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>> "Bitcoin is the textbook speculative mania for our time" This misses the point of bitcoin entirely. People need to understand Bitcoin solves a problem: a v

>> "Bitcoin is the textbook speculative mania for our time" This misses the point of bitcoin entirely. People need to understand Bitcoin solves a problem: a very big problem. This problem was caused by the gov and fed defaulting on it's obligation to maintain a stable currency. As a result, cash can no longer be used as a store of value. And by artificially suppressing interest rates, the fed/gov has eliminated yet another class of investement: fixed income. So with two major asset classes eliminated: cash and fixed income, it doesn't leave much else. The only asset classes we have remaining are equities, real estate and commodities. Real estate, there's no easy way to invest in it in a scalable way. So, what are you going to do put ALL your money in Equities? with no diversification. People desperately need a store of value, they can't just work until their 120 year old. Bitcoin solves this problem: it's a store of value. For a lot of people, bitcoin is NOT speculation, it's a long term buy and hold asset that you hold for a long time. And the tax rules encourage such buy and hold behavior. those that are selling the moment it goes up, are going to pay dearly in capital gains taxes 30, 40, 50%+ in some states.

biztos 6y ago
Sure, people are using Bitcoin as a store of value, but I think a lot of those people think it will just keep going up. Which is not a super rational thing to believe about an asset whose value has no relation to anything in the real world, and nothing to prop it up but the people who believe the same thing. Bitcoin is up something like 800% for the year. It might be up another 800% in six months! Or it might go down to $10000! Or $1000, $100, $10 -- any of these would make exactly as much sense as the ~$60K we see right now. Taxes aside, that strikes me as a pretty volatile place to be storing your value. Not everybody has the option of USD or CHF but still... it sure does look like a speculative bubble. (For actual "mania" maybe see NFT's instead.)
- samatman 6y ago
  It's also not rational to believe that a sovereign currency which is backed only by government fiat cannot crash due to inflationary spirals. After all, if it should happen to be the case for the currencies we all use right now, it would be the first time that this experiment, which has been tried often enough throughout history, hasn't ended in that particular way. We've put all our eggs in that basket, and it's working... so far! I'm glad there's a hedge against that outcome though. If the worst happened, and the debt balloon triggers ECB, the Fed, and their Asian cousins, to initiate hyperinflationary money printing, we'll all be grateful that there's an alternative to going back to shipping convoys protecting boats loaded up with gold and silver. I don't even think the aforementioned hyperinflationary spiral is inevitable, or even more likely than not. But I repeat, it is irrational not to consider it a real risk, given history, and that outcome would lead to immeasurable human suffering, which cryptocurrencies cannot prevent, but can at least ameliorate.
- thorwasdfasdf 6y ago
  >> Bitcoin is up something like 800% for the year. It might be up another 800% in six months! Or it might go down to $10000! That was the case in 2017. Not anymore, things have changed. the fundamentals of bitcoin are based on what people believe it will be worth and this has changed drastically in mid-2020. Mid 2020 is the year WallStreet "got" bitcoin. this fundamentally changed it's future path. You have all these hedge fund managers and institutions that are willing to pour trillions of dollars into this asset to gain some exposure. And now that, that's begun it's setting off a chain reaction. You've got to remember, the impetus for all this. It's not that bitcoin is some ideal form of investment. The driver for bitcoin and equity growth is the destruction of an existing asset class: fixed income. That 100 trillion worldwide wealth of fixed income has to go somewhere (not that all of it has to get sold). either it will go into bitcoin or equities or gold. it could go to cash but then it'll get wiped out.
  - endisneigh 6y ago
    Do you personally own any crypto?
  - biztos 6y ago
    > destruction of an existing asset class: fixed income I find it very intriguing that this could be the driver, but what do you base that on?
    - thorwasdfasdf 6y ago
