for the company that takes years to develop.

I don't think anyone argues against the fact that bitcoin is volatile.

So it really comes down to game theory. Is it a risk for Google or Apple to put some of their reserves into bitcoin? Absolutely. But, if one of them does take the risk, then it lowers the competitive risk for other competing companies to do the same. Mass Mutual put $100 million into bitcoin and by doing so lowered the risk for other insurance companies to do the same. After doing so, there was growing interest from other insurance companies to make the same play.

A recent survey of CFOs found that about 5% plan to buy bitcoin in 2021 with about 11% claiming to do so by 2024. That means that as more and more companies put a portion of their reserves into bitcoin, it lowers the risk for other companies in their competing market to make the same play. Then it becomes a risk against NOT putting a portion of reserves into bitcoin if this trend continues because such a trend would result in an unavoidable rise in price. So that means now your competition is gaining dominance in your market by such a move and as CFO you'd have to recognize that risk. Shareholders would also be questioning the reluctance to do so against a growing back drop of companies purchasing bitcoin. So again, it isn't so much about what the initial risk of putting money into bitcoin is but against the game theory risk of your competitors gaining a market growth advantage through such a move.

Tesla's purchase has already gained about $700 million on their purchase. Microstrategy's gains are even more absurd. The competitive advantage gained by growing your cash reserves to such an extend over such a short period of time can't be understated and from a game theory perspective, that's what masks such a move "too risky not to do." It isn't that bitcoin isn't a risk, but that by not doing so against your competitor's move to do so, puts you at a competitive disadvantage.

The same goes for simply just moving into the bitcoin market in general. Originally when Square moved into the space, it forced PayPal's hand at doing the same after seeing Square's profits. Look at all the banks now jumping in. It is a cascade of capitulation from once stout critics of the technology now making moves to enter the market.

Game theory is a hell of a drug.

Obviously, if Bitcoin continues to rise, companies that put cash into it will profit the most. But who gets a competitive advantage if Bitcoin tanks?

[onecoolcat]

Friendly reminder that today is February 18, 2021 and the price of 1 Bitcoin is $51,907, or, as I like to call it, more than twice of what it was when you made this thread on December 26, 2020 ($25,282).

[HPstache]

Friendly reminder that today is February 18, 2021 and the price of 1 Bitcoin is $51,907, or, as I like to call it, more than twice of what it was when you made this thread on December 26, 2020 ($25,282).

Boom!  Roasted.

[GuitarStv]

It's always important to remember that markets can remain irrational far longer than you can remain liquid.  :P

[seattlecyclone]

Friendly reminder that today is February 18, 2021 and the price of 1 Bitcoin is $51,907, or, as I like to call it, more than twice of what it was when you made this thread on December 26, 2020 ($25,282).

Yes, and Dogecoin has increased more than tenfold in that same amount of time. That's the real currency of the future right there.

[talltexan]

Maybe instead of focusing on how little sense crypto- currency makes, we should be spending more time thinking about how little sense plain old US Dollar currency makes. Our movement is about finding ways--new skills, new habits, new patterns of problem-solving--that enable a dramatic increase in the quality of life completely apart from financial movements. Mustachians will be fine no matter what currency people are using.

[lifeanon269]

Obviously, if Bitcoin continues to rise, companies that put cash into it will profit the most. But who gets a competitive advantage if Bitcoin tanks?

That was my entire point. If companies are continuing to put money into bitcoin, its price will continue to go up. You can't have increased demand result in a decrease in price. The cause and effect here is that companies continuing to put money into bitcoin results in its price rising. So the game theory side of it is that if a company continues to see their competitors put money into bitcoin (thus causing its price to rise), it becomes a risk to also not put money into bitcoin because you're losing out on a major competitive edge by becoming an increasingly less valuable company against your competitors.

[SuperSecretName]

Game theory is a hell of a drug.

Great post above.  The game theory aspect of bitcoin is what people miss when they start to learn about the space.  Thinking through everything that can happen almost makes it inevitable.

[MustacheAndaHalf]

lifeanon269 - A different poster claimed Tesla's example was one others would follow, so the CEO of Tesla's behavior is relevant to that claim.  Other CEOs don't imitate Tesla.  Your example of Mass Mutual is more compelling, actually.

