@ACEGOONER I would be interested to hear why you think BTC has a lack of integrity/transparency?
Its practical usage in the real world is to circumvent censorship, as a hedge against in your currency, as a trustless store of value then eventually as trustless medium of exchange. All of these things seem pretty important to me. They aren't so important in a country run fairly, but are of utmost important if you are a citizen in a country that isn't or whose currency has problems.
Did you know that Bitcion is currently at, or near its all time high in multiple currencies? Did you know that virtually every government currency that has ever existed has collapsed and ended up being worthless?
Mainstream media certainly got caught up in the mania of 2017. They recommended buying all sorts of cryptos at all time highs, but didn't mention any of them before they were at their peaks.
Its interesting that you mention Tom Lee and Mike Novogratz - both are massive fans of bitcoin, still. Tom Lee said this about bitcoin, earlier this year,
Mike Novogratz said this, this year:
If everyone had 5% of their portfolio in crypto/bitcoin, the market would be hundreds of times the size it is today.
I really don't want to get into an in depth discussion mate. But you know Bearlyther, not only a decent chap but he knows me and the background that I come from and have worked in for many years. I've briefly talked to him about BTC.
I will however cover off parts of your reply, bitcoin's integrity is tarnished in my opinion because for example if you bought bitcoin in 2010, and either lost the keys or even worse had them stolen because you didn't know how to secure your wallet (or couldn't be bothered) versus holding a stock say Amazon, there will always be that audit trail and proof of ownership which ultimately means that you can realise the value of your asset at any time. For any financial instrument be it a commodity or currency to operate in that way is unacceptable for the main stream. So you can see from this perspective we are already coming from opposite ends of the spectrum, there is very libertarian non centrist way of thinking here.
Practical uses, everyone is going out stockpiling bogroll again with the spikes in COVID, I can't go down to my local Tesco's and use bitcoin as a medium of exchange (this was its original intention I believe). Try presenting your vision of BTC as a censorship circumvention tool, you will see an awful lot of glazy eyed people saying yeah but what about my bogroll!
With regards to Bitcoins current value, I am very aware of trading values but not really bothered about currency hedging because at present I don't hold any. It is valued in USD and if other currencies being stronger put the value closer to all time highs that is as a result of central bank policy over anything to do with what is happening in the markets. Don't forget in the UK the pound has been depressed against the dollar since the brexit vote which is naturally going to amplify any return even if BTC remains static.
Tom Lee and Novogratz have been wrong about just about every price prediction they have made for BTC. If experts like them can't get it right what hope is there for the rest of us.
Novogratz made a generalised quote about portfolio construction, as with anything portfolios have many variables that affect which particular risk assets are put in. It wasn't tailored specific financial advice. The reality is for 90% of people crypto is highly unsuitable purely based on their risk profile.
If someone wanted to set up something similar to this in regards to other risk assets eg Stocks/Property/Currencies and Funds I would be more than happy to partake being industry trained, but after looking at crypto early in 2017 I decided it's not transparent enough for me to consider giving my time effort or money. I'm more of a Zoom/Snowflake/Apple/Scottish Mortgage man than I ever will be BTC.
I'm with @ACEGOONER on this one. I'm not a Financial Adviser, and this should not be construed as Financial Advice.
A "currency" that has existed for just 12 years. Invented by someone unknown using a false name.
That goes against the vested interests of major world Governments due to it being next to impossible to police (and, more importantly, tax). Compare and contrast with the additional state control of electronic banking versus cash.
It's not "gold"-that has millenia of provable performance in its investment. It's much more like Tanzanite. I'm not saying people shouldn't invest in Tanzanite-but beware buying it from people who say it is like gold or diamonds.
That's not to say that (like most things) some people will make a lot, and some will lose a lot. But there is a lot less data to show who is likely to be in which group.
It is either a medium-high risk investment or a high risk investment. Really only for people who can afford to lose the money. For most people, that does not mean "5% tops in BTC"-it means 5% tops in ANY form of investment of this level of risk.
Hello stranger @Essexphil. Hows tricks? Your kids need to teach you how to use whatsapp so we can have a chinwag sometime you social media technophobe🤓. Seriously though drop me a line mate. In Arteta we trust, a proper manager at last.
In terms of bitcoins risk profile its like derivatives/cfds on steroids. Truly the most high risk investment you can touch today. In saying that Tesla is doing a good job at competing with that mantra.
@chicknMelt , there is a lot about coins and tokens that make little sense, logically. I’ve touched on that before, about different countries and storing wealth. Coins, like stocks, are a punt. Stocks are nearly always overbought, and generally the market is priced with a six month view. There can be bad economic news out there, but that will be known to all. What generally makes the stock market crash, is the unexpected. But obv the risk on and off trades are always being scrutinised. BTW, is Theta not one of the best performers?
Regarding bitcoin, I guess it’s where you want to hang your hat, currency,asset or commodity, or all. I used to trade a bit, so I’m used to all the chart formations and predictions, same old. As a currency, although it is in use, countries aren’t keen on accepting it for payments. Russia allow holding crypto assets, but have banned payments. Russia also want a coin tied to their own currency. China are allowing coins, but also not to be spent in their economy. China are trialing blockchain networks in some provinces, with the intention of having a digital renminbi. That doesn’t seem to favor bitcoin taking over, although you could obviously exchange into whatever were to evolve. You mentioned coins for drugs etc. There’s also the countries that have sanctions on them, who will likely be the biggest players. Certain individuals are also banned from dealings in certain countries. This is obv a plus.Obviously money launderers don’t mind paying over the odds for an asset. Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA. But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves. I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela. Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why. In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether. I think the price can be manipulated quite easily. On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around. The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it. With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too. Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion, Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others might not know that. I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined. That size might make them seem rare, but there’s only one Mona Lisa. In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat. Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show. China are the biggest producers and consumers, with India lying second in consumption. India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact? That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that May be worthy of comment.
Forgot to add the recent event involving Kucoin. Also,if you get hit by a bus, somebody needs to have access to your keys. Funerals ain’t cheap🤣 Some folks think coins are dead because the owners are.
- I don't see why bitcoin should have a tarnished reputation because people lost the keys they were responsible for. The whole point is that you have the choice to be your own bank. Obviously if you make that choice, your in charge of your security. You can deposit your bitcoin into a custodial service if that isn't something you want to do. There is even a crypto bank that is regulated in the US now.
- Talking about not being able to purchase bogroll with bitcoin is extremely short sited. No one wants to spend bitcoin when they expect its purchasing power to increase dramatically. When people want to spend it, after its value has stabilized, it is easier for anywhere to accept than to set up a bank account. If they choose there are plenty of services that auto convert BTC to fiat (£/$ etc). demand to spend = people accepting it. no one wants to spend atm. In the 12 years it has existed its value has increased thousands of %. No none in their right mind would spend it now.
- I think you miss the point. The actions of central banks are exactly why bitcoin was created in the first place. Given the choice of a guaranteed loss of purchasing power because of an ever increasing money supply, or holding a deflationary asset that is likely to increase in purchasing power, the choice is an easy one.
