Bitcoin is funny money

[Juan Ponce de León]

Why is it that bitcoin needs an army of bullshit artists to give such a sales pitch all the time?

For that reason alone, people should avoid it.

Why is it that people that don't like bitcoin can never shut up about it?  Go and do something else LMAO.

Why should I? The title of this thread is “Bitcoin is funny money”. I’m on topic. I am correct. No one has been able to satisfactorily answer my questions (because there are none. Bitcoin is worthless). So, I refuse to cede the ground.

If bitcoin proponents want to have a jircle cerk, why don’t they go somewhere else and  do it.

Obviously it isn't worthless, it's trading at ~$56900 right now as I type this.  There are thousands and thousands of transactions every day, it's a very robust market with futures, options, margin trading.  The price discovery is very strong.  Clearly not worthless, so you're not correct.  You're wrong.  And you're only going to end up poorer because of it.

Tulip bulbs, my friend. Tulip bulbs.

And the best thing is you can just keep on repeating that, no matter what the price is.

[celerystalks]

Why is it that bitcoin needs an army of bullshit artists to give such a sales pitch all the time?

For that reason alone, people should avoid it.

Why is it that people that don't like bitcoin can never shut up about it?  Go and do something else LMAO.

Why should I? The title of this thread is “Bitcoin is funny money”. I’m on topic. I am correct. No one has been able to satisfactorily answer my questions (because there are none. Bitcoin is worthless). So, I refuse to cede the ground.

If bitcoin proponents want to have a jircle cerk, why don’t they go somewhere else and  do it.

Obviously it isn't worthless, it's trading at ~$56900 right now as I type this.  There are thousands and thousands of transactions every day, it's a very robust market with futures, options, margin trading.  The price discovery is very strong.  Clearly not worthless, so you're not correct.  You're wrong.  And you're only going to end up poorer because of it.

Tulip bulbs, my friend. Tulip bulbs.

And the best thing is you can just keep on repeating that, no matter what the price is.

Price does not equal value.  Lots of things are sold that are worthless.

 Take lottery tickets for example. There is huge demand for them. And, by and large, they are worthless because most people will not break even on lottery ticket purchases over their lifetime.

Tulip bulbs are classic example of price being unhinged from actual value.

Also lets take late 90s tech startups/IPOs. Mostly worthless.

Sub-prime mortgages. Almost took down the whole financial system.

All of these things had in common that the price, for a time, far outstriped any rational assessment of value. Those who understand this can avoid them. Those that can usually end up getting burned.

Now is not different with bitcoin. It is a worthless ledger entry. It doesn’t entitle anyone to anything. The fact that there is novelty in trading them today does not make them intrinsically valuable. So it goes.

[Telecaster]

Also, your facts about PSE's production sources is incorrect. Hydro is not their largest source of electricity. It isn't even second. It is third behind both coal and natural gas:

https://www.pse.com/pages/energy-supply/electric-supply

Thanks for the clarification.  However point remains, PSE doesn't generate their own hydro power.  They buy it.  If there isn't available hydro power to buy, they generate it themselves using fossil fuels.  Question:  Have Columbia Basin hydro producers cut back their sales to PSE due to increased demand by Bitcoin miners?  Answer:  Yes they have.

EDIT: Just wanted to add here is a comparison of electricity prices for Seattle in the period from just before bitcoin mining until now. From 10.8 cents/KWh to 11.4 cents/KWh. I'd be willing to bet that the share of that minor increase that is related to bitcoin mining is negligible.

https://www.bls.gov/regions/west/news-release/2019/averageenergyprices_seattle_20190116.htm
https://www.bls.gov/regions/west/news-release/averageenergyprices_seattle.htm

I'd agree with that.  Seattle has its own electrical utility, which obtains a lot power from hydro generated by dams the city owns, all on the west side of the mountains, none on the Columbia.   The rest of it they have to buy.  So power here is cheap, but it isn't Bitcoin cheap.  The price is also influenced by snowpack.  In big snow years they generate a lot more power, so the cost goes down.  Vice versa in dry years.    So you can pay 11.4  cents/KWh or whatever in Seattle or drive over the mountain and pay 2.4 cents/KWh.  If you are a bitcoin miner, you'll drive over the mountain.  In fact, the first miner I'm aware of who did it on a large scale (I'm sure there were others before him, but first one I heard about) did exactly that.  Relocated from Seattle to Wenatchee.  AFAIK, there's never been significant Bitcoin mining here beyond the hobby level.

[lifeanon269]

Price does not equal value.  Lots of things are sold that are worthless.

Take lottery tickets for example. There is huge demand for them. And, by and large, they are worthless because most people will not break even on lottery ticket purchases over their lifetime.

Tulip bulbs are classic example of price being unhinged from actual value.

Also lets take late 90s tech startups/IPOs. Mostly worthless.

Sub-prime mortgages. Almost took down the whole financial system.

All of these things had in common that the price, for a time, far outstriped any rational assessment of value. Those who understand this can avoid them. Those that can usually end up getting burned.

Now is not different with bitcoin. It is a worthless ledger entry. It doesn’t entitle anyone to anything. The fact that there is novelty in trading them today does not make them intrinsically valuable. So it goes.

How many of those things have been the best trading asset for 10+ years running? Certainly any market can act irrational for a period of time, but at some point you have to admit that you were wrong about what the market is demanding. Again, no one is saying there isn't a lot of speculation taking place, but behind all that speculation is massively growing demand for censorship resistant decentralized money.

But I do agree with you that price does not equal value. However, in this case I feel you're wrong in which direction it is misaligned. In this case the value is higher than what the market has been pricing it as and you're witnesses the market completely reprice it accordingly.

[lifeanon269]

Thanks for the clarification.  However point remains, PSE doesn't generate their own hydro power.  They buy it.  If there isn't available hydro power to buy, they generate it themselves using fossil fuels.  Question:  Have Columbia Basin hydro producers cut back their sales to PSE due to increased demand by Bitcoin miners?  Answer:  Yes they have.

But that's beside the point and it doesn't back up your claim that bitcoin mining in the river basin was driving up costs for PSE customers.

I'd agree with that.  Seattle has its own electrical utility, which obtains a lot power from hydro generated by dams the city owns, all on the west side of the mountains, none on the Columbia.   The rest of it they have to buy.  So power here is cheap, but it isn't Bitcoin cheap.  The price is also influenced by snowpack.  In big snow years they generate a lot more power, so the cost goes down.  Vice versa in dry years.    So you can pay 11.4  cents/KWh or whatever in Seattle or drive over the mountain and pay 2.4 cents/KWh.  If you are a bitcoin miner, you'll drive over the mountain.  In fact, the first miner I'm aware of who did it on a large scale (I'm sure there were others before him, but first one I heard about) did exactly that.  Relocated from Seattle to Wenatchee.  AFAIK, there's never been significant Bitcoin mining here beyond the hobby level.

