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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Radioherd88 on December 21, 2020, 10:16:03 AM

Title: Bitcoin - are we still out?
Post by: Radioherd88 on December 21, 2020, 10:16:03 AM
So my dad (who has never invested in a stock in his life) recently suggested he should start buying up bitcoin. He has been reading/seeing as we all have the fantastic stories of easy money but also seeing the bigger companies buying in and investing. I talked about the risk of bitcoin and that it's really making money based on the herd mentality and has no guarantee to be anything of value at some point in the future but you can certainly make money if you get it right. I sent him the MMM article and Warren Buffet's thoughts on it as an investment but I just read this article today which would suggest I am an idiot for not not having some sort of my portfolio invested in BTC.

https://www.investopedia.com/guggenheim-partners-cio-says-bitcoin-is-worth-400000-5092899?utm_source=personalized&utm_campaign=bouncex&utm_term=22447932&utm_medium=email (https://www.investopedia.com/guggenheim-partners-cio-says-bitcoin-is-worth-400000-5092899?utm_source=personalized&utm_campaign=bouncex&utm_term=22447932&utm_medium=email)

What percentage of us on here have some bitcoin at the moment?
Title: Re: Bitcoin - are we still out?
Post by: v8rx7guy on December 21, 2020, 10:23:49 AM
So my dad (who has never invested in a stock in his life) recently suggested he should start buying up bitcoin. He has been reading/seeing as we all have the fantastic stories of easy money but also seeing the bigger companies buying in and investing. I talked about the risk of bitcoin and that it's really making money based on the herd mentality and has no guarantee to be anything of value at some point in the future but you can certainly make money if you get it right. I sent him the MMM article and Warren Buffet's thoughts on it as an investment but I just read this article today which would suggest I am an idiot for not not having some sort of my portfolio invested in BTC.

https://www.investopedia.com/guggenheim-partners-cio-says-bitcoin-is-worth-400000-5092899?utm_source=personalized&utm_campaign=bouncex&utm_term=22447932&utm_medium=email (https://www.investopedia.com/guggenheim-partners-cio-says-bitcoin-is-worth-400000-5092899?utm_source=personalized&utm_campaign=bouncex&utm_term=22447932&utm_medium=email)

What percentage of us on here have some bitcoin at the moment?

I have a $100 investment in BTC that finally is worth more than when I bought it at the peak around Christmas of 2017.  I am quite certain the exact same drop is about to happen to shed off this most current round of "woke" investors...
Title: Re: Bitcoin - are we still out?
Post by: GoCubsGo on December 21, 2020, 11:04:43 AM
Yeah, my 22 year old cousin has decided to take a gap year and become a FOREX trader.  That lasted 4 months, now he's a Bitcoin investor.  I own GBTC (Bitcoin Trust) and am up over 300% on it , but I don't physically own Bitcoin.  I bought it as  a lottery ticket with some unexpected gains. I basically see it as a big momentum play.  Paypal buying up all the Bitcoin they can get was a pretty big bullish turn last month.

I have another family member who set up mining computers and was basically a huge believer in Bitcoin since probably 2015 and he's made hundreds of thousands on it I'd guess.  For what it's worth, he's not selling any and believes there's much more room to run.

On Friday CNBC reported on a survey of Bitcoin owners that have over $20 million worth and how something like 80% won't sell any.
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 21, 2020, 11:07:49 AM
I see the point of Bitcoin. I get paid for odd jobs in Starbucks gift cards sometimes and that's pretty much the same principle.
Title: Re: Bitcoin - are we still out?
Post by: theolympians on December 21, 2020, 11:44:50 AM
I'm skeptical of crypto in general. Sometimes I ask around, and I still don't know anyone who has bought anything with it. Some are "investing" in it and are excited about the valuation motion that has been involved. I've read all the arguments about how it is the way of the future, and benefits yada, yada.

Call me old school, but I only see  crypto as a vegas wheel. Maybe there will be a time when it becomes more used, but we are not there yet. When that does, the fed will likely issue a fed style coin that I would buy into ( I think I read about that recently). In that case there would be insurance/fdic guarantees. Nothing with the other crypto.

Does a part of me wish I had bought in when it was a penny? Sure, but that is not an investment plan for me. Good luck.
Title: Re: Bitcoin - are we still out?
Post by: GuitarStv on December 21, 2020, 11:55:16 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 21, 2020, 11:58:45 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.
Title: Re: Bitcoin - are we still out?
Post by: GuitarStv on December 21, 2020, 11:59:41 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.
Title: Re: Bitcoin - are we still out?
Post by: v8rx7guy on December 21, 2020, 12:00:21 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

I had one person in my social media newsfeed buy a car with BTC, he was an early adopter and did quite well with it.  I set it up as an option on my side gig website years ago and have had no one use BTC in about a thousand transactions.  Maybe that will be my indicator that BTC is about to go even bigger.... when someone buys from my website using it as currency.
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 21, 2020, 12:01:03 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

From what I understand, if you pay for it, then the performers will send you DMs on instagram and for some people that is thrilling. I don't understand it either.
Title: Re: Bitcoin - are we still out?
Post by: Optimiser on December 21, 2020, 12:07:30 PM
About .5% of my networth is bitcoin and other crypto that I received via mining or from watching videos on CoinBase. It's just enough to keep the FOMO at bay.
Title: Re: Bitcoin - are we still out?
Post by: ChpBstrd on December 21, 2020, 01:27:45 PM
I can't do it because if the price went down 75% or so, I would not be at all surprised. I'd kick myself for succumbing to a bubble mania for something with even less intrinsic value than Tulip bulbs - something utterly replicable and invented out of thin air. So I'd sell low for tax harvesting. Then in a couple of years crypto would go back up to where it was.

Because the algorithm above is inevitable, the odds of me losing money in crypto is far greater than me making money.
Title: Re: Bitcoin - are we still out?
Post by: JAYSLOL on December 21, 2020, 03:13:04 PM
I bought some before the big run up in 2017, ended up making a few k, sold everything when it was at the peak in December 2017, except for one litecoin.  Still havenít sold it or bought more.  Have a friend that has virtually no investment experience (he sold his very small portfolio of mutual funds in fall 2018  after a 5% dip and never bought back in) who just went all in on Bitcoin, heís up probably close to 100% now and Iím worried he thinks he canít lose.  Iíve recommended pulling his original investment out to eliminate any risk, but he says he knows itís at the beginning of a big run and heís going to pay off his house by this time next year.  I hope he can, but yikes, i think he drank way too much koolaid from the crypto pushers on the internet
Title: Re: Bitcoin - are we still out?
Post by: Malcat on December 21, 2020, 05:30:58 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 21, 2020, 06:57:07 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.
Title: Re: Bitcoin - are we still out?
Post by: Malcat on December 21, 2020, 07:32:30 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.
Title: Re: Bitcoin - are we still out?
Post by: J Boogie on December 21, 2020, 07:50:44 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

The kind that's so addicting an ivy league professional can't even take a quick break from to have work meeting on zoom.

Had to be the behest of a dom, right? The high stakes humiliation was the goal. There is no other explanation that makes sense.

Anyways, we're taking about bitcoin and not toobin. Sorry for the derailing. It's just something I am scratching my head over and is a topic uniquely well suited to pseudonymous internet discussion, compared to a dinner table convo with my wife and toddlers.
Title: Re: Bitcoin - are we still out?
Post by: Malcat on December 22, 2020, 03:19:05 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

The kind that's so addicting an ivy league professional can't even take a quick break from to have work meeting on zoom.

Had to be the behest of a dom, right? The high stakes humiliation was the goal. There is no other explanation that makes sense.

Anyways, we're taking about bitcoin and not toobin. Sorry for the derailing. It's just something I am scratching my head over and is a topic uniquely well suited to pseudonymous internet discussion, compared to a dinner table convo with my wife and toddlers.

I literally can't parse what on earth you are talking about and what it has to do with the various forms of illegal pornography and human trafficking that get purchased with crypto.
Title: Re: Bitcoin - are we still out?
Post by: frugledoc on December 22, 2020, 03:36:01 AM
Yeah, my 22 year old cousin has decided to take a gap year and become a FOREX trader.  That lasted 4 months, now he's a Bitcoin investor.  I own GBTC (Bitcoin Trust) and am up over 300% on it , but I don't physically own Bitcoin.  I bought it as  a lottery ticket with some unexpected gains. I basically see it as a big momentum play.  Paypal buying up all the Bitcoin they can get was a pretty big bullish turn last month.

I have another family member who set up mining computers and was basically a huge believer in Bitcoin since probably 2015 and he's made hundreds of thousands on it I'd guess.  For what it's worth, he's not selling any and believes there's much more room to run.

