No Bitcoin ETFs at Vanguard (2024)
corporate.vanguard.com
corporate.vanguard.com
Well said, this has been my own thinking on crypto, nice to see it so succinctly summarized.
On average you lose money at a casino because it is a business designed to make you lose money.
My vanguard funds on the other have gone up very nicely on average. Because they are invested in businesses designed to make shareholders money.
But I'm not talking about stocks. I'm talking about cash here. Cash is literally an article of faith and nothing else. It's not backed by any asset.
Let me guess, bought on credit, he over leveraged
> Cash is literally an article of faith and nothing else. It's not backed by any asset.
The US dollar is backed by the federal government, a behemoth that handles more assets than any other entity on earth. For example we know they target 2% inflation on average. So US dollars are much more stable than if I were to issue my own "klipt bucks" currency.
There is no reason why payment for labor should be a “temporary store of labor value”, whatever that means. There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot.
You're right about that. It's called the barter system and we don't use it anymore because it's inefficient and sucks shit.
>The main reason the value of cash decays and the main reason central banks target 2% is downward wage rigidity. If you reduce wages of people, they get angry, sometimes very angry to the point of strikes. If the value simply drops, they don’t get as mad. It’s as simple as that, a matter of psychology and social institutions.
No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
Barter sucks because of coincidence of wants. It doesn’t suck because paying in S&P500 ETF doesn’t correspond to magical temporary store of labor whatever that is supposed to mean.
> No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
What would grind to a halt exactly? Sorry, plebs, only rich people are allowed to be paid in stocks and other non-inflationary assets. You have to suffer, otherwise economy grinds to a halt!
How many shares of SPY does a car cost? Before you answer that, you cannot convert any value of this into currency first. I certainly can't answer it!
>Sorry, plebs, only rich people are allowed to be paid in stocks and other non-inflationary assets.
Rich people are paid in cash. When the CEO of a company gets $10m in stock grants, nobody involved in the transaction is working on number of shares of stock, they work with dollars and figure out how many shares they need to meet that number. If I get a $500 bonus from work and immediately buy a few shares of AAPL, there's no fundamental difference between that and me getting a $500 stock grant of AAPL. They're even taxed the same.
How many wons does a car cost? Why would I know it? You seem to keep missing the point that the unit of payment doesn’t need to be inflationary. And that there is no magical requirement for it to be a temporary store of labor value.
> Rich people are paid in cash.
You confuse a store of value with a unit of account.
> If I get a $500 bonus from work and immediately buy a few shares of AAPL, there's no fundamental difference between that and me getting a $500 stock grant of AAPL.
Ok? If there is no fundamental difference then how is swapping one for another supposed to bring an economy to a halt?
> we know they target 2% inflation on average
That's why you don't put all your long term savings in USD. But it's good to have your emergency fund in USD because it has less short term fluctuations than assets like stocks.
Currency is useful because people have faith in its properties: scarcity and ubiquity as a medium of exchange. Dollar is important because people have faith in the US government to not dilute it (too much), and because everyone in the world accepts it.
Bitcoin _is_ a currency. Its scarcity is limited by its construction, and it's widely accepted. But it's a bad currency, that is mostly backed by illicit transactions, and its "mechanical" usability just sucks due to delays and transaction fees.
Yes, cigarettes, like the dollar have an intrinsic value. You can smoke them and nicotine makes you feel good. It is similar to the way that I can pay my taxes in USD and feel comfort in the fact that I won't have to barter for cigarettes in federal prison.
Bitcoin is not a currency because it no longer meets the primary economic definition of currency - a medium of exchange. It is a speculative asset. A security, if you will. It can be used as a currency in the same way as gold bars and bricks of cocaine can (barter system) but it's not a currency.
If your old manager went bankrupt by mis-timing the market with a handful of tech stocks, then he most certainly didn't invest the Vanguard way: diversify and hold on for the long haul.
It's backed by contracts to pay it back. There are powerful institutions employing people with guns and other means to make you pay back. "Faith" undersells the situation. We developed the whole system to force people to pay their loans back.
Instruments in money market are of the kind of: "give me 100$ now and I will give you 101$ 3months later". Bitcoin is not backed by such contract. It's only backed by the hope of finding a bigger sucker later.
I'm pretty sure there's a lot of evidence that gold is a great inflation hedge but otherwise doesn't offer much in the way of returns on a long run basis. Which is a reason in various cases to hold or diversify into it over a money market fund (essentially over cash). That said, currently crypto has not proven itself to be either much like cash or much like gold.
Vanguard is 1. what they mention in their anti-cryoto thesis, all the real value makers that you don't need Vanguard to get into + 2. a casino on top of 1.
They sold you the idea, that their casino on top of 1. brings you money. I sincerely doubt it. You are making money on 1, true, and probably losing them on Vanguard.
Also, in BTC your Vanguard funds went down significantly on average.
Vanguard is a service that manages your portfolio so you don't have to. Literally the definition of providing an economic service.
Owning the portfolio does come with risk, but it's not fixed odds, rather the odds track the literal economy. If you buy index funds, your ballot tracks the value of the country you invested in. When society does well, so do you. And guess what? Everyone, including the government, spends their life trying to generate value and wealth.
It isn't a casino. Likening the US economy to a casino is perhaps the most disingenuous nonsense I've heard from the church of crypto.
How is it different from Bitcoin conceptually? Bitcoin reflects financial markets overall just as well as any Vanguard-managed fund. It does not matter that Vanguard intention is precisely that while Bitcoin's isn't if the outcome is the same.
Just in case I'll explain what I mean by an analogy: Imagine we are sailing an ocean in a small ship, and consequentially the ship rocks really hard. There's a table with two straight sticks on it in everyone's room, and the sticks constantly slide around the table due to rocking. And for whatever reason the parent comment author is tasked with keeping them as parallel as possible, while not stopping their movement alltogether. To do so he makes a contraption with electric motors attached to one end of each stick and sensors that detect when sticks are not parallel, which causes motors to align them. In the mean time in my room I took my sticks from the table and attached them to the ceiling instead because they look nice there. Here despite the lack of intention on my part my sticks will tend to stay parallel without much effort.
No it doesn't.
Bitcoin has no intrinsic tie to the financial markets.
The financial markets are all based on goods, services, and economic value. They build meta layers on top of it and sometimes those layers are bad, but nonetheless they are based on value.
Bitcoin is based on speculation. It offers no inherent value. No one needs or wants Bitcoin. People do want or need food, shelter, health, entertainment, education, human connection, etc, that the rest of the financial markets are based on.
I think a lot of crypto advocates don't understand that the stock market isn't made up. Yes there is volatility, yes it isn't perfect. But it isn't a pure casino.
Bitcoin has sometimes* correlated with the broader financial markets, but not because it was an indicator of the markets but because it was accidentally caught up in them as an inconsequential side thought. It got treated as an investment commodity by some big asset managers and thus followed the same trading patterns. When the asset managers thought outlook was poor, they sold a bit of everything, and everything would go down.
Not an obvious one for sure.
> The financial markets are all based on ...
> Bitcoin is based on ...
I don't understand why people consider this to be any kind of argument. The very same one also applies to AI discussions and comparing hardware used to run it to brains.
What does it matter what the thing "is based" on? Gas turbines, photovoltaics, and nuclear reactors are based on completely different phenomenon, and yet they all generate electricity.
I think you missed the whole point of my previous comment. Maybe the analogy was unclear? What do you think I was trying to say?
Vanguard is not a for-profit business, it's more like a credit union, it is owned by its own customers.
That's exactly the claim, yes. But how do you know just owning crypto (at infinity) does not have the same outcome?
On the other hand Bitcoin doesn't seem to have significant use as a currency outside of crime. Meme coins are even worse in that they don't have any use at all other than speculation.
Even bitcoin is priced in USD and operates trades via a Tether/Circle "stablecoin" "backed" by USD.
People use it as part of an allocation, sure, but nobody plans to retire with interest from a checking account, which is pretty much what you'd be doing if you invest in a money market fund.
You may have a point that since fiat currency has no inherent value compared to physical commodities there's no reason that the right crypto couldn't function as a fiat currency, which seem true. But if crypto were fit for use as a fiat currency, you wouldn't expect it to be an investment at all - at least no compared to stocks, bonds, etc.
Would you say gold’s value is determined mostly by its practical use? Because it seems demand is largely driven by speculation as an alternative currency.
2007: 31.59%, 2008: 3.41%, 2009: 27.63%, 2010: 27.74% [1]
Owning too much gold is terrible, but a modest allocation to gold in a portfolio of mostly stocks, which you rebalance every year or two, works out pretty well. [2]
[1] https://www.macrotrends.net/1333/historical-gold-prices-100-...
[2] https://portfoliocharts.com/2021/12/16/three-secret-ingredie...
