Bitcoin is still early

[jacoavlu]

Which means exactly a cash equivalent in the corporate world. And in personal finance. You are misleading in calling it a place to keep value other than $USD.
Actually, you imply it is "better than cash" because of stretching for yield. I completely disagree with your definition. From a risk exposure, probably higher than equating high yield or duress bond funds. It is a very liquid high risk investment. Nothing more or less. Please cut me a break. It is an alternative investment, like gold, diamonds or art. Some more liquid than others. It is not an alternative to cash, it is an alternative investment. Big difference.

By the way, you are an extremely intelligent person. Calling it an alternative to cash seems to be a deflection of the market risk in BTC.

Tim I didn't call it an alternative to cash nor did I state nor imply that it had a cash like risk equivalent.

I simply stated that these corps allocating to bitcoin, those are funds which they otherwise held in cash (presumably in the form of short treasuries). No one is stating that they're diverting funds otherwise from R&D, or investment in marketable securities or other instruments. Nor are they allocating to bitcoin in lieu of dividends they otherwise would have paid. What part of this do you disagree with?

In my mind as a measly little retail investor, the only reasonable investment in BTC is as a long term buy and hold investment, alongside someone's allocation to equities.

"alternative investment" we can agree 100%

[Antares]

This is my first post on BTC. I have been subjected to a lot of pro btc argumentation and blockchain education by a close friend. At this point 0.5% of my portfolio is in btc, expecting to go up to 2%.
I would love to regard it as an alternative store of wealth which is headed toward becoming a legitimate reserve currency. I can’t get there yet, but I can’t dismiss its potential to become that. I just don’t think there’s enough information currently to know how to think about it, and there are competing risks and upsides making it a volatile speculative choice at this point. But I wouldn’t argue with someone that this may be a risk worth taking like any other speculation, ie do it with a small amount of money, money you can afford to lose. As I am doing. It’s buy and hold for me.
For me the pros are increasing mainstream adoption, instability in the politics, banking sectors and currencies in many countries not in the more developed world, digital/global, and safety due to blockchain. Uncertainties/potential problems include lack of deposit insurance in the vein of fdic insurance (although maybe countered by inherently greater safety of the technology), volatility, unpredictability, possible future collective governmental action to limit, possible future creation of alternative mainstream digital currency, and question of future encryption problems arising from quantum computing. And I can’t completely rule out Ponzi scheme, but my intuition is that it is not. But when you have to use your intuition to figure out how to regard a financial instrument, I think you are still in the realm of speculation. I suspect over time it will become less volatile but we shall see.

[Tim]

Tim I didn't call it an alternative to cash nor did I state nor imply that it had a cash like risk equivalent.

I simply stated that these corps allocating to bitcoin, those are funds which they otherwise held in cash (presumably in the form of short treasuries). No one is stating that they're diverting funds otherwise from R&D, or investment in marketable securities or other instruments. Nor are they allocating to bitcoin in lieu of dividends they otherwise would have paid. What part of this do you disagree with?

In my mind as a measly little retail investor, the only reasonable investment in BTC is as a long term buy and hold investment, alongside someone's allocation to equities.

"alternative investment" we can agree 100%

"You are misleading in calling "it a place to keep value other than $USD".
"those are funds which they otherwise held in cash (presumably in the form of short treasuries)." Allocating capital out of cash is the same as a dividend or buying a new plant or R&D. It is no longer cash available for use by the company. Maybe it is successful and produces returns for shareholders. The problem I have with this from a shareholder perspective is that unless it is a BTC line of business, it is not in the business plan. Prior disclosure of the intended use of the corporate assets would be fine. Dabbling in alternative investments without notice is a corporate governance issue. If the company cannot use the cash in the business, it should be returned to shareholders. Just like acquisitions are approved by shareholders. BTC itself is probably not the issue. Appropriate use of funds is the issue.

