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BadEconomics: Putting $400M of Bitcoin on your company balance sheet
- suoinguon 6y agoCheck https://elasticbitcoin.org https://elasticbitcoin.org
- gruez 6y agoWhat's the point of this? I looks like it's some sort of token that represents bitcoin, on the etherum network? Why not just hold bitcoins directly?
- ChrisClark 6y agoIt looks like an algorithmic stablecoin pegged to the price of Bitcoin instead of USD like most others. Those are interesting because the economics are set up to turn greed into a stable value. If the price of the token gets too high or too low, people can make money bringing it back to the peg.
- gruez 6y agoSo some sort of bitcoin ETF with authorized participants[1]? That still doesn't explain why you'd use it rather than holding bitcoin directly. [1] https://www.investopedia.com/terms/a/authorizedparticipant.asp https://www.investopedia.com/terms/a/authorizedparticipant.a...
- whoisninja 6y agoscam
- mocmoc 6y agoI don’t know what to say. Or the person behind this is 150 years old and was living under a stone, or is someone that obviously has 0 knowledge about Blockchain
- whoisninja 6y agoyup this is hilarious: having control over supply of your currency is a good thing, as long as it’s well run. well run? how and by whom? “According to a study of 775 fiat currencies by DollarDaze.org, there is no historical precedence for a fiat currency that has succeeded in holding its value. Twenty percent failed through hyperinflation, 21% were destroyed by war, 12% destroyed by independence, 24% were monetarily reformed, and 23% are still in circulation approaching one of the other outcomes. The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it’s worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value.”
- mocmoc 6y agoThe problem is that the person doesn’t even understand the principles of BTC , why it came to be and why is there. He could just post a tweet , I don’t like BTC and spend the rest of his time brewing coffee
- reedf1 6y agoI feel like these analyses are always very well researched and set-out, but the authors lack any formal qualifications at all. Why read this when there are Nobel prize winners with polemics on Bitcoin? It ends up reading like man-waves-fist-at-cloud on how economics aught to be, rather than how it is.
- eeZah7Ux 6y ago...because some people with an agenda want to promote bitcoin.
- VHRanger 6y agoHey, author here. I've been a mod of r/economics for half a decade, I work as a data scientist and I have a Msc. in econometrics for what its worth on formal qualifications. I mainly wrote this one as a go-to to point people on my thoughts of the economics of BTC as pointed out in the TLDR box
- mocmoc 6y agoBTC is Money, perhaps even more than USD , I don’t know how old are you , but currently there are things(pure physical and digital things) that are only possible to be purchased with BTC, no other payment accepted. So yes , BTC is money , I’m close to people that only use BTC as a main exchange point for value , so BTC is money , weather you want to accept it or not is up to you
- reedf1 6y agoOh nice - I actually quite like the article. Probably shouldn't have come after it so hard. I like level headed people pouring cold-water on bitcoin occasionally as it can get a bit loony.
- ur-whale 6y agoBecause nobel prize winners polemics against Bitcoin (ie Krugman) are even less well argued than this. Bottom line, Bitcoin is a very different beast than everything that's existed before in finance, and "experts" poorly reasoned opinion carry barely more weight than this article. The truth is, no one knows what Bitcoin will become, because it's the first of its kind. When the dust settles, the survivor opinion will - of course - write a book and become famous selling the bedazzled masses a lengthy, sophisticated "I told you so".
- duxup 6y agoI'm seeing '500 Internal Server Error' at the moment from that URL.
- globile 6y agoHN hug-o-death: Cached version: https://webcache.googleusercontent.com/search?q=cache:JPTbrrAfCX0J:https://www.singlelunch.com/2020/10/21/badeconomics-putting-400m-of-bitcoin-on-your-company-balance-sheet/+&cd=1&hl=en&ct=clnk&gl=es https://webcache.googleusercontent.com/search?q=cache:JPTbrr...
- briefcomment 6y agoLaundry lists of reasons have begun to have the opposite effect on me than what their authors were probably intending. Idk how to explain it. Scott Adams puts it this way - you would probably use the very best reason if you felt strongly about it, rather than a laundry list.
- ben_w 6y agoI have observed that they are ineffective whenever I have used them. As I think I have only ever used them when an argument is completely wrong in every regard, it’s good to know why they are ineffective, so thank you for that suggestion.
- deleted 6y ago[deleted]
- ur-whale 6y agoAfter a quick read, I see no evidence of the author having shorted the microstrategy stock. Given the accumulated evidence in the article, this seems like a no-brainer play. I don't understand. Unless the whole article is hot air, of course.
- VHRanger 6y agoAuthor here, I'm actually short BTC as a whole, but that's besides the point of this article.
- testerino11111 6y agohope your ad revenue covers your losses
- ur-whale 6y agoThanks for the info, would be curious to know by what practical means you're shorting BTC. Also, it is traditional (and a good self-preservation move), when posting financial opinion - positive or negative - about an asset or instrument to disclose one's position if any. You may want to consider editing your article.
- VHRanger 6y agoI got into the short position after writing this article, someone happened to post this and make the front page of HN and now my site is down because WP caching was misconfigured. I'll edit the TLDR box when I physically can
- mateuszf 6y ago> I'm actually short BTC How's that going for you?
- gruez 6y agohe also says "...as a whole" so depending on how you interpret this it could be as simple as not holding any bitcoin. eg. if you held stocks in every S&P 500 company except GOOG, then you could probably say you were short google "as a whole".