(NB. Gold enthusiasts will sometimes try to cloud the waters by comparing gold to, say, S&P500 price only (ie pretending dividends aren’t a thing). This honestly still doesn’t leave gold looking very attractive, but it’s also dishonest. To compare like with like you want to look at S&P500 with dividends reinvested, and at that point gold just isn’t even in the running.)
But you can get the gist by observing that in 2008, the S&P500 dropped 38.49%,[1] while gold went up 3%. If you had, say, 10% of your portfolio in gold, then when you did your end-of-year rebalance you got to buy a lot of cheap stock. Gold also substantially outperformed stocks in 2007, 2009, and 2010. So I'm not convinced it's a "myth that people flee to gold in times of uncertainty." Maybe you're right that it's not as big an effect as some people believe, but it's enough to benefit your portfolio.
[1] https://www.macrotrends.net/2526/sp-500-historical-annual-re...
Very true. OTOH, if you bought gold one week, one month, six months, one year, five years, ten years or twenty years ago you would have made money.
I am not really a gold bug. It has a place, but it’s not the best asset ever. As others correctly point out, it is unproductive in itself. OTOH, if you have two uncorrelated assets, you can make money simply by rebalancing periodically between them. Not a lot of money, but not nothing.
Note too that cash itself is unproductive. Dollars ultimately derive their value from the fact that Americans have to pay their taxes in them, not because pieces of linen paper are useful for a lot.
Well, yes, but that's a rather unusual condition (the last time that would have been true would have been for a period in 2011, and before that for like a day or two in early 1980).
By contrast if you'd bought a broad index fund you'd have made a lot _more_ money (except for the one week example, due to Nvidia shitting the bed today). Like, a _lot_ more money.
> Note too that cash itself is unproductive.
Sure; approximately no-one will argue with you on that one. But cash isn't really the alternative to gold.
Gold has its uses. It’s a pretty metal and has practical uses in engineering and medicine.
It has been a choice for jewelry for thousands of years.
Would you say gold’s value is determined mostly by its practical use? Because it seems demand is largely driven by speculation as an alternative currency.
BTC is more volatile than gold.
Using paper money has already defined you as a participant in accepting the societal construct of money.
As such, Bitcoin having no intrinsic is not novel or consequential and has no bearing on its utility.
But (b) money is given some real grounding by states; you can pay tax with it, in particular. It’s not much, and it’s not bulletproof, but by comparison to cryptocurrency, well, it’s _something_.
But really, it makes no sense as an argument that hoarding cryptocurrency is a good idea, because hoarding _money_ is, notoriously, a _bad_ idea.
Granted a commodity's value may be driven by speculation, but at the end of the day it's a material that is consumed by various industries.
People in CS:GO pay (tens) of thousands of dollars for skins which are just digital status symbols.
Maybe the property of gold is that it is a status symbol which has a long history and cannot be duped.
Even from a speculative standpoint, gold or similar commodities have the advantage of being actually support limited. Now obviously the supply of an individual cryptocurrency can be limited, such as with Bitcoin, but the supply of cryptocurrency in general is essentially unlimited with very little barrier to entry. That's not great for even speculative investment, since you're essentially betting on the continued popularity of whatever currency you invested in with relatively little history to support that trend.
Gold has the Lindy effect going for it. Humans have been trading it for thousands of years. Bitcoin has been around for 16 years.
Gold has industrial uses and if its value dropped, its uses would expand. Bitcoin has no such inherent supply-demand curve.
I can restart forks of both bitcoin and Ethereum on my laptop at this moment. I can restart 10 forks each. Or 100.
I cannot do that with gold.
Yes, but Russian Federation uses only one to evade sanctions.
In China, it's nearly impossible to invest your assets without friends in the government. The government strictly controls conversion of their currency to non-Chinese currencies. As strange as this sounds, but with cryptocurrencies, you can export value from your country to something more stable.
Same goes for many south american countries.
I still wouldn't invest into Bitcoin or Ethereum but I live in the west where there is the rule of law and one can invest into a large variety of asset classes.
In addition to that, there are also 10.5 million altcoins (10000 new are created every day). But all of them together hold just 17% of crypto value. So you can, of course, create another millions of forks, but it won't make a dent in Bitcoin value.
No it isn't. My credit card has an intrinsic value of zero. It might even be negative due to the massive amounts of infrastructure necessary to run it, similarly to bitcoin. The value is in the networks surrounding it, not whatever method Visa uses to move the bits around, be it blockchain, databases, or whatever. And even then, Visa's value add is only a few points on the transaction. It's in no way a speculative asset and if Visa went away tomorrow forever, it would suck for maybe a month while we adjusted to using cash again. In the same vein, if bitcoin went away tomorrow, I wouldn't notice until reading a panicked article about it.
If the US dollar went away tomorrow, however, I'd be happy to have stocked up on ammunition and cured meats.
It's not only almost 100% speculation, it doesn't have much history track record.
Crypto bros need to understand that they aren't the first people to discover a speculation market, and just because they can dream of utility doesn't mean they test if the world wants to treat it as a reality. What they're doing is, from a financial perspective, boring and in many cases outdated.
What’s better: someone living in a house, or a house sitting idle as a store of value?
What’s better: someone storing his wealth in houses and gold ignots, or in special financial assets that don’t take away products from other people?
It’s bad to be able to transport wealth through time? Spend it or lose it? Never work hard now for later?
And bitcoin is even _worse_ than gold, on the fundamentals; gold does have at least have that bit of intrinsic value (plus a few millennia of cultural cachet). Bitcoin has _nothing_.
It really doesn't matter. The honest commodity value is the same price as the market value. 60+ percent of new gold mined every year goes towards jewelry and electronics. The base price of gold is high due to demand, not due to speculation. Gold is pretty and pretty hard to find - thus the price goes up.
That makes ETH is comparable to shares of a company, where fees are revenue, new issuance to stakers is cost, and any net profit is paid out to ETH holders in the form of stock buybacks. You can calculate a PE ratio.
You know all those economical instruments? They actually serve a purpose(like making the price stable or making the supply and demand predictable. This is important because it usually takes months to years to produce these things and you don't want to destroy your producers or production capacity for a glitch) and they're not just a gambling machine with strength rules.
Oh really? With stock buybacks, splits, and options, financial trickery, and market cap not matching production?
There are lots of forces in the market that make it very much a gambling machine. For example SMCI produces very real things, I've owned hundreds of their products, but some questionable decisions resulted in a huge drop despite them being well positioned for all the AI growth. Or TSLA, which has recently doubled from a point where many felt the stock price didn't match the available market.
I seem to remember in the past, commodity investments where viewed with an eye towards diversification benefits, for example.
In an apocalypse gold s still usable and gold has other uses. Like industrial and as jewelry
And the scarcity of gold is not likely to decrease in the near future, unlike with diamonds that can now be cheaply manufactured and bought on AliExpress.
Main difference between gold and bitcoin is in its history. Gold as a type of investment instrument has already earned its reputation and status. It’s not just a commodity, it’s a financial instrument that had its use in building and making of history and it’s well integrated, recognized and supported by most government and societies.
We still don’t know what Bitcoin really is and how it behaves. It could be valued 10k times up or down next year and there could be no clear reason why that happened. Bitcoin is not in hands of most powerful companies, people and governments and change of its value would not affect anything but net worth of certain individuals or organizations.
By no means, I think bitcoin is here to stay and it has a very clear future as an investment and payment instrument. But I think it’s really silly to say Bitcoin is speculative as much as other investment instruments.
As far as what should bitcoin's utility be valued at to the world at large, sure this is in a volatile state, but I don't see how that bears on it's classification as an asset.
And for what it's worth, Vanguard doesn't have a pure gold ETF.
Bitcoin is different. Although it's mined, the mining difficulty constantly adjusts to keep the block time at 10 minutes. The price is set by the people in the market buying and selling it and so fluctuates all over the place.
Companies don't pay dividends, so even if you have a claim on the underlying cash flow - you aren't really getting it in practice.
Further out, some pieces of equities are so overvalued that you're basically paying for 99% speculation rather than the underlying cash flow.
It's a spectrum.
While your argument is technically correct, there's a world of difference between cryptocurrency where the inherent value is definitionally $0, and stocks/bonds/commodities/real estate where the inherent value is almost always above $0 and can, if you want, be a large percentage of its total price. That allows an investor to determine their own level of speculative risk.
Which is what they are doing now.
With Blockchains, they are more stable, as there is no such guarantee. Many people choose to HODL instead, and this gives the coin some stability. As long as there is less interest in cashing out than people trying to cash in, the value is growing. And as long as the value is growing, people cash out.
For a Ponzi scheme with guarantees in terms of currencies not minted by the scheme creator, they are bound to collapse sooner or later. Blockchains could go on forever in theory. However, latter still requires more people to cash in than people to cash out. If there is enough people trying to cash out, maybe larger number of people will panic and cash out as well, leading to an avalanche like race to zero.