On Friday CNBC reported on a survey of Bitcoin owners that have over $20 million worth and how something like 80% won't sell any.

Bitcoin holders like to lie about never selling.

What happened to all the Hodlers when the price crashed by 80%?
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 22, 2020, 07:21:01 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

That's the dark side of libertarianism. No government regulation means no stopping people who don't respect the rights of others. And then evil spreads unchecked.
Title: Re: Bitcoin - are we still out?
Post by: utaca on December 22, 2020, 09:25:30 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

I think you're right and I also think that as long as there's a market for drugs, illegal porn, online hitmen (?), other nefarious things I've (thankfully) never heard of, etc., Bitcoin will have value. In light of that, is it's current valuation reasonable? I have no idea.

I also wonder how the emerging trend of drug legalization (which, granted, appears to be in its infancy although there appears to be strong support in many developed countries for legalizing weed and psychedelics, and (potentially) decriminalizing other drugs) may affect the value of Bitcoin. Presumably if a person can buy their illicit substance of choice with cash, they would prefer to do that than relying on the hassle of payment with Bitcoin.
Title: Re: Bitcoin - are we still out?
Post by: Malcat on December 22, 2020, 09:32:44 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

I think you're right and I also think that as long as there's a market for drugs, illegal porn, online hitmen (?), other nefarious things I've (thankfully) never heard of, etc., Bitcoin will have value. In light of that, is it's current valuation reasonable? I have no idea.

I also wonder how the emerging trend of drug legalization (which, granted, appears to be in its infancy although there appears to be strong support in many developed countries for legalizing weed and psychedelics, and (potentially) decriminalizing other drugs) may affect the value of Bitcoin. Presumably if a person can buy their illicit substance of choice with cash, they would prefer to do that than relying on the hassle of payment with Bitcoin.

I don't think individual buyers are purchasing drugs with Bitcoin as far as I know, but the upline supply chain does.

The individual buying for personal use is probably still using cash like they have forever.

But yes, legalization of drugs absolutely alters the economics of drugs, but I doubt anywhere is going to legalize deadly drugs like meth. Decriminalize, possibly, but full on legalize and incorporate it into the business world where people can buy stocks in meth and bath salts companies? I don't ever see that happening.

Unless a drug is legalized, the production and wholesale cannot be incorporated into the legal markets, and therefore will always require anonymized transaction options, and that's a very VERY BIG market.
Title: Re: Bitcoin - are we still out?
Post by: lifeanon269 on December 22, 2020, 10:57:52 AM
I'm of the sort that if you're going to talk about some (let alone invest in something), then you should be educated about what it is you're talking about. So with that said, I wanted to say a few things about bitcoin.

Full disclaimer, I've been involved with bitcoin for over half a decade now. I've mined bitcoin, I run a full node on the network, I run a lightning node, I've built tools for bitcoin, and have collaborated with many developers in the space to help further the technology.

Bitcoin is simply an amalgamation of several technologies, many of which have been around for decades. The way in which it combines these technologies and how it came about is what makes it unique. Central to these technologies is the blockchain. A blockchain is simply a type of database. It is not an efficient database. What does that mean? It means it is designed to be immutable. Unlike traditional relational database where data is stored in rows and columns and data stored within it can simply be changed on command, a blockchain database is built in blocks one by one and each additional block makes data in the previous blocks immutable.

Why run an inefficient and immutable database?

Well its sole benefit comes in the form of decentralization. If you're not going to run a blockchain database in a way that is entirely decentralized in all facets, then you might as well run a relational database that would be much easier to maintain. Furthermore, since a blockchain needs to be completely decentralized in order to maintain its sole benefit, then it much be extremely inefficient. What do I mean by inefficient? A decentralized database needs to be maintained on thousands of nodes all geographically dispersed and capable of running on easy to acquire hardware and cheap internet that is available in most places in the world. This means that the database must be maintained and synchronized across this very disperse network of database nodes.

So to accommodate this, database updates must be very slow (to allow for block propagation). The size of these database updates (blocks) must also be very limited in size. Since a blockchain database is immutable, in order to fully synchronize a new database node on the network, you must start with block 1 and download the entire blockchain database and verify its integrity. So to allow for a fully decentralize network of nodes that can be run without requiring massive expensive datacenters with large internet pipes, the blockchain MUST be limited in growth size (small blocks) and slow propagation of blocks (slower transaction speeds). If a blockchain is unlimited in growth, then massive numbers of transactions would cause the blockchain to grow in size exponentially which means that it could only be hosted by large datacenters with massive internet pipes and if database nodes are only located in large datacenters then it isn't decentralized and thus you lose the only benefit of running a blockchain to begin with.

All this is to simply say that there is an inherent trade off when using a blockchain database. Speed versus decentralization is an inherent trade-off when using a blockchain database. It is not a problem that can simply be fixed with "better blockchain tech". I started off with this slight technical introduction because blockchain has become a way overly hyped buzzword since bitcoin's price has risen and it seems like technologies and companies are using the word just to capitalize on the hype without actually understanding what the technology is and what value it serves. Any time you hear someone say that they have a "faster" bitcoin and it is the next best thing, what they're really telling you is that they're sacrificing decentralization (a blockchain's sole benefit) in favor of speed.

For a more detailed and technical breakdown on how bitcoin works, I suggest watching this video:  https://www.youtube.com/watch?v=bBC-nXj3Ng4


I started of my post with this information because since bitcoin came about, there have been thousands of new cryptocurrencies, many with wild promises of changing the world, most of which are small projects with almost no liquidity, with slight iterations on what came before them, almost none of them are decentralized, little testing or resiliency, and since there is almost no regulation in the space they're ripe with pump and dump schemes where the little guy ends up getting hurt in the end.

It is important to understand what bitcoin is and isn't and I wanted to make this distinction first because the cryptocurrency market is really a dumpster fire of mal-investment, but I really want to do my part in differentiating bitcoin from the rest of the market that has come to be.

Bitcoin is decentralized to almost the fullest degree at which it can be. It has no leader and no one knows who its creator (Satoshi Nakamoto) is where he disappeared to. There are thousands of nodes running copies of its blockchain database across the world today and can be run on small computers that cost as little as $50 and with common broadband internet access. Anyone is free to run a node. The network itself has resisted numerous attacks both large and small. There is no single entity in control of the network, it can't be sued, its token issuance was public and fair, there are numerous software implementations that can be utilized and many open source wallets that can be used, and the blockchain's history has never been rewritten which is a continuous testament to the resiliency of the network itself.

So with all this technology jargon said, what benefit does bitcoin actually provide society? After all, isn't the point of technology to benefit humanity and the world? Well a majority of the world lives under some sort of authoritarian or non-democratic regime. Many of these countries face harsh economic realities that are hard for those of us in a free nation to understand. While we're all able to work or our daily wages and save money up to retire early, many people are simply working to feed their families worried about whether yesterday's wages will still by them the same amount of food today. Economic sanctions (a war crime if you ask me) isolates off millions of people from the global economy while the regimes they're intended to hit continue to use their resources to access and traditional financial markets without any problem. Citizens are then left in poverty as a result. Grassroots charities hoping to reach these desperate places face an uphill funding battle because of the lack of financial infrastructure in place. Refugees hoping to flee these places have no hope of carry what little wealth they have with them to wherever it is they decide to go. Starting over from scratch is their only option which puts additional strain on those nations that do choose to accept them with open arms.

Regardless of your macro-economic viewpoints (and if you hold gold then you likely even somewhat agree here), government controlled central banking is a big problem in much of the world. Vast sums of money are printed at whim which exacerbates wealth inequality. It is easy for Americans to sit in our ivory towers with easy access to financial institutions and say this isn't a problem facing the world. But the reality is that it is.

Bitcoin, being our only truly scarce, truly global, and truly decentralized monetary asset, is one of the only options that is positioned well to solve many of these problems I mentioned (and more). People think bitcoin's purpose is to allow people to pay for their morning lattes from their phones and to do away with the likes of PayPal and banking. Paying for retail goods with some form of digital technology was never a technological hurdle for humanity. But its true purpose is to compete with central banking to give people at least the OPTION of being able to store some of their wealth into something other than whatever centralized authority they happened to be born under created, hoping it doesn't destroy their hard-earned livelihood.

Is there a ton of speculation taking place today with bitcoin? Absolutely, but there is simply no way you can have a digital asset like bitcoin be bootstrapped from a valuation of $0 without there being speculation involved along its way to being adopted. That just comes with the territory. What I do know is that bitcoin is our ONLY chance at hoping for something that will compete with central banking and offer the world that option. If bitcoin fails, there won't be a successor, at least not within our lifetimes. Will it do away with the USD or other fiat currencies? No, not at all, and again certainly not within my lifetime nor does it need to in order to serve its purpose. Bitcoin is global, so if it serves a purpose ANYWHERE, it will have value EVERYWHERE.

