I still don't get why I would want to hold a bitcoin for anything other than speculation. If I want some form of currency to actually use there are plenty of less volatile options.
My guess is that inflation-protection in a 3rd world country is only a very minor reason for Bitcoin ownership, i.e. the vast majority of Bitcoins are owned for different reasons. Which has implications for its future price.
There's value in this, Americans who are long America just hate admitting it.
Greatest heist of the century is the government convincing people that they don't need financial freedom and privacy.
You want to push for reforms to the current system that makes it easier to bring wealth to developing nations then I'd be all on board. To throw out the whole system in favour of something that enables oppression and hoarding of wealth only benefits those who already have power and wealth.
Anarchism sounds great when you think of being free to do whatever you want. It becomes less fun when you remember it also means the freedom to die in a ditch.
I'm not an anarchist by any stretch of the imagination, so to turn it around, "you can fuck all the way off with your strawman characterizations of my personal politics".
Upstack, and far less incendiarily, I merely advocate for alternatives (to the colonialist racist USG /s). Monocrops are as bad in government as they are in food production.
Great article on Argentina: https://www.freethink.com/hard-tech/crypto-argentina-black-m...
It is much safer and easier to hold than a sack of dollars. Also very easy for remittances.
If BTC with such a volatility can be considered an inflation hedge, then anything else can be as well. There's no intrinsic guarantee that BTC will keep going up, its protocol only defines the supply and not the demand, hence not its price either.
Actually I'm not convinced that BTC is favored as an inflation hedge instead of even USD-based stablecoins for people with currencies devaluating faster than USD.
Then explain why the US government has confiscated so much of it.
If all of your money is being held by random companies, it's not really your money is it? Cryptocurrencies give you all the autonomy of cash, while still allowing you to send it to anyone over the internet.
That’s the very definition of “taken” isn’t it?
But through multi-sig, time-locked contracts, multiple wallets, bitcoin is more difficult than most.
There you go, was that so hard?
Bitcoin isn’t some magical panacea, the reality is it’s as easily stolen/taken/lost in 99% of cases as anything else.
Sure, there might be some ultra tiny percentage of folks who are truly secure with it, but there is virtually the _same_ number who are ultra secure with other non-bitcoin stored value systems.
Governments have a legal monopoly on the use of force, and they have the means to employ it. If you can access your bitcoin, and a government can access you, that government can access your bitcoin.
You don't have that option with digital fiat, even if you wanted to.
Yes, you could, you just need to acquire the digital fiat anonymously through one of many methods. Then burn all record of it and watch your money disappear the same way as taking it to the grave, just no death required. Or go ahead and die if you must, but you’ll still not prove that Bitcoin is any different or any less “takeable”.
Citation needed.
Also note that buying stocks is only marginally more difficult than opening a bank account, and investing in major index funds via ETFs is almost as good as a term deposit (with minimal long term risk of realising a loss UNLESS you are forced to access the money at some time relatively soon after purchasing).
After you have created the account, buying more is easier than using a BTC ATM.
Given the risk of a) BTC going to 0 and b) being scammed and/or otherwise losing all of your BTC I'd say everday people are much, much better off putting their money in index funds.
If you knew that inflation was going to rapidly increase, the smartest thing you could do would be to take out as many loans as you can and buy usable assets, like a car and a warehouse full of canned beans.
Imagine you take out a loan to buy a car. Tomorrow, hyperinflation happens and the currency has lost 99% of its value. You can now pay off your car with a can of beans.
Inflation is also an avenue for a government to steal the excess value produced by an economy over time. Probably just a coincidence though.
What's the incentive here? "The government" (unless we're talking monarchies or dictatorships?) usually isn't some monolithic, self-interested entity capable of benefiting from things like "stealing" via inflation. Who's the evil mustache-twister behind all this?
The way this is usually trotted out makes it sound like Nancy Pelosi—because there's almost always a Nancy Pelosi hot take—is siphoning $20's out of IRS revenue streams, and laughing her way to the bank.
Social security, Medicare, etc are indexed to inflation.
Tax brackets are indexed to inflation.
So when the government needs more money, it can create it by paying less to elderly, poor, and sick people, or taking more taxes without the population aware.
There are better ways of calculating inflation. But they allow less shenanigans.
You know what would really make it hard to siphon money off to a black budget project, or to the business of a politician’s brother-in-law that gets the contract? A deflationary asset where there’s a cryptographically secure immutable ledger of all transactions.
