Bitcoin is still early

[NapoleanDynamite]

I’m too lazy to read all 72 replies has anyone said why bitcoin is good other than the fact that it will go up in price?

Stop being lazy. Read. Listen. Learn. Never Stop Learning.

1. 2. and 3. Store of Value/Store of Energy. 4. Usage as a global currency/peg.

Best argument against BTC (no one here has thought about discussing): The govt's stop printing money/introducing controlled inflation, allow deflation to occur and actually allow the free market to control itself. This undercuts Bitcoin's store of value proposition and returns the value to current currencies which are backed by big guns. Although possible, this is highly unlikely to occur. There would be a significant period of global civil/societal unrest from allowing this to happen. Another possible argument against BTC is that the world returns to a Gold Standard. This would cause a shift in store of value from BTC to Gold. Right now the opposite is occurring. Once again, I think it highly unlikely that the world will return to a gold standard. Other arguments against Bitcoin have been proven wrong.

Again...learn from the best...not from me. You may come to different conclusions. If you had the chance to learn to become one of the world leaders in engineering on a website about hydraulics or instead you had the chance to learn engineering at MIT while working with some other incredible students which would you choose? Metaphorically, that is the opportunity that exists right now in relation to bitcoin.

[EntrepreneurMD]

yes I am talking to you because I think we should actually talk about bitcoin, not just the price of bitcoin or people who are into bitcoin, I think it would be a more valuable discussion

It's hard to talk to somebody so averse to anything other than index funds about it.

People throw around the term risky and gambling, convinced that more risk cannot mean more reward because that is what they have been conditioned by others to believe for years.

Those of us who want more reward understand that we indeed take on more risk, but a calculated risk is very different from a slot machine. While past returns are not a guarantee of future results, a 15 year track record of returns gives relative guidance for the choices made. I understand very well that what rises faster falls harder, and who knows if I sell before the next prolonged recession or not. At least you should understand that at this point if I don't sell early in a recession I have the discipline to circumvent emotion and avoid selling low - investing 101. You know my diversification outside of market assets, including the cash safety net that is criticized since some argue that if the market crashes so too will the other assets, generally though history proves that temporary. Then you have those like Anne that post you can't base decisions off the past 15 years - and she's right. We can have a 30 year Japan style stagflation however low the odds are but the problem with that argument is that every market investment may lose relative to inflation...including indexing.

I actually guess at the future like everyone else likes to in the polls here for fun. However, most don't understand the actual decisions are based on the prevailing data of the day, not what I think about the future as that can changed based on new data sets. The reality is even indexing is taking risk, kind of how investing works not sure I have to tell people investing involves risks since it's in the routine disclosures in index funds too.

I do see and agree with the argument that long term Bitcoin will be multiples higher than it is today given it's increasing mainstream acceptance which is part of the discussion regarding who is partaking in it at this point. Can it drop from $20K back down to $5K and is it likely to remain quite volatile along the way? Of course, but those of us that are interested in this pattern see that as major opportunity, not a deterrent. That is based on my information today, it can ultimately get wiped out too, let's say if world governments start to ban it and replace it with a more regulated cryptocurrency. That's why I laugh when Tim asks me exactly what Bitcoin will be trading at on May 12, 2023 and the like. If a Bitcoin discussion is going to go like that it's not going to be a worthwhile conversation. If you're going to be irritated at people posting their trades a week or two later because that's when a relevant thread was started, the conversation can't be constructive. I get it you're not interested in actively managed funds and probably not Bitcoin either, so I can understand OP's hesitation in having the conversation with you versus someone open minded about active investing. As a hardcore stay the course guy, I suspect your conversation will be about how Bitcoin has to be a bad idea regardless of the information presented.

Headlines sure are sensational. DOW 30K, record closing high and and best month since 1987. Reality YTD 5%. SP 12%, IXIC 34%, NDX 38%, Direxion 2X NDX 78%, BTCUSD 163%. You already noted to me YTD returns don't matter. We are going to disagree there and that's okay, to each their own. Maybe I'll look at BTC with the next cycle you know I like the dips, I remain flexible and cautiously optimistic in seeking opportunities both in the markets and otherwise. Short term market fundamentals are signaling economic improvement including a restrained VIX, steadily dropping unemployment rate, widening yield spreads, COVID vaccine/therapeutic opportunities, strong housing and restrained foreclosures/evictions, an accommodative Fed, more faith in the reopening plays, and a likely improving relationship with a strengthening China look like a great brew of positive indicators for now. Short term technicals signal the indexes breaking out to the upside, as well as commodities...everything seems to be up right now. Considering a big infusion on the next retreat with bloated reserves - indexing, active, Bitcoin? We'll see. I appreciate this thread alerting me to another potential avenue.