Companies today (a lot of which has to do with macro monetary policy) are sitting on hordes of cash. Real world inflation rates are much higher than what CPI claims it to be. These hordes of cash will be/are losing massive amounts of value on an annual basis. Companies don't have many options on what to do with these reserves. You're going to see more and more companies looking for alternatives for their reserves. MassMutual, an insurance company that has been around for almost 200 years, who's sole business is to manage risk, can look at bitcoin and decide to put $100 million of its reserves into bitcoin. If that isn't a signal of what the macro economic landscape looks like and where bitcoin sits in that landscape, then I don't know what is.

What I am not saying is that bitcoin isn't without risk or that you should sell everything and buy bitcoin. But what I am saying is that it is risky to NOT hold any bitcoin in your portofolio at all. This forum is all about diversification and talks all about holding index funds and passive investing and yet I find it funny that many don't see the forest from the trees in the greater macro-economic picture that all these assets' valuations are tied to currencies that are being massively inflated.

I've already rambled for far too long, so I'll end with the usual don't invest money in bitcoin that you aren't OK with losing, but at the same time realize that having a 1-5% allocation in bitcoin will minimize your losses, while giving your portfolio access to a diversified upside that could be a once in a lifetime opportunity. And finally, as always, research as much as possible before putting your hard earned money into anything.

If anyone has any questions, I'll gladly answer them as well. Cheers.
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 22, 2020, 11:12:52 AM
I read the book "Life After Google" and found it thought-provoking when it came to blockchain technology. I think the author has a point that the true future of blockchain is in system security and breaking tech monopolies. As a currency, I think it causes a lot more problems than it solves, especially when North Korea is able to use it to bypass sanctions against them for their nuclear program and human rights abuses. But the tech exists so we need to find a way to live with it.
Title: Re: Bitcoin - are we still out?
Post by: Radioherd88 on December 22, 2020, 12:09:37 PM
I've already rambled for far too long, so I'll end with the usual don't invest money in bitcoin that you aren't OK with losing, but at the same time realize that having a 1-5% allocation in bitcoin will minimize your losses, while giving your portfolio access to a diversified upside that could be a once in a lifetime opportunity. And finally, as always, research as much as possible before putting your hard earned money into anything.

If anyone has any questions, I'll gladly answer them as well. Cheers.

Very insightful thanks - this is kind of where I'm at - happy to add up to 5% of my portfolio even based on the knowledge that it's mostly hype at the moment that's the driver
Title: Re: Bitcoin - are we still out?
Post by: the_gastropod on December 22, 2020, 01:06:08 PM
Well its sole benefit comes in the form of decentralization. If you're not going to run a blockchain database in a way that is entirely decentralized in all facets, then you might as well run a relational database that would be much easier to maintain. Furthermore, since a blockchain needs to be completely decentralized in order to maintain its sole benefit, then it much be extremely inefficient.

Ahhhh it's honestly refreshing to see a bitcoin enthusiast actually say this. Thank you for this! haha. I even want to reiterate: the *only* interesting thing (and it *is* interesting, don't get me wrong) is the trustless nature of Bitcoin. You can transact with people or organizations you 100% do not trust. That's interesting and neat. But it also means, many of the things blockchain enthusiasts talk about (e.g., "efficiency!") are total nonstarters and make no sense. Anytime someone talks about using a blockchain for tracking physical goods (you see people talk about using blockchains in supply chains all the time), they straight up have missed the entire purpose of a blockchain. After 10 years, the only viable thing blockchains are good at is cryptocurrencies like bitcoin.

Regardless of your macro-economic viewpoints (and if you hold gold then you likely even somewhat agree here), government controlled central banking is a big problem in much of the world. Vast sums of money are printed at whim which exacerbates wealth inequality. It is easy for Americans to sit in our ivory towers with easy access to financial institutions and say this isn't a problem facing the world. But the reality is that it is. [...]

And this is where I lose you. The theorycraft is all well and good, but realistically, what oppressed peoples are buying bitcoin? How would they even do it? And then what would they do with it? And then much of the rest here is good ol' Austrian School economics, which I don't feel is worth debating here.
Title: Re: Bitcoin - are we still out?
Post by: lifeanon269 on December 22, 2020, 01:57:35 PM
Ahhhh it's honestly refreshing to see a bitcoin enthusiast actually say this. Thank you for this! haha. I even want to reiterate: the *only* interesting thing (and it *is* interesting, don't get me wrong) is the trustless nature of Bitcoin. You can transact with people or organizations you 100% do not trust. That's interesting and neat. But it also means, many of the things blockchain enthusiasts talk about (e.g., "efficiency!") are total nonstarters and make no sense. Anytime someone talks about using a blockchain for tracking physical goods (you see people talk about using blockchains in supply chains all the time), they straight up have missed the entire purpose of a blockchain. After 10 years, the only viable thing blockchains are good at is cryptocurrencies like bitcoin.

Yup, you nailed it!

And this is where I lose you. The theorycraft is all well and good, but realistically, what oppressed peoples are buying bitcoin? How would they even do it? And then what would they do with it? And then much of the rest here is good ol' Austrian School economics, which I don't feel is worth debating here.

For sure, I never claimed that the benefits of bitcoin in situations like these have been fully realized. Far from it. That doesn't mean that the potential for that benefit isn't there. From a Belarus human rights org, pro-democracy anti-SARS protests in Nigeria, Hong Kong groups having their assets frozen and turning to bitcoin, countless examples of individuals turning to bitcoin in Venezuela, remittances being sent in economically isolated Iran, and other examples in Palestine, Argentina, Lebanon, Sudan, etc. I'd say we're at least beyond the "theorycraft" stage and at least to the point where communities are giving it a try because what else is there? All you need is a cellphone to transact with bitcoin and cell phones, even in the most desolate place, are extremely common place these days.

Like I said, if we feel these benefits are worthwhile and we hope to actually see some of these benefits worldwide, then bitcoin is probably one of our only shots at it. To me that's worth at least giving it a chance. It's a lot better than so much other mal-investment and wasteful expenditures in the world today.

Also, touching on the point that others mentioned about the bad outweighs the good. I believe that most people in the world are good and kind. If you believe that too, then thinking that economic sanctions or financial surveillance is an optimal strategy at fighting financial crimes is an extremely heavy handed approach to combating crime that punishes far more good people than it does bad. Criminal organizations and regimes have far more resources at hand to bypass capital restrictions anyway than the poor citizens that are impacted the most. If you think North Korea has any trouble funding its military programs with or without bitcoin, that's naive. Will bitcoin make it easier for financial crime to take place? Sure, but far more damage is done to innocent lives by heavy handed financial sanctions and surveillance than it helps. Collectively punishing millions of good innocent people simply because you want to stop a few bad apples who'd likely find other means anyway makes you no better than those you seek to punish.

https://www.independent.co.uk/voices/economic-sanctions-north-korea-syria-hospital-supplies-a8168321.html
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 22, 2020, 04:22:09 PM
Bitcoin is digital gold.  You can easily use it to buy whatever you want by linking it to a credit card.  Some stores will accept it straight up.  Itís cheap to use now too.  However, no one uses it for those purposes because itís used more as a store of value.  Volatile?  You betcha.  But everyone in crypto expects massive swings and figures they will just roll with them because it has a clear trajectory upwards and every dip it takes it just adds more legitimacy.  Bitcoin is much stronger now than it was in 2017!
Title: Re: Bitcoin - are we still out?
Post by: TheAnonOne on December 22, 2020, 10:20:04 PM
I keep just enough that a 5x-10x bump would FIRE me. That keeps it interesting.
Title: Re: Bitcoin - are we still out?
Post by: effigy98 on December 22, 2020, 10:25:57 PM
I keep just enough that a 5x-10x bump would FIRE me. That keeps it interesting.

Same here... Get the smallest allocation percentage of your portfolio you can afford to lose that would make you FIRE if it 10x so you don't feel like garbage when it does 10x and you were left out, working for the man still. Think of it as the only asymmetric insurance policy against government stupidity. I like gold, but don't see it 10x from here vs bitcoin in the next decade, but I really like both as a hedge against the system. I really don't know what has this potential upside at this CAPE ratio (stocks and real estate). Indirectly, you could play bitcoin with stocks like square and micro strategy. Eventually though, bitcoin will creep into your favorite stocks probably as more and more companies move their treasuries to it and you can just keep doing boring index funds and still capture some of the upside if it happens.
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 22, 2020, 11:28:35 PM
I can't do it because if the price went down 75% or so, I would not be at all surprised. I'd kick myself for succumbing to a bubble mania for something with even less intrinsic value than Tulip bulbs - something utterly replicable and invented out of thin air. So I'd sell low for tax harvesting. Then in a couple of years crypto would go back up to where it was.