Both are united by the requirement for a "greater fool", just with Ponzi schemes, this greater fool is exponentially growing while with Blockchains it can grow linearly.
All it matters that it will stay more stable than other assets. And we know from economic history that assets tied to nations may disappear overnight, e.g. Cyprus.
Towing such big asteroid sounds very risky (for the stability of our own planet and of the moon) and expensive, way more than just sending robots.
A Ponzi scheme typically involves a small inner circle perpetuating a fraud; even if "everyone knows" it's hinkey, it is ostensibly returning fabulous returns through actual investment/economic activity. Eventually, the insiders stop being able to keep the game going, and go bankrupt, get arrested, flee the country, or some other ignoble end.
Crypto has lost its layer of fraud; it used to be "this thing will be the future of money and therefore have value", but for the last five+ years it's all just been "this will be worth more in the future because people will buy it so you should buy it," a naked Ponzi.
Meanwhile, it is distributed, even if it is highly centralized at every point from mining pools to exchanges. There's no single person who has to go to jail or disappear with his money to collapse the whole system. It's happened dozens of times, and every time it does a new set of criminals steps up to keep the fraud going.
In summary, even if individual enterprises (eg, FTX) are classic Ponzi schemes, crypto as a whole deserves to be the name of its own type of scam.
It is also different than a casino: "Even if crypto investing is considered gambling, there is a factor not present in traditional casino games: the time variable of holding. Holding roulette chips has no effect on their value, while in crypto markets, prices change in time. By holding crypto assets for a longer duration, investors can potentially benefit from market fluctuations and price appreciation, making it a unique aspect compared to classic gambling games." [1].
[1] https://www.coinfabrik.com/blog/the-science-of-crypto-asset-...
If for whatever reason, something my go up in price because there's demand for it despite widely available and mostly correct information about its utility or lack of it, that's not a scam. This is the case with bitcoin. It's growth has fueled interest in a bit of gambling by members of the public about possible future growth. There's no central party running it as something it isn't or perpetuating a core lie by hiding some key information about what bitcoin really is.
People insisting on buying something despite it having an unstable market value and debatable concrete utility doesn't make that thing fraudulent. A scam requires intent and misdirection, regardless of how you and others who share your view try to redefine the word scam arbitrarily. You might as well also call all forms of speculation a scam by the same ridículous logic.
When people buy bonds, stocks, commodities, or purchase a car, a house, or even an Xbox, they are taking into account the resale value of that asset. If you supposed that when you're done with your house, it would be worth $0, you would be willing to pay a lot less for it. There's nothing fundamentally different here wrt Bitcoin.
The other examples you mentioned generally have some significant additionally value beyond just resale value -- e.g. stocks pay dividends or are expected to at some point, a house is something you can live in or get an income from by renting it out, and so on.
To be clear, there’s speculation involved in buying stocks, too, to an extent (particularly buying _individual_ stocks), but ultimately you have a share of some real thing. That is not the case with bitcoin.
Sure, there's some value there, you can use it to make gold-plated contacts or shiny things, but if that was the only use case, it wouldn't be nearly as valuable as it is now.
Gold is valuable because people think it is valuable, and the same hodls true for Bitcoin.
You also shouldn’t buy gold; over any long period it is almost guaranteed to massively underperform the markets. If you had bought gold at its 1980s peak, you would have been down in real terms ever since; adjusted for inflation it has never reached that value since, and may never do. While you can say that about some individual _companies_, of course, you would be hard pressed to find a major index for which that is the case.
Oil and real estate are totally different, though investment in oil in particular _is_ rather speculative; you’re betting on future real demand, but that demand is at least, like, _real_; there are obligate buyers of oil, almost no matter how high the price goes. Real estate, as I previously mentioned, produces value in terms of either rent or not having to pay rent.
The Nikkei 225 comes to mind. It only broke its 1989 peak last year.
The creators of small memecoins often are doing this, deliberately, of course. Some of them are amazingly open about this, often marketing their memecoins as, essentially, “it’s still early” (ie you, the buyer, get to get in before the scheme collapses; like early Madoff customers, you can be one of the lucky ones!).
Even without my cynical opinion, Vanguard doesn’t have a heavy commodity focus, and it’s hard to diversify crypto.
But if you’re going to hypothesize things out of thin air, you can give them literally any property you want. That’s hardly interesting.
The greater fool theory argues that prices go up because people are able to sell overpriced securities to a "greater fool," whether or not they are overvalued. That is, of course, until there are no greater fools left. [0]
Crypto technology had potential, but those involved never resolved the critical usability and security issues, and just went straight for killing the golden goose — get the money now and nevermind whether it ever becomes anything. Those now pushing for a "US Strategic Bitcoin Reserve" are attempting to cash out making the rest of the US taxpayers the last Greater Fools, and leave them holding the steaming bag...
[0] https://www.investopedia.com/terms/g/greaterfooltheory.asp
Don't you mean "All money that has even been invested into Bitcoin - total cost of mining = all money that investors will ever get back"
Cost of mining has left the system. "Investors" will never get it back.
Since they can be transferred, it's analogous to saying that the amount of value produced by Visa is equal to negative one times Visa's revenue.
(A typical form of blockchain apologia is that blockchains also do this. This is true only if you ignore the social and regulatory structure that allows companies and individuals to treat banks as mostly interchangeable assets.)
There are some real economic benefits to Bitcoin as well, but I don't believe they justify the valuation though that's neither here nor there.
Thanks to fractional reserve banking (i.e. institutionalized fraud), they also create new money along the way (i.e. debase the existing currency).
Thus, the amount they're skimming off is even more than one would originally think, since they're charging interest on something they didn't entirely have in the first place (second-order fraud).
That is quite the service being provided. How fortunate we all are!
I think so.
As someone who makes things, they solve a really important chicken-and-egg problem for me.
i.e. Where does the money needed to make a thing come from before you make it so that you can sell it and make money from selling the thing?
I suppose technically I could risk my money, assuming I have some. But I'd much rather risk the bank's, and I understand that they will charge me for that.
Bitcoin proponents always talk about how it has the potential to do x, y, and z. Okay so do it already.
It's responsible for facilitating a ton of fantastic trips amongst myself and friends.
We had extra money. There were some people on the Netherlands with some extra lsd. We swapped using Bitcoin. Value was created.
That said, I would wager enormous sums of money that on net, they have been dramatically negative. Once you factor in the vast quantities of energy wasted (even using up energy that would have otherwise gone to waste simply decreases the demand for batteries or competitiveness of other marginal-value uses) and all the funding of crime such as theft, fraud, hitmen, blackmail, money laundering, scams, and so on it’s very hard to see “I was able to get LSD” as compelling.
And I love LSD.
I don't want to make any moral statement here. I'm just saying that Bitcoin can be positive sum or negative sum. I don't know which is true and I don't know whether it's better or worse for humanity to have a global mechanism for unregulated money transfers. But that's what we have.
As a result of that financial crisis, real estate is somewhat heavily regulated in most countries, and exotic financial instruments based on real estate (which you’d need to make this work) are treated with suspicion. Probably not the most fertile ground for the aspiring scammer.
Economic value is whatever people are willing to pay for, and I do mean "pay for," not "invest in." If you want to use applications on the Ethereum network, you have to pay ETH to do it and the ETH gets burned. As long as people keep doing that, the economic value is demonstrably there. Whether that equates to any other kind of value at this point, I won't try to argue, but for significant periods after proof-of-stake rolled out, ETH has had a P/E comparable to some high-growth stocks. This does not apply to Bitcoin, which doesn't have the burn mechanism or much in the way of applications.
ETH and BTC are the two cryptocurrencies with ETFs available. It's unfortunate that even now, so many investment professionals don't understand their differences.
For the burn to be so extreme, the demand for transaction space would have to be much greater than the space available. Since they're also making large improvements to scaling, with the roadmap going to millions of transactions per second and the hardest parts already done, that also seems unlikely.
As for the infamous fork, that happened in Ethereum's first year and it didn't change the ETH supply. Nothing like it has happened in the nine years since. Bitcoin forked when it was eighteen months old, and that actually did change the Bitcoin supply.
i would expect this kind of technical ignorance from the news or my mom but not "hackernews". there is real value in exchanging value/currency P2P globally relatively quickly and cheap. you know "internet money" people dreamed about decades ago...
The overwhelming majority of users are holding it as an asset. Which it’s also poorly suited for in the long run: it generates nothing in and of itself and requires constant feeding of money and energy to keep it going. The only way to see a return is to trade it to a greater fool.
Yes. The size of the money-laundering, exchange control evasion, and tax evasion industry was way underestimated.
What surprised me is that after China banned cryptocurrencies in 2021 [1], the price didn't drop.
Outside of Bitcoin and Ethereum, almost everything in crypto eventually tanks. The entire NFT market has tanked. Even the big names, such as BAYC, are down. BAYC is down 80% since launch. In memecoin land, "eventually" can be measured in days. Check out TRUMP.
