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Learning, Sharing, and Teaching => Investor Alley => Topic started by: whywork on September 06, 2021, 07:29:43 PM

Title: What do you think of adding a low% of crypto allocation
Post by: whywork on September 06, 2021, 07:29:43 PM
Running a few backtests on portfolio visualizer, here are the stats using SPY and GBTC from year 2016 to now

100% SPY has 17% yearly returns and 19.4% maximum drawdown
98% SPY and 2% GBTC has 23% yearly returns and 19.8% max drawdown (note: portfolio is rebalanced annually)
95% SPY and 5% GBTC has 30% returns and 20.4% max drawdown

Wow, just 5% of the GBTC and we can see wonders with our returns (75% higher) and only 1% more drawdown

Having a huge allocation to Crypto can be dicey but just adding a small percent and annually rebalancing seems a great strategy to enhance returns. What are your thoughts on this?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on September 06, 2021, 07:35:51 PM
What are your thoughts on this?

It's six years of data where bitcoin has increased in price ~88x (also as I write this it is back up above $50,000, nice!). If bitcoin continues to grow that that rate, we'd be fools not to be 100% invested in it. If it does not continue to grow that that rate, backtesting on those six years isn't a good predictor of future returns.

The trick, as usual, is knowing which.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 06, 2021, 07:37:40 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: whywork on September 06, 2021, 07:52:58 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 06, 2021, 08:10:15 PM
Tulip bulb / greater fool posters in 3,2,1...
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 07, 2021, 06:54:38 AM
A small percent seems perfectly reasonable.  I don't have any, but that's because one of the rules on my IPS is not to invest in things I don't understand.  I understand crypto from a technical POV, I just don't understand why it has any inherent value, so I don't invest in it (just like I don't invest in gold or collectibles).  I realize that gold has been a store of value for humans for a very long time, but I still don't get it, so it isn't for me.

At the same time, I'm pretty much at my FI number so simplicity is even more important to me now than it was when I was focused on accumulation, so that's part of it too.  I think 5-10% is fine (as a random internet opinion).  I did that for a while with peer to peer lending (for example) years ago and did quite well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 07, 2021, 07:04:28 AM
Tulip bulb / greater fool posters in 3,2,1...

Actually, most people here are fine with a small allocation going towards stock picking/speculation.

If OP was switching to 50% crypto, that would be a different story.

However, my question for OP is if they mean that they're putting 5% of their current 'stache into crypto, or if they plan to maintain a 5% allocation with regular rebalancing?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 08, 2021, 06:30:15 AM
Tulip bulb / greater fool posters in 3,2,1...

Actually, most people here are fine with a small allocation going towards stock picking/speculation.

If OP was switching to 50% crypto, that would be a different story.

However, my question for OP is if they mean that they're putting 5% of their current 'stache into crypto, or if they plan to maintain a 5% allocation with regular rebalancing?

OP is already 20% crypto so they are just trying to justify it by starting this thread

Oops, another case of me barely skimming a post before replying. I just saw the 5% part and focused more on the replies.

My point though was just to the pp that I quoted that although the vast majority of us here are suspicious of crypto, that doesn't mean that we're dogmatically against people allocating a small portion of their assets to it, or any other higher risk/volatile venture.

The poster I quoted has been quite active in some crypto threads, so I understand why they think that someone wanting to get into crypto at all would be criticized, but that's simply not true.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on September 08, 2021, 07:04:28 AM
OP posts wacky/risky investing ideas regularly, this (while also almost certainly a bad idea) is actually not one of the weirder ones.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ender on September 08, 2021, 07:22:05 AM
I don't really understand this thread.

You have 20% crypto yourself, this reads like crypto shilling.

I sometimes wonder what % of the growth in crypto is the investors ponzi scheme where you get in then have to shill it so others buy in so that it continues to go up.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: whywork on September 08, 2021, 07:54:20 AM
Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

My question on this thread though is to understand what's the downside of adding a low% and rebalancing. Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

@waltworks Thank you for the recognition :)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 08, 2021, 08:26:03 AM
My question on this thread though is to understand what's the downside of adding a low% and rebalancing.

It's the same downside as adding any wildly volatile thing to your portfolio as a low percentage and rebalancing.  It could drop precipitously, or could go up higher than your safer investments.  It's not different in any way than putting a small portion of your portfolio on black at the casino and then rebalancing after the ball stops.



Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

There are currently more than 4,000 cryptocurrencies and 186 leveraged ETFs being traded.  Not all meet your claim.  That makes this a completely meaningless (if not outright fraudulent) statement, doesn't it?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on September 08, 2021, 08:30:04 AM
My question on this thread though is to understand what's the downside of adding a low% and rebalancing. Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

The risk is that your particular flavor gets put in the dustbin of history. If it's 5%, that loss is easy to recover. If it's 20%, that's a loss that will take years and years to recover.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FINate on September 08, 2021, 08:46:51 AM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.

You do you. But the above is where I start to disagree with the crypto evangelists.

20% is not a "small percentage." Sure, for a portfolio less than $100k, 20% is relatively small to one's lifetime earning potential. As one gets closer to FIRE, however, that allocation becomes a rather large chunk of money in an extremely volatile asset with an uncertain regulatory and tax future. Speaking for myself here, I wouldn't want my FIRE plans to depend on Uncle Sam continuing to play nice with crypto.

Owning crypto requires a certain amount of user responsibility somewhat analogous to holding physical gold. If you hold it yourself, you better be tech savvy and have consistently good backup and security hygiene. The vast majority of people fail in this area and struggle with losing family photos and other important documents when something as simple as a HDD/SSD fails. This is a recipe for disaster. The alternative is to have someone else hold your crypto, but such sites have a pretty bad track record on security and outright theft because they don't have the same level of regulatory oversight as banks/brokerages and, by design, crypto has little recourse if something goes wrong. No one should ever invest in anything they don't fully understand and are prepared to manage properly.

On a philosophical note, I will likely never get into crypto because I disagree with the overall premise. I won't derail this thread with all my objections (and they are manifold). Let's just leave it at there are downsides for lots of people once they think through all the implications of crypto.

So, by all means, you invest in what is right for you. I genuinely wish you the best. But it's not for everyone. I would even argue that it's not appropriate for most people.

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 08, 2021, 08:56:58 AM
Bitcoin and Ethereum seem most likely to stay around for years, while smaller coins could disappear at any time.  And yet we're talking about Bitcoin, that lost 99% of it's value when Mt Gox was hacked.  Looking at the past 7 crashes, the most common drops are 50% and 83%, losing half or 5/6th of it's value.
https://finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

OP - have you recalculated returns if you rebalance whenever GBTC reaches 10% of your portfolio?  It might have lower returns if you limit the risk.  And also, GBTC charges a 2% expense ratio, so buying on a crypto exchange might be cheaper.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 09, 2021, 11:04:21 AM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.

You do you. But the above is where I start to disagree with the crypto evangelists.

20% is not a "small percentage." Sure, for a portfolio less than $100k, 20% is relatively small to one's lifetime earning potential. As one gets closer to FIRE, however, that allocation becomes a rather large chunk of money in an extremely volatile asset with an uncertain regulatory and tax future. Speaking for myself here, I wouldn't want my FIRE plans to depend on Uncle Sam continuing to play nice with crypto.

Owning crypto requires a certain amount of user responsibility somewhat analogous to holding physical gold. If you hold it yourself, you better be tech savvy and have consistently good backup and security hygiene. The vast majority of people fail in this area and struggle with losing family photos and other important documents when something as simple as a HDD/SSD fails. This is a recipe for disaster. The alternative is to have someone else hold your crypto, but such sites have a pretty bad track record on security and outright theft because they don't have the same level of regulatory oversight as banks/brokerages and, by design, crypto has little recourse if something goes wrong. No one should ever invest in anything they don't fully understand and are prepared to manage properly.

On a philosophical note, I will likely never get into crypto because I disagree with the overall premise. I won't derail this thread with all my objections (and they are manifold). Let's just leave it at there are downsides for lots of people once they think through all the implications of crypto.

So, by all means, you invest in what is right for you. I genuinely wish you the best. But it's not for everyone. I would even argue that it's not appropriate for most people.

Lot's of solid stuff here that I agree with.  I definitely consider my 20% allocation a SIGNIFICANT amount. 

I also share your concerns about security.  As such, I guess I somewhat misspoke when I said I bought bitcoin and ether.  Technically, I invested into Grayscales Bitcoin and Ethereum trusts, because I don't trust myself yet to hold a large amount on either hot or cold storage, for all the reasons you mentioned. 

Also, I'm in a weird spot financially where I think taking a bigger investment risk doesn't have much of a downside.  I have about 750k in the stache, but my wife and I both will receive medium sized pensions in ten years, so we'll have a combined income of about 100k, along with a paid off house, at age 48 even without any stache.  My rationale is that if I lose the 150k or so I have in cyrpto, my retirement will essentially unchanged, both in terms of the date and the lifestyle.  However, if crypto really catches fire, which is completely possible, then it could have the upside of choosing to forego most of pension and retire in 5 years or so (we are 38/37 now).  And as an aside, my training is in math/stats, so I am able to understand the crypto stuff better than the general person saving for retirement. 

So, finally, I also agree that crypto is probably not for everyone.  Hopefully it works out for me, but if not, I'll still be retiring in June 2031 with an amazing wife and more than enough resources to live a full life after employment. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: DaMa on September 09, 2021, 11:54:23 AM
Is there a way to have crypto in a Fidelity IRA?

(Yes, I could research this myself, but I want to follow this thread anyway.  TIA!)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mntnmn117 on September 09, 2021, 12:54:06 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 09, 2021, 03:33:35 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

I am also 20% Crypto. Just don't see downside adding in a small percent for anyone.

You do you. But the above is where I start to disagree with the crypto evangelists.

20% is not a "small percentage." Sure, for a portfolio less than $100k, 20% is relatively small to one's lifetime earning potential. As one gets closer to FIRE, however, that allocation becomes a rather large chunk of money in an extremely volatile asset with an uncertain regulatory and tax future. Speaking for myself here, I wouldn't want my FIRE plans to depend on Uncle Sam continuing to play nice with crypto.

Owning crypto requires a certain amount of user responsibility somewhat analogous to holding physical gold. If you hold it yourself, you better be tech savvy and have consistently good backup and security hygiene. The vast majority of people fail in this area and struggle with losing family photos and other important documents when something as simple as a HDD/SSD fails. This is a recipe for disaster. The alternative is to have someone else hold your crypto, but such sites have a pretty bad track record on security and outright theft because they don't have the same level of regulatory oversight as banks/brokerages and, by design, crypto has little recourse if something goes wrong. No one should ever invest in anything they don't fully understand and are prepared to manage properly.

On a philosophical note, I will likely never get into crypto because I disagree with the overall premise. I won't derail this thread with all my objections (and they are manifold). Let's just leave it at there are downsides for lots of people once they think through all the implications of crypto.

So, by all means, you invest in what is right for you. I genuinely wish you the best. But it's not for everyone. I would even argue that it's not appropriate for most people.

Lot's of solid stuff here that I agree with.  I definitely consider my 20% allocation a SIGNIFICANT amount. 

I also share your concerns about security.  As such, I guess I somewhat misspoke when I said I bought bitcoin and ether.  Technically, I invested into Grayscales Bitcoin and Ethereum trusts, because I don't trust myself yet to hold a large amount on either hot or cold storage, for all the reasons you mentioned. 

Also, I'm in a weird spot financially where I think taking a bigger investment risk doesn't have much of a downside.  I have about 750k in the stache, but my wife and I both will receive medium sized pensions in ten years, so we'll have a combined income of about 100k, along with a paid off house, at age 48 even without any stache.  My rationale is that if I lose the 150k or so I have in cyrpto, my retirement will essentially unchanged, both in terms of the date and the lifestyle.  However, if crypto really catches fire, which is completely possible, then it could have the upside of choosing to forego most of pension and retire in 5 years or so (we are 38/37 now).  And as an aside, my training is in math/stats, so I am able to understand the crypto stuff better than the general person saving for retirement. 

So, finally, I also agree that crypto is probably not for everyone.  Hopefully it works out for me, but if not, I'll still be retiring in June 2031 with an amazing wife and more than enough resources to live a full life after employment.

So the 20% of your stashed isn't anywhere near 20% of your retirement assets because of the pensions.

That's kind of important.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on September 09, 2021, 10:34:14 PM
Yeah, if you have $100k/year in pensions coming (roughly equivalent to $2.5 million in index funds in 10 years time, or maybe ~$1.25 million right now if you assume roughly historical returns) then you've really only got ~5-7% of your NW in crypto.

Really, if you wanted to roll the dice and didn't mind waiting 10 years to retire, why not go all in on speculative/high risk stuff? If your $750k has no value to you in this scenario as you've argued, it makes no sense to be even slightly conservative with it.

On the other hand if that $750k is enough to let you RE 5 years earlier with some amount of hit to your pension, then the risk/reward tradeoff gets more complex and the expected utility of a low probability/large reward investment drops considerably, since you're right back in the same boat as everyone else where a failed investment will lead to more work/later RE.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 11, 2021, 08:34:46 AM
Yeah, if you have $100k/year in pensions coming (roughly equivalent to $2.5 million in index funds in 10 years time, or maybe ~$1.25 million right now if you assume roughly historical returns) then you've really only got ~5-7% of your NW in crypto.

Really, if you wanted to roll the dice and didn't mind waiting 10 years to retire, why not go all in on speculative/high risk stuff? If your $750k has no value to you in this scenario as you've argued, it makes no sense to be even slightly conservative with it.

On the other hand if that $750k is enough to let you RE 5 years earlier with some amount of hit to your pension, then the risk/reward tradeoff gets more complex and the expected utility of a low probability/large reward investment drops considerably, since you're right back in the same boat as everyone else where a failed investment will lead to more work/later RE.

-W

To Waltworks and Malcat...

Ok, you are both bringing up really valid points, I suppose it isn't near 20% of our actual stache.  I've just chosen to frame it that way in my mind over the years, but that isn't really accurate is it. 

And to Waltworks, I actually am planning to make an even bigger play into crypto, but the rest of stache is locked up in employer IRA's with no access to crypto investments.  However, we have 180k that is locked up in my wife's retirement account through work, but because she just switched employers, we are in the process of moving it to an institution that can access the grayscale trusts to buy more Bitcoin and Ethereum.  That will put us at about 350k.  If it does a 10x or something stupid like that, we could be instantly done with work.  If it doesn't, we are totally fine. 

Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

To mntnmn117, I thought this way for a while.  The more I learned about it, the less I take on that viewpoint.  The Crypto sphere in general is moving away from proof of work to proof of stake, and it takes so much less energy.  That process is accelerating.  With regards to illegal activity, that's already a very minor use of the blockchain, and if that was a reason for me boycotting it, then I'd be a hypocrite for not boycotting cash.  It's my understanding (but I'm not an expert) that 50 and 100 dollar bills are a much bigger cause of illegal activity, and no one has ever batted an eye at them. 

https://slate.com/business/2010/12/hundred-dollar-bills-are-for-criminals-and-sociopaths-why-do-we-still-print-them.html (https://slate.com/business/2010/12/hundred-dollar-bills-are-for-criminals-and-sociopaths-why-do-we-still-print-them.html)

Alright, time to enjoy the weekend and see if Novak Djokavic can complete the tennis grand slam.  Take care! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 11, 2021, 09:06:08 AM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.
What if those environmental aspects could be offset?

"This equaled about 0.92 pounds of CO2 emissions per kWh."
https://www.eia.gov/tools/faqs/faq.php?id=74&t=11

"Single Bitcoin Transaction Footprints ... 1724.62 kWh"
https://digiconomist.net/bitcoin-energy-consumption

"The price of carbon offsets varies widely from <$1 per ton to >$50 per ton."
https://secondnature.org/climate-action-guidance/purchasing-carbon-offsets-faqs/#cost

So it takes 2000/.92 = 2173kwh to equal one ton of CO2, and each Bitcoin transaction uses 1724.62kwh / 2173kwh per ton = 0.7933 tons of CO2.  That means a cost of $1 to $40 in carbon offsets covers the cost of one BTC transaction.

That might be one way to invest in Bitcoin, while offsetting the damage involved in your purchase.  Although buying BTC directly from someplace like Coinbase probably doesn't even involve a transaction: they buy large quantities, and then sell from their inventory.

It would be really interesting to start a "carbon neutral Bitcoin ETF".  Every purchase would be paired with carbon offsets.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on September 11, 2021, 12:59:18 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

Stop The Bitcoin FUD: Criminal Cryptocurrency Transactions Are Falling
https://www.nasdaq.com/articles/stop-the-bitcoin-fud%3A-criminal-cryptocurrency-transactions-are-falling-2021-01-20

From the Nasdaq article:
Cryptocurrency Is Leaving Criminals Behind
According to a summary of blockchain analysis firm Chainalysis’ “2021 Crypto Crime Report,” the proportion of cryptocurrency-related crime fell significantly last year.

“In 2019, criminal activity represented 2.1 percent of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers,” the firm found. “In 2020, the criminal share of all cryptocurrency activity fell to just 0.34 percent, or $10.0 billion in transaction volume.”

Title: Re: What do you think of adding a low% of crypto allocation
Post by: mjr on September 11, 2021, 01:29:40 PM
Now provide the proportion of criminal BTC transactions after excluding transactions of one speculator selling to another.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on September 11, 2021, 05:49:24 PM
Stop The Bitcoin FUD: Criminal Cryptocurrency Transactions Are Falling
https://www.nasdaq.com/articles/stop-the-bitcoin-fud%3A-criminal-cryptocurrency-transactions-are-falling-2021-01-20

...

“In 2019, criminal activity represented 2.1 percent of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers,” the firm found. “In 2020, the criminal share of all cryptocurrency activity fell to just 0.34 percent, or $10.0 billion in transaction volume.”
[/i]

The report that article refers to admits that they're almost certainly underestimating criminal activity in 2020. Their estimate for 2019 was off by nearly a factor of 2 (assuming it doesn't get revised up any further), a revision that would erase any alleged decrease (in dollar terms, not percent of transactions) from 2019 to 2020.

https://blog.chainalysis.com/reports/2021-crypto-crime-report-intro-ransomware-scams-darknet-markets

Quote
In 2019, criminal activity represented 2.1% of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers ... We should note that at the time of writing last year’s report, we reported 2019’s criminal share of cryptocurrency activity to be 1.1%. The reason for the change is the identification of more addresses associated with criminal activity that were active in 2019. Most of those addresses were related to scams that had yet to be identified as such, primarily related to the PlusToken scam. Some are related to previously unreported ransomware attacks. For that reason, we should expect 2020’s reported criminal activity numbers to rise over time as well.

It seems that an expected 1% or 2% up or down is not surprising in any report that is continually readjusted to reflect true impact.
What I really objected to was the sweeping statement by mtnmn117 (without stats) that crypto is used 'primarily' for criminal activities because that is simply not true.

I don't consider 2% to be 'primary' criminal use, especially given the exponential growth that crypto has recently undergone.

Interesting points made in this link ...
https://blog.coinbase.com/fact-check-crypto-is-increasingly-being-used-for-criminal-activity-and-is-a-haven-for-illicit-856a71dfb399

I don't think that crypto will ever be free of scams no more than the banks will ever be free of illegal cash transactions, fraud and ID theft.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Civex on September 14, 2021, 08:31:36 PM
I try not to invest anything that doesn't have inherent value, though I have ~2% of our portfolio in derivatives.

Firmly agree with Bogleheads that crypto is a pump and dump scheme.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 14, 2021, 08:46:49 PM
I'm glad all the real crypto experts are here to let us know the facts.  I appreciate the insight.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on September 19, 2021, 07:37:19 PM
Tulip bulb / greater fool posters in 3,2,1...

If you want to buy crypto, buy crypto.  But please, please, please.  Basing your asset allocation on a four year backtest is just so silly it defies words.  Most of us have investing horizons of 30, 40, and 50 years.  Assuming the last four years of returns is representative of the next 40 is just barking madness.

Again, if you want to buy crypto, buy crypto.  But don't assume that we're so incredibly fucking stupid that we think the last four years is representative of any future time frame.  But crypto if you like, but don't come here and insult us. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 22, 2021, 10:59:21 AM
Bitcoin used to be a new frontier that law enforcement hadn't discovered.  But now the FBI tracks blockchain transactions.  Long term, I'd guess criminals won't like putting the exact amount and time of their illegal activity on the public blockchain.

I'm viewing Bitcoin as an experiment where people are trying to figure out it's use.  Being of the non-criminal type, I didn't find much to buy with BTC when I tried years ago.  Visa and Mastercard are more widely accepted with lower fees - yet earlier this year, the sum total of all BTC exceeded the market caps of both of those credit card companies.  But there's experimentation, like El Salvador adopting it as legal currency or an ETF tracking it's price (GBTC, Grayscale Bitcoin Trust... expense ratio 2%).

Today I discovered I can buy "GBTC" in my Vanguard account.  It's an OTC (over the counter) stock, not traded on Nasdaq or NYSE.  For me, that means I can buy and sell in my Roth account, and not deal with tax issues (I hope).
https://finance.yahoo.com/quote/GBTC/

Crypto is a fraction of 1% of my assets.  I'm not sure what I'll do if it rises to 2% or more of my assets... I'm very uncomfortable with a 5% allocation, so I'll rebalance somewhere between 2-5%, if that happens.

Yahoo shows 7 years of BTC-USD market prices, and investing.com goes back to 2012 prices.  Others might want to use that if they are only seeing 4 years of data elsewhere.
https://finance.yahoo.com/quote/BTC-USD/
https://www.statista.com/statistics/326707/bitcoin-price-index/
https://www.investing.com/crypto/bitcoin/btc-usd

Keep in mind there was another great experiment to figure out the internet, which resulted in the dot-com crash.  Many of those companies went to zero, taking all the money put into them and going bankrupt.  Keep that in mind when putting money into crypto currencies.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on September 24, 2021, 07:12:54 AM
For a while $GBTC was trading at a discount to Net Asset Value, it may be a nice vehicle. If you're committed to crypto for the long haul, dollar-value-averaging into it may be wise. With something as volatile as Bitcoin, I'd set a goal of rebalancing each month such that 1% at a time was going into it. So--on the 15th of the month--you rebalance such that 1% of account is in it. Then, the next month, rebalance to 2% (committing to repeating this process for ten months will get you to a 10% stake in Bitcoin). This means that a massive surge will result in you putting less in when prices are high, and more when it's down.

The key is committing to a program like this, and then not looking at it in between rebalance days.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: joe189man on September 24, 2021, 09:21:48 AM
I'm glad all the real crypto experts are here to let us know the facts.  I appreciate the insight.

Can you point us in the right direction to learn about crypto?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 24, 2021, 09:51:15 AM
I see a pretty good case for holding some crypto, especially if you're young and can afford to take bigger risks.

I'm not young but I've bought some BTC and a little ETH and I intend to hold for some years. I see greater prospects for significant price increases than for zero over the next 5-10 years. I've put in enough to make a nice difference if it goes very well but not enough to do meaningful damage if it all goes belly up.

I might be participating in the next great revolution or I might have stumbled into the biggest ever 'greater fool' scheme, or maybe something in between. The world of crypto is undeniably novel/groundbreaking and it will be interesting to see how things develop - and I'm happy to have a bit of skin in the game.

The only thing I'm very confident about is that the future is unknown, and it will probably surprise us all.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 25, 2021, 07:44:58 AM
Why is the previous 4 years the timeline of choice? Why not the last 6 months? Over the past 6 months, Bitcoin is down 17%.

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.



Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 26, 2021, 06:31:47 AM
Why is the previous 4 years the timeline of choice? Why not the last 6 months? Over the past 6 months, Bitcoin is down 17%.
There's been multiple times where Bitcoin lost more than that in a day.

"Price lost one third of its value in 24 hours, dropping below $14,000."
"Price briefly dipped below $3,300, a 76% drop from the previous year and a 15-month low."
"... losing 25% in 24 hours early in the COVID-19 pandemic."
https://en.wikipedia.org/wiki/History_of_bitcoin#Prices_and_value_history

That list also mentions the price of Bitcoin in mid Dec 2017 and 2018, where Bitcoin sank from $17.9k to $3.3k over 12 months.  That's a loss of 81.6%, just a few years ago.

There should also be several more crashes before 2017 that were even worse than 81%.  Those buying it should do so knowing it is very, very risky.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: HamsterStache on September 26, 2021, 08:33:10 AM
I think a lot of people are going to lose a lot of money eventually by leaving assets tied up on crypto. I’ve been tempted to dabble, given the wild ride BTC has taken, but it’s just not worth it to me because I really don’t think any of it will last - especially now with China 100% outlawing it. It’s the type of investment that can evaporate overnight.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on September 26, 2021, 01:39:55 PM
Hamster Trades Cryptocurrencies, Outperforms Warren Buffett:
 https://futurism.com/hamster-trades-cryptocurrencies/amp (https://futurism.com/hamster-trades-cryptocurrencies/amp)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 27, 2021, 08:02:24 AM
Hamster Trades Cryptocurrencies, Outperforms Warren Buffett:
 https://futurism.com/hamster-trades-cryptocurrencies/amp (https://futurism.com/hamster-trades-cryptocurrencies/amp)

The hampster is clearly a shrewd investor.  If you can't see that, you probably aren't smart enough to understand crypto.  :P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on September 27, 2021, 08:21:29 AM
I can't wait for someone to shout "Have fun staying poor, Warren!"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FINate on September 27, 2021, 09:28:20 AM
Whoever created Mr Goxx certainly did their homework, I love it! The little trading desk with three monitors with city skyline view, Goxx Capital sign on the wall next to the quintessential office clock, the cold office swing-chair, Wheel of Intention, gratuitous stats like the speed of the wheel, and the animations for buy/sell events. Nailed it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Car Jack on September 27, 2021, 12:22:30 PM
If I wanted to add currency to my portfolio, I'd add either the Canadian dollar or British pound.  What's that got to do with crypto?  Well, they're all currency, right?  Less risk that say China outlaws the pound, where they just outlawed all crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 27, 2021, 12:33:45 PM

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.

I hope my assumptions are not barf, but I will soon be an example of a person with a medium portfolio (700k) who will be making a significant Crypto investment.  I'm at 20% now and will be moving to about 40% within the month.  I'll have about 320k in crypto (Ether and Bitcoin) and 400k in VTSAX at that point. 

I'm not doing it because I think the market is about to rise short term...I am not a short term investor and don't claim to know what any market will do short term.  I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century.  The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed.    I have put spent about 200 hours studying crypto over the past few months trying to poke holes and look for reasons it will fail, but it just leaves me convinced that it will succeed.

I am not posting this to try to change your mind or disagree with you, but rather to add myself as a public data point so we can all see together whether I succeed or fail.   If correct, I plan to celebrate and hopefully even retire sooner than expected.  If false, then I plan to laugh at myself along with the rest of the forum! 

Cheers! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 27, 2021, 01:31:13 PM
I certainly do not claim to be an expert on crypto, but I've recently been struck by analogies between the development of blockchain technology and the development of the internet, in the sense that both had / have tremendous potential to transform business (and our lives) in ways that are hard to imagine in advance.  Even if I buy that argument for blockchain (which I think I do), that still doesn't give me any confidence that any of the current coins or platforms are necessarily the way forward.  Lots of people went broke in the dot com bubble, even though they were absolutely right in betting that the internet would change the world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on September 27, 2021, 04:11:26 PM
Quote
I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century. The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed. 

Quote
I've recently been struck by analogies between the development of blockchain technology and the development of the internet, in the sense that both had / have tremendous potential to transform business (and our lives) in ways that are hard to imagine in advance. Even if I buy that argument for blockchain (which I think I do), that still doesn't give me any confidence that any of the current coins or platforms are necessarily the way forward.  Lots of people went broke in the dot com bubble, even though they were absolutely right in betting that the internet would change the world.


I hear a lot of talk about how we don't yet know how or if we will use specific cryptocurrencies in the future, and there may be a fair argument that we should own a few wild speculations or hedges to cover us in the event of unexpected technological change. In the domain of cryptocurrencies, if they become "the main financial instrument for the world by the middle of this century" our portfolios would experience the following consequences:

*Much of the banking sector would be destroyed, and replaced by crypto finance startups that would be un-investable for years after they've wiped out the companies we were invested in.
*If the dominant cryptocurrency had deflationary characteristics, like bitcoin, the world would sink into an economic depression. Deflation is really bad for economic growth.
*If central banks could no longer control the money supply, severe recessions and inflationary/deflationary episodes would rock economies, as occurred in the late 1800s. 
*A huge transfer of wealth would have to occur from people using national currencies to people holding and not spending fiat cryptocurrencies. This would be the biggest transfer since the Russian or Chinese Revolutions and nobody would take it sitting down. First, established interests would try to ban crypto. If that failed, war would be the result. I.e. few people would accept lifelong serfdom by shrugging their shoulders and saying "wish I bought Bitcoin when it was only $100,000."
*Wars might also be fought over cryptocurrency specific issues, like forks or other changes in the rules. A deflationary crypto would eventually have to change its rules to be inflationary if the economy is to grow, but existing wealthy people would be against such changes (as they are generally against QE now).
*An energy crisis and chronic microprocessor shortages would crimp economic growth and drive inflation. Things like air conditioning and electronics not dedicated to payment processing would become much more expensive, if not luxuries.
*A worst-case climate scenario would occur, as a mad dash for fossil fuels occurs in an attempt to keep up with growth in the use of crypto. Coastal cities worldwide face the fate Jakarta is facing now, and desertification occurs worldwide. Places like Arizona and Pakistan become as uninhabitable as the Sahara Desert around mid-century.
*Hackers become a secret nobility, wiping out entire national reserves of cryptocurrency and millions of investors at a time, and influencing politicians and law enforcement to look the other way. Again, wars ensue.
*Authoritarian nations that are able to ban crypto (e.g. China) will outperform nations where domestic interest groups prevent legislative action. Big cryptocurrency holders in democracies will soon lobby to prevent any legislation from limiting use of crypto. Energy companies may help them. Thus, the influence of authoritarianism expands.

Overall, it's a bleak picture for those of us retiring on the proceeds of investments and expecting to live in free, wealthy societies like we did in the past. I have no idea how to hedge for such a future, much less exploit it.

Picking which cryptocurrency will attain dominance 20 years from now is at least as hard as picking stocks. Bitcoin, Ethereum, Litecoin, Dogecoin, etc. could ALL easily fade into obsolescence just like hundreds of once-massive technology brands such as DEC, IBM, GE, Atari, Netscape, MySpace, Blackberry, Nokia, etc. In a future where one or maybe two cryptocurrencies become dominant, and hundreds (thousands?) of others fail, a diversification strategy may not be helpful. You'd actually have to pick the winner and have so much invested in it that you wouldn't get to pick very many others. This is a decidedly narrower path for retirement success than the old indexing and diversification advice. Even worse, there's no particular difference or reason why one cryptocurrency is more likely to succeed than another. It's literally a wild guess among hundreds of current and future contenders, and there is no way to be good at it or apply reason to it. Perhaps the winning strategy would be to place some kind of long-term bet against cryptocurrencies in the hope that the eventually successful currency hasn't been invented yet. Still, that's crazy risky.

Quite frankly, if we even started going down the road described above, there would be considerable backlash and probably some kind of reversal before it got too far. It's entirely possible though, that this backlash is misdirected. E.g. people might attribute their economic decline to the usual suspects: minorities, other countries, conspiracy theories, religious causes, political opponents, etc. rather than blaming the new currency. If crypto investors emerge as a political force, they could reshape politics by cultivating a blame game while they consolidate wealth.

Good luck hedging all of that! I figure I might as well bet everything that the whole cryptocurrency thing collapses or is banished by governments. That's probably the only direction which could lead to a prosperous and happy retirement. Given that a lot of other people have this interest, it's likely this side will gain support in the coming years.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on September 27, 2021, 04:48:41 PM
^ I don't think it will get to that point.  At least not very soon. 

Here are the main advantages of crypto:

1)  Does not require a trusted third-party to complete the transaction

2)  Cannot be inflated away by central government manipulation.

There are other advantages, but most are subsets of/related to those. 

But with Bitcoin in particular the transactions are so slow and so expensive that in order to use it as currency you actually do need a trusted third party application running on top of it.  So that advantage goes away.

And while Bitcoin can't be inflated away, it also can't be stabilized so you don't know what prices will be in the future.  That is a major liability, which essentially disqualifies it from having any real utility as a currency. 

So we're kind of left with Bitcoin as a store of value.  Which it might be.  As long as people in the future value it as much as people value it today. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 27, 2021, 04:59:46 PM
With the aid of 8(?) mainframes VISA can do 50.000 transactions per second.

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

Crypto might collapse or go through the roof, but I still stick with the tried and tested slow and steady to build wealth.

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 27, 2021, 11:00:28 PM

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.

I hope my assumptions are not barf, but I will soon be an example of a person with a medium portfolio (700k) who will be making a significant Crypto investment.  I'm at 20% now and will be moving to about 40% within the month.  I'll have about 320k in crypto (Ether and Bitcoin) and 400k in VTSAX at that point. 

I'm not doing it because I think the market is about to rise short term...I am not a short term investor and don't claim to know what any market will do short term.  I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century.  The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed.    I have put spent about 200 hours studying crypto over the past few months trying to poke holes and look for reasons it will fail, but it just leaves me convinced that it will succeed.

I am not posting this to try to change your mind or disagree with you, but rather to add myself as a public data point so we can all see together whether I succeed or fail.   If correct, I plan to celebrate and hopefully even retire sooner than expected.  If false, then I plan to laugh at myself along with the rest of the forum! 

Cheers!

It's possible to make money in anything. Some play and win the lottery. This discussion is more about what makes a good strategic investment. Not fear of missing out of potential future returns.

Good luck to you. You seem more reasonable than most. However, in order for this to work, your co-investors need to have the same level of confidence and determination. If trust weakens and people start to flee, it doesn't matter how well the technology performs.

If the technology performs well, it becomes a threat to the currency of the United States. It would be in the best interest of the United States to make it illegal or put restrictions on it. As others have said, due to special interest, we would have to engage in war for Bitcoin to become the dominant currency. It could happen. Anything is possible.

In a similar thread, (not too long ago), someone was advocating that rental real estate was just as risky as Bitcoin and cited the 2008-2012 housing recession. It's true that from Q1 2007 to Q1 2009, real estate decreased nationally about 19%.

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

Within the last 6 months, it looks like the biggest drop for Bitcoin was May 9 to 19. The drop was 36% over 11 days.

You said that if Bitcoin goes 10X, you will quit your job. You also said that you are in it for the long haul.

What is your withdrawal strategy for the next 30-40 years with Bitcoin?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 28, 2021, 05:58:07 AM
Here are the main advantages of crypto:

1)  Does not require a trusted third-party to complete the transaction

2)  Cannot be inflated away by central government manipulation.

There are other advantages, but most are subsets of/related to those. 

But with Bitcoin in particular the transactions are so slow and so expensive that in order to use it as currency you actually do need a trusted third party application running on top of it.  So that advantage goes away.

And while Bitcoin can't be inflated away, it also can't be stabilized so you don't know what prices will be in the future.  That is a major liability, which essentially disqualifies it from having any real utility as a currency. 

So we're kind of left with Bitcoin as a store of value.  Which it might be.  As long as people in the future value it as much as people value it today.

Also, re: #1, even if the need for a third party app were eliminated, I feel like this "advantage" cuts both ways.  After all, it's due to this "advantage" that people have lost coins, or have coins they can't access, etc.  Personally (and maybe this makes me a sheep or whatever), I like the fact that third parties (ie banks, investment firms) are responsible for keeping track of my money and investments.  They are insured professionals, and I'm comfortable with the minimal fees I pay for that service.  I agree that in some sort of catastrophic future, these entities could fail and I could lose access to everything, but I don't believe that in this same catastrophic future folks would accept a digital currency for loaves of bread.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 06:13:45 AM

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.


The governments of the US and other so-called semi-functioning countries may or may not choose to not accept bitcoin, but how often do you make a payment to a nation-state's governing body anyway? 

99.9% of the time, we make payments to corporations in the world, not the government institutions themselves.  And yes, those corporations will be accepting non government issued crypto. 

Twitter just announced that they will accept peer-to-peer bitcoin transfers as a general means of payment through a layer 2 solution called the lightning network.  Currently they have over 200 million daily users, most of whom are younger than 35 years old. 

https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication
 (https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication)

So now there exists whole countries (El Salvador currently, with Panama, Cuba, and Ukraine making strides) who accept bitcoin, and we have one of the biggest social networks in the world accepting it.  Keep in mind that bitcoin was created only 12 years ago.  To me, the take-away isn't "the US government doesn't even accept it yet".  The real take-away is "wow, in only 12 years, small countries and the some of the world's biggest corporations are already accepting it as legal tender.  This is pretty mind blowing!" 


Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 06:40:09 AM

I don't mind Bitcoin itself. However, the strong advocates for this type of "investment" has a tendency to bug the shit out of me. The very strong vocal advocates tend to have very little money to invest and want to get rich quick.

It is my belief that the MMM crowd probably has a small amount in their portfolio. However, the MMM crowd is smart enough not to be spewing Bitcoin FOMO all over the place. It looks and smells like barf.

I hope my assumptions are not barf, but I will soon be an example of a person with a medium portfolio (700k) who will be making a significant Crypto investment.  I'm at 20% now and will be moving to about 40% within the month.  I'll have about 320k in crypto (Ether and Bitcoin) and 400k in VTSAX at that point. 

I'm not doing it because I think the market is about to rise short term...I am not a short term investor and don't claim to know what any market will do short term.  I am doing this on the assumption that cyrpto is going to be the main financial instrument for the world by the middle of this century.  The only way I plan to exit this strategy is if it becomes crystal clear that this assumption has failed.    I have put spent about 200 hours studying crypto over the past few months trying to poke holes and look for reasons it will fail, but it just leaves me convinced that it will succeed.

I am not posting this to try to change your mind or disagree with you, but rather to add myself as a public data point so we can all see together whether I succeed or fail.   If correct, I plan to celebrate and hopefully even retire sooner than expected.  If false, then I plan to laugh at myself along with the rest of the forum! 

Cheers!

It's possible to make money in anything. Some play and win the lottery. This discussion is more about what makes a good strategic investment. Not fear of missing out of potential future returns.

Good luck to you. You seem more reasonable than most. However, in order for this to work, your co-investors need to have the same level of confidence and determination. If trust weakens and people start to flee, it doesn't matter how well the technology performs.

If the technology performs well, it becomes a threat to the currency of the United States. It would be in the best interest of the United States to make it illegal or put restrictions on it. As others have said, due to special interest, we would have to engage in war for Bitcoin to become the dominant currency. It could happen. Anything is possible.

In a similar thread, (not too long ago), someone was advocating that rental real estate was just as risky as Bitcoin and cited the 2008-2012 housing recession. It's true that from Q1 2007 to Q1 2009, real estate decreased nationally about 19%.

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

Within the last 6 months, it looks like the biggest drop for Bitcoin was May 9 to 19. The drop was 36% over 11 days.

You said that if Bitcoin goes 10X, you will quit your job. You also said that you are in it for the long haul.

What is your withdrawal strategy for the next 30-40 years with Bitcoin?

Thanks for being willing to have an open discussion, despite having a different viewpoint. 

First, to be clear, I plan to be more invested in Ethereum than Bitcoin, but to hold both.  Bitcoin has like the most pure currency that coders could dream of, which entices me.  Ethereum has a MUCH more robust network of coders and corporations building on it's platform, which entices me. 

Here's my current withdrawal strategy:

If Ether and Bitcoin do establish themselves, then a withdrawal strategy for them is probably much more graceful and simple than in today's environment.  Ether and Bitcoin currently have a combined market cap of about 1.1 trillion dollars.  Enough money to already be legit entities, but very small compared to the ~95 trillion market cap of the corporations that make up VTSAX.  This is what creates the possibility for variance where the coin can drop 36% over 11 days as you mentioned.

However, if my assumptions are correct, then 20 years from now corporations and even several countries will be accepting these currencies as acceptable form of payment, and the market cap will be far higher than 1.1 trillion.  This is key.  If there is let's say 25 trillion held worldwide in Bitcoin/Ether (which I don't think is unreasonable, and possibly an underestimate), the variance of the currency will drop significantly.  This will have the downside of creating lower growth potential, but the huge upside of taking away much of the risk of waking up to 25% of your wealth evaporating. 

So, over time, I predict that Bitcoin/Ethereum will likely become worse from a standpoint of wealth creation, but will become much more stable as a way to store value.  My guess is that in 20 years, I won't be getting out of my Ether/Bitcoin positions to decrease volatility, rather I'll be doing it because volatility is low enough that VTSAX is once again a higher level of volatility, and therefore once again a better way to grow wealth. 

I'm not asking you to agree with my opinion, but did I explain my thoughts well enough that you are able to understand my opinion?  I've been working really hard to clarify all this in my own mind, and I know I'm not amazing at clarifying my thoughts to others yet:) 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: TheAnonOne on September 28, 2021, 07:23:06 AM
For what it's worth I am something like 20% crypto.

I don't include it on my NW sheets and I really didn't spend THAT much on it(maybe 1% NW or less). It just grew to that. I dumped most of that into some newer projects (alts) earlier this year and reset the growth curve.

If it does a 5X, I can FIRE. It's worth the gamble to me. It's somewhat like holding a perpetual lottery ticket.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 28, 2021, 08:09:11 AM
Today I discovered I can buy "GBTC" in my Vanguard account.  It's an OTC (over the counter) stock, not traded on Nasdaq or NYSE.  For me, that means I can buy and sell in my Roth account, and not deal with tax issues (I hope).
https://finance.yahoo.com/quote/GBTC/
And a week later, I realized there's a problem: GBTC and BTCUSD performance are far apart.  For a 2% expense ratio, they should do a better job of it.

YTD, BTC beat GBTC by 45% to 7%, which is a huge performance gap.
2 year, BTC beat GBTC by almost 2x, 409% vs 223%
5 year, BTC beats GBTC by 6774% to 3356%
(Admittedly, anyone who made 34x their money probably isn't so worried about missing another 2x)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 08:46:56 AM

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.




