The Bitcoin Investment Thesis Is Broken
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Is it peer-to-peer digital cash like the original white paper claims? Clearly not, with slow settlement and high transaction costs.
Is it an uncorrelated hedge against stock market volatility? No, it trades like leveraged Nasdaq.
Is it a store of value based on [insert lurid fantasy about digital energy crystal magic on the blockchain]? No, see above.
Is it a backbone for other, faster payment systems? No, see the miserable state of the Lightning Network after nearly a decade.
Is it a system for remittances to the third world? No, see El Salvador’s experiment.
Is it a way out of dollar dependency for third world governments? No, see El Salvador again.
Is it a way for North Korea to get paid when extorting Western companies? In fact yes, this use case does seem to work.
It is literally illegal in the US to advertise investments on TV yet there has been an absolute bombardment of marketing trying to get as many average joes as possible to buy crypto to goose the price. Enticing unsophisticated investors with a promise of massive rewards coupled with badgering FOMO is the exact MO of pyramid schemes.
A pyramid scheme means that you use money from new investors to pay previous investors.
Thats not at all what happens with Bitcoin.
Bitcoin just trades like a commodity...
You can call it a bubble sure.
But its simply not a pyramid scheme
That's a Ponzi scheme.
A pyramid scheme is when you have to pay to your superiors and recruit subordinates, in a way that the main way of recouping your investment is by bringing more subordinates, so that it's only profitable to those in the first few levels of the pyramid.
Although meeting in person to physically transfer gold requires a similar amount of trust, so ¯\_(ツ)_/¯
Which is a huge win for gold.
I'm still looking for all my apes that got stolen.
# Yep, crypto and it's offshoots are totally not a scam.
Even more so, I feel like the third world is becoming more of a dumpster for first world crypto experiments where the number of greater fools is declining.
No doubt, as western nations increasingly ban this stuff or regulate it out of existence, the scam will move across the ocean.
https://behindmlm.com/companies/mmm-global/
It appears the main guy behind it died recently, but its still an active movement in Africa.
https://behindmlm.com/companies/mmm-global/mmm-globals-serge...
The number of people caught up in these scams is just insane:
3 million Nigerians lose $57 million in MMM Nigeria collapse
https://behindmlm.com/companies/mmm-global/3-million-nigeria...
It was really alarming to see how many vulnerable people had bought into this mania in a poor country. The moment this bubble pops and crashes it will bring down a lot of non-cryptobros that are being shilled, either by influencers or other "hodlers" friends or family (that may actually think it's a good "investment").
It's looking pretty ugly for the next recession.
Indeed.
And besides, twelve recession-free years doesn't mean a whole lot for a brand new class of currency. We'll see where money goes when there's nowhere good to invest it AND fiat currency is being inflated like crazy.
...that can collapse in value at any time, without regard to real-world economics.
Should I really park my retirement savings in Bitcoin, to ensure they don't get inflated away?
Rural land is a slightly different story, as there is some underlying productivity there (e.g. agricultural use, or maybe there's something to mine), but tundra real estate doesn't sound like a great buy.
We're literally seeing that now. The money is flowing out of BTC even faster than all the other investments losing value.
The original article is overstated and lacks nuance, but he's not wrong on that point.
Yes, but other than that, how did you enjoy the play, Mrs. Lincoln?
> We're literally seeing that now. The money is flowing out of BTC even faster than all the other investments losing value.
Yes, currently BTC apparently isn't becoming more valuable. But that's not all that relevant to people who're interested in it for the sake of inflation / store of value.
Like… buy a piece of farmland instead. Buy oil or steel. Buy something that has some value.
It’s very likely Bitcoin randomly goes to 0. I can’t imagine a long term world in which a random plot of land in Nebraska goes to 0….
If you parked your money in Bitcoin on Jan 1 because you were worried about inflation that was coming, today that money would only have about 60% of the purchasing power.
It is true that the market can remain irrational longer than you can remain solvent, but it's also true that you can remain irrational longer than you can remain solvent.
Beyond that core value, do what you wish with it or not.
It's just a tech stack that has potential value, it is not the end all be all of value networking, or value-as-a-protocal but it's insanely useful in driving innovation in this space.
Forest from the trees and all that.
Yes, it will be around. But beyond the idea it represents, and the technological invention that is blockchain, there is no value. This is marketing and ideas you invest in.