[jacoavlu]

It's hard to talk to somebody so averse to anything other than index funds about it.

I'm not averse to alternatives, my point is always tell the truth that's all but let's not turn this into a different discussion

my point is that we could try to have meaningful discussions about bitcoin, merits and faults rather than a pure focus on the price

Preston Pysh is someone I respect and he's in the bitcoin camp. It's a challenge to find good education from people who don't have an incentive. Much like the WCI and POF posts on real estate funds.

[NapoleanDynamite]

It's hard to talk to somebody so averse to anything other than index funds about it.

People throw around the term risky and gambling, convinced that more risk cannot mean more reward because that is what they have been conditioned by others to believe for years.

Those of us who want more reward understand that we indeed take on more risk, but a calculated risk is very different from a slot machine. While past returns are not a guarantee of future results, a 15 year track record of returns gives relative guidance for the choices made. I understand very well that what rises faster falls harder, and who knows if I sell before the next prolonged recession or not. At least you should understand that at this point if I don't sell early in a recession I have the discipline to circumvent emotion and avoid selling low - investing 101. You know my diversification outside of market assets, including the cash safety net that is criticized since some argue that if the market crashes so too will the other assets, generally though history proves that temporary. Then you have those like Anne that post you can't base decisions off the past 15 years - and she's right. We can have a 30 year Japan style stagflation however low the odds are but the problem with that argument is that every market investment may lose relative to inflation...including indexing.

I actually guess at the future like everyone else likes to in the polls here for fun. However, most don't understand the actual decisions are based on the prevailing data of the day, not what I think about the future as that can changed based on new data sets. The reality is even indexing is taking risk, kind of how investing works not sure I have to tell people investing involves risks since it's in the routine disclosures in index funds too.

I do see and agree with the argument that long term Bitcoin will be multiples higher than it is today given it's increasing mainstream acceptance which is part of the discussion regarding who is partaking in it at this point. Can it drop from $20K back down to $5K and is it likely to remain quite volatile along the way? Of course, but those of us that are interested in this pattern see that as major opportunity, not a deterrent. That is based on my information today, it can ultimately get wiped out too, let's say if world governments start to ban it and replace it with a more regulated cryptocurrency. That's why I laugh when Tim asks me exactly what Bitcoin will be trading at on May 12, 2023 and the like. If a Bitcoin discussion is going to go like that it's not going to be a worthwhile conversation. If you're going to be irritated at people posting their trades a week or two later because that's when a relevant thread was started, the conversation can't be constructive. I get it you're not interested in actively managed funds and probably not Bitcoin either, so I can understand OP's hesitation in having the conversation with you versus someone open minded about active investing. As a hardcore stay the course guy, I suspect your conversation will be about how Bitcoin has to be a bad idea regardless of the information presented.

Headlines sure are sensational. DOW 30K, record closing high and and best month since 1987. Reality YTD 5%. SP 12%, IXIC 34%, NDX 38%, Direxion 2X NDX 78%, BTCUSD 163%. You already noted to me YTD returns don't matter. We are going to disagree there and that's okay, to each their own. Maybe I'll look at BTC with the next cycle you know I like the dips, I remain flexible and cautiously optimistic in seeking opportunities both in the markets and otherwise. Short term market fundamentals are signaling economic improvement including a restrained VIX, steadily dropping unemployment rate, widening yield spreads, COVID vaccine/therapeutic opportunities, strong housing and restrained foreclosures/evictions, an accommodative Fed, more faith in the reopening plays, and a likely improving relationship with a strengthening China look like a great brew of positive indicators for now. Short term technicals signal the indexes breaking out to the upside, as well as commodities...everything seems to be up right now. Considering a big infusion on the next retreat with bloated reserves - indexing, active, Bitcoin? We'll see. I appreciate this thread alerting me to another potential avenue.

I agree with some of this...But there is one big difference. I think that BTC can be just as boring and easy going forward as simple index funds. It may have more volatility than some can stomach. But it may not. The big picture is that it is extremely easy to just DCA 1%, 5% or 10% of ones portfolio into BTC and just sit and wait. Had someone bought BTC at it's ATH in 2017 (the historic worst time to buy), but then DCA'd every month since then, the returns on that portion of this "lazy" portfolio would be outstanding. Anyone has this option moving forward.