The governments of the US and other so-called semi-functioning countries may or may not choose to not accept bitcoin, but how often do you make a payment to a nation-state's governing body anyway? 

99.9% of the time, we make payments to corporations in the world, not the government institutions themselves.  And yes, those corporations will be accepting non government issued crypto. 

Twitter just announced that they will accept peer-to-peer bitcoin transfers as a general means of payment through a layer 2 solution called the lightning network.  Currently they have over 200 million daily users, most of whom are younger than 35 years old. 

https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication
 (https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication)

So now there exists whole countries (El Salvador currently, with Panama, Cuba, and Ukraine making strides) who accept bitcoin, and we have one of the biggest social networks in the world accepting it.  Keep in mind that bitcoin was created only 12 years ago.  To me, the take-away isn't "the US government doesn't even accept it yet".  The real take-away is "wow, in only 12 years, small countries and the some of the world's biggest corporations are already accepting it as legal tender.  This is pretty mind blowing!"

so china has banned it if other global powers ban this the market for it basically goes away. Or it is now held and supported by these countries who had currency issues to begin with.  Currency in any form is only as good as the backing it receives from the trust of the general public.  I didn't put much trust in el Salvador's currency before bitcoin so its adoption along with the possible adoption of other 3rd world/corrupt economies does not interest me.  Maybe a combined 3rd world market currency with out fear of manipulation by the govt officials(they'll figure out a way) will help these economies do better in the long run it still doesn't solve the deflationary issues posed above.

Hey Boarder, I'm pumped you are chiming in.  I was actually thinking about PM'ing you recently because I know from your work in DFS that you are open to ways of making money that are considered outside the norm by most.  Your opinion holds a bit more weight to me on this topic than the average joe on the street, since I know you are generally open to pretty out of the box ideas. 

I can't deny that I am disappointed by China's banning of crypto as they roll out their cyrpto Yuan.  At first I was worried this could be an existential threat(I had an extra beer that night:), so I basically did nothing but look into the ramifications of this over the past few days.  I'm less concerned now.  It looks like democracies most of the rest of the world will have far less incentive to ban it, and far more pressure to allow it. 

For example, in the US:
- Companies like Fidelity are super close...like maybe within weeks of offering a crypto ETF.  When one institution offers this, they will all have to do it, and quickly, or they will lose clients.  Once most financial institutions offer this, then there will be more and more lobbyists in finance advocating for crypto.  Right now, the big banks are basically only being hurt by crypto, but I think in the coming year it will be more nuanced than that.  I see it as something that they wish was never created, but now that it does exist, they are going to have to quickly adapt and make the best of the new situation.  There are lots of examples of this already happening.

- Major corporations are adopting quickly.  I think in the tech industry the CEO's understand the value of blockchains, and they want to get cryto onboarded quickly for two reasons.  Unlike the finance industry, this is a help to most major tech firms, particularly in social media.  I think they don't want the government to ban it, so if they make it ubiquitous quickly, it gets really hard to do.  Last Thursday Jack Dorsey announced bitcoin as payment via tipping...that's 200 million people who  will shortly have the option.  I think we will see more of this by industries that stand to benefit from crypto adoption...they will want to make it ubiquitous quickly so the public sentiment would make it super hard for democracies to get in crypto's way too much. 

- Also, let's point out that the US may not make it a national currency, but that doesn't mean they will forbid people and corporations from using it.  At the most basic level, bitcoin is protected by the first amendment.  computer code is considered free speech, and it can't be outlawed.  Some applications of it can be banned.  So, for example, I could see stable coins be highly regulated, and maybe even banned (but hopefully not).  However, bitcoin, by definition, is literally computer code, and the constitution supersedes laws.  If bitcoin is banned in the US, then it means we have way bigger problems on our hands, and my implosion of my crypto portfolio will be the least of my concern.

Again, I am particularly interested in your opinion, so please let me know if and how your position on this solidifies or shifts over time.  I'd rather  change my position over time and be correct, then to hang on to the wrong ideas simply for pride or something stupid like that.  If I'm seeing this wrong, I want to understand why and act accordingly. 

Take care. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 28, 2021, 09:08:25 AM
Okay, here are very clueless and honest questions based on the opposing opinions I'm reading here.

Say I don't care about missing out on potential gains of investing in crypto, I'm just not a speculation person for whatever reason.
Let's also assume that crypto does take over at least large chunks of the currency system.

Would we not assume that if that happens, that there will be a reasonable system for transition?
Assuming I don't care about losing out on gains, what are the benefits of buying particular coins *at this time*?

Between the champing at the bit pro-crypto folks, and the frothing at the mouth anti-crypto folks, it's hard to get a decent sense of anything. But I simply cannot wrap my mind around the utility of buying crypto *now* other than speculation, despite the fact that the pro-crypto folks cite endless reasons beyond speculation for their positions.

Am I missing something?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 09:22:53 AM
Okay, here are very clueless and honest questions based on the opposing opinions I'm reading here.

Say I don't care about missing out on potential gains of investing in crypto, I'm just not a speculation person for whatever reason.
Let's also assume that crypto does take over at least large chunks of the currency system.

Would we not assume that if that happens, that there will be a reasonable system for transition?
Assuming I don't care about losing out on gains, what are the benefits of buying particular coins *at this time*?

Between the champing at the bit pro-crypto folks, and the frothing at the mouth anti-crypto folks, it's hard to get a decent sense of anything. But I simply cannot wrap my mind around the utility of buying crypto *now* other than speculation, despite the fact that the pro-crypto folks cite endless reasons beyond speculation for their positions.

Am I missing something?

Yeah, that's a totally reasonable position/questions to be throwing out there.

I'll try to state a case for people not interested in using it as an investment. 

Suppose you have a person who is not comfortable with investing in stocks.  That's weird for us since we are all MMMer's, but many people in first world countries are not comfortable with stock investing.  These people are in a tough position right now, because the US, the EU, and most all first world countries are debasing their currency by printing money.  So, many people need a way to at least maintain the value they've accumulated.  US dollars and the EU are getting eaten by inflation, whereas Bitcoin has a forever hard cap of 21 million coins, and over 18 million of them have already been minted.  By the way the code was written, bitcoin can't debase their currency.  So, even if the world continues to trust the dollar, it will still be worth less and less each year.  But if the world continues to trust crypto, it has the feature of maintaining it's value. 

Now, an even stronger case for cyrpto is people who live in the developing world.  In those countries you usually CAN'T invest in stocks, buy gold on an exchange, etc.  The ONLY thing they can hold is their countries currency, which gets debases way faster than the US dollar...they lose so much to inflation.  And even if they have access to the dollar bill, that's getting debased super fast as well.  For the third world, cyrpto is the only solid way to maintain wealth.  They can get paid, and with an internet connection they can convert their nation's currency to bitcoin.

You may see bitcoin as unstable, but that's from the point of view of a first world rich person.  To a third world person with few to no options monetarily, this is the most stable and legit way to store wealth that they've ever had access too.

So, given your personal position towards crypto and the options to invest in stocks, gold, bonds, etc, I might advocate that you don't invest in crypto.  But there are many who right now SHOULD be buying it even if they don't care about the speculative gains. 

Hope that helps a bit.  Cheers! 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 28, 2021, 09:24:48 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 28, 2021, 09:44:45 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: simonsez on September 28, 2021, 09:48:37 AM
Okay, here are very clueless and honest questions based on the opposing opinions I'm reading here.

Say I don't care about missing out on potential gains of investing in crypto, I'm just not a speculation person for whatever reason.
Let's also assume that crypto does take over at least large chunks of the currency system.

Would we not assume that if that happens, that there will be a reasonable system for transition?
Assuming I don't care about losing out on gains, what are the benefits of buying particular coins *at this time*?

Between the champing at the bit pro-crypto folks, and the frothing at the mouth anti-crypto folks, it's hard to get a decent sense of anything. But I simply cannot wrap my mind around the utility of buying crypto *now* other than speculation, despite the fact that the pro-crypto folks cite endless reasons beyond speculation for their positions.

Am I missing something?
For someone not interested, I'd say just keep buying pieces of businesses (or instruments that represent buying pieces of businesses) assuming this is part of your portfolio.  If those businesses you purchase start to use crypto as a currency in the future, cool, you still own a piece of the business.  If they do not start to use crypto as a currency in the future, cool, you still own a piece of the business.  Owning pieces of a business is still a viable tool to help win the financial game of life but there are more and more options for doing so (and more pitfalls, perhaps).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 10:22:39 AM

Store of value? Maybe, as long as enough folks believe in it. As a general means of payment? No way for Bitcoin.

There is also no way the US or any other semi-functioning country is gonna accept some new "currency" as legal tender,

If the US is ever gonna accept digital money it will be digital USD in some form, not some crypto.




The governments of the US and other so-called semi-functioning countries may or may not choose to not accept bitcoin, but how often do you make a payment to a nation-state's governing body anyway? 

99.9% of the time, we make payments to corporations in the world, not the government institutions themselves.  And yes, those corporations will be accepting non government issued crypto. 

Twitter just announced that they will accept peer-to-peer bitcoin transfers as a general means of payment through a layer 2 solution called the lightning network.  Currently they have over 200 million daily users, most of whom are younger than 35 years old. 

https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication
 (https://www.theverge.com/2021/9/23/22689806/twitter-bitcoin-lightning-tipping-nft-authentication)

So now there exists whole countries (El Salvador currently, with Panama, Cuba, and Ukraine making strides) who accept bitcoin, and we have one of the biggest social networks in the world accepting it.  Keep in mind that bitcoin was created only 12 years ago.  To me, the take-away isn't "the US government doesn't even accept it yet".  The real take-away is "wow, in only 12 years, small countries and the some of the world's biggest corporations are already accepting it as legal tender.  This is pretty mind blowing!"

so china has banned it if other global powers ban this the market for it basically goes away. Or it is now held and supported by these countries who had currency issues to begin with.  Currency in any form is only as good as the backing it receives from the trust of the general public.  I didn't put much trust in el Salvador's currency before bitcoin so its adoption along with the possible adoption of other 3rd world/corrupt economies does not interest me.  Maybe a combined 3rd world market currency with out fear of manipulation by the govt officials(they'll figure out a way) will help these economies do better in the long run it still doesn't solve the deflationary issues posed above.

Hey Boarder, I'm pumped you are chiming in.  I was actually thinking about PM'ing you recently because I know from your work in DFS that you are open to ways of making money that are considered outside the norm by most.  Your opinion holds a bit more weight to me on this topic than the average joe on the street, since I know you are generally open to pretty out of the box ideas. 

I can't deny that I am disappointed by China's banning of crypto as they roll out their cyrpto Yuan.  At first I was worried this could be an existential threat(I had an extra beer that night:), so I basically did nothing but look into the ramifications of this over the past few days.  I'm less concerned now.  It looks like democracies most of the rest of the world will have far less incentive to ban it, and far more pressure to allow it. 

For example, in the US:
- Companies like Fidelity are super close...like maybe within weeks of offering a crypto ETF.  When one institution offers this, they will all have to do it, and quickly, or they will lose clients.  Once most financial institutions offer this, then there will be more and more lobbyists in finance advocating for crypto.  Right now, the big banks are basically only being hurt by crypto, but I think in the coming year it will be more nuanced than that.  I see it as something that they wish was never created, but now that it does exist, they are going to have to quickly adapt and make the best of the new situation.  There are lots of examples of this already happening.

- Major corporations are adopting quickly.  I think in the tech industry the CEO's understand the value of blockchains, and they want to get cryto onboarded quickly for two reasons.  Unlike the finance industry, this is a help to most major tech firms, particularly in social media.  I think they don't want the government to ban it, so if they make it ubiquitous quickly, it gets really hard to do.  Last Thursday Jack Dorsey announced bitcoin as payment via tipping...that's 200 million people who  will shortly have the option.  I think we will see more of this by industries that stand to benefit from crypto adoption...they will want to make it ubiquitous quickly so the public sentiment would make it super hard for democracies to get in crypto's way too much. 

- Also, let's point out that the US may not make it a national currency, but that doesn't mean they will forbid people and corporations from using it.  At the most basic level, bitcoin is protected by the first amendment.  computer code is considered free speech, and it can't be outlawed.  Some applications of it can be banned.  So, for example, I could see stable coins be highly regulated, and maybe even banned (but hopefully not).  However, bitcoin, by definition, is literally computer code, and the constitution supersedes laws.  If bitcoin is banned in the US, then it means we have way bigger problems on our hands, and my implosion of my crypto portfolio will be the least of my concern.

Again, I am particularly interested in your opinion, so please let me know if and how your position on this solidifies or shifts over time.  I'd rather  change my position over time and be correct, then to hang on to the wrong ideas simply for pride or something stupid like that.  If I'm seeing this wrong, I want to understand why and act accordingly. 

Take care.

My opinion is there is far too much risk you're taking on to try to shave a few years off and FI timeline and possibly become mega rich.  having an allocation at no more than 5-10% maybe ok if this is something you believe in but its just a belief the history is far too short.  Investing in specific coins is even worse in my opinion as no one knows what will win or fail.  Just b/c something has a huge market cap doesnt mean its not a house of cards - see enron.  The govt may not be able to make this illegal per your statements but they can regulate it out of existance.  I just fundamentally see no value in this sector and mostly a bunch of talking heads trying to get rich quick.  I could not sleep at night or retire with an asset allocation that rich in a single short term trend that could completely fold on itself for no other reason than people lose interest in it being a thing. 

I'd also hope your research includes all of the counterpoints its very easy today to get confirmation bias on something when thats what you're seeking

Fair points.  I'll add that my wife and I each are ten years away from pensions.  Mine will probably be worth about 45k/year.  Hers will probably be worth 60k/year since she makes more than me.  We also own a house worth 400k currently that will be paid off in 9 years.  Additionally, we have 700k in the stach, 300k of which we are putting into crypto.  So even if that goes to zero, in 10 years we will have:

-100k+ pension per year (it would take a 2.5 million dollar stache to replicate this at a 4% withdrawal rate)
- paid off house
- whatever that 400k of VTSAX grows to in the next 10 years
- whatever additional VTSAX I buy in the next 10 years, plus the earnings on that additional money. 
- And we have a 500k life insurance policy on each other in the meantime for extra security. 

So in my particular position, I suppose it's not really 40% of my retirement.  It's 40% of my stache, but there's much outside of that.  If you include all that other stuff, I'm probably a bit over 10% allocated, but probably not much. 

Your last point is the one that is harder for me.  Searching for counterpoints to my assessment of crypto is harder than I'd like it to be.  I'm constantly looking, but many of the counterpoints are vague statements like "it's risky", "it's just used for crime", and things like that.  Things like "it's mainly used for crime" are just categorically false.  Statements like "it's risky" may be completely true, but there's seldom math to back it up. 

There is one REALLY VALID critique of crypto that I simply cannot deny, and you've pointed it out already.  Crypto has a super short lifespan, so the sample size is undeniably small.  This is a valid criticism and discounting it would be stupid.  Even though they seem like clear home runs to me, bitcoin has only been around for 12 years, and other coins are all younger than that.  This isn't a big deal, it's a really big deal:) 

My counter to that argument is this:  There was once a time when the US stock market was only 12 years old.  If we discount crypto because of it only being 12 years old, then we should similarly say that a person shouldn't have been buying stocks 12 years into the market's existence.  But a) that would have probably been a mistake for early adopters, and b) if they didn't invest in that, it wouldn't exist today, which would be sad. 

I believe that given all the layers of security I have listed above (pension/paid off house/400k in VTSAX, life insurance), I can easily absorb a 300k loss of wealth and still retire a happy and wealthy person in 10 years. 

Thanks again for your thoughtful response, hearing from an intelligent critic is far more valuable to me than someone who just drinks my cool-aide:)  It'll be fun to see how both of our views on this evolve in the coming months and years. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on September 28, 2021, 10:31:18 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?

If I'm understanding your question correctly, I agree that this position (you have to buy it now because it will be a viable currency) doesn't make any sense.  If a crypto currency becomes a viable form of currency, it would of course have to be obtainable via some sort of exchange process.  If it weren't, it wouldn't be a viable currency.  So, buying coins at this point in time is speculating on the particular coin(s) that will end up being viable.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 28, 2021, 10:45:59 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?

If I'm understanding your question correctly, I agree that this position (you have to buy it now because it will be a viable currency) doesn't make any sense.  If a crypto currency becomes a viable form of currency, it would of course have to be obtainable via some sort of exchange process.  If it weren't, it wouldn't be a viable currency.  So, buying coins at this point in time is speculating on the particular coin(s) that will end up being viable.

Okay, so I'm not missing anything.

I keep positing this and keep being told I'm wrong and "don't understand" crypto.

Granted, the majority of crypto-folk in my real life are fucking morons who don't know anything about investing, so aren't able to engage in a real conversation.

But I wanted to really understand that I wasn't missing anything, because as much as I've read, I do NOT feel confident holding much of an opinion or position on crypto at this time.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 11:55:00 AM
There is no real reason to own crypto if you don't have fear of missing out on potential future gains.  There don't appear to be many (any?) valid current use cases for a person living in a country without a failed currency or for people who aren't currently unbanked.  Just about anything that crypto can do for legal uses, your regular bank/credit card can do better at the moment.

Yeah, but the sentiment seems to be that there are legitimate reasons to buy it *now* in the event that it becomes a standard form of currency.

I just don't see the mechanism for this argument.

I say this because I have seen countless debates online where pro-crypto folks insist that it's not just speculation.

But how? How is it not just speculation for a typical north american investor?

If I'm understanding your question correctly, I agree that this position (you have to buy it now because it will be a viable currency) doesn't make any sense.  If a crypto currency becomes a viable form of currency, it would of course have to be obtainable via some sort of exchange process.  If it weren't, it wouldn't be a viable currency.  So, buying coins at this point in time is speculating on the particular coin(s) that will end up being viable.

Okay, so I'm not missing anything.

I keep positing this and keep being told I'm wrong and "don't understand" crypto.

Granted, the majority of crypto-folk in my real life are fucking morons who don't know anything about investing, so aren't able to engage in a real conversation.

But I wanted to really understand that I wasn't missing anything, because as much as I've read, I do NOT feel confident holding much of an opinion or position on crypto at this time.

+1  You are not missing anything.  If crypto takes off and becomes widespread currency you'll easily be able to convert your cash or stocks to it at any time.  Currently I am investing for the sake of speculation, and am assuming all the risk that goes with this, and not because it's my only shot to own it.  I strongly think it will rise in value faster than stocks.  But even if I'm right, the people who waited to buy it will be able to convert their currency to crypto at the click of the button in the future. 

No one living in a first world country currently needs to own any crypto at the moment.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on September 28, 2021, 11:59:19 AM

for the record if unicorn fartcoins ever come out i'm probably going to buy some just to say i own them

LOL. Unicorn fartcoins are the new Doge.

@aceyou, thanks for seeking and articulating reasonable arguments; ditto @Malcat.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 28, 2021, 12:13:44 PM
Yes I have 20%. @Malcat  I plan to rebalance my portfolio annually to keep it at 20% crypto.

My question on this thread though is to understand what's the downside of adding a low% and rebalancing. Crypto has better risk vs reward than leveraged ETFs and a 2-5% seem to do wonders to the returns.

@waltworks Thank you for the recognition :)

"My question on this thread though is to understand what's the downside of adding 20% Theranos and rebalancing.  Look at the backtesting!!1!1!"  -c2015

Good luck, OP.  It may well work out.  Or not.  I don't think there is any harm in gambling with a few % of your network or portfolio.  20%?  Seems exceedingly foolish to me but to the guy who wins $500,000,000 in the lottery,  I suppose buying a ticket wasn't a waste of money. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 28, 2021, 12:49:46 PM
1. I think the utility of crypto as a currency in 3rd world countries with unstable currencies is real. However, I don't see this value to be enough to allocate my money towards this "investment".

2. Similar to what others have said, my personal bias is that my family/friends that own bitcoin and crypto know very little about investing and have very little invested. They struggle to understand the basics of economics. They seem to take the "fairy dust" approach, which is difficult to debate.

3. Re-balancing at 20% and putting the profits into VTSAX seems like a better strategy than not re-balancing.

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance" 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 28, 2021, 02:46:27 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 29, 2021, 12:24:56 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist. 



Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on September 29, 2021, 03:32:00 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist.

Why should we assume that future prices of Bitcoin are normally distributed?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 29, 2021, 04:30:57 PM

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist.

On one day during the GFC Goldman Sachs published a note that the daily move in 2y US treasuries were 136 standard deviations (I might remeber the number incorrectly, but it was a botload of sigmas). They obv used it to make the point that stuff isn't really normally distributed in the real world.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 29, 2021, 05:01:57 PM

4. You are predicting less variance in Bitcoin in the future. Statistically speaking, that type of prediction is very difficult to pull off. To fully understand this prediction, I would encourage you to read up on "homogeneity of variance"

Ok, so it looks like the Levene Test will be my learning/reading for tonight.  Thanks clarkfan for the direction.

Without going off of too much of a tangent, homogeneity of variance is a statistical assumption we make regarding normally distributed constructs/variables. Reasonable people making reasonable assumptions are going to assume normally distributed variables to have homogeneity of variance when making predictions about our world. 

Once you start violating this rule, you essentially go into an alternative universe (statistically speaking). In this alternative universe you are more likely to conclude that you found "something" (maybe a black hole?) when it doesn't actually exist.

Why should we assume that future prices of Bitcoin are normally distributed?

Why should we assume anything about Bitcoin and it's future as anything of substance. I mean a coin made as a joke is insanely popular. What's stop edge investors from thinking doge is the best and my new unicorn farts are better.

Banks making vehicle to profit off transactions of something does not give value to something.

I'm mentally prepared to be totally wrong about Bitcoin and Ethereum, but if it's because Doge ends up supplanting them, well that's just not something I can emotionally prepare for:) 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: jojoguy on September 29, 2021, 07:10:45 PM
I have went from dabbling crypto to building a huge amount of excitement for it. I really like more of the Defi side of it. There are a bunch of ways to make money on it and hedge against a bearish market. Anchor Protocol basically has a 20% APY savings account and they also have a borrow/lending system that makes you interest in both directions, albeit there is a little risk involved. Staking is great too.

I bought a Helium(HNT) miner last week to make passive income on. So far it has been active for a couple of days. The wait was a headache. I had to wait two-three days for it to sync with the blockchain. The amount mined hasn`t been much so far because of there not being too many hotspots in a couple of miles radius of me. So, I ordered an outdoor antenna, that will soon arrive, to be able to pick up more hotspots a further away. Once I start building up more coins I will be able to stake those as well to get 8% APR.

I just really enjoy the vast ideas and projects within the crypto market. It is not just about buying and selling coins based on the price of the coin itself. You can put the coins to work to make you even more. I am taking a look at Pancake Swap and their daily auto-compounding as well as a newer one called Kogecoin. I don`t want to put too much into either, but both of those have such huge potential. Koge is newer than Pancake, but could possibly blow up in value.

I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Psychstache on September 29, 2021, 07:58:39 PM
Koge is newer than Pancake, but could possibly blow up in value.

To each their own, but I don't know how I could write a sentence like this and not feel ridiculous.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 30, 2021, 05:36:12 AM


I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.

i think this statement is categorically false - a few in the fire movement are drawn to it.  These threads are primarily composed of the same 3-5 people supporting it and a vast majority of people saying really wtf are you doing.

as to your comments on "interest" at 20% this is not even remotely the same as 20% interest on a dollar - the dollar is stable.  your coins fall as much as 80% in days.

I agree, the FIRE community is exceptionally risk averse on average compared to the rest of the population.

Perhaps there are other FIRE communities on the internet where crypto is big, but here the pro-crypto contingency is really just a small handful who post a lot about it.

That's not a criticism from me, I don't hold much of an opinion about crypto, it just doesn't really fit at this time with the demographic here, despite us having a huge proportion of techy folks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 30, 2021, 07:02:26 AM
There are a bunch of ways to make money on it and hedge against a bearish market.

The last bear market that I can remember was in 2008.  Didn't bitcoin become a thing in 2009?  What 'bearish market' are you hedging against?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on September 30, 2021, 08:41:38 AM
I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.
Many are drawn to it?  I'm guessing your claim is based on a guess?
Most people I've seen base early retirement around equity investment, not crypto.


Why should we assume anything about Bitcoin and it's future as anything of substance. I mean a coin made as a joke is insanely popular. What's stop edge investors from thinking doge is the best and my new unicorn farts are better.
Market cap counts the price of something times how much is available.  Bitcoin's market cap is 30x that of Dogecoin, so it's like comparing Visa to AMC.  The existence of irrational meme stocks (like AMC) does not by itself mean that stock investing is a bad idea.


Last market crash was in March 2020.  Btc went from 9763 to a bottom of 5336 a loss of 4427 a loss of 45%
Another way to measure is from Feb peak to the low point in March.  By that measure, the S&P 500 dropped 35.6%... and Bitcoin dropped 60.7%.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on September 30, 2021, 10:10:18 AM


I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.

i think this statement is categorically false - a few in the fire movement are drawn to it.  These threads are primarily composed of the same 3-5 people supporting it and a vast majority of people saying really wtf are you doing.

as to your comments on "interest" at 20% this is not even remotely the same as 20% interest on a dollar - the dollar is stable.  your coins fall as much as 80% in days.

I agree, the FIRE community is exceptionally risk averse on average compared to the rest of the population.

Perhaps there are other FIRE communities on the internet where crypto is big, but here the pro-crypto contingency is really just a small handful who post a lot about it.

That's not a criticism from me, I don't hold much of an opinion about crypto, it just doesn't really fit at this time with the demographic here, despite us having a huge proportion of techy folks.

Yep, just looking at this forum as my data points, the pro-crypto cohort around here is real small...like myself and a few other posters is all I've seen.

Also, confirming what Boarder said, I'd advice against looking at crypto as a hedge for stocks.  I've put a lot of time into this and there's a lot of things I love about crypto, but that isn't one of them. 

If crypto was going to be a hedge for something, it would be against inflation of a fiat currency.  Nation states can and do print money, which debases and inflates that currency.  However...

Cryptocurrencies are considered superior by people who are pro-crypto because they have a cap on how many can be put into circulation, so those currencies are protected from inflation via debasement.  Bitcoin is perfectly protected, and it is often compared to gold.  The code for Bitcoin caps the number of coins that can be minted at 21 million.  There are a little over 18 of them minted already.  Gold is similar, there's a finite amount, and the only way to get more is to mine it.  But unlike gold, where we don't actually know how much is left to be mined, we know exactly how much more bitcoin can be mined...and it isn't that much. 

Ethereum has a slightly different code to limit debasement.  They allow the minting of 18 million new coins per year.  So, for the first few years, it will inflate rather quickly.  However, each year, 18 million coins will become a smaller and smaller percent of the total coins in circulation.  So, not as finite as bitcoin, but unlike the dollar, there's a prescribed rule to ensure that over time inflation rate goes down and down and down.  The dollar, on the other hand, is getting debased by a greater and greater amount each year.

This is the main reason that I am pro-crypto...it solves several problems that the world needs solved...
1.  It's a global currency in a world that is now global. 
2.  Even if picked a nation-state backed currency like the dollar, the Euro, or the yuan to be a universal currency, it would still  require us to trust that nation state to
      a) not debase it...which we know won't happen...all nation states are debasing their currency by printing money.
      b) not cease to exist.  History shows us that the rise and fall of empires is a given.  The people who live in the US may continue to thrive if the U.S. empire changed ownership, but it's currency would likely be replaced.  Crypto is not tied to a nation state, so as long as there's internet, bitcoin will still be there. 

The downside of crypto is clear as well...even if it IS on paper a better currency than fiat notes like the dollar, it will only win if people want it to win.  Inferior products sometimes defeat superior products in the marketplace of ideas, and it's possible that it doesn't get mass adopted.  My bet is that it has enough legs to eventually overtake fiat currency, and that it will come to fruition.  This is the only reason a person should buy bitcoin or ethereum IMO. You are speculating markets gradually replacing some of their gold, fiat, and equity reserves with crypto until we reach a new market equilibrium, and that you'll ride the gains of the cryptocurrency as it moves towards this new equilibrium.  

I invest in Bitcoin because it is the most secure cyrpto on the market from a code standpoint and because it has the most trust by the general public.  I view bitcoin as a digital replacement of gold.  It would be SUPER HARD for another crypto to knock off Bitcoin, because Bitcoin doesn't try to be everything to everyone.  From pure security standpoint, good luck writing a code that beats bitcoin. 

I invest in Ethereum, because it's security is nearly as secure as bitcoin from a code standpoint, but it has far more coders developing the platform than does bitcoin.  I view Ethereum as the place where people will actually be doing business, because applications can be build on it easier.  Ethereum has more competition than Bitcoin, because several other cryptos are trying to beat Ethereum as platforms where applications can be build on even better.  Ethereums two biggest competitors are Solana and Cardano.  Solana, for example, has coded itself to make transactions happen faster than Ethereum, but it by definition had to trade a bit on security to do it.  So many feel that this part of the crypto market won't be winner take all.  Instead, there will likely be a few different protocals that stand out depending on what you are looking to do.  I you are creating a business that need to make super fast and cheap transactions and security isn't that important, you might choose solana.  But for an application that requires more security that approaches bitcoin, but is far easier to use than bitcoin, you might choose Ethereum.  It's possible that a single corporation would put different parts of their businesses on different protocals, depending on what each part of their business requires.  This is why I'm not super concerned with Ethereum's competitors.  The things Ethereum does well, it does REALLY well, and I see them exploding in those domains. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 30, 2021, 11:46:24 AM


I am not surprised that many from the FIRE movement are drawn to it. It seems good to mess around with if you want to risk a small amount for big rewards, and the amount of diversity it has.

i think this statement is categorically false - a few in the fire movement are drawn to it.  These threads are primarily composed of the same 3-5 people supporting it and a vast majority of people saying really wtf are you doing.

as to your comments on "interest" at 20% this is not even remotely the same as 20% interest on a dollar - the dollar is stable.  your coins fall as much as 80% in days.

I agree, the FIRE community is exceptionally risk averse on average compared to the rest of the population.

Perhaps there are other FIRE communities on the internet where crypto is big, but here the pro-crypto contingency is really just a small handful who post a lot about it.

That's not a criticism from me, I don't hold much of an opinion about crypto, it just doesn't really fit at this time with the demographic here, despite us having a huge proportion of techy folks.

Yep, just looking at this forum as my data points, the pro-crypto cohort around here is real small...like myself and a few other posters is all I've seen.

Also, confirming what Boarder said, I'd advice against looking at crypto as a hedge for stocks.  I've put a lot of time into this and there's a lot of things I love about crypto, but that isn't one of them. 

If crypto was going to be a hedge for something, it would be against inflation of a fiat currency.  Nation states can and do print money, which debases and inflates that currency.  However...

Cryptocurrencies are considered superior by people who are pro-crypto because they have a cap on how many can be put into circulation, so those currencies are protected from inflation via debasement.  Bitcoin is perfectly protected, and it is often compared to gold.  The code for Bitcoin caps the number of coins that can be minted at 21 million.  There are a little over 18 of them minted already.  Gold is similar, there's a finite amount, and the only way to get more is to mine it.  But unlike gold, where we don't actually know how much is left to be mined, we know exactly how much more bitcoin can be mined...and it isn't that much. 

Ethereum has a slightly different code to limit debasement.  They allow the minting of 18 million new coins per year.  So, for the first few years, it will inflate rather quickly.  However, each year, 18 million coins will become a smaller and smaller percent of the total coins in circulation.  So, not as finite as bitcoin, but unlike the dollar, there's a prescribed rule to ensure that over time inflation rate goes down and down and down.  The dollar, on the other hand, is getting debased by a greater and greater amount each year.

This is the main reason that I am pro-crypto...it solves several problems that the world needs solved...
1.  It's a global currency in a world that is now global. 
2.  Even if picked a nation-state backed currency like the dollar, the Euro, or the yuan to be a universal currency, it would still  require us to trust that nation state to
      a) not debase it...which we know won't happen...all nation states are debasing their currency by printing money.
      b) not cease to exist.  History shows us that the rise and fall of empires is a given.  The people who live in the US may continue to thrive if the U.S. empire changed ownership, but it's currency would likely be replaced.  Crypto is not tied to a nation state, so as long as there's internet, bitcoin will still be there. 

The downside of crypto is clear as well...even if it IS on paper a better currency than fiat notes like the dollar, it will only win if people want it to win.  Inferior products sometimes defeat superior products in the marketplace of ideas, and it's possible that it doesn't get mass adopted.  My bet is that it has enough legs to eventually overtake fiat currency, and that it will come to fruition.  This is the only reason a person should buy bitcoin or ethereum IMO. You are speculating markets gradually replacing some of their gold, fiat, and equity reserves with crypto until we reach a new market equilibrium, and that you'll ride the gains of the cryptocurrency as it moves towards this new equilibrium.  

I invest in Bitcoin because it is the most secure cyrpto on the market from a code standpoint and because it has the most trust by the general public.  I view bitcoin as a digital replacement of gold.  It would be SUPER HARD for another crypto to knock off Bitcoin, because Bitcoin doesn't try to be everything to everyone.  From pure security standpoint, good luck writing a code that beats bitcoin. 

I invest in Ethereum, because it's security is nearly as secure as bitcoin from a code standpoint, but it has far more coders developing the platform than does bitcoin.  I view Ethereum as the place where people will actually be doing business, because applications can be build on it easier.  Ethereum has more competition than Bitcoin, because several other cryptos are trying to beat Ethereum as platforms where applications can be build on even better.  Ethereums two biggest competitors are Solana and Cardano.  Solana, for example, has coded itself to make transactions happen faster than Ethereum, but it by definition had to trade a bit on security to do it.  So many feel that this part of the crypto market won't be winner take all.  Instead, there will likely be a few different protocals that stand out depending on what you are looking to do.  I you are creating a business that need to make super fast and cheap transactions and security isn't that important, you might choose solana.  But for an application that requires more security that approaches bitcoin, but is far easier to use than bitcoin, you might choose Ethereum.  It's possible that a single corporation would put different parts of their businesses on different protocals, depending on what each part of their business requires.  This is why I'm not super concerned with Ethereum's competitors.  The things Ethereum does well, it does REALLY well, and I see them exploding in those domains.

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on September 30, 2021, 12:18:06 PM
I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on September 30, 2021, 12:56:17 PM
I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

i think we've seen a practical application of block chain thru the tracking of digital art and media that people are selling.  Does this benefit bitcoin - NO b/c bitcoin holds no patents on blockchain so its pretty worthless.  I think there are other practical applications yet to be discovered but again these dont benefit the first coin made.

Bitcoin isn't a functional currency.

The main reason to hold it is that maybe someone else will pay you more money for it at some point in the future.  At the very best it should be considered like a non-dividend paying stock.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 01:00:42 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded




Title: Re: What do you think of adding a low% of crypto allocation
Post by: maisymouser on September 30, 2021, 01:39:44 PM
but if it becomes the new dollar your company will just be measured in unicorn fartcoins

OK, I was not a crypto person but I'm sold. Selling all my VTSAX to invest in fartcoins, thank you boarder42.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 30, 2021, 02:30:57 PM
If you look at crypto as an asset class you should or shouldn't own you can repeat the excercise for others. Why not own commodities (has outperformed crypto lately even), why not real estate in addition to your own home if you own one? Why not a certain % in precious metals? Or unlisted equity? Bonds get very little love these days despite being one of the key asset classes.

There are a lot of asset classes most folks don't invest in directly, myself included. I have yet have someone explain to me why I should own crypto other than "I think it's gonna go higher 'cuase it has been going higher" It's a purely speculative play. If you bought something as dull as natural gas futures at the start of the year you would be up like 250%. Why is noone talking about natural gas futures? It's been a spectacular run.

You don't need crypto or any other specific asset class to get rich or stay rich. My sister bought some ETH some time ago. She "invested" like 2k USD. I told her that if you get lucky and make 2x or 5x or 10x the return it won't - after tax - really make any meaningful difference to you as you make 120k per year. Its a miniscule play that's not gonna move the needle on anything, but she just refused to listen. She heard it was hot and bought some. I tried explaining to here that it would most likely never make her rich even if returns turned out great %-wise. but that was like talking to a wall.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: joe189man on September 30, 2021, 03:36:05 PM
If you look at crypto as an asset class you should or shouldn't own you can repeat the excercise for others. Why not own commodities (has outperformed crypto lately even), why not real estate in addition to your own home if you own one? Why not a certain % in precious metals? Or unlisted equity? Bonds get very little love these days despite being one of the key asset classes.

There are a lot of asset classes most folks don't invest in directly, myself included. I have yet have someone explain to me why I should own crypto other than "I think it's gonna go higher 'cuase it has been going higher" It's a purely speculative play. If you bought something as dull as natural gas futures at the start of the year you would be up like 250%. Why is noone talking about natural gas futures? It's been a spectacular run.

You don't need crypto or any other specific asset class to get rich or stay rich. My sister bought some ETH some time ago. She "invested" like 2k USD. I told her that if you get lucky and make 2x or 5x or 10x the return it won't - after tax - really make any meaningful difference to you as you make 120k per year. Its a miniscule play that's not gonna move the needle on anything, but she just refused to listen. She heard it was hot and bought some. I tried explaining to here that it would most likely never make her rich even if returns turned out great %-wise. but that was like talking to a wall.

The bolded is what i keep coming back to, if i had bought (or even known about) cardono last fall it could have made ~20x right now, but i would have never put more than $1k into it, so hypothetically thats ~$20k profit,  many folks here get bonuses that large or larger all the time. Like @habanero says its not likely to move the needle much. Especially now that the cheap gains have been made and everyone is talking about crypto. I couldn't imagine bitcoin or ethereum going 20 x again, but i thought the internet was a fad in the late 90s so what do i know.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 03:37:55 PM
If you look at crypto as an asset class you should or shouldn't own you can repeat the excercise for others. Why not own commodities (has outperformed crypto lately even), why not real estate in addition to your own home if you own one? Why not a certain % in precious metals? Or unlisted equity? Bonds get very little love these days despite being one of the key asset classes.
Why do you assume that anyone positive about crypto only looks at crypto ?

There are a lot of asset classes most folks don't invest in directly, myself included. I have yet have someone explain to me why I should own crypto other than "I think it's gonna go higher 'cuase it has been going higher" It's a purely speculative play. If you bought something as dull as natural gas futures at the start of the year you would be up like 250%. Why is noone talking about natural gas futures? It's been a spectacular run.
Who are you talking to ? Have you tried to find out for yourself ? For a more sophisticated case, try: https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/) and the follow-up articles listed there. You might still disagree with it all but at least you'll have a better understanding of what some see as sound reasoning.

People probably would be talking about Natural Gas Futures if they subscribed to the theory of: "I think it's gonna go higher 'cuase it has been going higher". Maybe they don't. I don't.

You don't need crypto or any other specific asset class to get rich or stay rich. My sister bought some ETH some time ago. She "invested" like 2k USD. I told her that if you get lucky and make 2x or 5x or 10x the return it won't - after tax - really make any meaningful difference to you as you make 120k per year. Its a miniscule play that's not gonna move the needle on anything, but she just refused to listen. She heard it was hot and bought some. I tried explaining to here that it would most likely never make her rich even if returns turned out great %-wise. but that was like talking to a wall.
Yeah, I don't always understand my sister's actions . . . not sure what that tells me about crypto though.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: habanero on September 30, 2021, 04:06:13 PM
Quote

Who are you talking to ? Have you tried to find out for yourself ? For a more sophisticated case, try: https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/) and the follow-up articles listed there. You might still disagree with it all but at least you'll have a better understanding of what some see as sound reasoning.


I (think) I have an at least fairly decent understanding of the main reasons why some / a lot think it will go to the moon and beyond. It might, or it might not. But given it's an asset class (like commodities) that pays no dividends or has no underlying income it boils down to the "will increase in value" argument otherwise there would be no point in owning it especially as it - at least seems like a - come hell or high water, I'm gonna stick to it thing. I have no idea what the price of bitcoin or any other crypto will be in 10 years, it might be very high and it might be very low. If it's the former there is no force of nature that dictatates it will stay that way, if it's the latter there is nothing that says it will rebound. You could kind of make the same argument for equities, but at least it's an asset class that pays semi-regular income and will scale with the general economy. I doubt many buy crypto hoping for 7% annual real returns. That would be like a slow Wednesday in crypto space.

Fwiw I find gold utterly useless - it barely has any uses other than being valued and scarce and that show has been going for like 5000 years or whatever so it's not like I think anything has to be useful to find widespread assumed value. If I bought X% of my NW in crypto today I might be vastly richer than if I didn't - I don't know. What I know for sure is that I don't need crypto or commodities or bonds or whatever to likely get and stay fairly rich. I could put some % of my NW in crypto but given the volatility it has my position would be small and unless I got very lucky it wouldn't matter that much in the end. If fairly confident in having say 1 million USD in global equities, in crypto  - not so much. Just like if I had some intel Moderna was probably gonna strike gold in 2020 I still wouldn't put 1 million into the bet on it.

Basically I have no need for the off-chance to get very rich very fast. Im fine with slow and steady the tried and tested way.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 30, 2021, 04:23:02 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 05:22:05 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question?
Not sure I have a particularly good answer. I was just querying the logic of the response.

If pushed, I'd say my gut-feeling is that such ongoing losses should be fairly insignificant in the scheme of things / compared to many other risks.
There's plenty of tales about people throwing away laptops 10 years ago with 100 'worthless' Bitcoins on them. However, I doubt many would be so careless today. My assumption is that people are generally careful with, and seek to protect, their valuables.
The total value of Bitcoin is currently around $800 billion. You'd need to misplace a lot of value to undermine any usefulness it has as a medium of exchange even now.
If it gets to the extreme point that everybody has some Bitcoin and we all use it every day and get a bit casual with it and regularly lose some, the total value will be waaaay higher and the losses proportionally smaller.