>Doesn't know what PoE is and the value it's provided to businesses already, thinks he is an expert on how it has no value.
You might want to look that up before you say silly things. I'm curious to see the goal post moving you are about to do.
As I said, use it or don't, just because you can't doesn't mean others are wrong lol
Planned economies haven't worked. Market economies have some clear inefficiencies and potentials for destabilizations. Applying data transparency and tracking to a market economy using supply chain blockchains has the potential to enable more decentralized planning to build better options.
Bitcoin had a market cap of $1.2 trillion in November. That becomes harder to sustain when quantitative easing is slowing, when the fed funds rate is slowly rising with indications of it rising more in this year if inflation is where it is etc.
It's the problem of all successful Ponzi schemes - eventually they grow too big and implode.
The "criminals use Bitcoin" while true is the weakest of the arguments against the current or future success of Bitcoin. Criminals still primarily use regular ole' fiat currency for this stuff, or have more sophisticated schemes like selling artwork. In the case of North Korea they'd have to either mine Bitcoin, or they'd have to convert their currency to Bitcoin. But who would sell to take worthless North Korean money? Unless you mean they convert dollars... in which case they were just using the dollars already.
The North Korea is thing is just rumor-mongering, or governments pointing fingers at each other as they always do. The only eastern country I've heard publicly admit to using bitcoin is Ukraine: https://www.nytimes.com/2022/03/11/technology/bitcoin-ukrain...
I agree, using the argument of "x is a tool for illegal activities" is brittle because you could say that about literally anything.
You could attribute the same thing to Amazon and Google gift cards being used in scams.
When financial instruments are primarily used for licit activity, we tend to add features that make illicit activity more difficult but accept that some illicit use will occur. That's why we still have $100 (but with serial numbers) and don't have bearer bonds any more.
Like they might accept a ransomware of $200 instead of nothing from person X because they're hitting up thousands of people with it, whereas if you go through all the effort to physically kidnap someone and leave a ransom note, you're not going to be able to do that thousands of times, probably just a couple at most, so you're going to demand a large ransom payment to make it worth the effort, like $1 million+.
They also didn't say 'unpayable', btw, just more difficult to pay.
Overall "money turnover" - idk whats the proper English term for that, basically value of all transactions over some period - is multiple orders of magnitude larger for fiat currency.
That does not change the fact that criminal activity is way, way larger % of crypto turnover.
> The "criminals use Bitcoin" while true is the weakest of the arguments against the current or future success of Bitcoin. Criminals still primarily use regular ole' fiat currency for this stuff, or have more sophisticated schemes like selling artwork.
Cryptocurrency enables criminal schemes that are totally impractical with cash, such as ransomware malware at scale (have you heard of it?). These schemes are an appealing use for cryptocurrency. Legitimate transactions can use conventional payment networks, but these can't and need a lawless transnational payment network like cryptocurrency provides.
Also, LOL at the idea that criminals are so busy selling artwork that they have no use for cryptocurrency.
> In the case of North Korea they'd have to either mine Bitcoin, or they'd have to convert their currency to Bitcoin. But who would sell to take worthless North Korean money? Unless you mean they convert dollars... in which case they were just using the dollars already.
LOL, I don't think you understand what you're trying to debunk at all. The North Korean state wants foreign hard currency, and cryptocurrency is a mechanism for them to acquire that (e.g. through the aforementioned ransomware).
Following that line of reasoning, a briefcase full of cash on an airplane to Colombia enabled criminal schemes that were totally impractical. Having a transnational payment network itself enables schemes. So does not having the government track and verify each and every one of your transactions.
If you wanted to make a good argument here, you'd actually focus on tradeoffs and cost-benefit for Bitcoin. Is "North Korean ransomware" an acceptable tradeoff to have Bitcoin? Idk. But the prevailing "criminals will do bad things" argument is asinine because criminals did bad stuff before Bitcoin/Cryptocurrency too, and they still mostly use fiat currency for "bad things" right now anyway. The fact that North Korea has to convert Bitcoin into dollars that ostensibly they're not allowed to have just proves the point.
