Author Topic: What do you think of adding a low% of crypto allocation  (Read 73365 times)

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #100 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.

aceyou

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Re: What do you think of adding a low% of crypto allocation
« Reply #101 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:)

clarkfan1979

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Re: What do you think of adding a low% of crypto allocation
« Reply #102 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.

 

Villanelle

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Re: What do you think of adding a low% of crypto allocation
« Reply #103 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? 

Villanelle

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Re: What do you think of adding a low% of crypto allocation
« Reply #104 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.'

onecoolcat

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Re: What do you think of adding a low% of crypto allocation
« Reply #105 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.

maizefolk

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Re: What do you think of adding a low% of crypto allocation
« Reply #106 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.)

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #107 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. 

jojoguy

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Re: What do you think of adding a low% of crypto allocation
« Reply #108 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.

LateStarter

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Re: What do you think of adding a low% of crypto allocation
« Reply #109 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://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/
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.wired.com/story/wired-lost-bitcoin/


Villanelle

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Re: What do you think of adding a low% of crypto allocation
« Reply #110 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://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/
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.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. 

LateStarter

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Re: What do you think of adding a low% of crypto allocation
« Reply #111 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://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/
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.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.

thisisjeopardy

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Re: What do you think of adding a low% of crypto allocation
« Reply #112 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).

Villanelle

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Re: What do you think of adding a low% of crypto allocation
« Reply #113 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://beincrypto.com/bitcoin-worth-140-billion-lost-says-uk-council/
https://river.com/learn/what-happens-to-lost-bitcoin/
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.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')

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #114 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).

LateStarter

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Re: What do you think of adding a low% of crypto allocation
« Reply #115 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/. 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.

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #116 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.

Juan Ponce de León

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Re: What do you think of adding a low% of crypto allocation
« Reply #117 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.

aceyou

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Re: What do you think of adding a low% of crypto allocation
« Reply #118 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. 

clarkfan1979

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Re: What do you think of adding a low% of crypto allocation
« Reply #119 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.   

clarkfan1979

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Re: What do you think of adding a low% of crypto allocation
« Reply #120 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.

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #121 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.

bacchi

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Re: What do you think of adding a low% of crypto allocation
« Reply #122 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


aceyou

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Re: What do you think of adding a low% of crypto allocation
« Reply #123 on: October 05, 2021, 11:31:38 AM »
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. 

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #124 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.

taekvideo

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Re: What do you think of adding a low% of crypto allocation
« Reply #125 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”

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #126 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

dreadmoose

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Re: What do you think of adding a low% of crypto allocation
« Reply #127 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"?
« Last Edit: October 06, 2021, 01:05:31 PM by dreadmoose »

dougules

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Re: What do you think of adding a low% of crypto allocation
« Reply #128 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. 

Juan Ponce de León

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Re: What do you think of adding a low% of crypto allocation
« Reply #129 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.
« Last Edit: October 06, 2021, 03:41:03 PM by Juan Ponce de León »

dougules

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Re: What do you think of adding a low% of crypto allocation
« Reply #130 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. 

BicycleB

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Re: What do you think of adding a low% of crypto allocation
« Reply #131 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

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.)

taekvideo

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Re: What do you think of adding a low% of crypto allocation
« Reply #132 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

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?).


talltexan

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Re: What do you think of adding a low% of crypto allocation
« Reply #133 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.

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #134 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

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?

taekvideo

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Re: What do you think of adding a low% of crypto allocation
« Reply #135 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

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?

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #136 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

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.

talltexan

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Re: What do you think of adding a low% of crypto allocation
« Reply #137 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.

Rosy

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Re: What do you think of adding a low% of crypto allocation
« Reply #138 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.

onecoolcat

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Re: What do you think of adding a low% of crypto allocation
« Reply #139 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. 

aceyou

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Re: What do you think of adding a low% of crypto allocation
« Reply #140 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. 

boarder42

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Re: What do you think of adding a low% of crypto allocation
« Reply #141 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

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.

blue_green_sparks

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Re: What do you think of adding a low% of crypto allocation
« Reply #142 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.

ChpBstrd

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Re: What do you think of adding a low% of crypto allocation
« Reply #143 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.

MustacheAndaHalf

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Re: What do you think of adding a low% of crypto allocation
« Reply #144 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.

waltworks

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Re: What do you think of adding a low% of crypto allocation
« Reply #145 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

clarkfan1979

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Re: What do you think of adding a low% of crypto allocation
« Reply #146 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.





maizefolk

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Re: What do you think of adding a low% of crypto allocation
« Reply #147 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.

index

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Re: What do you think of adding a low% of crypto allocation
« Reply #148 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.

 

GuitarStv

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Re: What do you think of adding a low% of crypto allocation
« Reply #149 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?