Bitcoin is still early

[NapoleanDynamite]

I'm well aware of the supposed $20k level of resistance but one of my biggest critiques of Bitcoin is that it just seems to do whatever with no rhyme or reason. Nobody can hardly ever explain price increases or decreases.

This price increase is easy to explain. Money printer go BRRRRRR.(Government decides on more stimulus) BTC rips higher every time it does.

[TheQuietOne]

I did a quick read of two of the articles you referred to in your previous thread and from my understanding, Bitcoin has value because of it’s scarcity and because of demand (from how I’ve seen it mentioned on the news, mostly due to speculative investment or ability to be used in anonymous ways - dark web? hacker ransom payments?). In 2140, there will be no new Bitcoins, and the value is supposed to be stabilized by the fees that people pay for transactions and the level of difficulty in running those transactions.

So my question is this: Bitcoin only works if people want to have it, and if most people are buying it as an investment, then what would prevent the price from crashing after 2140? Especially if there are new crypto currencies with similar properties as Bitcoin (anonymity, proof of work, etc), will there be “deflation” with new cryptos coming into favor? It seems to me that the natural impulse when being used as speculative investments, would be to start buying at the earliest conception and then selling at the end of mining. Once (if?) people catch on to that conclusion, the price may not reliably increase near the end of the timeline (less demand). Hence maybe the “buy now” marketing that seems to be occurring.

[EntrepreneurMD]

We've found our new EntrepreneurMD .

The thing I find most hilarious is that you think it is unwise if somebody doesn't have at least some stake in Bitcoin. Would I be wise if I bought $1 worth...$10 worth...$100 worth...$1,000 worth...etc.? I think it's unwise for somebody to invest in something they don't understand. I think it's unwise for somebody to deviate from their successful plan already in place. Again, nobody here needs Bitcoin. I think it's fine if you want to recommend it but to act like anyone here needs it is ridiculous.

Yes, undoubtedly OP as well will do laps around some people and their post's "likes". Reality is docs underperform teachers with no interest in (and fear of) a little effort and skills building outside of our medical comfort zone.

I find the psychology of fear that puts a ceiling on success very interesting. Jeff Bezos was doing quite well on Wall Street, he didn't say it would be unwise to deviate from this successful plan already in place. He got up and moved from New York to Seattle to start some e-commerce company from home...the rest is history.

No apologies from those of us with animal spirits. It's not about Bitcoin or active funds. It's about the land of opportunity, and taking on those opportunities head on for some upward mobility. I'm sure every developed country has index funds at this point, to keep it's masses comfortable. Yes, that's okay too but not why we're here. Many cookie cutter articles all over the internet on basic money management and investing is more than enough. No need for regurgitation. Alternatively, innovative and fresh threads are great regardless of which investments we choose or pass on. Bitcoin, is at a minimum very curious and the next few years will be telling, at which point you will argue past performance is no guarantee of future results but will forget that someone "told you so" years prior.

[chucki]

I did a quick read of two of the articles you referred to in your previous thread and from my understanding, Bitcoin has value because of it’s scarcity and because of demand (from how I’ve seen it mentioned on the news, mostly due to speculative investment or ability to be used in anonymous ways - dark web? hacker ransom payments?). In 2140, there will be no new Bitcoins, and the value is supposed to be stabilized by the fees that people pay for transactions and the level of difficulty in running those transactions.

So my question is this: Bitcoin only works if people want to have it, and if most people are buying it as an investment, then what would prevent the price from crashing after 2140? Especially if there are new crypto currencies with similar properties as Bitcoin (anonymity, proof of work, etc), will there be “deflation” with new cryptos coming into favor? It seems to me that the natural impulse when being used as speculative investments, would be to start buying at the earliest conception and then selling at the end of mining. Once (if?) people catch on to that conclusion, the price may not reliably increase near the end of the timeline (less demand). Hence maybe the “buy now” marketing that seems to be occurring.

Pretty much no other crypto is decentralized. That means they can essentially "turned off" by one or a group of people. The beauty of BTC is that is decentralized. That's why Ethereum, XRP, or the hypothetical digital dollar will not a hold a candle to it.

Bitcoin is one of the biggest ideas in the modern history, it's the evolution of money. It fits 2 key criteria of money -- a medium of exchange and a store of value. The dollar (and most fiat) is being devalued beyond belief as the Fed keeps printing it. It can't last forever and there will eventually be ramifications (I hope not for all our sake but sure doesn't look that way). At the very least, it's a deflationary hedge. Silicon valley execs, family offices, Wall Street, and institutional investors are accumulating it. Really big money (pensions, big funds) can't get in until there are better custodial solutions and liquidity (real ETFs, not Grayscale). That's when the real fun begins.