Even Ethereum peaked back in 2021. Bitcoin has had 75% drops. If you bought and held anything other than BTC, you're probably under water now.
Then there are the constant collapses and "rug pulls".[2] US$76 billion total so far.
There is some value for those without access to stable currencies in their home country, but that use case is absolutely dwarfed by the other use cases out there at the moment. Perhaps this will change if the US goes through an economic collapse due to bad tariffs or something.
Compared to what?
Let’s say your goal is to get some wealth out of Tibet into India.
Is it “quick and easy” to do that with dollars? Or Yuan? How about gold bricks? Maybe goats?
I’m not sure what the Chinese authorities at the border would have to say about those things.
With Bitcoin you can memorize a phrase like “witch collapse practice feed shame open despair creek road again ice least” and with that information in your brain you can move any amount of money anywhere your brain can go.
That is one _utility_ of Bitcoin. Just like one _utility_ of a dollar bill is I can put it in a Coke machine.
The first thing that many governments will do when a protest of any kind starts becoming too effective is to make it a crime to participate or support the protest. I think we should all keep this scenario in mind when discussing what the future of our financial system should look like.
It's foolish to gloss over the word "crime" like it only describes human trafficking and international drug trade, especially with everything going on in the US. What was "going to the doctor" yesterday could be "committing a crime" tomorrow.
Gold as a store of capital isn’t accessible to a lot of people, though, because it is easy to steal and thus hard to store. So instead, I can buy a gold ETF.
It does make sense that Vanguard doesn’t have a Bitcoin ETF, though: they don’t have a gold ETF either, for the same reason
So, if I were to print bitcoin keys on firewood and sell that, would it become a “good investment” in your mind?
That’s basically what gold is. A commodity with some limited material value, whose price has become completely detached from that value due to its use as a financial instrument.
That does not mean buy anything. Intentionality matters. Diversification is a risk mitigation strategy, but holding bitcoin increases a portfolio’s risk. So if you want to diversify to reduce risk, purchasing bitcoin is the exact opposite of what you want to do.
Like, it's valid to point to its historical volatility, but it struck me as intellectually dishonest to say it's been (historically) risky without also acknowledging that holders have (historically) been well-rewarded for their risk appetite. High Sharpe ratio, etc.
It's not even like gambling on an external event like whether a horse wins -- it's betting on how other people are betting.
There is absolutely no reasonable expectation that its value will increase over time. There's no reasonable expectation of anything because it has no demand-side fundamentals whatsoever.
How is this any different to any other security? There's speculation in all markets.
If stocks get too expensive or too cheap from what people's estimation of that present value is, we know a correction will come at some point. It always does.
But with crypto, there's utterly on sense of "too expensive" or "too cheap" or "correction". It's just betting on betting.
Regular securities are fundamental value plus limited speculation. Crypto is purely speculation that is unbounded. Two totally different things.
Crypto valuation is based on the greater fool theory and one day you will run out of fools.
Both Ethereum and Solana are currently coded to do this, though AFAIK neither of them are currently cash-positive due to their burned fees not being enough to offset issuance yet.
Bitcoin got labeled just a "store of value", but with Bitcoin Lightning it can be used for low fee payments too.
Pity about mining though, I wish they followed Ethereum into staking. It doesn't matter how much value you provide if you burn the planet along the way.
Even if BTC was determined to have value, wouldn't the risk of tether be enough to avoid it (if - aside from giving BTC value - speaking from verified facts only. Meaning it's an established FACT that the people who control tether have not proven it is or was ever backed by an equal amount of capital).
Stocks are ownership of a tiny part of a company that has assets, cash flow, and does something in the world. Stocks are a speculation as well, some more than others, but the balance of speculation to investment is weighted differently.
Bitcoin on the other hand is almost always only purchased for speculation that the exchange rate will go in your favor. You don't own a tiny part of anything.
From my perspective, a big issue with Bitcoin speculation is that it's inherently zero-sum. Investing in a company is usually positive-sum (even if it you don't profit).
“Losing money” is a bit different; if a company is, deliberately, investing in growth rather than generating a net profit, that _can_ be a _good_ thing, as it implies greater future profits. Amazon, say, _could_ have become profitable far earlier than it did, but it would be a much smaller company if it had. If they’re buying something for $20 and selling it for $10, then yeah, not so much, but again that’s in the class of companies that you should not invest in, that most people do not invest in (they’re not in the major indexes), and that arguably should never have been allowed to float.
When people talk about investing in the markets, they’re usually talking about either investing in an index, or in some approximation of an index (whether through active management or cobbling together their own portfolio of real companies which will generally more or less mirror the top 10 of at least one major index). They’re not talking about buying shares in weird scam companies; _that_ is speculation.
Historically all kinds of things have served the role of money. In recent examples, prison environments consistently give rise to people using "commodities" like ramen packs or cigarettes as a unit of money.
The reason why gold has been the choice over most of human kind's history is that it has properties that make it suitable for money. It's scarce. It's difficult to make more of it. It's difficult to fake (until recently). It's easy to "hold". It's durable. But above all, it has a history of social consensus that it is the asset that is globally agreed upon to serve this purpose.
If you think prisoners ascribe value to ramen packs as money because of their ability to eat it, you have a fundamental misunderstanding how money works and how moneyness gets assigned to physical objects.
It's difficult to understand what an introduction of a new type of money looks like, because most people haven't experienced that in their lifetime. That's ok. But as a crowd of people here of who frequently espouse first-principles thinking, it's unfortunate to see people repeatedly falling for the "it has industrial uses" argument for gold. Yes industrial use creates a demand floor and a price floor. But if you think most of the price of gold is driven by it's industrial use then I have a bridge to sell you.
"It's easy to 'hold'" is literally true for precious metals, without quotes. And unless someone taints your stash with radioactive fallout or atomizes it, it's also relatively difficult to lose via Act of God.
Crypto?
It might just be the hardest asset class to "hold."
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Also, all it takes for Bitcoin to lose literally all value is for miners to stop. While you might think the risk of this is zero, the risk is most assuredly higher than the risk of gold going to zero, which would only happen if all utility for gold disappears even outside its use as a store of value.
And all it takes to regain (some value) is for a few people to mine again. The difficulty will adapt. There are bigger threats than that, but all miners stopping is not one of them.
(didn't downvote you - I appreciate the discussion)
The broader point here is that no form of money wins on all dimensions. While bitcoin is most closely compared to gold, it doesn't win on all fronts. I'll be first to admit that in my lifetime, I don't think people will find the idea of private key management easier than stashing a gold bar under their mattress. But the point is bitcoin represents a different point in the design space of money -- one that has characteristics and tradeoffs that make it particularly relevant in today's increasingly digital world.
> Also, all it takes for Bitcoin to lose literally all value is for miners to stop. While you might think the risk of this is zero, the risk is most assuredly higher than the risk of gold going to zero, which would only happen if all utility for gold disappears even outside its use as a store of value.
This like saying "gold loses most of its value of everyone suddenly decides its not worth what it is".
The miners are here ultimately because of the social consensus (and price) that has been building around bitcoin. This kind of thing doesn't just unwind overnight. It has been building for 15 years.
If you're holding gold and believing that there is similar risk in loss of social consensus, but you're saying "well at least it won't go to zero, i'll be able to get 15% out", does that really make it that much better as a store of value?
But I do think it's somewhat hypocritical of them to not have things like gold and bitcoin when they do give access to other currencies -- many who's fate is also ultimately dependent on political decisions and global social consensus.
It's one thing to say we're not going to be let people speculate -- it's also another to say we're not going to let people hold assets that can hedge against global turmoil or hyperinflationary periods.
In terms of returns, I agree -- bitcoin's supposed "return" doesn't come from a productive use case in the same sense as other forms of capital (at least not yet.. though it is increasingly being used as a productive form of collateral in many cases, much in the same way that gold used to be used in contracts). But if you believe there is a trend of net shift in consensus away from gold and towards bitcoin, then it's also easy to see why you might expect the price per unit of bitcoin to go up.
It seems weird to me that vanguard lets you a make a statement like "I believe in the US gov's solvency so I'm going to hold all my financial worth in a sweep fund that earns money off of short term gov debt", but then at the same time not say things like "I think there's a small chance that the US gov might f' it up, or the balance of economic powers might shift in the world and so I want to hold other consensus assets that might diversify outcomes in those scenarios".
While Vanguard isn't against commodities completely (e.g., VCMDX):
* https://investor.vanguard.com/investment-products/mutual-fun...
* https://corporate.vanguard.com/content/dam/corp/research/pdf...
It's not really their thing either.
I've been a customer for over 10 years, and am ever more proud of their commitment to promoting long term average investor goals.
I am so, so tired of trying to explain to my retired mother why she should not buy any more bitcoin … with money that she really cannot afford to lose.
I wouldn’t support her putting her retirement savings all on black either, even though she might win plenty.