While cash can be useful for criminal schemes, it's old and has significant legitimate use due to legacy momentum. Cryptocurrency, on the other hand, is new and post-dates regulated payment networks that efficiently handle nearly all legitimate payments, so it suffers from similar problems to unmoderated internet forums: it actively attracts a disproportionate share of bad actors. I'm not saying that cryptocurrency should be banned for that reason, but it's an important fact to note when it's being denied.
IMHO, cryptocurrency isn't the "future of money," because there are no practical reasons for anyone to use it as money. The main reasons people actually use it are (in order): for speculation, criminal activity, or (often questionable) ideological reasons. The latter is a drop in the bucket compared to the first two.
Criminals will do bad things at scale with cryptocurrency. Ransomware existed before bitcoin, but the amounts demanded were pittances compared to what can be demanded today because the difficulty of using cash or the banking system for a transaction increases exponentially as the amounts involved increase.
It's hard to move cash, but it was harder to move gold ergo we should stop using cash because it's easy for criminals to move and use gold instead. That's the line of reasoning at play here that is espoused by this argument.
Wire transfers are also hard to reverse, but banks have security ceremonies around them to prevent misuse, and good luck to you if you want to pay a $20MM ransom with an international wire transfer. Even if you were able to find a banker who wouldn't call the FBI on you, the recipients of the transfer are exposing themselves to significant risk of capture by interacting with their local banking system and by providing you with the details of their account.
Cash being convenient for small transactions and difficult to use for large ones is a deliberate feature. The point is to strike a balance between usability and vulnerability to misuse. E.g., you have to declare when you're moving more than $10K across an international border, and it's actually hard to smuggle that much cash due to the weight and bulk. Gold is also heavy and bulky, which is an important security feature of Fort Knox (even if you break in, how are you going to abscond with tons of gold bars?).
It's actually pretty hard to spend dollars when you represent a sanctioned entity. A DPRK official may have a suitcase full of USD, but no western bank will accept their deposit or accept a transfer from a bank or account associated with the North Korean regime. But if they can find someone who will take their USD in exchange for no-questions-asked crypto, then they get to evade sanctions (at least for a little while).
The secondary and tertiary layers are still not worked out yet. I don't follow lightning closely and I'll take your word that it is in a miserable state, however I don't see a fundamental problem. But even now I'm pretty sure Bitcoin is faster and cheaper than anything else for settling high value irreversible, remote transactions.
I think Bitcoin has plenty of potential but right now it's at a point where speculators are vastly outnumbering any other uses. So its potential non speculative uses are invisible or even hindered. It's also hindered because it doesn't have the backing of a powerful government forcing its use upon its citizens. The fundamentals are all still valid and nothing you mentioned proves that it cannot ever work as a currency. One that isn't controlled by a central bank and fractional reserve system that continually erodes the currency's purchasing power.
Only if you ignore money transfer laws. If your transfer is legal, the alternatives are easier, cheaper, and faster. If you're willing to ignore the law, you might as well set up a bank that ignores the law and have that bank do the transfer orders of magnitude cheaper and quicker than Bitcoin.
Casinos serve alcohol.
Because of limited throughput (350k per day), most transact via exchanges and off chain. Some what 90+% of coins are owned by a ridiculously small volume of wallets, with most concentrated in exchanges with a huge volume of coins.
Because of the nature of mining, we are seeing more and more consolidation into fewer parties who can afford the electricity burden and hardware capital. We are long gone the day of people mining btc with their ati cards at home. In fact, I saw a blog about how mining is completely unprofitable.
It is massively controlled at this point by few rich parties (exchanges, miners) who have disproportionate sway on it's value (wash trading) and transaction throughput. Why exactly should people trust these guys rather than publicly traded/regulated banks or government bodies?
People might argue gold has other uses, but they don't move the needle, and anyway, so does Bitcoin.
The thing is gold has thousands of years track record as a store of value and as money or something to back money. Bitcoin obviously does not, and it remains to be seen if it can replace gold in that way. I don't see central banks stocking up on it yet.
- Gold has no dependency on electricity, computers, or any energy source. Bitcoin ceases to exist without these things.
- Gold has a lot of practical uses and applications as a material. Bitcoin has none.
- Gold is a naturally occurring element. Bitcoin is not.
The only advantage I've ever been able to see is that Bitcoin ownership can be transferred electronically compared to gold that must be moved. However, being able to be moved electronically also means that it can be stolen electronically. A bad actor in North Korea has the potential to steal a person's wallet credentials and transfer Bitcoin out of their possession. They can't do this with physical gold.