- You mention some people being wrong when they guessed the future price. So what? Amara's law explains this clearly.
We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run
-Bitcoin is risky? Maybe. All investments have risk. Which is more risky? holding wealth in a fiat currency when historically none have survived, or the best performing asset in history. I would argue that 90% of people absolutely should own a small amount of bitcoin in comparison to their net worth. Even in 2020, it has outperformed every other asset class bar none. Gold is a lot less risky, sure. But the potential rewards are a lot less too. Personally, I hold both, and some stocks.
I have no idea how you can say Bitcoin is not transparent. It is literally as transparent as humanly possible. The code is open source - any one can view it, or suggest a change. All transactions are visible to anyone who cares to look.
There is a very good reason the creator chose to remain anonymous, they would be targeted non stop by all sorts of governments or other ill willed people. In the end, it matters not one bit who started it - as I said above, the code is open source, and community controlled. It would make no difference if it was created by Ghandi, Hitler or my nan.
I am quite concerned by governments and large companies every increasing encroachment into peoples personal privacy. If you believe heavily state controlled and monitored finances is a good thing I think we will have to agree to disagree. I base my views on the fact that there no examples of them being successful at this in the entire history of the human race. Every currency has failed, due to the it being devalued through inflation, or diluting the gold content of coins etc. In Britain we are remarkably lucky with the pound, it is one of very few that have lasted more than a couple of hundred years.
and we are one of the luckiest/ most successful ones!
The level of risk involved with a BTC investment decreased the longer it survives. It is "anti fragile". Every test/ threat it survives makes it stronger and less likely to fail. The recent liquidity crisis is an excellent example of bitcoins robustness. I would say at this point it is far less likely to fail than any fiat currency given the current state of affairs. Yet the upside potential is far greater.
I do agree with your point about it being sensible to not own more than 5% of your investments in any one asset
@chilling Yes Theta has been smashing it recently - Its a decentralized version of youtube, started by a youtube founder and a twitch founder. It utilises processing power from people watching videos and rewards them for watching/ providing resources for the network.
I agree some countries are still trying to limit the usage of bitcoin and other cryptos, but they are fighting a losing battle. It's impossible to stop. More progressive countries are not trying to do that. For example you can pay your taxes with bitcoin in more than one US state & I have seen videos of discussions about it in US congress where they specifically say they do not want to try and ban technology - Its always a losing battle.
Regarding your comments about governments holding Bitcoin if it was a good store of value: I believe that will happen in the not to distant future. We are still just seeing the first wave of institutional purchasing of bitcoin and its probably deemed too high risk for governments. We saw the first large scale switch from $ to BTC with microstrategy, who swapped 85% of their $500m reserves for BTC. It took them 6 months to get to that decision and it will probably take similar or longer for other companies to copy them - I'm sure it is a big talking point between CEO's right now.
Its worth noting too that the MicroStrategy CEO has a long history with a high success rates of investing in emerging technologies.
Its also worth noting that countries that have tried to ban Bitcoin have not seen a reduction in usage, the opposite in fact, usually with huge premiums on the price.
I am not at all surprised that countries and organizations are tryng to make their own versions of bitcoin. In the end though, they have none of the qualities that make bitcoin successful, so are doomed to failure IMO.
This video on the sharing economy is brilliant, and highlights how countries and organizations will try to control new technology and usually fail. Its an excellent watch, and a real eye opener. The speaker doesn't mention blockchain until the Q&A, but blockchain technology is what enables everything he talks about.
One thing I thought about over the weekend, was the Kardashev scale, and how value would be transferred if humans were to reach a higher level of civilisation.
Once/if we reach much of a higher level than we are already (probably thanks to Elon), storing value on lumps of rock that are scarce on earth (gold) becomes meaningless.
"The trouble with the young is they believe everything. The trouble with the old is they suspect everything."
Just want to pick up on a few things you have said earlier today.
1. "You can choose to be your own bank." Yes, you can. Provided you are willing to take on a job that other people specialise in, and are willing to lose the protections of the likes of the Deposit Guarantee Scheme or the Financial Services Compensation Scheme.
2. You can also choose to be your own insurer. Because mainstream insurers either don't cover it, or reduce the insured events/amount to negligible amounts. Unlike every other asset you have.
3. Demand. Gresham's Law ("bad money drives out good") needs modifying where currency is driven by investment, rather than traditional spending power. People invest in just 1 form of cryptocurrency.
4. Legal protection. No-one can start producing £sterling without permission. Whereas cryptocurrency operates in an extra-legal way. No restriction on suppliers. nothing to stop the US, or China, creating a state-protected one, or introducing Laws that would make a particular currency look very unattractive. Who is going to stay in the rather primitive current cryptocurrencies if there is a mature alternative?
5. I totally agree that increased state control is not a "good thing". But my investment decisions are not based on what I want to happen, but on what is likely to happen
6. Does it matter who invented it? In one sense, no. On the other hand, someone has likely avoided paying tax on their profits, and has not safeguarded their invention in a traditional way. There are no clear Intellectual Property rights.
7. Fiat currencies are not "only" guaranteed by Governments. There are masses of legal protections. Which are rather lacking in the new currencies. The £ has existed for about 1300 years. Not 12. Remaining mainstream through Plagues, Civil Wars, and World Wars. Tested in every way imaginable.
8. You misunderstood me on the 5% bit. It should be 5% total between all of the high risk investments of which Bitcoin is just 1 small part. It's a punt. Attractive to many. But still a punt.
I am sure that I am too cautious. But things that sound too good to be true, have a nasty habit of being exactly that.
@chicknMelt , there is a lot about coins and tokens that make little sense, logically. I’ve touched on that before, about different countries and storing wealth. Coins, like stocks, are a punt. Stocks are nearly always overbought, and generally the market is priced with a six month view. There can be bad economic news out there, but that will be known to all. What generally makes the stock market crash, is the unexpected. But obv the risk on and off trades are always being scrutinised. BTW, is Theta not one of the best performers?
Regarding bitcoin, I guess it’s where you want to hang your hat, currency,asset or commodity, or all. I used to trade a bit, so I’m used to all the chart formations and predictions, same old. As a currency, although it is in use, countries aren’t keen on accepting it for payments. Russia allow holding crypto assets, but have banned payments. Russia also want a coin tied to their own currency. China are allowing coins, but also not to be spent in their economy. China are trialing blockchain networks in some provinces, with the intention of having a digital renminbi. That doesn’t seem to favor bitcoin taking over, although you could obviously exchange into whatever were to evolve. You mentioned coins for drugs etc. There’s also the countries that have sanctions on them, who will likely be the biggest players. Certain individuals are also banned from dealings in certain countries. This is obv a plus.Obviously money launderers don’t mind paying over the odds for an asset. Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA. But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves. I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela. Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why. In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether. I think the price can be manipulated quite easily. On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around. The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it. With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too. Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion, Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others might not know that. I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined. That size might make them seem rare, but there’s only one Mona Lisa. In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat. Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show. China are the biggest producers and consumers, with India lying second in consumption. India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact? That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that May be worthy of comment.
