bitcoin

[Zaphod]

thevaluedoc wrote:

 

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Crixus wrote:

Careful, this crypto thing is never go to scale. http://www.businessinsider.com/electricity-required-for-single-bitcoin-trade-could-power-a-house-for-a-month-2017-10

This si what happens after a decade of ZIRP and NIRP. We got BTC mania, TSLA burning millions per day, and sundry zombie companies buying back stock to enrich management. If Tbill rates were 5%, would we be seeing this garbage?

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This is exactly why I have been reluctant on bitcoin/blockchain. If I understand the blockchain technology correctly, each transaction requires incrementally more energy in order to extend the chain. If BTC/ETC/etc were to be adopted as a medium of exchange like credit cards, at what point does the billions (or greater) transactions per day cost more energy to conduct than the value of that energy expressed in the respective crypto. It looks like there has to be some upper bounds to this technology in terms of energy expenditure and I wonder if that limitation is it’s Achilles heel. Furthermore, does the inherent nature of blockchain lead to extended transaction times that inconvenience the consumer.

Also, given that this is a fiat currency, why adopt BTC/ETC which is backed by an algo vs. the dollar which is backed by US resources including its military. And it has been shown that this algo can be hacked/manipulated/etc, so who is really in control?

That being said, I acknowledge the fact that the adoption of blockchain technology by sovereign powers into a state/reserve currency is a completely different story.

But happy to be convinced otherwise because even though the downside of bitcoin is ~5K, many still argue its upside is in the 100sK or higher. Just ask John McAfee about BTC and what he’s willing to do if it doesn’t reach 500K in the next couple of years.

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Yeah, a lot of blockchain and the argument for scaleability is diametrically opposed to its reality. It actually greatly complicates many things or is frankly unnecessary. Some things supposedly fine (above my understanding capacity). Then you have all the other dumb arguments, its limited...ugh, but number of 'coin' types isnt. Facepalm.

To your fiat point, the people that understand what backs it are in the distinct minority. Even if they do understand it they rarely extrapolate as you have to the obvious, its our military might that really makes us the dominant reserve in addition to productive capacity.

All that and a whole lot more unsaid its a bubble, and theres lots of money to be made in bubbles. Dont have the cojones to personally invest in one of these unregulated near black market exchanges however.

[Donnie]

I don't diversify my cash holdings by currency, so I see no reason to add Bitcoin from a diversification point of view.

I don't speculate on currency, so I won't be adding Bitcoin to my portfolio as some kind of currency bet either.

[djohnflatfeecfp]

To paraphrase Josh Brown - I have to pay attention to it because it just won't die.  For me it is because clients are asking about it, not that any are buying it.

 

The graphic in the link below is interesting as to how it has risen after Dimon has talked about it.

https://qz.com/1101751/jamie-dimon-on-bitcoin-the-cryptocurrency-is-setting-new-records-after-jpmorgans-ceo-refuses-to-talk-about-it/

 

It's stuff like this the following that confuses me.  I hear one "expert" say there are estimates this technology could cut $20 billion in revenue out of the financial services industry.  Then I get an ad on my LinkedIn for crowdfunding my own ICO and it has a model dancing.

 

I guess we will see what happens in 10 years.  Ten years ago I never thought Amazon was going to be more than a place to buy books.  Now it is our first digital monopoly.

[AdamMGrossman]

I think bitcoin is a disaster and would recommend that you stay far away from it. It's not a viable currency, it's a completely unpredictable as an investment, and it lacks any inherent utility.

It is difficult to imagine bitcoin as a useful currency because it's price is so volatile. As a thought experiment, would you agree to accept your next year's pay in bitcoin?

It is also difficult to imagine bitcoin as an investment because it lacks any intrinsic value. That is to say, it doesn't produce any income, unlike a stock or a bond or real estate. It fits into the same category as gold, which is worth only what the next person will pay for it. However, it is much less useful than gold because it lacks any inherent use. At least you can use gold for jewelry. Bitcoin is useful for nothing.

And, as to the fact that the dollar is fiat currency: That is true, but it's also the currency that everyone in the U.S. (and in many other countries) use. And, since it's the only currency the IRS accepts, you can't dismiss it in the same way that you can bitcoin just because it's a fiat currency.