Because the algorithm above is inevitable, the odds of me losing money in crypto is far greater than me making money.

The tulip mania is a valuable lesson but it is apposite to Bitcoin.  The tulip mania was a single boom and bust; bitcoin has gone through at least 3 "crashes" and has each time come out much stronger than the previous rally.  Tulips never did that.  Tulips were objectively bad assets because they can be grown to demand, could not be divided (and retain value), and they die rather quickly.  Bitcoin by design is scarce, can be divided at will and never dies.  Accordingly, Bitcoin is much more like gold than anything. 

Bitcoin is volatile but it is unsupported to say a loss is inevitable.  Indeed, the data suggests the opposite is more likely to happen.  Each rally and crash of Bitcoin (2017 was not the first) has ended with lows that were significantly higher than their previous highs.  That is a pretty good indicator that this is not a fad because well, fads die. 

I never tell anyone to buy Bitcoin.  People should make their own educated decisions and do what makes sense for them.  Bitcoin could go to zero but every day seems to make that seem less and less likely. 
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 22, 2020, 11:36:19 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

Bitcoin is actually easier to track and link to individuals than USD.  Bitcoin does have a public ledger after all.  A few years back there were a lot claims that Bitcoin was the de facto criminal currency of choice.  Yes, of course people have/continue to use it for illegal activities but the news shifted toward how authorities were making busts of dumb criminals who dealt in Bitcoin.  Bitcoin is not private and it is the last thing you want to buy anything illegal with. 
Title: Re: Bitcoin - are we still out?
Post by: Malcat on December 23, 2020, 06:20:04 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

Bitcoin is actually easier to track and link to individuals than USD.  Bitcoin does have a public ledger after all.  A few years back there were a lot claims that Bitcoin was the de facto criminal currency of choice.  Yes, of course people have/continue to use it for illegal activities but the news shifted toward how authorities were making busts of dumb criminals who dealt in Bitcoin.  Bitcoin is not private and it is the last thing you want to buy anything illegal with.

???

So because authorities are using Bitcoin/crypto to track illegal activity, you use that as evidence that criminals *aren't* using Bitcoin/crypto??

Where did I say it was untraceable? I said criminals were using it. Perhaps they will stop now that it's being used to track them.

I wasn't passing judgement on Bitcoin/crypto, I don't give a fuck about it. I only commented specifically on GuitarStv's glib statement about paying for Internet instead of buying porn. That's it, otherwise, I have no dog in this race.
Title: Re: Bitcoin - are we still out?
Post by: WhiteTrashCash on December 23, 2020, 06:53:27 AM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

Bitcoin is actually easier to track and link to individuals than USD.  Bitcoin does have a public ledger after all.  A few years back there were a lot claims that Bitcoin was the de facto criminal currency of choice.  Yes, of course people have/continue to use it for illegal activities but the news shifted toward how authorities were making busts of dumb criminals who dealt in Bitcoin.  Bitcoin is not private and it is the last thing you want to buy anything illegal with.

???

So because authorities are using Bitcoin/crypto to track illegal activity, you use that as evidence that criminals *aren't* using Bitcoin/crypto??

Where did I say it was untraceable? I said criminals were using it. Perhaps they will stop now that it's being used to track them.

I wasn't passing judgement on Bitcoin/crypto, I don't give a fuck about it. I only commented specifically on GuitarStv's glib statement about paying for Internet instead of buying porn. That's it, otherwise, I have no dog in this race.

I wonder how does the tracking even work. Can they just track all transactions or do they have to actively search for what they are looking for? I remember when I used to work in the call center for a credit union and porn companies would charge credit cards with innocuous names like "A1 Transactions" so people could sneak their porn subscriptions under the noses of significant others. It also reminds me of how friends and I used to send notes to each other using DOS computers where we would write a text file and label it as a batch file, so laymen didn't know to open and read them. I could see illegal transactions doing something similar and finding simple ways to sneak around detectives.
Title: Re: Bitcoin - are we still out?
Post by: MustacheAndaHalf on December 23, 2020, 11:09:01 AM
When there's a money making scheme, I prefer to visit the ground floor first.  With Bitcoin, that was using Bitcoin to buy things - and years ago that was difficult.  Also, although it was supposedly decentralized, all but one core developer was hired by the same company.  A blockchain related company captured all the developers responsible for bitcoin/blockchain software changes ... so to me, that's not decentralized.  I think that was an early attempt at lightning nodes, so it was in their best interest to not allow the blockchain to process too many transactions at at time (which would make their company stock options worthless).  I kinda soured on it around then.

I think I have some posts on this forum where I predicted the 2017 crash.  That year, Bitcoin surged up 2000% (twenty times) and the market cap of all Bitcoin exceeded the market cap of Visa.  Visa runs a worldwide credit card network that processes hundreds of thousands of transactions per second ... the blockchain was many order of magnitudes slower, with orders of magnitudes fewer things you could buy with it.  It make no sense, so I predicted a crash then.  For what it's worth, I don't see that same situation now.

There's a lot of investment company interest in making funds and ETFs out of Bitcoin, which is new.  There's a more worldwide fear of governments printing money and causing inflation, which helps Bitcoin (while the fear lasts).

Years ago, I recall a reporter asking someone from Venezuela why they invested everything they had in Bitcoin, which could go to zero.  They said they had already been through Venezuela's currency becoming worthless - multiple times.  So to them, Bitcoin was less risky than trusting their government not to devalue the currency to zero again.

The best estimate of inflation isn't expert opinion, or even the views of the Federal Reserve.  More accurate than all of those, according to a study?  The current level of inflation.  So that's my prediction: inflation doesn't change much.  Historically, that's the most accurate prediction.  If that proves true, at some point people will realize inflation isn't likely, which removes a big reason to own Bitcoin.
Title: Re: Bitcoin - are we still out?
Post by: ChpBstrd on December 23, 2020, 12:36:56 PM
My other problem with crypto in general is the risk of having one's "coins" stolen in yet another hack. My cash in the bank is protected by multiple levels of insurance, but if I open an account at Coinbase or wherever website, what's to say there won't be another multi-million dollar heist like there is literally every year? There is no recourse. This is also an issue with physical gold, but at least then one maintains some control over hiding places / safes. In contrast, the world's best hackers will always be drawn to crypto, and they will always be better than the developers the exchanges can hire, notwithstanding inside jobs.
Title: Re: Bitcoin - are we still out?
Post by: lifeanon269 on December 23, 2020, 01:19:22 PM
When there's a money making scheme, I prefer to visit the ground floor first.  With Bitcoin, that was using Bitcoin to buy things - and years ago that was difficult.  Also, although it was supposedly decentralized, all but one core developer was hired by the same company.  A blockchain related company captured all the developers responsible for bitcoin/blockchain software changes ... so to me, that's not decentralized.  I think that was an early attempt at lightning nodes, so it was in their best interest to not allow the blockchain to process too many transactions at at time (which would make their company stock options worthless).  I kinda soured on it around then.

I think I have some posts on this forum where I predicted the 2017 crash.  That year, Bitcoin surged up 2000% (twenty times) and the market cap of all Bitcoin exceeded the market cap of Visa.  Visa runs a worldwide credit card network that processes hundreds of thousands of transactions per second ... the blockchain was many order of magnitudes slower, with orders of magnitudes fewer things you could buy with it.  It make no sense, so I predicted a crash then.  For what it's worth, I don't see that same situation now.

I'm not sure where you're getting your info from, but a lot of it is just flat out incorrect. What do you mean that all but one core developer was hired by the same company? There are currently almost 800 contributors the to bitcoin core implementation (https://github.com/bitcoin/bitcoin/graphs/contributors). Which was the only one not bought by said company you're claiming?

Open Source software developers need to make a living and while it is often the case that open source developer contribute much of their time to FOSS projects for free, they still need to make a living. Therefore it is very common for them to receive funding through grants, collaboratives, crowd funding, donations, etc. The claim that one single company has hired all but one open source developer contributing to bitcoin developer couldn't be further from the truth. Yes, many companies do help fund development (it is in their best interest to do so if they're a company dependent on bitcoin's future). But there are many companies that offer grants to developers. Here is one infographic with just a small snippet of such:

https://bitcoinmagazine.com/articles/infographic-who-has-funded-bitcoin-core-development

Many developers are also turning to direct individual contributions for help in supporting them with their hard development work:

https://bitcoindevlist.com/

Furthermore, this is just one software implementation of bitcoin. There are several others that have many different contributors to their project. As a bitcoin node operator, you're free to choose whichever software implementation you'd like. While most bitcoin nodes run the bitcoin core implementation, there are several others including Knots, bitcore, and btcd. You're also free to fork the software yourself and maintain the code base yourself even though that's not really practical, time efficient, or secure. So making a claim that the development of the project isn't decentralized because of some false claim you're making couldn't be further from the truth.