Gold is not a perfect store of value - it doesn't serve a fundamental need like food or a blanket - but it has served it's purpose over the millennia and I don't see how Bitcoin is improving on it.
I'm with you, in that I'm very skeptical Bitcoin could replace or supplement gold in that role. It's not impossible though.
I can hand you a piece of gold and the transfer is done. No 74 character address, no keys, no official public ledger of the transaction happening, just a transfer of value between two parties.
Keep in mind the vast majority of gold holdings and transactions are between central banks.
And how can I easily verify it's really 100% gold?
I don't think that gold can be sent over the internet or be invisibly held/transported in a brain wallet.
To play devil's advocate, I do wonder if once the get rich quick ponzi scheme ends, it will come to represent the "value" of it's investors innate skepticism and hostility toward the institutions that govern the global economy.
The remaining investors would be a cabal of cheerleaders for the destruction the current institutional structures (probably to replace it with yet another "purer' one more to their liking).
Maybe that underlying value isn't $30k but instead is only $5k, or maybe because BTC's only output is destructive (IIUC there is no future revenue stream of consequence - only the burning of fuels), it is $0 once it's "job" is done. I don't know.
But its original thesis involved undermining fiat money and bypassing tax levying authority by taking transactions away from the purview of institutions involved in both.
At it's most potent, I liken it more to a WMD against those institutions (which seems to be why it is particularly popular among the anti government crowd), not as some kind of basis for a hypothetically productive anarchist economy.
And as you say, at it's least potent it's largely, though not exclusively, a means of exchange for illicit and criminal activity.
> Is it a way for North Korea to get paid when extorting Western companies?
To be fair, Bitcoin didn't invent extortion, it is just a better tool that facilitates it at a distance - no suitcases of cash or diamonds or physical middlemen needed. Also traditional banks have come under scrutiny for looking the other way for all kinds of criminal activity, so it's not as easy to move illicit funds as it used to be.
>By contrast, the cumulative crypto complex grew from essentially $0 to $2T before its recent crash. Where did this money come from? It was essentially a money multiplier effect of QE.
>Crypto is now collapsing because the Fed is tightening.
Yes, and when the Fed reverses course after everything breaks from this tightening, BTC will rise again. Why are extreme boom and bust cycles of crypto surprising to anyone anymore?
It is the asset most correlated change in global liquidity. And if the author thinks the liquidity spigot is forever cut off with this much global debt, he's got another think coming. The Fed balance sheet will be going to 15, 20, $30 trillion eventually. No entity has a big enough balance sheet to buy the enormous debt and deficits the US produces, and the Eurodollar market can't function without continued liquidity injections.
I wouldn't be so sure. The narrative for crypto was that interest rates were never going to go up, QE was never going to stop, and we were going to see hyper inflation.
Somehow - crypto was uniquely the only possible hedge against this.
This has proven to be false.
It's at least going to need a new narrative. At some point, it's going to run out of narratives, and it's going to need to actually deliver value.
Hell, I'm also guilty of falling for that at times. It can, and likely will, happen again.
Who made this claim?
They went up in 2018 and BTC crashed. Then they went back down, Fed expanded their balance sheet, and BTC boomed.
The Fed has no choice but to eventually monetize the debt more. There is no other option. Where is the balance sheet going to come from to fund the massive deficits the US runs? There is no where else.
Meanwhile the US is freezing foreign reserves. Of course they could also mandate penalties for owning or buying BTC which could certainly crash the price for a time. But "rates are currently going up a little bit" is not in any way a refutation of the long term BTC trend. Rates can eventually rise after the $ devalues and the debt to GDP declines significantly. But Fed has not even begun to shrink their balance sheet yet you think they should declare victory?
Lets see what happens when the market falls 50% more. They will reverse course eventually, if not in the short term.
Of course none of this means you should blindly hodl BTC through the crashes. All risk assets are tanking now as long as Fed tightens. Then when they expand their balance sheet again and sent rates back down, you average into BTC as it moons. Being all or nothing on any investment thesis in perpetuity is silly. But look at the charts. You can't say BTC is finished until it fails to have another bull run.