[Panscan]

They could sell the btc in 1 second and get the cash to be used. I hardly think it’s similar to R&D or a factory which takes years upon years for returns or even liquidity of the involved funds

[jacoavlu]

Prior disclosure of the intended use of the corporate assets would be fine. Dabbling in alternative investments without notice is a corporate governance issue. If the company cannot use the cash in the business, it should be returned to shareholders. Just like acquisitions are approved by shareholders. BTC itself is probably not the issue. Appropriate use of funds is the issue.

prior disclosure to whom? These are not rogue CEOs acting unilaterally. Board approval required. CEO is employed in part to be capital allocator.

Warren doesn't ask for shareholder approval to make an investment whether in marketable securities or outright acquisition. Disclosure defeats the purpose. Warren has done pretty well over the years keeping the cash and allocating as he saw fit. Lately, not so much. Saylor has done a lot better in that regard recently. In either case, shareholders can vote with their own dollars.

Meanwhile, $1.9T stimulus passed by the house. I haven't noticed, how are treasury prices doing?

[Lordosis]

Do you realistically think bitcoin would go down to $10? The trajectory of bitcoin and the cryptocurrency space has been upwards for 10 years, obviously with heavy volatility.

Thinking it could go to $10 is essentially saying that cryptocurrencies would be completely invalidated after 10 years of growth in the space (including huge institutional committments and highly valued companies like Coinbase). Or you could be arguing that a competing cryptocurrency will completely overtake bitcoin causing catastrophic collapse.

How many companies had an upward trajectory for more then 10 years and have since crashed? Probably more then a few countries as well.

[Brains428]

The inherent stability is what will keep BTC at some value- like gold. I guess it could get down to $10, but I don't think it's likely unless there is a better proven blockchain protocol that gets widespread adoption.

[Tim]

They could sell the btc in 1 second and get the cash to be used. I hardly think it’s similar to R&D or a factory which takes years upon years for returns or even liquidity of the involved funds

Speed is not the issue. You are addressing liquidity. This would be the same as keeping your efund in BTC. Is that your recommendation? I don't think so.
With any asset, the risk should be considered before the return. Cash by definition requires preservation as the number one priority. Treasury function is an absolute value proposition.

Selling $5 billion of stock and investing $1.5 billion in BTC is speculation. I doubt anyone buying stock knew that 30% of the funds were for an alternative asset investment.Why was this allowed, because Elon Musk controls the BOD. Another "leading edge" marketing idea. Pretty simple.

Example: Currency hedging is a standard business practice. The policy should be to keep the currency exposure at zero. Not to speculate on the market movement.
Investing for gains is not the treasury function. Yes you can have a group that has a speculative goal. BRK has two speculative portfolio managers. Why? Because Warren saw opportunity to hire two hedge fund managers to work and make some money. Based upon Charlie, I doubt you will see $1.5B going into BTC.

[Panscan]

They probably wouldn’t call it investing for gains, they’d call it ensuring value. If you have inflation that is taking place, it’s essentially dumb to hold cash. It’s a hedge on value basically.

[Panscan]

Yes I am not surprised a 97 yr old doesn’t get Bitcoin. They also didn’t get Amazon or Google.

[jacoavlu]

Speed is not the issue. You are addressing liquidity. This would be the same as keeping your efund in BTC. Is that your recommendation? I don't think so.
With any asset, the risk should be considered before the return. Cash by definition requires preservation as the number one priority. Treasury function is an absolute value proposition.

Selling $5 billion of stock and investing $1.5 billion in BTC is speculation. I doubt anyone buying stock knew that 30% of the funds were for an alternative asset investment.Why was this allowed, because Elon Musk controls the BOD. Another "leading edge" marketing idea. Pretty simple.

Example: Currency hedging is a standard business practice. The policy should be to keep the currency exposure at zero. Not to speculate on the market movement.
Investing for gains is not the treasury function. Yes you can have a group that has a speculative goal. BRK has two speculative portfolio managers. Why? Because Warren saw opportunity to hire two hedge fund managers to work and make some money. Based upon Charlie, I doubt you will see $1.5B going into BTC.

so you don’t like corps buying BTC as a treasury asset. Got it.

we should steer the discussion back to bitcoin the asset.