My main interest in Bitcoin is as a store of value, and in that context any such losses would, presumably, increase the value. The 'coins' would still exist but they would be out of circulation, thus limiting supply.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on September 30, 2021, 06:49:07 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question?
Not sure I have a particularly good answer. I was just querying the logic of the response.

If pushed, I'd say my gut-feeling is that such ongoing losses should be fairly insignificant in the scheme of things / compared to many other risks.
There's plenty of tales about people throwing away laptops 10 years ago with 100 'worthless' Bitcoins on them. However, I doubt many would be so careless today. My assumption is that people are generally careful with, and seek to protect, their valuables.
The total value of Bitcoin is currently around $800 billion. You'd need to misplace a lot of value to undermine any usefulness it has as a medium of exchange even now.
If it gets to the extreme point that everybody has some Bitcoin and we all use it every day and get a bit casual with it and regularly lose some, the total value will be waaaay higher and the losses proportionally smaller.

My main interest in Bitcoin is as a store of value, and in that context any such losses would, presumably, increase the value. The 'coins' would still exist but they would be out of circulation, thus limiting supply.

But if there are only 50,000 and then 25,000 and then 1,000 Bitcoin left in circulation, how usable really are they?  How many places are going to accept this tiny little currency?  I now bitcoins can be spent fractionally, and maybe that's part of the answer--it won't matter if there are only 1000 of them left in circulation because that will actually 1,000,000,000 .0001th bit coins, then it spend the same as 1,000,000,000 bitcoins, as long as the value inflates? 

But regarding the second bolded, it seems to miss the entire point of my question.  It won't increase the value if everyone stops taking bitcoin because it becomes some fringe currency (a bit like it was initially, but on the way down instead of the way up) that almost no one has.  If almost no one has it, stores will stop taking it, and it stores stop taking it, it has almost no value at all, and if it has almost no value, more stores ill stop taking it, and...

And I'm not sure I buy the "it's valuable so people are going to take good care of it" rationale.  Gold and diamond jewelry is valuable, but people lose it.  Paper US currency is valuable but it gets lot and burned in a house fire and left in a coat pocket of a coat that gets thrown away. 

Imagine there is only one bitcoin left.  How would that increase its value, instead of making its value basically $0?  At that point, it's just some random bit of code (or a number generated by). It only has value if people are willing to exchange it for goods or a different currency.  And why would they do that if it's just an obscure solution to an equation that was all the rage in 2020?  I guess maybe it would have some value as a NFT to someone with a nostalgia for the 2020's? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 30, 2021, 07:21:23 PM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 07:32:32 PM
Store of exactly what value. It consumes massive amounts of energy and has no utility as a currency or way to be utilized as a commodity. So it's a store of a perception that it has value to those who think it does?

Gold is a store of value but is used in jewelry and computing. What exactly is Bitcoin used for.
The price of gold is primarily driven by the same intangible perception of it as a store of value. What exactly is all the gold piled up in vaults used for ?

To be clear, I am a long way from being a Bitcoin-to-the-moon crypto fanatic or expert. I do think there is some potential value there but it's not immediately clear. It's very easy to conclude from a casual glance is that it's "just a bunch of worthless bytes" and that's where most people seem to stop.

I recommend the articles I quoted above written by someone way smarter and more knowledgeable than me for anyone that genuinely wants to understand why some think it might have value.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 30, 2021, 07:42:20 PM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

But isn't that value based on the expectation that it *will* take over as a useful currency? It's not worth $43500 because of anything it actually does at the moment, it's worth $43500 because of faith in what it *will* become.

So if it does become a ubiquitous currency, then stops being useful as a currency due to loss of coins over time, then where will the value come from.

I know you like to give a lot of sarcastic responses in crypto threads because you think the naysayers just don't get it. But the conversation in this thread has been interesting and a lot of valid questions are being addressed.

Also, I'm not anti crypto, so I'm asking for you to legitimately answer and participate, because I think a lot of us here would like to better understand.

Or you can stick with the sarcasm because this is the internet and you don't owe anyone anything, if that's what you want.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 30, 2021, 08:00:55 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 08:01:44 PM
. . . Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?
. . .
Your comments are spot on.  Bitcoin is designed to be deflationary.  You don't want a deflating currency for the reasons you mention.  People will tend to horde money instead of spending it, which hurts the economy.

Villanelle: Won't Bitcoin become worthless due to scarcity ? (which is a bad thing)
Telecaster: Yes, Bitcoin will become very valuable due to scarcity. (which is also a bad thing)

Eh ??



edited for typo + expanded

So what is your answer to my question?
Not sure I have a particularly good answer. I was just querying the logic of the response.

If pushed, I'd say my gut-feeling is that such ongoing losses should be fairly insignificant in the scheme of things / compared to many other risks.
There's plenty of tales about people throwing away laptops 10 years ago with 100 'worthless' Bitcoins on them. However, I doubt many would be so careless today. My assumption is that people are generally careful with, and seek to protect, their valuables.
The total value of Bitcoin is currently around $800 billion. You'd need to misplace a lot of value to undermine any usefulness it has as a medium of exchange even now.
If it gets to the extreme point that everybody has some Bitcoin and we all use it every day and get a bit casual with it and regularly lose some, the total value will be waaaay higher and the losses proportionally smaller.

My main interest in Bitcoin is as a store of value, and in that context any such losses would, presumably, increase the value. The 'coins' would still exist but they would be out of circulation, thus limiting supply.

But if there are only 50,000 and then 25,000 and then 1,000 Bitcoin left in circulation, how usable really are they?  How many places are going to accept this tiny little currency?  I now bitcoins can be spent fractionally, and maybe that's part of the answer--it won't matter if there are only 1000 of them left in circulation because that will actually 1,000,000,000 .0001th bit coins, then it spend the same as 1,000,000,000 bitcoins, as long as the value inflates? 

But regarding the second bolded, it seems to miss the entire point of my question.  It won't increase the value if everyone stops taking bitcoin because it becomes some fringe currency (a bit like it was initially, but on the way down instead of the way up) that almost no one has.  If almost no one has it, stores will stop taking it, and it stores stop taking it, it has almost no value at all, and if it has almost no value, more stores ill stop taking it, and...

And I'm not sure I buy the "it's valuable so people are going to take good care of it" rationale.  Gold and diamond jewelry is valuable, but people lose it.  Paper US currency is valuable but it gets lot and burned in a house fire and left in a coat pocket of a coat that gets thrown away. 

Imagine there is only one bitcoin left.  How would that increase its value, instead of making its value basically $0?  At that point, it's just some random bit of code (or a number generated by). It only has value if people are willing to exchange it for goods or a different currency.  And why would they do that if it's just an obscure solution to an equation that was all the rage in 2020?  I guess maybe it would have some value as a NFT to someone with a nostalgia for the 2020's?
How much are you imagining will be lost ? And at what point would it become 'fringe' ?
1% loss per year ? That would be $8 billion per year down the drain at today's prices - seems rather careless.
Even with that attrition rate, 60% of BTC would still be un-lost after 50 years. Is it 'fringe' yet ?

As I said, I'm not sure I have a good answer. It's not something I'd previously given any thought to.
On the face of it, I don't think I'll be giving much more thought to it in the future. It seems like a non-issue.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on September 30, 2021, 08:43:09 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

So sticking to unhelpful sarcasm it is.

Cool. You do you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on September 30, 2021, 08:45:52 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

So sticking to unhelpful sarcasm it is.

Cool. You do you.

Yes that's the plan.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on September 30, 2021, 08:57:49 PM
To be fair, I think the question of whether bitcoin will be a currency is answered, and has been for about 5 years now. It won't. It can be digital gold maybe, though. I'm not interested in that, just like I'm not interested in regular gold, but people can do whatever they want, of course.

Nation states gonna nation state, so they'll just ban crypto/release their own. Controlling all the guns and infrastructure means you call the shots, so if/when anything gets mainstream enough that it's a threat to the dollar/euro/etc, that's the end of it. China already pulled the plug, I'd imagine others will follow in the next few years.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on September 30, 2021, 09:02:03 PM
Here is another opinion. It might not be worth much, but here it is.

1. People are making money on appreciating Bitcoin. However, they are not paying income taxes.

2. The US government wants to collect on the capital gains of Bitcoin.

3. The US government will start to put restrictions on buying/selling/trading bitcoin in an effort to collect capital gains.

4. The market of holders in bitcoin will interpret this as a threat to the growth and ceiling of Bitcoin.

5. Because Bitcoin is mostly based on speculation, trust and price will fall 50%-90% within 6 months of the first US government restriction. Yes, I understand the technology make sense. However, when people are scared, it really doesn't matter.

I don't really care either way.

I appreciate the few willing to allocate 40% to crypto when they have a near or above 1 million portfolio. It allows the opportunity for an apples to apples conversation. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on September 30, 2021, 09:28:09 PM
Store of exactly what value. It consumes massive amounts of energy and has no utility as a currency or way to be utilized as a commodity. So it's a store of a perception that it has value to those who think it does?

Gold is a store of value but is used in jewelry and computing. What exactly is Bitcoin used for.
The price of gold is primarily driven by the same intangible perception of it as a store of value. What exactly is all the gold piled up in vaults used for ?

To be clear, I am a long way from being a Bitcoin-to-the-moon crypto fanatic or expert. I do think there is some potential value there but it's not immediately clear. It's very easy to conclude from a casual glance is that it's "just a bunch of worthless bytes" and that's where most people seem to stop.

I recommend the articles I quoted above written by someone way smarter and more knowledgeable than me for anyone that genuinely wants to understand why some think it might have value.

Gold was used as currency accepted world wide for centuries. Wars were fought over it. It's useful in electronics today it's utilized to make jewelry.

Bitcoin has no utility no use as currency and is just being accepted as a store of value by a frenzy of people who mostly think their getting rich and assume they'll get richer
Yes, it was. Yes, they were. Yes, some of it is but you seem to have missed the 'thousands of tons piled up in vaults' part - that's not useful in electronics nor is it utilised in jewellery.
Gold has a tremendous history and it probably has a good future but it's price today has little to do with electronics and jewellery.

Oh, ok . . .
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 01, 2021, 06:36:00 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 01, 2021, 08:38:06 AM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

That is a strawman argument which you've repeated across two posts.  Nobody else claimed "stores stop taking bitcoin" before your first post, and nobody said "shops won't take it" until your second post.  You are creating arguments nobody else brought up, then arguing with yourself.  Why not respond to points people actually brought up?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 01, 2021, 09:00:45 AM
I'LL admit that I thought I'd missed the boat when Bitcoin declined so much in early 2018. Couldn't have imagined the kind of rebound we've had over the last year.

I spend entirely too much head space thinking about it. If long-term financial goals require leaving things alone, the volatility of crypto- seems to motivate kind of the opposite of that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 01, 2021, 09:17:21 AM
I'LL admit that I thought I'd missed the boat when Bitcoin declined so much in early 2018. Couldn't have imagined the kind of rebound we've had over the last year.

I spend entirely too much head space thinking about it. If long-term financial goals require leaving things alone, the volatility of crypto- seems to motivate kind of the opposite of that.

This is the root of the issue with discussions around this on a forum like this. We quickly shutdown discussions around individual stocks for basically the same reason. I don't see how one can retire relying on Bitcoin given it's history and feel secure in that retirement. As to the original point of this post. A small amount of crypto in a portfolio is unlikely to do much harm or much good for that matter.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 01, 2021, 09:50:54 AM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.


That is a strawman argument which you've repeated across two posts.  Nobody else claimed "stores stop taking bitcoin" before your first post, and nobody said "shops won't take it" until your second post.  You are creating arguments nobody else brought up, then arguing with yourself.  Why not respond to points people actually brought up?

I'd just let Juan's comments ride.  Juan already literally stated yesterday or the day before that his intention is to just complain on this thread, and not to add valuable contributions.  I don't understand using life energy this way, but Juan has certainly been true to his word:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 01, 2021, 10:09:51 AM
I'LL admit that I thought I'd missed the boat when Bitcoin declined so much in early 2018. Couldn't have imagined the kind of rebound we've had over the last year.

I spend entirely too much head space thinking about it. If long-term financial goals require leaving things alone, the volatility of crypto- seems to motivate kind of the opposite of that.

This is the root of the issue with discussions around this on a forum like this. We quickly shutdown discussions around individual stocks for basically the same reason. I don't see how one can retire relying on Bitcoin given it's history and feel secure in that retirement. As to the original point of this post. A small amount of crypto in a portfolio is unlikely to do much harm or much good for that matter.

Agreed. It is a very similar argument to picking a single stock. However, you need to add in extreme volatility and speculation. For the average MMM investor, it's unnecessary.

Bitcoin is a great "investment" for people who have very little invested and need a home run. This needs to work because it's their only chance. They spend alot of time consuming information that supports their decision (confirmation bias). It becomes part of their identity. They consider themselves to be an "insider" of special information that other people simply just don't understand.

The above description of bitcoin owners does not apply to everyone. However, based on my personal experience, this is what I have witnessed.

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 01, 2021, 12:44:59 PM
Hear that everyone?  If stores stop taking bitcoin, it's value will be worthless!  Except, stores never took it in the first place and it's value is $43500 per bitcoin.  Hrrmmmmm.

Huh.  I'm not sure where you live, but stores near me absolutely do take bitcoin.  Not all, but certainly some.  Yes, generally not directly, but they are still ultimately paid in bitcoin for a transaction.

I use "store" as a lazy stand-in for "any purchase transaction". I didn't think I needed to spell that out, but it seems I was wrong.  So... if stores, home sellers, coffee shops, restaurants, car sellers, online retailers, service providers, in-app purchases, travel companies, taxis, education providers,  etc., stop taking Bitcoin.... Is that better?

I notice you don't answer my actual question, either.  Doesn't the limited number of the 'currency' that will ever be available, and the obvious attrition that will happen to reduce that number, mean that eventually it will be so rare that no one will bother accepting it for any kind of payment, and it will then lose all value other than perhaps to digital antiques collectors? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 01, 2021, 01:01:37 PM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 01, 2021, 04:02:16 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

I realized this years ago.  That's why I don't get involved in these discussions.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 01, 2021, 05:31:33 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

I realized this years ago.  That's why I don't get involved in these discussions.

I'm curious if part of the apparent consensus on cryptocurrency on this forum is driven by the same phenomenon. Social media tends to exaggerate the ratio in differences in opinion on many controversial subjects. Over time people who find themselves in even the modest minority view (say 40/60) tend to drop out of discussions. So a view held by say two out of three people in a group can end up looking like the view held by an overwhelming majority.

I know I used to be much more active in cryptocurrency threads. (Not that I thought they were something people should invest in, but I think they do solve very really problems with current means of payment. I used to actually buy things with bitcoin before the transaction fees got high.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 01, 2021, 05:38:41 PM
I'm happy to have serious discussions on crypto all day long.  Just not on this forum where the level of discussion seems to be 'shops won't take it, it'll never be a currency!' 'tulip bulbs!' 'Greater fool!' etc etc.  The starting point for discussion around crypto on this forum is just not worth the effort.

I realized this years ago.  That's why I don't get involved in these discussions.

I'm curious if part of the apparent consensus on cryptocurrency on this forum is driven by the same phenomenon. Social media tends to exaggerate the ratio in differences in opinion on many controversial subjects. Over time people who find themselves in even the modest minority view (say 40/60) tend to drop out of discussions. So a view held by say two out of three people in a group can end up looking like the view held by an overwhelming majority.

I know I used to be much more active in cryptocurrency threads. (Not that I thought they were something people should invest in, but I think they do solve very really problems with current means of payment. I used to actually buy things with bitcoin before the transaction fees got high.)

As I've stated many times in this thread I believe Blockchain has uses but Bitcoin isn't one for the exact reason you just stated. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: jojoguy on October 02, 2021, 12:09:22 AM
Koge is newer than Pancake, but could possibly blow up in value.

To each their own, but I don't know how I could write a sentence like this and not feel ridiculous.

Mainly because in the last several months I have been spreading a little money broadly into some of these and they have been very profitable for me. I have no reason to feel ridiculous. I am not putting all my eggs into one basket.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 02, 2021, 08:44:39 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 02, 2021, 10:36:46 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

My comment about sarcastic responses wasn't directed at you at all.  Sorry that wasn't clear, but I meant it when I said that yours was excluded from that.  I felt like you were truly trying to engage in a conversation and an exchange of information. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 02, 2021, 11:15:45 AM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

My comment about sarcastic responses wasn't directed at you at all.  Sorry that wasn't clear, but I meant it when I said that yours was excluded from that.  I felt like you were truly trying to engage in a conversation and an exchange of information.
Note that I am not the original 'other party' in this discussion. You absolved aceyou, not me.

I'm genuinely interested to know if my previous post and the links above have changed your view in any way.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: thisisjeopardy on October 02, 2021, 11:29:24 AM
I've got a 401k, tIRA, and Roth. I'm going to xfer my six figure IRA into a self directed crypto IRA. Yep, fees, fees, and more fees. I firmly believe in BTC and SOL and I'm 20 years from retirement so I'm pushing half my retirement into these two.

I also put some of our joint holdings (5%) into crypto and my own cash flow / spending money goes into this. We still have the bulwark of our holdings into VTSAX and co (HSA, 529, joint brokerage).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 02, 2021, 01:27:26 PM

I'm highly unlikely to ever be a Bitcoin investor or holder, but I have a question about the bolded.  Isn't this actually a downside to Bitcoin?  Sure, it protects against inflation, as you explained.  But doesn't it also mean that Bitcoin will eventually become almost unusable?  It's not unlike if the US decided to stop making any more currency. Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?  Businesses and people would start seeking out and using Canadian dollars or Euro, or some other currency that would be more stable and more widely accepted, once the supply of USD started dwindling, no?  (That's assuming the US government didn't prevent that; they seem unlikely to interfere and try to force or even encourage the use of Bitcoin, so I doubt there would be any protection on that front.)   Just as finding places to take Bitcoin was tough in the very early days because there weren't enough to make them popular so people didn't want to take them and then not be able to easily spend them, isn't that going to happen on the way down, too, once they are all mined and every year we lose some to the various forms of attrition, until they are once again so uncommon that no one bothers to accepts them or want to take them because they don't want to get stuck holding a dying currency?

I absolutely could be thinking about this all wrong, and am truly asking from a place of ignorant curiousity--no snark or judgement.  Please explain to me why the hard limit on the number of Bitcoins isn't a bad thing in the longer term.

Hi Villanelle, fair question.  I am not concerned about lost coins affecting the utility of the supply, this was taken into account when the code was written.  In total, there will be 22 million coins made, but a bitcoin is not the smallest denomination of the coin.  Each coin is divided into 100 million base pieces, called Satoshi's (The founder of Bitcoin goes by the alias of Satoshi Yakamoto). So in total, there are about 2.2 quadrillion base units of bitcoin for potential circulation. 

Let's assume that an absurdly large amount of bitcoin gets lost, say 50% of the supply.  Well, there would still be 1.1 quadrillion Satoshi's in circulation.  Now let's keep with the toughest hypothetical scenarios possible, just to really pressure test bitcoins utility, and say that in 100 years we are a multiplanetary universe of 25 billion people, and we'll assume that 100% of them will be using bitcoin.  And for kicks we will assume that no one owns any other assets, no property, no gold, other cryptos or fiat currency, treasuries, stocks, etc...just bitcoin.  That would allow each of the 25 billion men, women, and babies in the universe to have 44,000 Satoshi's. 

Also, I think it's important that to understand that most of the coins that will ever be lost have likely already been lost.  People lost coins in the early days because a) they were worth almost nothing, and b) wallets and storage measures were in their infancy.  I don't have a way to track this, but I suspect that even 12 years in, the rate of coin loss is miniscule compared to what it was even 5 years ago. 

Bitcoin still has some tests to pass in order to gain permanent adoption on a large scale, but I personally wouldn't include coin loss as one of them.


Thanks for answering.  I disagree that most of the coins that will be lost are already lost.  I suspect the overall rate of loss will be lower, but people lose diamond rings all the time.  They lose paper currency, and with it the inherent value, all the time.  And they get locked out of accounts because they forgot the password or someone dies and doesn't leave the password info anywhere.  (With more typical accounts, a lost password probably doesn't matter as one can provide proper documentation to a bank, investment firm, etc., and be granted access.  Maybe I'm wrong--tell me if I am--but I don't think that applies to most methods of storing Bitcoin.) 

So if people lose other things of significant value, I'm not sure what Bitcoin would be much different, though clearly it's not quite the same as coming home from a day at the beach and realizing your $20,000 ring is gone.  Bitcoin is certainly more difficult to lose, but I think there are still plenty of plausible ways for coins or parts of coins to be lost. 

I can't even predict the rate at which that will happen, but logic suggests to me that when there is the most bitcoin in circulation, it will be at its most accepted (as a payment) and thereofer the easiest to spend.  But in a non-linear way, as it starts to dwindle in amount-available, fewer places (again, using "place" very loosely to mean 'anyone accepting payment for anything') will bother accepting it and as fewer places accept it, fewer people will want to hold it because it is more difficult to spin, and the spiral will reenforce itself until it is essentially dead.

But maybe the number of coin-shares, along with a relatively low rate of loss, means that the spiral won't get any momentum for 200 years, or some other big number, and it won't really matter.  That certainly could be the answer to my question. 

Once again, I will say that I'm truly coming at this from a place of curiosity, not trying to 'own the Bitcoiners'.  All the defensive, sarcastic responses (yours excluded, as it was neither of those things, to be clear!) certainly don't help make it look legit and less, well, dare I say... Tulip Bulby.  It certainly looks like, 'I don't have an answer, or don't understand enough to have and articulate an answer, so I'm going to claim you aren't work my time and run off in a huff, before my ignorance becomes crustal clear.'

If you found any of my responses sarcastic please just overlook it, that wasn't the intention and I stand by the actual content.
Full marks for the irony by the way - your complaint about sarcasm is extremely sarcastic :-)


A search for "bitcoin lost coins" brings up the following. This is just a random list of the first few relevant articles. I found nothing that echoed your concern.

The clearest statement comes from Investopedia:
Negligible Broader Impact
For users who misplace a wallet or key, the process can be overwhelmingly frustrating. However, the misplacement and potential loss of 20% of all BTC tokens should have little effect on the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency. This allows for loss of a sizable quantity of BTC without an overall impact on the currency itself. Even given that miners are approaching the final BTC, the rate of loss of tokens can continue for years without there being any sort of impact on the functionality of the coin. Indeed, even if there were very few individual tokens, the protocol for how BTC can be divided could be adjusted to facilitate its continued functioning. Of course, this doesn't help those people who have lost their tokens.


https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/ (https://www.investopedia.com/news/20-all-btc-lost-unrecoverable-study-shows/)
https://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/ (https://river.com/learn/what-happens-to-lost-bitcoin/)
https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever (https://cointelegraph.com/news/up-to-four-million-bitcoins-gone-forever)
https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html (https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html)
https://www.wired.com/story/wired-lost-bitcoin/ (https://www.wired.com/story/wired-lost-bitcoin/)

My comment about sarcastic responses wasn't directed at you at all.  Sorry that wasn't clear, but I meant it when I said that yours was excluded from that.  I felt like you were truly trying to engage in a conversation and an exchange of information.
Note that I am not the original 'other party' in this discussion. You absolved aceyou, not me.

I'm genuinely interested to know if my previous post and the links above have changed your view in any way.

Ah yes, sorry about the identify confusion.

And yes, it actually did change my view, at least somewhat.  I plan to do more research and reading.  To be clear, there is still a pretty much zero% chance that I will invest in Bitcoin or any crypto, if only because I don't stock pick.  (And even if I was buying actual crypto currency, I consider that to be much the same as owning a specific stock, as far as risk/reward goes).   But your links actually did address my question and give a good explanation of why it may lost coins and a resulting diminished supply may not be an issue. 

And that's sort of how these conversations should go.  So thank you.  (<<---Not at all '/s')
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 02, 2021, 03:05:37 PM
Agreed  @Villanelle picking a single crypto then siting why crypto adds value is akin to picking a single stock and siting why all stocks add value. Stocks are companies and have a long history of known regulation and trackable long-term performance. So while I agree with most sentiments here that Blockchain has value I don't see a way to invest in it that I think produces realistically predicable performance.

There is alot of recency bias here and around the investing forum today. From some one thinking owning the top of the qqq today would be a good investment which was quickly debunked by showing the top of the qqq 10 years ago underperformed the top today.

Saying this has a market cap of xyz today doesn't actual give credence to it's long term value as an investment vehicle. And more so a predictable investment vehicle. So if you invest in a coin today and make alot what makes you know it will be around tomorrow or how do you know when it's run its course and time to get out. It's the same question asked with an individual stock.

Further people who "win" at this technology advance if it pans out for them are likely inclined to think they can repeat this. When decentralized housing in the matrix comes out.(or whatever the next thing is).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 02, 2021, 05:37:39 PM
Agreed  @Villanelle picking a single crypto then siting why crypto adds value is akin to picking a single stock and siting why all stocks add value.
Who is "picking a single crypto then siting why crypto adds value" ?
If you're responding to the posts directly above . . . Villanelle's original question was specifically about Bitcoin. Hence, my response and others were specifically about Bitcoin. The conflation with general crypto seems to be all yours.

Saying this has a market cap of xyz today doesn't actual give credence to it's long term value as an investment vehicle. And more so a predictable investment vehicle. So if you invest in a coin today and make alot what makes you know it will be around tomorrow or how do you know when it's run its course and time to get out. It's the same question asked with an individual stock.
I agree, but a high market cap and a large number of participants give it some credence as a serious project. Bitcoin is quite a different animal to the latest fad meme coin.

I think the single-stock comparison is quite limited. As many are keen to repeatedly emphasise, it's not a stock.
Again, I recommend reading https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/). I'm not a Lyn Alden fanboy, don't know much about her, but I think this is a comprehensive, broad and objective piece that covers a lot that is relevant to this topic. At worst it will give you a ton more things to disagree with :-)

Further people who "win" at this technology advance if it pans out for them are likely inclined to think they can repeat this. When decentralized housing in the matrix comes out.(or whatever the next thing is).
And that's also a negative against crypto ?? You're clutching at straws here. I get it that you don't like crypto but I am puzzled by your enthusiasm for attacking it from every conceivable angle. It doesn't seem very objective.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 02, 2021, 06:02:02 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on October 02, 2021, 07:00:06 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

These posts are most likely going to come back to haunt you LMAO.  Why people want to put absolutes like this on the internet is beyond me, if you don't like crypto just move on to other interests.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 03, 2021, 03:19:56 PM
Just wanted to say thanks to the posters who I've interacted with in this thread.  A few posters helped me think about the topic in a new way, and that's been great.  And even to the people who just categorically reject it as a viable long term sector, it's valuable to know the full range of thoughts and attitudes on the emerging cyrpto space. 

This forum isn't perfect, but I've found it to be much better than most.  Cheers. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 04, 2021, 09:26:58 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

These posts are most likely going to come back to haunt you LMAO.  Why people want to put absolutes like this on the internet is beyond me, if you don't like crypto just move on to other interests.

Boarder42 is trying to provide value to the readers. He was requested by others to chime in. This is evidence that he has built some credibility over the past 7 years and 8,000+ posts. People like to hear his position and logic to support his position.

Boarder42 feels confident enough to make a specific prediction and is willing to accept a win or loss in 10 years. I don't see how that could be seen as a bad thing. It's very possible that he could be wrong. However, at this point in time he has more wins than losses and that is why people want to hear from him.

If I understand your logic correctly, you are firmly against making any type of specific prediction in the future because it might come back to haunt you (because you might be incorrect). How am I supposed to believe in your position on crypto when you don't believe in your position yourself.   
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 04, 2021, 09:41:25 PM
Just wanted to say thanks to the posters who I've interacted with in this thread.  A few posters helped me think about the topic in a new way, and that's been great.  And even to the people who just categorically reject it as a viable long term sector, it's valuable to know the full range of thoughts and attitudes on the emerging cyrpto space. 

This forum isn't perfect, but I've found it to be much better than most.  Cheers.

In order to beat the market you have to go against the consensus and be correct (Ray Dalio). In order to figure out the position of the consensus, you need to ask the question. 

You asked the question and the forum answered the question. Now you should have a better idea of the position of the consensus. It's now your choice to go with the consensus or against it.

It is my personal belief that the position of the consensus on real estate on this forum is that cash flow is more important than appreciation. I disagree and don't really follow that investing advice. However, I still appreciate and value the opinion of others. Even the one's in which I disagree.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 05, 2021, 10:01:54 AM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 05, 2021, 10:31:06 AM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.

I predict that the next market crash, which will happen before 2026, will shake out a lot of the Bitcoin/Ether/Doge/Binance/Etc. speculators. People will need money to pay their bills. Equities will go on sale and some currencies will fade into history, just like forgotten motorcycle and dotbomb companies.

$100k by 2026

Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 05, 2021, 11:31:38 AM
https://www.pymnts.com/news/payment-methods/2021/in-brazil-bitcoin-acceptance-comes-with-more-regulation/
 (https://www.pymnts.com/news/payment-methods/2021/in-brazil-bitcoin-acceptance-comes-with-more-regulation/)

Brazil is moving forward legislation to make bitcoin legal tender, just as El Salvador has.  Panama is getting there too.

When I brought up El Salvador, it was kind of denigrated by some as a bit of a backwater that doesn't really matter.  While I get that sentiment, I thought it was important because it was showing an overall trend towards legitimizing Bitcoin.

The total amount of Real's in circulation is worth a little over 1 trillion US dollars.  If this happens, a percentage of that trillion USD worth of WILL be converted to bitcoin. 

Brazil has a population of 213 million.  El Salvador has a population of 6 million.  Panama has 4 million.   I think it's likely that within the year, at least 223 million people in the world will live in countries where Bitcoin is a legal and legitimate currency. 

I don't think I'm speculating too wildly to say that in the coming months, many more millions of people are likely going to be trading their nation's current currencies for Bitcoin.  And since there's a hard limit of the number of bitcoins in circulation, this would serve to raise the value of each coin. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 05, 2021, 01:42:05 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.

if i were to pick an asset class for it to underperform the next 10 years it would be SCV - we can use AVUV as the baseline for comparison from the date that i said that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 06, 2021, 11:58:09 AM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".

The black market mostly operates in US Dollars, not crypto, and international banks launder 1000x more criminal money than crypto (you'd have to be a fool to put your money laundering transactions on an immutable public blockchain lol)

The true use cases are starting to be realized, like in El Salvador 1/4 of their GDP comes from remittances, which are now sent instantly over the Bitcoin Lightning Network bypassing the absurd Western Union fees.


But with Bitcoin in particular the transactions are so slow and so expensive that in order to use it as currency you actually do need a trusted third party application running on top of it.  So that advantage goes away.

The Lightning Network sends Bitcoin instantly and nearly free, in a trustless way. A lot of people will probably end up using custodians, but you don't have to, and the fact that you don't have to will help keep the custodians honest (kind of like having FU money gives you a lot of leverage, even if you don't quit your job).


Over time, coins fall down drains and paper bills get destroyed.  Bitcoins wallets are locked and the coins in them lost, no?  Someone dies and doesn't share their credentials with family, and those Bitcoins are forever lost from circulation.  So in either case, with no new 'money' being made, over time the available currency shrinks.  Eventually, isn't that currency going to die?  Who could accept USD if there are only a few million dollars worth left in existence?

Bitcoin is infinitely divisible. Right now the smallest unit is a satoshi, which is 1/100,000,000 of a Bitcoin, but it'd be trivial to add more zeroes after the decimal point with a soft fork to make it even more divisible. People losing Bitcoin just increases the value of other Bitcoins, it has no effect on utility for other participants.


Just b/c something has a huge market cap doesnt mean its not a house of cards - see enron.  I just fundamentally see no value in this sector and mostly a bunch of talking heads trying to get rich quick.

There's about $17 trillion that's currently invested in negative-yielding bonds, talk about a house of cards.
Betting long on a transformative technology like Bitcoin seems almost safe by comparison.

As a monetary technology Bitcoin is superior to gold/fiat across multiple dimensions:
-portability - transactions are instant & nearly free over Lightning (much cheaper than Visa), and final settlement occurs every 10 minutes on the blockchain (vs several business days for banks)
-verifiability - counterfeiting is impossible
-divisibility - each coin can be divided into as many fractional subunits as necessary
-durability - bitcoins never expire or degrade
-permissionless - there are no gatekeepers
-censorship resistant - transactions can be made peer-to-peer globally with no counterparty involvement
-fixed monetary policy - nobody can debase the currency. The founding fathers instituted the DEATH PENALTY for debasing the currency. They understood its importance. How the mighty have fallen. There's nothing modern about Modern Monetary Theory... history is full of empires debasing their currency and then collapsing.


I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

This is you right now:

Paul Krugman 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 06, 2021, 12:53:45 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dreadmoose on October 06, 2021, 01:03:26 PM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.

This is you right now:

Paul Krugman 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”

This is sure disingenuous if you read the whole thread. B42 is not saying Blockchain has no use and will die out, he's saying Bitcoin (or any other altcoin) "investment" is speculation. To me it seems akin to what resulted in the dot-com crash, "investing" in those individual companies back then was picking a winner, not a bet on the internet itself. Maybe a straw man between "coin speculation is silly" and "blockchain technology won't exist in 10 years"?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dougules on October 06, 2021, 03:25:32 PM
Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on October 06, 2021, 03:39:17 PM
Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability.

Look at the rate of US$ money printing over the last few years.  The prices of real estate, stocks and bitcoin may be speculative, but one thing you do know for sure is that they are scarcer assets than US$ and are going to appreciate vs US$ as the printing press rages on into the future.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dougules on October 06, 2021, 03:48:02 PM
Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability.

Look at the rate of US$ money printing over the last few years.  The prices of real estate, stocks and bitcoin may be speculative, but one thing you do know for sure is that they are scarcer assets than US$ and are going to appreciate vs US$ as the printing press rages on into the future.

But appreciation isn't necessarily good for a currency.  You want price stability.  I wouldn't want to take out a mortgage for 5 BTC if I knew that was going to just appreciate. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 06, 2021, 09:12:18 PM
As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".

Interesting argument! I had not absorbed the stabilizing argument before. That part seems plausible. (Harvesting gas flaring seems plausible too, but that doesn't stabilize a grid or provide other non-crypto value as far as I can see.)

Not sure it's enough to support "far from 'dirty' ", but am considering.

the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

I agree that Not All Bitcoin uses clean power, so it's false to claim BTC mining runs entirely clean.

But afaik stabilizing the grid for renewables by providing a non-essential buyer on demand is a legitimate benefit that can encourage construction of renewable facilities, because having such a buyer improves the breakeven economics of the renewable facilities. (Not an expert here, but it's what I have read in industry publications and heard from an individual whose job involves planning renewable facilities.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 06, 2021, 10:53:01 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.
And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.


This is sure disingenuous if you read the whole thread. B42 is not saying Blockchain has no use and will die out, he's saying Bitcoin (or any other altcoin) "investment" is speculation. To me it seems akin to what resulted in the dot-com crash, "investing" in those individual companies back then was picking a winner, not a bet on the internet itself. Maybe a straw man between "coin speculation is silly" and "blockchain technology won't exist in 10 years"?

He said "I just fundamentally see no value in this sector" and called it a "house of cards".

I think lumping all blockchain technology into the same "crypto" bucket is a mistake. There are different use cases that don't necessarily compete with each other. Separating those out makes things a lot more clear.

Bitcoin is already bigger than Facebook and commands orders of magnitude more hashrate than any other chain. Network effects will take it from here. You can call it speculation if you want but the way I see it the market has already chosen a winner: Bitcoin is digital gold.

The other use cases are less clear. Ethereum is probably the best bet for an application protocol and I have a lot of that too, but it's much more prone to disruption from a competitor like Solana, so yeah I would consider that speculation lol.



Does anybody currently actually price products in bitcoin or another crypto over an established currency?  It's one thing to pay using bitcoin; it's another thing to set prices, rates, and debts in bitcoin.  If you think you can make quick money off of bitcoin going up or down relative to established currencies, you're also implicitly saying that you believe there will be no price stability.

Store of value comes first, then medium of exchange, then unit of account. That's how it worked for gold thousands of years ago and Bitcoin is following the same progression. It's rapidly advancing as a medium of exchange now thanks to the Lightning Network, but it probably won't be commonly used as a unit of account until it's much closer to full saturation and the volatility is muted (maybe 10 years?).

Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 07, 2021, 07:12:03 AM
I'll be back to say I told you so I'm 10 years. Nothing but rampant speculation in this market. Admitted by those here.
It sounds like you are predicting BTC will underperform the S&P 500 over the next 10 years?  It's like Buffet's bet, but with Bitcoin.

I have a softer prediction.  Over time, Bitcoin's crashes have gotten smaller.  I think Bitcoin's volatility is decreasing, and it's performance.  Yahoo Finance shows BTC-USD price 5 years ago was $745.69, and is currently $49767.02 (per BTC).  That's 66.74x in 5 years.  I predict it's performance will be much worse over the next 5 years: under 20x.

I predict on Oct 5th 2026, 1 BTC will be priced at under $1 million USD.

I predict that the next market crash, which will happen before 2026, will shake out a lot of the Bitcoin/Ether/Doge/Binance/Etc. speculators. People will need money to pay their bills. Equities will go on sale and some currencies will fade into history, just like forgotten motorcycle and dotbomb companies.

$100k by 2026

If you truly believed there would be a moment within five years at which the price of Bitcoin would be 2X-20X of what it is today, why wouldn't you own some?

I think there will be a moment within the next five years at which Bitcoin's price will be 20% of what it is today. Both of these may well be true.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 07, 2021, 07:17:46 AM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 07, 2021, 12:26:01 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?

Following WW2 & the Bretton Woods agreement the US Dollar was backed by gold (which other nation states could redeem) and all other world currencies were pegged to the Dollar. But it was a scam. The US kept printing more dollars than they had gold to back it up. In 1971 Nixon defaulted on the debt and stopped allowing redemption of the dollar for gold. From that point on we operated under the Petrodollar. The US struck a deal with Saudi Arabia & other oil producing nations to only sell oil for dollars (in exchange for protection from the empire). So instead of being backed by gold it's backed by oil. And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that. The currency must be backed by guns and bombs to force everyone to keep using it.
A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war. Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.
The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative. A Bitcoin standard eliminates the need for trusted counterparties (who always, inevitably betray that trust) so it doesn't suffer the same drawbacks. A sound monetary system which nobody can cheat or manipulate has incredible potential to transform the human condition. Can the car idling in your driveway do that?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 07, 2021, 01:47:15 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?

Following WW2 & the Bretton Woods agreement the US Dollar was backed by gold (which other nation states could redeem) and all other world currencies were pegged to the Dollar. But it was a scam. The US kept printing more dollars than they had gold to back it up. In 1971 Nixon defaulted on the debt and stopped allowing redemption of the dollar for gold. From that point on we operated under the Petrodollar. The US struck a deal with Saudi Arabia & other oil producing nations to only sell oil for dollars (in exchange for protection from the empire). So instead of being backed by gold it's backed by oil. And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that. The currency must be backed by guns and bombs to force everyone to keep using it.

Some of what you've said above is true.  Some of it is pretty tinfoil hat conspiracy theorist though, and quite a bit of it is flat out wrong.

Argentina sells oil in currencies other than the US dollar, and I don't believe that the US has invaded or bombed them - so the theory about 'protection from the empire' falls flat at even the most cursory examination.  But if we look deeper . . . we also see that the US dollar isn't and has never been backed by oil.  If it was, the price of the US dollar and the price of oil would move in lockstep.  They don't.  Closest I can figure is that the US dollar is backed by the GDP of the US.

The US dollar is the world reserve currency because it has proven to be the most stable over time.  In finance, stability is very important in a functional currency (not good news for cryptocurrencies, I know!).  That's why it's the most commonly used currency to trade oil.  If bitcoin becomes the world reserve currency, I'd expect that it would be the most commonly used currency to trade oil.


A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war.

Math isn't a backing.  'Hashpower' isn't even a real word.

I'm not sure you fully understand the other terms you're using either.  A 'backed currency' is a currency that comes with a guarantee that it can always be exchanged for a predetermined amount of another asset.  That's the dictionary definition.

Neither the US dollar, nor bitcoin are backed currencies.


Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.  The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative.

The gold standard was abandoned in the US 1933 by FDR.  It was abandoned by Britian in 1931 and then the rest of the UK and most of it's allies as part of the Bretton Woods agreement in '44.  Not sure I understand what you're talking about here.  Since abandoning the gold standard in 1933, I'd argue that the lives of most Americans have significantly improved.

Nixon scrapped the Bretton Woods agreement.

Fractional reserve banking started in the 17th century.  It was a significant economic contributor as it allowed greater access to capital to people trying to start and build businesses.  Not exactly sure what your issue is with this, could you explain?


A Bitcoin standard eliminates the need for trusted counterparties (who always, inevitably betray that trust) so it doesn't suffer the same drawbacks.  A sound monetary system which nobody can cheat or manipulate has incredible potential to transform the human condition. Can the car idling in your driveway do that?

You're right.  Not the same drawbacks - it introduces completely different ones.  Bitcoin is not a currency, not a monetary system, and trying to use it as either today just doesn't work very well.  Right now it's a car idling in the driveway.  Will someone some day drive the car around so that there's some value to the waste?  Maybe.  But that's not happening right now.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 07, 2021, 02:13:31 PM
I'd encourage more reading on the Bretton Woods agreement.

It did establish the financial system from 1944-1973 on a foundation of the US Dollar, which was backed by Gold until the Nixon decision. Other aspects of trade that it established (such as the GATT) continued for another generation, until they were replaced by the WTO.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 07, 2021, 05:45:06 PM
@GuitarStv - Perhaps you are not familiar with crypto terminology because hashpower and hash rate are interchangeable terms. 
Quote
What Is Hash Power/Hash Rate?
Hash power, or hash rate, are interchangeable terms used to describe the combined computational power of a specific cryptocurrency network or the power of an individual mining rig on that network.

Quote
Hash Rate
The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

If Brazil as they have indicated declares BTC their legal tender in the near future then it is a currency and traded as such with the rest of the world.
That is the real reason why the IMF hated the idea of El Salvador choosing bitcoin as their legal tender. It means everyone incl the IMF has to accept it as currency.
Brazil has the sixth-largest population in the world. 212 Million people - roughly 150 Million of which would become active users of bitcoin.