[Zaphod]

AdamMGrossman wrote:

"it lacks any inherent utility."

 

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It has one very important very valuable utility. The ability to get your money out of regimes that put clamps down on capital flight, aka, China. As long as its legal and can be transferred back into cash, it will be useful for a subset of people.

[AdamMGrossman]

Zaphod wrote:

AdamMGrossman wrote:

“it lacks any inherent utility.”

 

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It has one very important very valuable utility. The ability to get your money out of regimes that put clamps down on capital flight, aka, China. As long as its legal and can be transferred back into cash, it will be useful for a subset of people.

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I agree that making funds transferable is a benefit. However, it's the price volatility that, in my view, makes it such a problem as a substitute currency.  But of course, it's the price volatility that makes it interesting to people who view it as an investment. Logically, I don't see how it can serve as a value transfer mechanism and as an investment. It's got to be one or the other in order to survive.

[Zaphod]

AdamMGrossman wrote:

Zaphod wrote:

AdamMGrossman wrote:

“it lacks any inherent utility.”

 

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It has one very important very valuable utility. The ability to get your money out of regimes that put clamps down on capital flight, aka, China. As long as its legal and can be transferred back into cash, it will be useful for a subset of people.

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I agree that making funds transferable is a benefit. However, it’s the price volatility that, in my view, makes it such a problem as a substitute currency.  But of course, it’s the price volatility that makes it interesting to people who view it as an investment. Logically, I don’t see how it can serve as a value transfer mechanism and as an investment. It’s got to be one or the other in order to survive.

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No way its a currency for all the reasons mentioned. Price volatility is the last thing you want out of a currency.

[G]

I didn't swing at this one.  Despite reading a lot, I still don't understand it.

I disagree that it doesn't have value or utility.  I mean, it has no lesser or greater value than paper with "federal reserve note" printed on it, or a certain yellow element.  I do agree that it is too volatile to be used as money.  (Is this car 10 bitcoins or 7 today?)

For now, I feel like I missed out.  Perhaps in 10 years, I'll really feel like I missed out.  Or perhaps I'll be glad that I didn't buy this particular Semper Augustus bulb....

[Craigy]

Zaphod wrote:

AdamMGrossman wrote:

“it lacks any inherent utility.”

 

Click to expand…

It has one very important very valuable utility. The ability to get your money out of regimes that put clamps down on capital flight, aka, China. As long as its legal and can be transferred back into cash, it will be useful for a subset of people.

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Plus lubricating criminal transactions.

[Craigy]

G wrote:

I didn’t swing at this one.  Despite reading a lot, I still don’t understand it.

I disagree that it doesn’t have value or utility.  I mean, it has no lesser or greater value than paper with “federal reserve note” printed on it, or a certain yellow element.  I do agree that it is too volatile to be used as money.  (Is this car 10 bitcoins or 7 today?)

For now, I feel like I missed out.  Perhaps in 10 years, I’ll really feel like I missed out.  Or perhaps I’ll be glad that I didn’t buy this particular Semper Augustus bulb….

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Meh, I can spend US currency almost anywhere.  Even in many foreign countries.

If I had a bitcoin wallet I would struggle to be able to use it.  The only real use is later conversion into cash, and that's also not something you can readily do.

[Chase_WrenneFinancial]

AdamMGrossman wrote:

I think bitcoin is a disaster and would recommend that you stay far away from it. It’s not a viable currency, it’s a completely unpredictable as an investment, and it lacks any inherent utility.

It is difficult to imagine bitcoin as a useful currency because it’s price is so volatile. As a thought experiment, would you agree to accept your next year’s pay in bitcoin?

It is also difficult to imagine bitcoin as an investment because it lacks any intrinsic value. That is to say, it doesn’t produce any income, unlike a stock or a bond or real estate. It fits into the same category as gold, which is worth only what the next person will pay for it. However, it is much less useful than gold because it lacks any inherent use. At least you can use gold for jewelry. Bitcoin is useful for nothing.

And, as to the fact that the dollar is fiat currency: That is true, but it’s also the currency that everyone in the U.S. (and in many other countries) use. And, since it’s the only currency the IRS accepts, you can’t dismiss it in the same way that you can bitcoin just because it’s a fiat currency.