Also, care to share which public company's stock you're referring to? I don't know of any publicly traded company whose interest would conflict with Lightning Network development. That doesn't make any sense and again I'm calling out as false here.

The best estimate of inflation isn't expert opinion, or even the views of the Federal Reserve.  More accurate than all of those, according to a study?  The current level of inflation.  So that's my prediction: inflation doesn't change much.  Historically, that's the most accurate prediction.  If that proves true, at some point people will realize inflation isn't likely, which removes a big reason to own Bitcoin.

Let me get this straight, the best estimate of future inflation is current inflation? That doesn't make any sense again. According to what study? Seems like you're making a lot of claims in one post without any links to what you're supposedly citing. Bitcoin doesn't need runaway hyperinflation to be a worthwhile control and hedge against it. If there is any certainty, based on historical precedent, it is that there is and will be inflation. That isn't always a bad thing (if kept in check) and it doesn't need to be a lot of inflation. Even just a little bit of inflation, at today's interests rates and GDP growth, is still a siphon on currency values in a world where there are very few alternatives or even monetary policy recourse.

"Every day that goes by and bitcoin hasn't collapsed due to legal or technical problems, that brings new information to the market. It increases the changes of bitcoin's eventual success and justifies a higher price."   -Hal Finney

You see, bitcoin is all about security. Ultimately that's what the property of decentralization provides. Security from attacks, natural disasters, geopolitical turmoil, etc. So the longer bitcoin is running continuously without legal or technical setbacks, the market grows continuously more trusting in the security that bitcoin provides and therefore the higher the price that market participants are willing to pay for bitcoin.
Title: Re: Bitcoin - are we still out?
Post by: lifeanon269 on December 23, 2020, 01:31:12 PM
My other problem with crypto in general is the risk of having one's "coins" stolen in yet another hack. My cash in the bank is protected by multiple levels of insurance, but if I open an account at Coinbase or wherever website, what's to say there won't be another multi-million dollar heist like there is literally every year? There is no recourse. This is also an issue with physical gold, but at least then one maintains some control over hiding places / safes. In contrast, the world's best hackers will always be drawn to crypto, and they will always be better than the developers the exchanges can hire, notwithstanding inside jobs.

That's why it is generally a best recommendation to never store bitcoin on and exchange or within a custodial account like that. Often, it is in these companies' best interest to insure their bitcoin deposits in the event of a breach or systemic failure on their part, but that doesn't protect against an attack compromising your account credentials and withdrawing your funds. In an event like that, you have very little recourse. The saying goes "Not your keys, not your bitcoin."

Storing large amounts of bitcoin in an "online" wallet or custodial account carries large amounts of risk to it. Anything more than just a couple thousand dollars and you should really be looking at controlling the keys to your own bitcoin and storing it offline in a way that prevents your bitcoin from being hacked and stolen. You mentioned gold; so much in the same fashion as storing and securing your own gold bars, you can secure and store your own bitcoin. You can store your keys (seed words) on steel plates and hide them away for safe keeping. The benefit of bitcoin being a digital asset as that new additional methods of security have come about that traditional commodities and financial tools don't provide. Things such as multi-sig storage where you must require access to 2-of-3 or 3-of-5 (or any combination) keys in order to spend the funds. These different keys can also then be dispersed geographically or given to different individuals or stored using differing methods for fault tolerance.

Is the user-interface there yet to allow such ease of use for securely storing your bitcoin in these ways? No, not yet. We're a long way from having grandma be able to secure bitcoin (if we ever get there). But there have been massive improvements in the tech that has been making it easier and easier. My best advice is to just store any large funds of bitcoin offline in a secure fashion that is hidden away. You can still send funds to it if you need to, but having it offline makes it so much more secure and having your seed words as something that you need to physically secure is something that everyone is generally much more familiar with doing.

Cheers.
Title: Re: Bitcoin - are we still out?
Post by: MustacheAndaHalf on December 23, 2020, 02:00:55 PM
This was about 5 years ago, when there were closer to 5 core developers, not 800.

https://www.newyorker.com/business/currency/inside-the-fight-over-bitcoins-future

"Aterrific rumpus broke out in the world of Bitcoin last week, when veteran developers Gavin Andresen and Mike Hearn published Bitcoin XT, a competing version of Bitcoin Core"
"One of the most vocal critics of XT has been Gregory Maxwell, one of Bitcoinís five core developers"

We're not going to agree on events, but the formation of a lightning network back then was only necessarily because the block size was not going to be expanded.  The core developers said no, and they won the fight.  Years ago, miners only trusted the version of the software written by a handful of people.

Technically you can fork the code and have your own blockchain, but nobody's going to trust or use that fork.  It would be like trusting someone who just created their own virtual currency, with no track record or indication of trust.

---
I didn't claim Bitcoin requires hyperinflation.  There's a very common view that people who are afraid of inflation are buying gold and "digital gold", Bitcoin.  You can see it in another thread on this forum - Buffet and Dalio's views about gold and Bitcoin.  People's fears of inflation are fueling the purchase of Bitcoin.
Title: Re: Bitcoin - are we still out?
Post by: lifeanon269 on December 23, 2020, 02:47:39 PM
This was about 5 years ago, when there were closer to 5 core developers, not 800.

Even in early 2015 there were over 40+ contributors to bitcoin's codebase. I sent you the link earlier and you could've verified yourself.

https://github.com/bitcoin/bitcoin/graphs/contributors?from=2009-08-25&to=2015-01-18&type=c

Technically you can fork the code and have your own blockchain, but nobody's going to trust or use that fork.  It would be like trusting someone who just created their own virtual currency, with no track record or indication of trust.

It is clear you don't understand some of the fundamentals. Forking the code doesn't mean a fork in the blockchain. I can fork the codebase of bitcoin core on github and choose to maintain it myself or have others help. Others have done that (see Bitcoin Knots). That doesn't create a fork in the blockchain itself.

We're not going to agree on events, but the formation of a lightning network back then was only necessarily because the block size was not going to be expanded

I suggest you read my first post in this thread where I discuss the trade-offs and benefits of a blockchain:

https://forum.mrmoneymustache.com/investor-alley/bitcoin-are-we-still-out/msg2757464/#msg2757464

Expanding the blocksize is not an effective way of scaling a blockchain. Since a blockchain's only benefit is decentralization, compromising its only benefit simply to allow more transactions to be processed defeats the entire purpose of using a blockchain. Therefore, a 2nd layer or sidechain like Lightning was ALWAYS going to be necessary as a means to scale.

Also, it wasn't bitcoin core developers that said no to a blocksize increase. It was the entire bitcoin node network that did. For a technical explanation on how full-nodes defend the network against changes to consensus rules, read this article. It is one of my favorites to this date:

https://medium.com/hackernoon/bitcoin-miners-beware-invalid-blocks-need-not-apply-51c293ee278b

Title: Re: Bitcoin - are we still out?
Post by: OtherJen on December 23, 2020, 06:53:13 PM
Definitely donít get involved in something like Quadriga: OSC: Quadriga founder Gerald Cotten carried out cryptocurrency fraud by himself (https://www.thechronicleherald.ca/business/local-business/osc-quadriga-founder-gerald-cotten-carried-out-cryptocurrency-fraud-by-himself-461043/)
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 23, 2020, 09:56:38 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

Bitcoin is actually easier to track and link to individuals than USD.  Bitcoin does have a public ledger after all.  A few years back there were a lot claims that Bitcoin was the de facto criminal currency of choice.  Yes, of course people have/continue to use it for illegal activities but the news shifted toward how authorities were making busts of dumb criminals who dealt in Bitcoin.  Bitcoin is not private and it is the last thing you want to buy anything illegal with.

???

So because authorities are using Bitcoin/crypto to track illegal activity, you use that as evidence that criminals *aren't* using Bitcoin/crypto??

Where did I say it was untraceable? I said criminals were using it. Perhaps they will stop now that it's being used to track them.

I wasn't passing judgement on Bitcoin/crypto, I don't give a fuck about it. I only commented specifically on GuitarStv's glib statement about paying for Internet instead of buying porn. That's it, otherwise, I have no dog in this race.

I didn't say any of things you questioned me on.  I am at a loss here.  Is this a really bad strawman or a misunderstanding?
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 23, 2020, 10:08:09 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

Bitcoin is actually easier to track and link to individuals than USD.  Bitcoin does have a public ledger after all.  A few years back there were a lot claims that Bitcoin was the de facto criminal currency of choice.  Yes, of course people have/continue to use it for illegal activities but the news shifted toward how authorities were making busts of dumb criminals who dealt in Bitcoin.  Bitcoin is not private and it is the last thing you want to buy anything illegal with.