This blog post, along with the fact that Vanguard is the only one of my accounts that immediately transferred my funds with no bullshit slow-walking the move, trying to keep them (looking at you, Schwab & E-Trade!), makes me sort of regret that transfer. I want to support companies like Vanguard!
Good financial managers decide how a portfolio gets managed.
That's not the case for a typical hedge fund.
“VGI provides services to the Funds “at cost”, i.e., without charging an arm’s length profit. VGI is a C corporation and the Funds are Regulated Investment Companies (RICs) not taxable at the corporate level, so this situation results in avoidance of billions of corporate taxes.”
And frankly, I suspect a lot of Vanguard customers DID want crypto. There are greater objectives at stake, and so I am glad Vanguard held the line.
I'm not utterly opposed to a possible future scenario for certain cryptocurrencies maturing into a more integral asset to the economy. But we ain't there yet, and their current volatility and novelty should not be promoted under the Vanguard reputation.
I am, too. Nobody puts their money in Vanguard to jump on the latest thing (or in the case of Bitcoin, the latest 16-year-old thing). If you really want to speculate, move some of your money elsewhere from Vanguard.
Most people that I've met who use Vanguard did not have an objective view on finance, or their risk-profile, the concept of a risk-profile, and were completely surprised to find that they had such a handicapped custodian
> If you really want to speculate, move some of your money elsewhere from Vanguard
Yes, this is the solution. You would be surprised how crazy of a thought that is to people. The idea of opening another bank or broker, despite how simple it is, just blows so many people's minds and is pretty controversial or involved to them.
They would prefer that Vanguard had all trading options.
I would wager that there are a lot of people that have money in Vanguard because Vanguard provides their employer's 401k, and their choice was "Vanguard or no 401k", not "Vanguard or something else of your choice".
Bitcoin ETFs had barely debuted a week before that statement. The offerings and even many institutional stances have largely changed since then.
I agree with the article that Bitcoin isn't an investment, it's a speculation, but...
They are mixing an overall return with a time-period return to promote some fear. That 100% return you need is from the bottom, but they are quoting the 150% return from before the drop.
Specifics: Jan 1 2022 @ $47K to Nov 2022 @ $16K, Jan 2025 $98K. At $16K, yes you need like 150% return just to get back to where you started. Actual return from the bottom was over 600%. If you got in at $47K, you do not need a 150% cumulative return to recover from the big drop.
The average investor shouldn't have the majority of their money in speculative instruments. However, my FIL gave me some great advice: Take a little of your money and invest it in something you like. Say, 5%. It makes the investing a little more fun. Of course, I love it because after he said that I invested in something I liked and it went up 15x...
The article is dated January 24, 2024. It was roughly in the $40-$50 range.
I believe this is a correct argument in theory. In practice, at the moment, everything is exclusively driven by speculation, and if you took the degenerate gambling out of the system, I don't know what would be left.
It's just gambling at all levels. There are legitimately "useful" services on blockchains, but the useful services they provide are mainly facilitating more gambling on stupid garbage coins. And even such useful "picks and shovels" services often still choose to make their own token for people to speculate on, because crypto people aren't interested in anything else. And then the L1 cryptocurrencies also have their prices driven by speculation.
there is a core of actual technical innovation, which is almost totally irrelevant to the phenomenon of "crypto" today. But there may be a future world where cryptocurrencies provide real value. In that world where all the true believers have their wildest dreams come true, the price of a cryptocurrency would be much higher than zero, but even then, it might be much lower than they are right now.
As far as mainstream financial organizations/economists/experts etc. are concerned, they have really no clue on the underlying revolution and transformation that is secretly underway because of crypto. Either that, or it dawns on them that the status quo will be disrupted, and then have a very predictable outburst: cite every imaginable crime being preferentially enabled by crypto.
It does seem to be very secret because I've been waiting for it for fifteen years, first excitedly, then frustratedly.
But let's not pretend (for example) that gold price reflects it's industrial value more than it's speculative value. The same can be said of venture backed tech companies (ie. Wework?) early in their public lives.
Bitcoin might do the same, but for this to occur it will always need new liquidity as it lacks intrinsic value. But this also implies that the real return will be zero over the long term, like with Gold. Moreover, as it's value comes entirely from its price, the door to the 'price value' of Bitcoin (or any other similar asset) reaching the Moon or zero will always be open.
However, Gold does have intrinsic value (10% annual use in industry) and has, over millenia and at present, an aesthetic value (40% in Jewellery). Which would probably classed under Sign Value in semiotics. So it has intrinsic, exchange, symbolic and sign values too.
Note that over the long term, most commodity real returns have been zero or even negative. Unsurprising, as we have gotten far more efficient at extracting them.
Well, they clearly have no idea what they’re talking about. Next!
Crypto is a scourge, it is not something you want in your society. It has no utility. It is pure speculation. There is no balance sheet to crypto, there is no financial statements. There is no audit inspection, examination, net capital requirements, no licensure of individuals involved, and there is no transparency into it. That creates real systemic risks, not just risks for investors.
But the other part people don't talk about enough is the dire externalities that are enabled by crypto. Every single crime you can think of, is easier to do now because of crypto. Especially ransomware, human sex trafficking, sanctions evasion, money laundering. North Korea is financing their nuclear program using crypto.
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Meanwhile, crypto investors, companies and executives accounted for almost half of corporate donations in the 2024 election cycle, with some contributing tens of millions of dollars to help Trump win a second term in office. See https://www.cnbc.com/2025/01/23/trump-signs-executive-order-...
> Bitcoin itself has no intrinsic value,
> It’s used heavily by sex traffickers, by money launderers, ransomware. So I just don’t feel great about Bitcoin.
- Blackrock, December 2024 [1]
[1] - https://www.blackrock.com/institutions/en-us/insights/portfo...
It's actually worse than that because it's being diluted (albeit slowly). The only way around this is for more and more money to be invested in Bitcoin, forever, which obviously isn't sustainable, at least not at historical rates of growth. If world GDP continues to grow, Bitcoin can continue to grow by sucking up that growing value, but that's limited, ultimately by GDP. And there's a limit to how much of GDP people will be willing to put into Bitcoin: for example, 100% of corn farmers aren't going to take their profits from farming corn, and stop putting them into the next year's corn crop to buy Bitcoin instead, because the more corn farmers did this, the higher the price of corn would go, so at some point it would become obviously more profitable to farm corn than buy Bitcoin.
It is quite possible that we will continue to see new all-time highs for Bitcoin in the next few decades--there's still lots of wiggle room between global GDP and Bitcoin market cap. But Bitcoin growth will slow to less than GDP growth at some point. It's simply impossible for that not to happen.
If you measure its value relative to dollars though, it will go up forever and faster than GDP (dollars are historically devalued by money supply inflation at 7%/year)
Sometimes it's worth it to believe in an irrational market, depending on how long you (and it) can hold out.
There are many bitcoin evangelists who think it will lead to freedom. The truth is that it will most likely lead to cbdc, that is why all banks, government and financial institutions are building blockchain technologies.
The exact opposite is true. Blockchain "technology" is useless beyond its ability to enable Bitcoin - a monetary innovation. Using it for anything other than that is simply trying to find a problem for a solution. Crypto beyond Bitcoin is also largely useless beyond serving as a democratized casino.
Every time there is a "code is law" gone wrong with large $ at stake, people immediately fall back to real life police. Because "code is law" is either a bad idea or immediately has to compromise to meet real human uses (for example, people forget their passwords all the time and not supporting password resets—which right now requires a centralized key store—is a non-starter.)
There is both a ton of money in crypto and it has completely failed to reach its promised potential.
The largest uses in the next half decade will continue to be scams, pump-and-dumps, speculative frenzies, and money laundering. We'll see shockingly open corruption with the president of the United States having a coin for on-chain bribery.
MakerDAO, Aave, Uniswap, Ethereum Name Service, and OpenSea are all long-running smart contract projects that have weathered multiple speculation cycles chugging along all the same.
> Every time there is a "code is law" gone wrong with large $ at stake, people immediately fall back to real life police.
It's one potential recourse. As opposed to legal contracts, where falling back to real life police is the only recourse.
Code is not law, but it does solve the "possession is 9/10 of the law" issue by aligning possession with legal ownership more closely than legal contracts do, so that the law has to get involved a lower percentage of the time. This is especially helpful for low-value contracts in the hundreds of dollars or less where it's not economical to involve a lawyer. Same for cross-border contracts where international litigation is infeasible.
> There is both a ton of money in crypto and it has completely failed to reach its promised potential.
Smart contract tooling has only been mature since about 2018 or so. Blockchains have only started scaling since about 2021. Coinbase, the largest cryptocurrency-related company, didn't launch their chain until 2023. Sharded data availability won't even be in production on a major blockchain until next year, with Ethereum's PeerDAS. Zero knowledge proof technology is both in its infancy and developing extremely rapidly. In other words a text-based browser isn't going to host a video stream over a dial-up connection. These roadmaps are long, and it takes time for new breakthroughs in math and computer science to mature, standardize and reach production.