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1.  Bitcoin isn't a currency, it's an asset.  Your argument goes back and forth between the two.

2. It's currrent utility isn't so much to transact value, but to store it. If you want a better thought experiment, think of the advantages bitcoin has to all the Swiss and Cayman bank accounts, the hidden gold bars, or cash under someone's mattress.. etc.  Add that all up, and divide by 21M -- that's a good place to start trying to understand the potential for the value of a single BTC.  Note: Potential.  There are obviously huge obstacles to overcome, and it may only capture a fraction of the market.

3. All new technologies are inherently risky, and thus volatile.  It's not even available to the retail investor at this point, without jumping through hoops. Stability will come with time.  By the time it's stable, it won't be an attractive investment.

4. See #2.  It's intrinsic value is as a scarce resource, and an unseizable store of value.  Try taking millions of dollars in gold or cash across the border, and see what happens.  Look at people's wealth eroded to nothing in countries like Venezuela or Argentina.  Who might want to protect themselves from civil asset forfeiture, or oppressive governments? While this isn't a primary concern in the US, it is in much of the world.  Even major corporations like Apple store their cash abroad in order to minimize taxes, etc.

5.  It's not out of the question that eventually everyone will accept digital currency (may or may not be bitcoin), and perhaps not even realize it -- i.e. pay with fiat backed by crypto.

 

It's definitely not for everyone, and nobody should buy without first studying it a ton, and then coming to their own conclusions.  But to suggest it has zero utility, or to dismiss it as a disaster waiting to happen, while clearly not having done much research, isn't very productive.  There are a ton of arguments against bitcoin, none of which you have laid out.

[AdamMGrossman]

I thought I had laid out a good number of the arguments against it.  But, if you are looking for more, the White Coat Investor provides an articulate set of arguments in his article on this topic: https://www.whitecoatinvestor.com/5-reasons-i-dont-invest-in-bitcoins/.  His most compelling point is this: "As a high income professional you’ve already won the game.  You don’t need to invest in speculative instruments like Bitcoins to reach all of your financial goals.  Don’t run risks you don’t need to run."

[Chase_WrenneFinancial]

I guess I should be more clear... There are arguments against Bitcoin, and then there are arguments against investing in bitcoin.

99.9% of people shouldn't invest in bitcoin, simply because it isn't suitable -- i.e. they don't understand it, it doesn't fit their investment objectives, unnecessary risk, etc.

The point I wanted to make was in regards to the statements seemingly made about it's viability as a new technology.  While Bitcoin may (and is likely to) fail, it isn't for any of the reasons listed above (no utility, too volatile to be a currency, zero intrinsic value, etc).

It's one thing to say don't invest in things you don't understand, or not to chase returns that are far from certain.  It's another to say don't invest in something for reasons that are unrelated to it's primary use case.

 

That being said, we are definitely in agreement that people shouldn't blindly invest in bitcoin. 

 

 

[Craigy]

Chase_WrenneFinancial wrote:

I guess I should be more clear… There are arguments against Bitcoin, and then there are arguments against investing in bitcoin.

99.9% of people shouldn’t invest in bitcoin, simply because it isn’t suitable — i.e. they don’t understand it, it doesn’t fit their investment objectives, unnecessary risk, etc.

The point I wanted to make was in regards to the statements seemingly made about it’s viability as a new technology.  While Bitcoin may (and is likely to) fail, it isn’t for any of the reasons listed above (no utility, too volatile to be a currency, zero intrinsic value, etc).

It’s one thing to say don’t invest in things you don’t understand, or not to chase returns that are far from certain.  It’s another to say don’t invest in something for reasons that are unrelated to it’s primary use case.

 

That being said, we are definitely in agreement that people shouldn’t blindly invest in bitcoin. 

 

 

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But should people even waste time to become fluent on bitcoin at all?

[Zaphod]

Read (finally) a very good breakdown of Bitcoin/Ethereum yesterday. Feel I have a lot better understanding of the whole thing. Most of my perceptions were echoed in it and did learn some new stuff. Bitcoin simply doesnt make sense for a lot of the stuff its currently hyped for, and has a very limited used profile, ie, non censored payments. While Ethereum is some sort of platform and should be judged by the apps created on it, which isnt anything useful yet.