The other poster was also the one who claimed companies have a "risk" in not buying Bitcoin.  You made a case for Bitcoin being less risky once other CEOs have bought it - but you didn't explain why Google or Apple face a risk if they don't buy Bitcoin.  Most of Google's ad revenue comes from advertising, not users.  Facebook is creating a competing cryptocurrency to Bitcoin.  I don't see the risk tech companies face in ignoring Bitcoin.

It's probably also reaching "the top is in"... not for all time, but for now.  Bitcoin goes through crashes every few years, and now seems like higher potential for a crash.  Visa and Mastercard have a combined market cap of about 800 billion, while Bitcoin is more valuable than both combined. This past year, Bitcoin ran up 5x in one year.  Those are similar conditions I saw right before another crash in Bitcoin's value price.

How can people use Bitcoin?  With a credit card, you can pay for an international ticket, pay for a hotel in another country, go dining and shopping.  All on the same credit card.  If Bitcoin can do that, it's by greatly restricting which places you visit - credit cards are far more useful than Bitcoin.  Other than HODL, what can Bitcoin do?

[onecoolcat]

This bull run just started.  There will be 30-40% crashes throughout this run but that is normal in crypto bullruns.  We just had our first one in January 2021 when OP made the “it has started meme”.  Everyone who has been in this for some knew it was going to bite him in the butt because we expected it.  In 2017 there were 7 similar drops in its bull run.  I don’t know when the real crash will happen which will lead us to an extended bear market (where prices will be higher than its previous cycles high mind you) but I would guess it’s got some time.  I would say sometime shortly after July 2021.  Many people say this cycle is different because there is institutional buying and ETFs on the horizon.  I don’t know but I think a crash is more likely than a multi year bull run. 

In conclusion, I expect big dips in the short term, a overall continued rally through atleast July 2021, followed by a crash sometime thereafter.

[lifeanon269]

lifeanon269 - A different poster claimed Tesla's example was one others would follow, so the CEO of Tesla's behavior is relevant to that claim.  Other CEOs don't imitate Tesla.  Your example of Mass Mutual is more compelling, actually.

The other poster was also the one who claimed companies have a "risk" in not buying Bitcoin.  You made a case for Bitcoin being less risky once other CEOs have bought it - but you didn't explain why Google or Apple face a risk if they don't buy Bitcoin.  Most of Google's ad revenue comes from advertising, not users.  Facebook is creating a competing cryptocurrency to Bitcoin.  I don't see the risk tech companies face in ignoring Bitcoin.

It's probably also reaching "the top is in"... not for all time, but for now.  Bitcoin goes through crashes every few years, and now seems like higher potential for a crash.  Visa and Mastercard have a combined market cap of about 800 billion, while Bitcoin is more valuable than both combined. This past year, Bitcoin ran up 5x in one year.  Those are similar conditions I saw right before another crash in Bitcoin's value price.

How can people use Bitcoin?  With a credit card, you can pay for an international ticket, pay for a hotel in another country, go dining and shopping.  All on the same credit card.  If Bitcoin can do that, it's by greatly restricting which places you visit - credit cards are far more useful than Bitcoin.  Other than HODL, what can Bitcoin do?

My point about risk (as I stated in my prior post) was in regards to companies that are in the same competing market. That's the entire concept of game theory. There is little risk to Google or Apple not investing in bitcoin if none of their competitors are investing in bitcoin. But that changes if a competitor decides to do so or they decide to entire into a market where their competitors are already in bitcoin (P2P payments industry?).

As far as your "top is in" point, it seems like you're basing your point on "feeling alone". Even just going on past behavior (which obviously is a flawed approach but that you brought up), it is no where near where the previous bubbles popped (2013 and 2017 bubbles). If it follows 2013's path, then we're still more than a 10x move away from the top from here and if it follows 2017's path then we're still a 4x move away from the top from here. So far it is moving closer to 2013's path, but again past analysis is pointless.

https://twitter.com/100trillionUSD/status/1362481800174579720?s=20

Ignoring past behavior, claiming the top is in ignores what future demand looks like. According to NYDIG, as claimed by Ross Stevens, their orderbook sees about $26 billion in additional demand for this year (compared with $5 billion currently for them today). They also just filed for a bitcoin ETF a couple days ago and list Morgan Stanley as a participant. I think if you look at the market and what the future demand looks like, claiming that the "top is in" today is horribly off base from reality.

