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>> life savings into this thing

If you put your life savings in crypto currencies you should be prepared to loose it all. Consider working on your FOMO before to start investing/gambling. It's a risky asset and I would say it will become worthless as store of value but that's a different discussion.

For sure, it's very risky, highly volatile and nobody should put more money than they are willing to lose.

But if you don't trust your gov/central bankers then crypto is one(only?) way to opt out.

The issue is that the value of crypto is influenced by gov/central bankers as well. I really don't see how you could hold and trade assets if your gov doesn't want to. It can simply make it illegal like they did in China. As a business you can't sell services using illegal currency so your crypto currency treasure becomes worthless because you can't buy a loaf of bread with it.

China, India and Nigeria have made - or are in the process of making - crypto illegal. That's about 30% of the world's population. More to come.

China did not make crypto illegal. "China has banned crypto exchanges and initial coin offerings but has not barred individuals from holding cryptocurrencies."

https://www.cnbc.com/2021/05/18/china-bans-financial-payment...

India is likely to just regulate crypto, not ban it outright, even though an official made the claim back in March that they were going to:

"The central government may form a fresh panel of experts to study the possibility of regulating cryptocurrency in India, three sources privy of the discussions told ET. This comes amid the prevailing view that the recommendations by a committee headed by former finance secretary Subhash Garg in 2019 for a blanket ban on these assets had become outdated."

https://economictimes.indiatimes.com/tech/technology/govt-ma...

Nigeria did not ban crypto.

"According to local publication TodayNG, Adamu Lamtek, the Deputy Governor of the monetary regulator, said that the CBN did not ban Nigerians from buying, selling or holding cryptocurrencies but protected the banking sector from the activities of cryptocurrencies.

Additionally, he clarified that the central bank did not place any restrictions on cryptocurrencies in general and is not discouraging people from trading them."

https://www.financemagnates.com/cryptocurrency/regulation/ni...

Nothing stopping people in China or Nigeria from having crypto, just certain institutions. And I doubt India goes through with a full ban on it.

> Mm, re: Nigeria.

CBN says: "Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities." Further, it describes them as "volatile speculative assets that can be a danger to Nigerian users," and banks are "not to use, hold, trade and/or transact in cryptocurrencies."

Further, all bank accounts associated with exchanges were ordered shut down in 2017 and reiterated in 2021. Also all bank accounts associated with individual traders.

So yes, individual ownership is not illegal, although to call this an attempt to discourage would be pretty tepid.

> India.

India is, to date, moving forward with a complete ban, and the plan of record is to give folks 6 months to sell off all assets they may have. They have not completed this yet, and of course to your point they may not. We'll have to watch.

> China.

PBOC is not a fan. Exchanges are illegal, ICOs are illegal, and I'm not sure I'd want to be caught anywhere near cryptos in China. Just ask Zhao Dong. [1]

> Clarification.

I apologize for not having my facts entirely straight, I should have said "heavily restricted" instead of banned.

[1] https://www.theblockcrypto.com/post/104550/chinese-court-beg...

The way I look at it, the whole point of the exercise is that nobody (no governments, no corporation, no billionaire with a twitter account) can affect the network itself.

If Bitcoin can't deliver on that promise, it doesn't deserve to exist and anybody who didn't do their due diligence should lose all their money (including me).

As long as the network is alive, it will have some value to some people somewhere.

>> it will have some value to some people somewhere.

That's not really very assuring for someone who puts life savings into a such asset.

I think the difference is influence vs control.

what has a higher probability of losing your life savings over the next 10 years, your gov/central bankers or any kind of crypto?

10 years ago, the answer to that question would have obviously been: Any kind of crypto

(though I'm not advocating anybody puts their life savings into crypto now)

US dollar is guaranteed to lose at least 50% (lowball) of its value over the next the 10 years, most with this knowledge are choosing to protect wealth by investing in scarce assets.

Bitcoin is an easy choice for wealth preservation as the most scarce/liquid/desirable asset available to most humans.

Well that's the sensible advice, but then you see stuff like this: https://www.reddit.com/r/Superstonk/comments/na8hk1/another_... (not crypto but still, the FOMO/meme factor is real).

>philosophical problems like embedding "rich gets richer" deep into the protocol

Proof of work is a pretty clear "rich get richer" system, except it's the rich with stakes in energy companies, semiconductor fabs, and mining hardware that get richer, not the rich in Bitcoin.

How do they cover those costs? By selling it on the market.

As a PoS staker, all I have to do is provide a cryptographic signature and I have zero pressure to sell the coins I receive on exchanges.

The "income tax as forcing function" bit in the OP was pretty rich.

Like someone staking millions of dollars worth of ETH can't set up a shell company in a tax haven to own the resulting riches?

Different issues. In PoS, the people with the most coins decide the protocol. In PoW, the people running nodes decide the protocol. See Segwit2x debate.

