Bitcoin surpasses $50K as major companies jump into crypto • Hacker News Board

Re: Bitcoin surpasses $50K as major companies jump into crypto

#811

Post by lupire » Fri, Feb 19, 2021, 2:19 AM UTC

tylerhou wrote: post #443

disruptalot wrote: post #322

Earlier quoted context omitted.

When Bitcoiners talk about "inflation" they don't mean inflation of prices. They mean loss of purchasing power. Demand-pull inflation in fact is exactly what is happening with Bitcoin and bitcoiners would agree. There's huge demand for bitcoin and an ever reduction of circulating supply. What that means is that it can maintain/increase purchasing power incredibly relative to other assets that have unconstrained and e…

Demand-pull inflation is not happening with Bitcoin. Again, inflation refers to the devaluation of currency. If the purchasing power of Bitcoin goes up, Bitcoin is deflating, not inflating. Maybe you are trying to say that the USD is inflating (w/ demand-pull inflation) because USD is becoming less valuable, relative to Bitcoin. But that theory is still problematic, since you can't measure inflation against just one…

That's half true, because Jeff Bezos can't buy himself a billion takeout dinners.

Consumer prices are flat, but the money printer is making investing assets expensive. That's fun for last year's investors but not next year's.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#812

Post by lupire » Fri, Feb 19, 2021, 2:35 AM UTC

TuringNYC wrote: post #339

ori_b wrote: post #311

Earlier quoted context omitted.

Over the last 100 years, you'd have done significantly better by putting your money into an index fund -- and had less volatility. As far as I can tell, gold is just a lousy place to keep your money. What kind of long term are you talking about?

I agree with you in theory. However, over the course of 100yrs you also need to worry about entire countries disappearing. If your index fund is denominated in the wrong currency, held by the wrong custodian, or has too many companies based in falling countries, you might be in trouble. Meanwhile, Gold has survived a thousand generations. In a hundred years, there can be wars, reparations, and lots of damage to equit…

When your country collapses, you tend to find practical matters that make gold a poor store of value, unless you dissolve your gold bars in acid when the war starts.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#813

Post by lupire » Fri, Feb 19, 2021, 2:37 AM UTC

im3w1l wrote: post #800

graeme wrote: post #551

Earlier quoted context omitted.

This seems to be flat out false. According to this 78% of gold globally is used in jewelry. Some other portion is used in electronics of industry. https://goldprice.com/project/facts-about-gold/ There’s no such reserve value for Bitcoin. You can’t look at it or hold it or do anything with it other than as a currency. I’ve seen widely varying stats estimating gold’s jewelry share but all of them are large.

Gold isn't used in jewelry because it's particularly suitable for jewelry. It isn't used because it's pretty, or shiny, or smooth against the skin. It's used because it's expensive. So it's fair to say that jewelry is very much tied to store of value and speculation.

Jewelry is incredibly expensive compared to the value of the gold in it. But only when you buy it, not when you sell it.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#814

Post by lupire » Fri, Feb 19, 2021, 2:44 AM UTC

bluecalm wrote: post #633

base698 wrote: post #622

Earlier quoted context omitted.

In the Weimar republic eggs went from $0.5 to $500 pretty quickly and by 8 months eggs were $1,500,000. Happens quicker than you think and that's a hell of a tail risk. Bitcoin has been pretty consistently up on any timeline over the last decade. I've been present every crash and my tolerance for keeping a small percentage of net worth in it increases each time. You don't have to keep 100% of your cash in bitcoin. Wi…

This happened because there wasn't enough eggs or food in general. If there is food shortage in the future people will pay all the bitcoins they have to get a loaf of bread or a few eggs.

Yes, inflation happens when there is more money than goods. What point are you making?

Re: Bitcoin surpasses $50K as major companies jump into crypto

#815

Post by efwfwef » Fri, Feb 19, 2021, 6:07 AM UTC

graeme wrote: post #604

efwfwef wrote: post #591

Earlier quoted context omitted.

That's a moot point, Gold actual usage has no relation with its usage as a store of value. It's used as a store of value because it's shiny and people associates it with "value". Think: why are diamonds so expensive?

Maybe I don’t follow you but if more than half of gold use is jewelry then it seems the use has a lot to do with it’s value. People trade gold on top of that but it’s linked to use. If jewelry demand dropped 98% it would surely affect the price of gold.

> half of gold use is jewelry

uh, no that's not true. I bet there's more bitcoin being used to buy drugs than gold being used in jewelry

Re: Bitcoin surpasses $50K as major companies jump into crypto

#816

Post by efwfwef » Fri, Feb 19, 2021, 6:08 AM UTC

dragontamer wrote: post #655

efwfwef wrote: post #590

Earlier quoted context omitted.

The same reason why when you use Venmo you don't think "wait, why use USD at all if it's all a database?" The truth is, the current financial system is just a large number of databases trying to sync with one another, and one of cryptocurrencies' goal is to decrease this amount of databases.