As far as using bitcoin, if you want to book a flight to anywhere in the world with bitcoin, feel free:

https://www.cheapair.com/blog/book-your-flights-on-cheapair-with-bitcoin-virtual-currency/
https://www.expedia.com/Checkout/BitcoinTermsAndConditions

I think once you get outside your bubble here in America where we have common access to robust financial services, you'll realize that many around the world do not and are rapidly finding that bitcoin provides a new avenue for access to the global economy and financial markets in the world that didn't exist previously for them:

https://www.statista.com/chart/18345/crypto-currency-adoption/

[MustacheAndaHalf]

It's probably also reaching "the top is in"... not for all time, but for now.  Bitcoin goes through crashes every few years, and now seems like higher potential for a crash.  Visa and Mastercard have a combined market cap of about 800 billion, while Bitcoin is more valuable than both combined. This past year, Bitcoin ran up 5x in one year.  Those are similar conditions I saw right before another crash in Bitcoin's value price.

As far as your "top is in" point, it seems like you're basing your point on "feeling alone". Even just going on past behavior (which obviously is a flawed approach but that you brought up), it is no where near where the previous bubbles popped (2013 and 2017 bubbles). If it follows 2013's path, then we're still more than a 10x move away from the top from here and if it follows 2017's path then we're still a 4x move away from the top from here. So far it is moving closer to 2013's path, but again past analysis is pointless.

I'm not sure why you put "feeling alone" in quotes.  You're not quoting me, and I provided reasons and data for my views.  Are you going to claim the market caps of Visa and Mastercard are feelings?  I compared them to Bitcoin, which is less useful than either credit card.

What is your source for the assumption all crashes must follow a previous "path"?

That is even disproven by your own example: the 2013 crash was deeper than the 2017 crash.  Put another way, the 2017 crash did not follow "2013's path".

How can people use Bitcoin?  With a credit card, you can pay for an international ticket, pay for a hotel in another country, go dining and shopping.  All on the same credit card.  If Bitcoin can do that, it's by greatly restricting which places you visit - credit cards are far more useful than Bitcoin.  Other than HODL, what can Bitcoin do?

As far as using bitcoin, if you want to book a flight to anywhere in the world with bitcoin, feel free

That puts you in a foreign country with no food.  I said plane ticket, hotel, dining and shopping.  You can't buy a ticket at the United Airlines counter of the airport - you have to use specific websites.  Similarly, almost no restaurants accept Bitcoin, but almost all accept Visa or Mastercard.  Credit cards are more useful than Bitcoin.

I think once you get outside your bubble here in America where we have common access to robust financial services, you'll realize that many around the world do not and are rapidly finding that bitcoin provides a new avenue for access to the global economy and financial markets in the world that didn't exist previously for them:
https://www.statista.com/chart/18345/crypto-currency-adoption/

Tell me more about the "bubble" I live in.  What were you saying earlier about saying things based on "feeling alone"?
I'm actually a Nigerian Price who needs 50 Bitcoin to re-claim my throne...

As to the assumption that getting outside America will reveal a lack of "robust financial services", is that how you describe Germany and Switzerland?  China and Japan appear on that list, two of the largest economies in the world.  Most of that list is countries that have financial services - including the largest economies in the world.  It doesn't really prove your point about financial services being lacking.

And also, if I may point out, 2/3rds of Bitcoin is mined in China.  But instead of having the highest use of Bitcoin, only 7% of Chinese in the survey have "used or owned cryptocurrency".  That's an interesting disparity to me.

[lifeanon269]

I'm not sure why you put "feeling alone" in quotes.  You're not quoting me, and I provided reasons and data for my views.  Are you going to claim the market caps of Visa and Mastercard are feelings?  I compared them to Bitcoin, which is less useful than either credit card.

What is your source for the assumption all crashes must follow a previous "path"?

That is even disproven by your own example: the 2013 crash was deeper than the 2017 crash.  Put another way, the 2017 crash did not follow "2013's path".

Your only data point was in regards to a comparison between the market caps of MasterCard and VISA versus bitcoin, which is an odd comparison considering bitcoin doesn't compete with either of those. Other than that singular data point you presented, the only other evidence for "the top is in" is using past performance in past bubbles to falsely claim such (because if you did compare it to past bubbles then by that measure the top is NOT in).

That puts you in a foreign country with no food.  I said plane ticket, hotel, dining and shopping.  You can't buy a ticket at the United Airlines counter of the airport - you have to use specific websites.  Similarly, almost no restaurants accept Bitcoin, but almost all accept Visa or Mastercard.  Credit cards are more useful than Bitcoin.