No one is saying that PSE electricity is as cheap as the electricity near the dams in the river basin where bitcoin mining is taking place. That's precisely why bitcoin miners would choose to locate there. But again, it goes back to the claim that bitcoin mining was driving up electricity rates for customers both inside the river basin and for outside utilities which just wasn't true. Here is another historical rate sheet for Avista, another utility in WA, going way back and there is just not any evidence to back up the claim being made.

https://www.myavista.com/-/media/myavista/content-documents/our-rates-and-tariffs/wa/waeratehist.pdf

Here is Chelan County's public utility's long term rate planning presentation that shows they haven't increased rates for customers for 8 straight years (2012-2020) and only a 9% increase in total from 2000-2020 (inflation during that time was 40%).

https://www.chelanpud.org/docs/default-source/commission/rates-planning.pdf

Same with Douglas County at the peak of bitcoin mining mania:

https://douglaspud.org/Documents/Feb%20Rates%202018.pdf


So it doesn't matter whether you're looking at outside utilities or residential customers of the public utilities in the river basin, there is just no data to back up the claim that bitcoin mining was driving up costs for customers. At the end of the day it is a lot of hand-waving over something that isn't as big as it is made out to be.

[BicycleB]

It seems like you both (seattlecyclone and BicycleB) are getting causality mixed up simply for the purpose of scapegoating bitcoin.

It may seem like it to you, but I'm not scapegoating. In case you haven't noticed, I haven't even taken sides in the great "BTC good, BTC bad" debate. I admit that I just expressed an opinion with a negative implication, but I did not extend from there to generalize "BTC bad". Because I haven't even concluded that. Maybe the utility of BTC is enough to compensate for the pollution; I'm pondering that question. The power causality and the carbon impact seem obvious to me, so they're what I said. Assuming my purpose is scapegoating seems like a unfair negative assumption to me, and hurts my feelings. Isn't assuming negative motivations an attack according to forum policy?

Re causality, I'm expressing the view of causality that numerous professional analysts of power and pricing systems believe, including economists, lawmakers and engineers. I suspect they would say you're the one who has causality mixed up. Your logic path on local power pricing makes sense based on its premises but the premises appear to omit relevant information that logically produces a different result - info that is considered fact by people in the field, and which I mentioned in my reply.

The examples you gave in the post just above seem suggestive in your argument's favor, but it's unclear whether they're enough to disprove the more general principles.

[lifeanon269]

It may seem like it to you, but I'm not scapegoating. In case you haven't noticed, I haven't even taken sides in the great "BTC good, BTC bad" debate. I admit that I just expressed an opinion with a negative implication, but I did not extend from there to generalize "BTC bad". Because I haven't even concluded that. Maybe the utility of BTC is enough to compensate for the pollution; I'm pondering that question. The power causality and the carbon impact seem obvious to me, so they're what I said. Assuming my purpose is scapegoating seems like a unfair negative assumption to me, and hurts my feelings. Isn't assuming negative motivations an attack according to forum policy?

Re causality, I'm expressing the view of causality that numerous professional analysts of power and pricing systems believe, including economists, lawmakers and engineers. I suspect they would say you're the one who has causality mixed up. Your logic path on local power pricing makes sense based on its premises but the premises appear to omit relevant information that logically produces a different result - info that is considered fact by people in the field, and which I mentioned in my reply.

The examples you gave in the post just above seem suggestive in your argument's favor, but it's unclear whether they're enough to disprove the more general principles.

Please don't take anything I said personally. I made no personal attacks against you. We're having a good debate and I was merely saying what my perception was. Rereading your original post again I understand your skepticism and that you're withholding judgement. I simply said scapegoating because bitcoin is often singled out as being very harmful for the climate, but in the end that blame is often outsized compared to the blame that should be pointed elsewhere. In reality, bitcoin's energy consumption is only about 0.15% of global electricity consumption and only 0.024% of total energy production.

Furthermore, there seems to be a lack of context when referring to bitcoin's energy use while it is being singled out. For example, in all the threads about gold on these forums, I don't see critics jumping into those threads about gold's carbon footprint even though it is much larger than bitcoin's. And while gold's footprint will likely get higher as reserves are more difficult to reach, at least bitcoin's is incentivized to get better with time. At the end of the day, bitcoin is an alternative. Whether that's an alternative to gold or fiat, it's energy use must be compared with those since you can only hold specific value in one or the other at any given time. In both cases, bitcoin's carbon footprint is lower. I'm not saying that bitcoin doesn't have an impact on the environment, everything we use and do does. But as an alternative to some of the money and stores of value that we have available to us, it can be better as an alternative from that perspective.

It is the same type of faulty scapegoating you see when critics call out electric vehicles and their batteries, solar, or wind power for their negative impacts on the environment without considering the fact that they're alternatives the fossil fuel industry. They're better alternatives and calling out the faults of battery components while not recognizing it as an alternative to fossil fuels is a major lapse in constructive criticism.

The appeal to authority that you made in regard economists, lawmakers, and engineers is hardly a decent rebuttal without the evidence from those authorities to back up the claims being made. That's not to say that there isn't some bitcoin mining out there that is raising the market price for customers in any given region. But there probably hasn't been a bigger concentration bitcoin mining in the world than what there was in the Columbia river basin during its peak in 2017-2018 and as I showed there wasn't any increase in electricity rates for customers. The reality is that the impact of bitcoin's electricity use, because of its decentralized nature, is mostly spread out over the globe and therefore doesn't impact local pricing for customers as much as you'd think. Bitcoin seeks out cheap electricity and usually with cheap electricity comes a heavy supply that has some elasticity to it before pricing needs to respond to increased demand.

At the end of the day, a lot of the criticism for bitcoin's energy use is unwarranted in context. Many of the people criticizing bitcoin for its carbon footprint probably wouldn't hesitate to sit down for a steak dinner even though animal agriculture accounts for about 18% of global emissions. Meanwhile bitcoin only accounts for 0.024% of global energy production and a good portion of that energy is clean. It just seems disingenuous to me with misplaced blame.

I do enjoy a good debate and that is why I engage in them. Frankly, nothing makes me more bullish about bitcoin after seeing some of the other tired arguments against it in this thread (tULiPs?!?!). It is a signal to me that we're still early.

[the_gastropod]

I simply said scapegoating because bitcoin is often singled out as being very harmful for the climate, but in the end that blame is often outsized compared to the blame that should be pointed elsewhere. [...] Furthermore, there seems to be a lack of context when referring to bitcoin's energy use while it is being singled out. For example, in all the threads about gold on these forums, I don't see critics jumping into those threads about gold's carbon footprint even though it is much larger than bitcoin's.

This thread is about Bitcoin. Talking about Bitcoin's carbon emissions is relevant and on topic. Talking about gold's is not, and is a rather common form of whataboutism from Bitcoin enthusiasts.

Second, even if this were relevant, do you have any sources for this? I did some back-of-the-napkin math, and I think this is incorrect. 198k tons of gold have been mined throughout history, and 2/3 of those have been mined since 1950 [1]. It's estimated that about 0.8 tons of CO2 are emitted per ounce of gold mined [2]. There are 32,000 ounces per ton, meaning a high estimate of CO2 emissions for total gold mining would be 0.8 tons/ounce * 32,000 ounces/ton * 198,000 tons * 2/3 = ~3.4 Billion total tons of CO2 since 1950 or 48M tons annually. Bitcoin is currently responsible for about 90.2M tons of CO2 per year [3].


