4 ms·

Unless the volatility were to go down in the extreme, nobody has any business borrowing or lending in bitcoin. I'm sorry but it's absurd, unless done as specula

Unless the volatility were to go down in the extreme, nobody has any business borrowing or lending in bitcoin. I'm sorry but it's absurd, unless done as speculation. Basically, borrow bitcoin and you are in a short BTC speculative trade, lend it and you are long the same. If you'd borrowed $100 worth of bitcoin last year, you'd owe what, $1,000 this year? It's not a loan, it's a bet. And how do futures fix this? Rates? Even mentioning rates on a BTC "loan" sounds entirely out of place. OK but money isn't just about credit. It has two other functions: store of value and means of exchange. As a store of value BTC is highly uncertain. It will multiply or decimate whatever value you try to store in it. I thought it might be interesting as a means of exchange, and maybe it is in certain situations, but commissions seem too high for use as a major global digital payment system. You pay out of your currency to BTC, then from BTC to the target currency, plus the transaction fees which can be prohibitive unless you're moving some serious loot. I make a lot of small international payments and would love a great solution, but I can't see bitcoin as it. Who actually uses BTC? I mean, other than speculators? ("Investor" is a euphemism here, buyers of bitcoin are commodity or currency speculators.)

MarkPNeyer 9y ago
Over long time periods, you're right that lending and borrowing don't make sense. People borrow bitcoin over very short time periods to do leveraged trades. > As a store of value BTC is highly uncertain. It will multiply or decimate whatever value you try to store in it. If it ends up being an accepted store of value, this property will change over time. It'll look more like gold. Most people wouldn't' consider 'SPY' (SP 500 index shares) a store of value, but this is essentially how people are using them. You save money, and store it somewhere that will best preserve that value. Given the rate of asset price inflation, as well as increases in costs like medicine, you need to earn a return just to store the value. The bitcoin price volatility you're seeing now is an adoption curve ramping up. Of course there are huge rewards for early adopters. All it takes is enough people believing that this store of value works, acting on the belief, and that belief becomes real. Financial markets are formalized mechanism to control what is really like magic; beliefs that become real when sufficient people believe them.
- kgwgk 9y ago
  There is the risk that people stops believing and the magic vanishes. The accepted store of value may not be so valuable in the end, like baseball cards in the 80’s or beanie babies in the 90’s.
hisabness 9y ago
i've done both sides of this trade multiple times. i.e. pledging bitcoin for fiat loans, and lending bitcoin. has worked out nicely.
- XR0CSWV3h3kZWg 9y ago
  I've done the lending and got burned. Lost at least a bitcoin or two (back when it was hovering below $20)
smokeyj 9y ago
While I believe other coins will inevitably be better suited for handling transactions than bitcoin, bitcoin may end up being the best store of value due to the amount of liquidity it has. Because of this bitcoin tends to act as the gateway to alternative currencies/tokens. It seems like a weird self-fulfilling prophecy. I predict even when a better chain comes along than bitcoin, bitcoin will still enjoy the benefit of being the gateway to and from traditional funds. Demand for alts will create demand for bitcoin which I think we already see.
- notyourday 9y ago
  Bitcoin is as liquid as a mattress industry before Casper.
blueprint 9y ago
> I make a lot of small international payments and would love a great solution, but I can't see bitcoin as it. Who actually uses BTC? That's actually one of the biggest use-cases.
- malloryerik 9y ago
  Yeah, it's the one that I'd personally want to use BTC for. I still might use it instead of a wire transfer, and in this case, I can see some use for futures as a hedging device, because even staying in bitcoin for one day or one hour seems like unnecessary risk when you're trying to get work done, and not make bets. This again ups the costs in terms of money and time, leading me to prefer, when possible, services like TransferWise.

MarkPNeyer 9y ago

Over long time periods, you're right that lending and borrowing don't make sense. People borrow bitcoin over very short time periods to do leveraged trades. > As a store of value BTC is highly uncertain. It will multiply or decimate whatever value you try to store in it. If it ends up being an accepted store of value, this property will change over time. It'll look more like gold. Most people wouldn't' consider 'SPY' (SP 500 index shares) a store of value, but this is essentially how people are using them. You save money, and store it somewhere that will best preserve that value. Given the rate of asset price inflation, as well as increases in costs like medicine, you need to earn a return just to store the value. The bitcoin price volatility you're seeing now is an adoption curve ramping up. Of course there are huge rewards for early adopters. All it takes is enough people believing that this store of value works, acting on the belief, and that belief becomes real. Financial markets are formalized mechanism to control what is really like magic; beliefs that become real when sufficient people believe them.

kgwgk 9y ago
There is the risk that people stops believing and the magic vanishes. The accepted store of value may not be so valuable in the end, like baseball cards in the 80’s or beanie babies in the 90’s.

hisabness 9y ago

i've done both sides of this trade multiple times. i.e. pledging bitcoin for fiat loans, and lending bitcoin. has worked out nicely.

XR0CSWV3h3kZWg 9y ago
I've done the lending and got burned. Lost at least a bitcoin or two (back when it was hovering below $20)

smokeyj 9y ago

While I believe other coins will inevitably be better suited for handling transactions than bitcoin, bitcoin may end up being the best store of value due to the amount of liquidity it has. Because of this bitcoin tends to act as the gateway to alternative currencies/tokens. It seems like a weird self-fulfilling prophecy. I predict even when a better chain comes along than bitcoin, bitcoin will still enjoy the benefit of being the gateway to and from traditional funds. Demand for alts will create demand for bitcoin which I think we already see.

notyourday 9y ago
Bitcoin is as liquid as a mattress industry before Casper.

blueprint 9y ago

> I make a lot of small international payments and would love a great solution, but I can't see bitcoin as it. Who actually uses BTC? That's actually one of the biggest use-cases.

malloryerik 9y ago
Yeah, it's the one that I'd personally want to use BTC for. I still might use it instead of a wire transfer, and in this case, I can see some use for futures as a hedging device, because even staying in bitcoin for one day or one hour seems like unnecessary risk when you're trying to get work done, and not make bets. This again ups the costs in terms of money and time, leading me to prefer, when possible, services like TransferWise.