> and one of cryptocurrencies' goal is to decrease this amount of databases. And replace them with one of the biggest wastes of electricity? What's the point of "getting rid of databases", when you end up needing them for something as fundamental as an BTC/USD exchange anyway?

> biggest wastes of electricity

you're aware that you're talking about legacy cryptocurrencies?

Re: Bitcoin surpasses $50K as major companies jump into crypto

#817

Post by efwfwef » Fri, Feb 19, 2021, 6:08 AM UTC

Thorrez wrote: post #640

efwfwef wrote: post #581

Earlier quoted context omitted.

> So then it becomes a digital store of value, one that is only as valued as the market gives it, and typically markets eventually correct when there’s no underlying true value proposition (as we can see with $GME). You're not missing anything, you said it yourself it's a store of value. Maybe markets eventually correct, but in the last 10 years Bitcoin has only gone up, so if you had planned to use it to store value…

>in the last 10 years Bitcoin has only gone up It was $19k in Dec 2017 and $3k in Dec 2018.

if you haven't sold*

Re: Bitcoin surpasses $50K as major companies jump into crypto

#818

Post by evilos » Fri, Feb 19, 2021, 8:29 AM UTC

ahnick wrote: post #652

evilos wrote: post #637

Earlier quoted context omitted.

That is deflation and is intentionally avoided by central banks because you don't want people to hoard their money. Hoarded money sits there and does nothing while money that is in banks can be lent out, invested, and be useful.

It's only avoided b/c in traditional economies there is no way to subdivide units of a denomination. (e.g. There is no way to split a penny into thousandths) Cryptocurrencies are purely digital and do not have this limitation. The only limitations are self-imposed by the algorithms themselves. If Bitcoins were the dominate and only currency, people would continue to buy food, clothing, luxury goods etc. b/c they need…

The pool of valuable stuff and services grows over time, in general. There is a fixed amount of bitcoin to represent the value of all valuable things. Therefore in a world with only bitcoin, a bitcoin grows in value over time and is more like an investment than currency. This is like if interest rates were always stupidly high, because why lend out your precious automatically appreciating asset when it makes you money just by sitting there? If people struggle to get credit (by borrowing) it becomes super hard to buy cars, houses, educations, etc. Imagine paying a mortgage but with credit card rates. It would be very bad.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#819

Post by evilos » Fri, Feb 19, 2021, 9:12 AM UTC

unstatusthequo wrote: post #464

incrudible wrote: post #300

Earlier quoted context omitted.

Why would you hedge against something like inflation, which is relatively constant over a year, by putting your money into a highly speculative risk asset with absolutely insane volatility over that same timeframe? Like many arguments for Bitcoin, this one just doesn't make sense.

Because our government just printed a LOT of money. Look into what money supply does to inflation. More supply of money means things cost more. Interest rates go down, and it’s better to not have cash but assets. I just loaded up on gold, platinum, silver, art, crypto, and real estate. Those will all fare better than cash or savings as hyperinflation grips the country.

FYI they do not print money. The US fed gives banks money in exchange for collateral (US govt debt). The banks cannot spend this money, it has to sit there doing nothing. The banks do make a small amount of money from the assets they swapped for the money. Eventually the swap is reversed, and if the bank does not return the money then the fed keeps the collateral.

The M2 has increased because interest rates are down (on purpose) and more money is being borrowed.

Re: Bitcoin surpasses $50K as major companies jump into crypto

#820

Post by ahnick » Fri, Feb 19, 2021, 8:05 PM UTC

evilos wrote: post #818

ahnick wrote: post #652

Earlier quoted context omitted.

It's only avoided b/c in traditional economies there is no way to subdivide units of a denomination. (e.g. There is no way to split a penny into thousandths) Cryptocurrencies are purely digital and do not have this limitation. The only limitations are self-imposed by the algorithms themselves. If Bitcoins were the dominate and only currency, people would continue to buy food, clothing, luxury goods etc. b/c they need…

The pool of valuable stuff and services grows over time, in general. There is a fixed amount of bitcoin to represent the value of all valuable things. Therefore in a world with only bitcoin, a bitcoin grows in value over time and is more like an investment than currency. This is like if interest rates were always stupidly high, because why lend out your precious automatically appreciating asset when it makes you mone…

For the same reason that people don't just leave all their money tied up in ETFs or indexed mutual funds. If you really want or really need something, then you are willing to give up on the opportunity cost of your asset appreciating.

In a pure BTC environment, the borrower is employed and being paid a salary in BTC. Loans would work just like in an inflationary environment, except now the overall deflation rate of BTC would be taken into account during loan origination.

Bitcoin is not a good asset to do loans in right now as it has high volatility, but as ownership of Bitcoin becomes more and more dispersed, then the volatility will reduce. Once the volatility of the asset is stabilized, then the depreciation rate could be factored into loans.

https://bitcoin.stackexchange.com/questions/1899/if-the-econ...