Bitcoin future

Discussion in 'Business & Economics' started by mathman, Apr 30, 2019.

  1. mathman Valued Senior Member

    Article in NYTimes (4/30/2019) speculates on the future of bitcoins and other cryptocurrencies. The article indicates most bitcoin transactions are by speculators, while most others involve illegal transactions (drugs, etc.).
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  3. RainbowSingularity Valued Senior Member

    gold(bitcoin) speculators [1869 (Nast) Harper's Weekly ]

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    unregulated speculative markets that deliver many times their investment are enjoyed as a law-less no regulation diet.

    "drugs" are a point of free will to choose to use or to choose to not use.
    however... many countrys have laws that make it illegal for tax paying citizens to enjoy recreational drugs.

    is an inserted morality to define that all markets must be regulated with morals.

    you need to define what type of morals you think all markets should be regulated with to start the debate around the economic principals of what is deemed regulated and unregulated markets.
    lets say you are a religous or human rights refugee from some country and with the amazing work, effort and help and good management from a western country you have managed to get a good job and are making an ok wage.
    your family live in that country you fleed from.
    your nephew or niece has become very sick with something like diabetes but the country wont operate or treat them.
    you have enough money that you can afford to send your family the money for the operation(treatment so they wont go blind and start to get fingers & toes chopped off).
    the great thing is global cell phone technology because you(and your children) in your new country have been face-timing with your niece/nephew for the last 7 years and your children have grown to love them and send them birthday cards and chat with them weekly on facebook.
    the transaction would be illegal because the country is on the banned list.

    how are your morals doing ?
    Last edited: Apr 30, 2019
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  5. mathman Valued Senior Member

    The use of bitcoins for illegal drug transactions is primarily about manufacturers and distributors, not users. They use bitcoins since large bank transactions ($10000 or more) are reported to the u.s. government. The description about drug users is not relevant to this post.
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  7. mathman Valued Senior Member

    60 minutes (May 5) described another use for bitcoins. Ransomware, where a hacker ties up files of a given entity, such as a small city or a hospital, and demands payment to unlock the files. Bitcoins seem to be a method of payment, making the transaction untraceable.
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  8. RainbowSingularity Valued Senior Member

    ... reader note intent of emotive direction to non person...
    i am aware you are probably quoting words from the TV and not really thinking about the real implications
    such is the majority of the citizenry

    while i agree that such nasty behaviour is nasty
    the supplanting of public socialist infrastructure as being the moral bastion at risk when pan-handling the subject to a hard line capitalist user pays market when the reality is more about private people being targeted...
    it does leave one wondering what you may be insinuating.
    private rich people are those who are most at risk, and will be wanting all the working class poor to pay for the rich to get expensive government laws to protect them while pretending its all about protecting socialist working class tax funded critical infrastructure.
    morally i think thats a little out there.

    because(explaining to the average reader) people doing all that ransomware stuff don't want government military's chasing them.
    they want money
    they get the money when they ransom private rich peoples home computers
    not when they target government agencies like hospitals and "small citys"

    so pretending your protecting hospitals when your really protecting rich peoples home computers but using the poor working class tax money and taking it away from the actual hospitals instead and giving it to rich peoples lazy home computer security instead of poor children medical bills...
    is very morally dishonest.

    taking working class medical funds away from hospitals to pay for government internet security for rich private home computers...

    i dont agree with such moral ideology
    i would prefer they leave the medical funding alone and not take money away from it while pretending to care and using that as an excuse.

    go ahead, ask for more money to directly fund a new government agency
    but dont pretend to care while trying to take the money away from the poorest working class critical expenses.
    Last edited: May 7, 2019
  9. RainbowSingularity Valued Senior Member

    white collar terrorism
  10. mathman Valued Senior Member

    Article in NYTimes May23, 2019. Recent rise in bitcoin price is largely due to its use for ransomware. Many U.S. cities have been attacked. Sources of attacks have been traced to Eastern Europe and Iran.
  11. exchemist Valued Senior Member

    Warren Buffet's verdict on Bitcoin:"Rat poison, squared".
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  12. Seattle Valued Senior Member

    He (and many others) isn't very well informed in this matter. He also refused to own tech stocks for years. Traditional sources of authority don't work well for info regarding crypto.
  13. exchemist Valued Senior Member

    A lot of people have got burnt with IT stocks, investing in "businesses" with no clear route to profitability. Buffett has always been conservative, betting on solid businesses with a proper bottom line. It seems to have served him well.