???

So because authorities are using Bitcoin/crypto to track illegal activity, you use that as evidence that criminals *aren't* using Bitcoin/crypto??

Where did I say it was untraceable? I said criminals were using it. Perhaps they will stop now that it's being used to track them.

I wasn't passing judgement on Bitcoin/crypto, I don't give a fuck about it. I only commented specifically on GuitarStv's glib statement about paying for Internet instead of buying porn. That's it, otherwise, I have no dog in this race.

I wonder how does the tracking even work. Can they just track all transactions or do they have to actively search for what they are looking for? I remember when I used to work in the call center for a credit union and porn companies would charge credit cards with innocuous names like "A1 Transactions" so people could sneak their porn subscriptions under the noses of significant others. It also reminds me of how friends and I used to send notes to each other using DOS computers where we would write a text file and label it as a batch file, so laymen didn't know to open and read them. I could see illegal transactions doing something similar and finding simple ways to sneak around detectives.

This is a good question.  Bitcoin has a blockchain which is essentially an public ledger.  Every bitcoin transaction that has ever taken place is stored on the ledger.  If you know someone's public wallet address then you can see all of their transactions.  The government can and has subpoenaed cryptocurrency exchanges for their data (customer deposits / public wallet addresses).  They link addresses to individuals and can see who they do business with that way.  So if they bust a human trafficker that is dumb enough to deal in Bitcoin then they can determine a good amount of their business partners by seeing who they exchange bitcoin with.  If you're going to do anything illegal then you're better off paying in cold hard cash.  That said, I much rather they use Bitcoin so we can bust em'.
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 23, 2020, 10:40:01 PM
When there's a money making scheme, I prefer to visit the ground floor first.  With Bitcoin, that was using Bitcoin to buy things - and years ago that was difficult.  Also, although it was supposedly decentralized, all but one core developer was hired by the same company.  A blockchain related company captured all the developers responsible for bitcoin/blockchain software changes ... so to me, that's not decentralized.  I think that was an early attempt at lightning nodes, so it was in their best interest to not allow the blockchain to process too many transactions at at time (which would make their company stock options worthless).  I kinda soured on it around then.

I think I have some posts on this forum where I predicted the 2017 crash.  That year, Bitcoin surged up 2000% (twenty times) and the market cap of all Bitcoin exceeded the market cap of Visa.  Visa runs a worldwide credit card network that processes hundreds of thousands of transactions per second ... the blockchain was many order of magnitudes slower, with orders of magnitudes fewer things you could buy with it.  It make no sense, so I predicted a crash then.  For what it's worth, I don't see that same situation now.

There's a lot of investment company interest in making funds and ETFs out of Bitcoin, which is new.  There's a more worldwide fear of governments printing money and causing inflation, which helps Bitcoin (while the fear lasts).

Years ago, I recall a reporter asking someone from Venezuela why they invested everything they had in Bitcoin, which could go to zero.  They said they had already been through Venezuela's currency becoming worthless - multiple times.  So to them, Bitcoin was less risky than trusting their government not to devalue the currency to zero again.

The best estimate of inflation isn't expert opinion, or even the views of the Federal Reserve.  More accurate than all of those, according to a study?  The current level of inflation.  So that's my prediction: inflation doesn't change much.  Historically, that's the most accurate prediction.  If that proves true, at some point people will realize inflation isn't likely, which removes a big reason to own Bitcoin.

I didn't find a post where you called the crash (I only search 2017) but I saw in March 2017 you shared your doubts as to Bitcoin and indicated you cashed out.  Is that what you are thinking of?  What was the value of Bitcoin when you sold?

I have my own concerns about Bitcoin.  I'm not about to be one of those guys or gals that goes all-in on it.  My number 1 priority is my retirement accounts but if I have a few bucks laying around I'll throw them at Coinbase.  I think in the long term it will go up but I know it will crash as well. 
Title: Re: Bitcoin - are we still out?
Post by: jsloan on December 24, 2020, 08:28:46 AM
My take as someone who owns Bitcoin and Ethereum:

In 2017 I became interested in blockchain technology and began playing around with the development tool kits for Ethereum and NEO (.net based alt coin).  Smart contracts are a very interesting concept (https://www.youtube.com/watch?v=ZE2HxTmxfrI) and is a core feature that Bitcoin lacks (at least natively).  To me Bitcoin is old technology that had first mover advantage that may someday go away.  With that said, I believe that Blockchain Technology is absolutely the future, and how the space stands today: Ethereum would be my coin of choice.  Most of the "alt coins" you see today are using Ethereum anyway so be aware of the promises of these products and investigate for yourself if they have the technology to back it up.

In my mind it is a very real possibility that some currencies/securities will someday be blockchain based (possibly China?).  As an investment, Bitcoin has been great.  Do I trust Bitcoin will stay on top and only increase in value since it has a fixed supply?  No.  Like any technology Bitcoin could be easily replaced with better technology, possibly also backed by a government currency.  Eventually a lot of financial technology with leverage blockchain (some already are) so its hard to know which one will come out of top.     
Title: Re: Bitcoin - are we still out?
Post by: MustacheAndaHalf on December 24, 2020, 11:42:16 AM
It is clear you don't understand some of the fundamentals. Forking the code doesn't mean a fork in the blockchain. I can fork the codebase of bitcoin core on github and choose to maintain it myself or have others help. Others have done that (see Bitcoin Knots). That doesn't create a fork in the blockchain itself.

We're not going to agree on events, but the formation of a lightning network back then was only necessarily because the block size was not going to be expanded
...
Also, it wasn't bitcoin core developers that said no to a blocksize increase. It was the entire bitcoin node network that did. For a technical explanation on how full-nodes defend the network against changes to consensus rules, read this article. It is one of my favorites to this date:

https://medium.com/hackernoon/bitcoin-miners-beware-invalid-blocks-need-not-apply-51c293ee278b
When I say "fork the code" and refer to a blockchain fork, I don't mean forking the client code.  But I don't remember the right terms from 5 years ago, and you seem inclined to pick on the way I describe things, so that's probably not productive.

Your description of a smaller block size is interesting, and the need to verify all transactions and avoid spamming.  You have a point there, about keeping block sizes small.  Thanks for the article you mention at the end, I learned a few things.
Title: Re: Bitcoin - are we still out?
Post by: MustacheAndaHalf on December 24, 2020, 12:12:10 PM
...
I think I have some posts on this forum where I predicted the 2017 crash.  That year, Bitcoin surged up 2000% (twenty times) and the market cap of all Bitcoin exceeded the market cap of Visa.  Visa runs a worldwide credit card network that processes hundreds of thousands of transactions per second ... the blockchain was many order of magnitudes slower, with orders of magnitudes fewer things you could buy with it.  It make no sense, so I predicted a crash then.  For what it's worth, I don't see that same situation now.
I didn't find a post where you called the crash (I only search 2017) but I saw in March 2017 you shared your doubts as to Bitcoin and indicated you cashed out.  Is that what you are thinking of?  What was the value of Bitcoin when you sold?

I have my own concerns about Bitcoin.  I'm not about to be one of those guys or gals that goes all-in on it.  My number 1 priority is my retirement accounts but if I have a few bucks laying around I'll throw them at Coinbase.  I think in the long term it will go up but I know it will crash as well.
I just scanned all of my posts from mid-2017 to Jan 2018, and I didn't mention it at all on this forum.  I retract that claim.  I had several forum accounts and am not sure where I posted my warning.

Because I wanted to use Bitcoin before investing in it, I didn't own much.  I paid for a year of VPN service with Bitcoin, which was the highlight.  The low point was selling small lots of BTC on eBay, where 100% of buyers lied and said they didn't get BTC, triggering a dispute process not worth the amounts involved.
Title: Re: Bitcoin - are we still out?
Post by: MustacheAndaHalf on December 24, 2020, 12:17:30 PM
Bitcoin is digital gold.  You can easily use it to buy whatever you want by linking it to a credit card.  Some stores will accept it straight up.  Itís cheap to use now too.  However, no one uses it for those purposes ...
If you use BTC that appreciated 33% to buy something, you owe capital gains tax on the increase.  I expect some crypto backed credit cards to disappear once the tax hassle becomes clear - maybe with some IRS audits.  The IRS now requires people to check a box if they bought or sold cryptocurrencies in the tax year they're filing.
https://www.cnbc.com/select/visa-backs-first-credit-card-to-offer-bitcoin-rewards/

Have those crypto credit cards mostly been offered in the last year or two?  Meaning, are there any from before 2019?
Title: Re: Bitcoin - are we still out?
Post by: onecoolcat on December 24, 2020, 12:51:00 PM
Bitcoin is digital gold.  You can easily use it to buy whatever you want by linking it to a credit card.  Some stores will accept it straight up.  Itís cheap to use now too.  However, no one uses it for those purposes ...
If you use BTC that appreciated 33% to buy something, you owe capital gains tax on the increase.  I expect some crypto backed credit cards to disappear once the tax hassle becomes clear - maybe with some IRS audits.  The IRS now requires people to check a box if they bought or sold cryptocurrencies in the tax year they're filing.
https://www.cnbc.com/select/visa-backs-first-credit-card-to-offer-bitcoin-rewards/

Have those crypto credit cards mostly been offered in the last year or two?  Meaning, are there any from before 2019?

