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The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

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Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#361

Post by eli_gottlieb »

ryanmonroe wrote: post #289
eli_gottlieb wrote: post #281

Earlier quoted context omitted.

Jewelry looks pretty. Bitcoins don't.

Well, it only looks pretty to you if you're into that type of thing. I don't think it would be hard to find people who don't think gold jewelry looks good. My point is that the utility is entirely dependent on the subjective experience of the user.

There's still a difference between use-value (looks pretty, albeit subjectively, to you) and exchange-value (looks resalable, albeit in your estimation, to someone else). There's a difference between what you want to do with the thing, and what you can do with the thing yourself, without someone else with whom to transact.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#362

Post by xtracto »

xchaotic wrote: post #296

Its not $10B worth. If you tried to liquidate, convert into another currency or asset etc there wouldn't be enough buyers at $9500, $1 would be much more likely towards the end of selling...

I don't think it would go all the way down to $1. I made a simple analysis of BitStamp's order book (https://www.bitstamp.net/market/order_book/ ) considering all the bids and, in total, only in that market you have $22.5 millions available in bids going from $9275 to $7429 for a weighted average of $8462 in price. This for a portfolio of BTC that at the current market price ($9275) would be $24.5 millions. This means that the slippage will take ~9% of the price

It is safe to assume that CoinBase has a larger order book, so I think that the slippage could go down to 50% if you wanted to sell $10B worth of BTC, so it would be more like $5B. Sure, that is if you want to sell it in one go, but usually you make a stop order or a limit order to protect you.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#363

Post by mundo »

snikeris wrote: post #117
jonknee wrote: post #82

Earlier quoted context omitted.

> What makes you think deflation would be bad? Literally economics 101. Investment grinds to a halt and progress along with it.

Does investment really grind to a halt though? I'm thinking people would just demand a higher return on their investments before they parted with their cash. Recently, many countries had negative interest rates. So I suppose people were being incentivized to find "investments" that would return 0% on their money. Was that a good thing? Also, inflation means everyone needs to be investors or the money they worked hard…

> Does investment really grind to a halt though?

Well, it's discouraged, but yes, basically. Under inflation, you need to invest money just to stay even. The lower inflation is, the less urgent the need to invest. With deflation, you're somewhat incentivized not to lend. A fixed money supply guarantees deflation, so yes, this would significantly reduce lending and the economic growth that lending stimulates.

> Also, inflation means everyone needs to be investors or the money they worked hard for evaporates. Why should we force Joe Sixpack into being an investor for the good of the economy?

If Joe Sixpack lives paycheck-to-paycheck he can ignore inflation entirely, it doesn't affect him a whit. Once he gets some savings, if he doesn't like risk he can buy bonds or something and continue ignoring inflation. But since you brought it up and since this seems to be a point of confusion for a lot of people, yes, let's see how a fixed money supply would affect Joe Sixpack.

If the government stops printing money, we are guaranteed to get deflation any time the GDP grows, right? With money supply held constant, "The US currency deflated by 2% last year" is equivalent to saying "The US GDP grew by 2% last year." And what makes the GDP grow? Joe Sixpack and his friends, out there mining ore or building furniture or otherwise increasing the amount of value in the world.

2% deflation also means that anyone with savings sees the buying power of their savings increase by 2%. If Scrooge McDuck has $5M in his mattress, his inflation-adjusted net worth increased by $100,000. He can retire and spend the rest of his life living very comfortably on the equivalent of $90k/year, and despite him doing no work, despite him incurring no financial risk, somehow every year he'll get a little wealthier.

How is that possible? Who's paying for his life of luxury? Joe Sixpack. Deflation is quite literally a tax by capital on labor. As long as the GDP is increasing, arguing for deflation is tantamount to saying, "I think some of that GDP growth created by workers should go to anyone with money." AFAIK this is universally understood to be a Bad Thing (tm) by virtually everyone.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#364

Post by jonknee »

jpadkins wrote: post #358
nerfhammer wrote: post #332

Earlier quoted context omitted.

> Inflationary fiat or credit based currency is a relatively new invention (1972 in the US) The dollar has been fiat since the 1930s. The gold standard from 1933-1972 was essentially in name only.

https://en.wikipedia.org/wiki/Bretton_Woods_system 45-72 was bretton woods era which was still fixed price to gold. It was only after 1972 that the value was allowed to be free floating, not tied to an amount of gold https://en.wikipedia.org/wiki/Nixon_shock

Did you miss the "essentially in name only" part? It was fixed to gold, but they also fixed the price of gold by outlawing [1] people from owning it! When they wanted to deflate the USD they just raised the price of gold [2]. It was a crude fiat system.