Their cities have a bigger population than the entire country of El Salvador.
If Brazil happens then the dominoes will fall in Latin America.

I see bitcoin as a store of value - digital gold. But that narrative could change as crypto and bitcoin morph over time to answer different demands.
For now, it will work well as currency for countries like Brazil and Venezuela, no corruption and no shenanigans, no runaway inflation.
Regardless, I do think it is within the realm of possibility that bitcoin might become the world currency in a couple of decades or not:).

BTW I'm old enough to remember when President Nixon decided he wanted to end the prior agreement. He ended the gold standard. It was supposed to be temporary...
I thought that happened in 1972 but maybe it didn't go into effect until 1973 based on talltexan's comments.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 07, 2021, 07:54:16 PM
@GuitarStv - Perhaps you are not familiar with crypto terminology because hashpower and hash rate are interchangeable terms. 
Quote
What Is Hash Power/Hash Rate?
Hash power, or hash rate, are interchangeable terms used to describe the combined computational power of a specific cryptocurrency network or the power of an individual mining rig on that network.

Quote
Hash Rate
The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

If Brazil as they have indicated declares BTC their legal tender in the near future then it is a currency and traded as such with the rest of the world.
That is the real reason why the IMF hated the idea of El Salvador choosing bitcoin as their legal tender. It means everyone incl the IMF has to accept it as currency.
Brazil has the sixth-largest population in the world. 212 Million people - roughly 150 Million of which would become active users of bitcoin.

Their cities have a bigger population than the entire country of El Salvador.
If Brazil happens then the dominoes will fall in Latin America.

I see bitcoin as a store of value - digital gold. But that narrative could change as crypto and bitcoin morph over time to answer different demands.
For now, it will work well as currency for countries like Brazil and Venezuela, no corruption and no shenanigans, no runaway inflation.
Regardless, I do think it is within the realm of possibility that bitcoin might become the world currency in a couple of decades or not:).

BTW I'm old enough to remember when President Nixon decided he wanted to end the prior agreement. He ended the gold standard. It was supposed to be temporary...
I thought that happened in 1972 but maybe it didn't go into effect until 1973 based on talltexan's comments.

I've been listening to people hate on Bitcoin since it was $1,200.  I hated on Bitcoin long before it got to $1,000.  Back then, I knew my arguments were weak, I understood what Bitcoin was doing, but I was stubborn and felt jealous of the folks that made a lot money in it.  I missed out on it for the longest time because of my stubbornness and that is on me.  I understand where GuitarStv is coming from.  He is a smart guy.  He won't admit it but he will come around sooner or later. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 07, 2021, 08:04:58 PM
Just wanted to say thanks to the posters who I've interacted with in this thread.  A few posters helped me think about the topic in a new way, and that's been great.  And even to the people who just categorically reject it as a viable long term sector, it's valuable to know the full range of thoughts and attitudes on the emerging cyrpto space. 

This forum isn't perfect, but I've found it to be much better than most.  Cheers.

In order to beat the market you have to go against the consensus and be correct (Ray Dalio). In order to figure out the position of the consensus, you need to ask the question. 

You asked the question and the forum answered the question. Now you should have a better idea of the position of the consensus. It's now your choice to go with the consensus or against it.

It is my personal belief that the position of the consensus on real estate on this forum is that cash flow is more important than appreciation. I disagree and don't really follow that investing advice. However, I still appreciate and value the opinion of others. Even the one's in which I disagree.

I just hopped on the site directly after listening to Ray Dalio being interviewed by Lex Fridman:)  This is the first post I read.  You summed his philosophy up well.  Love the analogy to your own ventures in real estate. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 07, 2021, 09:20:36 PM
Crypto is starting to feel like really dirty money. From the environmental aspects of mining it, to it's primary use of buying/selling black market stuff. I can't buy into it without thinking I'm helping some human trafficker get filthy rich.

The economics of Bitcoin force miners to pursue the cheapest energy, ie stranded/waste energy & renewables. Bitcoin mining operations are portable... El Salvador just started mining it with Volcano energy. As the buyer of first & last resort, Bitcoin will drive renewable energy development and harvest wasted gas flaring/etc. It will help stabilize the grid since miners can turn off when demand peaks or supply dips, which will be increasingly important as the grid shifts towards renewables. It's far from "dirty".


100% of the energy that goes into "mining" bitcoin is wasted energy.  It serves no productive purpose for the human race.  You're arguing that energy is expensive, and "miners" are cheap, so they'll find more efficient ways to waste this energy . . . but missing the fundamental point.

Mining bitcoin is similar to leaving your car running in your driveway all day, 24/7.  It might be more efficient to leave a prius running rather than a humvee . . . but you're still creating tremendous waste.


Like so much related to bitcoin, the idea that bitcoin "mining" is somehow ushering in an era of clean power by wasting power also doesn't pass the smell test.  Profitable bitcoin "mining" facilities have been found in Alberta, sucking away at the teat of natural gas:  https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731 (https://www.cbc.ca/news/canada/calgary/link-global-bitcoin-mine-alberta-1.6137731)

It's not wasted, the hash rate provides security for the network. Proof of work is necessary for a decentralized currency. That's what made gold work for thousands of years. Was all the energy expended in mining gold for coins & bars "wasted"? Far from it. The ability to store value and trade is what made civilization possible. Scaling beyond small groups requires a credible currency. Superior currencies (eg the Florin) have produced surges in human flourishing, whereas debasement of currencies has always led to ruin. The creation of a superior monetary system that can never be debased is perhaps the most valuable thing we could possibly expend the energy on.

Proof of work is necessary for a decentralized crypto-currency.  I haven't seen any compelling necessity for a decentralized crypto-currency though.  You're still running the car in the driveway in park.

As you mentioned, the ability to store value and trade existed before crypto-currency.  It will exist after crypto-currency.  Concerns about debasement seem particularly silly.  How is it possible to debase something with no value beyond speculation?



And it's not like the Petrodollar system backed by oil, guns, and bombs is a very clean alternative.

You seem to be implying with this comment that cryptocurrency won't ever be used to fund oil, guns, and bombs - or by any country involved in the trade or use of those.  At the moment, this seems to be true . . . as cryptocurrency isn't widely used to fund anything but speculation, terrorism, human trafficking, and drug purchases.  I'd expect someone with faith in the future of this alleged 'currency' to some day expect it to be used as any other currency is today.  In which case, all that 'oil/guns/bombs backing' would seem to apply to crypto as well.

So I'm not sure I understand what you're getting at here.  Can you elaborate?

Following WW2 & the Bretton Woods agreement the US Dollar was backed by gold (which other nation states could redeem) and all other world currencies were pegged to the Dollar. But it was a scam. The US kept printing more dollars than they had gold to back it up. In 1971 Nixon defaulted on the debt and stopped allowing redemption of the dollar for gold. From that point on we operated under the Petrodollar. The US struck a deal with Saudi Arabia & other oil producing nations to only sell oil for dollars (in exchange for protection from the empire). So instead of being backed by gold it's backed by oil. And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that. The currency must be backed by guns and bombs to force everyone to keep using it.
A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war. Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.
The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative. A Bitcoin standard eliminates the need for trusted counterparties (who always, inevitably betray that trust) so it doesn't suffer the same drawbacks. A sound monetary system which nobody can cheat or manipulate has incredible potential to transform the human condition. Can the car idling in your driveway do that?

Wow the stretches and amount of idealism in this post.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: blue_green_sparks on October 08, 2021, 06:54:02 AM
I feel like I missed out on Bitcoin. I am age 60, with NW = 80x my comfortable yearly spend...so no big deal. I did look at some tweets pumping up dozens of other coins, each with an animal or cartoon mascot all promising a rocket ship to the moon. The due diligence is usually a sub-penny price chart and a few sentence about why this coin is the best. Elon seems to be a common mascot of sorts. Then I saw some posts from people who said that their wallets got corrupted or they lost their secret number and I could really sense their misery.

So I continue to 'miss out' even though I do see great value in the technology, especially involving intellectual property. I am sorta waiting for that aspect to evolve and develop a bit more. However back in my 'risk-on' days I would have been all in on Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 08, 2021, 07:19:05 AM
I feel like I missed out on Bitcoin. I am age 60, with NW = 80x my comfortable yearly spend...so no big deal.

At some point, we must accept that we didn’t miss out on anything. Disabled Haitian orphans may have a strong case, but not those of us retiring rich after multi-decade lives. No we didn’t go all-in on every best-performing stock of each year for the past decade either, but to perceive that as an error would be to set the bar a little high.

Crypto FOMO is a source of misery and anxiety, not an urge to succeed in life and certainly not a path to satisfaction. Upon realizing this, the next realization is that these speculations are entirely based on FOMO, and while FOMO can be explosive it also can evaporate as fast as ether.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 08, 2021, 08:04:41 AM
A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war.
Math isn't a backing.  'Hashpower' isn't even a real word.

I'm not sure you fully understand the other terms you're using either.
You might be right about the other poster's use of terms, but for those who don't recognize "hash power" I can try an help.  Bitcoin miners are specialized machines that guess at answers to cryptographic problems.  Their guess is put through a hashing algorithm ("hash") until they get an answer with a certain number of leading zeros (trailing? it's been awhile).  The "power" of miners is measured in how many hash guesses they can make per second.  But that's for others who might wonder what "hash power" means.


... And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that.
Funny ... but are you sure that's true?  Do Russia and Iran only sell in U.S. dollars?  They haven't been invaded.  When you say "the US swiftly invades", are you ignoring partnerships of many countries?  How do you explain coalition lead invasions, if it's only about oil for America's benefit?  Seems like a lot of holes in this theory.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 08, 2021, 08:14:00 AM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 08, 2021, 08:58:19 AM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W


100% agree. For people who already have enough or are on a simple path of having enough, the crypto game is unnecessary, so there's no FOMO. For people with much less, the FOMO is unbearable. They have to buy because it's their only chance. That might not represent the average crypto buyer on MMM, but it is my personal belief that it represents the average crypto buyer in the marketplace.

Institutional investors are buying Bitcoin. However, they spend 100 million/year on research. When the fundamentals change, they will be the first to know and will get out first. Because of the large volatility, the average Joe will continue to hold on, even after seeing 90% declines. The loss will be too damaging to accept, so they never sell. There is always a chance that it will come back. It will be akin to baseball cards sitting in their attic or a stock worth pennies in their brokerage account.

Yes, it is possible for Bitcoin to go 10X over the next 5 years. However, even if it does 10X in 5 years, how do you model a withdrawal strategy with the extreme volatility? How do you avoid having a legitimate heart attack? Someone suggested that the volatility will decrease in the future. Those FIRE calculators assume homogeneity of variance because they use parametric statistics. As a result, even if the volatility does decrease, those numbers that the FIRE calculators spit out are worthless. 

I would be more likely to agree with someone who picks individual stocks with less volatility.

Cathy Wood was considered by many the best stock picker of 2020. Her ARKK Innovation Fund went up 150%. She recently predicted (September 14, 2021) that Bitcoin will go 10X in 5 years. She is advocating for a 5% position in crypto and a 60/40 split between Bitcoin and Ethereum.

https://www.youtube.com/watch?v=A3mA_7T3xO8

Unfortunately, her ARKK fund isn't performing as well as 2020. In 2021, it's down 3.5%. Based on the charts it looks like -9%. However, the analytics say -3.5%, so I will defer to the experts.




Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 08, 2021, 09:05:28 AM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W

Agreed.

You can drive yourself crazy looking backwards at your life with the benefit of perfect hindsight. You make the best decisions you can, with the information you have at the time. If things have worked out so you have a life that you're happy with, don't worry about it. If you're unhappy with your life, focus on things you can do today and in the future to change it rather than the different decisions you could have made in the past.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: index on October 08, 2021, 10:34:57 AM
... And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that.

There are a couple big reasons I haven't invested in crypto-

1. The US and EU could follow China and outlay crypto mining and transactions tomorrow. Crypto getting too big takes the power away from central governments and governments tend not to give away power. You are making the argument the US uses its military to go in and prevent destruction of the petrodollar, then ignoring the possibility the government will use its pen to outlaw crypto to prevent destruction of the petrodollar? China did it last month.

2. The credit market is 10-12x the size of the money supply. Borrowing for an asset today and using more efficient future work (productivity gains) to later pay on that credit is a  fundamental way economics has worked since Roman times. How does lending work with BTC? Can I borrow 8 BTC to buy a home today and promise to pay back those 8 BTC with interest over 30 years? The fundamentals you are using to say BTC is a good investment make it a bad currency. If BTC is increasing in value faster than productivity then I am paying back BTC with more hours worked in the future then hours worked today. On a fundamental level, credit breaks down.

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 08, 2021, 12:49:56 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 08, 2021, 01:01:00 PM
Yeah, I don't get the "missing out" angle.

I missed out on a zillion rocket to the moon investments in my life, because, you know, I'm not omniscient. But just plugging extra money into boring investments and not buying stuff I didn't need cut my (not particularly well paid, even) working career to something like 10 years. It's hard to say I "missed out" on anything there.

-W

Right.  I missed out on Bitcoin equally as much as I missed out on Enron. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 08, 2021, 01:07:26 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

I think the factor your predictions don't take into account is the difficulty adjustment built into bitcoin's hashing.

In the long term people can mine as much or as little as they'd like, the blockchain still works, the same number of transactions get processed with the same transaction fees and the total mining rewards per day or per week.

So ultimately the amount of money spent by miners (buying hardware and electricity primarily), adjusts to how much money is being spent on transaction fees + the shrinking block mining rewards, rather than the cost of the transaction fees having to increase or decrease to match the amount of money the miners are spending on hardware and electricity.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 08, 2021, 01:11:27 PM
Quote by @onecoolcat   
Quote
I've been listening to people hate on Bitcoin since it was $1,200.  I hated on Bitcoin long before it got to $1,000.  Back then, I knew my arguments were weak, I understood what Bitcoin was doing, but I was stubborn and felt jealous of the folks that made a lot money in it.  I missed out on it for the longest time because of my stubbornness and that is on me.  I understand where GuitarStv is coming from.  He is a smart guy.  He won't admit it but he will come around sooner or later.
I don't doubt for a second that GuitarStv is a smart guy. In fact, he is one of my long-time favorite posters, even when he is like a dog with a bone when something irks him:). It wouldn't be a good forum if we couldn't have discussions and disagreements.

My personal view on crypto is fairly idealistic,
more like @taekvideo not a view all that welcome everywhere. I care to support a movement (that is all it was from the beginning) to make the world a better place. I see and embrace the global aspect.

I love that:
The first big bitcoin currency experiment in El Salvador is going well. It took a lot of work and guts to go up against the IMF.
Their people are benefitting, the country coffers gained a few million, the GDP is up and their real estate is on fire.

I rejoice for every poor person anywhere who gets to keep an extra five to ten bucks a week because there are no remittance fees to send money home. I care that people fleeing Afghanistan were able to get some or most of their money out - thanks to Crypto. It is amazing that there is a game that allows you to make money in-game so that a kid can support his family in Africa/Asia thanks to crypto. I love the projects that Cardano is pursuing in Africa.

Innovation - Money Transfer
Nobody is talking about it, but - Square - Cash App - After Pay - Twitter - their payment app is underpinned by bitcoin. It is a monumental shift taking place quietly. Social Networks that span the globe and connect us with the Bank of the Future. As they say - the future is here.
(166M active daily users for Twitter) (Cash app 40M active daily users)
Jack Dorsey CEO of Twitter, is a huge fan of bitcoin. So yes, I do think bitcoin will be around for a while longer.

I can't say that I have ever been envious of others making bank on crypto except for one friend who made what he called "a drunk purchase" on his cell while out with his friends at the local hotspot. $35K that turned into $280K and is still going up. Life is so unfair:).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 08, 2021, 02:10:02 PM
I'm glad for your friend's fortune.

But I couldn't imagine carrying out a $35,000 transaction on public wifi. Unless he used phones to buy the bitcoin off of one of his friends who was right there.

But then I wonder about performing a five-figure financial transaction with a friend when you have a whole market available.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 08, 2021, 02:51:53 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

An economics-minded crypto-booster would answer that the transactions cost you'd pay to spend cryptocurrency would be less than the net difference in inflation between government fiat and crypto fiat currencies. In theory, cryptocurrencies would have a cost for using them, and government currencies would have a cost for holding them.

This would of course open up an arbitrage opportunity where you want to hold crypto and transact in govt. currencies. Thus in a world where you could buy goods with either, the markets can be expected to move toward an equilibrium where the cost (bid/ask spread plus transaction costs) to trade crypto for govt. currency is equal to the cost of simply transacting in crypto (transaction cost alone). This equilibrium would be impossible to actually achieve though, because the bid/ask + transaction cost must be greater than the transaction cost alone. Therefore, the incentive would be to simply transact in crypto, rather than paying to convert to dollars and then transacting with dollars. This incentive structure would lead to growing demand for transaction processing, which would lead to more processing supply, which would keep costs stable in the long run at some point just above the marginal supplier's cost of providing the service. The crypto-pundits keep saying it'll be any year now that lots of vendors/suppliers start accepting crypto. This would be because it's cheaper to just deal in crypto than to switch back and forth.

The end result of such a world, according to crypto-boosters, would be that we've traded/sold inflation in exchange for environmental degradation.

What the above analysis leaves out is that vendors will have to charge currency conversion costs to their buyers if they need to receive government currency in the end - i.e. the entire supply chain has not yet adopted the new currency. A retailer in the US or EU can sell you things for dollars and euros and pay their Chinese or Saudi suppliers in dollars in euros, but their Chinese or Saudi suppliers cannot/will not accept crypto. The vendor must pay the currency conversion cost to replenish, so they pass this cost along to their customers. You end up with a system like truck stops that will sell fuel for one price in cash and a higher price if credit cards are used, to recoup the credit card processing fee. For people in possession of dollars, why pay the cost to trade the dollars for crypto so that you can then pay the higher cost the vendor charges?

If neither consumers nor vendors can escape the dynamic of government currency having a cost to hold and cryptocurrency having a cost to transact, then it will be hard for people to do anything different with crypto than what they're doing now - holding it. Likewise it will be hard for people to do anything different with dollars/euros/yen than what they're doing now - spending it.

What we're still leaving out is the situation for people in countries who earn their local currency, but when buying imports must pay a retail price which includes the cost to convert to dollars or similar reserve currencies. In theory, they should be agnostic about using their local currency or a cryptocurrency when spending. Except there's the minor detail that wages are paid in their local currency, so they'd have to pay the conversion cost to exchange local currency for crypto, only to then pay another conversion cost - built into prices quoted in crypto - for the retailer to exchange crypto for dollars so that international suppliers can be paid. For people in this situation, using crypto would involve paying for two currency conversions instead of one. But what if they're paid in crypto by their employer? If that were the case, they'd pay one currency conversion, crypto-to-dollars perhaps, and be paying for the same number of conversions as they were when they were being paid in local currency.

This is all a roundabout way of explaining why cryptocurrencies still - after years and many billions of dollars of investment and R&D - are not routinely transacted as currencies for goods and services. Consumers would have to be willing to pay currency conversion costs, plus whatever their payment processing service charged, and in addition suffer the inconvenience of their cryptocurrency not being universally accepted - until the entire supply chain changed over. That's a PITA when I can just whip out my VISA, pay in dollars, and only pay the CC payment processing service charge as part of my vendor's price. For widespread adoption of crypto throughout the supply chain to happen, crypto would have to be easier and cheaper than continuing to use dollars.

So far, it hasn't happened for the same reason your keyboard has the QWERTY layout from the 1800s, even though better designs have been invented. Imagine being so devoted to making he Dvorak or Colemak keyboards work that you carried your own special keyboard everywhere you went. People aren't willing to suffer even the mildest inconveniences to save their lives, much less foot the bill for this level of changeover costs. That's why crypto will always be a collectible, not a currency.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 08, 2021, 03:10:04 PM
I feel like I missed out on Bitcoin. I am age 60, with NW = 80x my comfortable yearly spend...so no big deal. I did look at some tweets pumping up dozens of other coins, each with an animal or cartoon mascot all promising a rocket ship to the moon. The due diligence is usually a sub-penny price chart and a few sentence about why this coin is the best. Elon seems to be a common mascot of sorts. Then I saw some posts from people who said that their wallets got corrupted or they lost their secret number and I could really sense their misery.

So I continue to 'miss out' even though I do see great value in the technology, especially involving intellectual property. I am sorta waiting for that aspect to evolve and develop a bit more. However back in my 'risk-on' days I would have been all in on Bitcoin.

Are you seriously comparing $54K bitcoin to Doge at $0.22 ? - then it may be a good thing that you 'missed out'.
OK - I can't help myself - but wherever were you looking?:) Just kidding.
I promise you I have no investments involving an animal or a cartoon. But I do follow youtube channels that occasionally have rockets - you got me there.
How else would we get to the moon?:)

Shucks - BTC is $54K today and ETH is $3.6K today and to my never-ending chagrin, the altcoin I wanted to buy when it was $23 (SOL) is $164 or so today. Crypto has gotten expensive.

FWIW
You can look up the white paper for any project/coin online, see the use cases and review their network, see who the developer and the investors are. You can look at the tokenomics and evaluate from there. But that takes time and work beyond reading a Twitter from Elon and his doggies.

Well, actually I lied I do own Doge and I am not selling it either - that dog will have its day!:)

Congrats on the NW! I think if I were in your shoes I wouldn't bother with crypto either. Well done:).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 08, 2021, 03:31:26 PM
I'm glad for your friend's fortune.

But I couldn't imagine carrying out a $35,000 transaction on public wifi. Unless he used phones to buy the bitcoin off of one of his friends who was right there.

But then I wonder about performing a five-figure financial transaction with a friend when you have a whole market available.

Right:)
I think that is where the 'drunken' part of " drunken purchase" came in. It wasn't bitcoin. He had cash at the exchange and clicked on buy SOL.

Maybe we should ban rich people from investing in crypto and just make it available to desperate people.
But then what would Bitcoin be without the much maligned banks?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 03:33:23 PM
the US dollar isn't and has never been backed by oil.  If it was, the price of the US dollar and the price of oil would move in lockstep.  They don't.  Closest I can figure is that the US dollar is backed by the GDP of the US.

Yeah that's my bad I shouldn't have said "backed by", I'm just looking at the mechanisms for what sustains its value over time. The dollar isn't pegged to oil like it was pegged to gold during the gold standard. The gold standard bootstrapped the dollar as the reserve currency, but now the dollar is fiat. Oil being traded only in dollars sets a demand floor and forces countries to keep a strategic reserve of dollars, which helps maintain it as the reserve currency. Without that deal the dollar would have collapsed once Nixon exit scammed.
The dollar isn't the reserve currency because it's the most stable, it's the most stable because it's the reserve currency, which is achieved by force and politics.

A decentralized currency backed by math & hashpower is a lot cleaner and more peaceful than empire notes backed by fossil fuel cartels and war.

Math isn't a backing.  'Hashpower' isn't even a real word.

I'm not sure you fully understand the other terms you're using either.  A 'backed currency' is a currency that comes with a guarantee that it can always be exchanged for a predetermined amount of another asset.  That's the dictionary definition.

Neither the US dollar, nor bitcoin are backed currencies.

"secured by" then?
Bitcoin isn't backed by an asset, it's the asset itself, like gold.
Gold doesn't need to be backed by anything, it's the layer 1 money because it's the commodity with the most scarcity and resistance to supply inflation.
Or at least it was before the discovery of Bitcoin.


Bitcoin will be a lot better for the people as well, both within the empire and outside. Abandoning the gold standard has been a disaster for the average US citizen, since 1971 real wages flatlined and the divide between rich and poor skyrocketed.  The gold standard wasn't perfect as it still allowed the banks to commit legalized fraud in the form of fractional reserve banking, but it at least limited the damage they could do and kept real interest rates from going negative.

The gold standard was abandoned in the US 1933 by FDR.  It was abandoned by Britian in 1931 and then the rest of the UK and most of it's allies as part of the Bretton Woods agreement in '44.  Not sure I understand what you're talking about here.  Since abandoning the gold standard in 1933, I'd argue that the lives of most Americans have significantly improved.

FDR banned citizens from owning gold, but nation states could redeem dollars for gold until 1971. Once the money printing got so extreme that other countries lost confidence & started draining our gold reserves Nixon pulled the rug out from under them.



Fractional reserve banking started in the 17th century.  It was a significant economic contributor as it allowed greater access to capital to people trying to start and build businesses.  Not exactly sure what your issue is with this, could you explain?

It's easier to understand in the context of a gold standard. Due to certain flaws with gold as a medium of exchange, people end up trusting 3rd party vaults to store the gold, which issue gold receipts that are "as good as gold", but more portable/divisible/etc.
This trust eventually gets betrayed and the banks issue more gold receipts than they have gold in their vaults, which is fraud. As long as not many people actually redeem the certificates for gold, they'll get away with it. But if people lose confidence, then they rush to redeem their certificates, and the scheme blows up. This is basically what happened at an international nation-state level in 1971 when the US scammed the rest of the world with their fraudulent gold receipts.

In a fiat economy things get a little more confusing, but the end result is the same. The banks push risk and leverage out into the system, privatize the gains, and socialize the losses when it all blows up. The same "dollars" are loaned out to a bunch of different people at the same time, at interest. It's a scam, a confidence game. If I did what the banks do every day they would call it check kiting and I would go to jail.

Issuing more on-demand cash receipts (eg checking/savings balances) than they have cash in the vault is legalized fraud.
If a bank wants to issue loans without being fraudulent, that's certainly possible:
1) they can loan out their own capital reserves, or
2) they can raise money by issuing bonds for at least the amount and maturity dates of the loans they want to issue.
Being a credit middle-man is okay, that's a useful service banks can provide. But creating fraudulent cash receipts is a confidence game that always blows up eventually and we all suffer the consequences.

FDIC insurance wouldn't be necessary if the owners & managers of banks were held personally liable for defaults (they used to be long ago), but limited liability creates a severe moral hazard. FDIC makes it worse.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 08, 2021, 03:42:36 PM
Square - Cash App - After Pay - Twitter - their payment app is underpinned by bitcoin.

Underpinned? As in, when I transfer dollar-denominated cash to someone via CashApp, you're saying they convert my dollars to Bitcoin and use Bitcoin to transfer the value to the recipient, only converting back to dollars at the last step before reaching the recipient's account??

Or do you mean that BTC is one of the items that I can transfer to someone, just like dollars are, and CashApp somehow makes a profit on the BTC transfers, with the result that the BTC line of business may be profitable to Square's Cash App division?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 04:38:34 PM
... And when a nation like Iraq or Libya tries to sell oil for something other than dollars the US swiftly invades and puts a stop to that.

There are a couple big reasons I haven't invested in crypto-

1. The US and EU could follow China and outlay crypto mining and transactions tomorrow. Crypto getting too big takes the power away from central governments and governments tend not to give away power. You are making the argument the US uses its military to go in and prevent destruction of the petrodollar, then ignoring the possibility the government will use its pen to outlaw crypto to prevent destruction of the petrodollar? China did it last month.

2. The credit market is 10-12x the size of the money supply. Borrowing for an asset today and using more efficient future work (productivity gains) to later pay on that credit is a  fundamental way economics has worked since Roman times. How does lending work with BTC? Can I borrow 8 BTC to buy a home today and promise to pay back those 8 BTC with interest over 30 years? The fundamentals you are using to say BTC is a good investment make it a bad currency. If BTC is increasing in value faster than productivity then I am paying back BTC with more hours worked in the future then hours worked today. On a fundamental level, credit breaks down.

1) That's the biggest risk for sure. But I don't think so. The politics are a lot different here. It would violate the 1st amendment for starters, but that wouldn't necessarily stop them. There are interest groups here that strongly support it. And Congress is dysfunctional. But most of all, I think they know the dollar is on the way out, and they would rather nobody gain control of the reserve currency status than hand it over to China. But I could be wrong. Maybe I'm too much of an optimist.

2) After it levels off BTC will increase in value at the same rate as productivity, not faster.
The type of credit you describe is counter-productive. Taking from the future to consume in the present is a problem with the current system, not a benefit, especially if the government has the power to do that on our behalf. If borrowing is done to increase productivity (eg capital investments for a business), then it works just fine under a Bitcoin standard, and capital will be put to its most productive use on the free market. If borrowing is done to consume, then you'll have to pay more (interest) for the privilege, as you well should.
Low time preference is a good thing. It's a feature of the Bitcoin standard.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 04:49:34 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

Transaction fees are gradually taking over to pay the miners.
These fees are only for transactions on the blockchain... 99.9% of future transactions will be done off-chain (eg on the Lightning Network, which has much lower fees).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 08, 2021, 05:58:34 PM

2) After it levels off BTC will increase in value at the same rate as productivity, not faster.
The type of credit you describe is counter-productive. Taking from the future to consume in the present is a problem with the current system, not a benefit, especially if the government has the power to do that on our behalf. If borrowing is done to increase productivity (eg capital investments for a business), then it works just fine under a Bitcoin standard, and capital will be put to its most productive use on the free market. If borrowing is done to consume, then you'll have to pay more (interest) for the privilege, as you well should.
Low time preference is a good thing. It's a feature of the Bitcoin standard.

To me this sounds like you're describing an idealized "Bitcoin standard." It's pretty rare that something works exactly as designed, especially in a system as large as the world's finances. What happens if there's a deviation from the plan?

Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 08, 2021, 07:18:42 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

I didn't read the next 20 posts so this may have been answered, but each block contains a fixed block reward (that halves every approx. 4 years) and miner fees.  Miner fees are akin to transaction fees the person sending a transaction pays.  In about 100 years the fixed block reward will be zero.  At that point, there will be a hard-cap on the amount of Bitcoin (21m) and the miners will only be incentivized by the miner fees. 

Bitcoin is not guaranteed to become more expensive to use in the future.  To the contrary, it is expected to be cheaper through safe, secure Layer 2 ("L2") solutions that are already in use by many Bitcoiners; including the entire nation of El Salvadore.  In theory, L2 solutions can process a near infinite amount of transactions per second (TPS) near instantaneously.  The Lightning Network already provides near free and instantaneous Bitcoin transactions to thousands of its users and it can scale seamlessly if needed by setting up additional nodes (we are nowhere near reaching congestion on the Lightning Network or paying noticeable fees for transactions so its just not necessary). 

So thinking 100 years into the future, Bitcoin already has the framework to scale to support exponentially more transactions that are already taking place and through L2 solutions these fees can be split amongst thousands of individuals at nominal rates and paid to the miners.  Finally, Bitcoin is not unchanging.  There are somethings that will probably never change with Bitcoin (e.g. the 21m cap) but Bitcoin and and does change.  The technology improves and so does Bitcoin so its possible L2 solutions wont even be necessary to fix the congestion problem (which is related to your concern about block rewards).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 08, 2021, 08:47:25 PM
I have a question about bitcoin that has always bugged me, and hasn't really been satisfactorily answered.

Bitcoin depends on mining in order to keep writing it's block chain and remain a functional currency.  Without 'mining' of the block chain, bitcoin shuts down.  Currently almost all the computer/energy costs associated with this are foisted upon individual miners which makes transaction costs as cheap as they'll ever be.  The miners choose to do this because they're paid for their busywork in bitcoin.  However, since bitcoin mining is designed to yield less and less bitcoin over time the motive to keep mining will drop and eventually end.  This is true even if the price of Bitcoin inflates to gigantic sums . . . because consistent returns will end and it will become a random boon like winning the lottery.

The solution to this problem that I've seen presented is that people who use bitcoin as a currency will be happy to pay 'miners' to keep wasting energy and computing cycles to allow their transactions to go through.  But this solution means that once Bitcoin starts to mature as a 'currency', it is guaranteed to become significantly more expensive to use.  Most purchases with currency are small . . . a donut, a coffee, some paper or a pen at a store.  Doesn't this all but guarantee that Bitcoin is doomed for use as a real currency?

An economics-minded crypto-booster would answer that the transactions cost you'd pay to spend cryptocurrency would be less than the net difference in inflation between government fiat and crypto fiat currencies. In theory, cryptocurrencies would have a cost for using them, and government currencies would have a cost for holding them.

This would of course open up an arbitrage opportunity where you want to hold crypto and transact in govt. currencies. Thus in a world where you could buy goods with either, the markets can be expected to move toward an equilibrium where the cost (bid/ask spread plus transaction costs) to trade crypto for govt. currency is equal to the cost of simply transacting in crypto (transaction cost alone). This equilibrium would be impossible to actually achieve though, because the bid/ask + transaction cost must be greater than the transaction cost alone. Therefore, the incentive would be to simply transact in crypto, rather than paying to convert to dollars and then transacting with dollars. This incentive structure would lead to growing demand for transaction processing, which would lead to more processing supply, which would keep costs stable in the long run at some point just above the marginal supplier's cost of providing the service. The crypto-pundits keep saying it'll be any year now that lots of vendors/suppliers start accepting crypto. This would be because it's cheaper to just deal in crypto than to switch back and forth.

The end result of such a world, according to crypto-boosters, would be that we've traded/sold inflation in exchange for environmental degradation.

What the above analysis leaves out is that vendors will have to charge currency conversion costs to their buyers if they need to receive government currency in the end - i.e. the entire supply chain has not yet adopted the new currency. A retailer in the US or EU can sell you things for dollars and euros and pay their Chinese or Saudi suppliers in dollars in euros, but their Chinese or Saudi suppliers cannot/will not accept crypto. The vendor must pay the currency conversion cost to replenish, so they pass this cost along to their customers. You end up with a system like truck stops that will sell fuel for one price in cash and a higher price if credit cards are used, to recoup the credit card processing fee. For people in possession of dollars, why pay the cost to trade the dollars for crypto so that you can then pay the higher cost the vendor charges?

If neither consumers nor vendors can escape the dynamic of government currency having a cost to hold and cryptocurrency having a cost to transact, then it will be hard for people to do anything different with crypto than what they're doing now - holding it. Likewise it will be hard for people to do anything different with dollars/euros/yen than what they're doing now - spending it.

What we're still leaving out is the situation for people in countries who earn their local currency, but when buying imports must pay a retail price which includes the cost to convert to dollars or similar reserve currencies. In theory, they should be agnostic about using their local currency or a cryptocurrency when spending. Except there's the minor detail that wages are paid in their local currency, so they'd have to pay the conversion cost to exchange local currency for crypto, only to then pay another conversion cost - built into prices quoted in crypto - for the retailer to exchange crypto for dollars so that international suppliers can be paid. For people in this situation, using crypto would involve paying for two currency conversions instead of one. But what if they're paid in crypto by their employer? If that were the case, they'd pay one currency conversion, crypto-to-dollars perhaps, and be paying for the same number of conversions as they were when they were being paid in local currency.

This is all a roundabout way of explaining why cryptocurrencies still - after years and many billions of dollars of investment and R&D - are not routinely transacted as currencies for goods and services. Consumers would have to be willing to pay currency conversion costs, plus whatever their payment processing service charged, and in addition suffer the inconvenience of their cryptocurrency not being universally accepted - until the entire supply chain changed over. That's a PITA when I can just whip out my VISA, pay in dollars, and only pay the CC payment processing service charge as part of my vendor's price. For widespread adoption of crypto throughout the supply chain to happen, crypto would have to be easier and cheaper than continuing to use dollars.

So far, it hasn't happened for the same reason your keyboard has the QWERTY layout from the 1800s, even though better designs have been invented. Imagine being so devoted to making he Dvorak or Colemak keyboards work that you carried your own special keyboard everywhere you went. People aren't willing to suffer even the mildest inconveniences to save their lives, much less foot the bill for this level of changeover costs. That's why crypto will always be a collectible, not a currency.


lol I love the analogy. I actually use Dvorak. Took a little bit to retrain but soooo worth it in the long run with how much I type. You don't need a special keyboard, you can change the layout in the settings on Windows.

Your analysis about transaction costs is wrong though. It's a lot cheaper to transact in crypto than in fiat. Just a couple cents on Lightning. BTC to fiat exchange fees are around 0.1% (and will be driven lower in time). So a payment with a currency conversion on both sides is only 0.2% + 2cents (compared to VISA which charges 2.9% + 30 cents). Stores won't charge a premium to pay with Bitcoin, if anything they might offer a discount to avoid the VISA fees, like some places do with cash.
Strike is making this process seamless, enabling peer-to-peer payments with automatic currency conversions, you only pay a ~2 cents for the Lightning Network fee plus the market-spread execution cost on the currency conversion so you can receive the payment in fiat. Only available in the US and El Salvador currently, but will be expanding globally. You can link your Strike account to your Twitter account and receive the Bitcoin tips in dollars from any Lightning-compatible source anywhere in the world (I think they support blockchain payments too but the fees are higher than Lightning).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 09, 2021, 02:35:55 AM
It's a lot cheaper to transact in crypto than in fiat. Just a couple cents on Lightning. BTC to fiat exchange fees are around 0.1% (and will be driven lower in time). So a payment with a currency conversion on both sides is only 0.2% + 2cents (compared to VISA which charges 2.9% + 30 cents). Stores won't charge a premium to pay with Bitcoin, if anything they might offer a discount to avoid the VISA fees, like some places do with cash.
Strike is making this process seamless, enabling peer-to-peer payments with automatic currency conversions, you only pay a ~2 cents for the Lightning Network fee plus the market-spread execution cost on the currency conversion so you can receive the payment in fiat.
Well, that got my hopes up, but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024

My hope is for crypto currency to do something useful.  That's even more interesting than making a profit off my 0.7% crypto allocation.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 09, 2021, 09:04:14 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 09, 2021, 10:49:59 AM

lol I love the analogy. I actually use Dvorak. Took a little bit to retrain but soooo worth it in the long run with how much I type. You don't need a special keyboard, you can change the layout in the settings on Windows.

Do you mind discussing the process to learn Dvorak?   I love to do it, but I type all the time for work, so I can't really have a downtime when in the middle of learning two systems.  Put it another way, can you use either while you are learning?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 10, 2021, 03:28:00 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightning Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 10, 2021, 08:39:14 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightning Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.

Y'all are saying the same thing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 10, 2021, 10:26:16 AM
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightning Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.

Y'all are saying the same thing.

Yes, I think we are.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 10, 2021, 11:16:56 AM
[quote the blockchain as normal and are just as secure as ever.

Finally, I don't understand what you are getting at by "traceability and enforcement via blockchain".  I think you are suggesting, incorrectly, that because all the intermediary transaction are not recorded on the Bitcoin blockchain that Bitcoin is somehow less secure.  That doesn't make any sense because the Lightningauthor=onecoolcat link=topic=123904.msg2914027#msg2914027 date=1633858080]
The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

No, you are mistaken.  There are only two Bitcoin transactions when one uses the Lightning Network.  The first is when you open a channel (i.e. you lock up you Bitcoin in a smart contract).  What you confuse is that what happens next are not Bitcoin transactions.  You transact peer-to-peer via the Lightning Network's smart contract.  Your wallet will show your Bitcoin balance that is in the smart contract and you can transact off-chain with whoever else you want that is on the Lightning Network.  Everytime you make a transaction off-chain it updates the smart contract.  You can do this millions of times off-chain and anyone can close the smart contract at anytime.  When that happens, the a second Bitcoin transaction occurs and the person that closed the channel gets whatever Bitcoin they are owed out of the smart contract. 

All the intermediary transactions are not recorded onto the Bitcoin blockchain because they are "off-chain".  Fundamentally, they are not Bitcoin transactions (they are Lightning Network transaction) so it makes no sense for them to be on the Bitcoin blockchain.  All Bitcoin transactions are recorded on  Network is its own thing and nothing that happens on the network changes Bitcoin's function or security.

Y'all are saying the same thing.
  [/quote]


No, definitely not.
The traceability is off chain via smart contract and since every peer-to-peer smart contract is off chain it does not change Bitcoin's function or security.

Here is a rather good article and video about what the Lightning network is.
Excerpt from https://river.com/learn/what-is-the-lightning-network/

Quote
What Is the Lightning Network?
The Lightning Network is a second-layer protocol designed to enable off-chain Bitcoin transactions, which are not recorded on the blockchain. Because they are not recorded on the blockchain, and thus require no mining, Lightning payments are extremely fast and cheap.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 10, 2021, 03:50:08 PM
I know of a bunch of fast and free ways to pay people/buy stuff that don't involve bitcoin, though. Why would I use Lightning?

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: mjr on October 10, 2021, 05:41:15 PM
Bitcoin's transaction rate capacity is too slow, so let's build a whole new layer of payment processors on top of bitcoin.

Oh and there's an infinite number of potential cryptos other than bitcoin and an inifinite potential number of L2 processors that can sit on on the base currencies.

Genius!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 10, 2021, 07:52:08 PM
Bitcoin's transaction rate capacity is too slow, so let's build a whole new layer of payment processors on top of bitcoin..
SNIP Genius!

That is an old old old debate. Settled by consensus in 2015 by building the Lightning Network - the recent upgrades look pretty damn good.
The intent is to keep bitcoin secure.
You can't have your cake and eat it too. Bitcoin can handle 7 transactions per second that's it.
In comparison, Visa can handle 45,000+ transactions vs Lightning currently at 25Mil per second but with the potential to do hundreds of millions.
Lightning solved the scaleability issue in this instance but there are always new projects and improvements in the wings.

https://river.com/learn/what-is-the-lightning-network/
Quote
The Lightning Network is an example of how Bitcoin can become a global medium of exchange without sacrificing the security or decentralization of the Bitcoin network.

The Lightning network is growing exponentially.
The narrative surrounding bitcoin, its use, and scaleability continue to morph. If projects are not successfully implemented and adopted they die a natural death. Looks to me like the Lightning upgrades turned out to be wildly successful - judging from the number of investment dollars pouring in and the fact that nodes doubled in the space of three months. The need, speed and utility are firmly established. 

https://www.yahoo.com/now/nodes-bitcoin-lightning-network-double-213744044.html#:~:text=All%20in%20all%2C%20the%20first,Bitcoin%20blockchain%20as%20one%20transaction.
[quoteThere are several implementations of Lightning being developed by different teams, all working toward the same goal: making Lightning more stable, secure, efficient, private and easy to use.][/quote]
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 11, 2021, 10:39:37 AM
You mention "can handle" and "investment dollars".  What about actual purchase of goods on lightning network?