1) The Fed increasing the money supply. This lead to a situation where there was a lot of money that needed to be put somewhere.
2) The Fed keeping the interest rate near zero. This meant there was no safe place to put all the money the Fed was dumping into the system.
Warren Buffet, someone generally regarded as being very good at estimating value, has said that near-zero interest rates can support near-infinite valuations. That's exactly what we saw play out.
Without new money pumped into the system it collapses, without steadily increasing asset prices (at least assets not declining for long) the system collapses.
The interest on debt will crowd out everything else and put economy in depression if rates rise meaningfully. With energy becoming more expensive than in decades past ("peak cheap oil"), there is not enough real growth to keep the system going without injections of money/liquidity.
Inflation, however painful, is baked into the cake and is the only real path to devalue the debt. Cutting spending, cutting entitlements, cutting defense, raising taxes...all are politically near impossible and would put US economy into massive depression.
This.
I'd really like someone to explain to me, how the central banks and the states are supposedly going to get out of the increasing-debt-spiral we're in right now.
I see literally no way except for governments to tax the rich, which they won't do.
The only other way for governments to still sign off budgets to enact policy is to pile on more debt (going further down the spiral).
Try a longer term perspective, and BTC is indeed still deflationary - its potential to replace central bank functionality and to be a secure, global SoV is still valuable to investors.
Bitcoin was supposed to have started acting counter-cyclically (like gold) when it got mass adoption. So, 2018?
Instead, it acts like leveraged NASDAQ in its pricing, and has absolutely none of the utility that a cryptocurrency probably should have. The only benefit of bitcoin is name recognition. That doesn't create a currency or a store of value. The volatility of BTC/USD has only increased, as well as the correlation with QQQ, which does not suggest that BTC will ever become a store of value.
All fundamental signs point to a $0 value for bitcoin. Unfortunately, the dinosaur coin (BTC) will probably drag down the coins with utility (eg Solana, Zcash, and Monero) with it.
Please take this kind of argument elsewhere.
> The volatility of BTC/USD has only increased
Do you have a source for this? The data I have seen is that it is just slightly decreasing if anything, but there are many ways to measure volatility.
Instead, when asset prices crashed and most countries experienced their highest inflation in decades, BTC not only failed to gain in value as a "safe haven" but actually fell much faster. Impossible to stress how favourable this year should have been to an "uncensorable" abstract store of value whose supply doesnt vary according to economic conditions.
Um, the US dollar? (Not that I in any way shape or form support crypto just to be clear)
Even just the assumption that "whatever else they were using is also worthless" says a lot about their willingness to jump to conclusions
One thesis for Bitcoin is that the global economy is transitioning away from the petrodollar system and Bitcoin may play a part in the reserve currencies that replace it. El Salvador just hosted a summit with 44 countries to discuss adopting Bitcoin as legal tender and moving to a new reserve system.
You misspelled "attempt to cash grab by capitalizing on a silly trend"
Bitcoin was supposed to be useful because it was a decentralized currency, but a functional currency should, by definition, not be a good investment (that is, something that increases in value more quickly than other assets in the economy).
If the relative value of your currency keeps increasing, then you don't want to spend it, if people aren't spending the currency then it is not in fact a functional currency, and if it is not a functional currency, then it ought not have any value.
Bitcoin is a mirror image of bread-coins which subsequently rot. We know not to make currency out of bread (ie., items with negative time-bounded exchange value), I hope we have now discovered not to make them out of blockchain-slices.
Now that's some claim.
You probably disagree with me when I say that austrian economics [1] is indeed an economic school. Folks like Saifedean Ammous [2] appear to at least have tried reading up on some economics.
[1] https://en.wikipedia.org/wiki/Austrian_economics [2] https://lexfridman.com/saifedean-ammous/
The problem with the moral premises of this world view is their feudalist concequences, for reasons unknown to me, utopians of this type think that if a premise is true that they dont need to think about concequences.
In this case, if individualism is true, then feudalism cant possibly follow. But reality doesnt follow "ideas" in this sense.
If we create a system of individual ownership of fixed resources (land, crypto, etc.) then the few there first owns everything, and hence, feudalism.
I dont take this sort of "moral economics" seriously, since its not itself a serious sort of either morality, politics or economics. Its an attempt to deduce utopia from naive ridigid principles.
Aside from that ..
