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I get it, I just don't know who would sell such insurance? It'd probably be extremely expensive to purchase, extremely expensive to write the contract, extremel

I get it, I just don't know who would sell such insurance? It'd probably be extremely expensive to purchase, extremely expensive to write the contract, extremely expensive to litigate when they want to claim the losses weren't caused by systemic tech failure, etc. Those costs would take so much off the top that you'd probably need to make this play with tens of millions just to offset those costs and make the potential returns worthwhile. Also, by your argument, if bitcoin is going to be treated as a stable deflationary value store like gold, then that should put downward pressure on the price of gold (because they would be competing asset classes). It should also mean that bitcoin will eventually stabilize and merely reflect inflation. But the appeal of gold is that it's a hard asset and it's stable. Bitcoin is the opposite of that. Why would its price be based on it being treated like gold when it isn't and will never be anything like gold?

logicallee 9y ago
No real comment on anything you've written (which seems a good reply to me). Right, I think it could be quite expensive to insure. My point is that if you are investing $10 million into bitcoin today you will likely make a great return by Dec' 2021 if you actually spend literally $6 million of that (60%) on insurance that pays out only if it goes to less than 10% of its current price or gets stolen from you. So out of $10 million invested, only $4 million makes it into your position * 5x = $20 million, or 2x return over 4 years for an 18.9% year over year return. (1.189^4 = 2, i.e. the left side is the compound interest formula.) I also have perhaps these two quite minor points, - Why do you say gold is stable? (You write "the appeal of gold is that it's a hard asset and it's stable"). Here is its real price over just the past 10 years: https://www.kitco.com/charts/popup/au3650nyb.html https://www.kitco.com/charts/popup/au3650nyb.html - doesn't seem particularly stable to me. It seems more likely that the appeal of gold is 1) its historical use, and general acceptance as value, and 2) its inherent scarcity, i.e. its value reflects its scarcity. - Also you say bitcoin would "reflect inflation" - but where do you think inflation comes from? Wikipedia says it's just a direct effect of an increase in the money supply, but bitcoin doesn't have such a mechanism.

logicallee 9y ago

No real comment on anything you've written (which seems a good reply to me). Right, I think it could be quite expensive to insure. My point is that if you are investing $10 million into bitcoin today you will likely make a great return by Dec' 2021 if you actually spend literally $6 million of that (60%) on insurance that pays out only if it goes to less than 10% of its current price or gets stolen from you. So out of $10 million invested, only $4 million makes it into your position * 5x = $20 million, or 2x return over 4 years for an 18.9% year over year return. (1.189^4 = 2, i.e. the left side is the compound interest formula.) I also have perhaps these two quite minor points, - Why do you say gold is stable? (You write "the appeal of gold is that it's a hard asset and it's stable"). Here is its real price over just the past 10 years: https://www.kitco.com/charts/popup/au3650nyb.html https://www.kitco.com/charts/popup/au3650nyb.html - doesn't seem particularly stable to me. It seems more likely that the appeal of gold is 1) its historical use, and general acceptance as value, and 2) its inherent scarcity, i.e. its value reflects its scarcity. - Also you say bitcoin would "reflect inflation" - but where do you think inflation comes from? Wikipedia says it's just a direct effect of an increase in the money supply, but bitcoin doesn't have such a mechanism.