If stocks were a punt or even close to that the Warren Buffet wouldn't be a multi billionaire. It's widely acknowledged that over someones working life, stocks provide the best return of any asset class.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
- I don't see why bitcoin should have a tarnished reputation because people lost the keys they were responsible for. The whole point is that you have the choice to be your own bank. Obviously if you make that choice, your in charge of your security. You can deposit your bitcoin into a custodial service if that isn't something you want to do. There is even a crypto bank that is regulated in the US now.
- Talking about not being able to purchase bogroll with bitcoin is extremely short sited. No one wants to spend bitcoin when they expect its purchasing power to increase dramatically. When people want to spend it, after its value has stabilized, it is easier for anywhere to accept than to set up a bank account. If they choose there are plenty of services that auto convert BTC to fiat (£/$ etc). demand to spend = people accepting it. no one wants to spend atm. In the 12 years it has existed its value has increased thousands of %. No none in their right mind would spend it now.
My comment was tongue in cheek tbh. But let's see how Bitcoin evolves over the next decade, it's volatility makes it a prohibitive medium of exchange.
- I think you miss the point. The actions of central banks are exactly why bitcoin was created in the first place. Given the choice of a guaranteed loss of purchasing power because of an ever increasing money supply, or holding a deflationary asset that is likely to increase in purchasing power, the choice is an easy one.
Again this is quite a flawed argument. With the exception of those at the bottom of society most of the developed world has some exposure to risk assets, and it's government policy through deliberately depressing the value of home currencies especially the USD that has seen exponential rises in stock markets since 2008. Not also forgetting low interest rates also fuels house prices and in turn consumer demand.
An analyst on Bloomberg this morning said the global economy has lost something like $9trn since the pandemic began but by contrast central banks have pumped $20 trn into the markets. Large swathes of the UK won't know it but participate through being invested in ISA's and Pensions. Not forgetting our obsession like the Americans with property.
- You mention some people being wrong when they guessed the future price. So what? Amara's law explains this clearly.
We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run
-Bitcoin is risky? Maybe. All investments have risk. Which is more risky? holding wealth in a fiat currency when historically none have survived, or the best performing asset in history. I would argue that 90% of people absolutely should own a small amount of bitcoin in comparison to their net worth. Even in 2020, it has outperformed every other asset class bar none. Gold is a lot less risky, sure. But the potential rewards are a lot less too. Personally, I hold both, and some stocks.
Bitcoin has outperformed other asset classes but its such a small period of time. There are individual stocks that have produced returns far in excess of Bitcoin, Apple and Tesla spring to mind. Zoom has smashed Bitcoin out of the park since they floated last year. But really we shouldn't be looking at YTD returns we should be looking over the longer term, and who ever had the inclination to buy bitcoin even 5 years ago? It only truly hit the radar of the mainstream media and investors in 2017.
I have no idea how you can say Bitcoin is not transparent. It is literally as transparent as humanly possible. The code is open source - any one can view it, or suggest a change. All transactions are visible to anyone who cares to look.
There is a very good reason the creator chose to remain anonymous, they would be targeted non stop by all sorts of governments or other ill willed people. In the end, it matters not one bit who started it - as I said above, the code is open source, and community controlled. It would make no difference if it was created by Ghandi, Hitler or my nan.
I am quite concerned by governments and large companies every increasing encroachment into peoples personal privacy. If you believe heavily state controlled and monitored finances is a good thing I think we will have to agree to disagree. I base my views on the fact that there no examples of them being successful at this in the entire history of the human race. Every currency has failed, due to the it being devalued through inflation, or diluting the gold content of coins etc. In Britain we are remarkably lucky with the pound, it is one of very few that have lasted more than a couple of hundred years.
and we are one of the luckiest/ most successful ones!
The level of risk involved with a BTC investment decreased the longer it survives. It is "anti fragile". Every test/ threat it survives makes it stronger and less likely to fail. The recent liquidity crisis is an excellent example of bitcoins robustness. I would say at this point it is far less likely to fail than any fiat currency given the current state of affairs. Yet the upside potential is far greater.
I do agree with your point about it being sensible to not own more than 5% of your investments in any one asset
If stocks were a punt or even close to that the Warren Buffet wouldn't be a multi billionaire. It's widely acknowledged that over someones working life, stocks provide the best return of any asset class.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
Like Gold you mean? Bitcoin is a lot easier to use and verify than gold. You also don't need a bank account to use it, which allows approximately 2 billion people to start a business and accept payments when they were otherwise unable to. Not only that, they can accept payments from anywhere in the world. This is the exact reason Jack Dorsey (twitter founder) is so bullish on Bitcoin.
Warren Buffet is known for his reluctance to learn about anything technology related. He hasn't beaten the S&P500 over the last decade, and sold airlines at the bottom recently. It isn't that surprising, people don't get better with age and the guy is 90.
A lot of other crypto's derive their value from how productive they are, just like stocks.
An example:
Yearn.finance: YFI is a governance and profit sharing token for yearn.finance. Yearn.finance allows you to deposit money into various "vaults". The vaults follow a "strategy" that can be written by anyone and the highest yielding/lowest risk strategy is chosen. A strategy could be to simply lend the money for an interest rate, or provide liquidity to an automated market maker, or it could be more complex than that.
YFI token holders earn a share of the profits made by each "vault", as well as having voting rights on how the organisation is run.
The value of YFI is derived from the expected profits going forward. Exactly the same as stocks.
@chicknMelt , there is a lot about coins and tokens that make little sense, logically. I’ve touched on that before, about different countries and storing wealth. Coins, like stocks, are a punt. Stocks are nearly always overbought, and generally the market is priced with a six month view. There can be bad economic news out there, but that will be known to all. What generally makes the stock market crash, is the unexpected. But obv the risk on and off trades are always being scrutinised. BTW, is Theta not one of the best performers?
Regarding bitcoin, I guess it’s where you want to hang your hat, currency,asset or commodity, or all. I used to trade a bit, so I’m used to all the chart formations and predictions, same old. As a currency, although it is in use, countries aren’t keen on accepting it for payments. Russia allow holding crypto assets, but have banned payments. Russia also want a coin tied to their own currency. China are allowing coins, but also not to be spent in their economy. China are trialing blockchain networks in some provinces, with the intention of having a digital renminbi. That doesn’t seem to favor bitcoin taking over, although you could obviously exchange into whatever were to evolve. You mentioned coins for drugs etc. There’s also the countries that have sanctions on them, who will likely be the biggest players. Certain individuals are also banned from dealings in certain countries. This is obv a plus.Obviously money launderers don’t mind paying over the odds for an asset. Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA. But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves. I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela. Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why. In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether. I think the price can be manipulated quite easily. On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around. The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it. With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too. Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion, Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others might not know that. I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined. That size might make them seem rare, but there’s only one Mona Lisa. In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat. Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show. China are the biggest producers and consumers, with India lying second in consumption. India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact? That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that May be worthy of comment.
