Corporate treasury speculating on currency. What could possibly go wrong?
MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
121–130 of 176 posts
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#122Corporate treasury speculating on currency. What could possibly go wrong?
...elaborating, a corporate treasurer might want to hold some Euros on balance sheet if they expect to have future liabilities or expenses denominated in Euros. That is a hedge.
On the other hand, a treasurer that holds Euros because they have reasons to think the Euro will appreciate in value in the future is simply speculating. And using the company's balance sheet to do so.
This is looking like a bet. A well-reasoned bet, but a bet nonetheless.
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#123Earlier quoted context omitted.
Don't look at Bitcoin. That hasn't changed much and not much interesting stuff (besides some drama) goes on there. Look at the Ethereum space. That's where most of the action is these days. DeFi (Decentralized Finance) is the current hype. The ETH2 phase 0 is projected to go live later this year (this time for real :-). 60% of Tether is an ERC20 token now. etc. Oh, and if you are interested in drama and have missed i…
What is ETH2 and why should I care about it?
Ethereum + proof of stake + sharding. Right now every node on the Ethereum network validates every transaction using a similar proof of work system as Bitcoin. This creates a transaction bottleneck; I believe Bitcoin can do something like 7 TPS, Ethereum about 11, which is woefully inadequate for a global financial system (for comparison, I believe Visa does something like 20,000).
Proof-of-stake replaces this massive electricity waste with game theory. Every validator must put up a deposit (in ETH) to participate. If it cheats, it loses that deposit. The damage it can do to the network is limited to less than the deposit. Therefore, it's never profitable to cheat - and so they won't, or if they do, they will go bankrupt, remove themselves from the network, and self-limit the problem. And transaction validation can now be split among thousands of nodes (instead of having those thousands of nodes all validate the same PoW), which means the network can scale to tens or hundreds of thousands of transactions per second.
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#124Earlier quoted context omitted.
Some assets are indivisible, so increasing value makes it unaffordable. You can't buy a fraction of a house. For things like stocks, if the increased value is driven by inflation, you get less for your money. So it takes more money to store the same amount of value there.
Actually you can buy a fraction of a house: https://en.wikipedia.org/wiki/REIT
Can't really live in a REIT though.
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#125Earlier quoted context omitted.
The counterargument to this is that IF people are willing to pay for something, they must care about it. For both Bitcoin and Ethereum, the amount of money people are willing to pay in fees to propagate on the network are extremely high at the moment... so in theory at least, somebody thinks these networks are "worth" using, or they wouldn't spend this money.
>For both Bitcoin and Ethereum, the amount of money people are willing to pay in fees to propagate on the network are extremely high at the moment Just to add here, the transaction fees you have to pay are highly variable, see chart fee chart for the last 30 days[1]. As of this posting the market clearing rate for a typical transaction is about 0.000325 BTC[2], or around $3.73. However, a few hours ago it was as low…
Ethereum is the one that is generating more fees right now. 3.6M just in fees yesterday
https://coinmetrics.io/charts/#assets=btc,eth_left=FeeTotUSD...
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#126How is Bitcoin not just a proxy for USD?
USD is the only currency with which a person can pay its US taxes. Can't do that with Bitcoin.
One US dollar can not fluctuate in value relative to itself. The "exchange rate" between USD and BitCoin fluctuates continuously.
USD is legal tender. You can buy a cup of coffee anywhere with USD. Not so with BitCoin.
USD does not have a bid/offer spread for transactions. BitCoin trades as two sided market.
USD can be deposited at bank, be protected by FDIC deposit insurance, and can earn an agreed rate of interest. Not so with BitCoin.
...stopping, though this could become a long list
BitCoin is an asset that can be bought or sold in exchange for USD. So is gold (as already noted), oil, company stock, lawn chairs, tracts of land, etc. A dollar-denominated asset is not the same as its market value in dollars.
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#127Earlier quoted context omitted.
Some assets are indivisible, so increasing value makes it unaffordable. You can't buy a fraction of a house. For things like stocks, if the increased value is driven by inflation, you get less for your money. So it takes more money to store the same amount of value there.
Actually you can buy a fraction of a house: https://en.wikipedia.org/wiki/REIT
You can even buy a fraction of a house on ethereum! https://realt.co/
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#128Earlier quoted context omitted.
False, you do not have to trust anyone. You decide what code you run, not developers. As far as DNS goes, you should study the bitcoin consensus protocol in more detail.
https://bitcoin.stackexchange.com/questions/2027/how-does-th... Do you trust whoever happens to own xf2.org more than you trust a central bank? Do you trust the domain name registrar more than you trust a central bank? Why? You decide what code you run, not developers well, sure you can run whatever code you like on your machine...the Bitcoin devs get to decide whether your software counts as a Bitcoin client or not.…
You should read more about how the Bitcoin consensus protocol works.
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#129Good luck to them. They'll need it.
Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset
#130Earlier quoted context omitted.
I never understood how anyone can find it remotely fair for the Fed to introduce new money into the economy by any means other than equal division between all citizens.
The flip side is somewhat problematic: if the Fed needed to remove money from the economy (e.g. because inflation exceeded the target rate), they would have to take money away from everyone equally. It is easy to forget that the Fed's mission is to stabilize the value of money, not to conform to some concept of fairness. I would also point out that instability in the value of money disproportionately impacts the poor…
Thing is, we already have a mechanism for removing money from the economy that isn't controlled by the Fed - taxation. If there's too much money, you can always increase taxes.