The only reason why I mentioned those services was because you happened to bring it up. Again, bitcoin is not competing with VISA or Mastercard. But there are options out there to pay with bitcoin for certain services. But the payments options for bitcoin still have a long way to go because the payment scaling rails just aren't there just yet. Bitcoin is the base layer for this financial system. You can't have scaling payment rails unless that base layer sees validation first. The fact that you continue to say things like "credit cards are more useful than bitcoin", tells me you don't get it and don't understand where bitcoin's main utility lies (hint: it's not payments).

Tell me more about the "bubble" I live in.  What were you saying earlier about saying things based on "feeling alone"?
I'm actually a Nigerian Price who needs 50 Bitcoin to re-claim my throne...

As to the assumption that getting outside America will reveal a lack of "robust financial services", is that how you describe Germany and Switzerland?  China and Japan appear on that list, two of the largest economies in the world.  Most of that list is countries that have financial services - including the largest economies in the world.  It doesn't really prove your point about financial services being lacking.

And also, if I may point out, 2/3rds of Bitcoin is mined in China.  But instead of having the highest use of Bitcoin, only 7% of Chinese in the survey have "used or owned cryptocurrency".  That's an interesting disparity to me.

Huh? My point wasn't about Germany, Switzerland, China, Japan, or the USA. They all have fairly low adoption rates so far as shown in that chart.

It largely has to do with the network effect for these countries that drives more P2P usage. China has banned the use of bitcoin in its country (but allows mining) and so its citizens haven't used it much and China also has a fairly robust economy with decent reliable financial services. Nigeria has banned financial institutions from dealing with bitcoin, but allows its citizens to use it and given Nigeria's economic struggles over the last year, bitcoin use in the country has exploded with a lot of P2P usage. Most of the countries in that list that have larger adoption rates have economies that have been struggling a lot lately (Nigeria, Vietnam, Philippines, Turkey, Peru).

https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory

[celerystalks]

The only reason why I mentioned those services was because you happened to bring it up. Again, bitcoin is not competing with VISA or Mastercard. But there are options out there to pay with bitcoin for certain services. But the payments options for bitcoin still have a long way to go because the payment scaling rails just aren't there just yet. Bitcoin is the base layer for this financial system. You can't have scaling payment rails unless that base layer sees validation first. The fact that you continue to say things like "credit cards are more useful than bitcoin", tells me you don't get it and don't understand where bitcoin's main utility lies (hint: it's not payments).

Wait, what?

I thought bitcoin was touted as being a virtual currency, i.e. to be used to make payments... Wouldn’t that necessarily put it in competition with other payment networks like those operated by Visa or MC?

[lifeanon269]

Wait, what?

I thought bitcoin was touted as being a virtual currency, i.e. to be used to make payments... Wouldn’t that necessarily put it in competition with other payment networks like those operated by Visa or MC?

Bitcoin is both a currency and a monetary network all in one. That contrasts to our current financial system where the currency and the monetary network are not coupled together. Our current financial system operates in layers (Central banking > Settlement > FIs > Payments/P2P). The peer-2-peer payment systems (Venmo, Paypal, CashApp, etc) can't operate without the other layers in the financial system. The settlement layer (eg, Fedwire) is used to settle balances between financial institutions. This is not done in real-time, but usually daily, weekly, or monthly. It is much easier to settle large amounts of money in this way. So ultimately, millions of transactions that take place in the payments/P2P layers, get settled as larger transactions together in the settlements layer.

Bitcoin's main benefit is that its blockchain decentralized across thousands of nodes in the world. Without this decentralization, it has no other benefit over traditional financial solutions in the world that scale much better due to their centralized properties. Therefore, bitcoin will also have these same layered properties that our current financial system has. Bitcoin, at its base layer competes more with central banking and the settlement layer of our current financial system where large payments that require large amounts of security settle to this base layer. These larger settlements will, however, consist of millions and millions of smaller payment and peer to peer transactions (see the lightning network). Bitcoin's payments layer is still very new and therefore it just simply doesn't have much adoption yet (it's only been on mainnet for a little over 2 years). So bitcoin's payments layer just isn't there yet to compete with VISA or Venmo or these other applications at this layer of our financial system. It's base layer is however great for settling larger transactions that might be more akin to remittance payments, ACH transactions, wire transfers, FedWire settlements between institutions, etc as comparatively it competes with those very well.