But coins are fungible with dollars and dollars are fungible with mining the most coins... Most coins <-> Most USD <-> Most mining power <-> Most stake <-> Most coins.

yeah, but that doesn't matter, no matter how much you mine, or how many coins you have, you don't get any more say in the protocol rules than the people running the nodes. Your stake is irrelevant, and whilst your hashpower secures the network, if you try to break/change the rules, nobody will accept the coins you mine.

Generally one doesn't invest in currencies. Currencies aren't an asset class [1], and a currency isn't an asset. One uses currencies to buy assets. Conflating the two would be an economic catastrophe, as nobody spends an appreciating asset. That's why currencies and assets are forked the way they are.

Proof is in the pudding: Pomp's Bitcoin Pizza cannot be paid for in Bitcoin - or any other crypto.

[1] https://www.commonfund.org/blog/is-currency-an-asset-class#:....

What happens between the day of creation (when it's worth 0) and the day Bitcoin becomes global reserve currency (worth multiple trillions of dollars)?

It acts as a highly appreciating asset with a great upside.

Also, I agree with you, I wish IRS would treat it as currency so that we won't have to pay capital gains taxes on it.

>> What happens between the day of creation (when it's worth 0) and the day Bitcoin becomes global reserve currency (worth multiple trillions of dollars)?

You wake up and it's morning. That happens.

There are many sales pitches, the merchant currency adoption being just one and the weakest

Are you arguing that cryptocurrencies are a currency, and therefore not an asset class, or that cryptocurrencies are not a currency, because they are an asset class?

Because the way you worded it made it seem like the former, but your article makes it pretty clear to me that cryptocurrencies don't fit its definition for currency.

The US government has decided to treat crypto as a digital asset and not as a currency, at least, especially for the purposes of taxes.

> Pomp's Bitcoin Pizza cannot be paid for in Bitcoin

...which got him a lot of press and attention, far more than had he accepted Bitcoin. That's kinda boring these days.

The idea that nobody spends an appreciating asset is silly. I have BTC, and I need to buy things. One way or another I need to spend my wealth. How exactly I chose to do that comes down to things like convenience, privacy, conversion costs, etc. Quite often, yes, BTC won't be the most convenient or cheapest way to buy things! But sometimes it is, and when it is, my decision to spend my wealth isn't impacted by whether or not the asset I happen to use is appreciating.

It makes sense for me to spend BTC more than most people, because I'm often paid in BTC by foreign clients. So I tend to have an excess of it. But if I were, say, buying porn on a site like ManyVids, or refilling a burner phone's credit via Bitrefill, regardless of whether or not I had excess BTC I'd much rather get the privacy benefit of paying with a BTC/BTC Lightning wallet than giving my name and address with a credit card. And yes, both those sites do in fact do Lightning payments; I won't admit whether or not I've checked that myself. :)

Why would you ever spend an asset that you think is going to be worth more tomorrow than it is today? Doesn't make sense, you'd just borrow against it and wait. This is how the majority of the wealthy handle their investments. Buy, hold, borrow against it, spend. This is even doubly tax advantaged, as you don't have to recognize your capital gains - and you can deduct your margin interest.

Because these forms of wealth are fungible: if I spend fiat, that just means I have less fiat in the future that could be put into Bitcoin. The only difference is the conversion costs - depending on what exactly is the financial situation you might be saving a conversion cost by either spending fiat or spending BTC.

Keep in mind, because Bitcoin is an appreciating asset, sane investors will often need to spend their BTC to re-balance their overall portfolios. If I had never sold my BTC, essentially all my wealth would be in BTC, which is reckless. Spending my BTC directly vs trading it for fiat and then spending the fiat at minimum reduces the number of conversions needed, is better for privacy, and can even be more convenient now that Lightning works pretty well.

> Doesn't make sense, you'd just borrow against it and wait.

I have zero interest in taking that kind of risk, and I'm certainly not alone.

Fiat is intentionally worthless in the future to encourage you to spend it.

Shouldn't that be reason enough to get rid of it for something that's not trying to become worthless and rob you of your purchasing power?

It's pushing endless/pointless consumerism. People will spend money on things they need, they will also spend money on things they want, but this is pushing them to spend money for the sake of spending it.

Not necessarily consumerism. It's a temporary/intermediate representation of value. You can move it into any kind of investment. The only encouragement is to keep it as not-cash.

> The way I look at it, Bitcoin is my data (aka value) and eth is my computer (aka financial transaction platform), I switch computers every other year, but my data comes along with me.

Is Bitcoin the data, or is it the harddrive?

Because i switch harddrives every other 5 years too...

The answers depends on which 10 years of your life that you’re in

Couldn't agree more. Very well said.

Whether I answer this question correctly or not will have significant financial consequences for me, so I'm trying to be as fair and balanced as possible.