[1] https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold
[2] https://www.spglobal.com/marketintelligence/en/news-insights/blog/greenhouse-gas-and-gold-mines-nearly-1-ton-of-co2-emitted-per-ounce-of-gold-produced-in-2019
[3] https://www.theguardian.com/technology/2021/mar/10/bitcoin-rise-could-leave-carbon-footprint-size-london

And while gold's footprint will likely get higher as reserves are more difficult to reach, at least bitcoin's is incentivized to get better with time.

How do you figure this? As the price rises, so does the incentive to mine. Seems odd to simultaneously believe the price of Bitcoin will increase while its energy-requirements decrease. I know "Proof of Stake!" is the trademarked get-out-of-jail excuse here, but that's been the talking point for the better part of a decade. I ain't buyin' it.

At the end of the day, bitcoin is an alternative. Whether that's an alternative to gold or fiat, it's energy use must be compared with those since you can only hold specific value in one or the other at any given time. In both cases, bitcoin's carbon footprint is lower. I'm not saying that bitcoin doesn't have an impact on the environment, everything we use and do does. But as an alternative to some of the money and stores of value that we have available to us, it can be better as an alternative from that perspective.

Again, do you have any sources to back this up? And, given that it's not replaced either of these things (and looks extremely unlikely to do so), how is it helpful even if what you're saying is true? Lighting a tire fire in my back yard may produce less CO2 than having a kid, but it's still a pretty unnecessary thing to do. Even if someone offered to pay me lots of money to "own" the tire fire!

It is the same type of faulty scapegoating you see when critics call out electric vehicles and their batteries, solar, or wind power for their negative impacts on the environment without considering the fact that they're alternatives the fossil fuel industry. They're better alternatives and calling out the faults of battery components while not recognizing it as an alternative to fossil fuels is a major lapse in constructive criticism.

There's a fundamental difference. A solar farm replaces the need for a coal or oil powerplant. An electric vehicle replaces the need for a ICE vehicle. They're net positive. Bitcoin replaces nothing. Like my tire fire example, it's just damaging with no real upside from a climate perspective.

A more relevant comparison would be flights. They're huge polluters. Most Americans still fly. And maybe you could argue the cost is worth it. But it'd be silly to argue flights are good for the climate because they're not as bad as some other unrelated very bad thing (agriculture? cars?)

The appeal to authority that you made in regard economists, lawmakers, and engineers is hardly a decent rebuttal without the evidence from those authorities to back up the claims being made. That's not to say that there isn't some bitcoin mining out there that is raising the market price for customers in any given region. But there probably hasn't been a bigger concentration bitcoin mining in the world than what there was in the Columbia river basin during its peak in 2017-2018 and as I showed there wasn't any increase in electricity rates for customers. The reality is that the impact of bitcoin's electricity use, because of its decentralized nature, is mostly spread out over the globe and therefore doesn't impact local pricing for customers as much as you'd think. Bitcoin seeks out cheap electricity and usually with cheap electricity comes a heavy supply that has some elasticity to it before pricing needs to respond to increased demand.

Especially in countries with few regulations, like North Korea and China.

[lifeanon269]

This thread is about Bitcoin. Talking about Bitcoin's carbon emissions is relevant and on topic. Talking about gold's is not, and is a rather common form of whataboutism from Bitcoin enthusiasts.

I didn't say this thread. I said threads on this forum about gold. I was making the point that members on this forum (and in general) don't point the finger at gold's large carbon footprint when discussing gold, but won't hesitate to remark about bitcoin's the moment a bitcoin thread appears. You can do the searches on this forum yourself if you don't believe me. It isn't whataboutism. Because as I said, it is a zero-sum game. You can only store specific value in one or the other, so it is very relevant to compare the carbon footprints of both.

Second, even if this were relevant, do you have any sources for this? I did some back-of-the-napkin math, and I think this is incorrect. 198k tons of gold have been mined throughout history, and 2/3 of those have been mined since 1950 [1]. It's estimated that about 0.8 tons of CO2 are emitted per ounce of gold mined [2]. There are 32,000 ounces per ton, meaning a high estimate of CO2 emissions for total gold mining would be 0.8 tons/ounce * 32,000 ounces/ton * 198,000 tons * 2/3 = ~3.4 Billion total tons of CO2 since 1950 or 48M tons annually. Bitcoin is currently responsible for about 90.2M tons of CO2 per year [3].


[1] https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold
[2] https://www.spglobal.com/marketintelligence/en/news-insights/blog/greenhouse-gas-and-gold-mines-nearly-1-ton-of-co2-emitted-per-ounce-of-gold-produced-in-2019
[3] https://www.theguardian.com/technology/2021/mar/10/bitcoin-rise-could-leave-carbon-footprint-size-london

Yes, I do have a source. Digiconomist developed a new method of determining bitcoin's electricity consumption and thus carbon footprint. They've combined both the economics-based methods and the physics-based methods and combines them to form the Composite Bitcoin Energy Index (CBEI). You can read about their methodologies here:

https://bitcoinmagazine.com/business/introducing-cbei-a-new-way-to-measure-bitcoin-network-electrical-consumption

As you can see in their findings, Alex De Vries C-BECI results are usually on the higher bound of estimates and it seems like you're grabbing (or at least the article you cited is grabbing) the very highest bound estimate (not surprising for a news outlet to do so).



At any rate, the composite between all these methods that includes results from University of Cambridge, Judge Business School (JBS), The International Energy Agency (IEA), Electric Power Research Institute (EPRI), Coin Center, CoinShares, Marc Bevand, Hass McCook, and Alex de Vries can be found at the following link. The image above is from the old article describing the methodology to combine all these sources (hence why it isn't current), but the link below is up to date.

https://digiconomist.net/bitcoin-energy-consumption/

The current carbon footprint for Bitcoin's energy consumption stands at 37.82Mt CO2e.

For gold's carbon footprint, if we're looking at just the production side of gold, it currently stands at about 125.522Mt CO2e (source: World Gold Council). Why use "back-of-the-napkin" math when you can just cite the World Gold Council?

https://www.nsenergybusiness.com/news/gold-climate-change-net-zero-mining/

How do you figure this? As the price rises, so does the incentive to mine. Seems odd to simultaneously believe the price of Bitcoin will increase while its energy-requirements decrease. I know "Proof of Stake!" is the trademarked get-out-of-jail excuse here, but that's been the talking point for the better part of a decade. I ain't buyin' it.

No, you're not going to hear any proof-of-stake argument from me. Proof-of-stake is inherently flawed from a security standpoint and it will never be implemented for bitcoin. Bitcoin is incentivized to use renewables though. As the cost to produce electricity with renewables continues to decline, bitcoin will naturally becomes more and more green. As it stands, it is already way far ahead of any other industry once you take out subsidies for fossil fuels from the equation. In the US, bitcoin's total energy share from renewables stands at 63% while the total production share of renewables is only at 20%. So there are clear incentives to use clean energy. The overall trend in the energy industry is that renewables are getting cheaper and cheaper. As this trend continues, it will be cost prohibitive to mine bitcoin on anything but renewable energy. That's just how the incentives operate. That's not to say that gold's carbon footprint won't decrease either. But it will be a lot more difficult to clean up gold's carbon footprint from mining and heavy machinery. Furthermore, gold will most likely just simply go "net-zero" through offsets instead. But offsets are rather meaningless when it comes to climate change.

