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Bitcoins and Shitcoins
chicknMelt
Member Posts: 1,159
If any mods feel this should be under a different category in the forum, feel free to move this - well aware this is off topic.
*Disclaimer - nothing in this thread is financial advice*
Anyone that watched my podcast with Duesenberg will know I'm very much into crypto, so i thought I would start a thread to get other peoples opinions and maybe help one or two of you understand it a bit more.
I'll start off by linking what I would describe as the best article on the internet for explaining why Bitcoin is a thing and why it will likely remain a thing. Its not a short read, but I challenge anyone to read it all the way through and still be anti Bitcoin.
https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1
A brief history/description of bitcoin:
- Created in 2008 by an anonymous cyber punk Satoshi Nakomoto, who (sort of) famously said 1BTC will be worth $1m+ or nothing in 20 years.
- First real world transaction was 10000 BTC for 2 large pizzas in 2013 - worth a staggering $109m today.
-Only 21m bitcoin can ever exist. Each bitcoin can be divided into 100,000,000, so in theory you could buy 100,000,000th of a bitcoin (but the transaction fee would likely be more than that)
-Transactions are verified by everyone on the network, no single entity has to be trusted, nor can any one single entity control or censor it (governments included). The network is secured by processing power (miners) - the only way to overcome it is to provide more than 50% of the processing power (called a 51% attack)
-"Minors" are rewarded for securing the network with the new bitcoins that are minted along with transaction fees.
-It would take approximately 6+ months of buying every single new piece of mining equipment available on the planet to achieve a 51% attack, and that increases by the day.
-The amount of new bitcoin minted is halved approximately every 4 years. So far, each supply shock has resulted in a huge increase in price (demand increasing and supply decreasing). The last halving was in May this year. In approximately 100 years, no more bitcoin will be minted, and minors will only receive transaction fees.
I am particularly interested in any counter arguments, especially from people who manage to get all the way through the linked article and are still against the idea.
Happy to discuss other cryptos too.
Shitcoins is a term used in the industry to describe any crypto that isn't Bitcoin. The reason is there are (or were) so many that are completely useless, akin to the days of the .com boom where there was a website for absolutely everything. Think Pets.com - valued at almost $300m 20 years ago (no one buys pets on the internet). Currently there are approx 6000 different cryptos, most of which are useless, but there is also very likely the next amazon or google mixed in there somewhere too.
Banks are especially at risk with the current DeFi movement (decentralised finance). You can find out more about all the financial lego blocks that are being built here: https://defipulse.com/ - click on one and you can read about what it does.
*Disclaimer - nothing in this thread is financial advice*
Anyone that watched my podcast with Duesenberg will know I'm very much into crypto, so i thought I would start a thread to get other peoples opinions and maybe help one or two of you understand it a bit more.
I'll start off by linking what I would describe as the best article on the internet for explaining why Bitcoin is a thing and why it will likely remain a thing. Its not a short read, but I challenge anyone to read it all the way through and still be anti Bitcoin.
https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1
A brief history/description of bitcoin:
- Created in 2008 by an anonymous cyber punk Satoshi Nakomoto, who (sort of) famously said 1BTC will be worth $1m+ or nothing in 20 years.
- First real world transaction was 10000 BTC for 2 large pizzas in 2013 - worth a staggering $109m today.
-Only 21m bitcoin can ever exist. Each bitcoin can be divided into 100,000,000, so in theory you could buy 100,000,000th of a bitcoin (but the transaction fee would likely be more than that)
-Transactions are verified by everyone on the network, no single entity has to be trusted, nor can any one single entity control or censor it (governments included). The network is secured by processing power (miners) - the only way to overcome it is to provide more than 50% of the processing power (called a 51% attack)
-"Minors" are rewarded for securing the network with the new bitcoins that are minted along with transaction fees.
-It would take approximately 6+ months of buying every single new piece of mining equipment available on the planet to achieve a 51% attack, and that increases by the day.
-The amount of new bitcoin minted is halved approximately every 4 years. So far, each supply shock has resulted in a huge increase in price (demand increasing and supply decreasing). The last halving was in May this year. In approximately 100 years, no more bitcoin will be minted, and minors will only receive transaction fees.
I am particularly interested in any counter arguments, especially from people who manage to get all the way through the linked article and are still against the idea.
Happy to discuss other cryptos too.
Shitcoins is a term used in the industry to describe any crypto that isn't Bitcoin. The reason is there are (or were) so many that are completely useless, akin to the days of the .com boom where there was a website for absolutely everything. Think Pets.com - valued at almost $300m 20 years ago (no one buys pets on the internet). Currently there are approx 6000 different cryptos, most of which are useless, but there is also very likely the next amazon or google mixed in there somewhere too.
Banks are especially at risk with the current DeFi movement (decentralised finance). You can find out more about all the financial lego blocks that are being built here: https://defipulse.com/ - click on one and you can read about what it does.
Comments
Imo gold is a good investment too right now, so cant knock you too much.
The very fact that a government CAN'T control it is its selling point. if your local currency is hyper-inflating, what other option do you have? in Venezuela a £2.50 cup of coffee costs £100 a week later or something crazy. Unsurprisingly there is a massive premium on Bitcoin there.
Governments have a history of seizing assets when their currency goes to **** too, including gold.