[1] https://en.wikipedia.org/wiki/Executive_Order_6102

[2] https://en.wikipedia.org/wiki/Gold_Reserve_Act

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#365

Post by mr_spothawk »

emodendroket wrote: post #303
imgabe wrote: post #298

Earlier quoted context omitted.

You're conflating properties of a payment processor like Visa, with properties of a currency. What's the equivalent of a charge back if I pay in cash for services that aren't rendered? It's called a "lawsuit", and there's no reason you couldn't use it if you paid with Bitcoin. With Bitcoin, unlike cash, there is also a public record that you did in fact pay, so the defendant couldn't lie and say you never paid when t…

That's true, but Bitcoin has been marketed as a replacement for both traditional currency and traditional payment processors, and certainly encourages people to keep way larger amounts in "cash" than they'd otherwise be comfortable with.

s/marketed/embraced

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#366

Post by simias »

21 wrote: post #341
gamblor956 wrote: post #324

Earlier quoted context omitted.

What they are doing is, by definition, not hoarding their cash. TIPS are a form of investment usually classified as very-low risk (but correspondingly relatively low gains).

You are splitting hairs here. When people say that Apple is sitting on cash obviously they do not mean that they have 250 billion in one current bank account.

But that's a very important distinction don't you think? Actually even having money stagnant in a bank account does somewhat contribute to the economy because of fractional reserve banking. On the other hand having bitcoins buried in a bunker contributes absolutely nothing.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#367

Post by wpietri »

coryfklein wrote: post #348
wpietri wrote: post #306

Earlier quoted context omitted.

Yes, buying gold with the intention of selling it later is speculation. Buying anything with the intention of selling it later for a higher price is speculation. If you were a jewelry-maker, I suppose you could call buying gold an investment.

> Buying anything with the intention of selling it later for a higher price is speculation. I'm buying shares of an S&P 500 index now with the intention of selling them at a higher price in ~40-50 years. Am I a speculator or an investor?

Index funds receive dividends from the stocks, so you're investing.

This may be hidden from you if the index fund (or your broker) automatically reinvests. But either way, you own economically productive assets that a) create value for customers, and b) throw off a stream of cash. Even if the S&P 500 is at the exact same level in 50 years, you'll still gain significantly. That's obviously not true of commodities (e.g., gold, silver) or currencies.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#368

Post by Kiro »

graphitezepp wrote: post #279
lolsal wrote: post #128

Earlier quoted context omitted.

If you approach me on my farm and ask to trade BTC for pork or collard greens I will laugh in your face. Sorry.

Don't apologize the notion is deservedly laughable. BTC only has value in a technologically advanced society that you expect to continue. If you are concerned with societal collapse it is the absolute worst thing to expect to have value.

No need to bully me. I was just presenting an alternative scenario that I think is interesting.

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#369

Post by actsasbuffoon »

wpietri wrote: post #306
charlesdm wrote: post #193

Earlier quoted context omitted.

By that reasoning, investing in gold is also speculation. Because it only has minimal industrial uses and most of its value comes from the fact that people say it has value. And a piece of art is not a productive asset either. Yet, it can and will have value. I don't think there is anything inherently wrong with that. I'm happy to invest in things that I believe are likely to go up in value, whether those are compani…

Yes, buying gold with the intention of selling it later is speculation. Buying anything with the intention of selling it later for a higher price is speculation. If you were a jewelry-maker, I suppose you could call buying gold an investment.

Agreed. Even trading fiat currency through Forex is a form of speculation. The Wikipedia page for Forex even describes it as such: https://en.wikipedia.org/wiki/Foreign_exchange_market

Re: The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

#370

Post by actsasbuffoon »

zrobotics wrote: post #251
dragandj wrote: post #213

Earlier quoted context omitted.

> By that reasoning, investing in gold is also speculation. What else? However, gold has some utility as jewelry etc. Cryptocurrencies are (currently) pure speculation.

I would argue that there is a good argument to be made that gold is a speculative investment. Look at how similar the scammy "buy gold now" ads are to the crypto ads. There is also a large contingent of the gold market that is holding it not to make money, but as a store of value for after government collapses. The preppers that buy gold aren't that much different than the crypto-libertarians that fear currency colla…

It's also been used to hide assets from taxation. The IRS seems to being growing increasingly aware of this, so the utility is probably going to become negative soon.
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