[TheQuietOne]

? Oh really? I just found that there are several decentralized options, including Ethereum...

https://www.investopedia.com/tech/most-important-cryptocurrencies-other-than-bitcoin/

Well, regardless I don’t think I will be buying any cryptocurrencies.

[jacoavlu]

? Oh really? I just found that there are several decentralized options, including Ethereum...

bitcoin maximalists would laugh to hear you say this


decentralized” is not strictly defined, it’s shades of gray

[xraygoggles]

Silicon valley execs, family offices, Wall Street, and institutional investors are accumulating it. Really big money (pensions, big funds) can't get in until there are better custodial solutions and liquidity (real ETFs, not Grayscale). That's when the real fun begins.

Yep, that's the big difference between this bubbly rise versus the last one in 2017. Lot more institutional and big money buying Bitcoin and Ethereum by the boatloads. Some do it as a hedge, some believe in its potential, some are speculating. No matter the reason, it's still a good sign for the future.

This could still be a short term rise before it corrects, but the stabilization level will be higher than the previous one, that's for sure. It's not going anywhere anytime soon.

[NapoleanDynamite]

I did a quick read of two of the articles you referred to in your previous thread and from my understanding, Bitcoin has value because of it’s scarcity and because of demand (from how I’ve seen it mentioned on the news, mostly due to speculative investment or ability to be used in anonymous ways - dark web? hacker ransom payments?). In 2140, there will be no new Bitcoins, and the value is supposed to be stabilized by the fees that people pay for transactions and the level of difficulty in running those transactions.

So my question is this: Bitcoin only works if people want to have it, and if most people are buying it as an investment, then what would prevent the price from crashing after 2140? Especially if there are new crypto currencies with similar properties as Bitcoin (anonymity, proof of work, etc), will there be “deflation” with new cryptos coming into favor? It seems to me that the natural impulse when being used as speculative investments, would be to start buying at the earliest conception and then selling at the end of mining. Once (if?) people catch on to that conclusion, the price may not reliably increase near the end of the timeline (less demand). Hence maybe the “buy now” marketing that seems to be occurring.

Good on you for actually spending the time reading. I would suggest reading more on it as there is so much good information (and a lot of bad information) out there.

I will try to answer your question, but to be honest, trying to predict what the world will look like 120 years from now is a fools errand. Imagine living in 1900 and trying to speculate that the world would experience 2 world wars, atomic bombs, the Great depression, cars (much less electric cars), the internet, cell phones, and trillions of dollars in government stimulus in the year 2020. I guarantee that no one would have gotten those predictions correct. One thing that I can guarantee you is that I will be dead long before that day comes. I will have to leave those fixes to my children, grandchildren, and great-grandchildren.

All that being said, assuming BTC succeeds 120 years from now, it will either be used as a financial peg (reserve currency) or as an actual currency with layers on top of it to facilitate all of the necessary transactions. I think both are possible. For reference the average life span of a reserve currency for the past 700 years is only about 100 years. But hey, who knows....maybe Elon will have us living on Mars by then?

[Nysoz]

I was watching an interview of a guy that put in $500M of his company’s money into Bitcoin or something. He said a bunch of stuff but one thing that stuck out in my mind was that he said it’ll go up in value because there’s a limited supply and everyone wants it. So simple supply and demand.

The thing that keeps me from putting money in Bitcoin is that I don’t want any for any reason besides possible speculation. So not everyone wants it or accepts it.

So that kinda rules out currency use for the most part. Store of value could make sense but it’s so volatile you can’t store anything in it and know it’ll be the same value, either up or down the next day or even the next hour.

[jacoavlu]

I was watching an interview of a guy that put in $500M of his company’s money into Bitcoin or something.

Store of value could make sense but it’s so volatile you can’t store anything in it and know it’ll be the same value, either up or down the next day or even the next hour.

that was Michael Saylor https://forum.whitecoatinvestor.com/...ategy-is-doing

the store of value argument isn’t about this afternoon or tomorrow. It’s about decades. And the problem right now is, there doesn’t seem to be a lot of great choices.

USD - lots of printing, expect inflation.
bonds - rates been driven to the floor
equities - decade into a bull. Propped up by stimulus funds
gold - who knows. Custody is not a minor issue
real estate - inflated? Illiquid, scale problems

[TheQuietOne]

Good on you for actually spending the time reading. I would suggest reading more on it as there is so much good information (and a lot of bad information) out there.

I will try to answer your question, but to be honest, trying to predict what the world will look like 120 years from now is a fools errand. Imagine living in 1900 and trying to speculate that the world would experience 2 world wars, atomic bombs, the Great depression, cars (much less electric cars), the internet, cell phones, and trillions of dollars in government stimulus in the year 2020. I guarantee that no one would have gotten those predictions correct. One thing that I can guarantee you is that I will be dead long before that day comes. I will have to leave those fixes to my children, grandchildren, and great-grandchildren.