Again, do you have any sources to back this up? And, given that it's not replaced either of these things (and looks extremely unlikely to do so), how is it helpful even if what you're saying is true? Lighting a tire fire in my back yard may produce less CO2 than having a kid, but it's still a pretty unnecessary thing to do. Even if someone offered to pay me lots of money to "own" the tire fire!

See my sources above, but I don't see how your tire fire analogy is at all relevant here and it isn't even close to being an accurate analogy. Gold and bitcoin are very much competing assets from a store of value perspective. There are countless surveys with millennials and younger about whether they'd rather own gold or bitcoin and the choice is always a resounding bitcoin in that regard. If bitcoin continues to siphon away investment into gold, and thus gold mining declines, then that will very much be a net-positive when it comes to the environment/emissions.


"If it's a bubble, it dies and it consumes nothing. If it's digital gold, it's more efficient and will emit much less than the asset it disrupts. And if it's really successful, it's because of demand from truly value creating applications that define our future and should be worth the electricity."
(Source: Seetee's Whitepaper: https://www.seetee.io/static/shareholder_letter-6ae7e85717c28831bf1c0eca1d632722.pdf)

[celerystalks]

I’m surprised that 10 pages in we still haven’t heard any cogent arguments in favor of bitcoin. Well. Really I’m not actually surprised because there are none. It all boils down to a great fool argument as far as I can tell. There is still nothing to recommend bitcoin over regular money besides the argument that someone will pay more for it in the future. Why? Nobody knows. But we are assured by people, who are themselves heavily “invested” in it, that it will. Go figure.

[Wintergreen78]

Bitcoin is about to begin a long decline. As I’ve known all along, cryptokitties will be its downfall. They’re like Bitcoin, but with kittens!

Non-fungible tokens are the new thing. You can collect cryptokitties, digital collages, NBA highlights, and other tchotchkes. Even the Washington Post is writing articles about them now!

https://www.washingtonpost.com/technology/2021/03/12/nft-beeple-christies-blockchain/

[Not There Yet]

Non-fungible tokens are the new thing. You can collect cryptokitties, digital collages, NBA highlights, and other tchotchkes.

When I first learned about NFTs, I thought, "Great.  Now we have crypto-Beanie Babies."

Bitcoin is about to begin a long decline.

I agree.  People will dump Bitcoin and jump on NFTs as "The Next Big Thing".

[onecoolcat]

Friendly reminder that today is March 13, 2021 and the price of 1 Bitcoin is $60,137.  This is a 137% increase over what it was the date you made this thread on December 26, 2020 ($25,282).

[Wrenchturner]

This is basically a "top is in" thread for btc.

[Vienna4ever]

Bitcoin is funny money. Why? Because the story keeps changing.

First they said it is like currency and could do microtransactions, that you'd be able to buy a cup of coffee with it. Now it costs enough energy to heat a whole house for a year to make a transaction.

Then they said, oh, it's not currency, it's actually a store of value, like gold , or maybe it is a commodity. I even once heard someone say "it stores the energy made to produce it" - really? can you release the energy from a bitcoin to use it? Back to the store of value argument, what store of value is it if it can't be used for anything. "oh but gold is intrinsically useless". Really? I guess you better tell all those dentists, jewelers, aerospace companies, electronics makers, pharma companies, etc that they are wasting their money and time. The price of gold will never go to zero, because as a commodity, it has intrinsic usefulness for which there will always be some demand for, unlike bitcoin which has none.  Somebody tell me, what can you do with a bitcoin? Yeah yeah, we are all old and out of touch. Or maybe you are young and naive - don't have experience or wisdom -  and haven't seen (or read enough history) to know about bubbles.

"Oh but bitcoin is rare"..  Really are there like a bunch of satoshis? What about the 7000+ other cryptocurrencies (and growing)? If it is so easy to make your own cryptocurrency what then makes bitcoin rare? What's to stop anyone from getting bored with bitcoin and not move on to some other , better crypto? It's like buying the iPhone 1 and then expecting no one to want iPhone 25-XXX.


Asks yourselves, why is CBNC always talking about Bitcoin? Could it be that they are getting paid to constantly run ads by Grayscale Bitcoin Trust?

 
Sure those that got in early made money. But those coming in late will be left holding the bag.

 

[Juan Ponce de León]

Bitcoin is funny money. Why? Because the story keeps changing.

First they said it is like currency and could do microtransactions, that you'd be able to buy a cup of coffee with it. Now it costs enough energy to heat a whole house for a year to make a transaction.

Then they said, oh, it's not currency, it's actually a store of value, like gold , or maybe it is a commodity. I even once heard someone say "it stores the energy made to produce it" - really? can you release the energy from a bitcoin to use it? Back to the store of value argument, what store of value is it if it can't be used for anything. "oh but gold is intrinsically useless". Really? I guess you better tell all those dentists, jewelers, aerospace companies, electronics makers, pharma companies, etc that they are wasting their money and time. The price of gold will never go to zero, because as a commodity, it has intrinsic usefulness for which there will always be some demand for, unlike bitcoin which has none.  Somebody tell me, what can you do with a bitcoin? Yeah yeah, we are all old and out of touch. Or maybe you are young and naive - don't have experience or wisdom -  and haven't seen (or read enough history) to know about bubbles.

"Oh but bitcoin is rare"..  Really are there like a bunch of satoshis? What about the 7000+ other cryptocurrencies (and growing)? If it is so easy to make your own cryptocurrency what then makes bitcoin rare? What's to stop anyone from getting bored with bitcoin and not move on to some other , better crypto? It's like buying the iPhone 1 and then expecting no one to want iPhone 25-XXX.


Asks yourselves, why is CBNC always talking about Bitcoin? Could it be that they are getting paid to constantly run ads by Grayscale Bitcoin Trust?

 
Sure those that got in early made money. But those coming in late will be left holding the bag.

Have fun staying poor.

[lifeanon269]

Bitcoin is funny money. Why? Because the story keeps changing.

As someone who's been involved with it from early on, I can tell you that the story hasn't changed one bit. It has always been the arguments against it that have constantly been changing as it continued to gain adoption.

And if you really think that because there are a myriad of other cryptocurrencies out there then that somehow invalidates bitcoin's scarcity, then I suggest you do more research.

Start with this article perhaps:

https://www.lynalden.com/bitcoins-network-effect/

[onecoolcat]

Bitcoin is funny money. Why? Because the story keeps changing.

As someone who's been involved with it from early on, I can tell you that the story hasn't changed one bit. It has always been the arguments against it that have constantly been changing as it continued to gain adoption.

And if you really think that because there are a myriad of other cryptocurrencies out there then that somehow invalidates bitcoin's scarcity, then I suggest you do more research.