If stocks were a punt or even close to that the Warren Buffet wouldn't be a multi billionaire. It's widely acknowledged that over someones working life, stocks provide the best return of any asset class.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
Well, that depends on what you regard as a “ punt”. My definition is putting money into something that could lead to oneself losing all their capital. Going “ long only” is obv different than trading. Most folks buy stocks for hopefully capital appreciation, and hopefully some dividends. Are you using Warren Buffet as bench mark. That’s a bit like using Germany as a bench mark for the virus in Europe. Buffet has always been seen a value investor. He actually paid less tax than his own secretary, mainly due to his frugal lifestyle. There have been numerous companies , probably thousands that have gone t it’s up. These, in most cases , mean the equity holders get wiped out, leaving the bond holders to divi up the assets. Enron was worth $60 billion, priced at 70 times earnings,then went t it’s up. DeLorean ( quirky car ) Lionel corp,Aldephia, Pets.com, Bear Sterns, some of the biggest failures. If you’re lucky, a company that might be about to go under, might get bought out. By buying a stock, you’re taking a chance on the economic outlook,expected growth, and hopefully your stock choice doesn’t have major competitors in the future. Like @chicknMelts crypto, bitcoin in particular, you’re wealth lies in others bidding it up. At this moment in time, there’s more chance of listed companies going to nought than crypto, imo.
"The trouble with the young is they believe everything. The trouble with the old is they suspect everything."
Just want to pick up on a few things you have said earlier today.
1. "You can choose to be your own bank." Yes, you can. Provided you are willing to take on a job that other people specialise in, and are willing to lose the protections of the likes of the Deposit Guarantee Scheme or the Financial Services Compensation Scheme.
2. You can also choose to be your own insurer. Because mainstream insurers either don't cover it, or reduce the insured events/amount to negligible amounts. Unlike every other asset you have.
3. Demand. Gresham's Law ("bad money drives out good") needs modifying where currency is driven by investment, rather than traditional spending power. People invest in just 1 form of cryptocurrency.
4. Legal protection. No-one can start producing £sterling without permission. Whereas cryptocurrency operates in an extra-legal way. No restriction on suppliers. nothing to stop the US, or China, creating a state-protected one, or introducing Laws that would make a particular currency look very unattractive. Who is going to stay in the rather primitive current cryptocurrencies if there is a mature alternative?
5. I totally agree that increased state control is not a "good thing". But my investment decisions are not based on what I want to happen, but on what is likely to happen
6. Does it matter who invented it? In one sense, no. On the other hand, someone has likely avoided paying tax on their profits, and has not safeguarded their invention in a traditional way. There are no clear Intellectual Property rights.
7. Fiat currencies are not "only" guaranteed by Governments. There are masses of legal protections. Which are rather lacking in the new currencies. The £ has existed for about 1300 years. Not 12. Remaining mainstream through Plagues, Civil Wars, and World Wars. Tested in every way imaginable.
8. You misunderstood me on the 5% bit. It should be 5% total between all of the high risk investments of which Bitcoin is just 1 small part. It's a punt. Attractive to many. But still a punt.
I am sure that I am too cautious. But things that sound too good to be true, have a nasty habit of being exactly that.
1. I get what your saying, for some people (most probably) being your own bank might not be a wise choice. The point is you have the choice though. I keep referring to how lucky we are in this country - Its probably not much of a thing for us here - but who knows with all the money printing, possible negative interest rates, and no limit to the fractional reserves banks use. Having to pay to keep your money in a bank, but banks not being able to pay everyone who wants to withdraw sounds risky to me.
2. The concept of hot and cold wallets is key here: hot= online slush fund so users can withdraw and trade seamlessly. Cold = offline, likely stored physically in a vault of some sort in the for of a(or many) private keys. By far the highest risk is the hot wallet, and that tends to be what custodial services have insured. There are many that have enough insurance to cover losses from their hot wallet. Even when the insurance doesn't cover losses, the company is incentivised to cover it themselves, because if they don't, business dies. If they do, trust is built and business can continue as usual. This has been demonstrated with the recent hack of Kucoin for $150m, and Binance a couple of years ago. As the industry becomes more established, the situation will only improve.
3. I had to google Gresham's Law. I agree with it and believe it supports Bitcoins claim to a store of value of the future somewhat. Bitcoin harvests Energy. Energy cost is the primary factor to being a profitable bitcoin miner. When everyone has the latest computer chips it is the only factor that makes bitcoin miners profitable or unprofitable. Is energy not the purest form of value? Bitcoin solves a lot of problems, on the other hand, it has next to no other use than as a store of value. So far the asset with the best characteristics of money has won. Gold is the primary store of value for humans simply because it is the best thing on earth for it. Silver is a close second, because it is not as scarce. Diamonds are not suitable for example because they are not fungible (one diamond may be of higher quality than the next). Bitcoin beats everything in terms of the qualities required for money, especially once it is fully established, where its durability and established history will have improved marks. Source article of image: https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1
4. The whole point of bitcoin is that its supply is capped at 21 million bitcoins. There will be no more unless more people agree to it than disagree, which is unlikely. To be completely honest I believe Central Bank Digital Currencies (CBDCs) will only get people used to the idea of digital currencies, and bitcoin is clearly the king. Scarcity cant be discovered twice (there have been copy cats of bitcoin, each has had less and less success, and the most successful has 2% of the network security of bitcoin, and has been losing value vs bitcoin ever since its inception). Even if a nation was to create its own "scarce" digital currency, it wouldn't have the global appeal of bitcoin. I'm sure that wont happen though , because every government wants to print money given the chance. Even now the jury is out whether this actually works or not - more often than not it has led to the downfall of the currency.
5. I totally agree they are likely to try. The fact there is an alternative for people might be perfect timing. Covid is a convenient excuse for governments around the world to vastly reduce and restrict the circulation of cash for example.
6. I don't believe the bitcoin inventor has actually evaded any taxes: Every single one of his 100k bitcoins remain unmoved, ever. It is truly remarkable that this is the case, but it is none the less - the wallet and its transactions can be viewed by anyone. Tax is only due once profit is realised, and there is none so far.
7. The pound has been in a unique position for a lot of its existence, it was a reserve currency (was it the first of its kind?) meaning that the effect of any money printing was diluted across all the nations that used it. The dollar took over that position to a large extent during/after the first world war...
1900>now. Notice the effect of losing reserve currency status. The pound maintained half of its original value for 300 years. But over the last 100 years has managed to maintain less than 1% of its value!
At some point people realise that they no longer want to hold a currency that devalues, and that is the end of the currency. It has happened time and again throughout history. A currency always survives until it is devalued. The process probably takes longer now we are in a more global economy (dollar is reserve for the whole world atm), but I have not seen anything to convince me it wont happen again. Bitcoin although only 12 years old, has lived through turbulent times. I agree it has many tests to face still, but Im placing my bet on it over any fiat currency any day of the week.