      Take a look at what's been happening in US Treasuries. Yields have been dropping for the last 40 years. Investors have still been happy with their returns because they make up for low yields with increasing prices on those bonds (bond prices and yields are inversely relational). But, now that US treasury prices have reached their peak (yields can not possibly go lower), it's game over for US treasuries. this is playing out in other bond markets as well too. So, everyone is dumping bonds: see article "Why would anyone hold bonds?", it was shared on hacker news a few weeks ago. Listen to just about any financial professional speak about bonds: they wouldn't "touch it with a 10' pole", is what you hear more often than not. Especially in the inflationary environment we're in now. Governments everywhere across the globe are up to their eyeballs in debt. the only way out is inflation - they've all realized this. you can't raise taxes, you cant decrease spending. you can only inflate your way out of the debt. so, basically 100T worth of bonds, a very significant percentage of global assets, is being sold off. And it can't go into cash. So where's it going? Well, equities for the most part, hence the relentless rise of equity markets. but also, other places too like bitcoin because people need some diversification, which used to be served by bonds. In the past, investors recommended 60/40 equity bonds mix. in the future, maybe it's 60/40 equity/commodities/crypto.
- mw888 6y ago
  It’s easy to take this stance and call others crazy, but what would it take for you to believe your current opinion is wrong about Bitcoin, apart from it changing to something which is in spirit and function not equivalent? If the answer is: “nothing would change my mind”, then perhaps you are the crazy one; after all, carbon copies of you have been around for every cycle of bitcoin growth. Do speculative bubbles have cycles, has any speculative bubble grown as much, crashed as hard, then grown even larger than bitcoin has multiple times? Bubbles only pop once, and bitcoin has fell as hard as any other bubble I know you are tempted to compare it to, only to retake the ground later. Speculative, obviously, bubble? You might be crazy for thinking so.
  - biztos 6y ago
    If it must pop in order to be (have been) a bubble then yeah, maybe it never pops, and by that definition it would not have been a bubble, but how long do you have to wait for that to be true? I don't think that a very weird year or two is sufficient. A bubble, at least as I understand it, can pop more than once, after all we're not talking about a real physical bubble. Was there a real-estate bubble? I think there was, but prices now make it hard to remember that. I don't see how my current opinion is at odds with Bitcoin going up util I die and it melts the ice caps, hopefully in that order. If you're asking whether I'd stop thinking it's a bubble, I don't know -- I can be crazy (to miss out on the growth) and also right (if it pops some day). And of course you're right about "carbon copies" -- I ignored/missed/misread every crypto cycle so far. I'm not above buying some BTC at $100K but I probably won't, for reasons having nothing to do with crypto per se.
Sanzig 6y ago
> Real estate, there's no easy way to invest in it in a scalable way. Of course there is. It's called a REIT (Real Estate Investment Trust). If you want even more diversification, you can buy ETFs and mutual funds which hold multiple REITs in multiple market segments. You don't need to physically own a property to get real estate exposure... > So, what are you going to do put ALL your money in Equities? with no diversification. People desperately need a store of value, they can't just work until their 120 year old. You can buy bonds specifically indexed to inflation. In the United States, these are referred to as TIPS (Treasury inflation-protected securities). There are plenty of places to get exposure to these on the secondary market, eg: via ETFs. I find it a bit silly to claim that you're interested in a store of value while holding a highly volatile asset like Bitcoin. By definition, a store of value should have low volatility and basically track inflation. Bitcoin has behaved far more like a speculative investment: yes, it's substantially trended upwards, but it's also been highly volatile. How do you reconcile accepting Bitcoin but rejecting equities, which have historically outpaced inflation by a significant margin?
- thorwasdfasdf 6y ago
  TIPs I believe use the CPI, and so do other instruments like this. The CPI undercounts inflation by almost 1 to 1.5%. we've discussed this one many times: just look at bic mac index, housing prices, car prices. there are many buckets in the CPI and at least several of them don't fully count inflation, sometimes quite brazenly too: comparing beef prices to chicken prices instead of beef to beef, simply because beef has gone up faster than chicken. the appeal of bitcoin is there's a fixed supply as opposed to fiat which can increase exponentially. I never said reject equities. I want to invest in as many asset classes as possible, including equities, real estate and gold. The macro picture for equities is looking a little less rosy than it did 30 or 50 years ago. Equities are supposed to follow earnings growths, which is basically just population growth + productivity per capita increases plus dividends. if you break the 3 of those down and compare them to the last 50 years, you'll quickly see, future fundamentals are less rosy: - labor population growth has slowed to 0.5%, from 1.5% - per capita productivity growth is at all time lows - and dividends for s&p500 are now at 1.5%, down from 4.5%. Whereas the fundamentals for past growth were (4.5+1.5+2=8% real), the future fundamentals now show: (1.5+0.5+1.5=3.5%).