- bearbin 6y agoSite appears down, there is an archived version available: https://archive.is/yT3Pp https://archive.is/yT3Pp
- capnorange 6y agoThis argues that BTC is not money based on the big 3 properties, without considering that BTC has been running only for 11 years. BTC/Gold is probably the best way to store wealth across time on a 10+ year time horizon without losing much "energy". Historically fiat currency has been an anomaly, we don't know yet how long it will last. Only time will tell if this is the best form of money. Either way, it's always good we have alternatives.
- wave_function 6y agoWhat’s a “big 3 property”?
- capnorange 6y agomedium of exchange, unit of account, store of value.
- swalsh 6y agoMy one big issue with thinking about BTC as gold/commodity, is at least at the end of the day gold has actual uses. I can make jewlery, or use it in components. BTC has no inherit value at all. My only reason to own BTC is because other people also want it.
- rodiger 6y agoThat just establishes a price floor. Gold's "inherent" value is substantially below the current price. It is, like BTC, a largely speculative asset that holds the majority of its value "because other people also want it."
- capnorange 6y agoI get this argument but you can long BTC if you are long internet. BTC has some superior properties: 1. Censorship resistance / Self custody 2. Reasonably cheap to transact large value across space. 3. Network effects Also, gold like bitcoin have a huge monetary premium so the same argument applies.
- deleted 6y ago[deleted]
- gruez 6y agoI skimmed this and everything presented in this article has basically been argued to death already. eg. * bitcoin is volatile * bitcoin is deflationary * bitcoin doesn't have intrinsic value * blockchains are inefficient compared to centralized ledgers
- virgilp 6y agoThat doesn't make it wrong, though. - that BTC is volatile is, hopefully, non-controversial. Do you want your stock to be volatile? (if you have large BTC assets, it should be...) - I won't comment on deflationary/inefficient, I feel the article didn't focus too much on that. But it's a questionable store of value because it doesn't have intrinsic value - this, again, should be uncontroversial. The article lists multiple events that might absolutely destroy BTC (the section "BTC is really risky"). It's easy to imagine more (e.g. war or other catastrophic events that would make the BTC network "less interesting" and would make it really easy for a committed player to do a 51% attack, destroying all remaining trust). It definitely feels like a fancy ponzi scheme - at the very least, BTC ticks a lot of boxes for "how to identify a ponzi scheme" (definitely 1 & 5; arguably most others, except for 2): 1. Abnormally high investment returns. The most obvious sign of any investment skulduggery is the promise of an abnormally high investment return. ... 2. Guaranteed returns. ... 3. Consistently high performance. ... 4. Vague business model. ... 5. The need for more investors. ... 6. Pressure to reinvest. ... 7. The pressure to act now. ... 8. Credibility through association. --- Note that I'm not claiming that BTC was created with the intention of being a Ponzi scheme!!! I'm just saying it appears to have many such characteristics, and one may reasonably assume that a similar eventual outcome is not unlikely.
- gruez 6y ago> That doesn't make it wrong, though. I never claimed that. The point is that for most hn readers, these arguments would have been brought up already and therefore as a whole the article as a whole isn't really interesting. It's like being in 2020 reading a "mongodb is bad because it's not ACID compliant" article.
- 6y ago
- snowwolf 6y ago"As of December 21, 2020, the Company holds an aggregate of approximately 70,470 bitcoins, which were acquired at an aggregate purchase price of approximately $1.125 billion" Current value January 4, 2021 - $2,238 billion https://www.microstrategy.com/en/company/company-videos/microstrategy-announces-over-1b-in-total-bitcoin-purchases-in-2020 https://www.microstrategy.com/en/company/company-videos/micr...
- Melting_Harps 6y ago> Current value January 4, 2021 - $2,238 billion Seriously... this out paced Microstraegy's core business now in just the last year's investment, and who knows how much Saylor put in of his own money without the need to disclose it. Personally, I think Saylor doesn't understand the tech very well and is more focused on selling the news to his investment Corpo class friends sitting on piles of cheap and depreciating fiat, which has it use but is waste of time as he should be using his gains to focus on development in the ecosystem in things like LN, Schnoor and other critical things like micro loan systems in Africa to really make full use of this tech. Jack Dorsey, by contrast, has done most and all of those things and more, was actually on his way to Africa prior to COVID to embark on that. 'Badeconomics' should be what we call the advent of central bank based fiat currencies, as that has untold amounts of blood on its collective hands.
- SpicyLemonZest 6y agoIt reflects pretty badly on Microstrategy that a speculative investment of theirs outpaced their core business. Publicly traded software companies aren't hedge funds, they're not supposed to be making the kind of investments that can do that.
- renewiltord 6y agoIt happens all the time. Maybe the most famous is the Porsche/VW saga. It doesn't reflect badly or any weird moral thing like that. It's just business.
- OJFord 6y ago
- seibelj 6y agoBitcoin is voluntary! Investing in MicroStrategy is voluntary! There is absolute no coercion to buy bitcoin or invest in MicroStrategy. If you are so certain that bitcoin is toxic, short it on one of the many platforms that allow this, or if you don't have the guts, just ignore it. No one makes you use it. That bitcoin continues to grow and gain value relative to fiat currencies is an organic decision by market participants.
- acec 6y ago- Fixed supply is not a "problem built-in", it a a feature - Yes, it can be used as a medium of exchange using the lightning network - The blockckain is inefficient but it was not built for efficiency but to solve the trust problem in a trust-less network. and so on...
- loceng 6y agoIs any of these large amounts of money someone's individual money they've earned that they're putting into these schemes, or is it part of financial complex/capture - where decision making has trickled up to a small few - so few people to manipulate/convince into such decisions? "Bitcoin is almost as bs as fiat money" - Elon Musk; I haven't seen any pro-Bitcoiner try to spin this quote as a positive yet, though I'm sure I'll laugh at whatever mental gymnastics are presented. Good luck betting against Elon's understanding of the holistic, exponentials.