[Chessknt]

I found the analogy to digital gold disingenuous--Bitcoin is not a store of value like cash but is a speculative asset as evidenced by it's significant price fluctuations. You wouldn't want to put a savings account for a house down payment in bitcoin because it's price moves around so much you might not be able to close 1 week but be able to buy the entire house in cash a month later.

So if it is a speculative asset why is there so much religious zeal to get on board while it's 'early'? It isn't early anymore, it's late. There will be no governmental adoption of bitcoin from a major economy and I think if smaller economies try they will be crushed by a coordinated effort by the trading partners they actually rely on to keep their economies functional. It's fun to pretend that we can all live in anonymous global harmony with a single universal currency but in real life we are tribal and the tribes with the power are not going to just let it get taken away without a huge fight.

Beyond that my major issues with it are:
1-widespread criminal use
2-enriching the Chinese for using dirty energy who are a major threat to world and usa stability
3-no protection for fraud/theft (see #1)
4-enormous energy sinkhole for it's currently limited scale

Clearly lots of people look smart and are making piles of money (if they are actually locking in gains). I think that trend will not be able to sustain but when the gravy train ends is anyone's guess.

[jacoavlu]

I found the analogy to digital gold disingenuous--Bitcoin is not a store of value like cash but is a speculative asset as evidenced by it's significant price fluctuations. You wouldn't want to put a savings account for a house down payment in bitcoin because it's price moves around so much you might not be able to close 1 week but be able to buy the entire house in cash a month later.

the problem is there isn't a great analogy for bitcoin at all. If you have a better analogy I'm all ears.

The analogy to gold works in some ways because bitcoin like gold is a bearer asset, in that if you hold it, it's yours. Unlike a bond, or stock in a company. Bitcoin also shares with gold the monetary properties of being divisible, durable, portable, recognizable, and scarce.

The store of value argument can only be proven correctly long term. I think US equities will be a good store of value as well. Real estate too.

So if it is a speculative asset why is there so much religious zeal to get on board while it's 'early'? It isn't early anymore, it's late. There will be no governmental adoption of bitcoin from a major economy and I think if smaller economies try they will be crushed by a coordinated effort by the trading partners they actually rely on to keep their economies functional. It's fun to pretend that we can all live in anonymous global harmony with a single universal currency but in real life we are tribal and the tribes with the power are not going to just let it get taken away without a huge fight.

I don't know the future. I happen to think you are wrong. That doesn't mean I believe bitcoin is going to be the currency of the world. One can be long term bullish on bitcoin without having to believe that it takes over the world.

Beyond that my major issues with it are:
1-widespread criminal use
2-enriching the Chinese for using dirty energy who are a major threat to world and usa stability
3-no protection for fraud/theft (see #1)
4-enormous energy sinkhole for it's currently limited scale

Clearly lots of people look smart and are making piles of money (if they are actually locking in gains). I think that trend will not be able to sustain but when the gravy train ends is anyone's guess.

You can focus on negative externalities but I would argue that it disingenuous, or intellectually dishonest. There are a lot of things in our lives with negative externalities - the foods we feed our families, the cars we drive and the fuels they consume, the phones in our pockets, the pain medicines we prescribe, heck maybe even those fiat currencies that we use and the military we maintain and sometimes deploy to defend it.

Bitcoin is only code. If you want to argue honestly, I think you need to go back to first principles and examine why bitcoin is "succeeding". The market seems to think that it's a net good, just like our phones and opiates and cars and military. Why?

[Panscan]

People love the crime angle. It's hilarious.

[CordMcNally]

People love the crime angle. It's hilarious.

No matter how hard BTC tries, it'll never supplant the US dollar as being a criminal's first choice of currency.