6 ms·

> I'd doubt BTC will go to zero, but I wouldn't be surprised if the entire covid rally gets wiped out and we see BTC 6k again. I agree. We invest a small amoun

> I'd doubt BTC will go to zero, but I wouldn't be surprised if the entire covid rally gets wiped out and we see BTC 6k again. I agree. We invest a small amount of money into $BTC and I feel pretty neutral on the topic and my comments come from an intention of neutral observation. I think $BTC is in a bad spot that's about to get worse in the short-term. It's getting hit from both ends: expensive energy, and high interest rates. Many believe it's supposed to be a hedge, and I think it still is, but it's not a hedge against a high interest rate environment in which the dollar and fiat currency (primary reserve currencies: USD, EUR, YEN, GPB, etc.) are still normalized and valued. It's more of a hedge against low interest rates and the central banks printing money in that environment IMO. Long-term I'm bullish because it's a deflationary asset. Eventually we'll get to the point where, similar to maybe Japan or South Korea a pack of gum costs 1000 units of fiat, which will necessitate $BTC being "worth" hundreds of thousands of dollars (or it's worthless, I don't think there is a middle ground here). Unless something crazy happens, deflationary environments in fiat currency will always be avoided, and if you target 2% inflation every year it's all but guaranteed that $BTC will simply be "worth" a lot of dollars (or $0). So I wouldn't be surprised to see $BTC hit $6,000 or even less. I would be surprised if within, say, 15 years it's worth that amount and not $0 or $1,000,000 (or something).