- washedup 6y agoI don't understand why people keep trying to compare Bitcoin to traditional fiat money when it is an entirely new asset class that we have never seen. It is sorta like money (or can easily be converted to "real" money), an asset, store of value, protocol, and secure network all at once. Trying to simplify it into a narrower definition of currency is like trying to fit a tesseract shaped object through a sphere shaped hole.
- ahpearce 6y agoBut in the markets, it is not about the technical definition of Bitcoin, it is about how the average market participant interprets what Bitcoin is... Being technically novel does not protect Bitcoin from being treated like currency, and it doesn't alleviate the negative impact of people's (erroneous) conceptualization of it.
- stetrain 6y agoAt the end of the day it is being traded and speculated on like any normal asset though. The people buying bitcoin as an investment don't need to care about the asset or secure network, in fact bitcoin's technical details have actually created negatives when exchanges/vaults/services break and assets are lost. To most buyers it's just like buying and selling stocks, currency, gold, oil futures, whatever.
- hanniabu 6y agoIf a tanker sinks, that means nothing about the value of oil. Similarly, when there's an exchange hack, that means nothing about the value or security of bitcoin. It just means they had poor security standards.
- washedup 6y agoI agree that most buyers are investing as a speculation; all investing is speculation. Bitcoin is a new type of asset that has properties never seen before. That is what my point is, that they new properties are being discounted heavily by the author as they try to force it into a traditional asset to make a shaky comparison.
- abigger87 6y ago“internal server error” yup about correct
- ElKrist 6y agoWhen comparing BTC to GOLD > First, gold is hard to fake and impossible to manufacture. > Second, gold (...) doesn’t rust or tarnish. > Last, gold is pretty to conclude > On the other hand, BTC lacks all these attributes. I pretty much reach the opposite conclusion with the same premises
- andreygrehov 6y agoHere is a good comparison: https://twitter.com/balajis/status/1345757893161754624?s=20 https://twitter.com/balajis/status/1345757893161754624?s=20
- incrudible 6y agoBy that metric alone, Bitcoin compares very unfavorably to Ethereum, which transfers value almost instantly and far cheaper.
- hanniabu 6y agoYeah, this author has no idea what he's talking about and it's stuck in a cognitive dissonance bubble.
- joshuaengler 6y agoTechnically gold isn't impossible to manufacture as there are scientists and labs fully capable of making it, but it costs more energy to make than its value... For now... Let's remember that episode of the Twilight Zone when the gold thief goes into the future only to find out gold is manufactured and worthless. Gold lasts forever, it doesn't tarnish, rust, or corrode, that much is true. But it still could be stolen, or potentially damaged (like a big house fire). I suppose bitcoin could be stolen or lost as well though, but as it's not actually physical it should be easier to protect. Gold is beautiful so that's an excellent point as well. It can be turned into jewelry and such. Bitcoin isn't really the opposite though in every regard. It may not be physical but it's very difficult to "mine" and it gets harder every year. Plus there will come a day when it can no longer be mined at all, making it even more rare than gold, and impossible to produce more of.
- 6y ago
- DethNinja 6y agoWhat is with all those articles on HN front page about bitcoin? Is this because BTC price has risen sharply recently? You don’t have to be genius to understand what is going on: USA printed trillions and gave most of it to already rich people. What are they supposed to do with that money? Only option is buying more real estate, buying stock of their companies, or investing in BTC. Keep in mind that these trillions hasn’t flow into these assets yet but it will keep flowing and you will see these asset prices increasing. In essence, if you don’t own any real estate, company stock or BTC then you will essentially own nothing because thieves already sucked all the fiat to its own end.
- neffy 6y agoExactly. Every time there is any kind of mania there is always a slew of articles on how much people are making on it, there is a remarkable dearth of articles on how much is lost when the mania ends. (Credit to Reddit's Wall Street bets group for breaking that one a little though.) The $3 trillion+ of money printing behind all this? As you say, completely lost in the wind. But for the record here it is: https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2 You can go back 100 years in US monetary history and not see its like.
- apta_ 6y agoExactly. Bitcoin has been heavily criticized on HN by some, but we're seeing its value proposition come to fruition: an asset that is resistant to artificial government fueled inflation. Perhaps also easier to get into than stocks (no need for a brokerage account, and you can buy in almost arbitrary amounts), and definitely easier than getting into property.
- tehlike 6y agoIt is definitely not easier than stocks. Brokerages made it really easy to enroll and start buying it
- intev 6y agoIt is so much easier than stocks. In the US it is relatively easy but in most countries you can't just download an app and start trading. Anyone can buy a bitcoin with a credit card.
- freebuju 6y agoThe author may be right in that MSTR putting the surplus capital towards BTC was a somewhat strange and potentially reckless move. He got a lot of things wrong with what Bitcoin is and how it works. For instance he claims Bitcoin to be anonymous and a criminals' haven when all BTC transactions are publicly and permanently recorded on the blockchain. While also criticising it's inefficiencies he offers no other alternatives nor any solutions for them. Unrelated though; There is no fighting against Bitcoin as the future of digital currency. The fast dinosaurs like PayPal have already started seeing the mass extinction ahead.
