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MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

ir.microstrategy.com

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Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#141

Post by mac01021 »

mrfredward wrote: post #81
mac01021 wrote: post #34

Earlier 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 Fed just buys debt...the closest thing to giving away money they can do is nudge someone's interest rates lower or make a loan easier to get. Congress decides how the money is distributed when they're spending it.

Congress created the Fed and gave it what powers it has. They (assuming a consensus among legislators) could totally have given it a different mechanism for controlling the money supply. Even one that culminated in a check being mailed to every citizen.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#142

Post by beaner »

CryptoPunk wrote: post #131
martinko wrote: post #89

Earlier quoted context omitted.

Bitcoin's security does not need to keep going up indefinitely. It will reach an equilibrium where tx fees will be paying for the entire security of the network. As the block size is capped, there will be a market for fees. Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.

My point is that with a limit of 300,000 or so transactions a day, Bitcoin's average transaction fee would need to be extremely high to match even the current security subsidy, much less one communsurate with a global reserve currency. I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs. >Hard-forking to remove the block size limit would have profou…

> I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs.

Why not? At scale with current block sizes Bitcoin would probably be settling payments of institutional-level transfers, state money management, and 2nd-layer networks like Lightning. Individual transaction fees would be high but they would represent aggregated fees for millions of off-blockchain transactions.

The fees wouldn't likely be paid by everyday users at that point.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#143

Post by mac01021 »

betterunix2 wrote: post #136
sudosysgen wrote: post #130

Earlier quoted context omitted.

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.

The difference is that taxation is subject to political forces, and politicians may not be able to pursue an unpopular policy that stabilizes the value of money. The Fed is mostly immune to short-term political needs and often pursues unpopular actions to meet its objectives.

Is there a reason that congress couldn't bestow upon the Fed some powers of taxation, while still leaving it free of the political constraints that the legislature faces?

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#144

Post by CryptoPunk »

beaner wrote: post #142
CryptoPunk wrote: post #131

Earlier quoted context omitted.

My point is that with a limit of 300,000 or so transactions a day, Bitcoin's average transaction fee would need to be extremely high to match even the current security subsidy, much less one communsurate with a global reserve currency. I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs. >Hard-forking to remove the block size limit would have profou…

> I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs. Why not? At scale with current block sizes Bitcoin would probably be settling payments of institutional-level transfers, state money management, and 2nd-layer networks like Lightning. Individual transaction fees would be high but they would represent aggregated fees for millions of off-blockchai…

Because there is no market demand for it? Why would people pay thousands of dollars to transfer value? Value transfer will get less expensive with the proliferation of e-money, not more. Why would institutional players choose something so expensive?

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#145

Post by bhaak »

nextweek2 wrote: post #140
this_user wrote: post #114

Earlier quoted context omitted.

All of the previous Bitcoin bubbles were driven by by new, larger group of people discovering it, and driving prices higher. Hence, any new bubble would require such a new group of buyers to appear. The question is whether that group even exists. Because in 2017 Bitcoin, arguably, went as mainstream as it could go with full-on regular MSM coverage, and most people seem to have heard about it by now. So, who is there…

> who is there to buy Pension funds and other financial institutions. These were either locked out or didn't believe in bitcoin. If you were a Pension fund now you're probably keeping an eye on the space to help your returns.

That belief is summarized in the crypto scene as "the herd is coming".

Last bubble they didn't, this time, we will see.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#146

Post by beaner »

CryptoPunk wrote: post #144
beaner wrote: post #142

Earlier quoted context omitted.

> I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs. Why not? At scale with current block sizes Bitcoin would probably be settling payments of institutional-level transfers, state money management, and 2nd-layer networks like Lightning. Individual transaction fees would be high but they would represent aggregated fees for millions of off-blockchai…

Because there is no market demand for it? Why would people pay thousands of dollars to transfer value? Value transfer will get less expensive with the proliferation of e-money, not more. Why would institutional players choose something so expensive?

Because it won't be expensive.

Visa does something like $11 trillion in volume per year. Why does anybody use that if visa takes 1-2%?

1% of 11 trillion is 110 billion. With that amount of fee revenue you'd be able to secure the Bitcoin network 12,000 times over.

So Bitcoin's security is able to grow by 1,000x and still cut prices relative to current popular providers by 12x.

That's cheap, not expensive, and that will lead to demand over time.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#147

Post by verdverm »

nostrademons wrote: post #120
this_user wrote: post #114

Earlier quoted context omitted.