As of today (11/25/2020) I have no desire to trade Bitcoin. My income taxes are already WAY too high. I don't need more. Do I think BTC will be worth significantly more in 5 years and 10 years than it is today? Absolutely. Could my mind change in the future and might I be wrong? Absolutely. Do I think the S/P will be higher in 5 years and 10 years than it is today? Yes. Could my mind change and might I be wrong? Absolutely.

jacoavlu - Preston Pysh is very good and I really enjoy his body of work. There are others. Glad to hear you are investing the energy.

[Brains428]

I feel like with rates at near near zero, the speculation is the same for both. The risk for equities to go to zero is likely much much less, but also not still zero.

An alternative electronic currency will likely exist in our lifetime (for those less than 50) and be ubiquitous. What it is, I don't know. Will it be tethered to the dollar, BTC, RNB, Euro... I don't know.

[CordMcNally]

An alternative electronic currency will likely exist in our lifetime (for those less than 50) and be ubiquitous. What it is, I don't know. Will it be tethered to the dollar, BTC, RNB, Euro... I don't know.

My best guess is that it'll be something government related.

[Max Power]

...An alternative electronic currency will likely exist in our lifetime (for those less than 50) and be ubiquitous. What it is, I don't know. Will it be tethered to the dollar, BTC, RNB, Euro... I don't know.

You would be a fool to bet on anyone except the guys with the guns (and the banks controlling those guys' commanders). BTC fanboys don't want to talk about that part.

...there simply doesn't need to be an "alternate" electronic currency. There never did. BitCoin tries to fill niches that don't exist. There is PayPal, Visa, AmEx, Venmo, Zelle, bank xfers, CashApp, etc etc etc. They deal every day in USD, AUD, pounds, Euros, CAD, pesos, yuan, and many more. Unless you are a criminal, you simply use those.

The "store of value" is a joke also for BTC; it cannot fill that niche by its very nature. It is not land or diamonds or gold... not even silver or pearls or a well built house or a cattle herd. How can something computer-made with unregulated and poorly understood supply and many unpredictable forks store value? It cannot.
Currency simply needs to be exchangeable, divisible, portable, etc... BTC could do that (so do a ton of other things already... pencils could be currency, or lumps of coal in World of Warcraft can be currency).
Money has to do all of that and be a store of value (keep its value over time). Again, gold (and silver) were, are, and will be that... BTC will go the way of thousands of failed human currencies now worth $0 unless they have novelty value - or gold or silver content in them. For those who want to speculate that BTC will have its run or might even survive our lifetime, enjoy rolling the dice on the greater fool theory... but the end will logically arrive. Again, there is a reason that Bitcoin is always pictured as gold, lol.

[abds]

You would be a fool to bet on anyone except the guys with the guns (and the banks controlling those guys' commanders). BTC fanboys don't want to talk about that part.

...there simply doesn't need to be an "alternate" electronic currency. There never did. BitCoin tries to fill niches that don't exist. There is PayPal, Visa, AmEx, Venmo, Zelle, bank xfers, CashApp, etc etc etc. They deal every day in USD, AUD, pounds, Euros, CAD, pesos, yuan, and many more. Unless you are a criminal, you simply use those.

The "store of value" is a joke also for BTC; it cannot fill that niche by its very nature. It is not land or diamonds or gold... not even silver or pearls or a well built house or a cattle herd. How can something computer-made with unregulated and poorly understood supply and many unpredictable forks store value? It cannot.
Currency simply needs to be exchangeable, divisible, portable, etc... BTC could do that (so do a ton of other things already... pencils could be currency, or lumps of coal in World of Warcraft can be currency).
Money has to do all of that and be a store of value (keep its value over time). Again, gold (and silver) were, are, and will be that... BTC will go the way of thousands of failed human currencies now worth $0 unless they have novelty value - or gold or silver content in them. For those who want to speculate that BTC will have its run or might even survive our lifetime, enjoy rolling the dice on the greater fool theory... but the end will logically arrive. Again, there is a reason that Bitcoin is always pictured as gold, lol.

What are the odds (measured in gold, of course) that Max Power has the same IP address as Crixus and Toe Cheeze?

[billy]

What are the odds (measured in gold, of course) that Max Power has the same IP address as Crixus and Toe Cheeze?

Maybe its been a while so I forget, but I would think Crixus would be advocating for bitcoin, not against it.

[Perry Ict]

I’m listening to the audiobook version of Michael Mauboussin’s “Think Twice”, it’s a great book, I wish I had read it earlier.

To answer your previous question from another thread that got closed, I’ve averaged down into a hole in a lot of things that turned out to be value traps at the time from oil, uranium, SP500, Reits, tech stocks, GBP, gold miners and probably others I can’t even remember now. It’s a wonder I’m still alive!