- helen___keller 6y ago> There is no fighting against Bitcoin as the future of digital currency. The fast dinosaurs like PayPal have already started seeing the mass extinction ahead. My experience in the past 9 months is that shopify is winning online payments for small vendors with websites, venmo is winning for individuals selling peer-to-peer (e.g. facebook marketplace), and anyone bigger has their own credit card management front-end. I've purchased from many small operations for my hobby (houseplants), and in the past 9 months only 1 of them has advertised accepting bitcoin. YMMV
- freebuju 6y agoThat is why I said future . Bitcoin is not ready today or even tomorrow for merchant or even peer to peer payments. Takes forever to confirm transactions and is not exactly intuitive to use. However it is a no-brainer once it matures to be robust, faster, and have cheaper fees to use. Btw doesn't have to be the winner here since Bitcoin has competitors in this space. Might take 5-7 decades for this to be fully achieved but it will eventually replace most middlemen we have today for payments.
- sodafountan 6y agoI think we're actually on the cusp of some sort of hyperinflation/stagflation this decade, so BTC is a fantastic hedge against that. You can't float the entire US economy along, shutter all of the businesses but keep people employed on government loans without ramifications. We should be in a terrible recession right now, but of course the government stepped in to prevent that from happening (mostly). A functioning economy has a healthy level of financial inputs and outputs: you go to work, you spend X amount of your dollars on entertainment, food, home improvement etc. and you save Y amount. The problem is when you shutter all of the businesses that just creates a massive surplus of money. That doesn't even get into things like stimulus checks, PPP loans, etc. People don't necessarily need more cash, people really need to produce more and start spending money again. Too much economic input without enough output. Needless to say the MicroStrategy investment was really smart and the author doesn't know what he's talking about. 51% attack? Really? So an individual actor is going to spin up computational power eclipsing the country of Switzerland just to take down bitcoin?
- zander312 6y agomaybe try to properly host an html page before advising multi billion businesses...
- janandonly 6y agoI am curious why all articles that are positive about Bitcoin are shunned from HN but negative articles “somehow” make it to #1. Manipulation much?
- inv13 6y agoI am not expert in economics, but form what I see: - Not being able to print money might sound really good first, but this could be the reason COVID haven't done the havoc it would have without that money. Stopping businesses from collapse is crucial, no mater at what cost. Why? You really want your local super market to be totally empty? And scavenge for food? No. We just need a way to be able to prevent it. This is what helped in 2008, and currently trying to help. What this money printing is going to cause, we don't know, but its better than dieing because of not having the ability to intervene when we have to. - We always need some way of policing this society as a whole. We cant really have nice things. There is a reason we have locks, and fences. Wouldn't it be good if we were are just one happy family(I just laughed myself to death saying this)? No crimes, no anything. Everybody just live a happy life without any crime. That would be wonderful. But we all know that is not really what is happening. I feel like that's the fairy tale crypto currency is selling, and that's why it sells really good, as always, we always thrive some easy way to make a living, make money, whatever. And crypto currency checks a lot of boxes we are all want.
- nickff 6y agoIf you're looking to compare Bitcoin to something, it should be the (free banking) gold standard (before the Federal Reserve 'changed' it), which was similarly inflexible. In the era of the gold standard , there were depressions, but they were quite brief (usually a few months); there were no great depressions or great recessions
- manarth 6y ago> In the era of the gold standard, there were no great depressions Apart from this one? https://en.wikipedia.org/wiki/Great_Depression https://en.wikipedia.org/wiki/Great_Depression > "The gold standard was the primary transmission mechanism of the Great Depression"
- splintercell 6y agoIs your understanding of this only from that line or do you have a more deeper take on it. Back in 1920s, govt could 'adjust' the gold standard by changing the rate whenever they wanted. Wanna double the money supply by 60%? Change the gold standard peg from 1.505g to 0.888g of gold. When you didn't do that, you got a very short lived depression of 1920-1921 [1]. When you did, like FDR did in 1933, you got a long, extended deperession. 1. https://en.wikipedia.org/wiki/Depression_of_1920%E2%80%931921 https://en.wikipedia.org/wiki/Depression_of_1920%E2%80%93192...
- moscovium 6y ago"Before money we had to barter, which led to the double coincidence of wants problem. When everyone accepts the same money you can buy something from someone even if they don’t like the stuff you own." Stopped reading right here. Anthropologists have widely discredited any ideas that "before money we had barter", but it's just shyly asserted as absolute fact. If you're going to argue something isn't money, you should first have a correct idea of what is money.
- yjftsjthsd-h 6y agoWait, then what did people do before the current system?
- alexilliamson 6y agoThe book "Debt: The 5000 Years" laboriously debunks the idea that early cultures bartered, then realized they needed money. I don't have more details unfortunately because it's been a while since I read it (and it's quite dense). I remember being convinced of the logic though!
- ARandumGuy 6y agoIf you'll accept a Wikipedia link, this gives a basic overview: https://en.wikipedia.org/wiki/History_of_money#Prehistory:_predecessors_of_money_and_its_emergence https://en.wikipedia.org/wiki/History_of_money#Prehistory:_p... In short, while bartering likely did exist in some forms, it was not the primary means of commerce. Within a tribe or group of people, a 'gift economy' was generally used. This makes sense, as an average pre-historic tribe had like 50 people, making a complicated economic system unnecessary. When civilization started to form, primitive forms of money came along with it. There was never a time when you went to the market with a handful of wheat and some furs, and hoped to trade them for some salt and fruit. That idea was popularized by Adam Smith in the 1700s, who was an economist, not an anthropologist.
