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.