> The largest uses in the next half decade will continue to be scams, pump-and-dumps, speculative frenzies, and money laundering.
The "largest" uses aren't really relevant unless you're trying to make an overarching moral judgement and say "blockchains are bad", which whether true or not, I think is an observation about as useless as "knives can be used to hurt people".
If you're trying to determine whether a tool has any legitimate helpful uses, look for an increase in its legitimate helpful uses.
And yet, reality disagrees with your logic and stablecoins are on track to be used even more.
Tokenization on Ethereum will end up being way more important and useful than pet rock Bitcoin.
On a related note, blockchains often obscure the true consensus mechanism behind layers of complex jargon. Upon closer inspection, consensus is still built on trusted parties, just not the same ones typically found in the traditional economy. In Bitcoin, for example, you not only have the relatively few powerful miners but also the Bitcoin Core developers, who wield significant influence over which changes are incorporated into the Bitcoin node. For example, enabling the OP_CAT opcode again [1][2].
[1] https://www.reddit.com/r/CryptoTechnology/comments/19bik6z/u...
[2] https://www.reddit.com/r/Bitcoin/comments/19adyi0/should_op_...
This has hardly been proven. Gold has been recognized as source of value across several millennia and multiple cultures. I would bet that 1000 years from now gold will still have value, whereas stocks are only valuable in as much as the rights that they represent can be enforced by a court and implicitly the state backing it.
I have met so many people obsessed with building things on top of the blockchain and when you ask them what it is they need it is essentially a database and they don’t want it to be public. Fortunately the recent years this has been a decreasing trend. Only now a days the requests are to replace developers with 10x AI agents.
The vast majority of scams are run through crypto now. In fact, crypto is a step backwards and makes it easier to scam people.
The solution to this is maturity. The endgame is to be able to create smart contracts that are as readable to a layperson, if not more readable, than legal contracts. And to come up with a set of standard smart contract templates vetted by programmers, just as today we have a set of standard legal contract templates vetted by lawyers.
That, and encouraging people to actually read what they sign, whether it's a pen-and-paper signature or a cryptographic signature.
I'll tell my parents to learn JavaScript or Rust to make sure that there is no bug in the smart contracts they are signing.
https://i.imgur.com/MgEw0Bd.png
As a fun fact, a puzzle-piece style editor like this is how I wrote my first computer program as a toddler.
Crypto solves a problem that less than 0.1% of the world have. It's not very useful. Local laws and regulations are way more effective for me.
In short, the legal system is pretty useless in enforcing any broken contract that's worth less than a few thousand dollars, especially one of any complexity.
And as an aside, I feel like I enter into low-trust transactions all the time. Don't you?
* I don't trust people who sell products to me online. I've gotten bad product many times. But I need to be able to buy from independent sellers online.
* On a related note, I don't trust half the websites I put my credit card info into. But it's an important part of sending money over the internet.
* I don't trust my ride share drivers or short-term-rental hosts. I could do without short-term-rentals by only staying at trusted hotels, but I can't really do without ride shares.
* When I trade a stock with some random counterparty, I don't trust them to actually deliver the stock to me at T+1. But I need to be able to trade stocks with whoever else can give me the best price.
The typical solution is to have a corporation step in to act as judge and jury for contract breaches that are too small to be worth bringing to court (brokerages, credit card companies, Amazon, PayPal, AirBnB, Uber). In fact, these companies' main value creation has come from adding a layer of trust to traditionally zero-trust transactions. Thus, these zero-trust transactions have been able to thrive while the dispute resolution corporation charges fees for their value-added trust.
The only reason these roles traditionally have to be performed by companies is that autonomous money-custodying software did not exist. But programmable blockchains now allow for this. You could easily imagine a dispute-resolution alternative to PayPal where the organizational structure is a piece of autonomous software directly employing people/AI, rather than a traditional corporate entity.
So if you overstate something in December 2024, you can enter a correcting transaction today for that.
The first, erroneous entry has both it's accounting and business dates in December 2024.
The second entry, correcting the first is made today and so has an accounting date of today and a business date of December 2024.
Ironically, where you had 1 person = 1 vote (democracy), now this system favors the ultra-rich.
And it is presented as decentralized / free, but in reality, control is in the handful of very rich people.
No surprise that Trump, Musk and others are promoting it.
I believe this will change either when consortium chains figure out the interoperability problem (so they can bridge seamlessly with public chains) or public chains figure out the privacy problem (allowing consensus over entirely private transaction zones).
To me it seems like the latter is more likely than the former. We've finally got both featureful/performant Ethereum roll-ups and private Ethereum roll-ups. Now the trick is to combine all those properties and bundle them into a business ledger that's high-performance, with customizable privacy zones, with consensus and data availability provided by a credibly neutral setup such as the Ethereum validator set.
This seems to be the direction some firms are going, for example Ernst & Young with their Nightfall product, and more recently their OpsChain Contract Manager to try to bring it to enterprise customers.
That is only achieved with bitcoin because of a security model that has financial value to the blocks, and a distributed system of nodes and financially-invested miners. As soon as you remove the valuable digital token from the system it all falls apart; people could just rewrite the blocks and back-date the timestamps. It's like a machine that needs all of the parts to make sense.
The trick is that it must be triple accounting and the counterparty needs to share the ledger, which cannot be done without PK.
Just because you write that you own 5 million litres of olive oil or what have you on a chain doesn't prove you actually have it.
Hint: if you look at similar systems such as those used for certificate transparency logs, they look quite like...a blockchain.
If Company A and B already trust each other not to put bad data on the chain, then they also trust each other to just send emails back and forth, and you don't need a cryptographically verified blockchain. It secures the least important part of the process.
The only way to standardize ~all companies would be to have them all run the same exact ledger system, and if it was easy enough to make them do that, it would be easy enough to have them standardize a different reporting system for the same purpose.
It sank like Titanic. Nobody was interested in it, turns out that companies are fine with emailing each other Excel sheets.
P.S. I do have a Ph.D. in trying to fit blockchain for other use cases.
It was used in the Guatemalan 2023 elections to timestamp tally sheets in different election districts around the country, so they can't be manipulated at a later time.
Instead of a patchwork of DNS servers that can go down, registrars that go through enshittification cycles, and complicated ownership/transfer rules that vary based on country and TLD, ENS presents a single unified database that runs on signed message broadcasts.
To change an ENS entry, you just sign a message and broadcast it anywhere. No need to interface with a registrar. The global resolver gets updated seconds later.
It reduces an incredibly complex system of registries and registrars, authoritative and recursive resolvers, domain transfers - it distills it down to a system of just sending signed messages to update a single global name database that gets replicated to everyone who cares to have a copy.
Yeah. And if your domain name keys are stolen or lost, they're gone. Forever. Or held for ransom. That's a huge reason why people are not rushing to use blockchain-based DNS.
ENS is not worse in this respect than DNS. The DNS solution is for your registrar to require 2FA to protect your name from being transferred out in the first place. The ENS solution is for your custodian to... require 2FA to protect your name from being transferred out in the first place.
The difference is that anyone has the option to custody their own domain name if they want to - entrusting a third party is not a necessity.
Edit: Additionally, ENS gives you the equivalent of DNSSEC for free. So no need for certificate authorities, which represent DNS' reliance on cryptographic keys that would be catstrophic if stolen anyways.
If it's a high-value domain, you call the registrar and get it back. Worst case, you can sue the thief if you hold a trademark for the name.
> There is no standard recovery path once a domain leaves the hands of your registrar.
There is. It's called "a lawsuit".
When a domain name is stolen, definitionally it leaves control of the registrar.
> Worst case, you can sue the thief if you hold a trademark for the name.
You can also sue a thief who has a blockchain name. Blockchains don't magically make it so you can't sue someone and win a judgement.
International lawsuits for domain recovery work fine if you're a medium to large company. But "just sue an international thief" doesn't work so well if you're a small business or an individual. In that case, DNS doesn't hold any legal advantage over ENS, whereas ENS allows for much greater flexibility in secure custody setups to prevent theft in the first place.
> There is. It's called "a lawsuit".
And you can just as "easily" sue someone who steals a blockchain name. Just dig past the fake identity they're hiding behind, figure out which city and country they live in, hire a private investigator to determine their name and address, and hire a lawyer that practices in the theif's country but speaks your native language. It's not any harder than suing someone who stole your DNS name.
So call the registry?
The difference is that a judgement will actually get you something because in the end, the registry can give the domain to whoever they want. If your crypto DNS name is gone, you can’t appeal anywhere, even if you win your lawsuit (which you will, the opponent won’t appear).
Verisign's phone tree is pretty gnarly last time I checked.