- speeder 6y agoWhen I was researching this subject, what I found out is that the path was: 1. Gift based economy. Where people aren't really giving gifts... this still exists in some parts of the world, basically if you accept the "gift", you are now in debt, and is expected to do something in return, not necessarily immediately. In small villages it makes sense, for example the hunter "gifts" everyone with the meat he hunted, increasing his social standing, so when he needs medical attention, the medic will take care of him, because he is socially in debt to the hunter. In a modern economy this instead can be disastrous, for example I have a cousin that visited France, and was horrified when african immigrants kept following him and his wife, hugging him forcefully, and trying to put random crap (it was some beads to wear around the wrist) on his hands and saying it is a gift, meanwhile when a nearby tourist did take the object, they demanded a 50 euro "gift" back. 2. When society is too big to be "social standing based", currency shows up rather quickly, when you can't remember everyone or use everyone's fame as currency, you need something easier to track, can be objects (rocks, salt, gold, whatever) or a ledger (numbers on a piece of clay, bank account, bitcoin, whatever), or both. 3. Barter shows up AFTER currency, because people use the currency to know the value of what they are bartering, for example a guy wants to buy a house, and doesn't have 3 tons of salt required, so he says he will offer you this gold bar worth 1 ton of salt, his horses worth the other ton of salt, and 5 years of his work worth the last ton of salt. Here is a reasonable article on the subject, I remember vaguely it was one of my sources at the time, it is not the best source, but is the one that pointed me in the right direction. https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ https://www.theatlantic.com/business/archive/2016/02/barter-...
- frankenst1 6y agoLike most posts critical of Bitcoin it ignores that - Bitcoin becomes less volatile over time - Bitcoin was less volatile than TLSA, AMZN or AAPL in 2020 (3-month realised volatility) [0] - Bitcoin becomes less risky over time (since despite increased incentives to "hack" it, no exploits happened) It also repeats typical nocoiner fallacies like "it has no intrinsic value" and "gold is used for jewelry", ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. New in this post was the author's stance to trust the Fed to keep inflation predictable: "as long as the Fed isn’t run by spider monkeys stacked in a trench coat, the inflation is likely to be within reasonable bounds" "well-run currencies like the USD, GBP, CAD, EUR, etc. all lose their value at a low and most importantly fairly predictible rate" However, the Fed increased M1 money supply by ~20% just in the 2 months following that blog post and by ~70% in the total of 2020 - an increase unprecedented in the history of the US dollar. 2 of the 3 dollars in your pocket have been created out of thin air in 2020. Believing that inflation rates in the next years won't spike as a result requires an amount of trust even more artificially inflated than the USD today. [0]: Daily %-change of TSLA,BTC,NFLX,AAPL,AMZN: https://imgur.com/a/mE7bSI4 https://imgur.com/a/mE7bSI4 (TSLA is green)
- mrlala 6y ago>Bitcoin becomes less volatile over time >Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) Not sure what you are smoking. Bitcoin literally just went between about 27k and 34k today. That's about a 20% swing. Ethereum had a 60% swing. Not volatile at all! Nope, nope, nope not at all.
- Bjartr 6y agoYou have a point, but so does he, considering today took place in 2021, not 2020.
- frankenst1 6y agoI was talking about 3-month volatility in 2020, you are talking about daily volatility today. But even on daily %-change in 2020, BTC doesn't look different to other stocks: https://imgur.com/a/mE7bSI4 https://imgur.com/a/mE7bSI4 (the green one is TSLA by the way). Since we are talking about a company putting $400M of BTC in their balance sheets, I doubt they are worried by daily volatility.
- roywiggins 6y ago> Before money we had to barter, which led to the double coincidence of wants problem this is contested: https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ https://www.theatlantic.com/business/archive/2016/02/barter-...
- vvpan 6y agoDavid Graeber (the late...) is the most vocal opponent of the idea that "barter economies" existed and he's very compelling.
- baobabKoodaa 6y agoThis website is currently returning 500, so I'm unable to read the article. This is because it is configured as a server-side rendered website, as opposed to a static website which can be delivered by a CDN. I wish people would stop doing this. The core functionality of a web page (including "blog post" type content) should be entirely static assets delivered by a CDN. Auxiliary functionality can be delivered by a server, an the webpage should gracefully degrade when the server breaks down.
- knodi 6y agoI'm not about to trade off a bank for ledge indexing service. BTC is the digital Tulip craze.
- Devasta 6y agoHonestly, when you look at the massive energy consumption compared to the tiny transaction volume, Bitcoin should be banned. Whatever about other cryptocurrencies, Bitcoin is climate arson.
- gruez 6y agoShould private jets and yachts be banned as well? Their emissions are probably much higher on a per-user basis.
- null0pointer 6y agoAre the supply and demand curves supposed to be reversed?
- eafer 6y agoI noticed that too, it has to be a mistake right? The price of the dollar should act like any other price, I think.
- meehow 6y agoIPFS copy in case of error 500: https://ipfs.2read.net/ipfs/QmVYyc1zi8FtAAd63uCrxrunUgzvZztdGkuiUW5vsNzYXG/ https://ipfs.2read.net/ipfs/QmVYyc1zi8FtAAd63uCrxrunUgzvZztd...
- christiansakai 6y agoSatoshi Nakamoto (whoever he/she/they) would not believe what he/she/they see today: - Bitcoin is not used for transaction, due to it is not scalable - But used for store of value, which plenty of people find reason 1 is not a bug but a feature Suddenly Covid19 hits. People go crazy over masks, lockdown, trust in government at all time low. Government attempt to fix the damage done by pumping more money. Economy destroyed, money printer go brrr makes all asset class bubbles. Institutions are out of asset class to invest and "hey we got too much money, where should we throw this? look there is this thing called Bitcoin we forgot about it, let's just gamble it away, 5% of our portfolio, if we lose it we lose it, but if we made it we gonna go to the moon" Institutions then joining in, prompting more retail skeptics to reason "if institutions join then this gonna go to Jupiter, and at best land on the moon, I'll join up, I need to pay my mortgage/student debt, or get out of whatever screwed economic situation that happens in this 2020 pandemic just like most millennials out there, I have no other choice, go big or go home". Welcome to the (USA only) Circus. Soon there will be Bitcoin Mining Employment Act because all of us will only mine Bitcoin, no other economic activity matters.