    And crypto is something to avoid like the plague, in my view. I remember the dotcom bubble.
  14. Seattle Valued Senior Member

    Your point is don't invest in Microsoft, Apple, Google, etc?
    Crypto has nothing to do with the dotcom bubble plus the above companies came out of that bubble.
    Bitcoin was been around though for 10 years, hardly a bubble and not a stock so I'm not sure of the connection. Bitcoin has a market capital of around one trillion dollars. I'm guessing Buffet wasn't real hot of the internet either.

    I remember when executives bragged about not knowing how to use a computer, not having email and implying that was for secretaries.
  15. exchemist Valued Senior Member

    .......And J S Bach thought the pianoforte would never catch on, I know, I know.

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    But, re bitcoin, I don't understand the point of it, it seems to use disgraceful amounts of energy - and many people have lost a lot of money buying it for speculation, as they did in the dotcom bubble, which is what I was thinking of. Cryptos seems to be being hyped at the moment, so I am suspicious.
  16. Seattle Valued Senior Member

    This is the key (respectfully speaking) "I don't understand the point of it".

    That is everyone's first impression (including mine). That's why the Saturday Night Live News Update skit was so on point when Elon Musk was on.

    They changed his name and had him on as a Bitcoin expert. The news anchor introduces him and says "So, what is Bitcoin?" Musk gives a definitional type of response and the anchor says "So....what's Bitcoin?" and then the other anchor comes on and says "I'm really interested in the Bitcoin movement but I just have one technical question" Elon smiles thinking OK this guy has a clue at least and then that guy says "So, what is Bitcoin"

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    The point is everyone reads the Google definition, thinks OK, it's digital money, something about decentralized, blockchain...OK but why do I need it when using a dollar to buy a cup of coffee is already working quite well?

    Back in May, before I was really following it I remember reading a news story about it being at $64k and then dropping rapidly to $30k. I remember chuckling and thinking "well what do you expect, it's just like Pet Rocks or Cabbage Patch Kids".

    Everyone initially has similar thoughts. However in most cases, everyone also changes their mind the more research they do. I was surprised to see that it had actually been around for 10 years and has a market cap of around one trillion dollars.

    It isn't about buying a cup of coffee with Bitcoin any more than you would buy a cup of coffee with gold. The talk about it mainly being used by criminals is nonsense. Most criminal activity is done using dollars but that's not the point when we are discussing dollars and its not the point when discussing Bitcoin.

    Bitcoin is volatile however on a year to year basis its return has been better (by far) than any other asset class whereas the dollar only goes down (buys less year after year). The energy usage thing is a bit of a red herring. It can use energy in places where there is surplus energy (Iceland), it can use clean energy, and the energy that it uses is no more than mining gold or other things we do all the time.

    It's also like saying the energy use is too much or unnecessary without considered how important it can be to the world's financial system. If it was energy being used by the internet would we say that it was "too much"?

    All those typical comments are just red herrings by those in government or the financial institutions that feel most threatened by change.

    Governments like the U.S. don't like it because they are "printing" money like crazy and thus reducing the purchasing power of everyone's dollars. Bitcoin is doing the opposite and it's beyond the control (for debasement) of politicians.

    More and more companies and funds will be putting more and more of their funds in Bitcoins as a hedge against the dollar and as a low correlated asset to the stock markets. The supply of Bitcoin is limited forever to 21 million Bitcoins.

    People thought Amazon was overpriced because "It's worth as much as all the other booksellers in the world" so the mainstream press were all just missing the point. It's the same with Tesla "It's valued as highly as all the other automakers combined" etc. Tesla is more of an energy company than anything else just as Amazon is much more now than just a bookseller.

    Knee jerk reactions are often wrong

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    People losing money speculating on Bitcoin is neither here nor there. I bought some this summer and it's now up over 60% but that's not even the point. If you understand it (or any other investment) and have a high enough level of conviction to hold it for the long haul (which should be the case for any investment) then it's the best performing asset class.

    People think of Bitcoin, in its role as a store of value, as Gold 2.0. An ounce of gold (picture a coin) in 1900 would buy a fine men's suit. It's would do the same today. Compare that to the dollar. I'm guess 20 dollars would have bought a fine suit in 1900 but today it wouldn't even pay the sales tax on a suit.