> The difference is that a judgement will actually get you something
It could easily cost tens to hundreds of thousands of dollars to win a lawsuit in the registrar's jurisdiction, which is not feasible for an individual or small business.
As far as large corporations go, they don't have to worry about domain theft anyways. They all just pay tens of thousands of dollars for MarkMonitor to guard their domains with enterprise security, never have their domains stolen, and call it a day. I think where ENS shines is for small businesses and individuals.
The better option than recovery is just to prevent your domain from being stolen in the first place. For ENS or DNS this is fundamentally the same concept - just make sure you trust the company that holds custody of your domain name. For ENS, you have the option but not the obligation to custody your name yourself, or to use an M-of-N signature scheme amongst trusted friends, business partners, and/or third-party companies. It's hard to steal a domain name when you need to fool 3 out of 5 executives plus a third party into approving a transfer.
> the registry can give the domain to whoever they want
Could be a feature, could be a bug.
If your name is like `microsoft.com`, then you call the registrar. They have contacts in the .com and .net TLD administrators to file issues. If that fails, there's a formal process: https://www.icann.org/resources/pages/providers-6d-2012-02-2...
Never mind that most registrars have protections against the transfer and will generally spam the hell out of you with notifications.
This makes the domain hijacking a low-value target for crooks. It happens, but not a lot.
> The better option than recovery is just to prevent your domain from being stolen in the first place.
Which will not happen. You still have all the same issues with lost keys, misconfigured settings, etc. Except now with zero recourse.
> For ENS, you have the option but not the obligation to custody your name yourself, or to use an M-of-N signature scheme amongst trusted friends, business partners, and/or third-party companies.
Yeah. Have you actually ever done anything like that in real life?
That's the thing, blockchain astronauts are kinda like PGP enthusiasts. They keep claiming that it solves all the problems, if you attend their groupie, erm, key signing party.
As I said, large companies like Microsoft don't risk their domains being stolen in the first place, since they use enterprise protection services like MarkMonitor.
> there's a formal process
Ultimately every time I discuss ENS, the conversation turns into a discussion about how feasible it is for a layperson to afford, file, and actually win a UDRP dispute to recover a stolen domain name, which doesn't have any provision for theft by the way. UDRP only considers whether the current owner of the domain is using the domain to infringe upon your business trademark (if you have one).
The answer is that UDRP is completely unworkable for the vast majority of people who are at risk of domain theft; it isn't even an anti-theft tool. In terms of theft resolution, it's a justice theater where you can watch it work for very specific types of companies who have very specific trademark issues that the UDRP covers, and imagine that it must work great for every mom and pop who has a domain name nicked because surely we live in a just world.
The individual filing the dispute is on the hook for the UDRP fees which are significant and I believe well into the four figures (completely unaffordable in developing countries, and likely not worth it for small businesses). Typically companies need to hire a specialized lawyer to navigate the UDRP system, at additional expense.
So you're misinformed that there is a formal process for domain theft - the UDRP is only for trademark infringement. UDRP is unnecessary for large companies (who have the resources to safeguard their name from theft) and it's useless to individuals and small companies who can't afford it and/or have theft problems but no trademark infringement problems. UDRP is only useful if you are a medium-sized company with a well-established trademark in a developed country and you didn't do your due diligence in properly securing your domain name.
So I'll give you that - if you're a medium-sized company with a well-established trademark in a developed country and you didn't do your due diligence in properly securing your domain name, then UDRP might be better than nothing. But depending on what kind of company you are, it still might be cheaper and easier to just switch domain names.
> Never mind that most registrars have protections against the transfer and will generally spam the hell out of you with notifications.
A blockchain can be designed to be more reliable because it doesn't "generally" do anything. It always, specifically, does exactly what it's programmed to do. A smart contract's predictability is a function of how well it's understood, and the tooling for creating and auditing bug-free smart contracts is maturing rapidly.
If you want to be spammed with notifications, there's nothing more reliable than multiple audited pieces of open source software that run directly on all your devices and monitor a public blockchain for an action. Add several third-party blockchain monitoring services for good measure.
And, of course, it's easy to write custody code in such a way that transfers are time-locked, so you have time to see the notification before the name changes owners. Write-once, audit-once, use-many.
> Have you actually ever done anything like that in real life?
Yes.
But aside from that, I use cryptographic keys in my life for countless reasons other than cryptocurrency. Git, SSH, E2E messaging apps, web passkeys, object storage, HTTPS server certificates, tapping my credit card at the supermarket, accessing the cell network, unlocking my car, etc. Everyone is already managing cryptographic keys whether they know it or not, and everyone's cell phone has keys already available and quite safe in its secure element, ready to sign messages with.
No need to break out the pocket protectors and meet up in someone's living room. A key signing ceremony for ENS could be easily piggybacked off a standard E2E group chat, like for example a Signal or iMessage chat:
* Someone creates a group chat on their smartphone and invites people (specifying the "M" value, aka the threshold for a valid group signature)
* The invited people join, their devices silently and automatically exchange keys, and the chat displays the group key
* Whoever has the asset transfers it to the group key
* Whenever someone proposes a message to sign, the system messages the group chat showing how many more signatures are needed, with a "sign" button that people can click.
This is pretty similar to what Safe Wallet already does, and it currently secures over $100 billion worth of cryptocurrency for some of the largest companies in the industry. But it's also quite simple to just download the app and use it as an end-user. It's directly compatible with ENS, since they both implement the ERC-721 token standard.
I've thought through all of this extensively, I know quite a lot of details about how both blockchains and the current DNS systems work, I've had numerous conversations with countless people about it, and it all adds up to me.
The thing is, ENS is strictly _worse_ than regular domains. If your key is stolen, then you are at the total mercy of the thief. With the regular domains, you simply lodge a complaint with the registrar, and they'll roll back the transfer within 90 days.
You can lose a domain if you basically register it, don't use it, and then forget to renew it for a year.
> But aside from that, I use cryptographic keys in my life for countless reasons other than cryptocurrency.
Can you please stop the bullshit? It's downright nauseating.
We're not talking about the general cryptography, which is incredibly useful. We're talking about "code is law" blockchains with proof-of-work/proof-of-stake method of consensus. They are completely useless for anything but paying for illicit drugs and other illegal transactions.
Yes, I naturally type in walls of text that are usually grammatically sound but tend to meander in structure. I'm pretty sure I repeated myself in places. You're repeating yourself in places, too. But believe what you want to believe. Maybe you're the LLM and the dead internet theory is well underway.
> With the regular domains, you simply lodge a complaint with the registrar, and they'll roll back the transfer within 90 days.
Domain registrars (for DNS) do not do this and they structurally cannot do this.
> You can lose a domain if you basically register it, don't use it, and then forget to renew it for a year.
Equally true of both systems.
> We're not talking about the general cryptography, which is incredibly useful. We're talking about "code is law" blockchains with proof-of-work/proof-of-stake method of consensus. They are completely useless for anything but paying for illicit drugs and other illegal transactions.
When you say that, what I hear is "When you use cryptography to sign messages, it's incredibly useful. When you timestamp messages, that can also be useful. But if you sign and timestamp messages, that makes it a Blockchain and Blockchains are incredibly UnUseful. That's silly.
To be very clear I think "code is law" is a nonsensical idea, almost as incongruous as the term "cryptocurrency" itself. They are definitely not currencies, and their code is definitely not law. But blockchains can be useful without trying to create new currencies, and without their code being law.
I've been seeing where the tides are headed in both the public and private sectors, and everyone wants to use cross-organization attributable append-only timestamped databases as an accounting tool now, in part because they are so easily auditable. From there it makes perfect sense to want to attach expressive internal constraints to these databases, via a scripting language. And I'm not sure what anyone could call that kind of database except "blockchain".
I also wonder how the long-term monetary incentives work for a truly trustless domain name scheme. Having a quick look at https://app.ens.domains this doesn't seem terribly cheaper than a traditional registrar.
If I run a blockchain that I, or my business, has full control of, and I show you as a form of “proof”, you shouldn’t believe me. A time stamped Twitter post would hold more weight.
The power of, say, the bitcoin blockchain, is in the fact that it’s widely distributed and publicly verifiable by anyone, and due to the size of the network it is prohibitively expensive to tamper with.
Ultimately it will just keep going up in price relative to everything else and people will invest simply based on that without understanding why - similar to the real estate investment market.
Of course the combination of signed transactions, common visible ledgers, introducing computational challenges to forgery, resiliency through consensus (kinda)… all the bits and pieces can be remixed into really interesting ideas.
Bitcoin, I still don’t get. More public, slower, more expensive, no fundamental utility, and still subject to nation-state interference?
That's because they have no idea what they're talking about. At a certain point you have to ask yourself why Bitcoin is worth $2T and no enterprise blockchain has ever taken off. How many years more of this trend is required to prove the "technologists" are wrong? It's already been 16 years.