> ... system of individual ownership of fixed resources (land, crypto, etc.) then the few there first owns everything, and hence, feudalism.
I doubt your claim here. Maybe there's some empirical evidence that these systems of individual ownership of fixed resources tend to lead to few individuals owning most of or "everthing", thus feudalism. But for one, we do have very high concentration of wealth in the current fiat system. (So the alternative to the system of individual ownership of fixed resources apparently does not appear to have a clearly better outcome.) And two, this possibly existing empirical evidence may just reflect what happened until now, but the world is changing and new circumstances may very well lead to new outcomes.
> I dont take this sort of "moral economics" seriously ..
I don't follow, where you take the "moral" keyword from. To me, Austrian Economics is just a (heterodox) take on economic questions that differs in some key views from the majority of the economics field and what they are currently teaching, publishing, giving advice to governments about or implementing as economic/monetary policy.
> Its an attempt to deduce utopia from naive ridigid principles.
Fair enough, if that's your perception of what AE is, it's totally valid. Such vague counter position (that doesn't address concrete claims) is hardly valuable as an actual critique, though.
yeah, I've seen it said a currency that's a better investment than the economy it serves is a self-defeating abomination exactly because it incentivizes people not to participate in productive activity
And I suspect that most people, given a choice, would prefer to get paid in a currency that retains value over time rather than one which loses it.
This choice doesn't exist today. But it could exist in a future where Bitcoin's UX improves and its price becomes less volatile.
I find odd that people already have final judgements about bitcoin's success after little more than a decade of existence, when even its issuance schedule is over a century long. Does it really make sense to expect an entirely novel currency/asset/whatever you wanna call it to find its definitive price in one decade?
But in my opinion, Bitcoin is not backed by a lot of value, rather it’s backed by a lot of cost, which is confused for value.
Enthusiasts wrongly believe that proof of work (the primary cost) is necessary to create scarcity (the primary value).
Proof of work is not necessary to create scarcity, so it’s a pointless cost, and scarcity is not valuable enough to be the primary value.
While scarcity is important to prevent inflation, we now have many cryptocurrencies which support scarcity. With that plethora of choices, the most valuable currency will be the one that producers and consumers (the real source if value) choose to transact in.
People will choose to transact in the currency that best supports transactions. This comes down to cost, speed, and features.
But it does so why do you think that may be?
Let's take this chestnut:
> As the Fed printed more money, more crypto assets were created.
The author is probably referring to Quantitative Easing. But QE is not "money printing." It is an asset swap in which the Fed issues a utility token called "bank reserves" in exchange for a treasury or mortgage backed security. Bank reserves can not be used outside of the Federal Reserve system. They can not be converted to "cash," nor can they be used to pay salaries, bonuses, etc. (They can be converted to treasuries through Quantitative Tightening). Bank reserves are not money. Therefore the fed printed no money. It did, however, do a lot of asset swaps, accumulating a bunch of treasuries and MBS, while issuing a lot of bank reserves.
This is not a mainstream view, but it is supported by the evidence. If you try to find documentary evidence for the notion of the Fed money printer spinning new dollars into existence, you will find none.
Even worse, some economist view QE as a restriction on money. By locking highly valuable collateral (treasuries) on the Fed balance sheet, the financial system is deprived of the stuff that keeps it going. You see this manifest itself with the nearly $2 trillion in reverse repo being done now.
Because it's all most people care about, let's stick with the inflation hedge thing.
> Now, that’s from an all time high but the point is that all time high came before evidence of inflation. Once the inflation arrived, BTC has gone only one direction – the wrong one.
An asset class that correctly hedged against CPI acceleration (as separate from money printing) would show exactly this behavior. A bull market prior to the appearance of CPI acceleration. Then, when the peak is reached, the hedge loses steam and retraces some of the gains.
This behavior is sometimes called "buy the rumor sell the news."
I can see how it might be irritating to separate CPI acceleration from money printing, but this is the conundrum you must resolve for yourself in today's world.
I'm not saying that Bitcoin is a hedge against "inflation." I'm just saying that the authors statements and conclusions aren't the only explanations for the price behavior of Bitcoin. There are many confounding factors under the surface.
I'm totally not a crypto apologist btw, just pointing out inaccuracies.