- redhot2323 6y agoLets say you are right and was bad ec0n0mics... Your shorting vested interest wins? Not today...
- H8crilA 6y agoThe title is inverted, it should say "Putting $400M of your company [balance sheet] into Bitcoin". And it's no different than any other corporate management decision: makes sense if your company is supposed to do such things. Almost all companies aren't supposed to trade cryptocurrency.
- coinward 6y agoI've adopted Bitcoin as my preferred money and use it for savings. I noticed that usd and all other currencies are very volatile, but 1btc is always equal to 1btc. For me, Bitcoin is the least volatile option.
- H8crilA 6y agoIf you enjoy this sort of humor [that the parent comment is employing] there are some very good parody accounts on Twitter: https://twitter.com/parikpatelcfa https://twitter.com/parikpatelcfa https://twitter.com/punchablefacevi https://twitter.com/punchablefacevi https://twitter.com/cokedupoptions https://twitter.com/cokedupoptions https://twitter.com/thestinkmarket https://twitter.com/thestinkmarket
- dwaltrip 6y agoPoe's law strikes again. Looking at their comment history, I think they were serious.
- konschubert 6y agoOr just r/wallstreetbets
- greenhacker 6y agoHave fun staying poor
- Jimmc414 6y ago"A single transaction takes as much electricity as 800,000 VISA transactions, or watching 50,000 hours of youtube videos." Respectfully, I'd like to call BS on those points. I'm surprised to find these assertions in a post this highly ranked on HN.
- rodiger 6y agoYeah really depends on how deep your effect tree is. I made this point in another post but the human-hours/waste required to keep VISA running should be taken into account. Also the power put into BTC is used to secure the network- it isn't exactly "wasted."
- imhoguy 6y agoAnd one can heat a house now while mining on the north.
- rcxdude 6y agoSeems low TBH. Bitcoin is astonishingly, ridiculously inefficient and people's minds just seem to bounce off the numbers because they're so ludicrous. and before you try to say 'well the financial industry also uses a lot of energy', consider that the bitcoin network uses about as much energy as the entire financial industry (the servers, people, offices, everything). One basically runs the world's economy, the other can do 7 transactions a second.
- Ecstatify 6y agoI think bitcoin is the new politics, we won’t be able to talk about it in work soon. It’s ok to disagree with someone, but to just attack the author is ridiculous. examples: “I work in this space and can confirm this guy is talking out his ass and has no idea what he's talking about” “Yeah, this author has no idea what he's talking about and it's stuck in a cognitive dissonance bubble” “I don’t know what to say. Or the person behind this is 150 years old and was living under a stone, or is someone that obviously has 0 knowledge about Blockchain” “maybe try to properly host an html page before advising multi billion businesses...” “I feel like these analyses are always very well researched and set-out, but the authors lack any formal qualifications at all. Why read this when there are Nobel prize winners with polemics on Bitcoin?”
- cryptica 6y ago>> Having control over supply of your currency is a good thing, as long as it’s well run. Depends whose control we're referring to. The people who control the currency control the dynamics of the economy and society. That's all good if the dynamics work in your favor (e.g. your friends are central bankers and billionaires) but otherwise it's terrible. Also, what does it mean "well run"? Well run from whose perspective? Monetary policy does not create economic value; it can only help those in charge to decide who are the winners and who are the losers. My personal values don't align at all with the current monetary system. It doesn't work for me. It works against me. I'd rather accept a currency which cannot be controlled by anyone than one which is controlled by my enemies.
- Zamicol 6y agoI'm not the biggest Bitcoin fan, but this article is dumb. I'm not a Bitcoin "believer" in that I don't believe the modern Bitcoiner's dogma. But many newcomers don't know the history: a significant number of early Bitcoin engineers have moved on to other projects (like Ethereum) that better align with some of Bitcoin's early goals, such as a cash alternative and an accessible economic cypherpunk system. There are many cryptocurrency projects that are less dogmatic and more pragmatic. >"Is Bitcoin money? No." While I appreciate the upfrontness, the problem with this mentality is failing to conceive how the technology itself can easily overcome these minor criticism. >"1. Medium of Exchange." Even if Bitcoin isn't, which you'd need a very narrow definition, Eth easily overcomes this argument. Eth has functional, successful, trustless, and distributed stable assets that serve as stable priced mediums of exchange. I don't see how other cryptocurrencies aren't money even if Bitcoin isn't, which also undermines the intent of the article. >"2. Unit of Account. ... We denominate BTC in terms of how many USD they’re worth, so BTC is not a unit of account presently." That is severely ignorant and makes it obvious that the author has spent superficial time in the space. I cannot think of a charting tool that doesn't allow denomination in at least one other cryptocurrency. The Eth community refers to "the ratio" (denomination in Bitcoin or other assets) constantly. > 3. Store of Value. See point 1. This is a solved problem.
- ekianjo 6y ago> Even if you erased humanity and started over, the new humans would still find gold to be economically valuable Ridiculous point to make. Gold is valuable for some applications, but in no way is its current value related to its utility in industry and all.
- hyko 6y agoI think the article misses the point completely: this is bad practice because the company has no business buying up random assets using other people’s money. That would be equally true if they bought $400M of fine wine, real estate, or gratitude crystals.