It is important to understand this to avoid pigeon-holing bitcoin's technology into preconceived notions about what it should be doing as opposed to understanding the benefits of what the technology is and what its benefits actually are and building on those benefits to create new infrastructure around it.

[onecoolcat]

Wait, what?

I thought bitcoin was touted as being a virtual currency, i.e. to be used to make payments... Wouldn’t that necessarily put it in competition with other payment networks like those operated by Visa or MC?

Bitcoin is both a currency and a monetary network all in one. That contrasts to our current financial system where the currency and the monetary network are not coupled together. Our current financial system operates in layers (Central banking > Settlement > FIs > Payments/P2P). The peer-2-peer payment systems (Venmo, Paypal, CashApp, etc) can't operate without the other layers in the financial system. The settlement layer (eg, Fedwire) is used to settle balances between financial institutions. This is not done in real-time, but usually daily, weekly, or monthly. It is much easier to settle large amounts of money in this way. So ultimately, millions of transactions that take place in the payments/P2P layers, get settled as larger transactions together in the settlements layer.

Bitcoin's main benefit is that its blockchain decentralized across thousands of nodes in the world. Without this decentralization, it has no other benefit over traditional financial solutions in the world that scale much better due to their centralized properties. Therefore, bitcoin will also have these same layered properties that our current financial system has. Bitcoin, at its base layer competes more with central banking and the settlement layer of our current financial system where large payments that require large amounts of security settle to this base layer. These larger settlements will, however, consist of millions and millions of smaller payment and peer to peer transactions (see the lightning network). Bitcoin's payments layer is still very new and therefore it just simply doesn't have much adoption yet (it's only been on mainnet for a little over 2 years). So bitcoin's payments layer just isn't there yet to compete with VISA or Venmo or these other applications at this layer of our financial system. It's base layer is however great for settling larger transactions that might be more akin to remittance payments, ACH transactions, wire transfers, FedWire settlements between institutions, etc as comparatively it competes with those very well.

It is important to understand this to avoid pigeon-holing bitcoin's technology into preconceived notions about what it should be doing as opposed to understanding the benefits of what the technology is and what its benefits actually are and building on those benefits to create new infrastructure around it.

You're wasting your breath.  Although you are more elegant with your words, hes been told this before and doesn't care.

[celerystalks]

You're wasting your breath.  Although you are more elegant with your words, hes been told this before and doesn't care.

Thanks. Keep trolling’!


Might I remind you this is an antiBitcoin thread.

[seattlecyclone]

Wait, what?

I thought bitcoin was touted as being a virtual currency, i.e. to be used to make payments... Wouldn’t that necessarily put it in competition with other payment networks like those operated by Visa or MC?

Bitcoin is both a currency and a monetary network all in one.

It doesn't serve either purpose very well at the moment. A currency needs relative stability in value so I can quote you a price in that currency, and if you pay me next week or next month I know I'm getting basically what I asked for, and you're paying basically what you expected. A monetary network needs to be able to perform transactions quickly and cheaply. Bitcoin doesn't really do this very well at the moment either.

Bitcoin's main benefit is that its blockchain decentralized across thousands of nodes in the world. Without this decentralization, it has no other benefit over traditional financial solutions in the world that scale much better due to their centralized properties.

Agreed. Centralization can be quite efficient where it works. A decentralized approach necessarily needs to introduce inefficiencies to maintain the security of the network in the face of untrustworthy actors. For this decentralized network to take hold, it therefore needs to have obvious advantages that outweigh the inefficiencies. So yeah, we shouldn't use Bitcoin to buy groceries. I get it. The centralized payment networks work quite well for this purpose and Bitcoin can't really hope to compete. Seems we're in agreement there.

Therefore, bitcoin will also have these same layered properties that our current financial system has. Bitcoin, at its base layer competes more with central banking and the settlement layer of our current financial system where large payments that require large amounts of security settle to this base layer. These larger settlements will, however, consist of millions and millions of smaller payment and peer to peer transactions (see the lightning network). Bitcoin's payments layer is still very new and therefore it just simply doesn't have much adoption yet (it's only been on mainnet for a little over 2 years). So bitcoin's payments layer just isn't there yet to compete with VISA or Venmo or these other applications at this layer of our financial system.