Start with this article perhaps:

https://www.lynalden.com/bitcoins-network-effect/

I got a chuckle out of that comment too! 

[effigy98]

Top is in 61k! Maybe I will get a MicroStrategy tattoo soon. MicroStrategy position is larger than my grandpa index funds now... Maybe its time to rebalance.

[celerystalks]

Bitcoin is nothing. When someone “owns” a bitcoin they own nothing. The money used to buy the bitcoin is immediately transferred to the seller where, I assume, it is promptly spent on base consumption. So there is no investment in bitcoin because money is not put to productive endeavors nor does it represent a static pattern of higher value gained through human achievement such as fine art.

Bitcoin is valueless because, assuming one had enough money, it would not be worth it to own them all...at any price.  Once someone owns them all the whole thing ends.  The same cannot be said for a real investment. Ownership of all stock in a company would entitle one to all of the future earnings of the company or to liquidate the assets. Ownership of all of a bond issue of a company would entitle one to a stream of income and return of principal upon maturity. Real estate provides real tangible benefits which can be enjoyed by the owner or rented out. Ownership of more real estate provides more rights.  Ownership of virtually all of the real estate rights in a given locale turns someone into a lord in the traditional sense.

Further, the price of a bitcoin is a silly thing. This is just the price at which the last one traded at.  But they cannot all be sold at this price. If everyone tried to get out on short notice, there would be no buyers and the price would disappear. Miners would quickly withdraw and the whole thing could vanish.  Sure a rush for the exits could happen in any asset but eventually someone will ride in and begin buying based their understanding of the underlying or intrinsic value. This is the essence of value investing. This is how markets right themselves after volatility. People stop panicking and recover a sense of value. But since there is no underlying value to bitcoin there should be no belief that a market collapse would eventually stop and then turn around in all cases. It is possible to loose everything with bitcoin.

[Vienna4ever]

Have fun staying poor.

The kool-aid is strong in this one.

[Vienna4ever]

As someone who's been involved with it from early on, I can tell you that the story hasn't changed one bit. It has always been the arguments against it that have constantly been changing as it continued to gain adoption.

https://bitcoinmagazine.com/technical/bitcoin-now-useless-micropayments-solutions-are-coming1

And if you really think that because there are a myriad of other cryptocurrencies out there then that somehow invalidates bitcoin's scarcity, then I suggest you do more research.

Start with this article perhaps:

https://www.lynalden.com/bitcoins-network-effect/

Thanks I will read that. Lyn Alden is very bright and good at explaining things.

I would like to see her and Peter Schiff both on Clubhouse giving arguments for and against bitcoin. So far Peter Schiff has crushed the bitcoiners arguments.

And celerystalks latest post makes excellent points.

[lifeanon269]

https://bitcoinmagazine.com/technical/bitcoin-now-useless-micropayments-solutions-are-coming1

-----------------------------
Excerpt from your article:

"While the level of censorship resistance offered by Bitcoin’s permissionless payment network has obvious value, it’s also rather expensive. The system must remain decentralized in order for this resistance to censorship to remain intact. The cost of operating a full node increases as more transactions are processed on the network, and some users already see the costs related to full node operation as too high."
...
"Bitcoin payments were much cheaper in the past because demand for block space was much lower. Users are now essentially bidding on the right to have their transactions included in the next block. Large-value transfers and payments that necessitate a certain degree of censorship resistance will tend to outbid lower-value, everyday payments such as the purchase of a cup of coffee."
-----------------------------


The entire premise of bitcoin from day one was its decentralized nature. Without that, it has no advantage over current monetary systems offered today. The base layer blockchain simply can't scale to incorporate the entire world's everyday payments. That was always the case even though early on people were able to do so simply because of lack of transaction activity. Here is a statement from Hal Finney, one of the first users of bitcoin:



It was widely understood from early on that bitcoin just wasn't going to scale for everyday payments while still maintaining a level of decentralization required for security of the system. That's where secondary payment layers come in, but those need to be developed after the base layer blockchain and thus it takes time and won't be available from day one. Technical hurdles and technical progress doesn't mean the story has changed. The Lightning Network is live and seeing great progress and this is where micro-payments can be made while still being backed by the security of the base layer.

I would like to see her and Peter Schiff both on Clubhouse giving arguments for and against bitcoin. So far Peter Schiff has crushed the bitcoiners arguments.

And celerystalks latest post makes excellent points.

Do you wish to share some of Peter Schiff's arguments he's made that you feel have crushed bitcoiner arguments? Because I honestly haven't really seen many valid arguments from him and he seems to more simply troll the community nowadays. I honestly wouldn't be surprised if he actually owns a decent amount of bitcoin and just has spates with bitcoiners for the attention.

As far as celerystalks arguments go...ya I wasn't going to respond to those because frankly nothing he wrote made any sense whatsoever. I'm so glad to hear from him though that stocks and bonds can't go to zero ever...Phew!!

The price is just what the last one was traded at?...you mean like how every market operates?? haha. You can't sell every bitcoin at a given price?? Again, you mean like everything that is publicly traded?? For example, Jeff Bezos' net worth shouldn't technically be considered the value of his entire stock holdings at Amazon because there is no way for him to actually capitalize on his entire stock holdings at the current given market price. That's just basics fundamentals of supply and demand.

Furthermore, as mentioned in ARK's Bitcoin letter they released a little while back, Bitcoin is actually more liquid than most publicly traded equities with bid-ask spreads below 0.0001% on many exchanges around the world while the average US equity spread is roughly 0.035%. (Source on page 19: https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARKinvest_091729_Whitepaper_Bitcoin_II_An%20Investment.pdf)

There are some other interesting bits in the paper as well that are unrelated to the discussion but worth point out. For example on page 11, it shows how bitcoin has near zero correlation to the S&P500, gold, oil, bonds, emerging currencies, real estate, BoA, Apple, and Tesla. This suggests it marches to the beat of its own drum and is the only major asset with consistently low correlations to traditional asset classes. It amazes me that people can't get over their own odd inhibitions and recognize bitcoin as a legit asset that can play a valid risk reduction role with potential massive upside even with just a 1% allocation. Every day that the bitcoin network continues to operate and produce blocks is another day that proves its anti-fragile status and thus justifies a higher price in the market.

[celerystalks]

Every day that the bitcoin network continues to operate and produce blocks is another day that proves its anti-fragile status and thus justifies a higher price in the market.

Ahh yes. Past performance guarantees future success. How could I have forgotten this age old investment premise..

[marcus_aurelius]

I have been reading a lot about the pros and cons of Bitcoin. I find plenty to agree with in both camps, and have come to the conclusion that no one knows how Bitcoin is going to play out. It could hit $500K or zero tomorrow, and both results will seem obvious the day after.

At the same time, I want to profit from the long tail chance that it might go up in value, so I bought 1 Bitcoin and 8 Etherium for ~$6K a few years ago. I think it’s worth $70K today but I’m not selling or adding to my position. I still continue to agree with people in the pro and con camps.