Also, if the article I quoted is correct, node fees could make Lightning Network costly:
... but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024

I recently came across DASH (digital cash) with thousands of nodes allowing crypto payments.  Is there any ranking of consumer usage of crypto?  Number of transactions doesn't cover it - many people are buying and selling BTC, without using it.  The consumer spending volume would be a key metric.  But I don't see it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 11, 2021, 01:05:37 PM
I'd guess it's a fraction of 1%/rounding error. Nobody has ever so much as offered to pay me/my business in bitcoin, and I do thousands of transactions a year. The bitcoin transactions being tracked are presumably all just people exchanging crypto with each other.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 11, 2021, 01:25:52 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 11, 2021, 01:37:19 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

I think they're saying that the fast transactions on Lightning are fairly secure, just not via the permanent record provided by Blockchain, while recording the net effect of numerous fast transactions does get very securely recorded on the Blockchain. Kind of like saying the financial statements of a company are accurate and publicly known, but the individual transactions summarized therein are not themselves public. This method of blockchain recording for net effects of transactions allows even the fast transactions to be denominated usefully in the main currency, which means the system can be (and is) based on crypto one can buy today, in this case BTC.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 11, 2021, 01:52:29 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

i think this is most true of bitcoin - since its just code in cyberspace not being managed - many of the others are managed by some group like eth just did an upgrade so in theory it could keep pace if the technology underlying it doesn't fundamentally change significantly.   And if there is one thing i like to bet on its the tech today being the same in 30 years. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: taekvideo on October 13, 2021, 12:14:50 PM

lol I love the analogy. I actually use Dvorak. Took a little bit to retrain but soooo worth it in the long run with how much I type. You don't need a special keyboard, you can change the layout in the settings on Windows.

Do you mind discussing the process to learn Dvorak?   I love to do it, but I type all the time for work, so I can't really have a downtime when in the middle of learning two systems.  Put it another way, can you use either while you are learning?

I made the switch a few weeks before I started an online tutoring job.
It's not that hard, the brain can relearn a new layout 10x easier than mastering touch-typing for the first time.
There was a program I used to do the training I forget what it was called though.
It starts with just the middle row and adds more keys as you master them.
After an hour or 2 a day for ~ 2 weeks I was back up to speed.
They say you can type faster in Dvorak but my speed improvement after full mastery was only like 3%, I was already really fast, I mostly switched to reduce the strain on my fingers from long hours of constant typing and it worked wonders for that.
You should be able to do both but you'd make more typos during the learning process, and the learning process would take longer. I planned to do that but ended up abandoning qwerty entirely.
It might be easier to wait until you have at least a week off work and just grind it out.


The lightning network allows bitcoin transactions without writing to the block chain?  Doesn't that undermine the single thing that bitcoin has going for it . . . which it traceability and enforcement via blockchain?

There is an increased attack surface for the nodes because a node has to actively monitor the blockchain to prevent the nodes its connected to from stealing the funds, but it's still trustless and quite secure. The typical end user won't be running their own lightning node and won't have to worry about how any of it works. Most lightning wallets are custodial, so users are trusting their wallet provider. Muun & Breez have self-custodial lightning wallets but I'm not clear on how they work internally (submarine swaps?).
Best bet is to keep the bulk of your Bitcoin safe in cold storage and use Muun or Breez for fast/frequent transactions.

When a lightning transaction goes through a channel between 2 nodes, they exchange an update to the channel state off-chain.
Either party can close the channel any time by submitting the final channel state to the blockchain.
But any of the prior channel states could also be submitted to the blockchain in an attempt to steal Bitcoin, by using an earlier channel state where there was more BTC on your side of the channel than in the final valid state.
To prevent this, the channel closing has a wait period (I think 1 week is normal). During this time the other node can submit the actual final channel state which proves the fraud attempt, and the scammer loses the entire channel balance.
As an extra measure most nodes employ 1 or more "watchtower" services from 3rd parties that monitor the blockchain for these fraud attempts and submit the proofs (which could be necessary if your node is offline for a week and unable to do that).

Also, if the article I quoted is correct, node fees could make Lightning Network costly:
... but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024

That example is higher than most real-world Lightning fees, but even in that case VISA or PayPal would charge $16.25 in fees on a $550 transaction, so even in your over-estimate Lightning is still cheaper.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 14, 2021, 08:14:44 AM
Also, if the article I quoted is correct, node fees could make Lightning Network costly:
... but there's "intermediate node fees", which can be far more expensive.  In this example, a transaction of $550 costs about $6.60 in node fees, which overwhelms all other fees.
https://medium.com/suredbits/lightning-101-lightning-network-fees-86abbbc17024
That example is higher than most real-world Lightning fees, but even in that case VISA or PayPal would charge $16.25 in fees on a $550 transaction, so even in your over-estimate Lightning is still cheaper.
You are incorrectly attributing the estimate to me, when I have repeated twice already that it came from an article on the topic.  By the way, when are you going to quote a source with "most real-world Lightning fees"?

You also claim Visa charges 2.9%, which is false.  Three separate websites claim lower rates than that.
https://paymentdepot.com/blog/average-credit-card-processing-fees/
https://www.valuepenguin.com/what-credit-card-processing-fees-costs
https://www.bankrate.com/finance/credit-cards/merchants-guide-to-credit-card-processing-fees/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 16, 2021, 01:32:02 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 16, 2021, 02:38:33 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.

Are you not aware of the long standing history of security problems with the lightning network?

The history of vulnerabilities and problems is not too encouraging . . . multiple security vulnerabilities that allowed for theft of bitcoin were reported last year - https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/ (https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/).  It's possible today to prevent someone from closing their channel and getting their bitcoin out by executing a 'griefing' attack - https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing (https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing).  There was this research paper published last year demonstrating how a 'time dilation attack' can occur in the lightning network allowing someone to steal the total contents of a channel - https://arxiv.org/abs/2006.01418 (https://arxiv.org/abs/2006.01418).  Then you've got all the disk management related issues described here - https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work (https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work) . . . basically, if the record of any transaction on lightning network is lost (say due to a disk failure) your transaction is also lost.  Theoretically, some day watchtowers will be working on all transactions to cover this problem . . . but that's not how it works today.

With the lightning network, you are relying on buggy software for security.  Fast it may well be, but 'very secure'?  Not really.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 16, 2021, 04:11:45 PM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.

Are you not aware of the long standing history of security problems with the lightning network?

The history of vulnerabilities and problems is not too encouraging . . . multiple security vulnerabilities that allowed for theft of bitcoin were reported last year - https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/ (https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/).  It's possible today to prevent someone from closing their channel and getting their bitcoin out by executing a 'griefing' attack - https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing (https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing).  There was this research paper published last year demonstrating how a 'time dilation attack' can occur in the lightning network allowing someone to steal the total contents of a channel - https://arxiv.org/abs/2006.01418 (https://arxiv.org/abs/2006.01418).  Then you've got all the disk management related issues described here - https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work (https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work) . . . basically, if the record of any transaction on lightning network is lost (say due to a disk failure) your transaction is also lost.  Theoretically, some day watchtowers will be working on all transactions to cover this problem . . . but that's not how it works today.

With the lightning network, you are relying on buggy software for security.  Fast it may well be, but 'very secure'?  Not really.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

I am not familiar with "griefing attacks" so I can't speak on them apart from what your articles wrote about it.  Its seems like a nuisance more than anything.  Additionally, its just another thing that can be patched if its real problem. 

The research papers theorizing on vulnerabilities is exactly why cryptocurrency is the best money we ever had.  Its open source and you have all the brightest folks looking for vulnerabilities, sharing their ideas, and making it better.  It's great.  That's the theme behind all your articles as well.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 18, 2021, 07:30:56 AM
If we're going to tout the benefits of cryptocurrency as a secure, trustless method of exchange utilizing blockchain, we cannot also tout Lightning as the solution to slow processing speeds, because by using Lightning it sounds like we are bypassing true blockchain and its benefits/drawbacks. In other words, it's fast OR secure, not fast AND secure. You lose one when you obtain the other, and this might be a fundamental tradeoff with cryptocurrencies.

If security is the most important thing, the current crop of cryptocurrencies will have to be replaced by new technologies that can scale while maintaining security. If instead the market rewards speed and low cost, we can expect non-blockchain currencies to emerge to meet this need. Either way, any crypto one can buy today is toast, right?

Lightning is very fast and very secure.  Please read the basics on how it works.

Are you not aware of the long standing history of security problems with the lightning network?

The history of vulnerabilities and problems is not too encouraging . . . multiple security vulnerabilities that allowed for theft of bitcoin were reported last year - https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/ (https://www.bleepingcomputer.com/news/security/lightning-network-discloses-concerning-crypto-vulnerabilities/).  It's possible today to prevent someone from closing their channel and getting their bitcoin out by executing a 'griefing' attack - https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing (https://bitcoinmagazine.com/technical/good-griefing-a-lingering-vulnerability-on-lightning-network-that-still-needs-fixing).  There was this research paper published last year demonstrating how a 'time dilation attack' can occur in the lightning network allowing someone to steal the total contents of a channel - https://arxiv.org/abs/2006.01418 (https://arxiv.org/abs/2006.01418).  Then you've got all the disk management related issues described here - https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work (https://bitcoinmagazine.com/technical/why-the-bitcoin-lightning-network-doesnt-work) . . . basically, if the record of any transaction on lightning network is lost (say due to a disk failure) your transaction is also lost.  Theoretically, some day watchtowers will be working on all transactions to cover this problem . . . but that's not how it works today.

With the lightning network, you are relying on buggy software for security.  Fast it may well be, but 'very secure'?  Not really.

The history of vulnerabilities with cash and credit card is even less encouraging because, unlike cash and credit card vulnerability, Lightning Network fixed their issues well over a year ago.  Also, no one lost funds due to a lightning network vulnerability.  The same cannot be said about the alternative.

I am not familiar with "griefing attacks" so I can't speak on them apart from what your articles wrote about it.  Its seems like a nuisance more than anything.  Additionally, its just another thing that can be patched if its real problem. 

The research papers theorizing on vulnerabilities is exactly why cryptocurrency is the best money we ever had.  Its open source and you have all the brightest folks looking for vulnerabilities, sharing their ideas, and making it better.  It's great.  That's the theme behind all your articles as well.

The lightning network is still vulnerable to all of the issues mentioned that are not in the first link.  I'd encourage you to read up the basics of how these existing vulnerabilities work - particularly if you're under the mistaken impression that the lightning network is safe and secure.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: yachi on October 18, 2021, 08:50:53 AM

That is the real reason why the IMF hated the idea of El Salvador choosing bitcoin as their legal tender. It means everyone incl the IMF has to accept it as currency.


There is a very big difference between El Salvador choosing bitcoin as their legal tender, and El Salvador making bitcoin legal tender.

El Salvador did not move their entire economy from the US dollar to Bitcoin, they just started accepting Bitcoin in addition to the US Dollar.  If you're imagining 90% of the population paying for meals, taxi rides, rent, and getting their salary in Bitcoin, then you've read it wrong.

Just because El Salvador made something legal tender in their country does not strong arm the IMF into accepting it for payment.  When the IMF makes a loan, it dictates what currency will be used for repayment.  That's true for all loans.  You see it happen all the time: countries with unstable currencies will not be able to borrow in their own currency.  Instead the loan will be denominated in US dollars or Euro.

Do you mean something different when you say "has to accept it as currency"?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 19, 2021, 08:35:41 AM
Bitcoin now has a futures ETF, which means more people can get exposure to cyrpto through their retirement accounts. 

https://www.cnbc.com/quotes/BITO (https://www.cnbc.com/quotes/BITO)

As of this post....
Over 100 million people own bitcoin...check
Nation States are beginning to accept it as currency....check
Large institutional buying is now occurring through ETF's....check

Look, I'm not trying to put Bitcoin on the same level as the Dollar, Yuan, or Euro at this point.  That would be nonsense.  But let's face it, there are MANY legitimate national currencies that can't check the three boxes above like Bitcoin does.  For those saying...sure, blockchain is here to stay, but it's to early to have ANY IDEA which will last...I think that's not giving Bitcoin enough credit.  To me I see real and tangible reasons why a PARTICULAR blockchain has staying power. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 19, 2021, 09:14:24 AM
I'm both excited about a Bitcoin Futures ETF (BITO), and also aware I shouldn't be excited.  I prefer to have an alternative to GBTC, even one that suffers from contango when rolling into new contracts.  But fundamentally payment systems is rather competitive, and I'm not sure Bitcoin will turn out to succeed there.

I now have equal investments in BITO and GBTC.  GBTC's market price changes trailed Bitcoin's price changes by 162% in the past 12 months.  Unless BITO spends that much renewing futures contracts, I expect their performance will beat GBTC.  Once that happens, I'm switching to BITO.

But there's a risk Bitcoin doesn't become something new and useful.  Facebook's payment system will likely gain more customers than Bitcoin.  China's two most popular payment apps already were well ahead of Bitcoin, before Bitcoin was banned there.  So while I'm happy BITO exists, I wonder about the long term prospects of Bitcoin doing something useful and unique.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 19, 2021, 09:14:58 AM
Bitcoin now has a futures ETF, which means more people can get exposure to cyrpto through their retirement accounts. 

https://www.cnbc.com/quotes/BITO (https://www.cnbc.com/quotes/BITO)

As of this post....
Over 100 million people own bitcoin...check
Nation States are beginning to accept it as currency....check
Large institutional buying is now occurring through ETF's....check

Look, I'm not trying to put Bitcoin on the same level as the Dollar, Yuan, or Euro at this point.  That would be nonsense.  But let's face it, there are MANY legitimate national currencies that can't check the three boxes above like Bitcoin does.  For those saying...sure, blockchain is here to stay, but it's to early to have ANY IDEA which will last...I think that's not giving Bitcoin enough credit.  To me I see real and tangible reasons why a PARTICULAR blockchain has staying power.

El Salvador's adoption of bitcoin didn't go as smoothly as one might think:
https://nypost.com/2021/09/16/protests-in-el-salvador-after-bitcoin-made-official-currency/
If I were a shop owner forced to accept a speculative and risky currency I'd probably take to the streets too.

Also there are fundamental issues already raised here that have never been answered by bitcoin proponents.
- How is a currency that is designed to have a ceiling to the amount of it that's ever created supposed to work? Who is going to actually spend (as opposed to swing-trade) a currency that's going to be worth more in the future?
- Proponents say it's awesome for poor and unbanked people, yet we constantly hear about bitcoin scams and hacks. If I'm poor and/or don't even have a bank account, what are the odds that I'm also tech-savvy enough not to have my wallet stolen or be otherwise robbed?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 19, 2021, 09:28:48 AM
@MustacheAndaHalf the other way to read all this good news for Bitcoin is as a sell signal. What other good news remains to catalyze even more appreciation? Bear in mind there’s a lot more bad news on the way, such as more hacks, more bans, higher interest rates, etc. At what point are things as good as they get for BTC?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 19, 2021, 09:55:03 AM
@MustacheAndaHalf the other way to read all this good news for Bitcoin is as a sell signal. What other good news remains to catalyze even more appreciation? Bear in mind there’s a lot more bad news on the way, such as more hacks, more bans, higher interest rates, etc. At what point are things as good as they get for BTC?
Bitcoin gained +429% in the past 12 months.  I think it can handle interest rates hitting 2%!  :)  I also question your point about "more hacks", as I'm not aware of any recent, significant hacks.

Only a ban in the U.S. would carry as much weight as the ban in China.  At the time China banned it, a majority of Bitcoin was mined in China.  I know BTC was over $60k earlier this year, and I have one purchase for below $30k... so it dropped in half (and has recovered above $60k now).  That's normal for Bitcoin - anyone who doesn't like losing half their balance should avoid it.

For whatever reason, Bitcoin is more likely to gain +50% than to collapse.  My guess is that Bitcoin has a 1 in 5 chance of collapse over the long term.  So I keep my allocation very small, such that if it hit zero, I wouldn't miss it.  A fat zero for BTC wouldn't even be my biggest loss this year.

Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 19, 2021, 10:37:30 AM
I also question your point about "more hacks", as I'm not aware of any recent, significant hacks.

I guess that depends on your tolerance for "significant" or "recent".
https://www.cnbc.com/2021/08/13/poly-network-hack-nearly-all-of-600-million-in-crypto-returned.html
Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 19, 2021, 11:05:46 AM
Also there are fundamental issues already raised here that have never been answered by bitcoin proponents.
- How is a currency that is designed to have a ceiling to the amount of it that's ever created supposed to work? Who is going to actually spend (as opposed to swing-trade) a currency that's going to be worth more in the future?
- Proponents say it's awesome for poor and unbanked people, yet we constantly hear about bitcoin scams and hacks. If I'm poor and/or don't even have a bank account, what are the odds that I'm also tech-savvy enough not to have my wallet stolen or be otherwise robbed?

To be honest, I'm more concerned about the second than the first.

El Salvador & other countries considering adopting Bitcoin are some of the poorest countries on Earth with the vast majority of the population having savings rates near zero. The idea that they'll suddenly stop spending money because a deflationary currency disincentivizes consumption seems completely unrealistic to me. More likely they'll keep on spending nearly 100% of their income to sustain their subsistence lifestyle, but those tiny amounts of unspent Satoshis could give them a touch of extra wealth.

My biggest concern for the El Salvadoran people is that someone will find a security flaw in the Chivo app and steal any remittance payments before they can be cashed out. It's a very high crime country and the people are keeping their money on the Lightning Network and won't be able to afford the safer blockchain.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 19, 2021, 12:30:41 PM
Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.

Or maybe they're AOL and Yahoo! :) Those were great investments in 1998.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 19, 2021, 12:41:31 PM
Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.

Or maybe they're AOL and Yahoo! :) Those were great investments in 1998.

Better than Pets.com, AskJeeves, Lycos, Web Crawler, Jumpstation, Altavista . . .

:P
Title: Re: What do you think of adding a low% of crypto allocation
Post by: yachi on October 19, 2021, 12:49:22 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: Villanelle on October 19, 2021, 12:55:12 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 19, 2021, 01:09:21 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.

its not a currency just b/c its called a currency doesnt make it one -

Currency - a system of money in general use in a particular country.

no country is using this generally as money still even though some have activated it as accepted as tender.

is it a store of value - well currently its a store of the value people believe it will have and the growth they expect.  Will that level of value be maintained over decades after it reaches the peak of growth - will it act similar to gold and younger generations see it as a safe place to keep value outside of under the mattress or in US dollars? Will it even continue to grow or will the massive amounts of coins bought with debt come crashing down like a house of cards and bring equities with it - i'd say this is the most likely outcome in the next 5-10 years.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 19, 2021, 02:21:40 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.

its not a currency just b/c its called a currency doesnt make it one -

Currency - a system of money in general use in a particular country.

no country is using this generally as money still even though some have activated it as accepted as tender.

is it a store of value - well currently its a store of the value people believe it will have and the growth they expect.  Will that level of value be maintained over decades after it reaches the peak of growth - will it act similar to gold and younger generations see it as a safe place to keep value outside of under the mattress or in US dollars? Will it even continue to grow or will the massive amounts of coins bought with debt come crashing down like a house of cards and bring equities with it - i'd say this is the most likely outcome in the next 5-10 years.

I don't think Bitcoin has any chance for long-term survival as just a "store of value". That would just make it a virtual version of gold, but with a ridiculously high carbon footprint. No way is that sustainable at all. Bitcoin has to achieve its destiny as a global currency (or regional currency, possibly in Latin America) to have any long-term value, which I'd guess is less than 15% likely, or its long-term value will crash down.

But I do invest in it, because it seems to be in the middle stages of a very lengthy bull run that could last several more years before we learn its long-term fate.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 19, 2021, 02:32:31 PM
Bitcoin reminds me of the dot-com era, both with the boom and potential bust.  That's why I stick to BTC and ETH.  Are they the Apple and Amazon of the crypto currency era?  I don't know, but they seem safer than new coins with no history or institutional investment.  BTC and ETH have massive volatility, while newer coins are volatility squared.

Or maybe they're AOL and Yahoo! :) Those were great investments in 1998.

Better than Pets.com, AskJeeves, Lycos, Web Crawler, Jumpstation, Altavista . . .

:P

I've never heard of Jumpstation. The U of Stirling missed an opportunity.

https://en.wikipedia.org/wiki/JumpStation
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 19, 2021, 02:41:05 PM
Bitcoin gained +429% in the past 12 months.

This is what I see getting in the way of Bitcoin as a currency.  I can't imagine a contract or salary denominated in a currency whose value can swing by 400% in a year.
Can you imagine last October your hourly rate was set at the bitcoin equivalent of $10 an hour (0.00084 bitcoin), now you're making the bitcoin equivalent of $52.90 per hour (still 0.00084 bitcoin)?

When it starts gaining only 2% to 3% per year for years on end, then we can talk about it being a currency substitute.  But at that point, less people will be excited about it because it's not gaining by leaps and bounds.

Interesting point, and one I hadn't considered.  Thanks.

its not a currency just b/c its called a currency doesnt make it one -

Currency - a system of money in general use in a particular country.

no country is using this generally as money still even though some have activated it as accepted as tender.

is it a store of value - well currently its a store of the value people believe it will have and the growth they expect.  Will that level of value be maintained over decades after it reaches the peak of growth - will it act similar to gold and younger generations see it as a safe place to keep value outside of under the mattress or in US dollars? Will it even continue to grow or will the massive amounts of coins bought with debt come crashing down like a house of cards and bring equities with it - i'd say this is the most likely outcome in the next 5-10 years.

I don't think Bitcoin has any chance for long-term survival as just a "store of value". That would just make it a virtual version of gold, but with a ridiculously high carbon footprint. No way is that sustainable at all. Bitcoin has to achieve its destiny as a global currency (or regional currency, possibly in Latin America) to have any long-term value, which I'd guess is less than 15% likely, or its long-term value will crash down.

But I do invest in it, because it seems to be in the middle stages of a very lengthy bull run that could last several more years before we learn its long-term fate.

In the long term the grid won't have a ridiculously high carbon footprint.  We are likely in the last 50 years of using fossil fuels in my opinion, and hopefully less than 50 years. 


Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 19, 2021, 03:36:52 PM
Bitcoin now has a futures ETF, which means more people can get exposure to cyrpto through their retirement accounts. 

https://www.cnbc.com/quotes/BITO (https://www.cnbc.com/quotes/BITO)

As of this post....
Over 100 million people own bitcoin...check
Nation States are beginning to accept it as currency....check
Large institutional buying is now occurring through ETF's....check

Look, I'm not trying to put Bitcoin on the same level as the Dollar, Yuan, or Euro at this point.  That would be nonsense.  But let's face it, there are MANY legitimate national currencies that can't check the three boxes above like Bitcoin does.  For those saying...sure, blockchain is here to stay, but it's to early to have ANY IDEA which will last...I think that's not giving Bitcoin enough credit.  To me I see real and tangible reasons why a PARTICULAR blockchain has staying power.

PRO SHARES FUTURES ETF APPROVAL
It is really interesting to hear the reactions to this new Pro Shares Futures ETF. I agree that it could be good for large institutional buying.
What I don't like is this push to keep retail buyers out and let the big boys play their "high-level arbitration games".
Not that I'm familiar with contango or backwardation or understand the multitude of fees that go along with this arbitraged digital casino.
None of this involves buying actual Bitcoin at a spot exchange.

Gary Gensler knows damn well that the crypto community wanted a real Bitcoin ETF. We already have options and leverage for crypto; enough for any fool to get "rekt". Regulating and reducing the % of leverage allowed was a move I had no issue with.
But I am suspicious about the SEC's motives for not approving an ETF with direct bitcoin or ethereum ownership; not even for Grayscale.
We'll see what havoc if any this creates for the bitcoin spot exchange price in the future.
Bitcoin never does what one expects it to do.

MEANWHILE
Europe just approved another real Bitcoin ETF and Canada has continued to approve more ETFs as have other countries.

NATION STATES
The Nation States who do and will benefit from a bitcoin currency now or in the future are under intense scrutiny. El Salvador isn't even past its first three months and yet every yahoo who hates bitcoin even though they don't know the difference between a sh$t coin and bitcoin is hoping for the demise of this currency experiment. The best part is that the IMF has to accept bitcoin as a currency.

No one in El Salvador is forced to accept only bitcoin that's a convenient twist of the truth. Truth is that the app requires them to agree to accept bitcoin as legal tender. It does not force the use of bitcoin only since you can instantly convert to US $ or any other currency.
They'll have hiccups - it would be a miracle if they did not.
It will take time, there will be bonuses and interest and whatever else is needed to nudge and reach the population and slowly improve access and tech.

It took Europe a long time time to go from local currencies to the EURO for all and they didn't have any of the third world problems El Salvador faces.

I think El Salvador is doing a splendid job so far but it is too soon to tell whether it will be a long-term success.
What I'd like to see happening is for El Salvador to start their own bitcoin mining using their clean energy, volcanic thermopower. There was talk about that but implementation will require time, a huge amount of money and probably significant foreign investment.
Again, these are not projects that happen overnight.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 19, 2021, 04:35:47 PM
Y'all are really blind if you think Bitcoin is useable as currency. It's been stated oh so many times here how it doesn't work for that even by investors in it. Could some block chain become acceptable as world currency yes but that's not what Bitcoin is it destroys the entire debt system the world runs on.

It's not even currency today by definition. Legal tender of a country is not currency. Currency has to be generally accepted and used.

We should have called it bitsnocones then everyone would think they own a bunch of snow cones.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 19, 2021, 05:18:54 PM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 19, 2021, 11:27:45 PM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 20, 2021, 04:19:27 AM
The best part is that the IMF has to accept bitcoin as a currency.

 I think someone already told you that's not true, either higher in this thread or in another.


No one in El Salvador is forced to accept only bitcoin that's a convenient twist of the truth. Truth is that the app requires them to agree to accept bitcoin as legal tender.

If that's in reply to me, please re-read what I wrote. I didn't say people had to accept only bitcoins, but that they had to accept bitcoins, which is true because that's what legal tender means. No one claimed people couldn't pay in/accept dollars.


What I'd like to see happening is for El Salvador to start their own bitcoin mining using their clean energy, volcanic thermopower. There was talk about that but implementation will require time, a huge amount of money and probably significant foreign investment.
Again, these are not projects that happen overnight.

I really don't think more mining is the solution to anything. Wasted clean energy is still wasted energy.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 20, 2021, 06:02:36 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

I don't see this as a problem in the long-term for Bitcoin:

1. The MMM philosophy of life discourages consumerism and encourages long-term savings & investment. A deflationary currency makes it easier for the world's poor to save for the future since they wouldn't even need access to capital markets. The currency itself becomes a savings vehicle.

2. The countries most likely to adopt a crypto-currency as legal tender in the next decade are in Latin America, Africa, Polynesia. In most countries of these regions the majority of people don't have access to traditional banking services and savings rates are near zero. I see little risk that El Salvadorans or Africans would suddenly stop spending money if their governments made Bitcoin the legal currency. That's a first world/middle class problem that wouldn't have any relevance for ~6 billion people alive today.

3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 20, 2021, 07:00:13 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

I don't see this as a problem in the long-term for Bitcoin:

1. The MMM philosophy of life discourages consumerism and encourages long-term savings & investment. A deflationary currency makes it easier for the world's poor to save for the future since they wouldn't even need access to capital markets. The currency itself becomes a savings vehicle.

2. The countries most likely to adopt a crypto-currency as legal tender in the next decade are in Latin America, Africa, Polynesia. In most countries of these regions the majority of people don't have access to traditional banking services and savings rates are near zero. I see little risk that El Salvadorans or Africans would suddenly stop spending money if their governments made Bitcoin the legal currency. That's a first world/middle class problem that wouldn't have any relevance for ~6 billion people alive today.

3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

When I think to myself "I can live in a world where my savings are in a deflationary currency but I actually spend and borrow in a slightly inflationary currency" then I realize I've fallen into a mental trap. If everyone does this, then Bitcoin will never be a currency, and will thus be doomed forever to inhabit the dangerous realm of trendy collectibles like the Confederate notes traded for beer money by white supremacists at gun shows. No more of those are being minted either.

When I think to myself "I can buy the limited-edition currency today that impoverished people around the world will be using in 30 years when it costs a million dollars a coin" I have to ask myself why the global poor will choose to work all their lives producing goods and services for my chain of digits, when this digital slavery is actually a worse situation than their status quo. At least they can borrow money in their local currencies - or if not that, then in dollars - and finance their farms and businesses. Deflation shuts down lending. And at least their entire life savings doesn't disappear one day because their online exchange got hacked (btw, how exactly does this keep happening? You don't hear about Bank of America losing all their clients' funds with no recourse.). Why would people with no savings be more attracted to a deflationary cryptocurrency than they are to a currency that can be borrowed, loaned, invested, and securely exchanged worldwide - i.e. the dollar?

El Salvador? People are on the verge of starvation in that gang-run dictatorship, and they're walking the entire continent to escape it and enjoy the privileges of US immigration prisons. My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island. Maybe I'm a pessimist on E.S. but I've been reading the world news long enough to spot the patterns by now. it's always the same.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 20, 2021, 07:13:13 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

I don't see this as a problem in the long-term for Bitcoin:

1. The MMM philosophy of life discourages consumerism and encourages long-term savings & investment. A deflationary currency makes it easier for the world's poor to save for the future since they wouldn't even need access to capital markets. The currency itself becomes a savings vehicle.

2. The countries most likely to adopt a crypto-currency as legal tender in the next decade are in Latin America, Africa, Polynesia. In most countries of these regions the majority of people don't have access to traditional banking services and savings rates are near zero. I see little risk that El Salvadorans or Africans would suddenly stop spending money if their governments made Bitcoin the legal currency. That's a first world/middle class problem that wouldn't have any relevance for ~6 billion people alive today.

3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

When I think to myself "I can live in a world where my savings are in a deflationary currency but I actually spend and borrow in a slightly inflationary currency" then I realize I've fallen into a mental trap. If everyone does this, then Bitcoin will never be a currency, and will thus be doomed forever to inhabit the dangerous realm of trendy collectibles like the Confederate notes traded for beer money by white supremacists at gun shows. No more of those are being minted either.

When I think to myself "I can buy the limited-edition currency today that impoverished people around the world will be using in 30 years when it costs a million dollars a coin" I have to ask myself why the global poor will choose to work all their lives producing goods and services for my chain of digits, when this digital slavery is actually a worse situation than their status quo. At least they can borrow money in their local currencies - or if not that, then in dollars - and finance their farms and businesses. Deflation shuts down lending. And at least their entire life savings doesn't disappear one day because their online exchange got hacked (btw, how exactly does this keep happening? You don't hear about Bank of America losing all their clients' funds with no recourse.). Why would people with no savings be more attracted to a deflationary cryptocurrency than they are to a currency that can be borrowed, loaned, invested, and securely exchanged worldwide - i.e. the dollar?

El Salvador? People are on the verge of starvation in that gang-run dictatorship, and they're walking the entire continent to escape it and enjoy the privileges of US immigration prisons. My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island. Maybe I'm a pessimist on E.S. but I've been reading the world news long enough to spot the patterns by now. it's always the same.

Isn't the nature of the Bitcoin ledger such that El Salvador's Bitcoin stake is publicly visible?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 20, 2021, 07:17:23 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

It makes me furious. I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

You can have a long argument about whether 0 or 1 or 2% inflation is ideal in a currency, but there's no coherent argument for one that is actually *deflationary*.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 07:26:30 AM
And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

This is  the sticky wicket of Bitcoin.  Bitcoin solved the trusted third party transaction problem.   But the creator(s) didn't think about what money actually is.  You do not want a currency that is inherently deflationary.

It makes me furious. I really, really hate paying credit card transaction fees. Crypto has the promise to solve this and make humanity vastly better off, but because bitcoin is so terribly designed it is actually preventing that scenario from becoming a reality.

You can have a long argument about whether 0 or 1 or 2% inflation is ideal in a currency, but there's no coherent argument for one that is actually *deflationary*.

-W

agreed this is fundamentally why some block chain is likely to become useable as a currency world wide or country wide. Just b/c bitcoin was first doesn't mean its best and we already know its likely the worst.  I do not understand how someone investing in bitcoin doesn't see this.  Many here have stated they have an allocation they are glad to lose b/c its highly speculative.  But no one has laid out a roadmap to what BTC is specifically going to be used for in the future.  The US accumulates 750B a year in debt to fund defense.  The largest military in the world is not going to allow something deflationary to become standard exchange - This does not just shut down the person to person/bank borrowing problem it kills entire countries propped up on debt and something tells me between china who is 2nd who already made this illegal and the us who is first in defense spending with a combined total of 1T dollars arent just going to let something like this take hold and replace fiat.

so then someone please explain the use case for this thing called bitcoin and dont go down the path of the value of blockchain which almost everyone here who doesnt speculate in crypto agrees has value.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 20, 2021, 07:32:09 AM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

Walt and Johnny Z
No - the IMF agreement states that it must accept payment in the legal tender of their member countries. Since bitcoin is now legal tender in El Salvador and there is no exclusion of bitcoin that means El Salvador can pay the IMF in bitcoin.

Quote from the IMF
Quote
Jul 26, 2021 — If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes ...

You raise an excellent point Walt in whether this might apply to an existing loan contract if that contract names only one currency. I don't know if the primary clause would override a specific contract.
It would not apply to your example of Argentina since they do not use bitcoin as legal tender.

Quote from Bloomberg - Oct 19, 2021
Quote
El Salvador’s first-of-its-kind adoption of Bitcoin won’t be an obstacle for the government to reach a $1.3 billion loan agreement with the International Monetary Fund, according to the country’s central bank president.
This Bloomberg article makes it crystal clear that the IMF is playing hard ball.

Since El Salvador is still using the US$ as legal tender alongside crypto (it takes time to convert to a new currency) who is to say they will not simply convert their crypto into dollars anyway?
If the day ever comes where they declare the US$ a foreign currency then it is a new ball game.

I like your comment Walt:)
"Any freshman macro econ student could have designed a better currency."
That may well be true for all I know but then maybe those deficiencies can be addressed? I'm neither an economist nor an expert on currencies and don't pretend to be. So I will leave discussions on the finer points of a currency to the experts.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 07:35:24 AM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

Walt and Johnny Z
No - the IMF agreement states that it must accept payment in the legal tender of their member countries. Since bitcoin is now legal tender in El Salvador and there is no exclusion of bitcoin that means El Salvador can pay the IMF in bitcoin.

Quote from the IMF
Quote
Jul 26, 2021 — If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes ...

You raise an excellent point Walt in whether this might apply to an existing loan contract if that contract names only one currency. I don't know if the primary clause would override a specific contract.
It would not apply to your example of Argentina since they do not use bitcoin as legal tender.

Quote from Bloomberg - Oct 19, 2021
Quote
El Salvador’s first-of-its-kind adoption of Bitcoin won’t be an obstacle for the government to reach a $1.3 billion loan agreement with the International Monetary Fund, according to the country’s central bank president.
This Bloomberg article makes it crystal clear that the IMF is playing hard ball.

Since El Salvador is still using the US$ as legal tender alongside crypto (it takes time to convert to a new currency) who is to say they will not simply convert their crypto into dollars anyway?
If the day ever comes where they declare the US$ a foreign currency then it is a new ball game.

I like your comment Walt:)
"Any freshman macro econ student could have designed a better currency."
That may well be true for all I know but then maybe those deficiencies can be addressed? I'm neither an economist nor an expert on currencies and don't pretend to be. So I will leave discussions on the finer points of a currency to the experts.

this statement right here - you said it yourself its been stated multiple times here why BTC is not useable as a currency and never can be but you choose to claim ignorance on the issue - great way to invest your green soldiers.

BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 20, 2021, 07:50:39 AM
You don't need to be an economics professor here. Just imagine you have some bitcoin, which is limited in supply, and hence is going to slowly gain value, forever, because it's the world currency.

I come to you asking for a loan. Do you give me a loan? If so, how much interest do you charge me? Worldwide, are people more or less likely to loan each other money and buy/sell things to each other if their money is constantly gaining value?

-W

Title: Re: What do you think of adding a low% of crypto allocation
Post by: grmagne on October 20, 2021, 08:02:56 AM
When I think to myself "I can live in a world where my savings are in a deflationary currency but I actually spend and borrow in a slightly inflationary currency" then I realize I've fallen into a mental trap. If everyone does this, then Bitcoin will never be a currency, and will thus be doomed forever to inhabit the dangerous realm of trendy collectibles like the Confederate notes traded for beer money by white supremacists at gun shows. No more of those are being minted either.

When I think to myself "I can buy the limited-edition currency today that impoverished people around the world will be using in 30 years when it costs a million dollars a coin" I have to ask myself why the global poor will choose to work all their lives producing goods and services for my chain of digits, when this digital slavery is actually a worse situation than their status quo. At least they can borrow money in their local currencies - or if not that, then in dollars - and finance their farms and businesses. Deflation shuts down lending. And at least their entire life savings doesn't disappear one day because their online exchange got hacked (btw, how exactly does this keep happening? You don't hear about Bank of America losing all their clients' funds with no recourse.). Why would people with no savings be more attracted to a deflationary cryptocurrency than they are to a currency that can be borrowed, loaned, invested, and securely exchanged worldwide - i.e. the dollar?

El Salvador? People are on the verge of starvation in that gang-run dictatorship, and they're walking the entire continent to escape it and enjoy the privileges of US immigration prisons. My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island. Maybe I'm a pessimist on E.S. but I've been reading the world news long enough to spot the patterns by now. it's always the same.

I don't expect Bitcoin to work miracles in El Salvador, but I can easily imagine that thousands of people are already seeing tangible benefits. Let's say my neighbor and I both receive $100/month remittance from a relative in the United States, which is a very common situation there. Every month we walk to the Western Union office where we collect $94 after fees. Only this month I've received $100 through the Chivo App with no fees and didn't have to leave my home. I'm already $6 ahead, which is the first real-world tangible benefit most El Salvadorans will notice. My neighbor still receives the $94 cash and spent it all. I spent $94 and decided to hold on to the other $6. Now, one month later I learn that my $6 is actually worth $8 because Bitcoin's been going up a lot. A lightbulb goes on in my brain that if I save that extra $6 every month, not only will I be saving significant money (by their standards) for the first time in my life, but it can actually grow very quickly. Of course, it can also go down very quickly, but if this becomes a common currency in Latin America it should tend to grow more than shrink for years to come.

At first it seems most people are just taking their remittance money, converting to $USD and then spending that, just as they always have. So maybe people will just save a tiny bit on their Chivo app, but shun using Bitcoin as cash. But eventually people will notice that they can save a step. Instead of converting Bitcoin to cash, and spending that, it's actually faster to just skip the ATM and just spend the Bitcoin. I could easily imagine 20-25% of El Salvador using Bitcoin as their primary savings & spending currency by 2025, given that public sentiment has turned a bit more favorable after just 7 weeks of usage.

I know there are potential pitfalls. I can imagine anything from EU/US regulation crushing cryptocurrency in the future and wiping out El Salvadorans savings, to a security glitch in the Chivo app leading to widespread thefts, or the dangers of having both your savings & short-term spending cash all lumped together on one phone app. But, given that Bitcoin can introduce poor people to an easy way to save for the future, I'm mostly optimistic.

I don't really buy into the argument that a deflationary currency can't work. And even if it doesn't, I described in an earlier post that it's possible to modify Bitcoin into an inflationary currency if that's ever needed. There have already been multiple upgrades to Bitcoin's protocol in the first 13 years. But if someone says we're only incentivized to invest for the future by holding fiat currency with a -2% annual value due to inflation, I'd ask why I can't also be incentivized to invest for the future while holding a digital currency that grows 2% in value annually? After all, I'm still better off investing at 7% per year than saving at 2%. And, if I lived in a country where corruption and hyperinflation were daily realities, I'd jump at the opportunity to have Bitcoin as a currency alternative.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 20, 2021, 08:16:59 AM
We already can see how a deflationary currency doesn't work, though. Nobody, and I mean nobody uses bitcoin to buy or sell things or to pay salaries. Because they hold onto it instead, expecting it to sporadically and randomly increase in value.

Contrast this to dollars - nobody thinks twice about making loans, purchasing things, etc. Because holding onto the currency itself is a losing proposition.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 20, 2021, 08:37:57 AM
My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island.
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

A good example is the excitement over seeing a 9 year old Bitcoin wallet suddenly become active.  That old wallet has 616 BTC, and since Bitcoin recently shot up in value, that's worth over $40 million now ($29 million when the article was written).  Lying about the contents of a bitcoin wallet just won't work.
https://finance.yahoo.com/news/bitcoin-wallet-satoshi-nakamoto-era-075836330.html


BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 08:45:23 AM
My guess is the E.S. government found a way to pilfer the entire treasury because their Bitcoin holdings can be obscured from audit. Move $ into Bitcoin within the treasury, take Bitcoin home and trade back for $, treasury reports it still has Bitcoin, repeat until rich enough to disappear to a Caribbean island.
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

A good example is the excitement over seeing a 9 year old Bitcoin wallet suddenly become active.  That old wallet has 616 BTC, and since Bitcoin recently shot up in value, that's worth over $40 million now ($29 million when the article was written).  Lying about the contents of a bitcoin wallet just won't work.
https://finance.yahoo.com/news/bitcoin-wallet-satoshi-nakamoto-era-075836330.html


BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp

so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 20, 2021, 09:37:40 AM

I don't really buy into the argument that a deflationary currency can't work.

Your belief isn't the issue. You certainly have a right to your opinion, but consider why most people who study currencies conclude differently. It's simply this: if a deflationary currency is the dominant currency of a nation, its deflationary character has the tendency to slow down the real economy, causing worsened life conditions for the people. A currency with slight inflation works better.