My understanding is that the issuance of bank reserves allows banks to issue more loans, thus injecting more cash into the economy. That's the mechanism people are blaming for these asset bubbles. It's also what the Fed intended to happen.
> This is not a mainstream view
Right.
Treasuries are locked away, while the cash is made up from nothing and handed over to the government to continue spending.
More government spending means more money sloshing around the economy, driving prices up.
> If you try to find documentary evidence for the notion of the Fed money printer spinning new dollars into existence, you will find none.
The stock market is awfully correlated to the Fed balance sheet.
https://www.currentmarketvaluation.com/posts/2021/07/Fed-Bal...
I wonder about the psychological needs of those who come out to declare victory when an asset drops in value. What is their motivation? Why does this person need to believe that Bitcoin is dead?
Secondly, the reason why most anti coin people want it to fail is because they hate it. And most people that hate it, do it because they lost money because of it.
As in gambling, over 90% of people lose money in this market. The reason why people don't hate gambling that much after they lose money there is because they think gambling is relatively fair. A lot of people that lost money on crypto did it because a 'promise' made to them by the shillers that we all see, was not met. Or even worse, there was an obvious fraud like the many rug pulls that happen, scams, or so called stable coins losing their value, even though they were not supposed to.
There are more reasons to hate cryptocurrency though, like the fact that it's used by a lot of criminals, the fact that gamers can't find reasonably priced video cards anymore and also the effects it has on climate change.
Yes it does. Volume on Kraken BTCUSD has been around 4-5K BTC daily in the past week, yet the price barely budged from $30k. Any trade means a person selling AND another buying. Therefore someone is buying near $30k.
> And most people that hate it, do it because they lost money because of it.
You have a simplistic view. Two of my friends reject it because of energy waste and unfairly high rewards to early adopters, but none of my friends abandoned it because they lost money in it. Another is worried about their inadequate cybersecurity skills in holding it. Admittedly a small sample size (N=3), but I suspect it's representative of the larger world.
> over 90% of people lose money in this market.
If you do the accounting in national-currencies of evaporating value, your holdings keep going up in the long-term. That is the main value proposition that I see in crypto and Bitcoin.
I stay away from the rug pulls and scams that you mention, which are indeed a threat.
Didn't those crypto.com guys buy a 10-year contract?
I really think this is wishful thinking by the author.
I'm not a crypto fan, but it's undeniable that serious investments are now involved, and really, why is crypto much different than gold, or sovereign currencies?
They're all only worth what everyone agrees they're worth, ultimately.
Gold has some intrinsic value but is more similar to Bitcoin.
> many of us choose crypto for this reason, it isnt backed by military force. it is backed by the work and collaboration and agreement of people all over the world.
You're missing the point. It's not about aesthetics.
i dont think that for aesthetic reasons. It IS more robust, there is a better chance of survival.
(And FWIW cryptocurrencies now have some debt repayable in them which helps stabilise their price somewhat, but the markets are relatively thin and short term, and the companies taking on crypto repayment obligations are generally trying to obtain the crypto by swapping for other volatile tokens in a zero-sum bet rather than borrowing to produce real world goods and services to trade or securing their debts against valuable real estate)
The military is useful to ensure property in general is still a thing (including ensuring people aren't rounded up and tortured by enemy soldiers hunting their crypto keys) but doesn't play much role in ensuring that people sell their labour to meet mortgage repayments.
Debt repayment is enforced by exactly the same rule of law and exactly the same law enforcement as the property ownership of anyone else, including cryptofantasists.
Tax collection is backed by force.
Try not paying your taxes and see what happens
the world continues to do things.
The unit of account has nothing to do with actual production.
It's a bit ironic how all his criticism revolves around Bitcoin's price whereas that is exactly what Bitcoin supporters are invariably criticized for.
One more obituary for https://99bitcoins.com/bitcoin-obituaries/
It’s funny because the article never talks about the actual valuable part of Bitcoin, the network.
He links articles about how BTC is insecure, but none of those articles are the Bitcoin network itself failing, it was other networks with BTC on them.
Seems like someone just wrote a half assed uninformed article for clicks
One hopes.
governments have printed money at unprecedented rates worldwide
over the last year. If there were ever a time for BTC to be going
parabolic, it would have been over the last year. What happened?