biztos 6y ago

Sure, people are using Bitcoin as a store of value, but I think a lot of those people think it will just keep going up. Which is not a super rational thing to believe about an asset whose value has no relation to anything in the real world, and nothing to prop it up but the people who believe the same thing. Bitcoin is up something like 800% for the year. It might be up another 800% in six months! Or it might go down to $10000! Or $1000, $100, $10 -- any of these would make exactly as much sense as the ~$60K we see right now. Taxes aside, that strikes me as a pretty volatile place to be storing your value. Not everybody has the option of USD or CHF but still... it sure does look like a speculative bubble. (For actual "mania" maybe see NFT's instead.)

samatman 6y ago
It's also not rational to believe that a sovereign currency which is backed only by government fiat cannot crash due to inflationary spirals. After all, if it should happen to be the case for the currencies we all use right now, it would be the first time that this experiment, which has been tried often enough throughout history, hasn't ended in that particular way. We've put all our eggs in that basket, and it's working... so far! I'm glad there's a hedge against that outcome though. If the worst happened, and the debt balloon triggers ECB, the Fed, and their Asian cousins, to initiate hyperinflationary money printing, we'll all be grateful that there's an alternative to going back to shipping convoys protecting boats loaded up with gold and silver. I don't even think the aforementioned hyperinflationary spiral is inevitable, or even more likely than not. But I repeat, it is irrational not to consider it a real risk, given history, and that outcome would lead to immeasurable human suffering, which cryptocurrencies cannot prevent, but can at least ameliorate.
thorwasdfasdf 6y ago
>> Bitcoin is up something like 800% for the year. It might be up another 800% in six months! Or it might go down to $10000! That was the case in 2017. Not anymore, things have changed. the fundamentals of bitcoin are based on what people believe it will be worth and this has changed drastically in mid-2020. Mid 2020 is the year WallStreet "got" bitcoin. this fundamentally changed it's future path. You have all these hedge fund managers and institutions that are willing to pour trillions of dollars into this asset to gain some exposure. And now that, that's begun it's setting off a chain reaction. You've got to remember, the impetus for all this. It's not that bitcoin is some ideal form of investment. The driver for bitcoin and equity growth is the destruction of an existing asset class: fixed income. That 100 trillion worldwide wealth of fixed income has to go somewhere (not that all of it has to get sold). either it will go into bitcoin or equities or gold. it could go to cash but then it'll get wiped out.
- endisneigh 6y ago
  Do you personally own any crypto?
- biztos 6y ago
  > destruction of an existing asset class: fixed income I find it very intriguing that this could be the driver, but what do you base that on?
  - thorwasdfasdf 6y ago
    Take a look at what's been happening in US Treasuries. Yields have been dropping for the last 40 years. Investors have still been happy with their returns because they make up for low yields with increasing prices on those bonds (bond prices and yields are inversely relational). But, now that US treasury prices have reached their peak (yields can not possibly go lower), it's game over for US treasuries. this is playing out in other bond markets as well too. So, everyone is dumping bonds: see article "Why would anyone hold bonds?", it was shared on hacker news a few weeks ago. Listen to just about any financial professional speak about bonds: they wouldn't "touch it with a 10' pole", is what you hear more often than not. Especially in the inflationary environment we're in now. Governments everywhere across the globe are up to their eyeballs in debt. the only way out is inflation - they've all realized this. you can't raise taxes, you cant decrease spending. you can only inflate your way out of the debt. so, basically 100T worth of bonds, a very significant percentage of global assets, is being sold off. And it can't go into cash. So where's it going? Well, equities for the most part, hence the relentless rise of equity markets. but also, other places too like bitcoin because people need some diversification, which used to be served by bonds. In the past, investors recommended 60/40 equity bonds mix. in the future, maybe it's 60/40 equity/commodities/crypto.
mw888 6y ago
It’s easy to take this stance and call others crazy, but what would it take for you to believe your current opinion is wrong about Bitcoin, apart from it changing to something which is in spirit and function not equivalent? If the answer is: “nothing would change my mind”, then perhaps you are the crazy one; after all, carbon copies of you have been around for every cycle of bitcoin growth. Do speculative bubbles have cycles, has any speculative bubble grown as much, crashed as hard, then grown even larger than bitcoin has multiple times? Bubbles only pop once, and bitcoin has fell as hard as any other bubble I know you are tempted to compare it to, only to retake the ground later. Speculative, obviously, bubble? You might be crazy for thinking so.
- biztos 6y ago
  If it must pop in order to be (have been) a bubble then yeah, maybe it never pops, and by that definition it would not have been a bubble, but how long do you have to wait for that to be true? I don't think that a very weird year or two is sufficient. A bubble, at least as I understand it, can pop more than once, after all we're not talking about a real physical bubble. Was there a real-estate bubble? I think there was, but prices now make it hard to remember that. I don't see how my current opinion is at odds with Bitcoin going up util I die and it melts the ice caps, hopefully in that order. If you're asking whether I'd stop thinking it's a bubble, I don't know -- I can be crazy (to miss out on the growth) and also right (if it pops some day). And of course you're right about "carbon copies" -- I ignored/missed/misread every crypto cycle so far. I'm not above buying some BTC at $100K but I probably won't, for reasons having nothing to do with crypto per se.