The decision driving this isn't normally a person deciding to use one currency instead of another. It's the decision of a person who has temporarily saved some money, deciding what to do next. The savings are already in the dominant currency of the day, be it dollars or BTC or seashells. If the currency is deflationary, keeping the seashells or BTC is a safe choice that is likely to be profitable. #WinningBySaving, yay!

Unfortunately for everyone, this means that in an economy dominated by deflationary currency, the common choice is not to invest. By contrast, in an inflationary currency, the saver faces the unpleasant reality that if they do nothing, their savings will evaparate over time due to the currency's inflation. Sadly for them, the only way to preserve their capital is take the risky course of doing something with it - investing it in some business that does work, produces things, provides services, somehow provides value to customers. The inflating currency motivates investment and thus stimulates the real economy. In a nation with deflating currency, the motivation to invest declines and the real economy follows. Everyone becomes poorer in real life than they would have been, eagerly hoarding their seashells while houses rot and children start to get hungry.

I may yet invest in crypto and even BTC, but not because I believe in deflationary currency being something that "works" in the sense of being a good currency, a currency that has a positive effect.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 20, 2021, 09:51:49 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 10:03:20 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.

bitcoin going up 6% is not the same as inflation its deflation bitcoin has to decrease by 6% in value to be the same as the COL adjustment given by the SSA to account for inflation which means 1 dollar is worth 6% less this year than last.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 20, 2021, 10:09:43 AM
Deflation shuts down lending.

Out of curiosity, do we have strong evidence that the above is true? I know interest rates in many parts of the EU went negative and banks were making home loans at negative interest rates and investors were buying debt at negative interest rates.

So negative interest rates in of themselves don't appear to be a barrier to lending. But not sure if the EU experienced genuine deflation or not during that period.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 20, 2021, 10:09:57 AM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 20, 2021, 10:23:52 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.

bitcoin going up 6% is not the same as inflation its deflation bitcoin has to decrease by 6% in value to be the same as the COL adjustment given by the SSA to account for inflation which means 1 dollar is worth 6% less this year than last.
Oh, I see what you're saying.  The U.S. can print more dollars (or buy treasuries in the bond market, like it's doing now), which dilutes existing dollars.  Bitcoin is still generating block rewards, which create more Bitcoin.

Google says the current reward is 6.25 BTC (over $400k!), and a block is created 6 times an hour.  Dividing annual block rewards by Bitcoin in circulation gives me 1.7%.  Bitcoin went up +450% in the past 12 months (last I checked), so the extra 1.7% of Bitcoin rewards don't seem to matter much.

Viewing Bitcoin as a currency, wouldn't it be in extreme deflation?  If you look at the behavior of people with BTC, they just hold onto it.  Holding a currency and refusing to buy anything would be like a currency with extreme deflation... hyper-deflation?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 20, 2021, 10:25:54 AM
BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC
If Bitcoin miners agree, the code can be changed.  It's rare, but happened earlier this year.
https://www.cnbc.com/2021/06/12/bitcoin-taproot-upgrade-what-it-means.html

Bitcoin's security is that a majority of the computing power needs to confirm blocks.  Someone who has control of most of the computing power can, in theory, make changes until others relent and adopt the changes.  This "51% attack" is only theoretical, it's never been done.  Controlling an entire datacenter wouldn't be enough.
https://www.investopedia.com/terms/1/51-attack.asp
so what you're saying is in order for this to be money the people holding the computing power have to decide to deflate the value of their assets -  that sounds like something people would willing choose to do who like above admittedly dont actually understand monetary policy.
I didn't say anything about money - maybe you're conflating my comments with another poster?  I actually don't consider Bitcoin to be money.

Bitcoin's volatility has been more significant than inflation.  Social security is giving a cost of living increase of 5.9%, which is more inflation than we've seen in some time.  If Bitcoin only went up 6% per year for a couple years, I think large numbers of people would abandon it.

Restaurants and move theaters have thin profit margins.  The volatility of BTC would make them either change their prices hourly, or potentially get underpaid by a percentage greater than their profit margin.  Five days ago (Oct 15), Bitcoin rose +7.4% in one day - but it could easily have dropped that much.  While Bitcoin remains volatile, it seems more appropriate for online transactions, where prices can be changed more smoothly than a printed menu.

bitcoin going up 6% is not the same as inflation its deflation bitcoin has to decrease by 6% in value to be the same as the COL adjustment given by the SSA to account for inflation which means 1 dollar is worth 6% less this year than last.
Oh, I see what you're saying.  The U.S. can print more dollars (or buy treasuries in the bond market, like it's doing now), which dilutes existing dollars.  Bitcoin is still generating block rewards, which create more Bitcoin.

Google says the current reward is 6.25 BTC (over $400k!), and a block is created 6 times an hour.  Dividing annual block rewards by Bitcoin in circulation gives me 1.7%.  Bitcoin went up +450% in the past 12 months (last I checked), so the extra 1.7% of Bitcoin rewards don't seem to matter much.

Viewing Bitcoin as a currency, wouldn't it be in extreme deflation?  If you look at the behavior of people with BTC, they just hold onto it.  Holding a currency and refusing to buy anything would be like a currency with extreme deflation... hyper-deflation?

correct that was the entire point i was making when you snipped off part of my post and started a different thread.  Basically btc isnt a currency unless something dramatically changes which most of the BTC holders here agree to but then you have quite a few still spouting its benefits as currency which with out heavy modification can never happen.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 20, 2021, 04:08:02 PM
Rosy, can you elaborate on the IMF thing? Doesn't the IMF require repayment of loans in a specific currency when they make the loan (all loans I'm aware of work this way)? Are you saying, for example, Argentina could decide to pay the IMF in bitcoin and they'd be required to accept it for some reason?

For what it's worth, I've run a business for ~20 years that is really popular with techie white dudes who are the prime demographic for bitcoin. Never, once, in what has to be 10,000 transactions has anyone tried to pay me with it. It's something (for better or worse) that you own, not something you spend. And it's pretty clear to me that was the intent. Any freshman macro econ student could have designed a better currency.

-W

Walt and Johnny Z
No - the IMF agreement states that it must accept payment in the legal tender of their member countries. Since bitcoin is now legal tender in El Salvador and there is no exclusion of bitcoin that means El Salvador can pay the IMF in bitcoin.

Quote from the IMF
Quote
Jul 26, 2021 — If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes ...

You raise an excellent point Walt in whether this might apply to an existing loan contract if that contract names only one currency. I don't know if the primary clause would override a specific contract.
It would not apply to your example of Argentina since they do not use bitcoin as legal tender.

Quote from Bloomberg - Oct 19, 2021
Quote
El Salvador’s first-of-its-kind adoption of Bitcoin won’t be an obstacle for the government to reach a $1.3 billion loan agreement with the International Monetary Fund, according to the country’s central bank president.
This Bloomberg article makes it crystal clear that the IMF is playing hard ball.

Since El Salvador is still using the US$ as legal tender alongside crypto (it takes time to convert to a new currency) who is to say they will not simply convert their crypto into dollars anyway?
If the day ever comes where they declare the US$ a foreign currency then it is a new ball game.

I like your comment Walt:)
"Any freshman macro econ student could have designed a better currency."
That may well be true for all I know but then maybe those deficiencies can be addressed? I'm neither an economist nor an expert on currencies and don't pretend to be. So I will leave discussions on the finer points of a currency to the experts.

this statement right here - you said it yourself its been stated multiple times here why BTC is not useable as a currency and never can be but you choose to claim ignorance on the issue - great way to invest your green soldiers.

BTC deficiencies cannot be addressed b/c there are a finite number of coins per how the code is written - that's an unsolvable deficiency for BTC

I doubt that it is an unsolvable deficiency for BTC. The consensus to change the code and implement a change takes years. Like MustacheandaHalf said it is rare and for good reason. I do see where the 'deflationary' aspect might be a problem in the long run. Believe it or not there are smart people in crypto who are arguing the pros and cons and the functionality of bitcoin as a true currency in its current state. It is not that I claim ignorance on the issue(s) what I said is that I am not an expert on currencies or an economist.

There is the issue of scarcity and finite coins, but I do think that since bitcoin is divisible by eight digits down to satoshis this will perhaps dilute and slow down the scarcity by eight as the smaller denominations gain in value prolonging the process. Just a thought.

To clarify, I invested in bitcoin because I see it as a store of value.
Ideologically I like the idea of a global currency that succeeds in more financial equality and opportunities for all.

Ideology and reality generally do not mix.
It would be ironic if bitcoin was destroyed by the very idea that conceived it - a global currency.
I don't see that happening - bitcoin is here to stay, whether it ever becomes a global currency or not is not relevant to its survival.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 20, 2021, 06:31:17 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: js82 on October 20, 2021, 07:12:34 PM
I'm currently 80% vtsax, 11% Ethereum, 9% Bitcoin.  I'll likely shift another 20% into crypto by the end of the year. 

So yeah, I'd endorcse a 95/5 split as not being too crazy:)

Somewhere along the way I allocated to a ~93% equity/7% crypto split.  That balance is now something like 70% equity/30% crypto(Oops!).  I haven't rebalanced yet because I'm waiting until it rolls over into long term cap gains so I can rebalance without killing myself too badly with taxes.

My general thought process is this:

1) Most Crypto is not a great choice as a long-term asset(i.e. performance once we get past the next 5 years or so) for the same reasons that Gold is not a great choice as a long-term asset.  Gold is mostly a dumb asset because it's non-productive and its price is somewhat detached from its intrinsic worth, and similarly most cryptocurrencies will be pretty useless as investments once they've reached full-scale adoption.

2) *HOWEVER* (and this is where I missed the boat on crypto earlier on), Crypto is still coming up its S-curve in terms of adoption - meaning that there will be an increase in demand in crypto over the next few years, which should drive a general increase in the crypto market cap and prices of non-junk cryptocurrencies.  Crypto *IS* likely to be an extremely strong asset class in the mid-term.

3) There's a lot of junk (and outright scams) in the crypto space right now - I think the soundest strategy in the crypto space is to A) diversify, and B) look for crypto applications with clearly-defined use cases and consider total potential markets, as opposed to chasing memecoins.  The latter is basically gambling as opposed to investing.

In general I'm bullish on the technology(blockchain) itself, moreso than any individual cryptocurrency.  I also think that future gains will not be as large as past gains due to how far we've come up the adoption curve already.  That said, I drastically underestimated crypto's potential in its early phases, and I could very well be wrong(in either direction) again.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 20, 2021, 07:36:34 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.

Basics are just what I need! Explain?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 20, 2021, 08:06:06 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.

Basics are just what I need! Explain?

Here you go (https://googlethatforyou.com?q=is%20bitcoin%20deflationary).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 20, 2021, 10:38:33 PM
LOL at these criticism of Bitcoin for being "deflationary". 

Also, just because its not inflationary at the whim of the treasury does not equal it being deflationary.  I guess we have to start with the basics.

Basics are just what I need! Explain?

Here you go (https://googlethatforyou.com?q=is%20bitcoin%20deflationary).

I will assume you meant this Connor Brown article: https://medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345

He makes some interesting points, but does not successfully address the key mechanism by which I am suggesting that BTC would have a deflationary effect. He mentions the concern, but mis-states the mechanism by which "critics" say BTC would have a deflationary effect; therefore, he doesn't address my actual concern, which as I understand it is most economists' main concern about any fixed money supply relative to a growing economy.

Sure, technically it's not a shrinking money supply. It's slowly increasing until 2140, he says, then flatlining. Fine. But Brown asserts the price will stablize. He asserts that slowing population growth will cause demand for currency to just perfectly match the amount of currency BTC will provide.

That's unlikely. Setting aside the improbability of a precise enough match between population numbers and number of Bitcoins, the money supply needs to meet the needs of economic growth. We'd prefer for buying power to rise even if population doesn't. BTC isn't prepared for an expanding economy if the population is stable. A better solution would be a currency that can be adjusted to the economy's needs. BTC will only maximize productive incentives if its coin production and maintenance curve happens to exactly match the future needs of the global economy. Brown asserts this will approximately happen, but his proposed mechanism is basically to get lucky in matching the two things.

In any case, he claims that "investors would certainly still be motivated to invest" without providing realistic reasoning to support his assertion. The actual mechanism where a slightly inflating currency motivates investment wouldn't happen, and Brown agrees it wouldn't! He views this motivation as people being "forced to harbor their money into speculative ventures just to protect themselves against inflation's decay." I'd like a riskless store of value as much as the next person, but there's a difference between investing rationally and speculating, so he's putting up a straw man there a little bit. But he's right, inflation does prompt savers to invest.

Sure, some investment would occur if BTC achieved a perfectly stable currency status. But more would occur under slight inflation, so compared to case of light inflation, BTC would have a deflationary effect - because it would prevent exactly the motivations that Brown himself points out do exist. The article mentions the reason that the article itself is incorrect, I think.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 03:23:23 AM
Sure, technically it's not a shrinking money supply.

But it is a shrinking supply. People lose their keys, die, send bitcoins to invalid addresses, etc. Those coins are as good as gone. Satoshi’s own 1 Million+ BTC have remained untouched for a decade—and I think it’s likely they never will be moved again.

Deflation was a deliberate design choice in Bitcoin. It was fundamentally inspired by Austrian economics. It’s an odd argument to simultaneously be pro-Bitcoin and deny its deflationary design. Almost like someone doesn’t understand the basics, and repeatedly weasels out of any serious discussion by slinging mud and linking to other cultish crypto propaganda.

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 21, 2021, 07:57:29 AM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/

Wow @the_gastropod that's more than I knew, and my spidey senses were already tingling before I knew it.

To Summarize:
1) Bitcoin will someday be a superior currency because it allows for trustless transactions through blockchain technology, UNLESS you use Lightning or Chivo like everyone is doing because that's the only way to cheaply and quickly process large numbers of transactions.
2) Bitcoin will go up in value forever because it has a limited supply, UNLESS it is decided at some future fork in the road to increase the supply or split the currency, as already happens every few years. See https://en.wikipedia.org/wiki/List_of_bitcoin_forks (https://en.wikipedia.org/wiki/List_of_bitcoin_forks).
3) Bitcoin will help regular people in undeveloped, corrupt countries with unstable currencies, UNLESS crypto is simply a new angle on corruption as it appears to be in E.S. I wonder if the regime's opponents are comfortable using Chivo?

Is it just me or do all the proposed benefits have a solution that undermines another of the proposed benefits in a circular fashion?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 08:57:57 AM
I think holding a small crypto piece in the portfolio is a good idea. Picking any particular platform is a shot in the dark, but an etf of some wouldn't be bad. Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 21, 2021, 09:05:18 AM
Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 09:09:39 AM
I think holding a small crypto piece in the portfolio is a good idea. Picking any particular platform is a shot in the dark, but an etf of some wouldn't be bad. Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

I disagree. I think this "eh, what's the harm! I'll hold a little" attitude is, sadly, harmful. There are other people on the other end of these trades that will be hurt. This is a negative sum game. If you "win", it's necessarily at the expense of someone else. Additionally, there's that whole aspect of its outrageous energy requirements. Participating in this charade only keeps the insanity going.

As for the "blockchain will be everywhere!" thing. No. It won't. This is a pretty detailed and easy-to-understand essay explaining why: https://onlinelibrary.wiley.com/doi/epdf/10.1111/1468-2230.12603

I really urge you—and everyone else buying into the hype—to think critically about this mess. There's a lot of techno-babble going on that seems to distract people from the reality of it all. Blockchain is new(ish) and it is neat in some sense. But it absolutely cannot solve virtually any problem it's touted as being able to solve. And "investing" in an obvious Ponzi that's also somehow a currency—even though virtually any rational person would understand those are fundamentally at odds with one another—is a really silly and very bad idea. (ETA: in before the "LOL BUT NUMBER GO UP UR JUST JEALOUS". Number go up is how every Ponzi in the history of ponzis have worked, too. Investors in Enron, Madoff, and, yes, tulip bulbs thought they were geniuses for a while, too)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 09:42:11 AM
I don't have access to that paper and won't pay for it so I can't respond to it. Could be right, but I don't know who that person is or why an essay written a year ago is an authority today. There are literally smart contracts already being used today. Businesses building blockchain platforms for hosting ledgers, sharing information, and doing cross border payments is not a ponzi scheme.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 09:50:29 AM
Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.

You can search for blockchain etf. There are a good bit now. BLOK, Global X BLockchain, FTEC. I don't hold any because I haven't researched what they hold and why, but it's on my to do list because I do think applications are exploding.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 21, 2021, 10:00:13 AM

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?

Sure looks like it.

PS. Hmm, that's a rather (ahem) deflating answer for the assertion that Bitcoin isn't deflationary.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 21, 2021, 10:33:04 AM

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?

Sure looks like it.

PS. Hmm, that's a rather (ahem) deflating answer for the assertion that Bitcoin isn't deflationary.

The first rule of bike club is you don't tempt the fates by talking about deflation.  That leads to flats and flats are the path to the dark side.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 10:43:31 AM
I don't have access to that paper and won't pay for it so I can't respond to it. Could be right, but I don't know who that person is or why an essay written a year ago is an authority today.

Ahh, bummer. That's odd, I was able to view without paying. Maybe try this link? (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3476678 and then click on "View PDF"). Not to appeal to authority, but the author is a Professor of Law at London School of Economics. Regardless, I'll not quite do it justice, but I'll attempt to summarize here:

The raison d'être for the blockchain is to solve the double-spending problem. While this is an impressive technological feat, it does not necessarily follow that this solves any real-world problems. It's important to remember two things:

1. that the double-spending problem only arises in distributed systems lacking a trusted record keeper or authority. If such a record keeper or authority existed, they could accomplish the same feat orders of magnitude more efficiently. Remember, the solution to the double spending problem is by design inefficient. It was designed to be wasteful to make it prohibitively costly for bad actors to act badly. and
2. that as far as crypto-assets are concerned, the legal system and courts themselves are mandatory central authorities that are the final arbiters of assigning owners to assets.

Therefore, any blockchain-based system of property ownership is a redundancy and must be kept in-sync somehow with the legal centralized legal system. The article then thoroughly goes into why this is not only impossible for myriad of reasons, but also explains why doing so would just be unnecessary and offer no benefits, while being significantly costly.

There are literally smart contracts already being used today. Businesses building blockchain platforms for hosting ledgers, sharing information, and doing cross border payments is not a ponzi scheme.

There are psychics with paying customers, plenty of people devoting lots of time and money to astrology, and countless MLM businesses making significant money. It doesn't make these things good ideas or worth pursuing.

I will grant you, one of the actual use-cases for blockchain technology today is regulatory arbitrage. Whether that's a good thing or not is up for debate. But blockchain tech does currently allow this. Once laws catch up, this loophole mostly closes, though.

One of the reasons talking about this is so difficult, is that enthusiasts tend to weasel out of criticism by shifting goal posts. This is another example. From an investment context, Bitcoin is absolutely a Ponzi scheme. That it can be used to skirt regulation is irrelevant from the investment context.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 21, 2021, 11:07:56 AM
Sure, technically it's not a shrinking money supply.

But it is a shrinking supply. People lose their keys, die, send bitcoins to invalid addresses, etc. Those coins are as good as gone. Satoshi’s own 1 Million+ BTC have remained untouched for a decade—and I think it’s likely they never will be moved again.

Deflation was a deliberate design choice in Bitcoin. It was fundamentally inspired by Austrian economics. It’s an odd argument to simultaneously be pro-Bitcoin and deny its deflationary design. Almost like someone doesn’t understand the basics, and repeatedly weasels out of any serious discussion by slinging mud and linking to other cultish crypto propaganda.

Also, for what it’s worth, the Google answer I get when I click occ’s link is this:
Quote
On the other hand, Bitcoin is deflationary, meaning buying power increases over time. If you put your private key under your mattress for 20 years (assuming Bitcoin is still around in 20 years), it will buy you more then than it will today.

Smartassery kinda backfired there eh?

Naw - it's more like google knows "our" bias -
here is my top result
Quote
Bitcoin is not deflationary in the formal sense of the term. Its supply will continue to increase on a curve that should account for lost coins and a growing population over the next century.
Stop Calling Bitcoin Deflationary. | by Conner Brown | The ...
medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345
medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345

If crypto enthusiasts really wanted to be jackassery they can easily point to the current news:
One Billion US $ Trades were made on the first day of the Bitcoin Futures ETF on Oct 19, 2021
The highest natural volume for an ETF ever in the history of Wallstreet.

One billion US dollars undeniably reflects a mind-blowing interest in the futures of a digital asset.
The SEC just approved two more Futures ETFs - one of them for Ethereum.
Or maybe Wallstreet just likes to bet and the wealthy have more cash than they know what to do with.

The Grayscale Trust has also filed for SEC approval - converting their trust into a real ETF, not Futures.
We know that the SEC, Gary Gensler, is not keen on promoting the sale of real bitcoin.
They know that the retail investors will see the first real ETF as a stamp of approval for bitcoin.

Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.

I'm invested in a couple, like the BLOK ETF which is all about blockchain technology. Glad to see the acknowledgment of tech like blockchain and I agree that the current narrative is that bitcoin - not crypto et al - is a store of value or digital gold.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 11:15:03 AM
Smartassery kinda backfired there eh?

Naw - it's more like google knows "our" bias -

(https://preview.redd.it/ma4zn7lwfuo11.jpg?width=640&crop=smart&auto=webp&s=a3bd22539396df6e180e59a5c357c76d14fa331a)

Quote from: Rosy
If crypto enthusiasts really wanted to be jackassery they can easily point to the current news:
One Billion US $ Trades were made on the first day of the Bitcoin Futures ETF on Oct 19, 2021
The highest natural volume for an ETF ever in the history of Wallstreet.

One billion US dollars undeniably reflects a mind-blowing interest in the futures of a digital asset.
The SEC just approved two more Futures ETFs - one of them for Ethereum.
Or maybe Wallstreet just likes to bet and the wealthy have more cash than they know what to do with.

Always comes back to NUMBER GO UPPPPPP!!!!

I just watched LuLaRich on Amazon Prime (highly recommended), and it's kinda funny. The execs of the LuLaRoe MLM cited the rapidly increasing number of LuLaRoe associates to demonstrate the success of the organization. Similarly, that uhh... enthusiasm... is certainly profitable for some Bitcoin participants. These numbers don't make me any more likely to participate, myself, though

Relatedly, 100,000+ people have had their eyes scanned to get this rad new Worldcoin cryptocurrency. You in? Everybody's doing it! https://www.ft.com/content/0f873676-26c8-4b57-b369-23a2b30f11a5
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 21, 2021, 11:18:30 AM

I will assume you meant this Connor Brown article: https://medium.com/the-bitcoin-times/stop-calling-bitcoin-deflationary-84462cb90345

He makes some interesting points, but does not successfully address the key mechanism by which I am suggesting that BTC would have a deflationary effect. He mentions the concern, but mis-states the mechanism by which "critics" say BTC would have a deflationary effect; therefore, he doesn't address my actual concern, which as I understand it is most economists' main concern about any fixed money supply relative to a growing economy.

I thought you made a good summation, but there are even more problems than that.  First, is that his definition of deflation isn't necessarily correct.  In fact, it isn't correct.
 Famously, one of the first pubic Bitcoin transactions was a guy who paid 10,000 Bitcoin for a pizza.  Now, that same 10,000 Bitcoin will buy you a chain of pizza restaurants.     From a consumer perspective that 100% meets the definition of deflation.  Saying that is not deflation is absurd. The reason why deflation is bad for the economy is that consumers believe that goods and services will become cheaper in the future and so delay spending money.   This puts downward pressure on prices and wages, and so people delay even more, rinse lather repeat.  To be clear, usually a depression causes deflation, not the other way around.  But once you are in the deflationary spiral it is hard to get out. 

His section on wages was even worse, if possible.  He missed some basic economic principles regarding wages and prices.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 21, 2021, 11:37:08 AM
I think having a system for withdrawing balance from crypto- over time can reduce the risk if it turns into a Ponzi scheme.

But I also see how problematic it would be for a person who sincerely believes this to be the future.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 21, 2021, 12:17:18 PM
Crypto isn't just for currencies; blockchain technology will be used for many things in the future because it can be used to create protected, distributed general ledgers. Currencies, stable coins, medical records, wills, physical asset records, all kinds of things.

Blockchain technology certainly has uses.  The only use I've seen anyone touting though, and the entire raison d'etre for cryptocurrency is it's use as a store of value.  What crypto ETF is investing in blockchain technology as opposed to it's use as a currency?  I haven't been able to find one.

I'm invested in a couple, like the BLOK ETF which is all about blockchain technology. Glad to see the acknowledgment of tech like blockchain and I agree that the current narrative is that bitcoin - not crypto et al - is a store of value or digital gold.

BLOCK ETF, top 10 holdings:
HUT 8 MNG CORP NEW COM    6.17% - Cryptocurrency miner (bitcoin and ethereum)
MARATHON DIGITAL HOLDINGS INC COM   6.02% - Bitcoin miner
MICROSTRATEGY INC   5.91% - Bitcoin speculator
COINBASE GLOBAL INC   4.68% - Cryptocurrency exchange platform
HIVE BLOCKCHAIN TECHNOLOGIES   4.33% - Cryptocurrency miner
SILVERGATE CAP CORP   4.11% - Cryptocurrency speculator
SQUARE INC   3.98% - Cryptocurrency speculator and point of sale provider for crypto currency
PAYPAL HLDGS INC   3.81% - Allows people to pay for things with bitcoin, ethereum, bitcoin cash, and litecoin
NVIDIA CORPORATION    3.51% - Builds graphics cards used by cryptocurrency miners
SBI HOLDINGS INC   3.23% - Bank that started a cryptocurrency fund


I'm seeing a lot to do with cryptocurrency, but little to nothing to do with 'blockchain technology'.  Which of the holdings in this fund are related to all the non-'currency' technology?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: lemonlyman on October 21, 2021, 12:28:44 PM
One of the reasons talking about this is so difficult, is that enthusiasts tend to weasel out of criticism by shifting goal posts. This is another example. From an investment context, Bitcoin is absolutely a Ponzi scheme. That it can be used to skirt regulation is irrelevant from the investment context.

Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid. They either hold their coins or sell them. That's completely different than an asset going to zero value. Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.

I think that link will work. I'll read that essay sometime. Thanks.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 21, 2021, 01:19:07 PM
Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid.

Miners. Miners get a consistent stream of cash that they remove from the system.

Quote from: lemonlyman
Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.

It's certainly more sophisticated, I'll grant you that. But miners run and operate and profit from the scheme, do they not? Does the operator necessarily need to be one person? Is a distributed Ponzi any better than a centralized one?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 21, 2021, 07:25:53 PM
Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid.

Miners. Miners get a consistent stream of cash that they remove from the system.

Quote from: lemonlyman
Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.



It's certainly more sophisticated, I'll grant you that. But miners run and operate and profit from the scheme, do they not? Does the operator necessarily need to be one person? Is a distributed Ponzi any better than a centralized one?

I hate to be a pedantic, but that never stopped me before  ;)    A Ponzi scheme is a specific type of fraud, where early investors are paid off by later investors, until there aren't enough investors to continue and the whole thing collapses.   Bitcoin is not that.   When a miner sells a bitcoin, the buyer gets exactly what she is expecting:  one bitcoin.  There's no fraud in that transaction.

I think it most correct to think of bitcoin as a speculative asset. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 21, 2021, 07:29:55 PM
Even in an investment context, it's still not a ponzi scheme. A speculative asset doesn't meet the definition of a ponzi scheme. There's not a consistent level of cash going to people at the top of the pyramid.

Miners. Miners get a consistent stream of cash that they remove from the system.

Quote from: lemonlyman
Ponzi schemes also require someone actively running and operating the scheme. I don't believe Satoshi's activity is very equivalent to Ponzi or Madoff.



It's certainly more sophisticated, I'll grant you that. But miners run and operate and profit from the scheme, do they not? Does the operator necessarily need to be one person? Is a distributed Ponzi any better than a centralized one?

I hate to be a pedantic, but that never stopped me before  ;)    A Ponzi scheme is a specific type of fraud, where early investors are paid off by later investors, until there aren't enough investors to continue and the whole thing collapses.   Bitcoin is not that.   When a miner sells a bitcoin, the buyer gets exactly what she is expecting:  one bitcoin.  There's no fraud in that transaction.

I think it most correct to think of bitcoin as a speculative asset.

I've got some copper engravings of Lincoln for sale for 10k a piece. Probably be more valuable an asset it 10 years than a Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Juan Ponce de León on October 21, 2021, 08:03:39 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 21, 2021, 08:58:21 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

People who bought yesterday are in the red.  Also, people who short Bitcoin lost money.  Ban Bitcoin.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 21, 2021, 09:56:34 PM
Ponzi schemes are a very specific thing, and bitcoin (or other cryptocurrencies) are not that. You can make a very strong argument for "speculative bubble" (ie, bunch of people bidding the price of something of limited value up with each other) but it's not a ponzi.

Now, the effect when you finally don't have any new investors entering is similar, of course. If there's not new money going in, the upward spiral/returns vanish in both cases.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 21, 2021, 10:01:24 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

People who bought yesterday are in the red.  Also, people who short Bitcoin lost money.  Ban Bitcoin.

People who sold yesterday - red lambo ....:)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 22, 2021, 03:12:58 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 07:53:00 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 22, 2021, 09:19:16 AM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/
Oh, no!  You're quite right, thanks for the correction.  I assumed they put accounts on the blockchain.

But they created a new wallet in a matter of months and put everyone's Bitcoin in that system.  Was the launch their first large scale test?

The accounts can't be verified in some hidden system that does not use the blockchain.  The wallets may or may not have Bitcoin in them, since there's no external way to verify it without moving Bitcoin out of the wallets (and paying a fee to get the transfer registered on Bitcoin's blockchain).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 22, 2021, 10:23:35 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 22, 2021, 11:17:57 AM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 22, 2021, 11:57:50 AM
Ponzi schemes are a very specific thing, and bitcoin (or other cryptocurrencies) are not that. You can make a very strong argument for "speculative bubble" (ie, bunch of people bidding the price of something of limited value up with each other) but it's not a ponzi.

Now, the effect when you finally don't have any new investors entering is similar, of course. If there's not new money going in, the upward spiral/returns vanish in both cases.

-W

If the allegations about Tether are true, how is it different from a Ponzi scheme?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 22, 2021, 12:12:45 PM
Ponzi schemes are a very specific thing, and bitcoin (or other cryptocurrencies) are not that. You can make a very strong argument for "speculative bubble" (ie, bunch of people bidding the price of something of limited value up with each other) but it's not a ponzi.

Now, the effect when you finally don't have any new investors entering is similar, of course. If there's not new money going in, the upward spiral/returns vanish in both cases.

-W

If the allegations about Tether are true, how is it different from a Ponzi scheme?

I agree that Tether is probably 100% fraud. But that doesn't make the entire bitcoin ecosystem fraudulent, at least in theory.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 12:31:46 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 22, 2021, 01:54:24 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).

I congratulate you on finding what seems to be a fairly well-balanced article ! Most out there seem to be ridiculously skewed one way or the other by the author's obvious agenda.

Apples and oranges ?
I don't think the current market capitalisation is relevant - the figures in the report are based on $ value of production.
I don't think jewellery and electronics are relevant - we're talking about it's use as a store of value.

What is probably more relevant is that the article is based on 2018 prices.

Overall, it seems like a reasonable article though and, at least, gives the energy considerations some perspective.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 22, 2021, 02:15:03 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).

I congratulate you on finding what seems to be a fairly well-balanced article ! Most out there seem to be ridiculously skewed one way or the other by the author's obvious agenda.

Apples and oranges ?
I don't think the current market capitalisation is relevant - the figures in the report are based on $ value of production.
I don't think jewellery and electronics are relevant - we're talking about it's use as a store of value.

What is probably more relevant is that the article is based on 2018 prices.

Overall, it seems like a reasonable article though and, at least, gives the energy considerations some perspective.

It is not irrelevant that it has uses besides a store of value it's actually extremely relevant and why it was prized so much was our natural instincts as humans to be drawn to shiny things like back 8n the day when shiny meant a water source. So it was used in prized jewelry which helped it maintain it's long term store of value then was utilized in electronics. One could assume gold is a store of value only because of our very deep animalistic instincts that made it so prized.

Bitcoin is for all purposes today no more than a collectable and we'll see how long it's prized as that.

Further gold was in fact used as currency for a long time in trade prior to it becoming stock piled bc of the very reasons stated here about why btc isn't a currency and can't be bc we know more today than we did then about how economics work.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 22, 2021, 02:27:31 PM
3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

One thing that is missed is that the money supply needs to expand at about the same rate as the economy, not the population.   That was a lesson learned when the US (and other countries) on the gold standard, but that lesson has been forgotten in recent times.  Back in the day, the US was on the gold standard which limited money supply and caused economic problems for some groups, but facilitated trade with England which benefited others.   So there were contentious factions arguing for each side.   William Jennings Bryan's 1900 Cross of Gold Speech (https://en.wikipedia.org/wiki/Cross_of_Gold_speech) is considered an American political classic. 

The Wizard of Oz, which is best known as a children's book, was actually political commentary on monetary policy.   The Yellow Brick Road was the gold standard, the silver slippers (ruby slippers in the movie) were the silver standard.  The wicked witch of the east and west were the big banks and industrialists on the coasts who were screwing the American people (Dorothy).  The scarecrow represented the farmers who were too dumb to avoid the debt trap, the tin man represented the broken down industrial workers who lacked heart to side with the farmers, and the Cowardly lion was the political class who weren't willing to do anything about it.   But as the story progressed,  the scarecrow was actually smart, the tin man had a heart, and the lion turned out to be brave. 

Point is, we already know what living with a deflationary currency is like.  In 1873, the US dropped the bimetallic standard and went to the gold standard.   The resulting deflation caused the Long Depression, which as the name suggests, was the longest depression in US history.   Worse, the country kept sinking back into depression.    The US was in the middle of one of the subsequent recessions in 1900 when L. Frank Baum wrote the book and Bryan made his speech blasting the gold standard.  Getting away from a deflating currency was a central political issue of the day.   We don't need to run the experiment again. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 22, 2021, 03:42:59 PM
The amount of Bitcoin in every wallet / account is public knowledge.  If they lie about how much Bitcoin is present in one of their accounts, they will be proved wrong within minutes of saying it.

This is not true, though, right? All of these transactions go through Chivo, which is not transparent. It's allowing Bukele to make up wildly ridiculous stats about the success (https://twitter.com/nayibbukele/status/1442624279028408321), like there are more transactions in ES on Chivo than Visa handles worldwide. That seems rather unlikely.

To ChpBstrd's point, much of this is deeply suspicious. A lawyer prosecuted for falsifying a will helped create the company running Chivo Wallet. The notary who attested to the legality of Chivo SA de CV, created with public resources by the Government, was accused of documentary falsification in 2020 [1]. President Bukele’s Chief of Staff, Marta Carolina Recinos de Bernal, is on the US State Department’s Engel List of corrupt officials. She’s also a director of Chivo SA [2].

It really is depressing seeing a bunch of crypto enthusiasts—who claim to be wholly against corruption—cheer on this naked pillaging of some of the most impoverished people on Earth all because "number go up" on their pet Ponzi scheme.

[1] https://www.revistafactum.com/abogada-chivo/
[2] https://www.elsalvador.com/noticias/nacional/funcionaria-bukele-lista-engel-directora-empresa-detras-chivo/877437/2021/
Oh, no!  You're quite right, thanks for the correction.  I assumed they put accounts on the blockchain.

But they created a new wallet in a matter of months and put everyone's Bitcoin in that system.  Was the launch their first large scale test?

The accounts can't be verified in some hidden system that does not use the blockchain.  The wallets may or may not have Bitcoin in them, since there's no external way to verify it without moving Bitcoin out of the wallets (and paying a fee to get the transfer registered on Bitcoin's blockchain).

Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.
Here is the first thing I came across:

Quote
Is Chivo a lightning wallet?
“Just like every other participant on Bitcoin's Lightning Network, Chivo runs a Lightning node. Since Chivo is a custodial wallet, all Lightning payments that Chivo users send to and from other Lightning wallets will transfer liquidity to and from Chivo's node.” ... The Chivo node “ranks 83rd among public Lightning nodes.”Sep 24, 2021

OK, now that I've looked a little deeper. It looks like Chivo bypasses the lightning network unless you specifically choose it under payment option in the Chivo wallet, they do provide the QR code for the lightning option in-app. Chivo seems to be a private network, a proprietary app using lightning. It will make it difficult to discover irregularities if there are any.

Either way, it is a private, closed system rather than open-sourced.
Three months for development was definitely ambitious but all in all, it appears to work well enough at this point. Whether the stats given by Bukele are spot on will be difficult to confirm without full transparency. Since when are government stats the absolute truth? All govts want to look good.

Inferring criminal intent is a big accusation and condemnation. The fact that you can use any bitcoin wallet like Moon (not just Chivo) and that you have the lightning network option right in your Chivo app speaks against it.   
US$ transactions are still the norm and anyone who wants to avoid the volatility of bitcoin can immediately switch from bitcoin to US $.
But hey, for all we know this is a South/Central American Syndicate setting up the scam of the century. There were two Venezuelans and five different companies involved in the app creation. That makes it even more impressive, with hyper coordination and given a deadline of three months.     

El Salvador is under such tight scrutiny at present, their every move is questioned. Not to mention the new loan discussions with the IMF.

After all, they are a sovereign government and if they choose to veer from the 'true path' of bitcoin (enthusiasts who want open source, no privacy, financial transactions) then they can. Maybe they are only concerned about the benefit for their own country.
Maybe they have developed more than we think and are already planning to integrate with other South and Central American countries. 
I still think that is a very gutsy move made more difficult by the lack of tech, pressure from the IMF, poor odds of success, and the realities of a third-world country.

Nothing but a clever criminal bitcoin scam?
Or an opportunist with a vision who wants to build a better country?

Too much rumor, bias, and skewed perspective from all sides, not to mention harsh judgment or idealistic hopium.
Time will tell - gangster or hero? 
t
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 03:52:14 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 22, 2021, 04:10:53 PM
Bitcoin is not a 'zero sum game'.  The market cap has gone from nothing to over a trillion dollars.  Tell me who has lost money on that, you'd have to be really trying.  When Bitcoin hit its latest all time high the other day, there was no reason for anyone on earth to have 'lost money' on bitcoin, unless you managed to trade your way into loss with paper hands.  The average realized price of bitcoin holders is currently ~23k.

This isn’t even really up for debate. Bitcoin, as a matter of fact is a *negative-sum* game. The only way to make money is by new entrants paying you more money for your Bitcoin than you paid when you entered. Miners, meanwhile, suck money out of the system, ensuring that, on average, Bitcoin investors will have a negative expected return. That, thus far, NUMBER GO UP, is not a refutation at all of the claim that it’s a negative-sum-game.

Are we also not counting the millions (billions?) of dollars in wasted environmental damage?  Last I was reading, bitcoin mining is using comperable power to that of the entire country of Poland (178.92 TWh) each year . . . with a carbon footprint equivalent to the entire country of Bangladesh (84.99 Mt CO2) . . . and generating equivalent electronic waste to that of the the entire country of the Netherlands (24.37 kt).
  - https://digiconomist.net/bitcoin-energy-consumption/ (https://digiconomist.net/bitcoin-energy-consumption/)

Just because people who buy and sell bitcoin pretend these issues don't exist doesn't mean that there isn't a significant cost associated with them.
There is no question that Bitcoin consumes energy and harms the environment. And, if you completely reject the idea of Bitcoin having any useful purpose then, obviously, you have to conclude it's pure waste. But that doesn't mean it is - that's just your opinion.

If you can imagine that Bitcoin could be a useful store of value, how does it compare to the conventional alternatives ?
What environmental damage results from extracting, transporting, processing, storing and securing the many thousands of tons of gold just stacked up in vaults ?

Instead of just posing the question, and (I guess?) assuming that it must be more: why don't you look into it, and tell us! (Hot tip: look up these values on your own, not from BITCOIN.ORG or some other crypto website)


It's kind of a tricky question to answer.  Bitcoin is a failure as a currency, so it doesn't seem fair to compare it to currencies and banking systems.  It's closest to a store of value like gold, silver, or beanie babies.

As of the publication of this 2018 study (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com (https://www.nature.com/articles/s41893-018-0152-7.epdf?referrer_access_token=4WFhbLVH943fe3mcf8oZANRgN0jAjWel9jnR3ZoTv0NdJEcpPQZqiP9V_5sRM6OFeEt1maRlkYa2rAMRc-x1aVbfFmAZSeIy1BUabgBXZ5z6UQfH0t8xSV-r-npyxYVvgn4cGz5vnYe41OneS4y9iDEq9qg_P_yvZnh3zShMKtDW2Q4oj7ea5KOxnmJf-j_pUXVLuKqBdId1DeooWHyXBGTsaKAeh50jbelu7OUy1zXIkZZVtyhwK389Tt_6m7EusXgJedPs47tRpklbfG1lrE7zSz3Bqp6kqnD7z10SVdY%3D&tracking_referrer=blogs.discovermagazine.com)), the worldwide energy costs of gold are equivalent to that of bitcoin.

This is still an apples to oranges comparison though, as the market capitalization of gold is 17x higher than bitcoin (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html (https://ca.finance.yahoo.com/news/bitcoin-vs-gold-debate-reignited-125947770.html)) . . . and gold has real world uses (jewelry, electronics, etc.).

I congratulate you on finding what seems to be a fairly well-balanced article ! Most out there seem to be ridiculously skewed one way or the other by the author's obvious agenda.

Apples and oranges ?
I don't think the current market capitalisation is relevant - the figures in the report are based on $ value of production.
I don't think jewellery and electronics are relevant - we're talking about it's use as a store of value.

What is probably more relevant is that the article is based on 2018 prices.

Overall, it seems like a reasonable article though and, at least, gives the energy considerations some perspective.

It is not irrelevant that it has uses besides a store of value it's actually extremely relevant and why it was prized so much was our natural instincts as humans to be drawn to shiny things like back 8n the day when shiny meant a water source. So it was used in prized jewelry which helped it maintain it's long term store of value then was utilized in electronics. One could assume gold is a store of value only because of our very deep animalistic instincts that made it so prized.