Warren Buffet is known for his reluctance to learn about anything technology related. He hasn't beaten the S&P500 over the last decade, and sold airlines at the bottom recently. It isn't that surprising, people don't get better with age and the guy is 90.
A bit ageist there if I might say so. Let's look at the BH portfolio, two notable tech stocks in his portfolio are Apple and Amazon. He has a $70bn stake in Apple, being the largest institutional shareholder in the world. He also has a $1bn stake in Amazon, which by comparison is small fry but Buffet has always been a value investor. If an asset is hard to value there is a big chance he will overlook it. Other notable stocks in the portfolio, Visa Inc which now really is a fintech stock and Verizon a telecoms firm.
His long term track investment record comfortably outperforms the rate of inflation, not over one, three, five or ten years but six decades. Knowing what I do today about wealth creation, would I trust Warren Buffet aged 30 versus Bitcoin over the next 20 years, (think of a word that is the opposite of heaven that sky doesn't permit) yes.
The way I look at it is the crypto evangelists always turn against Buffet because they don't like what he said a few years back about Bitcoin. Well he's still go his shirt, a lot of crypto enthusiasts have lost a lot of money.
You keep going on about people's real wealth being eroded by fiat inflationary depreciation of the £/$/Yen or whatever currency you want to quote, again I put to you that most people don't only hold assets in pure Fiat. Every worker in this country is participating in a workplace pension, a lot of them hold ISA's as well that they either use to supplement their pensions or to build a lump sum for property purchase. The UK financial services industry manages over $1trn in assets and that's before you even start looking at DIY investors. The UK property market is worth over $8trn, and despite the pandemic prices are still rising as we speak. In the United States 401k plans hold over $5 trn in assets (2018). And I am not talking about the super rich here, it's the average Joe's that also participate in stock market rallies these days.
None of these asset classes over decades have lagged behind the real rate of inflation. You can pull off every currency graph you like but that is fact. On a social level there may be sectors of the population that have not participated in accruing wealth for various reasons but that is a totally different discussion.
1. We are lucky enough to live in a country where banks provide significant safety and legal protections. Precisely why we shouldn't act as though we are a bank. You quite rightly point to the possibility banks may introduce some sort of charge. But don't compare that with the raft of significant charges that a BTC investor faces, particularly a private investor
2. The "hot" wallet is terrible. As a purely short-term in and out investment it is worse than almost every comparable investment. It needs to be regarded as a long-term investment. I love this idea that we don't need legal protections in place because the market will be self-interested to regulate itself. An idea discredited since the South Sea Bubble of 1720.
3. That supposed set of "ratings" you quote. From an international financier? Multi-billion fund manager? International Banker? No. A former Google software guy who is "interested" in Austrian economics. So-relevant qualifications/experience? None whatsoever.
Then look at his gradings. For a start, he does not compare like with like-he compares 1 cryptocurrency, but treats all currencies as though they were equal. Even though he expressly admits that the $US and the £Sterling are different and better. And uses the Indian Rupee and Weimar Germany as examples.
"Durable"? Ah-the 12-year-old hidden currency is already more durable that fiat currency. Really?
"Divisible/Portable". A-plus. Really? More so than money? In theory. But never in practice. Let's give a real example.
Suppose 1 BTC is worth £7,000. you have 1 BTC, and £7,000 in an online bank account.
With the bank account you have 700,000 separate units, any or all of which you can spend instantly without charge, and transfer instantly without charge to anyone or anywhere else. and that's a "B". Compare/contrast with Bitcoin. It is nowhere near as divisible or portable.
"Established History". Just 1 mark below. Really?
"Scarce". Using supply without demand is meaningless. Or I would be investing in Zambian Kwacha. It is a lot scarcer.
He actually states in that article that he expects Governments to start investing once the total value exceeds $1 Trillion. In any comparable investment with proper regulation, if anyone dared to suggest a benefit that would apply once something had quintupled in value, then they would be up before their regulator.
Risk does reduce over time. Of course. Not all but resolved after 20 years as that article suggests, but noticeably. I think cryptocurrencies are here to stay, but there will be massive changes ahead. Cynical me thinks the big investors will do better than the small ones.
@chicknMelt , there is a lot about coins and tokens that make little sense, logically. I’ve touched on that before, about different countries and storing wealth. Coins, like stocks, are a punt. Stocks are nearly always overbought, and generally the market is priced with a six month view. There can be bad economic news out there, but that will be known to all. What generally makes the stock market crash, is the unexpected. But obv the risk on and off trades are always being scrutinised. BTW, is Theta not one of the best performers?
Regarding bitcoin, I guess it’s where you want to hang your hat, currency,asset or commodity, or all. I used to trade a bit, so I’m used to all the chart formations and predictions, same old. As a currency, although it is in use, countries aren’t keen on accepting it for payments. Russia allow holding crypto assets, but have banned payments. Russia also want a coin tied to their own currency. China are allowing coins, but also not to be spent in their economy. China are trialing blockchain networks in some provinces, with the intention of having a digital renminbi. That doesn’t seem to favor bitcoin taking over, although you could obviously exchange into whatever were to evolve. You mentioned coins for drugs etc. There’s also the countries that have sanctions on them, who will likely be the biggest players. Certain individuals are also banned from dealings in certain countries. This is obv a plus.Obviously money launderers don’t mind paying over the odds for an asset. Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA. But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves. I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela. Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why. In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether. I think the price can be manipulated quite easily. On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around. The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it. With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too. Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion, Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others might not know that. I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined. That size might make them seem rare, but there’s only one Mona Lisa. In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat. Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show. China are the biggest producers and consumers, with India lying second in consumption. India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact? That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that May be worthy of comment.
If stocks were a punt or even close to that the Warren Buffet wouldn't be a multi billionaire. It's widely acknowledged that over someones working life, stocks provide the best return of any asset class.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
Well, that depends on what you regard as a “ punt”. My definition is putting money into something that could lead to oneself losing all their capital. Going “ long only” is obv different than trading. Most folks buy stocks for hopefully capital appreciation, and hopefully some dividends. Are you using Warren Buffet as bench mark. That’s a bit like using Germany as a bench mark for the virus in Europe. Buffet has always been seen a value investor. He actually paid less tax than his own secretary, mainly due to his frugal lifestyle. There have been numerous companies , probably thousands that have gone t it’s up. These, in most cases , mean the equity holders get wiped out, leaving the bond holders to divi up the assets. Enron was worth $60 billion, priced at 70 times earnings,then went t it’s up. DeLorean ( quirky car ) Lionel corp,Aldephia, Pets.com, Bear Sterns, some of the biggest failures. If you’re lucky, a company that might be about to go under, might get bought out. By buying a stock, you’re taking a chance on the economic outlook,expected growth, and hopefully your stock choice doesn’t have major competitors in the future. Like @chicknMelts crypto, bitcoin in particular, you’re wealth lies in others bidding it up. At this moment in time, there’s more chance of listed companies going to nought than crypto, imo.
Why would you construct a portfolio based on the expectation of how one company would perform?