    Bitcoin has a lot more going for it that what I've mentioned here but this is a start at least.

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    Last edited: Oct 13, 2021
  17. exchemist Valued Senior Member

    I suppose, then, you would discount the warnings of someone like the Deputy Governor of the Bank of England in this article, on the basis that he feels threatened by change:

    But I'm going to listen to him.
  18. Seattle Valued Senior Member

    Go ahead and listen to him

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    But also understand what he is saying.

    I agree that there are too many crypto coins (so called shitcoins). I agree that there is too much leverage trading of derivatives in the crypto space and the main concern for many regulators is "stacking" where high "interest" rates are paid on coins that have little other use.

    Bitcoin is a proof of work coin so you don't earn interest using Bitcoin.

    The problem isn't Bitcoin and Ethereum for people who buy it and hold it (aren't leveraged). Some institutions fear Bitcoin as a store of value and Ethereum for its smart contracts because it eliminates a lot of middlemen.

    It's good to be either for or against something after you understand it. Otherwise it's just an appeal to authority. That's OK too if that's your thing. It isn't mine.
  19. exchemist Valued Senior Member

    Appeal to authority is exactly what any sensible person does, when confronted with a complex subject on which he is not expert. It saves time. We all make use of it, every day.
  20. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

    One must make sure, though, that the "authority" one appeals to is one on the matter in question. Someone being an "authority" in traditional finance might not necessarily be one in crypto, for example, with their "advice" merely stemming from their own lack of knowledge on the matter.
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  21. Seattle Valued Senior Member

    The average "worker" pays the highest price for the Fed's easy money policies resulting in such large increases in the money supply. Those with a little more money to invest can at least buy assets and hope to stay even (or better) but those with less money just see little wage growth while prices increase as the purchasing power of the dollar decreases.

    Most everyone can buy Bitcoin, there are no minimum amounts, someone may not be able to buy a house which will increase in value but they can put some money into Bitcoin each payday. They can't put money into savings accounts since they pay nothing. Bitcoin will maintain the purchasing power of money put into it (short-term volatility not withstanding).

    Bitcoin also serves as competition to the dollar which should start to keep the Fed and politicians a little more in check with sound financial policies. The U.S. has gotten away with a lot just because the dollar is the world's reserve currency and therefore it's kind of the only game in town. It's still the strongest currency just because all other governments are racking up debt as well.

    Bitcoin is another option and it should start to keep policy decisions more financially honest. If our dollar wasn't being constantly devalued Bitcoin wouldn't have grown this fast in the first place.
  22. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

    I'm not yet convinced that Bitcoin is the store of value you seem to think it is, rather than a purely speculative asset. Ideally it would be, sure. Ideally it would hit a stable range whereby 1 Bitcoin could always buy the same value of products. But that is not the case yet, even ignoring short-term volatility. To achieve that I think it needs wide-spread acceptance in the market that it is a store of value, not necessarily wide-spread adoption. I.e. it needs to be like gold is today: noone really disputes that gold is a reasonable store of value, but only a small portion of the world actually owns any. But it's there to buy if anyone wants it. Once Bitcoin reaches that acceptance, then it may be a store of value.
    At the moment it is very much a high-risk / high-reward investment asset. Even long-term based on the regulatory situation surrounding it. And so not what I would consider a store of value.
  23. Seattle Valued Senior Member

    It has nothing to do with "acceptance". Volatility will go down (not be totally eliminated however) with wider spread adoption.

    You seem to agree that gold is a store of value and yet the spot price of gold isn't stable. Just look at a chart. It may be less volatile than Bitcoin but it's not stable.

    If you define stability as in pegged to the dollar, there are stable coins for that. That's not a store of value though since the dollar's purchasing power only goes down.

    If you pick a Jan 1 at anytime in the past, Bitcoin will buy at least as much now as it did then. That makes it a store of value. In addition, it is also a good investment since it has gone up, as an asset class, more than any other asset class. Gold is not a particularly good investment, it's just a decent store of value.

    What more could someone expect from Bitcoin as a store of value?

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    It's not a great currency, we have the dollar for that in the U.S. In more inflationary countries Bitcoin could be used with a secondary layer (Lightning Network) on top of that or one could use Ether or Ada or whatever.

    I don't see how Bitcoin is anything though if not a better version of gold.

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