It went down by half.
https://twitter.com/JonathanBeuys/status/1529091761460727810
First of all, the government did not start printing at unprecedented rates last year. It started that in 2008.
Second, monetary policy decisions do not impact asset prices in a linear way. And also not in a real time fashion.
When I look at the chart, all I see is that both - the money supply and the price of Bitcoin - went up over time.
* Are high beta (outsized correlation with general market moves)
* Are not (primarily) counter inflationary due inflation being a much smaller and uncorrelated to negatively correlated with speculation
* Are not (primarily) priced by scarcity since sentiment will effect price more than predictably slowing supply
* Are not (primarily) priced by usage since speculation is a greater use case for the time being
It remains to be seen whether Bitcoin will move into a more mature category. I have a small position (~1%, selling along the way) in Bitcoin under the digital gold argument/for fun, but I expect it to remain more volatile than gold for the foreseeable future.
I've been bearish on Bitcoin for fundamental reasons for years, but I'm not an expert by any means, and I have no idea what's actually true.
But THAT SUMMARY _feels_ so true.
*Not An Inflation Hedge* (it's appreciating much faster than inflation over its life)
*Bitcoin Actually Created Inflation* (What? the FED pumped money from thin air and it's Bitcoins' fault)
*Unresponsive To Higher Costs* (There's more to cost then cost of goods -- you know, like there's a market involved)
*Lack of Transaction Demand* (why transact an asset that's volatile, but apricating so quickly?)
*Failed Security Promises* (not sure WTF he is talking about)
*Stable Coins Shouldn’t Be Volatile* (so BTC is now responsible for Stable Coin prices?)
I have no doubt that people who bought in early have beat inflation very well, but that doesn’t make it an inflation hedge. It doesn’t move inversely from inflation.
FTA: "An inflation hedge is an investment that is considered to protect the decreased purchasing power of a currency that results from the loss of its value due to rising prices either macro-economically or due to inflation. It typically involves investing in an asset that is expected to maintain or increase its value over a specified period of time. Alternatively, the hedge could involve taking a higher position in assets, which may decrease in value less rapidly than the value of the currency."
I think one thing he hints at is key to bitcoin: it is part of the global financial system, not an alternative. Regardless of intent or dreams, anything born into this world is subject to the prevailing rules and will be co-opted by those with the power, money & will to do so. Which is why for all crypto's lofty goals, it's largely been used to make money and fund scams.
This, like the rest of them, likely will not age well.
This is why it's not even close to dead and will continue to get flows of liquidity during boom cycles, because many others also see this regularity you've identified.
do you have the same criticisms for the biggest equities in the US stock market?
Does it happen every two years? - obviously not
Are stocks intended to be currency? - no
Stocks also are attached to real property - ownership in a revenue / profit generating company and their assets. Crypto is only a vehicle for speculation.
A currency should not experience regular crashes or explosions of value. Assets are generally more volatile by their very nature.
But imagine living in Argentina and working and saving your whole life just to see your life savings wiped out in a two week timeframe.
Or you get on some government shitlist and they freeze all your assets.
This happens over and over, and crypto can solve those problems.
Meanwhile, you still can't use it to buy a sandwich and promises to the contrary are over five years old with no progress to speak of. It remains merely environmentally disastrous not-money. Gold buggery is eternal, though; I wonder if the elderly watching right-wing news channels are the next to be targeted with buy-it-now ads.
My Venezuelan friends feel differently.
> you still can't use it to buy a sandwich
https://www.investing.com/news/cryptocurrency-news/walmart-m...
>It remains merely environmentally disastrous
https://www.coindesk.com/business/2021/03/05/the-frustrating...
False. 2020 is the year you're thinking of.
https://am.jpmorgan.com/sg/en/asset-management/liq/insights/...
The USD index is defined in terms of other fiat currencies. It is meaningless; only shows how fast currencies are debasing against each other.
> And many commodities are at 20 year highs to the dollar!
This means the dollar is at its least worth in the past 20 years, so inflation HAS occurred.
> Now, that’s from an all time high but the point is that all time high came before evidence of inflation.
Evidence of inflation came before Bitcoins existence. "but the point is" ... very fabricated.
Similar to https://bionic-reading.com/ which was on HN recently, except at the sentence level instead of every word.
A store of value is any commodity or asset that would normally retain purchasing power into the future and is the function of the asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.