I’m not sure how Bitcoin is simultaneously completely transparent, bringing daylight to big bad government fraud and also a privacy-protecting, regulatory circumvention tool. These things seem at odds.
If scam artists and criminals can obfuscate their transactions sufficiently to avoid being tracked down, I’m confident any half-competent government could do the same for its black budget spending.
And if the answer is an obvious "yes", then the whole thing about "immutable ledgers stop governments from spending money sketchily!" is obviously incorrect.
The government corruption bitcoin stops is really bank corruption, but the central banks (including the fed) work hand in hand with the governments (control them in fact), so it's a kind of joint effort.
The corruption works like this:
When the Fed was formed in the early 20th century, it came to an agreement with the government to be able to print off unlimited amounts of money, providing it was in the form of loans and under the agreement that it would destroy the money when the loans were repaid. All under the Keynesian guise of "elasticity of money". The fly in the ointment is that the banks can charge interest on this money they print - if they didn't it would be a free-for all, because interest is what disincentivises debt.
What this led to was the doubling of the money supply every decade for the last 100 years, as the banks are incentivised to lend as much money as possible.
https://fred.stlouisfed.org/series/M2SL
Each time you double the number of currency units, the total value of the money is diluted across double the number of units and so the value of each unit is halved. If you do this too quickly, people lose confidence in the money and you fall into hyperinflation, but if you throttle it just right, they don't catch on. It helps that the value of consumables (cars, food, toothbrushes etc) goes down by around 5%/year due to technology-driven manufacturing efficiency gains. This means that they can devalue the currency by 5% each year without prices going up. They then devalue it by a further 2% or 3%, simply because they can. This 2% or 3% is the CPI that's reported.
By holding interest rates lower than the free-market rate, banks both gain a monopoly on lending, and also ensure that people are incentivised to take on more and more debt - even though the money is destroyed when an individual debt is repaid, the total debt continuously increases.
The outcome of all this is that every year, the banking system is charging interest on every single dollar, euro, pound etc in existence. And it printed them all out of thin air. This has given it more power than you can even imagine and leads to all kind of evil and corruption. What's the best way to lend money? Start a war. Even better if it goes on for years and you can fund both sides...
It also results in the "Cantillon Effect" - an enormous transfer of wealth from the poor to the already rich without anyone noticing until it's too late.
This is because the newly printed notes take their value from all the existing currency units i.e. the value in the money in your pocket/bank account/pension/wages is being sucked out into the new notes they print off. You could bury your money in a concrete bunker a mile underground and they can still steal it. If you don't get a 7% nominal pay rise each year, you're actually getting a pay cut.
I highly recommend reading "The Creature From Jekyll Island" by Edward Griffin for all the history and details. This is a global problem.
The message in Bitcoin's genesis block reads "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
Bitcoin's purpose is to shutdown the central banking scam, and is probably the only thing that can stop global domination by the bankers. Because its supply is hard capped, the more fiat currency the banks print, the more the price of bitcoin goes up. Over time it becomes more and more attractive as storage for large amounts of value. See Thiers and Greshams' laws for the result.
People worry about an AI machine taking over the world (https://www.youtube.com/watch?v=tcdVC4e6EV4), but its already here in the form of large human systems - an organisation with hive intelligence whose overall reward system is to make as much money as possible and a constraint of keeping the people happy (it does this largely by deception). And we gave this monster a money printer.
I'll leave you with a quote from F.A.Hayek (nobel prize winning economist who wrote "The Road To Serfdom" back in the 40s - he saw this coming):
"I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop." https://www.youtube.com/watch?v=CBIidtaUCzs
There's I think supposed to only ever be 21 million bitcoin. Bitcoin rewards for mining halve every ~4 years. Eventually they will stop; there will be no new bitcoin.
People will also lose bitcoin; this already happens. Famously, no one knows where ~1m bitcoin supposedly mined by Satoshi are, they are assumed to be permanently out of circulation. So not only is there a cap on maximum bitcoin, and over time less new bitcoin will be injected into circulation, existing bitcoin will also be removed from circulation over time.
This presents a strong incentive to hold bitcoin instead of spending it, since scarce assets become more valuable with increased scarcity. If a bitcoin is likely to be worth more tomorrow than it is today, you're less likely to spend it. Which has the compound effect of reducing bitcoin in circulation further.
This is why people say it's deflationary.
