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Bitcoin is a disaster

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Re: Bitcoin is a disaster

#161

Post by keithwhor »

SamBam wrote: post #146
sunshinerag wrote: post #87

Earlier quoted context omitted.

Your armchair analysis is on the mark. in a fiat dominated world, any market distortions caused by monetary mismanagement (money printing through QE, asset inflation) is not visible as everything in the market is priced in the same underlying asset (USD globally). Since bitcoin is outside this system it is actually holding up a mirror to the increasing worthlessness of the USD and other mismanaged fiat currencies.

> as everything in the market is priced in the same underlying asset > the increasing worthlessness of the USD I think you must be using words different from what I take them to mean, which means you can draw radically different conclusions from how I read them. If everything in the economy is tied together, such that $10 is still an hour of work at a grocery store, and $10 still buys you a lunch or three gallons of…

To my understanding, inflation -- and the causes of such -- is something that can only really be assessed ex post facto.

What's being asked is, "is what we're seeing a warning sign of inflation-yet-to-come?" Rephrased, "are people bullish on technology stocks and Bitcoin because they're speculating that there's major fiat inflationary risk and these asset classes are most likely to hold value?"

Re: Bitcoin is a disaster

#162

Post by yourapostasy »

keithwhor wrote: post #24

Related: the current rise of Bitcoin prices has been peculiar to me, and seems to be a bit of a canary in an inflationary coal mine. We've injected trillions of dollars of fiat into the economy this year. It feels like the sky-high valuations of technology companies and Bitcoin are "shock absorbers" of sorts, or early signals of inflation-yet-to-come. If we assume the market is efficiently pricing these assets (like…

> After all, you can only charge what consumers can afford to pay.

In the US, it is more like "you can only charge what consumers can go into debt for". The self-correcting force of consumer inflation on price discovery has been time-delayed buffered and confusing price signals for a long time for select industries by acommodative consumer debt issuance. Without that effect upon price discovery, I suspect the number one reason bankruptcies occur to consumers to trade categories every few years as the inflation works its way through different key industries and their customers. Which is why US personal bankruptcy has been quite consistently caused by medical bills for decades [1].

When/If this inflation wave takes root in the consumer sector, it first has to overcome the deflationary secular bias that has plagued developed world economies for a few decades. I suspect this is because price discovery in wages has been quite robust, but in goods and services it is obfuscated by many means (consumer debt issuance is only one of many mechanisms), and the end effect is people are functionally broke.

If it breaks that deflationary bias, then it will break a great many households who cannot bear inflation while their wages stay functionally unresponsive to the same inflation. If that happens, then I expect the deflationary bias to turn into a depression.

[1] https://www.debt.org/bankruptcy/statistics/

Re: Bitcoin is a disaster

#163

Post by brokencode »

smabie wrote: post #118
brokencode wrote: post #82

Earlier quoted context omitted.

But a stock represents ownership of a real company that (hopefully) will make profits that can be distributed as a dividend or be used to grow the company and increase the value. A Bitcoin is totally speculative and has virtually no useful purpose in the real world yet. You can’t actually buy stuff with it from stores, due to its niche status, high fees, slow transactions, and wild price fluctuations. Looking at it t…

It doesn't matter how safe an investment is. Uncorrelated alternative assets (metals, crypto, art, etc), when added to your portfolio, lower the total volatility (risk) and boost the risk adjusted returns. You can take a really crappy asset with low returns and high volatility (like gold) and add it to your portfolio to boost your risk adjusted return. In short, from a quantitative perspective, it never makes sense t…

Sure, maybe put a few percent of your portfolio in it. But my point is that Bitcoin is highly speculative and risky compared to pretty much any other kind of investment. Even gold has industrial uses and isn’t simply a token of value like Bitcoin.

I will concede though that there is a huge market of derivatives which often seem pretty unusual and risky to an amateur investor such as myself, so maybe Bitcoin isn’t that different from some of those investments. I don’t know a lot about that market, other than that it played a large role in the Great Recession, which is a dubious distinction.

Re: Bitcoin is a disaster

#164

Post by chemmail »

hombre_fatal wrote: post #39
Barrin92 wrote: post #3

>The scarcity of block chain space has led people to re-invent every last feature of the banks they thought they were going to be escaping. This is a pretty funny point because every time I go on twitter and see people talk about crypto, what they're essentially having is a discussion about public policy, and often they seem to try to reinvent institutions that already exist without even knowing it. From market-maker…

I don't see the irony. The point is that Bitcoin has introduced an actual "digital cash" currency without institutional/governmental middlemen. That institutions can be built on top of that, and that some people want such institutions, doesn't change the novel utility of finally having a currency that functions like digital cash. It's like saying it's ironic that people use physical USD for anonymous p2p transactions…

That is a good way of thinking about it. "The Internet of Money" is a very good way of labeling it. The internet protocols itself and it's openess are very foundational like bitcoin. Everything we use today is built on top of that. BTC is really just the brand right now. Moving forward we will see if BTC is Yahoo/Myspace and who will be the Google/Amazon of this new sector.