All of the previous Bitcoin bubbles were driven by by new, larger group of people discovering it, and driving prices higher. Hence, any new bubble would require such a new group of buyers to appear. The question is whether that group even exists. Because in 2017 Bitcoin, arguably, went as mainstream as it could go with full-on regular MSM coverage, and most people seem to have heard about it by now. So, who is there…

Do you use Bitcoin? No? Then you're part of the group of new buyers. Don't think you ever would? Opinions can change rapidly when you're struggling to buy food.The article's thesis isn't really that the utility of Bitcoin will increase, it's that the utility of the dollar (its primary competition) will decrease. If your dollars will be worth half tomorrow, it's a no-brainer to get rid of them ASAP and put your money…

Were you a Bitcoin user? Yes, then you won't be a buyer this time around. I will not be putting money in, but I will happily make the bags of others lighter. Of another hype bubble materializes, I will be extracting more of the free money Bitcoin Network printed.

In the states, using crypto is a taxable event. Until that is changed, they can only be stores of value, not currency, as I have no interest in recording every transaction with the IRS. I don't see a differentiation within cryptos coming from USG, so the crypto ecosystem can only be one or the other?

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#148

Post by mac01021 »

SpicyLemonZest wrote: post #62
baconandeggs wrote: post #51

Earlier quoted context omitted.

Hence why they shouldn't do it.

It seems unfortunate to give up a useful tool for managing the economy just because it can't be structured to provide everyone an equal amount of benefit. Should we end small business programs because not everyone's wealthy enough to own a small business? I'd see the problem if it worked how I've sometimes seen it described, where rich people and banks are just getting free gifts of cash, but that's not accurate.

I don't see why it's unfortunate if there's an equally good tool that is more egalitarian.

Congress could give the Fed the power to, rather than just buy bonds (or whatever it is they do) introduce money to the economy simply by giving everyone money.

I understand that it is not exactly true that the rich are getting free money for nothing. But the whole reason we're talking about this here is that someone pointed out that all the new money supply from the Fed is finding its way straight to people and corporations that don't have anything better to do with it than buy assets, the prices of which continue to grow as a result, even while the GDP rate is plummeting.

Lastly, I'm totally open to the idea that someone will come along and explain to me why my idea for how the Fed should give everyone money is just not workable. If that happens, I'll be happy to have learned something useful. But it's definitely not clear to me, a priori, why it wouldn't work if it wouldn't.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#149

Post by CryptoPunk »

gizmo686 wrote: post #137
martinko wrote: post #89

Earlier quoted context omitted.

Bitcoin's security does not need to keep going up indefinitely. It will reach an equilibrium where tx fees will be paying for the entire security of the network. As the block size is capped, there will be a market for fees. Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.

Assume a block size limit of 4MB. The minimum transaction size is 166 bytes. This gives us maximum 25266 transactions/block. The current block reward is 6.25 https://blockchair.com/tools/halving-countdown This is worth about $72,000 USD https://duckduckgo.com/?q=6.250+BTC+to+usd&t=canonical&ia=cu... This means that, to match current security without block rewards, transaction fees would need to rise by at least $2.84…

Where does 4 MB come from?

The average block size right now is 1.2 MB (the 0.2 MB because of SegWit). Assuming SegWit adoption increases to 100%, we get 1.6 MB.

The average fee on a transaction would need to rise $7.47 to match the post-halving's new, lower, security budget.

The average value of a transaction would need to double to make an average transaction fee of $14 (the current average fee of $6.50 + an increase of $7.50 to cover the loss of the security subsidy) economical.

But the doubling of value flows would make the current $security budget less adequate, so even less suitable for reserve currency usage.

And if the price increases, as Bitcoin investors hope it will, value flows would increase further, requiring an even larger security budget and average transaction fee.

At some point's further utilization and appreciation will be arrested by the diseconomies of scale caused by rising fees.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#150

Post by betterunix2 »

mac01021 wrote: post #143
betterunix2 wrote: post #136

Earlier quoted context omitted.

The difference is that taxation is subject to political forces, and politicians may not be able to pursue an unpopular policy that stabilizes the value of money. The Fed is mostly immune to short-term political needs and often pursues unpopular actions to meet its objectives.

Is there a reason that congress couldn't bestow upon the Fed some powers of taxation, while still leaving it free of the political constraints that the legislature faces?

I do not know what the law allows, but in principle a government could give such power to its central bank, and there is some precedent (the ancient Romans had a system of private tax collectors, who would basically pay the government for a kind of license to collect taxes). I am not sure there would be much of a point, since the Fed can always raise interest rates, which has the same effect on the supply of money and ultimately affects the general population in the same way (you are left with less money to save/invest/blow on parties). Taxation is somewhat more direct e.g. higher property taxes have to be paid immediately whereas a fixed rate mortgage will not suddenly become more expensive when interest rates rise, but in terms of stabilizing the value of money it does not make much of a difference one way or the other. The fact that taxes are more direct actually makes taxation the preferred tool of politicians, who typically resort to tax cuts when they are desperate for votes or propose taxes on the wealthy in order to rally support from the working class.
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