If anything it's far more prudent to buy an OEIC or IT to minimise investment risk and at the same time employing a professional to manage your money. Even if you did buy stocks rather than investment funds, you'd be pretty unlucky to come across more than a few large companies going bust over your lifetime, and that's where basic investment strategy comes into play. Most active investors who manage their own portfolios usually employ techniques like stop losses to get out of investments that depreciate by a set percentage.
Comparing the probability of one company going broke versus a commodity/currency going to zero is a total apples and pears comparison.
Comments
I will however cover off parts of your reply, bitcoin's integrity is tarnished in my opinion because for example if you bought bitcoin in 2010, and either lost the keys or even worse had them stolen because you didn't know how to secure your wallet (or couldn't be bothered) versus holding a stock say Amazon, there will always be that audit trail and proof of ownership which ultimately means that you can realise the value of your asset at any time. For any financial instrument be it a commodity or currency to operate in that way is unacceptable for the main stream. So you can see from this perspective we are already coming from opposite ends of the spectrum, there is very libertarian non centrist way of thinking here.
Practical uses, everyone is going out stockpiling bogroll again with the spikes in COVID, I can't go down to my local Tesco's and use bitcoin as a medium of exchange (this was its original intention I believe). Try presenting your vision of BTC as a censorship circumvention tool, you will see an awful lot of glazy eyed people saying yeah but what about my bogroll!
With regards to Bitcoins current value, I am very aware of trading values but not really bothered about currency hedging because at present I don't hold any. It is valued in USD and if other currencies being stronger put the value closer to all time highs that is as a result of central bank policy over anything to do with what is happening in the markets. Don't forget in the UK the pound has been depressed against the dollar since the brexit vote which is naturally going to amplify any return even if BTC remains static.
Tom Lee and Novogratz have been wrong about just about every price prediction they have made for BTC. If experts like them can't get it right what hope is there for the rest of us.
Novogratz made a generalised quote about portfolio construction, as with anything portfolios have many variables that affect which particular risk assets are put in. It wasn't tailored specific financial advice. The reality is for 90% of people crypto is highly unsuitable purely based on their risk profile.
If someone wanted to set up something similar to this in regards to other risk assets eg Stocks/Property/Currencies and Funds I would be more than happy to partake being industry trained, but after looking at crypto early in 2017 I decided it's not transparent enough for me to consider giving my time effort or money. I'm more of a Zoom/Snowflake/Apple/Scottish Mortgage man than I ever will be BTC.
A "currency" that has existed for just 12 years. Invented by someone unknown using a false name.
That goes against the vested interests of major world Governments due to it being next to impossible to police (and, more importantly, tax). Compare and contrast with the additional state control of electronic banking versus cash.
It's not "gold"-that has millenia of provable performance in its investment. It's much more like Tanzanite. I'm not saying people shouldn't invest in Tanzanite-but beware buying it from people who say it is like gold or diamonds.
That's not to say that (like most things) some people will make a lot, and some will lose a lot. But there is a lot less data to show who is likely to be in which group.
It is either a medium-high risk investment or a high risk investment. Really only for people who can afford to lose the money. For most people, that does not mean "5% tops in BTC"-it means 5% tops in ANY form of investment of this level of risk.
In terms of bitcoins risk profile its like derivatives/cfds on steroids. Truly the most high risk investment you can touch today. In saying that Tesla is doing a good job at competing with that mantra.
I’ve touched on that before, about different countries and storing wealth.
Coins, like stocks, are a punt.
Stocks are nearly always overbought, and generally the market is priced with a six month view.
There can be bad economic news out there, but that will be known to all.
What generally makes the stock market crash, is the unexpected.
But obv the risk on and off trades are always being scrutinised.
BTW, is Theta not one of the best performers?
Regarding bitcoin, I guess it’s where you want to hang your hat, currency,asset or commodity, or all.
I used to trade a bit, so I’m used to all the chart formations and predictions, same old.
As a currency, although it is in use, countries aren’t keen on accepting it for payments.
Russia allow holding crypto assets, but have banned payments.
Russia also want a coin tied to their own currency.
China are allowing coins, but also not to be spent in their economy.
China are trialing blockchain networks in some provinces, with the intention of having a digital renminbi. That doesn’t seem to favor bitcoin taking over, although you could obviously exchange into whatever were to evolve.
You mentioned coins for drugs etc. There’s also the countries that have sanctions on them, who will likely be the biggest players. Certain individuals are also banned from dealings in certain countries. This is obv a plus.Obviously money launderers don’t mind paying over the odds for an asset.
Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA.
But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves.
I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela.
Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why.
In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether.
I think the price can be manipulated quite easily.
On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around.
The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it.
With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too.
Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion,
Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others
might not know that.
I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined.
That size might make them seem rare, but there’s only one Mona Lisa.
In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat.
Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show.
China are the biggest producers and consumers, with India lying second in consumption.
India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact?
That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that
May be worthy of comment.
Also,if you get hit by a bus, somebody needs to have access to your keys.
Funerals ain’t cheap🤣 Some folks think coins are dead because the owners are.
Security is priority though.
- Talking about not being able to purchase bogroll with bitcoin is extremely short sited. No one wants to spend bitcoin when they expect its purchasing power to increase dramatically. When people want to spend it, after its value has stabilized, it is easier for anywhere to accept than to set up a bank account. If they choose there are plenty of services that auto convert BTC to fiat (£/$ etc). demand to spend = people accepting it. no one wants to spend atm. In the 12 years it has existed its value has increased thousands of %. No none in their right mind would spend it now.
- I think you miss the point. The actions of central banks are exactly why bitcoin was created in the first place. Given the choice of a guaranteed loss of purchasing power because of an ever increasing money supply, or holding a deflationary asset that is likely to increase in purchasing power, the choice is an easy one.
- You mention some people being wrong when they guessed the future price. So what? Amara's law explains this clearly.
We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run
-Bitcoin is risky? Maybe. All investments have risk. Which is more risky? holding wealth in a fiat currency when historically none have survived, or the best performing asset in history. I would argue that 90% of people absolutely should own a small amount of bitcoin in comparison to their net worth. Even in 2020, it has outperformed every other asset class bar none. Gold is a lot less risky, sure. But the potential rewards are a lot less too. Personally, I hold both, and some stocks.
I have no idea how you can say Bitcoin is not transparent. It is literally as transparent as humanly possible. The code is open source - any one can view it, or suggest a change. All transactions are visible to anyone who cares to look.
@essexphil
There is a very good reason the creator chose to remain anonymous, they would be targeted non stop by all sorts of governments or other ill willed people. In the end, it matters not one bit who started it - as I said above, the code is open source, and community controlled. It would make no difference if it was created by Ghandi, Hitler or my nan.
I am quite concerned by governments and large companies every increasing encroachment into peoples personal privacy. If you believe heavily state controlled and monitored finances is a good thing I think we will have to agree to disagree. I base my views on the fact that there no examples of them being successful at this in the entire history of the human race. Every currency has failed, due to the it being devalued through inflation, or diluting the gold content of coins etc. In Britain we are remarkably lucky with the pound, it is one of very few that have lasted more than a couple of hundred years.
and we are one of the luckiest/ most successful ones!