My advice to people is — determine the amount of money you are 100% comfortable with losing, and buy some Bitcoin with that just to get some exposure to it. Your amount could be $50, $500 or $50,000 -- whatever you're OK with losing. I think it gives you vast potential upside with limited downside. Don't fool yourself -- know that this is pure speculation, not an investment, and hold your position for at least 5-10 years. Good luck!

[lifeanon269]

Every day that the bitcoin network continues to operate and produce blocks is another day that proves its anti-fragile status and thus justifies a higher price in the market.

Ahh yes. Past performance guarantees future success. How could I have forgotten this age old investment premise..

Has nothing to do with past performance in price, if that's what you're suggesting. It has to do with security.

[onecoolcat]

Every day that the bitcoin network continues to operate and produce blocks is another day that proves its anti-fragile status and thus justifies a higher price in the market.

Ahh yes. Past performance guarantees future success. How could I have forgotten this age old investment premise..

Has nothing to do with past performance in price, if that's what you're suggesting. It has to do with security.

Stop wasting your time with his bad faith arguments and feign ignorance.

[mjr]

I'm still laughing hysterically at the riposte to the woefully inadequate transaction rate argument that there will be multiple banks acting as secondary networks backed by bitcoin.

Bitcoin itself has no inherent value, now people are dreaming of a whole secondary financial network built on a foundation not even as strong as shifting sand...

It's just subprime mortgages all over again, layer upon layer of greedy folk looking to make an easy dollar.  Prudence and ethics would forbid me from getting involved, let alone common sense.

[celerystalks]

Every day that the bitcoin network continues to operate and produce blocks is another day that proves its anti-fragile status and thus justifies a higher price in the market.

Ahh yes. Past performance guarantees future success. How could I have forgotten this age old investment premise..

Has nothing to do with past performance in price, if that's what you're suggesting. It has to do with security.

Stop wasting your time with his bad faith arguments and feign ignorance.

I’m one of the few actual contributors to the discussion here. The topic of this thread is that bitcoin is funny money. Remember?

[BicycleB]

bitcoin has near zero correlation to the S&P500, gold, oil, bonds, emerging currencies, real estate, BoA, Apple, and Tesla. This suggests it marches to the beat of its own drum and is the only major asset with consistently low correlations to traditional asset classes. It amazes me that people can't get over their own odd inhibitions and recognize bitcoin as a legit asset that can play a valid risk reduction role with potential massive upside even with just a 1% allocation.

This seems to me to be one of the best arguments in favor.

[celerystalks]

bitcoin has near zero correlation to the S&P500, gold, oil, bonds, emerging currencies, real estate, BoA, Apple, and Tesla. This suggests it marches to the beat of its own drum and is the only major asset with consistently low correlations to traditional asset classes. It amazes me that people can't get over their own odd inhibitions and recognize bitcoin as a legit asset that can play a valid risk reduction role with potential massive upside even with just a 1% allocation.

This seems to me to be one of the best arguments in favor.

So does placing a wager on a roulette wheel or a horse race.

[celerystalks]

https://www.reuters.com/article/us-india-cryptocurrency-ban-idUSKBN2B60R0

India is waking up to smell the coffee. These cryptos are a direct threat to government sovereignty. They are like a perpetual wild west with no hope of ever being tamed.  An inability to be placed under the rule of law is not a bug, it is an inherent feature of cryptos, especially bitcoin.

[mjr]

As has been said on this very thread, BTC has no long-term future.  Governments will just not allow it to become ubiquitous in the economy.

Too bad, so sad.

[Juan Ponce de León]

https://www.reuters.com/article/us-india-cryptocurrency-ban-idUSKBN2B60R0

India is waking up to smell the coffee. These cryptos are a direct threat to government sovereignty. They are like a perpetual wild west with no hope of ever being tamed.  An inability to be placed under the rule of law is not a bug, it is an inherent feature of cryptos, especially bitcoin.

I love these posts.  So Bitcoin is not only worthless, a bubble, irrelevant, has no actual use and is headed for zero, but it is also simultaneously a direct threat to government sovereignty and a perpetual wild west with no hope of ever being tamed.

LMAO.

[mjr]

What a facile post.  No one disputes that the underlying technology is real and that its design gives it some characteristics of a global currency.

Indeed, it's entirely possible that central banks will one day create sovereign cryptocurrencies, no argument from me on that.  But they won't be anonymous and they'll be better designed to scale.

It's just bitcoin that won't ever get up to be the currency/store-of-value (pick one, it keeps changing) that the speculators want it to be.

[lifeanon269]

I'm still laughing hysterically at the riposte to the woefully inadequate transaction rate argument that there will be multiple banks acting as secondary networks backed by bitcoin.

Well this is embarrassing...

https://www.coindesk.com/kraken-crypto-exchange-secures-bank-charter-under-wyoming-law

[talltexan]

I have been reading a lot about the pros and cons of Bitcoin. I find plenty to agree with in both camps, and have come to the conclusion that no one knows how Bitcoin is going to play out. It could hit $500K or zero tomorrow, and both results will seem obvious the day after.

At the same time, I want to profit from the long tail chance that it might go up in value, so I bought 1 Bitcoin and 8 Etherium for ~$6K a few years ago. I think it’s worth $70K today but I’m not selling or adding to my position. I still continue to agree with people in the pro and con camps.

My advice to people is — determine the amount of money you are 100% comfortable with losing, and buy some Bitcoin with that just to get some exposure to it. Your amount could be $50, $500 or $50,000 -- whatever you're OK with losing. I think it gives you vast potential upside with limited downside. Don't fool yourself -- know that this is pure speculation, not an investment, and hold your position for at least 5-10 years. Good luck!

Sincere question: if your 1 Bitcoin declines in value from $55,000 today to $6,000 at a moment when you sell it, have you lost $49,000 or zero?

It traded over $60,000 over the weekend, you could have sold 0.1 BTC and gotten your principal back. I think the mental accounting matters a great deal.

[celerystalks]

I'm still laughing hysterically at the riposte to the woefully inadequate transaction rate argument that there will be multiple banks acting as secondary networks backed by bitcoin.

Well this is embarrassing...

https://www.coindesk.com/kraken-crypto-exchange-secures-bank-charter-under-wyoming-law

I agree, Wyoming is going to have egg on their face when this fails. And it will fail spectacularly.

A bank-type thing that can’t loan money? It makes all of its money off of charging lots of fees. What a popular idea. I’m surprised we don’t have tons more of those.

[lifeanon269]

I agree, Wyoming is going to have egg on their face when this fails. And it will fail spectacularly.

A bank-type thing that can’t loan money? It makes all of its money off of charging lots of fees. What a popular idea. I’m surprised we don’t have tons more of those.