That is why I'm veering away from sector and country bets (and, tying it into this thread, I would include bitcoin as well, even though I'm not as skeptical as some) - I'm realizing there is too much idiosyncratic risk for me with trying to get that specific. Anyway, I'm glad you ended up fine despite some of those outcomes. I think it's common to make these attempts, and some end up luckier than others.

The S&P 500 stands out among your examples though. How did that end up being a "value trap"? Did you end up buying at a top and selling at a bottom? If so, I would classify that differently than a "value trap".

[NapoleanDynamite]

You would be a fool to bet on anyone except the guys with the guns (and the banks controlling those guys' commanders). BTC fanboys don't want to talk about that part.

...there simply doesn't need to be an "alternate" electronic currency. There never did. BitCoin tries to fill niches that don't exist. There is PayPal, Visa, AmEx, Venmo, Zelle, bank xfers, CashApp, etc etc etc. They deal every day in USD, AUD, pounds, Euros, CAD, pesos, yuan, and many more. Unless you are a criminal, you simply use those.

The "store of value" is a joke also for BTC; it cannot fill that niche by its very nature. It is not land or diamonds or gold... not even silver or pearls or a well built house or a cattle herd. How can something computer-made with unregulated and poorly understood supply and many unpredictable forks store value? It cannot.
Currency simply needs to be exchangeable, divisible, portable, etc... BTC could do that (so do a ton of other things already... pencils could be currency, or lumps of coal in World of Warcraft can be currency).
Money has to do all of that and be a store of value (keep its value over time). Again, gold (and silver) were, are, and will be that... BTC will go the way of thousands of failed human currencies now worth $0 unless they have novelty value - or gold or silver content in them. For those who want to speculate that BTC will have its run or might even survive our lifetime, enjoy rolling the dice on the greater fool theory... but the end will logically arrive. Again, there is a reason that Bitcoin is always pictured as gold, lol.

The arguments here are really ridiculous and shouldn't need to be discussed, but I will due to the sheer ignorance that they display in regards to just how far BTC has come. Most of these arguments were concerns in 2015-2017....but they have since been addressed many times over. I will briefly discuss them.

1. "guys with guns and banks controlling them" - Let's say this argument is for "banning Bitcoin" or outlawing it, although it is vague. Gold was outlawed in the US from 1933 to 1974. It is not out of the realm of possibility that the policy makers try to outlaw Bitcoin. But at this point it is so ingrained into the financial system, state laws, publicly traded companies, and government institutions that the chance of this is almost zero. Even if this were to happen, if it is legal in even one country, it will survive and thrive. Could all countries across the globe come together and outlaw it? Sure I guess, but name one time in the history of the world when every country came together to agree on something? I would suggest you start to think globally....not egocentric US only policies.

2. "Doesn't need an alternate currency" - You state this and then you list of companies that deal in said currencies. Paypal, Visa, Amex etc will all still exist. Bitcoin cannot and does not currently compete with any of them...yet. It theoretically could in the future, but I also think this is unlikely. Lightning network payments are happening, which is what a good metaphor for what you are suggesting...but this does not compete with any of the institutions you mention. Globally this is much more important that in the US where Cell phones are more common than credit cards in third world countries. The key with this argument is, that BTC doesn't have to compete with any of these companies to exist and thrive. It could take them all out which would be a huge value add, but time will tell on that one. Even if it doesn't, it will thrive.

3. "Store of value is a joke" - I obviously strongly disagree with this one, as do many large institutions at this point. Your argument that Gold and Silver offer a store of value is somewhat valid...they do offer a store of value currently and have in the past. Their portability is far worse than Bitcoin and there are arguments that BTC will take over Gold and Silver, but I won't go down that road. But for you to argue that money is currently a store of value "Money has to do all of that and be a store of value" is grossly ignoring what is happening in the world. The USD, Euro, Pound, Peso, Yuan and many more are currently inflating away any store of value at rates that are impossible to ignore. And there is not a logical argument out of the path we have gone down. Short of a global reset (something like Bretton Woods but on a larger scale that would include China/Russia), it may take a WWIII for global powers to decide the best path. This is unfortunately possible in my lifetime.

4. "Unregulated and poorly understood supply and many unpredictable forks" - You are clearly not up to date and the one who poorly understands it. BTC is already regulated on both a federal and state level. Forks can occur, and have occurred. But I have never once mentioned one of the thousand of other coins that have tried to replicate what Bitcoin is doing. There is a reason I haven't mentioned them. There is also a reason why they will continue to fail. (most no longer exist) There may be one or two other "winners" in the crypto space, but BTC is the one and only BTC. It won't be replicated at this point.