Re: Bitcoin is a disaster

#165

Post by hombre_fatal »

exclusiv wrote: post #124
hombre_fatal wrote: post #104

Earlier quoted context omitted.

How do you send USD to someone digitally?

A lot of ways. And the banks reconcile the cash movement behind the scenes. As I understand it, in a simple example, if you send $1k to someone. And someone at their bank sends $1k to someone at your bank, there's nothing that the banks need to do other than record it.

That you brought up banking is precisely my point. Imagine if you needed a bank account to give someone $100 cash. Or to spend a few bucks at a street hotdog vendor.

Most people take it for granted that they need a bank to do anything, and they don't really consider how powerless they are over their own money. Like how it's illegal to carry too much cash (and it can simply be taken away). And how your bank can impose arbitrary restrictions against you like rejecting transactions and freezing your account. I've lost various bank accounts over the years as a permanent traveler. I'm banned from Paypal.

I want to be able to send $100 cash digitally with the operational minimalism of giving someone $100 cash in person. I want some control over my money even when I want to exchange it digitally.

Re: Bitcoin is a disaster

#166

Post by smabie »

oblio wrote: post #67
baby wrote: post #31

That’s nonsense. Bitcoin is as good a store of value as gold due to one unique feature: scarcity. Actually, it’s even less power consuming than the gold industry and is much more transparent. I wouldn’t really advise bitcoin for anything else, like day to day transactions, although I and many of my friends have used bitcoin to transact on dark markets and it works. The only argument I’ve heard about gold being better…

> Gold is good for nothing useful imo, but is used in jewlery and other because it has value (not the other way around, as in gold has value because people make jewelry with it). You do know that gold has super low reactivity and it's a very good conductor, right? :-)

The vast majority of mined gold in existence is not used for industrial purposes.

Re: Bitcoin is a disaster

#167

Post by [deleted] »

sunshinerag wrote: post #140
xapata wrote: post #36

Earlier quoted context omitted.

> No VAT on bitcoin transactions Sounds like a defect in the technology to me. A good currency should be able to support the full range of social policies (like VAT). One of the problems of the Euro is not being able to inflate different countries within the Eurozone at different rates. If Bitcoin were ever to become popular for regular transactions within many countries, it'd be a fiscal policy disaster. Pretty soon…

You are confused. There is nothing in Bitcoin that prevents VAT. It's just Germany's policy. Elsewhere they charge VAT on it like any other currency. I have paid VAT on all my bitcoin transactions like any other currency. I am not in Germany.

[deleted]

Re: Bitcoin is a disaster

#168

Post by tokai »

baby wrote: post #81
oblio wrote: post #67

Earlier quoted context omitted.

> Gold is good for nothing useful imo, but is used in jewlery and other because it has value (not the other way around, as in gold has value because people make jewelry with it). You do know that gold has super low reactivity and it's a very good conductor, right? :-)

How often is it used for that use case? Does gold have a high value due to this? No. I would even say that we might see more use industrially if people weren’t inflating its price by using it as a store of value.

37% of gold use in the US is for electronics.

https://geology.com/minerals/gold/uses-of-gold.shtml

Re: Bitcoin is a disaster

#169

Post by sunshinerag »

hombre_fatal wrote: post #39
Barrin92 wrote: post #3

>The scarcity of block chain space has led people to re-invent every last feature of the banks they thought they were going to be escaping. This is a pretty funny point because every time I go on twitter and see people talk about crypto, what they're essentially having is a discussion about public policy, and often they seem to try to reinvent institutions that already exist without even knowing it. From market-maker…

I don't see the irony. The point is that Bitcoin has introduced an actual "digital cash" currency without institutional/governmental middlemen. That institutions can be built on top of that, and that some people want such institutions, doesn't change the novel utility of finally having a currency that functions like digital cash. It's like saying it's ironic that people use physical USD for anonymous p2p transactions…

Amen

Re: Bitcoin is a disaster

#170

Post by smabie »

TheAnswerMan wrote: post #154
baby wrote: post #81

Earlier quoted context omitted.

How often is it used for that use case? Does gold have a high value due to this? No. I would even say that we might see more use industrially if people weren’t inflating its price by using it as a store of value.

> How often is it used for that use case? 100% of all cases. You just used gold to ask that question.

Most gold is not used for industrial purposes
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