- x87678r 6y agoIt has been a very good strategy so far. Stock is up 3x in a few months. Hopefully MicroStrategy can spin off the software part of the business and just buy bitcoin.
- aqme28 6y agoWould anyone have written this article if it was $400M of TSLA? The company made a risky investment with its spare capital. That's not a crazy thing for a company to do.
- richardARPANET 6y agoAuthor is mad he didn't buy Bitcoin sooner.
- latchkey 6y agohttps://twitter.com/fintechfrank/status/1346102729140297730?s=21 https://twitter.com/fintechfrank/status/1346102729140297730?... Three Arrows Capital position in GBTC tops $1 billion. As per a filing with the SEC, the firm's holdings represent 36,969 bitcoin. 1,240,000,000/36,969 = average price is $33,541. The fomo is real.
- atemerev 6y agoBitcoin is money, of course. I can buy a pizza or whatever for bitcoins (it will be rather inefficient though, so there is a great way of doing this indirectly -- Bitcoin-backed credit cards). In my country, I can pay taxes with cryptocurrencies (on municipal and cantonal levels). It is volatile, of course, but there were (and are) quite a lot of currencies no less volatile, and nobody have argued that these are not money. This article is like those from 2017, all over again.
- artursapek 6y agoSounds like someone missed the bull run, aaahahaha
- Triv888 6y agoLoL, the first page of comments on this post only show one top-level comment...
- shadowofneptune 6y agoAs someone who has never been particularly interested in cryptocurrency: what happened? I remember it being a novelty in news articles around 2012, something you could use in very select cases to buy things. Idea of an online currency was interesting, but not something I spent too much time thinking about. PayPal already served much the same purpose. Flash forwards to 2017 and the popularity of bitcoin is to the point where it's affecting supplies of computer hardware. Yet, it's not being treated as a currency at all, instead it's an investment. Again, what happened? I don't understand why it shifted like this, and I haven't found any particularly convincing explanations.
- anm89 6y agoIf you want to understand the broader macro story around bitcoin, go listen to Lyn Alden. https://www.youtube.com/watch?v=f_JmGLMjIOk&t=27s https://www.youtube.com/watch?v=f_JmGLMjIOk&t=27s
- lifty 6y agoI love that Lyn Alden get's referenced more and more on HN. She manages to break down macro-economic thoughts and analysis in a clear and concise way. +1 for reading and listening to her materials.
- shadowofneptune 6y agoThis is not exactly what I was looking for. Bitcoin is being treated as a risky investment, not as a reserve currency. I do not understand what led to Bitcoin becoming that instead of serving its stated goal as an online currency.
- anm89 6y agoCare to share your data behind that assertion? Go look into the amount of btc being held by corporations as a treasury asset. There's a provable number and it says large financial interests are interested in hold large amounts of bitcoin as a reserve.
- MichaelBurge 6y agoDon't futures completely solve the "Bitcoin price is volatile" problem for large actors? Short Bitcoin futures to lock in your current rate; or buy some puts & sell calls to constrain it to a range without spending anything extra. And your counterparty is CME rather than some fly-by-night cryptocurrency exchange. Doesn't help with buying a pizza(a single futures contract is 5 bitcoin, or $150k at current rate), but that seems solvable.
- enahs-sf 6y ago> Some form of 51% attack succeeds Given the current state of the market, this seems implausible to succeed. Total BTC in circulation: 18.6m Current BTC price: $31,697 51% of 18.6m: 9,486,000 to outright buy that would cost ~$300bn. not accounting for lost coins, the fact that such a supply is inherently distributed throughout the market and such an attempt would almost certainly move the price much higher. Zuckerberg and Bezos should pool their cash and take a stab at it, though.
- trsohmers 6y ago51% attack does not correlate at all with owning 51% of the coins, it is about having 51% of the network hashrate. If you were to round up the current network hashrate from 145 million TH/s to 150 million TH/s, and use the Nicehash price of ~$219 per PH per hour as a price, it would cost around $15B to run a 51% attack for an hour. Obviously the price per PH would go up as you buy up that much hashpower (which wouldn't even be for sale), so this is a low end estimate, but your $300bn number is completely out of the park.
- anm89 6y agoSurely there is no tinge of jealousy on missing out on an asset class that has 10xd this year because "it has no value". So many people are quick to call this out as a bubble as if it's a predetermined outcome, because, have you ever heard of tulip mania and this one time tech stocks, blah blah blah. Call it a bubble after it crashes, not before. Well, Saylor just made a billion dollars on his convictions (seems like a bad economic outcome to me). The future could prove the bears right but so far the present says they're dead wrong. One of the funniest things to me is that very few mainstream economists could articulate the value proposition and missed out on the absurd gains of the last 10 years although assessing the value of something like this is exactly what they claim their advanced degrees should give them an advantage in doing. If they truly had a deeper understanding they wouldn't be writing angry rants because the missed the train. The awesome thing about markets is that they separate the talkers from the doers, so go write another editorial if it makes you feel better. A bunch of kids in their 20's have made more money than this author will make in his whole life because they called it better than this "expert"
- LittlePeter 6y ago> The awesome thing about markets is that they separate the talkers from the doers, so go write another editorial if it makes you feel better. A bunch of kids in their 20's have made more money than this author will make in his whole life because they called it better than this "expert" You can be an expert and still be poor. Your argument seems to imply if the author was an expert he would be filthy rich. I am an expert on roulette. I know it is a losing proposition and I can give you the expected value of your bets. I choose not to play because of negative expected value. Yet there are kids in their 20's that have made fortune with roulette.