Good luck my friend. But in the best case scenario it is your close minded dogmatic opinions will prevent you from attaining significant improvements in your investment goals. In the worst case scenario, being this strongly opinioned will leave you poor when you had great opportunity to maintain wealth.

[billy]

"will leave you poor when you had opportunity to maintain wealth"
This will not happen to any of us here- If you consistently stock away 20% in a boglehead fashion, and dont buy a tesla a year, everyone here will eventually be wealthy enough. Can you miss out on an opportunity to make millions more? Certainly, but you also lose nothing by not risking anything. This can also apply to everyone who takes an employed position vs starting their own entity/group/practice. Risk/reward etc. Taking that line of thinking to the extreme, we all missed out on opportunities to "maintain wealth" in our lives. Yet we are not poor, and I doubt anyone here will be. But as WCI said- there is no called strikes in investing. Some here will risk on BTC, others wont. I've found you cant convince either side, and there's nothing wrong with that.

[NapoleanDynamite]

"will leave you poor when you had opportunity to maintain wealth"
This will not happen to any of us here- If you consistently stock away 20% in a boglehead fashion, and dont buy a tesla a year, everyone here will eventually be wealthy enough. Can you miss out on an opportunity to make millions more? Certainly, but you also lose nothing by not risking anything. This can also apply to everyone who takes an employed position vs starting their own entity/group/practice. Risk/reward etc. Taking that line of thinking to the extreme, we all missed out on opportunities to "maintain wealth" in our lives. Yet we are not poor, and I doubt anyone here will be. But as WCI said- there is no called strikes in investing. Some here will risk on BTC, others wont. I've found you cant convince either side, and there's nothing wrong with that.

I'm glad you honed in on this point that I made. I stated it for a reason.

Although I feel it is highly unlikely, it is possible that the dollar collapses in our life time. Stocks/bonds/everything would necessitate revaluation. In a situation like this, even the wealthy become poor (yes this includes you, me and everyone else who has accumulated wealth in the dollar). So I would suggest you may be incorrect stating that no one on here will be poor and that you lose nothing by "not risking anything". Just because you are currently wealthy, in one of the wealthiest countries in the world, with one of the biggest military's in the world, it does not rule out the possibility of currency collapse. It has happened many times over in the history of the world. It is likely to happen again. We just don't know when. Bitcoin is a more world wide currency and helps hedge against the American dependence on the dollar. I hope this helps explain my point (no matter how unlikely).

Also, I'm not trying to convince people one way or another. I'm only trying to provide people with realistic facts to make more educated decisions. On the topic of BTC, I think far too many people are making a lack of educated decision. They won't be when BTC hits a 1 Trillion, then 10 Trillion dollar market cap. The money will require everyone to educate themselves.

[G]

I'm glad you honed in on this point that I made. I stated it for a reason.

Although I feel it is highly unlikely, it is possible that the dollar collapses in our life time. Stocks/bonds/everything would necessitate revaluation. In a situation like this, even the wealthy become poor (yes this includes you, me and everyone else who has accumulated wealth in the dollar). So I would suggest you may be incorrect stating that no one on here will be poor and that you lose nothing by "not risking anything". Just because you are currently wealthy, in one of the wealthiest countries in the world, with one of the biggest military's in the world, it does not rule out the possibility of currency collapse. It has happened many times over in the history of the world. It is likely to happen again. We just don't know when. Bitcoin is a more world wide currency and helps hedge against the American dependence on the dollar. I hope this helps explain my point (no matter how unlikely).

Also, I'm not trying to convince people one way or another. I'm only trying to provide people with realistic facts to make more educated decisions. On the topic of BTC, I think far too many people are making a lack of educated decision. They won't be when BTC hits a 1 Trillion, then 10 Trillion dollar market cap. The money will require everyone to educate themselves.

I find great irony when someone discusses complete global collapse and then discusses bitcoin...Bitcoin (still) valued in dollars.

it is intriguing that you spend so much time here being so altruistic and educating us poor dimwitted plebeians.

If the dollar is suddenly worth nothing, I have a bunch of ammo and hard goods saved up. And a unique skill set. And I will not be accepting BTC written on a piece of paper as payment...because you ain't gonna be logging into coin base to be sending me an electronic transfer if we are in anarchy.

[G]

Sorry, that might have come across as too confrontational without the associated tone of voice. (Which is one of exasperated amusement.)