And while I don't believe in appeal to authority, it's worth mentioning that I have been working in this field for pretty much my entire career and TA'd the first Stanford CS course on blockchains and crypto currencies in 2015. I very much know what I'm talking about and the people at Vanguard are blindly parroting what Deloitte and McKinsey are telling them about "blockchain".
Gold didn't have this problem because it's issued through proof of work - you have to put in N kgs of gold worth of work to mine N kgs of gold. But it's a rock and in today's world we need a digital form.
I do agree that cryptocurrencies are the killer feature of the blockchain but other use cases do exist (like trustless timestamping).
Personally my "bull case" for crypto is that I am pretty confident about answering no and yes to those two questions, respectively.
I'm being cynical, but I also think that's true.
I haven't owned any crypto in a long time and won't going forward.
Do you think you will be alive hundred years from now?
> I would say avoid bitcoin like the plague. Did I make myself clear?
1) Vanguard offers Gold ETFs. Now they would say something ike 'oh that's because gold is used as an actual product ie has a purpose'. But most people accept that gold is also speculative and is the way it is simply because it's been that way for such a long time vs. it's inherent value or purpose. Yes the swings are not as wild and not as easily manipulated (there was the situation with Silver that was years ago) but still it could be done.
2) Stock investing is by and large gambling and whatever income the stock owns in no way really flows measuably to the person who owns stock in the company but seems to drive some type of accepted value going forward. No it's not entirely chance (like traditional gambling) but there are many players and much skill level and 'the regular guy' is not in a position to compete so they must interpret signals and they don't have access to all the signals that a higher level investor does.
3) The entire 'long term' for stock is similar mantra to HODL with crypto.
4) The 'problem' with both crypto and stocks is not really when to buy but when to sell.
Bogle was kind of a gold bug. It's unsatisfying and inconsistent and I agree you could make a similar argument for excluding gold if it wasn't already kind of grandfathered in.
> Stock investing is by and large gambling and whatever income the stock owns in no way really flows measuably to the person who owns stock in the company but seems to drive some type of accepted value going forward.
No, stock investing and gambling are absolutely incomparable. Income clearly and directly flows to owners; it's not obscure.
gold has stayed as a value of store that is tradeable, longer than any civilization has existed.
USD or Stocks or Bonds for that matter any other currency is 1000x more speculative than gold
Gold is also a “commodity” which vanguard stated has inflation protection properties
If Satoshi Nakamoto’s Dormant BTC wallet wakes up tomorrow it’ll burn down the whole market…
Imagine you know a skilled chef, whose new restaurant is losing money, but you believe he can turn it around and start being profitable if he is able to keep operating for another few months. You buy 10% of his business for $100k, so that he can keep paying rent and wages. Your thesis is correct and his restaurant becomes popular and profitable, and you share in the profits. New value is created (a thriving business, providing food and jobs) that would not have existed without the capital you provided.
Did you take a risk? Yes. Were you just gambling? No. In contrast, there's no scenario where betting on a sports game or memecoin creates new real-world economic value.
Sports betting or gambling has nevative EV and you lose more (on average) than you win.
So they are like night and day.
Even if the diffrence is 49.9% odds versus 51.01% odds that is worlds apart when it comes to laws of large numbers.
You can buy insurance to ensure you’re not left behind this very cheaply, for just 1% of your portfolio. Yes, it is coordination dilemma with ponzi characteristics. Yes, sticking to your principles may feel like the intellectually correct thing to do. But its a big coordination dilemma which so far is only going in one direction, and the risk that anyone not getting involved ends up having fun staying poor increases as btc ascends.
All the ETFs mean is that it will be so much easier to get out of the position and cause even bigger cascades of selling than before when the next shock happens.
You can't have a reserve currency with an asset that has so much volatility it can't even function as a currency.
Why? There’s no way to derive value from that use.
There actually would be if it were, say, Ethereum (which is proof of stake, with fees accruing to holders). However, let’s say Ethereum were to become a global reserve currency. This would be essentially a tax on all financial activity, and governments and companies would be _strongly_ incentivised to create an alternative which they controlled and which did not have that tax. Something a _bit_ like this, incidentally, has already happened. Prior to the creation of SWIFT, international bank transfers generally went through what is now Citibank. Governments, and banks other than Citibank, generally saw this as unsatisfactory (even though AIUI Citibank was doing it extremely cheaply and not deriving all that much value from it; the mere threat that they _might_ was enough) and thus SWIFT was born.
no inherent economic value
As in: Do they mean that the existence of the Bitcoin blockchain has no economic value, or that owning Bitcoin tokens has no value?
Both have value though. If you want to store data publicly and tamperproof for a long time, the Bitcoin blockchain is by far the best solution. So the Bitcoin blockchain has value. And the Bitcoin token lets you use the Bitcoin blockchain. Without Bitcoin tokens, there is no way you can write anything to the Bitcoin blockchain.
Don't you get 80 bytes per transaction? That seems like about $7M per GB... maybe storing hashes is reasonable but storing data actually on the bitcoin blockchain itself doesn't seem great?
Another very powerful type of data is transaction settlements. With a single onchain transaction, an infinite amount of second layer transactions can be settled.
Matt Levine has written about how buying convertible bonds from Microstrategy is sort of doing this [1] but it seems complicated to do.
> This is the more practical meaning of hedging your stock-price risk. It means that every day the stock moves around and you rebalance your hedge. When the stock goes up, you sell some stock at high prices. When the stock goes down, you buy some stock at low prices. Hedging the convertible means buying stock low and selling it high.
...
> a convertible bond is a bet on volatility: The more the company’s stock bounces around, the more money convertible arbitrageurs can make.
It is with options on MicroStrategy (MSTR). I think one strategy is holding MSTR and selling calls (i.e. covered calls). There are probably other strategies that don't require holding MSTR shares, like selling a call and buying a put, but I may be messing that up.
Check out the youtube channel called "Quant Bros" (cringe name, I know), and the /r/MSTR subreddit.
It is also likely to be very _expensive_, and the market can of course stay irrational longer than you can remain solvent.
Buy when it's blue sell when it's orange.
The current newest fool is President Trump who wants to take a portion of Federal reserve and put it in Bitcoin. The greatest fool one would say.
And when Bitcoin has a 50% decline due to a scare pullout, the federal reserve also has a pullout and ……… the entire economy tanks.
The market is so hot right now with absurd P/E ratios. One bad nvidia earnings and we’re gonna be in bearish mode.
It exploded after the US election after it became clear that the crypto bros are in charge. It is now theoretically possible to buy a president by launching a new coin and have the "lobbyists" buy the coin. Previously this needed to be done using high speaker fees and book deals after the presidency.
If the wars and sanctions stop and if more people are aware of the oligarch influence, Bitcoin will drop.
Trump is continuing the Blinken policies in Gaza (make the Palestinians leave to Jordan and Egypt and build Kushner seafront properties in Gaza) and the Bolton policies in Greenland. So perhaps he'll continue the Blinken policies in Ukraine, too, despite election promises to the contrary. That is the only hope for the Bitcoin scam.
Senile laggards.
Well, maybe the US government? What if the US starts dedicating 10-15% of yearly federal receipts to serve as exit liquidity for Bitcoin holders?
Fidelity knows that investors in their cryptocurrency products will lose money in aggregate, but offers them anyway. It's a black mark against their integrity.
No. It's that people in many of the countries in the top 20 live under unstable governments and monetary systems, with extreme debasement, inflation, inability to store value without seizure, transfer value without controls, accept remittances, etc. Crypto absolutely has use cases in these situations, and these extremes inform the means.
"If you’re in a developed country, and you’re happy with your banking system, and you’re not a sex worker, and you have zero concerns about your country being taken over by fascists, you probably don’t need cryptocurrency and shouldn’t worry about it. If other people say they do need it, don’t call them liars and say you know with certainty that nobody has ever used crypto for anything besides Ponzi schemes and monkey pictures. Just let them use it!" [2]
[1] https://www.chainalysis.com/blog/2024-global-crypto-adoption...
[2] https://www.astralcodexten.com/p/why-im-less-than-infinitely...
> concerns about your country being taken over by fascists,
.. do not record all your transactions on a permanent public leger!
If you mean to hold USD paper notes, that does happen a lot all over the world as you say; and not necessarily legally. Many advantages to digitization (and some disadvantages).
I agree.
Bitcoin has a really good and nice use case, you can move millions of dollars between countries with words in your head. No customs will ever find out. Can Gold, diamonds or even paper dollars do that?
You can hit met with the ethics subject but another matter.
it isn't important to me that this is speculation versus some form of financial game that's put on a mental pedestal
it is important to me that this fits my risk profile
generic advice gives generic results
Value does not arise out of usage or cash flow or how something is classified or even its history. Value arises out of perception. Its all a narrative. It always has been.
People thinking crypto is useless is a narrative. People thinking money will always lose value due to inflation is a narrative. Both are true based on your point of perception.