The level of risk involved with a BTC investment decreased the longer it survives. It is "anti fragile". Every test/ threat it survives makes it stronger and less likely to fail. The recent liquidity crisis is an excellent example of bitcoins robustness. I would say at this point it is far less likely to fail than any fiat currency given the current state of affairs. Yet the upside potential is far greater.
I do agree with your point about it being sensible to not own more than 5% of your investments in any one asset
Yes Theta has been smashing it recently - Its a decentralized version of youtube, started by a youtube founder and a twitch founder. It utilises processing power from people watching videos and rewards them for watching/ providing resources for the network.
I agree some countries are still trying to limit the usage of bitcoin and other cryptos, but they are fighting a losing battle. It's impossible to stop. More progressive countries are not trying to do that. For example you can pay your taxes with bitcoin in more than one US state & I have seen videos of discussions about it in US congress where they specifically say they do not want to try and ban technology - Its always a losing battle.
Regarding your comments about governments holding Bitcoin if it was a good store of value: I believe that will happen in the not to distant future. We are still just seeing the first wave of institutional purchasing of bitcoin and its probably deemed too high risk for governments. We saw the first large scale switch from $ to BTC with microstrategy, who swapped 85% of their $500m reserves for BTC. It took them 6 months to get to that decision and it will probably take similar or longer for other companies to copy them - I'm sure it is a big talking point between CEO's right now.
Its worth noting too that the MicroStrategy CEO has a long history with a high success rates of investing in emerging technologies.
Its also worth noting that countries that have tried to ban Bitcoin have not seen a reduction in usage, the opposite in fact, usually with huge premiums on the price.
I am not at all surprised that countries and organizations are tryng to make their own versions of bitcoin. In the end though, they have none of the qualities that make bitcoin successful, so are doomed to failure IMO.
This video on the sharing economy is brilliant, and highlights how countries and organizations will try to control new technology and usually fail. Its an excellent watch, and a real eye opener. The speaker doesn't mention blockchain until the Q&A, but blockchain technology is what enables everything he talks about.
Once/if we reach much of a higher level than we are already (probably thanks to Elon), storing value on lumps of rock that are scarce on earth (gold) becomes meaningless.
Is Bitcoin the answer?
I am reminded of the old saying:-
"The trouble with the young is they believe everything.
The trouble with the old is they suspect everything."
Just want to pick up on a few things you have said earlier today.
1. "You can choose to be your own bank." Yes, you can. Provided you are willing to take on a job that other people specialise in, and are willing to lose the protections of the likes of the Deposit Guarantee Scheme or the Financial Services Compensation Scheme.
2. You can also choose to be your own insurer. Because mainstream insurers either don't cover it, or reduce the insured events/amount to negligible amounts. Unlike every other asset you have.
3. Demand. Gresham's Law ("bad money drives out good") needs modifying where currency is driven by investment, rather than traditional spending power. People invest in just 1 form of cryptocurrency.
4. Legal protection. No-one can start producing £sterling without permission. Whereas cryptocurrency operates in an extra-legal way. No restriction on suppliers. nothing to stop the US, or China, creating a state-protected one, or introducing Laws that would make a particular currency look very unattractive. Who is going to stay in the rather primitive current cryptocurrencies if there is a mature alternative?
5. I totally agree that increased state control is not a "good thing". But my investment decisions are not based on what I want to happen, but on what is likely to happen
6. Does it matter who invented it? In one sense, no. On the other hand, someone has likely avoided paying tax on their profits, and has not safeguarded their invention in a traditional way. There are no clear Intellectual Property rights.
7. Fiat currencies are not "only" guaranteed by Governments. There are masses of legal protections. Which are rather lacking in the new currencies. The £ has existed for about 1300 years. Not 12. Remaining mainstream through Plagues, Civil Wars, and World Wars. Tested in every way imaginable.
8. You misunderstood me on the 5% bit. It should be 5% total between all of the high risk investments of which Bitcoin is just 1 small part. It's a punt. Attractive to many. But still a punt.
I am sure that I am too cautious. But things that sound too good to be true, have a nasty habit of being exactly that.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
Warren Buffet is known for his reluctance to learn about anything technology related. He hasn't beaten the S&P500 over the last decade, and sold airlines at the bottom recently. It isn't that surprising, people don't get better with age and the guy is 90.
A lot of other crypto's derive their value from how productive they are, just like stocks.
An example:
Yearn.finance: YFI is a governance and profit sharing token for yearn.finance.
Yearn.finance allows you to deposit money into various "vaults". The vaults follow a "strategy" that can be written by anyone and the highest yielding/lowest risk strategy is chosen. A strategy could be to simply lend the money for an interest rate, or provide liquidity to an automated market maker, or it could be more complex than that.
YFI token holders earn a share of the profits made by each "vault", as well as having voting rights on how the organisation is run.
The value of YFI is derived from the expected profits going forward. Exactly the same as stocks.
There are plenty of others like this.
My definition is putting money into something that could lead to oneself losing all their capital.
Going “ long only” is obv different than trading.
Most folks buy stocks for hopefully capital appreciation, and hopefully some dividends.
Are you using Warren Buffet as bench mark. That’s a bit like using Germany as a bench mark for the virus in Europe. Buffet has always been seen a value investor.
He actually paid less tax than his own secretary, mainly due to his frugal lifestyle.
There have been numerous companies , probably thousands that have gone t it’s up.
These, in most cases , mean the equity holders get wiped out, leaving the bond holders to divi up the assets.
Enron was worth $60 billion, priced at 70 times earnings,then went t it’s up.
DeLorean ( quirky car ) Lionel corp,Aldephia, Pets.com, Bear Sterns, some of the biggest failures.
If you’re lucky, a company that might be about to go under, might get bought out.
By buying a stock, you’re taking a chance on the economic outlook,expected growth, and hopefully your stock choice doesn’t have major competitors in the future.
Like @chicknMelts crypto, bitcoin in particular, you’re wealth lies in others bidding it up.
At this moment in time, there’s more chance of listed companies going to nought than crypto, imo.
2. The concept of hot and cold wallets is key here: hot= online slush fund so users can withdraw and trade seamlessly. Cold = offline, likely stored physically in a vault of some sort in the for of a(or many) private keys. By far the highest risk is the hot wallet, and that tends to be what custodial services have insured. There are many that have enough insurance to cover losses from their hot wallet. Even when the insurance doesn't cover losses, the company is incentivised to cover it themselves, because if they don't, business dies. If they do, trust is built and business can continue as usual. This has been demonstrated with the recent hack of Kucoin for $150m, and Binance a couple of years ago. As the industry becomes more established, the situation will only improve.