Okay, but will the payments layer ever achieve widespread adoption? What fraction of payment transactions cannot be accomplished efficiently in the existing system and would be significantly faster/cheaper/more predictable if Bitcoin was used as the base layer instead? Either Bitcoin is unsuitable for most everyday transactions (and we're wrong to measure it on that basis), or we should expect it to be a strong competitor against Visa et al. once the infrastructure is in place. You can't have it both ways.

It is important to understand this to avoid pigeon-holing bitcoin's technology into preconceived notions about what it should be doing as opposed to understanding the benefits of what the technology is and what its benefits actually are and building on those benefits to create new infrastructure around it.

The phrase "preconceived notions" doesn't really fit here. The technology does what it does. Its capabilities can be demonstrated and evaluated based on their relative advantages and disadvantages to existing alternatives. I have an open mind about this. You say people are working on building infrastructure to make it more useful, and I believe you. What's the "killer app" that would cause some significant fraction of the world's financial transactions to be denominated in BTC or transacted over the Bitcoin network instead of using incumbent currencies and payment networks?

[lifeanon269]

It doesn't serve either purpose very well at the moment. A currency needs relative stability in value so I can quote you a price in that currency, and if you pay me next week or next month I know I'm getting basically what I asked for, and you're paying basically what you expected. A monetary network needs to be able to perform transactions quickly and cheaply. Bitcoin doesn't really do this very well at the moment either.

Again, I feel this is pigeonholing bitcoin and money into certain classifications that it must meet before you consider it money. But bitcoin is different than anything before it. Money can have many properties, but just because it is missing a few of them, doesn't make it not money. It doesn't make a good unit of account yet because of its volatility, but there is no long term stability without short term volatility. However, what it lacks in being a unit of account, it makes up for as a global medium of exchange with no borders, a store of value that cannot be deluted, every unit as fungible as the last, extremely divisible, uniform, portable, growingly acceptable, and infinitely durable.

While it lacks being a unit of account, modern technology today allows for its unit of account to be measured at any point in the day against a stable unit of account (US dollar) that all parties can agree on. Back in the days when gold coins were used as a medium of exchange, gold was not a great unit of account either. Barter between two parties generally just agreed upon a price and that price varied greatly from transaction to transaction among different parties. The world is different today with modern technology. I don't think anyone is naive to think that bitcoin is going to replace the US dollar. Therefore I don't think it is very crucial to be a unit of account with modern technology available when bitcoin has just about every other property of good sound money. Also, being a unit of account is not an inherent problem for bitcoin, as I said: there is no long term stability without short term volatility.

Okay, but will the payments layer ever achieve widespread adoption? What fraction of payment transactions cannot be accomplished efficiently in the existing system and would be significantly faster/cheaper/more predictable if Bitcoin was used as the base layer instead? Either Bitcoin is unsuitable for most everyday transactions (and we're wrong to measure it on that basis), or we should expect it to be a strong competitor against Visa et al. once the infrastructure is in place. You can't have it both ways.

I have no reason to believe that the payment layers for bitcoin will not be accepted just as its base layer is. If the base layer is widely accepted, it will stand to reason that the payments layer will be as well. If enough people own bitcoin, they'll want to use it as well. What can't be accomplished today under the current fiat system? Global payments. Bitcoin is global and no fiat system will be able to do global payments as well as bitcoin. Borders are inherent to the fiat system and that will always carry with it friction whereas bitcoin has no borders and is friction-less in this regard (see LNStrike for example). If you're a web developer in Iran and you want to get paid for some work that you did online for someone, bitcoin is the easiest way to do so. Bitcoin is the easiest way to enter the global market online. There is no internet money and bitcoin fills this role and it is sorely needed in a world economy that takes place more and more online around the world. I'm not sure what you mean by "can't have it both ways". It is good for payments, it just has some developments and acceptance to go before it's fully there. It seems like you're chalking it up to a problem that can't be solved when that just isn't the case. It is like making the claim that the internet will never stream videos well in the year 2000 and yet here we are in 2021...

The phrase "preconceived notions" doesn't really fit here. The technology does what it does. Its capabilities can be demonstrated and evaluated based on their relative advantages and disadvantages to existing alternatives. I have an open mind about this. You say people are working on building infrastructure to make it more useful, and I believe you. What's the "killer app" that would cause some significant fraction of the world's financial transactions to be denominated in BTC or transacted over the Bitcoin network instead of using incumbent currencies and payment networks?

I just leave you with this recent YouTube video put together by the Human Rights Foundation: https://youtu.be/xLYYh4aPXAM

There is no better "killer app" than this.