Bitcoin is for all purposes today no more than a collectable and we'll see how long it's prized as that.

Further gold was in fact used as currency for a long time in trade prior to it becoming stock piled bc of the very reasons stated here about why btc isn't a currency and can't be bc we know more today than we did then about how economics work.
We've discussed this point before  - the price of gold on the market has very little to do with any intrinsic value in terms of jewellery and electronics - it's as good as irrelevant.
I agree with your history lesson, that's why gold is where it is, but that history is history.

I won't go into the currency thing here - I need to catch up on the recent discussions on that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Rosy on October 22, 2021, 04:56:45 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.

Yes, of course, I know that, but the assertion that was made is that Chivo is not on the blockchain at all and the answer from what I found is that it depends. (which is what I outlined below the quote)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 22, 2021, 05:34:31 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.

Yes, of course, I know that, but the assertion that was made is that Chivo is not on the blockchain at all and the answer from what I found is that it depends. (which is what I outlined below the quote)

It doesn't depend.  Neither the lightning network nor Chivo are on blockchain.  You need to close your lightning payment channel or move your earnings out of Chivo to get your bitcoin recorded in the ledger.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 22, 2021, 09:23:50 PM
Since Chivo runs on the bitcoin lightning network - why would it not be recorded on the bitcoin blockchain? The transaction itself does not happen on the blockchain but it is recorded on the bitcoin ledger.

The purpose of the Lightning network is to perform Bitcoin transactions without the cost, slowness, security, and protection of being recorded in the blockchain ledger.  Only when a payment channel on the lightning network is closed are transactions recorded, and the costs for using the Lightning network climb significantly if this is done often.
Yes, of course, I know that, but the assertion that was made is that Chivo is not on the blockchain at all and the answer from what I found is that it depends. (which is what I outlined below the quote)
El Salvador's population is 6.5 million.  What percentage of Bitcoin deposits into accounts of El Salvadorians have happened on Bitcoin's blockchain?

The question isn't about what Chivo could do, it's about transparency of giving Bitcoin to citizens of El Salvador.  If all of those transactions were on the blockchain, they would be visible and fully transparent.  Of course, in the past 30 days, Bitcoin transactions have averaged $3.50 each, which is significant compared to the amount of money being given to each person in El Salvador.

I think the best answer we'll get is if reporters try and reach out to a number of people, and walk them through getting their Bitcoin accounts and seeing what happens.  Then we'll have an idea if people's allegations of having their accounts already claimed is significant or not.

Foolishly aiming towards the thread topic, acceptance by a government - however awkward - does suggest greater acceptance of Bitcoin.  Combined with new Bitcoin futures ETFs, maybe that's an indication to invest a very small percentage in it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 23, 2021, 07:53:38 AM
Returning to the bitcoin is deflationary 'problem' . . .

At what point would that 'problem' become a real problem ?

When/if BTC is widely accepted by retailers ?
When/if BTC is widely used by the general pop. for everyday transactions ?
When/if BTC is widely used by the general pop. to store wealth ?
When/if BTC is locally recognised as legal tender alongside a fiat currency ?
When/if BTC is globally recognised as legal tender alongside fiat currencies ?
When/if BTC starts to replace some fiat currencies ?
When/if BTC replaces all fiat currencies ?
Other ?

It seems to me that BTC would need to be broadly dominant for it's deflationary nature to start negatively impacting national economies in the ways described. But I'm no economist . . .


What about the problems associated with inflationary fiat currencies ? It's far from a perfect solution.
It seems pretty clear that inflation tends to take money from the poor and hand it to the asset-rich.
Are we not concerned about potential hyper-inflation / fiat-devaluation resulting from the rampant money-printing in recent years ?
Inflation can get away from you - runaway inflation causes horrific damage to economies. Inflation is all well and good - until it isn't.
What's the outlook for Joe Average's meagre savings over the next few years ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 23, 2021, 02:13:04 PM
3. I think it's unlikely that Bitcoin would become a global currency in the 22nd century, but for the sake of argument let's suppose that it does. After the last Bitcoin is mined early next century it would become a truly deflationary currency. But economists in the future keep proclaiming that this currency doesn't work, undermining public confidence. So the Bitcoin community might decide to expand the supply above 21 million by restarting mining operations, solving the problem. And yes, they can do this despite its decentralized nature. For example, right now Bitcoin is being upgraded with the Taproot project which includes security and functionality upgrades agreed upon by the community near unanimously. An unpopular modification to the algorithm (such as expanding the supply above 21 million) could cause an uproar and lead to a hard fork into 2 currencies: the original version versus the modified version. In that case there would be 2 competing currencies and economists would get to observe in real-time whether the inflationary version is superior to the deflationary one.

One thing that is missed is that the money supply needs to expand at about the same rate as the economy, not the population.   That was a lesson learned when the US (and other countries) on the gold standard, but that lesson has been forgotten in recent times.  Back in the day, the US was on the gold standard which limited money supply and caused economic problems for some groups, but facilitated trade with England which benefited others.   So there were contentious factions arguing for each side.   William Jennings Bryan's 1900 Cross of Gold Speech (https://en.wikipedia.org/wiki/Cross_of_Gold_speech) is considered an American political classic. 

The Wizard of Oz, which is best known as a children's book, was actually political commentary on monetary policy.   The Yellow Brick Road was the gold standard, the silver slippers (ruby slippers in the movie) were the silver standard.  The wicked witch of the east and west were the big banks and industrialists on the coasts who were screwing the American people (Dorothy).  The scarecrow represented the farmers who were too dumb to avoid the debt trap, the tin man represented the broken down industrial workers who lacked heart to side with the farmers, and the Cowardly lion was the political class who weren't willing to do anything about it.   But as the story progressed,  the scarecrow was actually smart, the tin man had a heart, and the lion turned out to be brave. 

Point is, we already know what living with a deflationary currency is like.  In 1873, the US dropped the bimetallic standard and went to the gold standard.   The resulting deflation caused the Long Depression, which as the name suggests, was the longest depression in US history.   Worse, the country kept sinking back into depression.    The US was in the middle of one of the subsequent recessions in 1900 when L. Frank Baum wrote the book and Bryan made his speech blasting the gold standard.  Getting away from a deflating currency was a central political issue of the day.   We don't need to run the experiment again.

Great post, @Telecaster!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Telecaster on October 24, 2021, 01:18:30 PM
It seems to me that BTC would need to be broadly dominant for it's deflationary nature to start negatively impacting national economies in the ways described. But I'm no economist . . .

Agree completely.  My claim is that Bitcoin is unsuitable as currency in the first place, so can never become a reserve currency.  Quick anecdote.  The Chivo app had a feature that would freeze the Bitcoin price for one minute to give the user time to complete the transaction.  However, one minute was enough time for users to search exchanges for arbitrage opportunities.  So if one minute is too long for Bitcoin pricing, what if you have a complex product like a dishwasher say where components ordered in advance and wages have to be paid before the product is sold?  How could you possibly calculate your costs or potential profit? 

On the consumer side, lets say I want to buy a car on credit and pay a fix amount of Bitcoin each month.   I will have no idea how much the car will wind up costing or even how expensive my next payment would be. 

Bitcoin proponents say that as Bitcoin becomes more widely adopted as a currency the the price will stabilize.  Two problems with that, first is the chicken and the egg.  It can't become more widely adopted until the prices stabilize and prices can't stabilize until it becomes more widely adopted.   Second problem is that it needs to be really stable.  Like fluctuating no more than a few percent a year.  Unless there is some entity in charge of keeping it stable I don't see how that is even possible.   

Quote
What about the problems associated with inflationary fiat currencies ? It's far from a perfect solution.
It seems pretty clear that inflation tends to take money from the poor and hand it to the asset-rich.
Are we not concerned about potential hyper-inflation / fiat-devaluation resulting from the rampant money-printing in recent years ?
Inflation can get away from you - runaway inflation causes horrific damage to economies. Inflation is all well and good - until it isn't.
What's the outlook for Joe Average's meagre savings over the next few years ?

All fair points.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 24, 2021, 01:31:42 PM
If bitcoin became really stable over a period of many years, tons of people holding only for gainz would sell it and crash the price, though.

So it's a chicken and egg problem twice - it can't become stable until it's not sexy for speculation, and it will crash if it's not sexy for speculation anymore, hence not being stable.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 24, 2021, 03:53:27 PM
If bitcoin became really stable over a period of many years, tons of people holding only for gainz would sell it and crash the price, though.

So it's a chicken and egg problem twice - it can't become stable until it's not sexy for speculation, and it will crash if it's not sexy for speculation anymore, hence not being stable.

-W

Nope.it only goes up
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 24, 2021, 04:20:25 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 24, 2021, 06:08:09 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 24, 2021, 10:34:55 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 25, 2021, 04:28:56 AM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Not sure where you came up with that thought I'm Fi. I have no resentment about this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 25, 2021, 05:20:58 AM
The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

How did you read resentment from that post? I don't see it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 25, 2021, 06:16:50 AM
The uncertainty is what keeps BTC rising.  If everyone knew for certain the limits of what Bitcoin will do in the future, there would be certainty in Bitcoin's price.  I think it's the lack of certainty is what makes the price hard to define (which is also like the dot-com bubble, trying to define which websites would flourish on the internet).

I guess the case "for" Bitcoin is as a cheaper means of cross-border transactions.  Maybe subscriptions are handled by "smart contracts", so everyone can see the cost and how to end the subscription.  All speculation - which is what the "for" case has to be, at this point.  Most people don't do anything in Bitcoin in their daily lives.

Most crypto investors are probably relying on the price always going up.  Once you see that for a few years, it's easy to believe rationalizations that will let you participate in the easy money.  The hardest thing for the "pro" camp to consider is that Bitcoin might crash to zero.  If all of BTC's uses are done better elsewhere, why would BTC hold it's value?  There's a chance that happens, which is why I limit my crypto investment to a tiny percentage of net worth.  (But if I was young and in need of a lottery ticket, maybe I'd allocate much more).  While putting money in crypto, keep in mind it might crash and not recover, so diversify.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 25, 2021, 06:36:34 AM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Rather than resentment, I read a deep philosophical theme here:

If we support the lifestyle of the FIRE movement, do we have a moral obligation to use our voices to speak toward replicable methods of achieving it over time. Because the traditional stock market, index fund route seems replicable over time (roughly a century of data), we feel comfortable growing our movement through investing using this method. And--because of the relatively short time frame and high volatility--we are much less secure in enouraging others to use crypto positions to reach FIRE.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 25, 2021, 11:40:13 AM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Rather than resentment, I read a deep philosophical theme here:

If we support the lifestyle of the FIRE movement, do we have a moral obligation to use our voices to speak toward replicable methods of achieving it over time. Because the traditional stock market, index fund route seems replicable over time (roughly a century of data), we feel comfortable growing our movement through investing using this method. And--because of the relatively short time frame and high volatility--we are much less secure in enouraging others to use crypto positions to reach FIRE.

I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

If philosophy is what you're looking for, consider:
The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.
Bertrand Russell
Title: Re: What do you think of adding a low% of crypto allocation
Post by: bacchi on October 25, 2021, 12:01:38 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 25, 2021, 12:07:42 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

also i've never cited it as a pump and dump spectulative scam.  Beanie babies and tulip bulbs still have value and sell on the open market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 25, 2021, 12:21:55 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 25, 2021, 12:25:28 PM
Sometimes I think of BTC (and crypto in general) like this:
1. No, won't be currency. Not broadly, not really really.
2. Will have some value over time but current price is probably above that value
3. Probably won't be stable in price but if it does, will take a long time to get there
4. Might end up having store-of-value utility even if prices are unstable

And:
5. Yes, is in a speculative bubble
6. Might be nowhere near the end of the speculative bubble
7. The limit on price might be social, not logical
8. A fair approximation of the upper price limit might be things like:
a. How many dollars are people willing to "invest" (store) in risk assets, minus the valuation of the stock market, during an optimistic period
b. When nearly all, not just some, of markets' speculative energy is in BTC
c. When speculative valuation on crypto is higher than the total value of the stock market
d. When valuation of crypto is larger than the stock market
e. (Some of these overlap) When total valuation of risk "assets" (say, stocks + crypto) is much higher than stocks alone have ever been.

8c, 8d, and 8e may well put the global financial system at risk of a BTC-triggered meltdown. So in a way, I'm rooting for a BTC crash before they happen.

It's hard to measure the items in 8, but my guess that if these thoughts are true, the upper limit on BTC is far higher than today. Like BTC at US$250,000 or $500,000. Maybe $1 million.

There's a part of me that then says "Well, then it's not too late to buy. Take the ride!" Haven't done it though.

Re the thread topic, if the upper limit of valuation is far higher than today, a small % crypto could have a big positive impact on returns - if you can get yourself out before the Last Big Crash. Sometimes I think the way to go is reset rarely, like maybe once a year instead of once a quarter, and set some share-of-risk-market boundaries for when to sell.

The majority of people here supporting this are of the get rich quicker mindset.

Even in a forum with a simple equation for wealth accumulation you have people believing in this thing.

Take rosy for example. Hit a 6 figure number years ahead of schedule. Not by following the logic. But bc they bought a lottery ticket. Built in belief. Not a single person in any crypto thread has articulated it's value.  Other than it goes up. So I don't want to miss it. Austin take rosy. Proclaiming it's value as a currency and yet doesn't understand modern economics or admittedly how currency functions

I'm all about using inventive ways to get richer faster to shorten the timeline. Anyone can look at my history of posts and journals here to see that. But at some point you have to know when to fold em.  And these staunch advocates of a meer collectible can't see past their own greed.

Resentment is not a good look on you.

Rather than resentment, I read a deep philosophical theme here:

If we support the lifestyle of the FIRE movement, do we have a moral obligation to use our voices to speak toward replicable methods of achieving it over time. Because the traditional stock market, index fund route seems replicable over time (roughly a century of data), we feel comfortable growing our movement through investing using this method. And--because of the relatively short time frame and high volatility--we are much less secure in enouraging others to use crypto positions to reach FIRE.

I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

If philosophy is what you're looking for, consider:
The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.
Bertrand Russell

Agreed.  The MMM audience, including myself, tends to be well-informed but rigid in their collective financial views.  We are predisposed to think the best way to obtain FIRE is to earn alot, live below our means, and invest heavily into traditional markets (S&P 500, REITS, Bonds, ect.).  Some people take this "best approach", which unites us, to the extremes and act as though it is the only approach.

Unevitably, when a Mustachian asks about crypto it instantly becomes controversial because some Mustachians explain why they believe it's not a bad idea to invest a small portion of their portfolio into it and other Mustachians attack them for trying to find shortcuts to the long, hard, but well-deserved journey to FIRE.  If you don't see the appeal to crypto that's fine, there is much more that unites us here.  However, you are being insulting when you personally target another Mustachian and dismiss their well-thought out strategy as a get rich quick scheme.  It is mean-spirited and intellectually dishonest.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 25, 2021, 12:26:05 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 25, 2021, 12:52:46 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here.  I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 25, 2021, 12:58:37 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here. I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.

The arguments for crypto haven't been dismissed . . . they've been debated and found wanting (repeatedly, and on many fronts).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 25, 2021, 01:02:53 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here.  I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.

That's not fair at all.

I am actively looking to understand crypto, I've been reading a bunch on it and feel like no matter how much I read, I can't make sense between the two sides.

I very much appreciate seeing arguments from both sides, and have no issue with someone staunchly arguing their point.

There are A LOT of us out there who want to better understand *both* sides.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 25, 2021, 01:18:18 PM
I read it as "I have decreed that Bitcoin is nothing but a pump/dump, speculative scam, etc. and anyone that disagrees with me is simply a greedy fool trying to get rich quick, especially dim-witted Rosy."

It's just personal attacks on a group and an individual, ie. a clear contravention of forum rules 2 and 4.

Only you used the phrases "greedy fool" and "dim-witted" in this thread.

A personal attack isn't simply disagreeing with someone's opinion, even if that opinion is strongly held.

Yeah, no personal attack, B42 just holds a very strong opinion, like he does about basically everything.

Agree or disagree with him, that's fine. You can think his opinion is totally ridiculous if you want, and you are totally free to call him out on it, people often do when he gets dogmatic about things. But that wouldn't be considered a personal attack, just as his post singling out what one person has said also isn't a personal attack.

He's heavily criticized ideas, which is entirely fair play. People are totally entitled to criticize his ideas in return, but instead the rebuttals seem to be getting personal, which is kind of ironic.

I say this as someone who is not pro or anti crypto. I have no skin in this game, but what I do observe are reactive, sarcastic, defensive comments from one side more than the other.

That may be just a product of this forum being predominantly anti-crypto, so the crypto folks feel frustrated here. I don't know.

But as someone who is avidly reading along and trying to better understand the two sides and where the truth lies between them, I can say that B42 has been extremely effective in articulating their side of the debate and I keep wishing that someone on the pro-crypto side would really articulately pick apart his arguments in a way that really made sense to me.

However, perhaps this is not the forum to find that.

I'm waiting for that too - I'll get on any gravy train that i think has real long term traction.  I think i've proven that here -

These things have been discussed ad nauseum here.  I am not going to dig it up but there was another thread from earlier in the year where you guitar, and Telecaster dismissed all the arguements for crypto.  Crypto has its pros and cons.  If your sound judgment tells you not to put a little skin in the game then it's best to just stay on the sidelines.

That's not fair at all.

I am actively looking to understand crypto, I've been reading a bunch on it and feel like no matter how much I read, I can't make sense between the two sides.

I very much appreciate seeing arguments from both sides, and have no issue with someone staunchly arguing their point.

There are A LOT of us out there who want to better understand *both* sides.

What do you want to want to know? 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 25, 2021, 01:42:35 PM
What do you want to want to know?

The same thing I've been asking since the beginning of this thread: where does the truth lie between the two sides that tend to be quite extremely opposed?

What I find frustrating is that most pro crypto people argue as if it's just a given that crypto is the best thing ever, and that those who question it are just clueless, ignorant idiots.

This stance is hard to grasp since so many of the arguments from those against crypto sound quite informed and reasonable.

It's frustrating to read.

It doesn't help that I know a few people in the crypto tech world who don't invest in crypto coins themselves and even more who mount a lot of similar arguments as I see here against investing in hugely valued coins like Bitcoin.

I've got one "expert" saying Etherium is the only coin that makes sense to invest in, and yet another saying that despite some hiccups that EOS remains the "Etherium killer", and yet more saying that it's premature to heavily invest in any individual coins, except as pure speculation.

And then I have piles of really angry people on the internet basically calling everyone stupid for not buying Bitcoin.

It's fucking confusing.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 25, 2021, 03:51:45 PM
What do you want to want to know?

The same thing I've been asking since the beginning of this thread: where does the truth lie between the two sides that tend to be quite extremely opposed?

What I find frustrating is that most pro crypto people argue as if it's just a given that crypto is the best thing ever, and that those who question it are just clueless, ignorant idiots.

This stance is hard to grasp since so many of the arguments from those against crypto sound quite informed and reasonable.

It's frustrating to read.

It doesn't help that I know a few people in the crypto tech world who don't invest in crypto coins themselves and even more who mount a lot of similar arguments as I see here against investing in hugely valued coins like Bitcoin.

I've got one "expert" saying Etherium is the only coin that makes sense to invest in, and yet another saying that despite some hiccups that EOS remains the "Etherium killer", and yet more saying that it's premature to heavily invest in any individual coins, except as pure speculation.

And then I have piles of really angry people on the internet basically calling everyone stupid for not buying Bitcoin.

It's fucking confusing.

That's a really legitimate quandary! Quite interesting to hear the report of your crypto insiders, too. A key cautionary data point to my ears.

I know I'm not saying anything new here, but - the BTC attitude you see "piles" of seems like a motivated paradigm. A paradigm in that once you see the vision of BTC Shall Rule, everything fits into its gravity. Motivated in that, obviously, the inherent vision of rising wealth depends on acceptance by others at some point; acceptance makes it real, denial threatens the vision. It's only a store of value if people think it is. The feel seems a lot like MLM things that I've seen, except that the downline is replaced by acceptance of the BTC-centric future. And once you're in, breaking out requires a painful shift, so the stakes of denial get even higher, I guess. 

As far as the truth, I wonder too. It seems like kind of a Schrodinger's thing because it's not really determined yet. Yet the general picture seems clear-ish (??). There's something that might be of value, but exactly how and how much is unclear. The something's under feverish and varied development, like early autos (or 1600s tulip bulbs), while being both encouraged and obscured by the fever of excitement about the high financial value now ascribed to one of the early strains (BTC). Most of the what we see is the fever.

Unless people do end up accepting forever that BTC has value. Can't quite sort out the odds.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: solon on October 25, 2021, 04:09:31 PM
Could you all do me a favor? Suppose you were trying to summarize this thread for a CEO. You have to produce 3-4 good points for each side of the debate. Bonus points for using bullets. For example:

Pro Crypto

Anti Crypto



(I admit I haven't read through this thread. But it's so lengthy it seems like a quick summary might reset the debate and help everyone understand it better.)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 25, 2021, 04:14:45 PM
Could you all do me a favor? Suppose you were trying to summarize this thread for a CEO. You have to produce 3-4 good points for each side of the debate. Bonus points for using bullets. For example:

Pro Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument

Anti Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument



(I admit I haven't read through this thread. But it's so lengthy it seems like a quick summary might reset the debate and help everyone understand it better.)

From what I can tell the argument goes like this

Pro
"Something, something fiat, something, something gains, something something Bitcoin is legal currency in El Salvador"

Con

"Something, something crypto is actually useless, something, something, banned in China, something, something, slow and wasteful"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 25, 2021, 04:57:04 PM
Could you all do me a favor? Suppose you were trying to summarize this thread for a CEO. You have to produce 3-4 good points for each side of the debate. Bonus points for using bullets. For example:

Pro Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument

Anti Crypto
  • a really good argument
  • another really good argument
  • yet a third really good argument



(I admit I haven't read through this thread. But it's so lengthy it seems like a quick summary might reset the debate and help everyone understand it better.)

Can't give you good, I'm here to learn. Common and semi-plausible from one reader's viewpoint:

Pro
1. Novel blockchain technology provides an electronic means of exchange and value storage with decentralized (aka nongovernmental) security, a unique value
2. Has been used to create electronic coins that rise in value at first, due to inherent features in the algorithm, but are limited in total number and thus can provide a store of value that's more reliable than fickle fiat currency. This can provide a useful store of value when governments inevitably inflate their currencies. Digital gold!
3. Realistically, the fact these are not inherently part of the existing financial system has offered a variety of opportunities that derive from avoiding financial regulation. For a while longer, these opportunities will be quite profitable.

Anti
4. The main use of decentralized crypto is evading government. That's of limited value, and as regulation increases, the value will fade away or at least be small. Advocates make bigger claims for it than this but none of them will really work.
5. The creation of individual "coins" uses large and increasing amounts of energy, making crypto destructive to the climate.
6. The original value rise was triggered by the algorithmic tricks from point 2 above, but it's primarily become a speculative bubble with no enduring value underneath - especially because new types of "coins" can be made at will, cheaply. Existing coins are far above any intrinsic value already and the bubble is going to pop.

PS. Argument zero is in the pro bucket. Namely, one day crypto will be fast reliable non-inflationary non-governmental electronic currency, solving the saver's problem that there is no risk free store of value, and until then it thrillingly rises in value. But the counterarguments that it can't do all that at once seem compelling enough that it's hard to count that as a "good" argument - it just looks like the most common.

(leaves to go buy popcorn with credit card)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 25, 2021, 05:16:05 PM
I'll give it a shot:

Pro:
-Existing ways of paying for stuff are expensive (ie credit card fees of 3-4%, wire transfer fees to/from foreign countries even higher) and crypto can allow people to pay each other, in theory at least, inexpensively and securely.
-Crypto can allow people to prove ownership of both digital and real-world items, and to create binding contracts without a third party.
-Crypto can prevent governments from debasing the value of fiat currency and causing hyperinflation crises.

Con:
-The leading cryptocurrency (bitcoin) has never succeeding in becoming a method of making payments as it is extremely volatile in value. This volatility, along with it's deflationary nature (fixed/limited supply of coins) make it unusable as a currency and it will never be used to make transactions in any meaningful way. Hence it has no utility and, at best, can function only as "digital gold" (or like a baseball card/collectible) as a store of value. No other cryptocurrencies, even those with better designs, have so far succeeded in becoming commonly used for commerce either.
-There are thousands of other cryptocurrencies, and a low bar to entry. There is nothing stopping national governments from creating their own cryptocurrencies and/or making any extant non-government currencies illegal (something that has already happened). This means that investing in any individual cryptocurrency is, at best, extremely risky as most or even all current versions will likely end up useless and valueless.
-The cryptocurrency world is rife with fraud (some would say it's mostly fraud) and existing values are propped up by orders of magnitude (ie tether) by said fraud.
-Crypto (or at least bitcoin) uses an incredible amount of energy and is an environmental disaster.

Hopefully that helps.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 25, 2021, 06:15:31 PM
Pro:
-Existing ways of paying for stuff are expensive (ie credit card fees of 3-4%, wire transfer fees to/from foreign countries even higher) and crypto can allow people to pay each other, in theory at least, inexpensively and securely.

 It may be my western privilege speaking, but I've never really understood that argument. I can wire money to any EU country without any fee, and I can use transferwise to send money in many countries with great exchange rates. It seems to me what we need is not a new currency, but a paypal without all the price-gouging.
 On the other hand, apparently you have to be an IT major, who has extensively researched exchanges and possibly bought some hardware, to be able to use bitcoin safely.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 25, 2021, 08:28:37 PM
I'll give it a shot:

Pro:
-Existing ways of paying for stuff are expensive (ie credit card fees of 3-4%, wire transfer fees to/from foreign countries even higher) and crypto can allow people to pay each other, in theory at least, inexpensively and securely.
-Crypto can allow people to prove ownership of both digital and real-world items, and to create binding contracts without a third party.
-Crypto can prevent governments from debasing the value of fiat currency and causing hyperinflation crises.

Con:
-The leading cryptocurrency (bitcoin) has never succeeding in becoming a method of making payments as it is extremely volatile in value. This volatility, along with it's deflationary nature (fixed/limited supply of coins) make it unusable as a currency and it will never be used to make transactions in any meaningful way. Hence it has no utility and, at best, can function only as "digital gold" (or like a baseball card/collectible) as a store of value. No other cryptocurrencies, even those with better designs, have so far succeeded in becoming commonly used for commerce either.
-There are thousands of other cryptocurrencies, and a low bar to entry. There is nothing stopping national governments from creating their own cryptocurrencies and/or making any extant non-government currencies illegal (something that has already happened). This means that investing in any individual cryptocurrency is, at best, extremely risky as most or even all current versions will likely end up useless and valueless.
-The cryptocurrency world is rife with fraud (some would say it's mostly fraud) and existing values are propped up by orders of magnitude (ie tether) by said fraud.
-Crypto (or at least bitcoin) uses an incredible amount of energy and is an environmental disaster.

Hopefully that helps.

-W

This seems a pretty good summary of both the strongest pro and strongest con arguments.

The only amendment I'd suggest is that I would extend the first "pro" point that not only do existing ways of paying for stuff not-in-person cost 3-4%, but they also create private gatekeeping of who does and does not get to receive payment via a relatively small number of corporations. This small set of companies may someday decide I'm not allowed to buy (legal) product A, pay for (legal) service B, or contribute to (legal) political cause C.

I first heard about bitcoin around the same time visa and mastercard had decided to cut off wikileaks from donations through credit card networks for choosing to publish leaked US diplomatic cables. It had never occurred to me that credit card companies could just decide a certain organization wouldn't be allowed to receive money. Was very formative to how I view the cryptocurrencies.

Also having had a fair bit of exposure to the Chinese banking system where there are various opaque, confusing, and changing rules about how much money you can take out and where and who you can send money to also probably played a role in how much more value I seem to put on the idea of being able to pay money to people without needing my bank to cooperate and agree with me than many other folks seem to value the same feature.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 25, 2021, 08:58:08 PM
Yeah, the one sentence summary, I think, is:

"Crypto has the amazing potential to improve the human condition and make everyone happier, wealthier, and more free, but bitcoin can't do that and is useless trash backed up by fraud."

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FrugalFukuoka on October 25, 2021, 10:54:59 PM
https://bitsonblocks.net/basics-bitcoins-blockchains-book/

I recommend this book to anyone serious about understanding any of the concepts discussed here. It's refreshing in the sense that the author is very knowledgeable and not trying to be persuasive.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 07:36:49 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 26, 2021, 07:55:39 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.

Yeah, that article doesn't say anything different than what has been said here, and it basically says that Bitcoin is appropriate as a small portion of an otherwise well diversified investment portfolio because of the speculative potential.

This is exactly in line with what basically everyone on this forum agrees with in terms of crypto as an investment. Some coins will explode in value, Bitcoin may continue to explode in value. A small portion of a well diversified portfolio invested in crypto is a reasonable way to capture some of that potential explosive growth.

I don't think anyone here would argue against that. I don't even think B42 would argue against anyone gambling a small part of their portfolio on a speculative investment, even if he believes the growth is based on nonsense. There's still potential money to be made in nonsense.

That's why I asked the question early on, if I'm not concerned about FOMO or speculation, is there any logical reason that I should be invested in crypto at this time, and the response from both sides was "not really".

I personally have an interesting perspective, because I'm very interested in understanding, I don't hold an anti-crypto position, but I have zero FOMO, so I'm not looking at it from an individual investment perspective.

I'm just trying to cut through the bullshit. And there is A TON of bullshit. ESPECIALLY from the pro-crypto side.

I'm sorry, but objectively, I have never seen more fucking nonsense than I have read and heard from tons and tons of morons who are intensely bullish on crypto.

Like the article you cited, the most rational, and reasonable perspectives I've seen that are pro-crypto have been very conservative in their investment recommendations.

I have yet to see a compelling source that recommends anything beyond a modest, speculative play.

Because I keep seeing what I'm hearing from the kind of people who are currently advising governments on future use of blockchain. The money in new inventions is almost never in the inventions, it's in the businesses who figure out how to use the inventions.

So the more I learn about this, the more I'm becoming convinced that individual coins are not the optimal crypto play, but that there are no ideal plays for individual consumers at this point. So small, speculative coin purchases remain the most reasonable bet for people with FOMO.

Exactly as that article states.

As always though, I am not at all confident in my position, and am very open to learning how my interpretation is wrong. I'm just REALLY struggling to find high quality pro-crypto content that says anything other than what you've already posted.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 26, 2021, 09:03:53 AM
Has anyone done a study of "new crypto coins" and their performance after 3 months or 12 months?  They have a significant chance of going nowhere, like the "venture capital" investing of the crypto world.  Very early, very risky investments.  I'd be curious if their gains are worth the coins that go to zero - especially compared to BTC or ETH.

I think the biggest gap between "pro crypto" and "anti crypto" is the time frame.  If you point to the future, you can make a case for what cryptocurrencies could become.  But "anti crypto" can point to the present, where not much has been done.

If Bitcoin's market cap was turned into a public U.S. company, it would land at #5 on the S&P 500, between Facebook and Amazon.  It would be +50% larger than Visa and Mastercard, combined.  Do you rely on Facebook or Bitcoin more?  Spend with Visa or Bitcoin more?  Market cap is a point against Bitcoin.

Maybe the best way to decide for yourselves is to look at the past 10 years of Bitcoin.  There's the Lightning Network for faster, more efficient transactions.  The potential for "smart contracts", but it's still a work in progress.  Adoption of Bitcoin into futures markets and large holdings by billionaires.  In the past 10 years, is that enough to justify Bitcoin's price or not?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 26, 2021, 09:21:07 AM
I got this email today from Venmo:
    
"Got a few bucks? You could use it to buy crypto.   
    
Did you know you can put that money sitting in your Venmo account to good use? You could use it to buy Bitcoin, Ethereum, and more in a few taps!"

There's also an amazing graphic of a dollar dissolving and turning into some kind of coin with a weird symbol on it.

-W

 
 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 10:13:31 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.

Yeah, that article doesn't say anything different than what has been said here, and it basically says that Bitcoin is appropriate as a small portion of an otherwise well diversified investment portfolio because of the speculative potential.

This is exactly in line with what basically everyone on this forum agrees with in terms of crypto as an investment. Some coins will explode in value, Bitcoin may continue to explode in value. A small portion of a well diversified portfolio invested in crypto is a reasonable way to capture some of that potential explosive growth.

I don't think anyone here would argue against that. I don't even think B42 would argue against anyone gambling a small part of their portfolio on a speculative investment, even if he believes the growth is based on nonsense. There's still potential money to be made in nonsense.

That's why I asked the question early on, if I'm not concerned about FOMO or speculation, is there any logical reason that I should be invested in crypto at this time, and the response from both sides was "not really".

I personally have an interesting perspective, because I'm very interested in understanding, I don't hold an anti-crypto position, but I have zero FOMO, so I'm not looking at it from an individual investment perspective.

I'm just trying to cut through the bullshit. And there is A TON of bullshit. ESPECIALLY from the pro-crypto side.

I'm sorry, but objectively, I have never seen more fucking nonsense than I have read and heard from tons and tons of morons who are intensely bullish on crypto.

Like the article you cited, the most rational, and reasonable perspectives I've seen that are pro-crypto have been very conservative in their investment recommendations.

I have yet to see a compelling source that recommends anything beyond a modest, speculative play.

Because I keep seeing what I'm hearing from the kind of people who are currently advising governments on future use of blockchain. The money in new inventions is almost never in the inventions, it's in the businesses who figure out how to use the inventions.

So the more I learn about this, the more I'm becoming convinced that individual coins are not the optimal crypto play, but that there are no ideal plays for individual consumers at this point. So small, speculative coin purchases remain the most reasonable bet for people with FOMO.

Exactly as that article states.

As always though, I am not at all confident in my position, and am very open to learning how my interpretation is wrong. I'm just REALLY struggling to find high quality pro-crypto content that says anything other than what you've already posted.

Like all investments, crypto is speculative.  I don't think anyone would say crypto isn't. 

I don't know any of the "pro-crypto" Mustachians that advocate for more than putting a small portion of their portfolio into crypto.  In fact, I don't tell anyone to buy it.  I can tell you that I personally only ever put in a very small portion of my own disposable income in crypto since 2017 and, while I feel Bitcoin has steadily become stronger and stronger with each year, I have no plans to change that.  So I would certainly not advocate for anyone putting anything more than a modent amount into crypto.  Personally, only 3% of my disposable income has gone into crypto since 2017; most of that went in when noone was talking about crypto (2018-2019) and almost all of it went into Bitcoin or Ethereum.  Like you, I read up on crypto.  Like you, I was turned off by the moonboys.  Like you, I was even more turned off by the altcoin shillers.  My sentiments are the same today than they were then.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Then I learned about ethereum and all the cool things people were doing with ethereum's smart contracts at the time.  I saw value in that. Then I learned about oracles on etheruem and how Eth3  will open doors that I didnt think were possible.  I saw even more value in Etheruem and by connection; bitcoin.

That said, I am truly glad you took the time to study it and make your own determination.  I am good with us being united on the other 94% if our sound portfolios (I have another 3% of my money tied into something that is non-crypto but pure speculative/hobby that I am too embarrassed to discuss!).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 26, 2021, 10:15:59 AM
I got this email today from Venmo:
    
"Got a few bucks? You could use it to buy crypto.   
    
Did you know you can put that money sitting in your Venmo account to good use? You could use it to buy Bitcoin, Ethereum, and more in a few taps!"

There's also an amazing graphic of a dollar dissolving and turning into some kind of coin with a weird symbol on it.

-W

You should see how hard Interactive Brokers is pushing crypto. Giant quote tables appear on your main screen. Messages appear in your inbox. Emails are sent weekly. The message is, "you're missing out and this investment is totally legitimate - on par with index funds!". If it all comes crashing down, expect class action lawsuits.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 26, 2021, 10:22:52 AM
You should see how hard Interactive Brokers is pushing crypto. Giant quote tables appear on your main screen. Messages appear in your inbox. Emails are sent weekly. The message is, "you're missing out and this investment is totally legitimate - on par with index funds!". If it all comes crashing down, expect class action lawsuits.

It feels like end-stage pyramid scheme/MLM stuff, where there aren't many investors/suckers left so you have to try harder and harder to rope more in.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 10:28:35 AM
For those that wish to understand some aspects of the positive case for Bitcoin, I (again) recommend this piece (a 20-30 minute read):
https://www.lynalden.com/invest-in-bitcoin/ (https://www.lynalden.com/invest-in-bitcoin/)

To me, it comes across as balanced and objective, and the author seems knowledgeable and smart.

If someone can point me towards a similarly detailed, well-balanced and objective piece with an anti-Bitcoin conclusion, I would be very glad to read it.

Yeah, that article doesn't say anything different than what has been said here, and it basically says that Bitcoin is appropriate as a small portion of an otherwise well diversified investment portfolio because of the speculative potential.

This is exactly in line with what basically everyone on this forum agrees with in terms of crypto as an investment. Some coins will explode in value, Bitcoin may continue to explode in value. A small portion of a well diversified portfolio invested in crypto is a reasonable way to capture some of that potential explosive growth.

I don't think anyone here would argue against that. I don't even think B42 would argue against anyone gambling a small part of their portfolio on a speculative investment, even if he believes the growth is based on nonsense. There's still potential money to be made in nonsense.

The article does add a lot of context and background to some of the headline issues already discussed here, and it's a clear answer to the Topic question.

That's not my understanding. The article concludes with a positive recommendation. I think the anti consensus here is that you should steer clear (plus some varying opinions about those that invest so little that win/lose makes no difference anyway).

That's why I asked the question early on, if I'm not concerned about FOMO or speculation, is there any logical reason that I should be invested in crypto at this time, and the response from both sides was "not really".

I personally have an interesting perspective, because I'm very interested in understanding, I don't hold an anti-crypto position, but I have zero FOMO, so I'm not looking at it from an individual investment perspective.

I'm just trying to cut through the bullshit. And there is A TON of bullshit. ESPECIALLY from the pro-crypto side.

I'm sorry, but objectively, I have never seen more fucking nonsense than I have read and heard from tons and tons of morons who are intensely bullish on crypto.

Like the article you cited, the most rational, and reasonable perspectives I've seen that are pro-crypto have been very conservative in their investment recommendations.

I have yet to see a compelling source that recommends anything beyond a modest, speculative play.

Modest ? I agree. There is much uncertainty here.
Speculative ? I agree, but it's speculation based on some sound and detailed reasoning, as opposed to just some crazy hopeful punt.

Because I keep seeing what I'm hearing from the kind of people who are currently advising governments on future use of blockchain. The money in new inventions is almost never in the inventions, it's in the businesses who figure out how to use the inventions.

So the more I learn about this, the more I'm becoming convinced that individual coins are not the optimal crypto play, but that there are no ideal plays for individual consumers at this point. So small, speculative coin purchases remain the most reasonable bet for people with FOMO.

Exactly as that article states.
as that article states . . . specifically for Bitcoin - and including reasons why Bitcoin over other crypto.

And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

As always though, I am not at all confident in my position, and am very open to learning how my interpretation is wrong. I'm just REALLY struggling to find high quality pro-crypto content that says anything other than what you've already posted.

That's fair enough - I too have many doubts. The posts and the article have covered quite a wide range - is there a specific area that has been overlooked ?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 10:41:30 AM


And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.



whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that?  The last time the market crash BTC fell further than the market.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 26, 2021, 11:04:14 AM
Like all investments, crypto is speculative.  I don't think anyone would say crypto isn't. 

I don't know any of the "pro-crypto" Mustachians that advocate for more than putting a small portion of their portfolio into crypto.  In fact, I don't tell anyone to buy it.  I can tell you that I personally only ever put in a very small portion of my own disposable income in crypto since 2017 and, while I feel Bitcoin has steadily become stronger and stronger with each year, I have no plans to change that.  So I would certainly not advocate for anyone putting anything more than a modent amount into crypto.  Personally, only 3% of my disposable income has gone into crypto since 2017; most of that went in when noone was talking about crypto (2018-2019) and almost all of it went into Bitcoin or Ethereum.  Like you, I read up on crypto.  Like you, I was turned off by the moonboys.  Like you, I was even more turned off by the altcoin shillers.  My sentiments are the same today than they were then.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Then I learned about ethereum and all the cool things people were doing with ethereum's smart contracts at the time.  I saw value in that. Then I learned about oracles on etheruem and how Eth3  will open doors that I didnt think were possible.  I saw even more value in Etheruem and by connection; bitcoin.

That said, I am truly glad you took the time to study it and make your own determination.  I am good with us being united on the other 94% if our sound portfolios (I have another 3% of my money tied into something that is non-crypto but pure speculative/hobby that I am too embarrassed to discuss!).

I haven't made my own conclusions though, I am completely clueless as to where I stand on crypto. That's why I'm so confused and value well thought out perspectives of any sort.

I recently contemplated a speculative real estate investment and was left equally ambivalent.

But I do like to try and understand things.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 11:36:27 AM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 11:39:04 AM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 11:58:10 AM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 

I'm expecting that Bitcoin will become (is becoming ?) more like gold.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 12:04:23 PM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 

I'm expecting that Bitcoin will become (is becoming ?) more like gold.
[/quote]

so your fundamental bet is on BTC being something collected or shall we just call it what it is a collectible.  Which have throughout history been very very almost extremely volatile with respect to how people feel about it and typically come in fads.  So you're picking one of the OLDEST BEST performing collectibles and saying yeah its going to be that.  Feel like you've been in a confirmation bias machine.  With all the things that have been collected through out time or just even all the stocks in the world making that proclamation is like trying to find a needle in a haystack. 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 26, 2021, 12:08:25 PM
Just put it all in the new eNaira cryptocurrency out of Nigeria. What could go wrong?

https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html (https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 26, 2021, 12:15:02 PM
Just put it all in the new eNaira cryptocurrency out of Nigeria. What could go wrong?

https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html (https://finance.yahoo.com/video/nigeria-launches-cryptocurrency-enaira-amid-155450308.html)

Just the other day I was contacted by a Nigerian prince.  He needed access to my accounts to move some money.  I really would have lost out if he just used cryptocurrency instead!
Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 26, 2021, 01:07:25 PM
I have a flawed get rich scheme - hack Satoshi's wallets.  Now if the founder of Bitcoin had used only one wallet to store 1.1 million Bitcoin, that wallet would be worth about $68 billion.  If you set a computer working to hack it, and it succeeded... that computer would earn about one penny an hour, because it would take 0.65 billion years.