I don't follow the crypto credit cards but I recall they were around in 2017-18.  They were pricier to transact in back then because it was per-lightning network but they were around.  It is not much more affordable (and quicker) to transact in BTC so the transaction fees are no longer a barrier to using BTC for everyday purchases.  Thing is, no one wants to transact in Bitcoin because (1) volatile assets are not good currency and (2) BTC is viewed more as an asset now than a currency (no one wants to use their gold bullion to buy coffee either). 
Title: Re: Bitcoin - are we still out?
Post by: Malcat on December 24, 2020, 05:47:52 PM
Is if finally usable as a currency (what everyone was sold on half a decade ago), or still entirely speculative BS?

As far as I can tell, it's still mostly used to sell drugs online and pay for porn.

I may be old fashioned, but I prefer to simply buy an internet subscription rather than pay for porn.

Not that type of porn. The expensive kind that no one wants traced back to them.

Ew.

Well yeah. Ew.
Bitcoin/crypto is the currency of choice for the worst of humanity. It's very popular in the human trafficking world.

Bitcoin is actually easier to track and link to individuals than USD.  Bitcoin does have a public ledger after all.  A few years back there were a lot claims that Bitcoin was the de facto criminal currency of choice.  Yes, of course people have/continue to use it for illegal activities but the news shifted toward how authorities were making busts of dumb criminals who dealt in Bitcoin.  Bitcoin is not private and it is the last thing you want to buy anything illegal with.

???

So because authorities are using Bitcoin/crypto to track illegal activity, you use that as evidence that criminals *aren't* using Bitcoin/crypto??

Where did I say it was untraceable? I said criminals were using it. Perhaps they will stop now that it's being used to track them.

I wasn't passing judgement on Bitcoin/crypto, I don't give a fuck about it. I only commented specifically on GuitarStv's glib statement about paying for Internet instead of buying porn. That's it, otherwise, I have no dog in this race.

I didn't say any of things you questioned me on.  I am at a loss here.  Is this a really bad strawman or a misunderstanding?

I was probably misunderstanding.
Title: Re: Bitcoin - are we still out?
Post by: forgerator on December 24, 2020, 08:15:19 PM
Invested in it in the late 2017 boom, was left holding bags which were down 80% from all time high. But kept believing in the tech and kept buying small amounts all the way until July of this year when I finally broke even. That's when I took a gamble and put all my IRA into GBTC (risky bet which could have back fired). Ended up tripling my IRA balance due to the recent run-up to 23k. So I can say I'm very much in profit but it involved immense risk taking.
Title: Re: Bitcoin - are we still out?
Post by: Radioherd88 on December 28, 2020, 03:09:32 PM
Invested in it in the late 2017 boom, was left holding bags which were down 80% from all time high. But kept believing in the tech and kept buying small amounts all the way until July of this year when I finally broke even. That's when I took a gamble and put all my IRA into GBTC (risky bet which could have back fired). Ended up tripling my IRA balance due to the recent run-up to 23k. So I can say I'm very much in profit but it involved immense risk taking.

Are you sticking with it or cashing in your original investment to hedge against a crash?
Title: Re: Bitcoin - are we still out?
Post by: forgerator on December 29, 2020, 09:06:31 AM
I'm planning to cash out in January on 50% of my initial investment, then remaining 50% perhaps in summer of 2021.
Title: Re: Bitcoin - are we still out?
Post by: monfluo on April 25, 2021, 09:10:49 PM
When there's a money making scheme, I prefer to visit the ground floor first.  With Bitcoin, that was using Bitcoin to buy things - and years ago that was difficult.  Also, although it was supposedly decentralized, all but one core developer was hired by the same company.  A blockchain related company captured all the developers responsible for bitcoin/blockchain software changes ... so to me, that's not decentralized.  I think that was an early attempt at lightning nodes, so it was in their best interest to not allow the blockchain to process too many transactions at at time (which would make their company stock options worthless).  I kinda soured on it around then.

I think I have some posts on this forum where I predicted the 2017 crash.  That year, Bitcoin surged up 2000% (twenty times) and the market cap of all Bitcoin exceeded the market cap of Visa.  Visa runs a worldwide credit card network that processes hundreds of thousands of transactions per second ... the blockchain was many order of magnitudes slower, with orders of magnitudes fewer things you could buy with it.  It make no sense, so I predicted a crash then.  For what it's worth, I don't see that same situation now.

There's a lot of investment company interest in making funds and ETFs out of Bitcoin, which is new.  There's a more worldwide fear of governments printing money and causing inflation, which helps Bitcoin (while the fear lasts).

Years ago, I recall a reporter asking someone from Venezuela why they invested everything they had in Bitcoin, which could go to zero.  They said they had already been through Venezuela's currency becoming worthless - multiple times.  So to them, Bitcoin was less risky than trusting their government not to devalue the currency to zero again.

The best estimate of inflation isn't expert opinion, or even the views of the Federal Reserve.  More accurate than all of those, according to a study?  The current level of inflation.  So that's my prediction: inflation doesn't change much.  Historically, that's the most accurate prediction.  If that proves true, at some point people will realize inflation isn't likely, which removes a big reason to own Bitcoin.

Agree with this comment. This is where I arrive. However, it does remind me that crypto, and more specifically Bitcoin is not more or less important in fiat land where the currency can be trusted, BUT in countries where the fiat cannot be trusted, well perhaps it might have a significant future. If you thought your Government was going to devalue your currency 100x, you'd probably try Bitcoin (as you say), and in many developing nations individuals already use other forms of currency such as mobile money minutes.

Here's my thought, the more use cases that become available for Bitcoin, the more it might be worth, because then it won't simply be an inflation store (like gold) it will be a true cross border currency (already is - but just with insufficient participation versus say USD).

Love to know what others thing, whether they'd want investing exposure to BTC through say borrowing on their investments / property and then gaining exposure to BTC? Too risk? Or should you have a portfolio theory approach where 0.5-1% should be in crypto to take some upside (should it occur)?
Title: Re: Bitcoin - are we still out?
Post by: talltexan on April 26, 2021, 07:38:30 AM
My approach to Crypto...very quick summary is that I've "dollar value averaged" up to where I think I can stand it. It's worked out for me since I've done so during the dramatic run up.

Each pay period--I only buy/sell on my paycheck days--I set a target amount I wanted to own, increasing that target by $100 every cycle. As the currencies I've owned have moved around that target, I might have to buy or sell to bring my stake back to the target amount.

This method has given me a lower-risk path to where I am now, which is basically having about the equivalent of one month's pay in crypto- while having sold enough to make back my original cost. The downside is that my return would have been greater if I'd simply dollar-cost-averaged, as I woul have bought more at lower prices, but that path would have carried greater risk.

Title: Re: Bitcoin - are we still out?
Post by: marcus_aurelius on April 26, 2021, 06:21:01 PM

What I am not saying is that bitcoin isn't without risk or that you should sell everything and buy bitcoin. But what I am saying is that it is risky to NOT hold any bitcoin in your portofolio at all. This forum is all about diversification and talks all about holding index funds and passive investing and yet I find it funny that many don't see the forest from the trees in the greater macro-economic picture that all these assets' valuations are tied to currencies that are being massively inflated.


I liked your post a lot and agree 100%. I find plenty to agree with both views that Bitcoin is a great idea or a bad one, but don't understand why people don't invest in it. You don't need to understand something to invest in it, just like you don't need to understand Bernoulli's principle to travel on an airplane.

Someone here was asking where the long-term holders are. Count me as one. My ~$6K speculation is worth ~$55K today and could all be gone tomorrow. My advice to people is to determine the amount of money you are 100% comfortable with losing, and buy some Bitcoin just to get some exposure to it. Even a small $100 exposure means potential high upside with the downside limited to $100.
Title: Re: Bitcoin - are we still out?
Post by: GuitarStv on April 27, 2021, 07:44:32 AM
FOMO still appears to be the main driver for Bitcoin 'investors' then?
Title: Re: Bitcoin - are we still out?
Post by: Maschinist on April 27, 2021, 08:21:07 AM
I'm FI and mostly a passive investor nowadays but also still doing active trend following trading with a smaller percentage of our net worth.