Sanzig 6y ago

> Real estate, there's no easy way to invest in it in a scalable way. Of course there is. It's called a REIT (Real Estate Investment Trust). If you want even more diversification, you can buy ETFs and mutual funds which hold multiple REITs in multiple market segments. You don't need to physically own a property to get real estate exposure... > So, what are you going to do put ALL your money in Equities? with no diversification. People desperately need a store of value, they can't just work until their 120 year old. You can buy bonds specifically indexed to inflation. In the United States, these are referred to as TIPS (Treasury inflation-protected securities). There are plenty of places to get exposure to these on the secondary market, eg: via ETFs. I find it a bit silly to claim that you're interested in a store of value while holding a highly volatile asset like Bitcoin. By definition, a store of value should have low volatility and basically track inflation. Bitcoin has behaved far more like a speculative investment: yes, it's substantially trended upwards, but it's also been highly volatile. How do you reconcile accepting Bitcoin but rejecting equities, which have historically outpaced inflation by a significant margin?

thorwasdfasdf 6y ago
TIPs I believe use the CPI, and so do other instruments like this. The CPI undercounts inflation by almost 1 to 1.5%. we've discussed this one many times: just look at bic mac index, housing prices, car prices. there are many buckets in the CPI and at least several of them don't fully count inflation, sometimes quite brazenly too: comparing beef prices to chicken prices instead of beef to beef, simply because beef has gone up faster than chicken. the appeal of bitcoin is there's a fixed supply as opposed to fiat which can increase exponentially. I never said reject equities. I want to invest in as many asset classes as possible, including equities, real estate and gold. The macro picture for equities is looking a little less rosy than it did 30 or 50 years ago. Equities are supposed to follow earnings growths, which is basically just population growth + productivity per capita increases plus dividends. if you break the 3 of those down and compare them to the last 50 years, you'll quickly see, future fundamentals are less rosy: - labor population growth has slowed to 0.5%, from 1.5% - per capita productivity growth is at all time lows - and dividends for s&p500 are now at 1.5%, down from 4.5%. Whereas the fundamentals for past growth were (4.5+1.5+2=8% real), the future fundamentals now show: (1.5+0.5+1.5=3.5%).