Also ethereum is actually deflationary now without relying on people losing their keys (and being excited about that)
tl;dr: international payments for digital goods using the Lightning Network is (arguably) a valid use for Bitcoin that is not speculation.
I guess with software margins there is a bit more room to move with price fluctuations. For ecommerce though accepting and holding a currency that moves this much could quickly erode the smaller margins.
Instead of finding a company active on both ends (which will have to be a major company like Western Union, with major fees), you can find two separate (potentially local and small, think "coner store money exchanger") entities to get fiat (regular) currency into Bitcoin on one end and out of Bitcoin on the other end. If there is no single company that does business at both your source and destination location/community, there's a good chance you're out of luck.
You have to trust those two exchangers to not defraud you, but these two don't need to trust, or even know, each other.
Of course, other cryptocurrencies, stablecoins etc. would also work for this, but network effect means Bitcoin is the coin where you're most likely to find participants on both ends.
I’d love to be convinced. If I hear a single convincing argument I’ll beat that drum all day alongside you.
But all you’ve given is:
- gambling exists
- “musical chairs”
- cults exist
So, hand-waving. Help me out here.
Bitcoin has value for the same reason that vintage sneakers or Pokemon cards have value; that is there is a fetish for them and thus some belief that at some later time, someone will want to buy it for personal reasons (either due to their own beliefs or sentimentality).
Actual currency, on the other hand, derives its value from the willingness of the issuing sovereign to accept it back in payment of taxes.
Fiat currency holds value because it is backed by a sufficiently large group with guns.
Crypto currency holds value because it is backed by a sufficiently large group with encryption.
Yep that's what I said: payment of taxes.
> Crypto currency holds value because it is backed by a sufficiently large group with encryption.
I disagree. There is no reason for bitcoin to hold its value. Miners expend real resources (which they pay for) to obtain bitcoin because they speculate that someone will pay more for it further down the line.
People buy bitcoin for the same reason.
The price of bitcoin could go to zero without any compromise of the underlying encryption.
The purchasing power of a currency issued by a soevereign can only go to zero as a result of the collapse of sovereignty (ie. no more guns, or being outgunned). This is the very definition of hyper inflation in terms of a currency: when a government cannot provision itself in exchange for that currency.
The greater fool is not required when one asset is inflationary and the other is deflationary. A falling denominator is all you need.
> There is no reason for bitcoin to hold its value.
It holds its value for the same reason as fiat. Because the chance of anyone executing a successful attack on it is prohibitively small.
And if someone does, as you said, then it goes to zero.
In your view, how would bitcoin go to zero without a compromise in encryption?
Everyone realises that it’s worthless and new buyers stop turning up to buy it for more money than the last round of fools
And yet the purchasing power of the dollar has fallen by 99.5% since moving off the gold standard. Bitcoin claims to hedge against this steady decline in value which is caused by money printing.
If you believe they will stop printing money and diluting the value of the dollar, the argument for Bitcoin fails. If not, Bitcoin’s hard supply cap and perfectly inelastic supply when faced with changes in demand make it a compelling hedge.
Betting on a single index even being around in 100 years is risky. Betting on the dollar lasting 100 years is risky. Betting on Bitcoin lasting 100 years is also risky.
I think looking at 5, 10, or 20 time horizons is more practical and I have high confidence that Bitcoin will continue to be the best performing asset on those time horizons.
The reason I said 100 years is because the US went off the gold standard in 1933 (although it had a weird modified version until the 70s).
There are individual stocks that have been around for over 100 years. The Dow Jones has been around since 1884. Stock exchanges have been around since the 1500s.
Indexes that apply to the averages of top, say, 200 stocks in a given country's econonmy will definitely be there in 100 years, absent a collapse so monumental that money itself has no meaning.
Bitcoin is a freakish sideshow by comparison. Might as well buy baseball cards.
That it'll become the main world reserve asset and suck in all the stored value in the world like a black hole? Then, you're bang on - that's the only reason I hold it.
The economic theory is that money printing is the primary cause of inflation and bitcoin, as the first purely fungible commodity with a fixed total supply that is perfectly inelastic to demand, is an ideal hedge against inflation.
Imagine if gold went up 100x in price. New gold mines would be opened. People would come forward with their gold jewelry, etc which would increase the supply of gold.
If bitcoin goes up 100x, it’s supply cap and inflation rate would remain unchanged.
If you believe the government or central banks will stop printing money, then the argument for bitcoin collapses.