"in 1933, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with exceptions for some jewelry and collector's coins. ... By 1975 Americans could again freely own and trade gold." US citizens had to sell their gold to the government for 1/4 of the market value, or face the concequences.
Imagine trying to get out of the country with £1m of gold undetected too...with BTC you can literally store the encryption key in your head.
Another more recent example:
Italy's government may tax cash and other valuables locked away in safety deposit boxes held with banks, Italian newspapers said on Wednesday, quoting Deputy Prime Minister Matteo Salvini.11 Jun 2019
I honestly don't think any government has any control over it whatsoever, no matter how hard they try. India for example tried to make it illegal recently, and it was overturned. You cant make transactions illegal based on the industry you work in - its against human rights.
More progressive countries realise that trying to fight against technology is always a losing battle -almost these exact worse were said in US congress, and their direction seems to be regulation instead of banning.
There are even publicly listed companies buying in now, and the more that happens, the less likely any kind of ban is, because it would cause a a crash in stock prices if bitcoin crashed.
https://cointelegraph.com/news/other-companies-will-follow-mstr-stock-up-9-after-buying-bitcoin
The time for banning, controlling or stopping it was 10 years ago, the opportunity has passed now imo.
I recommend reading the article i linked in the OP to understand why
It has better properties of money than any other asset in human history, including gold. That is the main reason it has any value in the first place
US gov already looked into shutting it down 8 years ago.
They had shut down previous versions (e-cash) before it managed to take off, so a new unstoppable one was created, with the specific purpose of being unstoppable.
Not counterarguments per se, more reasons why I don't currently own any crypto, would be interested in your thoughts:
The swings and swongs are a direct result of the massive increase in purchasing power. You cant expect an asset to increase thousands of % in purchasing power without having swongs in the double digits every now and then. Its just the nature of markets. Nothing goes up in a straight line, even Tesla.
Sorry for the long quote but I really dot know any other way to explain it. This came from the bullish case for bitcoin article i linked in the OP:
Many have criticized Bitcoin as being an unsuitable money because its price has been too volatile to be suitable as a medium of exchange. This puts the cart before the horse, however. Money has always evolved in stages, with the store of value role preceding the medium of exchange role. One of the fathers of marginalist economics, William Stanley Jevons, explained that:
Historically speaking … gold seems to have served, firstly, as a commodity valuable for ornamental purposes; secondly, as stored wealth; thirdly, as a medium of exchange; and, lastly, as a measure of value.
Using modern terminology, money always evolves in the following four stages:
Collectible. In the very first stage of its evolution, money will be demanded solely based on its peculiar properties, usually becoming a whimsy of its possessor. Shells, beads and gold were all collectibles before later transitioning to the more familiar roles of money.
Store of value: Once it is demanded by enough people for its peculiarities, money will be recognized as a means of keeping and storing value over time. As a good becomes more widely recognized as a suitable store of value, its purchasing power will rise as more people demand it for this purpose. The purchasing power of a store of value will eventually plateau when it is widely held and the influx of new people desiring it as a store of value dwindles.
Medium of exchange: When money is fully established as a store of value, its purchasing power will stabilize. Having stabilized in purchasing power, the opportunity cost of using money to complete trades will diminish to a level where it is suitable for use as a medium of exchange. In the earliest days of Bitcoin, many people did not appreciate the huge opportunity cost of using bitcoins as a medium of exchange, rather than as an incipient store of value. The famous story of a man trading 10,000 bitcoins (worth approximately $94 million at the time of this article’s writing) for two pizzas illustrates this confusion.
Unit of account. When money is widely used as a medium of exchange, goods will be priced in terms of it. I.e., the exchange ratio against money will be available for most goods. It is a common misconception that bitcoin prices are available for many goods today. For example, while a cup of coffee might be available for purchase using bitcoins, the price listed is not a true bitcoin price; rather it is the dollar price desired by the merchant translated into bitcoin terms at the current USD/BTC market exchange rate. If the price of bitcoin were to drop in dollar terms, the number of bitcoins requested by the merchant would increase commensurately. Only when merchants are willing to accept bitcoins for payment without regard to the bitcoin exchange rate against fiat currencies can we truly think of Bitcoin as having become a unit of account.
I wonder if anyone can enlighten me
The way these profits are achieved are completely transparent, and anyone can come up with a new strategy. Who ever comes up with the strategy is rewarded with a small % of the profits from the ENTIRE POOL. The rest are fairly distributed based on the capital you provide.
Your money is used for arbitrages between the dollar pegged assets for example, and provides liquidity to exchanges, generating exchange fees. All of this is handled automatically, following whatever is the most profitable strategy.
@Angmar2626
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There IS a temporary workaround
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Passed on bitcoin as thought it was going to be a fad and die out. Had not researched it though and an ex-college talked about toshi a fair bit.
I like the idea there is a limited number of bitcoin too. Can't dump more coins into the market lessening the value of the current ones.
I chose Litecoin and got very lucky as this was just before bitcoin surged to $20,000- all other currencies basically followed the same pattern.
I withdrew at a good time before it all came crashing down did a little research and I am currently holding EOS and etherum - just going to hold for the long haul now and see what happens - Hopefully can at some point I can give the returns to my son when he is older.