All that being said, assuming BTC succeeds 120 years from now, it will either be used as a financial peg (reserve currency) or as an actual currency with layers on top of it to facilitate all of the necessary transactions. I think both are possible. For reference the average life span of a reserve currency for the past 700 years is only about 100 years. But hey, who knows....maybe Elon will have us living on Mars by then?

Good point, but the question remains of what keeps it from bottoming out? Prices are increasing partly because institutional investors are buying in (for now), but I don’t see why a new similar cryptocurrency or different fiscal climate could not drop demand. It has no other intrinsic value other then supply and demand, unlike equities. I know PayPal is allowing Bitcoin to be used for payment but honestly who uses Bitcoin other then for anonymity (like buying drugs, etc)? I don’t think it would be used in normal daily life. Maybe criminal activity has increased during COVID (half kidding).

Even if I have some Bitcoin as part of my retirement portfolio, the price has been so volatile I would not count it as a reliable investment. I am not the type to invest in single stocks either.

[Brains428]

Ric Edelman is a FA who at least sees it as an important part of a well diversified portfolio- even if it's only 1%.

Maybe it's time WCI has a crypto person on the podcast. Maybe someone with a macro background who can prove a use case (or disprove it). Or even back to back episodes on pros and cons. Either way, an asset class with an ever growing market cap should be addressed more formally than it was back in 2017 (I know he discussed it then).

The issue with finding someone to discuss BTC and crypto is finding someone objective about it. People seem to love it or hate it.

[chucki]

BTC is unique from other cryptos (so, why they are not much of a threat): network affect (massive adoption, in the cryptosphere) and decentralized (not controlled by a single entity, foundation, or government). It helps that the creator, psuedonym Satoshi Nakamoto, is unknown and quietly disappeared into the ether so there is no known person or entity in charge. Can there be a new crypto that disrupts BTC? Sure, but there could be something that comes along and disrupts the dollar or pretty much anything.

BTC was being used in normal like for peer to peer transactions in its early days but then the value of BTC (going up) and price of transactions no longer made it an ideal medium of exchange. I think for it to be used as an actual currency, the solutions are on layers built on top of BTC, such as liquid and lightning network. These transactions can be instant and nearly free but they are still under development and have limited adoption. Therefore, the current use case is akin to digital gold. BTC is indeed volatile but the trajectory is upward and it will continue to disrupt gold. More money will move into it as a deflationary hedge vs the dollar and fiat in general.

[NapoleanDynamite]

Good point, but the question remains of what keeps it from bottoming out? Prices are increasing partly because institutional investors are buying in (for now), but I don’t see why a new similar cryptocurrency or different fiscal climate could not drop demand. It has no other intrinsic value other then supply and demand, unlike equities. I know PayPal is allowing Bitcoin to be used for payment but honestly who uses Bitcoin other then for anonymity (like buying drugs, etc)? I don’t think it would be used in normal daily life. Maybe criminal activity has increased during COVID (half kidding).

Even if I have some Bitcoin as part of my retirement portfolio, the price has been so volatile I would not count it as a reliable investment. I am not the type to invest in single stocks either.

Bitcoin may or may not be used in daily exchanges in the future. It is currently being used for daily exchanges but only on a limited use basis (it is not the dark underworld that you are imagining). Exchange across borders is one important area as are transactions in other countries. The "buy my coffee" argument is not there yet for the US. But, there are two big innovations being developed (The lightning network and the liquid network) that would make transactions with BTC more likely going forward. I would estimate this will occur over the next 1-7 years if/when it in fact occurs.

As a metaphor, I honestly never used Amazon until about 2-3 years ago. I hated the idea of it. I thought it was stupid and something I would never use. I was wrong. Now, the vast majority of my purchases are from Amazon. I could envision BTC development going down this route.

As for picking stocks, that's not how I use my retirement money. I have a side account that I do a little trading for fun (but that is a tiny fraction of what I do and it does not include any of my retirement funds). BTC is now a part of my retirement asset allocation. It is actually quite easy to set it and forget it just like you would with your index fund investing. If you don't like looking at the volatility, just check on it once a quarter or once a year. I think in 5-10 years you will be very happy. I'm willing to bet that if you made it 1% of your AA today and did no rebalancing, it would be at least 10% of your AA in 10 years. Again, do what you like, and what allows you to sleep at night. But for me, not having BTC as a part of my portfolio at this point would keep me awake more than having it.

[CordMcNally]

But for me, not having BTC as a part of my portfolio at this point would keep me awake more than having it.

What about the other coins?