Bitcoin Breaks $17,000
coinmarketcap.com
coinmarketcap.com
One major thing I like about Bitcoin is that anyone can buy small amounts from an app, and even self-custody it themselves. This is similar to gold but much, much easier and because Bitcoin is purely digital you don’t need anything more than an app and an internet connection. Bitcoin is inflation-protection for the global poor, something rich HNers are less likely to appreciate.
And I recognize that Bitcoin is extremely volatile, which makes it harder to use as a hedge against inflation. But if you use currency that is guaranteed to lose 30 to 90% of its value per year (Venezuela, Turkey, Lebanon) then dollar-cost-averaging into Bitcoin makes way more sense than holding worthless paper.
All inflation does is set a cap on real pay decrease. Since very few businesses will decrease pay, then a 4% inflation environment means Bob who didn't get a rise this year effectively gets a 4% pay cut in real terms.
If you want to invest your money, buy index funds. That's about as safe as it can be while still bringing in reasonable returns.
S&P 500 seems to be a particularly stubborn climber. No idea why it climbs harder than other index funds, but it's been very reliable for as long as I've been paying attention to it.
Would be interesting to see distributions compared. I imagine it to be similar everywhere: most stuff is owned by not that many people. Only difference: in Bitcoin, they might be different people, thus adding to a better distribution overall.
Also I do not consider ETFs safe at all. If you dislike Bitcoin (which is totally fine), maybe buy gold or land, since ETF composition might change, land and gold might not.
ETF and land represent real production value. Land most directly of course, and that's about the most stable as you can get: even if literally the entire economy collapsed, at least you still have land you can farm.
ETFs are a bit indirect; to be more direct, you'd have to buy shares of the individual companies represented in them, but for most people that's a lot of work. ETFs get you the same thing. Their composition might change, but only slowly and tied to a whole bunch of criteria. And in the end, they do represent the economic value of real companies that produce things.
My thesis remains, that "real production value" does not exist, or at least is dwarfed by people "electing" a store of value. Like Tesla, gold or land.
Bitcoin seems to me uniquely suited to become the next store of value elected by the most.
If it does, even land might lose value compared to it.
Volatility might lessen over time, in any case is only a real problem if there is a long-term down trend. Else, just DCA in and out.
Of course, this is all hypothetical, no guarantees.
I strongly doubt that. It's too impractical. Literally the only thing that gives it value is the trust of people, and that's a fickle thing.
It might have gotten big as an online payment system if it could scale sufficiently for that, but it turns out it can't; payments are too slow and expensive. With that gone, blind trust in a system that has proven to be very volatile and has had a lot of events where a lot of people lost access to their bitcoins, does not seem very likely.
It’s this funny quasi status that I see lots of statements around. We need a digital currency. But currencies shouldn’t fluctuate or be primarily an investment since that makes it sucky as a currency.
For example, I had a friend who grew up in post-communist Yugoslavia. Their grandmother would send them to the grocery store with a thousand dinar (or whatever) to buy vegetables for dinner and the price would go up during the time to walk to the store. That sucked.
If I want to get a salary of 1 Bitcoin a year, and that varies in value from buying a month’s rent to six month’s rent that is not useful.
No currency is guaranteed to lose or gain value over a mid to long term. Venezuela will go away and change their currency, few are holding Venezuelan currency except people who live there and must use it to live. People there don’t want to switch to Bitcoin for many reasons like it’s volatile, shitty for transactions, and not as widely used. Last I heard they are trying to use dollars and maybe euros unless their government bans.
There are more countries that just use the dollar [0] and don’t think it would be wise for any to switch to Bitcoin. For all it’s weaknesses at least the US$ is fairly stable and tied to the USG that has some accountability. A country tied to a currency as manipulated as Bitcoin will be in a bad space.
The first stable government that comes out with a digital currency will be in a good macro place. But it won’t be a good speculative investment.
[0] https://en.wikipedia.org/wiki/International_use_of_the_U.S._...
People have been saying "Bitcoin is dead" for the last 10 years. I'll watch them say it for another 10 years.
Yes, Bitcoin has problems. The transaction fees are pretty high. Transactions are slow as molasses. It's value fluctuates wildly. But I don't care because I only really use it on large transactions online.
Bitcoin is great for me because it takes me 1 click to send money to anybody else who uses it. If I send a transaction with a decent fee I know 100% it's going to go through. It won't get blocked by my bank for fraud. The government will have no idea I sent the transaction (Bitcoin isn't 100% anon but it's more anon than most other systems). The other party also knows that once the transaction is confirmed, I won't be able to dispute it.
I'm also 100% confident that my money is mine alone. Nobody is able to freeze my funds. You can't take my Bitcoin even if you rob my house.
It's the confidence combined by the guarantees that gives Bitcoin so much value to me.
You definitely have a small but meaningful use case. I don't see how that makes it worth the current $300B market cap.
But from the definition on Wikipedia, a Ponzi scheme is a form of fraud, which itself Wikipedia defines as "intentional deception". I wouldn't say that Bitcoin or the Bitcoin project itself is intentionally trying to deceive you into using it as an investment. Maybe all the companies that are advertising Bitcoin as an investment are though.
I also do believe Bitcoin is overvalued currently. It makes sense to me that the value of each Bitcoin would grow over time, just not at the crazy speed it's currently growing at.
"A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own."
Bitcoin isn't a business, it's an asset with decentralized production and a distributed ledger. Also, assuming the network isn't down (which it never has been to date) you can liquidate in full immediately. The asset exists and maintains ownership on an individual basis, therefore in direct contradiction to a Ponzi scheme.
I think you could possibly argue that stocks are Ponzi schemes too by your description. Correct me if I'm wrong, it was developed around the 2008 era financial crisis to act as an alternative to US Dollars, in the event that pulling out cash from a bank is no longer a valid option. Public exchanges offer a variety of options to trade BTC to USD, but there wasn't really any of that about a decade ago. It seems more like some of tech has absorbed crypto and incorporated, or designed, their products around it. And personally it doesn't seem likely that cypherpunks have the highest regard for corporate America.
Tether is working and working very well, its just not transparent to retails, only to exchanges.
It seems to have a pattern leading up to and after every halving over a four year cycle (https://hackernoon.com/a-detailed-breakdown-of-bitcoins-four...), though some argue well that it doesn't (https://bitcoinist.com/is-bitcoin-price-cyclical/)
Bitcoin miners tend to find the cheapest electricity, like near hydroelectric dams. So let's assume they can get electricity for $0.05/kwh. And to keep things simple, assume that 100% of their costs are electricity (in reality there will be capital costs and other operational costs, adjust calculation to your own liking). That means they can collectively consume 18,750,000/0.05=375,000,000 kwh/h= 375 gigawatt of power before they stop making a profit.
Now compare that to global electricity use, which is on the order of 20,000 TWh/year or about 2000 gigawatt. Bitcoin miners would be using on the order of 20% of all electricity!
Except that at those consumption levels, they would start driving up electricity prices, which brings me to my point: will governments really allow everybody's electricity bill to rise significantly because it is profitable for bitcoin miners? I think not.
What a whimsical financial product.