Nothing like turning something to a complete 180 here and then making ignorant remarks about what an SPDI's purpose is. An SPDI is simply prohibited from lending out money using customer deposits since their primary purpose is fiduciary custodialship. An SPDI never hold's legal ownership over the funds that it holds in custody. Therefore if they're ever to go out of business, those funds must be returned to the customer (a good thing). Therefore there is no need for FDIC insurance and why lending out customer funds is not allowed. It's essentially the opposite of fractional reserve banking. I think it is a good thing to have alternative banking options in the world with different regulatory requirements to meet the demands of different types of customers, so I don't see that as a bad thing here.

http://wyomingbankingdivision.wyo.gov/home/areas-of-regulation/laws-and-regulation/special-purpose-depository-institution

[marcus_aurelius]

I have been reading a lot about the pros and cons of Bitcoin. I find plenty to agree with in both camps, and have come to the conclusion that no one knows how Bitcoin is going to play out. It could hit $500K or zero tomorrow, and both results will seem obvious the day after.

At the same time, I want to profit from the long tail chance that it might go up in value, so I bought 1 Bitcoin and 8 Etherium for ~$6K a few years ago. I think it’s worth $70K today but I’m not selling or adding to my position. I still continue to agree with people in the pro and con camps.

My advice to people is — determine the amount of money you are 100% comfortable with losing, and buy some Bitcoin with that just to get some exposure to it. Your amount could be $50, $500 or $50,000 -- whatever you're OK with losing. I think it gives you vast potential upside with limited downside. Don't fool yourself -- know that this is pure speculation, not an investment, and hold your position for at least 5-10 years. Good luck!

Sincere question: if your 1 Bitcoin declines in value from $55,000 today to $6,000 at a moment when you sell it, have you lost $49,000 or zero?

It traded over $60,000 over the weekend, you could have sold 0.1 BTC and gotten your principal back. I think the mental accounting matters a great deal.

Unless it reaches $500K or above, I won't sell it. Even if it reaches that sum, I will sell just a little to get some profit. Like I said, no one knows how this is going to end. The bottom line is I will sleep well at night even if I lose every cent.

[celerystalks]

I agree, Wyoming is going to have egg on their face when this fails. And it will fail spectacularly.

A bank-type thing that can’t loan money? It makes all of its money off of charging lots of fees. What a popular idea. I’m surprised we don’t have tons more of those.

Nothing like turning something to a complete 180 here and then making ignorant remarks about what an SPDI's purpose is. An SPDI is simply prohibited from lending out money using customer deposits since their primary purpose is fiduciary custodialship. An SPDI never hold's legal ownership over the funds that it holds in custody.

Legally speaking it is probably actually the converse of this. If it is set up like a custodial trust, the spdi would probably have legal title to the assets under their custodianship since thee assets would be in the name of the spdi and under their immediate discretion and control. But they wouldn’t have equitable title since the economic benefit of the crypto would inure to another, the bendiciary. Distinction smishtintions.  Lack of comprehension has never stopped a crypto enthusiast from attempting to seem knowledgable or profound.

Therefore if they're ever to go out of business, those funds must be returned to the customer (a good thing).

And if those funds disappear or cannot be accessed? I mean this is a problem even when real money is involved. But I fail to see how cryptos make it better.  And it doesn’t require a lot of imagination to see how the nature of cryptos could make it a lot lot worse.

Therefore there is no need for FDIC insurance and why lending out customer funds is not allowed. It's essentially the opposite of fractional reserve banking. I think it is a good thing to have alternative banking options in the world with different regulatory requirements to meet the demands of different types of customers, so I don't see that as a bad thing here.

No FDIC! Hot damn! Who ever benefited from a thing like that! Certainly not the banks themselves nor their customers.

So basically the spdi is analogous to the structure of every other hot storage exchange that has been ripped of over the last decade except they have a piece of paper from Wyoming banking regulators? How long have these SPDI things been around again?

http://wyomingbankingdivision.wyo.gov/home/areas-of-regulation/laws-and-regulation/special-purpose-depository-institution

Ahh yes. Less than two years. Thats why we’ve all never heard of them. To me this is just another attempt to launder the legitimacy of cryptos with an appeal to authority. In this some weird form of government permission. And I’m sure there is probably safe harbor or some limit on liability worked in there for when these spdi/exchanges eventually default on their obligations. That will be handy because prior to this poor defenseless crypto exchange operators,  who either lost or stole client money, were subjected to harsh criminal and civil penalties when the cash, bitcoins and/ other cryptos they held mysteriously went poof.

[BicycleB]

After enough repetition, even slow people like me start forming opinions. Mine are roughly:
1. Like @marcus_aurelius, can't tell whether the endgame is up or down.
2. Like him (him?) also, suspect that some small dip in the pool is risky but might be worthwhile.
3. "Small" balances the real risk of zero versus the possibility of the large upside.
4. Unclear whether the balance is positive or negative, but am guessing it's close enough to zero that it's a harmless-ish adventure in small doses.
5. As said previously, can see some benefit from volatile non-correlation separate from longterm rise or fall.
6. Harvesting 5 requires some rebalancing.
7. Can't tell when to rebalance but assume that, similar to stocks, anywhere from quarterly to annually is good enough.
8. I don't see that case for it as being strong enough to think most people SHOULD do it, but am guessing it's good enough for a diverse-portfolio type of investor to "reasonably" do it.
9. So - funny money camp, I guess I have opened my mouth and removed all doubt that I am a fool.
10. Still nervous about the price. Seems high! Now that I opened my trap, I can only assume BTC is poised to plummet. :)

At this point laziness and implementation details are the only remaining barrier. May report back at some point, but as one of the laziest forum members IRL, don't hold your breath.

[Jacob F]

I agree, Wyoming is going to have egg on their face when this fails. And it will fail spectacularly.

A bank-type thing that can’t loan money? It makes all of its money off of charging lots of fees. What a popular idea. I’m surprised we don’t have tons more of those.

Nothing like turning something to a complete 180 here and then making ignorant remarks about what an SPDI's purpose is. An SPDI is simply prohibited from lending out money using customer deposits since their primary purpose is fiduciary custodialship. An SPDI never hold's legal ownership over the funds that it holds in custody.

Legally speaking it is probably actually the converse of this. If it is set up like a custodial trust, the spdi would probably have legal title to the assets under their custodianship since thee assets would be in the name of the spdi and under their immediate discretion and control. But they wouldn’t have equitable title since the economic benefit of the crypto would inure to another, the bendiciary. Distinction smishtintions.  Lack of comprehension has never stopped a crypto enthusiast from attempting to seem knowledgable or profound.

Therefore if they're ever to go out of business, those funds must be returned to the customer (a good thing).

And if those funds disappear or cannot be accessed? I mean this is a problem even when real money is involved. But I fail to see how cryptos make it better.  And it doesn’t require a lot of imagination to see how the nature of cryptos could make it a lot lot worse.

Therefore there is no need for FDIC insurance and why lending out customer funds is not allowed. It's essentially the opposite of fractional reserve banking. I think it is a good thing to have alternative banking options in the world with different regulatory requirements to meet the demands of different types of customers, so I don't see that as a bad thing here.

No FDIC! Hot damn! Who ever benefited from a thing like that! Certainly not the banks themselves nor their customers.