- anm89 6y agoInvesting in crypto on a short term basis is certainly roulette but over the long term it is not. Not more so than a stock at least.
- 908087 6y agoI'm already getting texts from random gullible marks I know telling me to "buy the dip". Always a good sign.
- jpsalm 6y agoCan someone explain this to me? The year is 2150 or whatever -- bitcoin is fully mined. There is a metric asston of mining hardware out there that needs to be running to secure the chain -- presumably all coming from transaction fees. Not only to transaction fees have to scale to cover the entirety of block rewards but they must continue to grow over time to compete with increased hardware efficiency in hashing. Does it not follow that: a) transaction fees rise to recoup not only current cost of mining hardware, but R&D and deployment of new hardware over time to keep the chain secure. As people realize this they convert their bitcoin to something else to avoid bag holding. OR b) transaction fees cannot support the mining hardware as is, miners sell of their hardware to recoup their costs and the chain becomes vulnerable. I confess I might be missing something but I don't see how a fully mined coin is stable.
- X6S1x6Okd1st 6y agoYou are right, the security of the chain should always be proportional to fees paid. The security of any given transaction is a little different. In practice we haven't seen that many double spends against chains that are defacto vulnerable (e.g. any chain that uses the same PoW as bitcoin is always vulnerable to an attack). Assuming that PoS goes well for ETH it might make sense to start moving away from PoW coins before the fees drop to worrying levels.
- rcxdude 6y agoIt seems quite unlikely for bitcoin to successfully change anything about the protocol: even simple changes have been failures.
- rodiger 6y agoAs of right now yes, but when there are more stakeholders and clear/imminent threats to the chain there will likely be more discussion. All proposed forks thus far have been unnecessary for the short-term success of the chain.
- rcxdude 6y ago
- luka-birsa 6y agoI KNOW Bitcoin is really bad/evil/ponzi/fake, but can't you guys just leave the people to do mistakes on their own? /sarcasm off Funny how people tend to disregard this comment and keep doing just fine. For over a decade.
- joshuaengler 6y agoThis was actually an incredibly incompetent post that misunderstands WHAT Bitcoin actually is, while at the same time spewing word salad to make it sound like a well-researched opinion.
- EVa5I7bHFq9mnYK 6y agoBitcoin is first and foremost about power and control. You can receive and spend it without anyone's permission and even without anyone knowing that you have it. It's value increases as those in power are trying to impose greater and greater controls over our lives.
- EVa5I7bHFq9mnYK 6y agoAnd the most awful thing is that they now have $900M of Bitcoins on their company balance sheet. Bitcoin does that: you invest 5% of your portfolio and boom its now 80%. Real creepy.
- tseing 6y agoI often encounter arguments that conflate the volatile price of Bitcoin with its utility. Price is a meeting of supply and demand, and we're discussing an asset that is roughly only a decade old. Of course the price is volatile, but that does not reflect anything intrinsic about the utility of Bitcoin itself. If gold never existed, and just suddenly starting raining from the sky occasionally, we would also have trouble meeting minds on the effective price of this sky rock.
- throwaway41597 6y agoThings I wished someone had told me about Bitcoin years ago (disclaimers, I own some and I haven't read the article but most comments are tangential anyway): - Your takeaway from the comments may be that Bitcoin is still controversial but what if Paul Graham, Sam Altam, Naval Ravikant, Chamath, Peter Thiel, Nassim Taleb, etc all joined the chat to tell you it's a good asymmetric bet. It's an appeal to authority, sure, but sometimes, you need the right person to tell you the truth. It was at the price they bought and it very well may be today. - The current narrative is it's digital gold (but easier to transfer, verify, hide, no inflation, etc). It's very easy to fall for arguments that it's useless because it's hard to transact, too public, that it's going to get replaced by something better, but as of today, there is product-market fit, regardless of whether it only works for the rich. - This fall saw a lot of financial adoption, Druckenmiller, Guggenheim, Mass Mutual, off the top of my head. In May, it was Paul Tudor Jones. Everytime these people come, they bring hundreds of millions. These sometimes start with financial disclosures that prevent them from buying before announcing it. Microstrategy publicly asked the bond market $400M to buy BTC, got $650M within a week when price was $18k but got to buy at $23k IIRC. This frontrunning is a recipe to pump the price. - There are 19M BTC in circulation, the next 2M are already somewhat owned by mining companies and their investors, past buyers were either flushed out by past crashes or are battle-hardened and convinced it can go a lot higher. What I'm trying to say is that Bitcoin could go to $100k with today's fundamentals alone. I missed out much of it because of endless ideological, semantic and technological debates, but financially, it's makes complete sense and honestly I'm also in it for the money. This is not financial advice but I feel compeled to end with a few disclaimers: Bitcoin is here to fight inflation, but if deflation occurs, it could hurt; Tether may collapse (this is a shady company selling blockchain dollars which may or may not hold billions of dollars worth of BTC on one side and $20B of liabilities on the other side); investing too much may cloud one's judgement, the market is out to get your money.
- dwaltrip 6y agoThis is a great, well-balanced summary that covers a lot of the complexity and nuance. I'm also somewhat skeptical of the ethical aspects of bitcoin but I can easily see it going much higher. The aggregate value of all BTC is currently around 5% of that of all gold holdings (~$10 trillion). If the "digital gold" narrative is partially true, perhaps it could reach 20% to 30% (or more?) of that number in next few years.
- yamrzou 6y ago> On the other hand, BTC lacks all these attributes. Its value is largely based on common perception of value. The same can be said for gold. Why would being pretty, durable and impossible to manufacture justify an intrinsic value?