But the wallets are are more spread out, like the one that moved 616 BTC to another location ($38 million USD at current prices).  I wonder if Satoshi moved $38 million BTC into a brokerage account, and can now take our loans against it?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 26, 2021, 01:07:38 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 01:50:49 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian. 

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

The immutable public Ledger means your coins can't be double spent.  This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here. 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: LateStarter on October 26, 2021, 01:56:03 PM
And not just FOMO. For me personally, as a little (potential) insurance against devalued fiat / inflation / pumped up markets; all of which = risk to my primary conventional stash / income.

whats the baseline for me to know if crypto is a pumped up market today or not and how this is insurance against that? 

The last time the market crash BTC fell further than the market.

I'm not sure there is a baseline. However, I see good potential for further growth in Bitcoin - the trend is towards greater adoption and it seems to be gathering breadth. Despite it's spectacular growth, it doesn't seem pumped-up to me. I made no claim that my Bitcoin investment is insurance against a Bitcoin crash (??).

A fair point that has been made before (in this topic, I think). My expectation is that Bitcoin will become (is becoming ?) less speculative and more of an established store-of-value as it matures.
There is undoubtedly a fair amount of nervous money in Bitcoin currently, and that's prone to jumping ship at the first sign of trouble in any market. Store-of-value money is likely to be more resilient and negatively-correlated to the stock markets - more like gold, yet very different to gold in terms of continued growth potential.

you compare it to gold and yet it has yet to do anything like gold except consume massive amounts of energy being mined. 

I'm expecting that Bitcoin will become (is becoming ?) more like gold.

so your fundamental bet is on BTC being something collected or shall we just call it what it is a collectible.  Which have throughout history been very very almost extremely volatile with respect to how people feel about it and typically come in fads.  So you're picking one of the OLDEST BEST performing collectibles and saying yeah its going to be that.

No, you're misquoting me again. I clearly said I expect it to become something more like gold.
For clarity, my view (and that of many others) is that the Bitcoin price is likely to become less positively-correlated with the stock market and will tend towards negative-correlation - more like gold.

Feel like you've been in a confirmation bias machine.

Nope, I've seen, read and heard many different views - and I'm interested in all of them. Almost every one of my posts here includes a caveat of uncertainty and an acknowledgement of risk. Contrast that to the conviction and certainty expressed by many here, with regard to a novel technology and an inherently uncertain future.

I probably come across as more pro-Bitcoin than I really am. I am pro-Bitcoin, and I've disagreed with many of the anti concerns raised here but I haven't disagreed with all of them. The deflationary currency issue is interesting and I'm endeavouring to learn more about it.

With all the things that have been collected through out time or just even all the stocks in the world making that proclamation is like trying to find a needle in a haystack.

Well, maybe and maybe not. For someone that is positive about the future of crypto, there are legitimate 'network effect' arguments that put Bitcoin in a strong position vs the competition. See the article I linked previously if you're interested in the detail.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 26, 2021, 02:00:41 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian. 

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

The immutable public Ledger means your coins can't be double spent.  This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

so is it like gold or is it maybe going to become like gold b/c you've stated both in your analysis.  or is it like beanie babies of which many people produced lots of extra crap for including storage of and many sold at one point for many times over value today.  Same with sneakers today.  there are a finite number of air jordan's created in a given year there never will be any more of that specific shoe released in that specific vintage.  people produce lots of extra crap for sneakers too.  There is also only one mona lisa.  through out time there has been many many many ways to store value - you've selected that this will be gold got it ... but then you said maybe it will be ... but then you said it is.  man i'm confused.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 26, 2021, 02:09:53 PM
Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian.

You can use whatever word and/or definition you like. But at the end of the day businesses (stocks) have value because they earn profits, and in turn pay you money (in dividends). This also means there is something "there" to price them. Bitcoin is different in that it is 100% pure speculation. There is no revenue. This is substantially different from investments advocated by this community, generally, and much more similar to meme stocks. What's odd is we don't see many "What do you think about adding a low % of GME allocation?" threads...

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

And let the goal post shift game begin! Either Bitcoin is a currency or an asset. It cannot be both: the attributes that make a good asset necessarily make it a bad currency, and the attributes that make for a good currency necessarily make for a poor asset. That you—and frankly most—crypto enthusiasts fail to grasp this very basic rule of finance is part of the reason many of us struggle to take you seriously.

The immutable public Ledger means your coins can't be double spent.

And then there's this stuff. Like that's not at all the point of the immutable ledger. The immutable/public ledger is for audibility. Immutable public ledgers (merkle trees) have been widely used in software development for ~40 years. They are very cheap and efficient. Proof of Work is the mechanism that prevents double-spending. Proof of Work is necessarily VERY inefficient and expensive.

This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

These are problems very few of us on this board will ever have to deal with. As I've repeatedly agreed: Bitcoin's single actual use-case is regulatory arbitrage. I think it's important to understand this is not a technical feat. This is only a temporary "too new to have yet been regulated" point in time. This use-case will evaporate eventually.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

But Bitcoin is digital gold, not a currency, right? What legislators are passing gold laws?! Or have you goal-post shifted back to currency chat already? Tough to keep track.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Again, PoW is only for solving the double spending problem. Immutability is easily solved with very basic cryptography. And "secure" is meaningless without mentioning an attack-vector (I'm guessing you mean mutating the values, which... again, is very simple and cheap to do).

As for zero sum game... I'm not sure if we agree on what that phrase means?! Every cryptocurrency I'm familiar with is, well, worse than a zero-sum game, they're negative-sum games. But I digress..

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

It's not irrelevant, but it's not a good reason to get into a whole lot of anything. It's basically the old "if everybody else was jumping off a bridge..." wisdom your parents may've mentioned as a child.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 02:16:29 PM
Like all investments, crypto is speculative.

Technically, I don't believe that's accurate. "Speculative", as I understand it, means an investor expects to profit by timing price fluctuations correctly. And, as you've stated, this is the only way to make money by purchasing bitcoin—hoping you can sell it to someone else later for more money.

This is substantially different than other things people typically consider investments. Stocks pay (or have the expectation to eventually pay) dividends. Bonds have yields. There is a very obvious and "win-win" system whereby investors profit even if they never need to sell their shares to someone at a higher price later.

Where we differ is that I determined that I like many of the characteristics of bitcoin that people here pass disparagments on: 21m cap, immutabie public Ledger, consensus design, POW security, thousands of developers working on bitcoin and side projects built on top of bitcoin (e.g. lightning network), it's track record of perseverance over years and track record of only improving, growing utility, and it's blossoming into a recognized asset class.  I made the determination that I wanted to see bitcoin to succeed and I wanted to be apart of it so I bought some and continued to read about it and frequent bitcoin forums.

Many of us pass disparagements on these characteristics because these are characteristics that are detrimental. Let's go over them:

1. 21m cap. A fixed money supply will lead to deflation in a growing economy. Given the classical quantity theory formula 𝑀𝑉=𝑃𝑌, where M=the money supply, V = the velocity of money, P = the price, and Y = the quantity of real goods. Assuming M stays constant (21M bitcoins), and Y increases (a growing economy), you see that the price or the velocity. must compensate. By virtually any theory of economics, from Austrian to Keynesian, this is a very bad idea.
2. Immutable public ledger. Crypto enthusiasts like to mention this as evidence that Bitcoin is "secure". In my mind, this is tantamount to lying. It depends on a really bizarre definition of "secure" that misleads people into thinking they're less likely to be scammed if they transact in Bitcoin. But in reality, because there are no trusted 3rd parties, and because the ledger is immutable, if someone tricks you into a fraudulent transaction, there is nothing you can do about it. Credit card payments, by contrast, can be stopped and reversed. The immutability doesn't reduce fraud—it just shifts who suffers the consequences: to the consumer. Some merchants, and certainly most swindlers definitely like the immutable ledger idea, though.
3. Consensus design. I'm curious what you find beneficial here?
4. POW security. Proof of Work is another thing Bitcoin (rightfully, imo) gets attacked for. Proof of Work is the deliberately wasteful scheme by which Bitcoin solves the double spending problem. This problem only exists in authorityless distributed systems. So it's unclear what you like about PoW. Much like a Segway, it is a neat invention. But... I'm not convinced that it's particularly useful for much.

I think the remaining points can be summed up as "other people are spending time/money on it, therefore..." aka argumentum ad populum—so no point in arguing that one.

Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian. 

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

The immutable public Ledger means your coins can't be double spent.  This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

so is it like gold or is it maybe going to become like gold b/c you've stated both in your analysis.  or is it like beanie babies of which many people produced lots of extra crap for including storage of and many sold at one point for many times over value today.  Same with sneakers today.  there are a finite number of air jordan's created in a given year there never will be any more of that specific shoe released in that specific vintage.  people produce lots of extra crap for sneakers too.  There is also only one mona lisa.  through out time there has been many many many ways to store value - you've selected that this will be gold got it ... but then you said maybe it will be ... but then you said it is.  man i'm confused.

Yeah I am confused too because I don't know where you got that from.  I've received many criticism but I've never been called inconsistent.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: GuitarStv on October 26, 2021, 02:18:24 PM
Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian.

This is not the financial usage as I understand it, and it doesn't seem to correspond with anything I can find online:

"In the world of finance, speculation, or speculative trading, refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value." - https://www.investopedia.com/terms/s/speculation.asp (https://www.investopedia.com/terms/s/speculation.asp)

"Speculation involves trading a financial instrument involving high risk, in expectation of significant returns. The motive is to take maximum advantage from fluctuations in the market.

Speculators are prevalent in the markets where price movements of securities are highly frequent and volatile. They play very important roles in the markets by absorbing excess risk and providing much needed liquidity in the market by buying and selling when other investors don't participate."  - https://economictimes.indiatimes.com/definition/speculation (https://economictimes.indiatimes.com/definition/speculation)

"Speculation - Purchasing risky investments that present the possibility of large profits, but also pose a higher-than-average possibility of loss. A profitable strategy over the long term if undertaken by professionals who hedge their portfolios to control the amount of risk." - https://financial-dictionary.thefreedictionary.com/speculation (https://financial-dictionary.thefreedictionary.com/speculation)

"In finance, speculation is also the practice of engaging in risky financial transactions in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument—rather than attempting to profit from the underlying financial attributes embodied in the instrument such as value addition, return on investment, or dividends.

Speculators play one of four primary roles in financial markets, along with hedgers, who engage in transactions to offset some other pre-existing risk, arbitrageurs who seek to profit from situations where fungible instruments trade at different prices in different market segments, and investors who seek profit through long-term ownership of an instrument's underlying attributes" - https://en.wikipedia.org/wiki/Speculation (https://en.wikipedia.org/wiki/Speculation)



I believe that most people on this forum advocate for investment rather than speculation.  They don't seem to be equivalent terms.  Speculation is a risky short term thing, that depends upon quick market changes . . . investment is less risky and involves holding the investment for extended periods of times (often decades or longer).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: onecoolcat on October 26, 2021, 02:30:39 PM
Speculating means you buy it with the goal of making money or not losing opportunity cost in the process.  We speculate everytime we buy a stock or and index fund; its not inherently harmful nor unmustachian.

You can use whatever word and/or definition you like. But at the end of the day businesses (stocks) have value because they pay you money (in dividends). This also means there is something "there" to price them. Bitcoin is different in that it is 100% pure speculation. There is no revenue. This is substantially different from investments advocated by this community, generally, and much more similar to meme stocks.

Bitcoin is an asset like gold.  It's fixed supply is a net positive because investors have the confidence that it's supply won't fluctuate at the whim of a central authority.  You can use bitcoin as a currency if you want, and some do, but I would wager most view it as an asset and have done so for atleast the past 7 years.

And let the goal post shift game begin! Either Bitcoin is a currency or an asset. It cannot be both: the attributes that make a good asset necessarily make it a bad currency, and the attributes that make for a good currency necessarily make for a poor asset. That you—and frankly most—crypto enthusiasts fail to grasp this very basic rule of finance is part of the reason many of us struggle to take you seriously.

The immutable public Ledger means your coins can't be double spent.

And then there's this stuff. Like that's not at all the point of the immutable ledger. The immutable/public ledger is for audibility. Immutable public ledgers (merkle trees) have been widely used in software development for ~40 years. They are very cheap and efficient. Proof of Work is the mechanism that prevents double-spending. Proof of Work is necessarily VERY inefficient and expensive.

This is a counter to wire fraud and also facilitates trustless transactions.  This has its downside, which some may say is an upside (including me), because it also allows government to seize funds (i.e. colonial pipeline) and enforce tax laws.  Alot of crypto proponents don't like these last two thing but I see it all as a positive.

These are problems very few of us on this board will ever have to deal with. As I've repeatedly agreed: Bitcoin's single actual use-case is regulatory arbitrage. I think it's important to understand this is not a technical feat. This is only a temporary "too new to have yet been regulated" point in time. This use-case will evaporate eventually.

Consensus is good because it, in theory, results in more careful, calculated, and popular updates.  The alternative is having legislators pass unpopular laws in the dead of night that the people don't want.  This happens all the time.

But Bitcoin is digital gold, not a currency, right? What legislators are passing gold laws?! Or have you goal-post shifted back to currency chat already? Tough to keep track.

POW is not wasted energy because that energy ensures transactions are secure and immutable.  Moreover, if you don't like POW then crypto is not a zero sum game.  You can chose to back other cryptos that don't have POW. 

Again, PoW is only for solving the double spending problem. Immutability is easily solved with very basic cryptography. And "secure" is meaningless without mentioning an attack-vector (I'm guessing you mean mutating the values, which... again, is very simple and cheap to do).

As for zero sum game... I'm not sure if we agree on what that phrase means?! Every cryptocurrency I'm familiar with is, well, worse than a zero-sum game, they're negative-sum games. But I digress..

Finally, you aren't going to convince me that it's irrelevant that there are thousands of developers working on improving or building services ontop of bitcoin.  These developers help scale bitcoin.  It's only going to get better, cheaper, quicker, and more accessible from here.

It's not irrelevant, but it's not a good reason to get into a whole lot of anything. It's basically the old "if everybody else was jumping off a bridge..." wisdom your parents may've mentioned as a child.

Not all stocks pay dividends.  People buy stocks because they think it's a better place to grow their money than cash.  That's a form of speculation.  Is there more risk is speculating in crypto than the s&p 500 index - well yeah.  That doesn't mean an element of speculation is not in common between the two.

Truthfully, I don't want to convince you to change your views.  You do your thing and I'll do mine and only time will tell which of us is right.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: the_gastropod on October 26, 2021, 02:36:48 PM
Not all stocks pay dividends.  People buy stocks because they think it's a better place to grow their money than cash.  That's a form of speculation.  Is there more risk is speculating in crypto than the s&p 500 index - well yeah.  That doesn't mean an element of speculation is not in common between the two.

Some stocks (e.g., Amazon) don't pay dividends because they reinvest their profits into the company. There is 100% an expectation that eventually Amazon will pay profits out as dividends. That is what stock is: entitlement to a company's assets and profits in proportion to how much of their stock you own.

Some other stocks (e.g., GME) are absolutely just speculative nightmares, no question. There is absolutely some grey between the black/white of "speculation" vs "investment". But... you were the one that made the assertion "all investment is speculation". I think that's obviously pretty bogus—there is a massive divide between investing in the S&P500 and investing in Bitcoin.

Truthfully, I don't want to convince you to change your views.  You do your thing and I'll do mine and only time will tell which of us is right.

Ay, that's cool. For your sake, I hope I'm wrong :) Let's mark our calendars to check this thread in 2031 and see what happens?
Title: Re: What do you think of adding a low% of crypto allocation
Post by: waltworks on October 26, 2021, 03:22:46 PM
People buy stocks because they think it's a better place to grow their money than cash. 

This, I think, sums it up. There are 2 types of people:

-People who want to save up *money* and not have it lose value, ie who want to grow their money by having cash or cash equivalents.

-People who just want to use money as a tool and have little interest in cash because their wealth is in other assets.

For example, I have low/middle 7 figure net worth, but I probably only have 2% of that in actual dollars (not physical cash) - and I only have that much because I want to have some ready money on hand in case I need to put a new roof on my house and buy a car at the same time or something and I don't want to deal with the hassle of selling stock to accomplish that. If I was less lazy and cared about optimizing more I would move most of that cash into something (stocks, bonds, RE, etc). Money is like a hammer - as long as I have enough hammers to pound the nails I need to pound, I really don't want more. If my on-hand cash loses 5 or 10 or even 20% of it's value in a year, I really don't care all that much.

Then there are the people with thousands of dollars in their walls/mattress, or a bunch of gold in their safe deposit box. People buy the collectors coins out of Parade magazine or off an ad on Fox News. Having that *money* physically in their possession is necessary for their sense of security. Inflation feels like an attack on their very being.

Folks who want money to never lose value predate bitcoin of course, we call them goldbugs. It's a personality type. Honestly it's not a mindset I really understand, but it is what it is.

So to a meaningful degree, some of us are never going to see eye to eye on this.

-W
Title: Re: What do you think of adding a low% of crypto allocation
Post by: thesis on October 26, 2021, 03:47:05 PM
I remember reading the first few pages of this thread when it first started, and now I've read the last few pages.

Most of the people I know who are buying cryptocurrencies are basically treating them like penny stocks, hoping to buy super low, thereafter to experience high growth and a massive net gain. "To the moon" is one of the most annoying phrases I have heard in this regard.

But this, in itself, is not an indictment of investing in crypto.

Moreover, a lot of libertarian-types are drawn to crytpo currencies because their "de-centralized" use as a store of value seems to appeal to their "fight the government" attitude.

But this, in itself, is not an indictment of investing in crypto.

I'm with Malcat on this one. I may have mentioned before, I keep hoping to see some core principle of understanding emerge from the debate, but I'm not seeing it either way.

What I am slightly concerned about is that financial institutions realize there is money to be made selling these "coins" to the masses, and as others have mentioned, they are pushing this very heavily. Having some crypto has become quite fashionable. But if crypto starts to be used as financial backing more and more, could it actually trigger a recession if it all implodes? This is pure speculation on my part, and it's not the reason I don't own any crytpo, but think of how people got fancy with mortgage-backed securities and how that all imploded in the great recession. Are there now crytpo-backed securities? The popularity it has experienced is not a good thing, IMO, especially since most investors are just trying to chase the gains of Bitcoin, just like how stock investors pine over how much Apple stock would now be worth if they had bought when it first went public (or at least, you get the idea).

I guess my point is, it's not my problem until it's everyone's problem (potentially). As it is, I don't like jumping on fads (or at least, if I'm being deeply honest, I don't like to be thought of as having jumped on any fads), and I don't yet have a compelling reason to invest in crytpo, so I'm comfortably on the outside at this point.

(I'm not overly committed to these views, just wanted to add something)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FLBiker on October 27, 2021, 09:44:14 AM
You should see how hard Interactive Brokers is pushing crypto. Giant quote tables appear on your main screen. Messages appear in your inbox. Emails are sent weekly. The message is, "you're missing out and this investment is totally legitimate - on par with index funds!". If it all comes crashing down, expect class action lawsuits.

It feels like end-stage pyramid scheme/MLM stuff, where there aren't many investors/suckers left so you have to try harder and harder to rope more in.

-W

Paypal too.  I just received some money from my dad and got this message: "Did you know your money can now do even more in PayPal?  Buy, sell, and hold crypto right from your PayPal Balance account."  Feels like the cab driver giving me stock tips...

Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 10:20:31 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 27, 2021, 10:25:50 AM
Has anyone said this before?

No matter how many ponzi schemes I invest in, I am not diversifying my portfolio.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 27, 2021, 10:51:07 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

probably thinks he avoids the taxes he should be paying on his gains by using it to buy the house b/c its money right -
Title: Re: What do you think of adding a low% of crypto allocation
Post by: solon on October 27, 2021, 11:10:21 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

What do you mean he "believes" he owns? Is he not sure? Ownership should be pretty easy to know.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 11:29:01 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

What do you mean he "believes" he owns? Is he not sure? Ownership should be pretty easy to know.

It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.

I'm guessing some random guy in India created a website claiming to sell "the new crypto". He probably posts the price and artificially increases the price every few months on his website. It always goes up. You just send him a few thousand dollars and you will be worth millions in a few short months. The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 

According to him, everyone else is an idiot because they will not accept his crypto for real currency. The conversations are incredibly bizarre.

 

Title: Re: What do you think of adding a low% of crypto allocation
Post by: JohnnyZ on October 27, 2021, 11:31:47 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

I for one have found this thread very interesting, though probably no one has changed their mind, but there was some interesting discussion and from the crypto side, even if I don't find they very persuasive, finally some actual arguments instead of "I made so much money LMAO have fun staying poor" and "if you're against crypto you don't understand it" the same few posters contributed in previous threads.


For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

 Maybe they can buy something in El Salvador instead?
 Seriously though, this is not about "understanding crypto"; why would the seller accept when they don't even know how much they'll get? It could be up or down 20% before they're even done with the papers.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: BicycleB on October 27, 2021, 11:32:29 AM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.

We have beaten this topic to death, but I would like to attempt to add or expand on a topic that should get more attention. It seems like 90% of the discussions for pro-crypto are based on the technology alone. As a Social Psychologist, let's not forget the behavioral component of holding an investment. As many of you know, I love real estate. However, in 2002-2006, we had a large increase in unqualified buyers. The end result was a real estate crash, even though the asset itself was fundamentally correct. They were not poorly built houses that were falling down. The flaw was the people who owned them and their behavior.

This is not a knock on the people on this forum. This applies more to people outside of this forum. When I look at the people who own bitcoin and other types of crypto, it scares the shit out of me.

For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

What do you mean he "believes" he owns? Is he not sure? Ownership should be pretty easy to know.

Maybe it's in one of these companies that is lending "your" BTC to several borrowers, but you have to buy in from a non-US address because <reasons>, with the unspoken reason that the firm can't legally operate in the US? And the practical one that you sent your original investment out using a fake non-US computer address, now you have no ability to compel its return?

I think I've read that getting your money out of those is tricky.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 27, 2021, 11:54:25 AM
Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there. Also found myself unable to ignore him when he escalated to mining and was lying about the price of electricity in our city. So much of this stuff is obviously a scam. Guaranteed 10% per day returns. Your chosen platform's website is one page with no details at all? C'mon man. This is an unregulated space and the hype this time around is all people who still don't understand the technology in the slightest but are experiencing big time FOMO.

And I had this written up yesterday much lengthier - but as an anti-crypto person, I have absolutely nothing to prove. This is just another thing in the sea of ideas that might become something worthwhile or more likely will prove to be nothing of consequence ever. If I'm wrong, I'll benefit via my index funds all the same. With a side bonus of being able to benefit from almost anything else that becomes as huge as the pro-crypto crowd claims this will be. All without having to waste a minute thinking about it (I'm still working on actually doing this last part, but at least I know I don't have any reason to think about this). I might bring up some points on why not to get into crypto because, as with any investment and particularly with one that is very new to you, and even more particularly with one that is very new to pretty much everyone, you should be starting from a place of deep skepticism.

Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff. And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 12:17:05 PM
I've been following this thread since it began. I have read every single post. However, I haven't read every single word of every single post. When someone starts saying the same thing again, I tend to scroll to the bottom, looking for new information.

From my perspective, the pro-crypto side lacks consistency. It's all over the place. I'm less convinced.

From the anti-crypto side, there tends to be more consistency and logic.

This doesn't mean one side is right and one side is wrong. Maybe one side consists of better communicators? That is possible. I sometimes have great ideas, but do a poor job of explaining them.


I for one have found this thread very interesting, though probably no one has changed their mind, but there was some interesting discussion and from the crypto side, even if I don't find they very persuasive, finally some actual arguments instead of "I made so much money LMAO have fun staying poor" and "if you're against crypto you don't understand it" the same few posters contributed in previous threads.


For example, I have a family member that believes he owns more than a million dollars in crypto. They want to make an offer on 2-3 million dollar house with the crypto. The real estate agent suggested that they convert their crypto into real U.S. currency and then make the offer in U.S. currency. The family member then comes up with really confusing explanations on why this is not possible. They get upset and blast others for "not understanding crypto"

 Maybe they can buy something in El Salvador instead?
 Seriously though, this is not about "understanding crypto"; why would the seller accept when they don't even know how much they'll get? It could be up or down 20% before they're even done with the papers.


It's not real. It's fake and it's a scam. Someone created a fake website with fake crypto and sells it to conspiracy theory followers that have a poor understanding of economics.

I am obviously doing a poor job of explaining myself. For that, I apologize.

Here is my best analogy.

Please send me $2,000 in U.S. currency and I will send you $2,000 in my crypto currency. I guarantee you that it will be worth $80,000 in two months. However, you can never actually collect real money from me. Then I go off and list a bunch of excuses.

Title: Re: What do you think of adding a low% of crypto allocation
Post by: MustacheAndaHalf on October 27, 2021, 12:24:46 PM
It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.
... The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/

That's the angle I would use to pressure his belief.  If this crypto has been so profitable, why isn't it on the list with 6800 other crypto currencies?  Some of those have gone up +1000% as well, so the special returns are no reason to keep it off the list.


You could also ask "which crypto exchange do you use?", or ask him to look up the crypto exchange himself, on this list of 300:
https://coinmarketcap.com/rankings/exchanges/

Almost all of those exchanges have a market called "BTCUSDT" - the most popular market by far.  As a buyer, you pay USDT and buy BTC.  As a seller, you sell BTC and get USDT.  Almost every crypto exchange will have USDT.  Which means this guy should be able to sell his crypto for USDT.  If it's a scam, there will be no way to trade his crypto for USDT.  It's a really bad sign if he can't convert his crypto holdings into USDT.

(International crypto exchanges aren't allowed to transact in USD.  The U.S. Treasury Department will come after them with anti-money laundering rules, and can force their bank to drop them.  Banks do not want to be sanctioned by the U.S. - they can be dropped off the international banking system.  But those rules don't apply to USDT, so crypto exchanges use that, instead)
Title: Re: What do you think of adding a low% of crypto allocation
Post by: clarkfan1979 on October 27, 2021, 01:54:52 PM
It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.
... The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/

That's the angle I would use to pressure his belief.  If this crypto has been so profitable, why isn't it on the list with 6800 other crypto currencies?  Some of those have gone up +1000% as well, so the special returns are no reason to keep it off the list.


You could also ask "which crypto exchange do you use?", or ask him to look up the crypto exchange himself, on this list of 300:
https://coinmarketcap.com/rankings/exchanges/

Almost all of those exchanges have a market called "BTCUSDT" - the most popular market by far.  As a buyer, you pay USDT and buy BTC.  As a seller, you sell BTC and get USDT.  Almost every crypto exchange will have USDT.  Which means this guy should be able to sell his crypto for USDT.  If it's a scam, there will be no way to trade his crypto for USDT.  It's a really bad sign if he can't convert his crypto holdings into USDT.

(International crypto exchanges aren't allowed to transact in USD.  The U.S. Treasury Department will come after them with anti-money laundering rules, and can force their bank to drop them.  Banks do not want to be sanctioned by the U.S. - they can be dropped off the international banking system.  But those rules don't apply to USDT, so crypto exchanges use that, instead)

"It's a really bad sign if he can't convert his crypto holdings into USDT."

I agree that it is a really bad sign. There is no exchange. It's a fake website with a fake currency. I immediately realized that it was a scam. He was in denial. He just blamed everyone else for "not understanding crypto"

It's now one year later and he hasn't mentioned it. It's possible that he realized that he lost all his money to a scam. He doesn't want to talk about it because it's embarrassing and that is understandable.

The bigger part that is super embarrassing that he doesn't realize is when he gives the hard sell to the real estate agent to use his 1 million of "crypto" to buy a 2-3 million dollar house. It's the equivalent of offering monopoly money for the house. When the realtor won't even put their name on it, they blame the realtor. They just don't understand monopoly money.

I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

 
Title: Re: What do you think of adding a low% of crypto allocation
Post by: maizefolk on October 27, 2021, 05:16:55 PM
Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff.

Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 27, 2021, 05:25:21 PM
Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff.

Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).

I'd agree with this statement. I think the underlying tech has a future. I don't think BTC does eth might but not enough for me to buy any. Just like I don't buy individual stocks. Or invest in ultra specific market sectors.

The whole financial world could run on Blockchain some day that doesn't mean BTC has to exist for that.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 27, 2021, 05:55:10 PM
Fair point - we are in a thread about allocating a portion of your portfolio to crypto currency, but I didn't write out "pro direct ownership of crypto crowd".
Title: Re: What do you think of adding a low% of crypto allocation
Post by: dandarc on October 27, 2021, 06:03:06 PM
Pro-crypto crowd, on the other hand, actually needs to really prove the case because they're the ones making the outlandish claim and trying to convince people to buy into this stuff.

Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).

I'd agree with this statement. I think the underlying tech has a future. I don't think BTC does eth might but not enough for me to buy any. Just like I don't buy individual stocks. Or invest in ultra specific market sectors.

The whole financial world could run on Blockchain some day that doesn't mean BTC has to exist for that.
Or any other crypto currency - there might be something to the underlying tech (emphasis on might) but crypto currency - this particular application of that technology is a solution looking for a problem. But the IBM private Blockchain is not as sexy as the brand new casino.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: js82 on October 27, 2021, 06:09:29 PM
It's fake crypto that is not worth anything. Literally zero. He fell for a scam but is in denial. He owns it. He believes it to be worth over one million. It's actually worth zero.
... The problem is that if you ever try to cash out your crypto, it cannot be exchanged for real money. You just need to convince someone else to accept it as real currency. 
Is the fake crypto he bought on this list of 6800+ crypto currencies?
https://coinmarketcap.com/

That's the angle I would use to pressure his belief.  If this crypto has been so profitable, why isn't it on the list with 6800 other crypto currencies?  Some of those have gone up +1000% as well, so the special returns are no reason to keep it off the list.


You could also ask "which crypto exchange do you use?", or ask him to look up the crypto exchange himself, on this list of 300:
https://coinmarketcap.com/rankings/exchanges/

Almost all of those exchanges have a market called "BTCUSDT" - the most popular market by far.  As a buyer, you pay USDT and buy BTC.  As a seller, you sell BTC and get USDT.  Almost every crypto exchange will have USDT.  Which means this guy should be able to sell his crypto for USDT.  If it's a scam, there will be no way to trade his crypto for USDT.  It's a really bad sign if he can't convert his crypto holdings into USDT.

(International crypto exchanges aren't allowed to transact in USD.  The U.S. Treasury Department will come after them with anti-money laundering rules, and can force their bank to drop them.  Banks do not want to be sanctioned by the U.S. - they can be dropped off the international banking system.  But those rules don't apply to USDT, so crypto exchanges use that, instead)

For the sake of pointing it out: Just because it's on CoinMarketCap doesn't mean it's not a scam.  There's a bunch of garbage that's listed on there that's basically a bunch of dudes saying "let's make a coin from some open source code, hype it on reddit/social media to sucker people in, get the price to go up, and then we can cash out".  I'd go so far as to say that *most* of these coins will eventually be worthless (and a non-trivial number are outright scams), but there will be a handful of genuine ones that survive to become important/impactful beyond an investment tool.


Just to clarify, you can be pro-crypto and not think it makes sense an investment (I also don't think turkish lira, japanese yen, or gold coins make sense as investments).

Agreed.  And FWIW, crypto is pretty clearly not a good investment once the adoption cycle winds down - just like cash is trash, so will be crypto once rising demand stops driving prices.  I see Crypto as interesting in the near to mid term, useless(as an asset class, not a technology) in the long term.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 27, 2021, 08:42:50 PM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FrugalFukuoka on October 27, 2021, 11:52:59 PM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: boarder42 on October 28, 2021, 05:26:44 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.

its not just volatility that matters here its that there is no underlying value to BTC other than it was the first one and people are buying it today.  if BTC had a patent on blockchain they'd probably have something but they don't.

it doesn't have a long enough history of anything to even begin to discuss correlation and diversification.  Its best comparison still is a lottery ticket or a beanie baby or some tulip bulbs.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: Malcat on October 28, 2021, 06:47:30 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

It's actually the skeptical who are the most subject to scams these days. It's people who have a lack of faith in "the system," but not enough ability to assess information, who end up the most susceptible.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: FrugalFukuoka on October 28, 2021, 06:48:24 AM

its not just volatility that matters here its that there is no underlying value to BTC other than it was the first one and people are buying it today.  if BTC had a patent on blockchain they'd probably have something but they don't.

it doesn't have a long enough history of anything to even begin to discuss correlation and diversification.  Its best comparison still is a lottery ticket or a beanie baby or some tulip bulbs.

It's not BTC, it's cryptocurrency. Again, BTC = cryptocurrency is an assumption too many people mistakenly make.
As for BTC, it's undeniable underlying value is that it's just that. Well known. Is Tom Cruise a better actor than your average Netflix flick line-up? I doubt it. Does he bring in more money? Surely. Not saying that just because it's well known, it's a wise investment, but it's not entirely without underlying value either.

And denying that correlation and diversification have nothing to do with it because it's not around for long enough sounds like missing the point behind why correlation and diversification matter in investing in the first place. Past performance is no guarantee for future returns is literally something every investor is told; so why does it need to have enough past performance before you start considering it's role in it all? If bonds and equity have a correlation of 0 for the past 10 years, but historically they had a positive correlation of 0.9, would you still make the decision based on the historical correlation rather than the last 10 years?

Also, a lottery ticket loses all of it value the moment it expires out of the money. A beanie baby still retains some value. And unless you can get your tulip bulbs for free every winter,  they still retain their value quite nicely as well hundreds of years later. Surely, 1 bulb won't buy you a house anymore,  but they're not for free either.

And lastly, let's not think for even one second that everything VTI invests in is pure undeniable value. It's not. Yet we all understand it's role in our portfolio. Cryptocurrency can serve a role if you're looking for something that's highly volatile and not moving in step with the markets. Should everyone therefore invest in it? No, it's high risk and completely uncertain where it will end up in the end. It's not guaranteed to succeed nor is it guaranteed to fail. No way of knowing. That's all I am trying to say.



Title: Re: What do you think of adding a low% of crypto allocation
Post by: ChpBstrd on October 28, 2021, 07:42:34 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.

Imagine if Bernie Madoff's Ponzi scheme was discovered by the markets, but for some obscure legal reason he could not be prosecuted or shut down. While some of today's investors would seek immediate exit, others would see value. They would see how his fund's stated performance has a low correlation to other assets. They would note the volatility but also note how Madoff's fund tends to go up and see in that "some form of utility" which will continue to attract future buyers due to FOMO. Certainly, they'd say, there is some risk associated with investing in a known Ponzi scheme, but that risk "can increase portfolio performance" as a diversifier "if properly risk managed" with a modest allocation. Madoff juices things by noting that his fund is buying back a few shares here and there, making the fund inherently deflationary - like a currency during a depression!

Now suppose Bernie Madoff declared "it is necessary for me to collect all of your money because we are investing in a new cold fusion powered quantum computing chip infrastructure that will completely change the world. It's all very hard for most people to understand." Now the flow of funds into his scheme increases. But wait, there's more! Madoff continues, "the chips with cold fusion reactors installed on them don't actually work very well right now, and can only complete a couple of clock cycles, so until the tech matures we will be using these 'lightning' chips which are surplus Intel chromebook processors." Now investors' mouths are watering. Madoff's fund represents both the tech of the future and a proof-of-concept today!

Shares in Madoff's known ponzi scheme go to the moon. Traders are doing technical analysis on YouTube, while others take a HODL approach. Kids on WallStreetBets start posting seven-figure gain porn and doing CNBC interviews from their parents' basements. Long-term thinkers discuss the implications of quantum-fusion-chips regarding radiation and the eventual plutonium contamination of the entire planet, but these thoughts are drowned out by debates over whether the 18 year old who bought a house with proceeds from Madoff's fund sold too soon and is going to regret it.

Occasionally, random investors in the fund see their assets go to zero. Madoff simply explains to them that "hackers" stole their shares and there's nothing he can do. Everyone accepts this.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: talltexan on October 28, 2021, 07:45:51 AM
I'm not pressing him for any details. I've heard enough of this crap over the past 5 years. It's not possible for him to realize that these are scams because he is so invested in conspiracy theories. Unfortunately, his group is a pretty easy target on the internet for scams. People make a living taking money from these people. 

People are just going to have to wise up or get wiped out. Hundreds of thousands of Americans have just lost their lives to COVID, after vaccines became available, because they believed social media influencers over doctors, scientists, and public health experts. Millions more will suffer long COVID or disability. People are sitting in jail right now because they believed online nonsense and committed some act of violence or fraud. Now you have people putting everything into this hybrid ponzi / MLM coin scam because it keeps attracting marks and all the influencers are making (monetized) videos about it. If you wouldn't take stock-picking advice from Wall Street Bets, and you wouldn't take healthcare advice from Dr. Fucking Oz, and you're not doing the latest TikTok challenge that involves huffing WD-40 and trying to run down the street or whatever, then WTF would you let social media / media influence you to buy something that is both worthless and useless??? It's. All. The. Same. Gullibility.

Literal death and the loss of one's fortune is the price of believing disinformation on the internet. Wise up or die. Only the skeptical will survive in the 21st century.

https://www.rationaloptimist.com/ ;)

It looks like the discussion is derailing a bit into an argument about a new invention called the bicycle that is supposedly a great boat by it's proponents which is vehemently denied by it's opponents saying it will sink like a rock. We'll have some really smart and creative people explain how a contraption with the bicycle on top could potentially power the boat and therefore justify the utility of the bicycle, which naturally will be 'too complicated' to understand by intelligent opponents who really try to understand it all but cannot see how this would possibly be better than a paddle. In the meanwhile there is a small group of people seeing the bicycle for what it is, a great tool for transport on land.

Digital tokens, blockchain technology, smart contracts, they all have great potential to make our lives easier, but they do not all mean BTC and the only use case is not limited to 'digital currency'. Firstly, if you're not aware what each part is, and it's potential utility, read up on those separately (preferably outside of the context of BTC ).

Secondly, if we do want to have an argument what drives the price of a cryptocurrency, let's dive in systematically: just like any other financial asset it's driven by buyers and sellers who make trading decisions. As predominantly index investors we probably all know this to be emotional in the short term, enter your favorite Warren Buffet or Benjamin Graham quote. Luckily for an asset class such as equity this gets dampened over time as there is some real undeniable activity (or lack thereof) represented by the token (stock) you buy or sell. With a cryptocurrency, it's true that a lot of it's owners do not fully grasp the utility thereof, proving a lot of the opponents in this thread right that it tends to be a pump and dump scheme. Look at the volatility of BTC and read twitter, and the pump and dump is so transparent you wonder who would possibly fall for this.
Which brings us to the next point, aside from just popularity keeping the price from going to 0 frequently, what is the reason behind BTC and ETH, and other more accepted cryptocurrencies having an increasingly higher bottom? That is some form of utility. Whether in the case of BTC that utility is the decentralized nature of transferring value, or it's volatility by itself, or any other of a myriad of reasons, is all very debatable; but one thing that is increasingly clear is that the concept and underlying technology are persistent.
So lastly, why invest in BTC or ETH or other cryptocurrencies?
1. The volatility, if properly risk managed by e.g. assigning only a low allocation, can increase portfolio performance
2. The correlation to other asset classes can contribute in terms of diversification
3. The project that will see widespread adoption in the real world will likely see the value of it's associated tokens increase by a many-fold

And why not invest? The same reasons, it's volatile, you can find diversification in lower risk products, and you don't necessarily want to follow a Taleb style portfolio of 90% security and 10% high risk high return. Fair enough.

its not just volatility that matters here its that there is no underlying value to BTC other than it was the first one and people are buying it today.  if BTC had a patent on blockchain they'd probably have something but they don't.

it doesn't have a long enough history of anything to even begin to discuss correlation and diversification.  Its best comparison still is a lottery ticket or a beanie baby or some tulip bulbs.

These comparisons are what are awkward for me. Even if I miss a genuine opportunity for value with Bitcoin, I enable behavior within myself that could well lose all those gains when the next rapidly surging asset is created.
Title: Re: What do you think of adding a low% of crypto allocation
Post by: aceyou on October 28, 2021, 09:35:26 AM
Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there.

I'm sorry to hear this Dandarc.  Losing friendships over how another person chooses to allocate their retirement savings seems super sad to me. 

And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.

I don't need greater fools to make money in this space.  Take, for example, a small investment I've made in VeChain (about 3k).  The purpose of this crypto is to use a blockchain as a validator/authenticator.  If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff.  It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc. 

Here's a brief quote that I think does a good job of summing up the plans for VeChain:  VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes. By utilizing tamper-proof and distributed ledger technology, VeChain provides retailers and consumers with the ability to determine the quality and authenticity of products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring about a supply chain management ecosystem that is secure for all participants. VeChain plans to achieve this secure supply chain management ecosystem via the method of asset digitization. VeChain enables manufactures to assign products with unique identities to the platform. This will allow manufacturers, supply chain partners, and even consumers, to track the movement of products through their supply chain.


Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time.  But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false. 

If you want to criticize me for investing in a single company rather than an index, I can see merit for that.  Personally, I have been nothing but 100% VTSAX since I started my FIRE journey 6 years ago.  We are, after all, on Mr. Money Mustache's forum, where face punches for buying individual ventures is part of the fun.  But to hold a position that crypto is just fools looking for even greater fools only hurting yourself in the long run. 

Finally, I want to say that this sentiment is WHY I'm venturing out of purely VTSAX.  I find that 95% plus of people I talk to and read on the internet seem to share your view that crypto is fools looking for bigger fools.  Because of this, my thesis is that groups trying to solve real-world problems using crypto are vastly underpriced in the market.  The total market cap of all things crypto is about 2.5 trillion dollars.  It will be MANY times that when the world