So basically the spdi is analogous to the structure of every other hot storage exchange that has been ripped of over the last decade except they have a piece of paper from Wyoming banking regulators? How long have these SPDI things been around again?

http://wyomingbankingdivision.wyo.gov/home/areas-of-regulation/laws-and-regulation/special-purpose-depository-institution

Ahh yes. Less than two years. Thats why we’ve all never heard of them. To me this is just another attempt to launder the legitimacy of cryptos with an appeal to authority. In this some weird form of government permission. And I’m sure there is probably safe harbor or some limit on liability worked in there for when these spdi/exchanges eventually default on their obligations. That will be handy because prior to this poor defenseless crypto exchange operators,  who either lost or stole client money, were subjected to harsh criminal and civil penalties when the cash, bitcoins and/ other cryptos they held mysteriously went poof.

Starting your post with "legally speaking probably"..... clearly sets the stage. Ever realized that even the vanguard mutual fund account is not FDIC insured either? Its a custodial account, which means the title always remains with the customer. Hot damn! Needless to say that your post just contributed to global warming without generating any value :D

[celerystalks]

Starting your post with "legally speaking probably"..... clearly sets the stage. Ever realized that even the vanguard mutual fund account is not FDIC insured either? Its a custodial account, which means the title always remains with the customer. Hot damn! Needless to say that your post just contributed to global warming without generating any value :D

Wow! Another legal scholar! Sorry, pal, but you are just wrong

 First a brokerage such as vanguard is insured via SIPC. This sort of equivalent to the FDIC except it insures the account holders ownership interest in the securities but not necessarily their value.

 Further for things like stocks that people hold in their brokerage accounts the legal title to the securities are  is placed in “street name” in registration with the transfer agent for the stock. It is the equitable and beneficial title which is held by the account owner and represented in their brokerage account and which is established their brokerage account agreement and the fiduciary duty’s owed to them by the brokerage house.

I know learning is hard. But thanks for playing..
 

[lifeanon269]

Legally speaking it is probably actually the converse of this. If it is set up like a custodial trust, the spdi would probably have legal title to the assets under their custodianship since thee assets would be in the name of the spdi and under their immediate discretion and control. But they wouldn’t have equitable title since the economic benefit of the crypto would inure to another, the bendiciary. Distinction smishtintions.  Lack of comprehension has never stopped a crypto enthusiast from attempting to seem knowledgable or profound.

It is almost like you don't read anything that is linked to here, then you claim others have a lack of comprehension.

"SPDI banks can hold digital assets but will never have legal ownership over those assets. This means that even if a SPDI bank goes bankrupt, those assets have to be returned to customers, whereas a trust company can have its assets claimed by a judge during bankruptcy."

https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/custody-services/pub-ch-custody-services.pdf

No, they're not like a trust company at all and the entire legal framework provided by the state of Wyoming was entirely built for this purpose, so saying "Legally speaking it is probably actually the converse of this", just shows your unwillingness to understand, read, and learn when others are providing you information. A custody service bank is very different from a trust company. I've worked in the financial industry for 15+ years and the current institution I work for just received its trust charter in my state a couple years ago, so I am familiar with the regulatory process required to become one.

No FDIC! Hot damn! Who ever benefited from a thing like that! Certainly not the banks themselves nor their customers.

Since traditional banks operate under a fractional reserve banking, this means that a customer's deposits in such a bank is directly dependent on the health of the financial institution. Only a small fraction of deposits are actually backed by cash and this is where FDIC insurance comes in. If you have a custodial bank regulatory framework that prohibits fractional reserves like that, then there is no need for insurance such as that provided by FDIC or NCUA. That doesn't stop the institution from having their own insurance to protect the business from theft, breaches, or other things like that (those things are not covered under FDIC or NCUA anyways). But keep going with your ignorance.

[seattlecyclone]

It is almost like you don't read anything that is linked to here, then you claim others have a lack of comprehension.

"SPDI banks can hold digital assets but will never have legal ownership over those assets. This means that even if a SPDI bank goes bankrupt, those assets have to be returned to customers, whereas a trust company can have its assets claimed by a judge during bankruptcy."

And how exactly do you expect this requirement to be enforced if they don't actually have the assets on hand anymore? Suppose a rogue employee finds a way to empty a huge customer account, sends the money out of the reach of Wyoming authorities, and skips town. This is obviously illegal, and the bank would have a legal obligation to make the customer whole, but a legal obligation is only as good as the assets backing it up. If the bank can't make good on its obligation, where does that leave us?

[lifeanon269]

And how exactly do you expect this requirement to be enforced if they don't actually have the assets on hand anymore? Suppose a rogue employee finds a way to empty a huge customer account, sends the money out of the reach of Wyoming authorities, and skips town. This is obviously illegal, and the bank would have a legal obligation to make the customer whole, but a legal obligation is only as good as the assets backing it up. If the bank can't make good on its obligation, where does that leave us?

First off, FDIC insurance wouldn't protect a traditional financial institution from such breaches as you described either. That's where private insurance comes in. Furthermore, the lack of fractional reserve banking means that they're not required to be insured by the FDIC, but by having a valid bank charter from Wyoming, they are authorized to obtain it if they desired. Finally, the SPDI regulatory framework requires a certain level of private insurance to protect the funds held in custody for their customers.

See here:
https://www.wyoleg.gov/Legislation/2019/hb0074

[lifeanon269]

Suppose a rogue employee finds a way to empty a huge customer account, sends the money out of the reach of Wyoming authorities, and skips town.

I also wanted to address this specifically. The SPDI legal framework specifically requires institutions to only hold online enough funds to meet the transactional demands of its customers and all other deposit funds must be held offline in cold storage. These means that it will not be possible for a single inside employee to have access to all the funds in deposit at the institution (multi-signature). This is usually common practice at most large cryptocurrency exchanges now, but it is good to see it is called out as a regulatory requirement in this SPDI framework by Wyoming.

[the_gastropod]

Maybe this is a stupid question, but what is the value prop of using a blockchain-backed cryptocurrency stored at a government-regulated and legally insured bank? Isn’t the entire purpose of cryptocurrency to skirt the need for government authority / law /etc? Isn’t the entire purpose to be able to avoid trusting a 3rd party?

[lifeanon269]

Maybe this is a stupid question, but what is the value prop of using a blockchain-backed cryptocurrency stored at a government-regulated and legally insured bank? Isn’t the entire purpose of cryptocurrency to skirt the need for government authority / law /etc? Isn’t the entire purpose to be able to avoid trusting a 3rd party?

I suppose it depends on what your reason is for buying bitcoin. Bitcoin is different things to different people. If you're simply purchasing bitcoin as an uncorrelated asset that can't be diluted by any central entity, then having a third-party custodial ship that will still expose you to those properties of the asset in your portfolio will suffice. There is obviously third-party risk that is inherent with any custodial account. So due diligence is required.

If you want to take advantage of the censorship resistant and full decentralization and privacy aspects of bitcoin, then yes I would suggest taking control of your own private keys and hosting your own full node that is a part of the network. That also then requires personal responsibility and understanding of all the underlying technology that is absolutely a hurdle for many.

Information security is always a trade-off balancing act between convenience and security. So its important to do your own personal assessment and threat modeling as to where you see the greatest risk with your finances and what solutions would be best. In the end, bitcoin offers additional solutions that never existed before, but with them are definitely trade-offs that need to be considered.