I bought Bitcoin end of November 2020 at $18.500 per coin with about 8% of net worth when it was about to brake out to new all time highs ( I missed the complete 2017 run up caused by laziness of not following up on my own analysis).
 
In December 2020 I bought Ethereum (ETH) with the same approach (about to break out to new ATH in a super log trend with about 5% of net worth.
I wrote this article about it at that time: https://freiheitsmaschine.com/bitcoin-2020-oder-die-blase-die-keine-war/  (in German)

Both trades are now 200-300% plus and I'm planning to hold both positions during most of 2021.

That said from a fundamental perspective I think MMM is wrong with his Bitcoin article.
What he (in my opinion) forgets to consider is the strength of the network effect.

Things have value because people are using them.

You could clone Facebook 1.000 times but they would not get any value without users (network) of the original Facebook. This existing network effect is a super strong moat. More users are still joining Facebook not because they like Mark Zuckerberg, but because everybody else is using it.

Bitcoin also has a huge network effect with more than hundred million users. This user base is constantly growing and no other blockchain project comes even close and will take that away.

Ethereum is another animal because its the leading platform for "world computer" applications (DeFi and NFT) and it has the by far biggest network effect in this area of technology.

I have no crystal ball but I speculate that Bitcoin could reach $150.000 per coin as "Gold 2.0" till end of 2021 before another bear market starts. This would represent a market capitalization of about 3 Trillion or just below 30% of the market cap of Gold.
Ethereum could reach about $9.000 per coin till end of 2021 which would be a 1 Trillion market cap or 50% of Apple stock.

Could this be wrong? Of course.
But there is a significant chance that both speculations are playing out because the majority of people still don't understand them or the reason why they have value.

Initially I risked about 12% of net worth and if both speculations would have instantly dropped to zero, it would have been painful, but we would still have been FI.
I both speculations play out like I estimate they would double our family net worth after tax. (crypto gains are tax free in Germany after 12 month holding period)

That's a pretty good bet in my opinion and a maybe once in a decade opportunity.

Have a nice day
Title: Re: Bitcoin - are we still out?
Post by: talltexan on April 27, 2021, 12:33:45 PM
@Maschinist , what do you believe to be an appropriate share of your net worth to be in crypto currency?

When considering your stock investments, what international % do you use?
Title: Re: Bitcoin - are we still out?
Post by: Maschinist on April 27, 2021, 03:24:48 PM
Hi.

At this time of the cycle I would only allocate a single digit percentage of net worth into the crypto area.

In December 2020, when Bitcoin & Ethereum where breaking out to new all time highs, risk/reward was very favorable. Now its still a good possibility to participate in this massive trend (and also to avoid FOMO when everybody gets into a buying panic in the second half of 2021) but I would clearly set a limit of how much to invest percentage wise.

Majority of net worth should in general be in cash flow producing assets like stocks / ETF.

Have a nice day

Title: Re: Bitcoin - are we still out?
Post by: Telecaster on April 27, 2021, 03:45:41 PM

Bitcoin also has a huge network effect with more than hundred million users. This user base is constantly growing and no other blockchain project comes even close and will take that away.


How many users does Bitcoin really have though?   I mean, there are lots of owners, but what percentage of those owners use Bitcoin to buy and sell things?  For that reason, I view Bitcoin as a collectable, like say, Picasso paintings or Beanie babies.  You don't need a network effect for Picasso paintings to be valuable, there just has to be a public perception that it is in fact valuable. 
Title: Re: Bitcoin - are we still out?
Post by: Maschinist on April 28, 2021, 02:57:26 PM

How many users does Bitcoin really have though?   I mean, there are lots of owners, but what percentage of those owners use Bitcoin to buy and sell things?  For that reason, I view Bitcoin as a collectable, like say, Picasso paintings or Beanie babies.  You don't need a network effect for Picasso paintings to be valuable, there just has to be a public perception that it is in fact valuable.

Nobody in his right mind is "selling" a currency / asset / product that compounds with an annual rate of more than 200% per year since its introduction in 2009 (and on top is producing a lot of capital gains taxation events with those currency like sales.)

Bitcoin went from:
0.1 to 1
1 to 10
10 to 100
100 to 1,000
1,000 to 10,000
10,000 to currently 50.000+
in 12 years

Its already the best performing asset/product, call it whatever you want, in our lifetime.

Current market cap: 1 trillion US dollar!

You can call it also beany babies.

But maybe, just maybe, you are overlooking something.

Maybe its a new inflation resistant 100+ mil. user (and growing) asset class.
Tesla & MicroStrategy have it already on their balance sheets.
A "Gold 2.0" with currently only 10% of Golds market cap.

You can copy its code but not its network.
 
Like you can pay a great painter to do perfect Picasso copies but all the interested people in the world (the Picasso network) only want the original (Network effect).
Title: Re: Bitcoin - are we still out?
Post by: effigy98 on May 01, 2021, 11:59:02 AM
Probably safer to park in bonds. The government has your back and will not cause inflation.
Title: Re: Bitcoin - are we still out?
Post by: Telecaster on May 01, 2021, 01:13:56 PM
Nobody in his right mind is "selling" a currency / asset / product that compounds with an annual rate of more than 200% per year since its introduction in 2009 (and on top is producing a lot of capital gains taxation events with those currency like sales.)

<snip>
 
Like you can pay a great painter to do perfect Picasso copies but all the interested people in the world (the Picasso network) only want the original (Network effect).

First, that's not the network effect and second, you are arguing against yourself.  The network effect is when something gains utility as its use becomes more widespread. 

As you point out, the vast majority of Bitcoin owners do not use Bitcoin to buy things.  They just own it in hopes of future appreciation.  Bitcoin use is not becoming more widespread by any appreciable measure.  Therefore the utility of using Bitcoin is not growing because the network of users is not growing.   

Note: "owning" and "using" are different words with different definitions.  I'm not interested in arguing the accepted definitions of commonly used words. 
Title: Network effect?
Post by: ChpBstrd on May 03, 2021, 10:46:37 AM
Thought 1:

What if the network effect only has value if the network produces something of value?

E.g.
English language is valuable for international trade because so many people speak it.
US dollar is valuable for international trade because so many people accept it.
Facebook is valuable because so many people are already there.
AirBnB is valuable because so many properties are listed on it.

The top 2-3 cryptos have brand awareness, but is it also necessary that they produce an economic benefit for that to matter? Try to complete the sentence "Bitcoin is useful because..." with something coherent about how many other people have bought it. I suppose a crypto with higher liquidity is theoretically more useful to trade with than a crypto with lower liquidity, with lower bid-ask spreads as a percentage of price than an unknown penny crypto. Thus as a zero-sum trading game it would be more fun.

Thought 2:

In a still-theoretical future where people trade Bitcoin for labor, goods, and services, a larger user base will likely result in more stuff made available to buy. Yet, for some reason, I still cannot go to the gas station to buy a Red Bull and a candy bar with 0.00001 Bitcoins, despite the currency being around for a dozen years and having many millions of holders.

Perhaps the network effect is actually crypto's enemy. The gas station only sells in dollars because everyone already has dollars and there are few people trying to use Bitcoin. Dollars have already seized the network, even if it is an inferior system like the QWERTY keyboard or (ugh) Facebook. The reason it is unlikely I'll learn to speak Hindi or take the time to open and monitor a MySpace account is because there isn't much of a network effect to use those things, and so they aren't useful. If we had no pre-established alternative language or social media company, then yes we might learn Hindi as our first language and waste time on MySpace instead of Facebook. However, because there is a pre-established language and social media service we'd have to go out of our way to find other speakers of a relatively rare language in our area or convince our friends to switch social networks and lose touch with all their friends, etc. Why do that when the status quo is easy? Why pay the switching costs?

Finally, in the theoretical world where Bitcoin is starting to gain acceptance as a way to spend money and vendors will accept either USD or BTC, which money are you going to spend: your Bitcoin or your dollars? Dollars are losing purchasing power at about 2-3% per year, while Bitcoin's deflationary properties mean it is appreciating - let's say - 2-3% per year in this hypothetical future. The choice is easy. Buy your Red Bull and candy bar with dollars so that you don't lose 2-3% purchasing power, and don't miss out on the opportunity for 2-3% gains in Bitcoin. That's a 4-6% arbitrage opportunity! Of course, if everyone makes the logical choice, there is no one to trade Bitcoin with the gas station, and so the gas station shuts down their Bitcoin terminal as a cost savings move. If every business makes this decision, Bitcoin stops functioning as an accepted currency.

Perhaps this dynamic explains why cryptos are still collectibles and not currencies. The USD is just good enough that there's no justification to pay the switching costs.