3. I had to google Gresham's Law. I agree with it and believe it supports Bitcoins claim to a store of value of the future somewhat. Bitcoin harvests Energy. Energy cost is the primary factor to being a profitable bitcoin miner. When everyone has the latest computer chips it is the only factor that makes bitcoin miners profitable or unprofitable. Is energy not the purest form of value? Bitcoin solves a lot of problems, on the other hand, it has next to no other use than as a store of value. So far the asset with the best characteristics of money has won. Gold is the primary store of value for humans simply because it is the best thing on earth for it. Silver is a close second, because it is not as scarce. Diamonds are not suitable for example because they are not fungible (one diamond may be of higher quality than the next). Bitcoin beats everything in terms of the qualities required for money, especially once it is fully established, where its durability and established history will have improved marks. Source article of image: https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1
4. The whole point of bitcoin is that its supply is capped at 21 million bitcoins. There will be no more unless more people agree to it than disagree, which is unlikely. To be completely honest I believe Central Bank Digital Currencies (CBDCs) will only get people used to the idea of digital currencies, and bitcoin is clearly the king. Scarcity cant be discovered twice (there have been copy cats of bitcoin, each has had less and less success, and the most successful has 2% of the network security of bitcoin, and has been losing value vs bitcoin ever since its inception). Even if a nation was to create its own "scarce" digital currency, it wouldn't have the global appeal of bitcoin. I'm sure that wont happen though , because every government wants to print money given the chance. Even now the jury is out whether this actually works or not - more often than not it has led to the downfall of the currency.
5. I totally agree they are likely to try. The fact there is an alternative for people might be perfect timing. Covid is a convenient excuse for governments around the world to vastly reduce and restrict the circulation of cash for example.
6. I don't believe the bitcoin inventor has actually evaded any taxes: Every single one of his 100k bitcoins remain unmoved, ever. It is truly remarkable that this is the case, but it is none the less - the wallet and its transactions can be viewed by anyone. Tax is only due once profit is realised, and there is none so far.
7. The pound has been in a unique position for a lot of its existence, it was a reserve currency (was it the first of its kind?) meaning that the effect of any money printing was diluted across all the nations that used it. The dollar took over that position to a large extent during/after the first world war...
1900>now. Notice the effect of losing reserve currency status. The pound maintained half of its original value for 300 years. But over the last 100 years has managed to maintain less than 1% of its value!
At some point people realise that they no longer want to hold a currency that devalues, and that is the end of the currency. It has happened time and again throughout history. A currency always survives until it is devalued. The process probably takes longer now we are in a more global economy (dollar is reserve for the whole world atm), but I have not seen anything to convince me it wont happen again. Bitcoin although only 12 years old, has lived through turbulent times. I agree it has many tests to face still, but Im placing my bet on it over any fiat currency any day of the week.
A bit ageist there if I might say so. Let's look at the BH portfolio, two notable tech stocks in his portfolio are Apple and Amazon. He has a $70bn stake in Apple, being the largest institutional shareholder in the world. He also has a $1bn stake in Amazon, which by comparison is small fry but Buffet has always been a value investor. If an asset is hard to value there is a big chance he will overlook it. Other notable stocks in the portfolio, Visa Inc which now really is a fintech stock and Verizon a telecoms firm.
His long term track investment record comfortably outperforms the rate of inflation, not over one, three, five or ten years but six decades. Knowing what I do today about wealth creation, would I trust Warren Buffet aged 30 versus Bitcoin over the next 20 years, (think of a word that is the opposite of heaven that sky doesn't permit) yes.
The way I look at it is the crypto evangelists always turn against Buffet because they don't like what he said a few years back about Bitcoin. Well he's still go his shirt, a lot of crypto enthusiasts have lost a lot of money.
You keep going on about people's real wealth being eroded by fiat inflationary depreciation of the £/$/Yen or whatever currency you want to quote, again I put to you that most people don't only hold assets in pure Fiat. Every worker in this country is participating in a workplace pension, a lot of them hold ISA's as well that they either use to supplement their pensions or to build a lump sum for property purchase. The UK financial services industry manages over $1trn in assets and that's before you even start looking at DIY investors. The UK property market is worth over $8trn, and despite the pandemic prices are still rising as we speak. In the United States 401k plans hold over $5 trn in assets (2018). And I am not talking about the super rich here, it's the average Joe's that also participate in stock market rallies these days.
None of these asset classes over decades have lagged behind the real rate of inflation. You can pull off every currency graph you like but that is fact. On a social level there may be sectors of the population that have not participated in accruing wealth for various reasons but that is a totally different discussion.
1. We are lucky enough to live in a country where banks provide significant safety and legal protections. Precisely why we shouldn't act as though we are a bank. You quite rightly point to the possibility banks may introduce some sort of charge. But don't compare that with the raft of significant charges that a BTC investor faces, particularly a private investor
2. The "hot" wallet is terrible. As a purely short-term in and out investment it is worse than almost every comparable investment. It needs to be regarded as a long-term investment.
I love this idea that we don't need legal protections in place because the market will be self-interested to regulate itself. An idea discredited since the South Sea Bubble of 1720.
3. That supposed set of "ratings" you quote. From an international financier? Multi-billion fund manager? International Banker? No. A former Google software guy who is "interested" in Austrian economics. So-relevant qualifications/experience? None whatsoever.
Then look at his gradings. For a start, he does not compare like with like-he compares 1 cryptocurrency, but treats all currencies as though they were equal. Even though he expressly admits that the $US and the £Sterling are different and better. And uses the Indian Rupee and Weimar Germany as examples.
"Durable"? Ah-the 12-year-old hidden currency is already more durable that fiat currency. Really?
"Divisible/Portable". A-plus. Really? More so than money? In theory. But never in practice. Let's give a real example.
Suppose 1 BTC is worth £7,000. you have 1 BTC, and £7,000 in an online bank account.
With the bank account you have 700,000 separate units, any or all of which you can spend instantly without charge, and transfer instantly without charge to anyone or anywhere else. and that's a "B". Compare/contrast with Bitcoin. It is nowhere near as divisible or portable.
"Established History". Just 1 mark below. Really?
"Scarce". Using supply without demand is meaningless. Or I would be investing in Zambian Kwacha. It is a lot scarcer.
He actually states in that article that he expects Governments to start investing once the total value exceeds $1 Trillion. In any comparable investment with proper regulation, if anyone dared to suggest a benefit that would apply once something had quintupled in value, then they would be up before their regulator.
Risk does reduce over time. Of course. Not all but resolved after 20 years as that article suggests, but noticeably. I think cryptocurrencies are here to stay, but there will be massive changes ahead. Cynical me thinks the big investors will do better than the small ones.
If anything it's far more prudent to buy an OEIC or IT to minimise investment risk and at the same time employing a professional to manage your money. Even if you did buy stocks rather than investment funds, you'd be pretty unlucky to come across more than a few large companies going bust over your lifetime, and that's where basic investment strategy comes into play. Most active investors who manage their own portfolios usually employ techniques like stop losses to get out of investments that depreciate by a set percentage.
Comparing the probability of one company going broke versus a commodity/currency going to zero is a total apples and pears comparison.