mumblemumble 4y ago
Long term I'm bearish because it's a deflationary asset. Deflationary value stores have a tendency to cause all sorts of social ills by encouraging hoarding. There's a reasonable line of thought that observes that it's no coincidence that the end of the age of European colonialism coincided with the demise of the gold standard. More concretely: if crypto is deflationary, then its value works similarly to how an Amway or Herbalife membership's value does. You get rich by getting in first and then convincing others to join after you.
- bombcar 4y ago
  More importantly it's only "bitcoin" because it's the first; even if everything crypto takes off the world could collectively decide to use something else (Etherium being an obvious choice, but there could be others).
- imtringued 4y ago
  In my opinion mixing the functions of medium of exchange and store of value has caused untold amounts of needless suffering. You see 2% inflation is the middle ground. Rich people may want to save and increase their wealth but my mom just wants a job to pay rent and buy groceries, she has no grand ambitions to become super wealthy. When you mix the two functions into cash, one of the two is going to dominate the economy and with gold it was the rich, with fiat it is mostly average people because having a job is more important than maintaining purchasing power.
  - ericmay 4y ago
    Maybe the issue is just that we no longer have a store of wealth that isn't tied to a speculative asset? Fiat currency is a fantastic currency - even terrorists who hate America use dollars. But it's a terrible store of wealth because it loses at least 2% of its value by intention (this fluctuates - just going off the stated Federal Reserve targets). I think this is where things like houses becoming collateralized assets start coming into the picture. You can buy stocks or index funds, but those can lose value and they're definitely not guaranteed to increase in value. Houses are a pretty "hard" asset in physical reality and with inflation basically they go up in value while also providing utility. And to buy a house you need fiat currency so they're somewhat liquid in that sense. So what do you do? Buy gold? Maybe. Bitcoin is another option similar in some ways to gold (in function at least). Other cryptocurrencies are assets in my view more similar to a stock with products or platforms behind them. I'm just not sure what to do. If you make cash inflation neutral or deflationary that sounds ideal, but how do you do that? And would people be likely to take risk in such an environment? Do we need to? Is it bad that we are encouraging the use of fiat currency by threatening to devalue it over time? I'm not sure.
    - saalweachter 4y ago
      > Maybe the issue is just that we no longer have a store of wealth that isn't tied to a speculative asset? You say speculative, I say productive. Is a non-productive store of value actually a thing which exists in nature? For most things, you can't store a thing itself: grain rots, chickens die, houses decay, iron rusts, water is fouled. If you want to have a thing in the future, you need a way to produce the thing: fields of grains, lineages of chickens, maintenance and construction of houses, refinement of iron, the purification of water. All investment in these future means of production is speculative; you have no guarantee the bet you made on how you will obtain a chicken in 20 years will play out.
- ericmay 4y ago
  > Long term I'm bearish because it's a deflationary asset. Deflationary value stores have a tendency to cause all sorts of social ills by encouraging hoarding. There's a reasonable line of thought that observes that it's no coincidence that the end of the age of European colonialism coincided with the demise of the gold standard. It's definitely an interesting theory - any particular articles or books you've read on the subject? I find the story of money fascinating. On the other hand, however, States are no longer constrained by how much gold they have. In the past you could wage war until you ran out of gold and then that was that - you couldn't print money out of thin air. Now you can just print money and at least up until some point (which we don't know yet) it works. I guess you could argue back to your first point that this is what caused wars - you needed to accumulate resources in order to have wealth so you'd start wars and take stuff. I think deflationary economies have bad attributes - like why take risks when you can do nothing and the value of your assets goes up? On the other hand, (and someone else mentioned something related to this) inflation literally destroys wealth so how can someone working a non-high paying job store wealth when the value of that wealth is destroyed at a minimum of 2% per year?
  - vel0city 4y ago
    > inflation literally destroys wealth Inflation doesn't destroy wealth, inflation erodes the value of money. Wealth and money are two separate but related ideas. One shouldn't tie up the majority of their wealth in money, its non-productive. > how can someone working a non-high paying job store wealth when the value of that wealth is destroyed at a minimum of 2% per year? By investing in productive assets instead of holding pieces of paper under their mattress.
- Geee 4y ago
  That's a common fallacy. Hoarding, saving, preparing for the future is one of most fundamental human needs and the bedrock for a functioning economy and society. There's no fundamental economic principle which would indicate that an inflationary money would do any good to a society. It destroys savings, which is opposite of what is good for an individual and a society. Also, because you mentioned colonialism, read this to understand how colonialism and slave trade was enabled by inflation (counterfeit money): https://breedlove22.medium.com/masters-and-slaves-of-money-255ecc93404f https://breedlove22.medium.com/masters-and-slaves-of-money-2...
  - lolc 4y ago
    Money isn't wealth. What you can get for it is. Hoarding casino chips does not prepare you for the future. It just makes the people running the casino richer with goods you traded for the chips. Oh you say, I can trade the chips with other people. Also the chips are numbered and we have an agreement to never accept a casino chip numbered over 1 trillion. Then we pay the casino one chip every time we trade. So the casino always has some chips to trade. The casino always wins. You're even paying their horrendous electricity bill.
    - Geee 4y ago
      Money allows optionality - instead of hoarding food and fuel, you can hoard money and buy the things you need in the future. If you know for sure that you need food and fuel, and hoard them in advance, they will rot and evaporate by the time you need them. Inflationary money is like rotting food, instead of canned food. It makes no sense at all to store your wealth in rotting and evaporating things.
      - lolc 4y ago
        How do you know people will want to trade fuel for casino chips in the future?
        Geee 4y ago
        Well, you don't really know, but you can make certain assumptions. Money is like a social network with network effects, which means that people want to hoard casino chips which are most popular, and thus they also want to accept them in trade and reject everything else. This keeps them in the most popular economic network, and also keeps the casino chips valuable. However, if there's something wrong in the casino chips itself (like inflation), people start to switch to a better version of casino chips, and they can assume that everyone switches, sooner or later, to the best alternative available, with least issues and largest network. Network effects will keep the new casino chips valuable as long as there's no better alternative.
candiddevmike 4y ago
What does Bitcoin provide that a cheaper coin doesn't? The only thing pushing the price up is speculation, all digital coins are worth pennies as they're all completely interchangeable from an end user perspective.
- RestlessMind 4y ago
  > What does Bitcoin provide that a cheaper coin doesn't? Longer track record than the rest. More buy-in from people. Just like Gold vs other shiny metals.
  - lumost 4y ago
    The network effect is strong, if BTC actually was to take over for USD then people would have to have trust that BTC wouldn't evaporate the next day. BTC's incentive model and network effect provide that. Assuming of course that BTC could outplace USD.
    - RestlessMind 4y ago
      I see BTC in the same class as Gold (hard assets without any intrinsic value and valued only because everyone else values it). USD is a different asset type - Fiat currencies which are essentially debts owed by various governments to the holders of those currencies. So BTC won't be replacing USD, imo.
      - tiborsaas 4y ago
        Gold has some intrinsic value, you can turn it into fancy jewelry, teeth replacement or cutlery :)
        RestlessMind 4y ago
        And yet its market cap, >10T USD, is not at all commensurate to the uses you cited. Governments hold gold in their reserves because they see it as a hard asset.
lovingCranberry 4y ago
> which will necessitate $BTC being "worth" hundreds of thousands of dollars You'd need a two trillion dollar market cap in bitcoin to make each unit worth more than 100k USD. (Currently there are 19m out of 21m coins minted; two trillion / 19million = ~105k)
jtbayly 4y ago
It sounds to me like you’ve said that BTC will both go up and not go up in an inflationary environment. I’ve been wondering why a hedge wouldn’t be for this exact environment, so can you explain your thinking a bit more?
yunohn 4y ago
> It's more of a hedge against low interest rates and the central banks printing money in that environment IMO. Could you explain how /exactly/ it functions as a hedge? I don’t care about price, just the mechanics/logic.
- ericmay 4y ago
  From what I gather, and certainly someone may come in with a much better explanation or refutation is that Bitcoin is in a sense a finite resource (let's just look at the mechanics right now) and if appetite for Bitcoins increases you can't make more of them. If a central bank is inflating a currency, it means each year that more of that currency exists than it did previously, so people can effectively bid for resources with more currency which increases the relative price. A pack of gum used to cost $.05. Now it's like $2.99 (or whatever). This is primarily due to inflation as far as I can tell. Likewise the same is true for Bitcoin, except that it has an additional feature in that it's transmutable into a pack of gum, or a share of JPMorgan stock, or a house, or a car, or some service. It's also transferrable - you can move it (again let's ignore how well it works right now) from place to place without having to actually ship it anywhere. So because Bitcoin is transmutable like a Euro or Dollar it can do similar things, except the difference is that more Euros and Dollars are effectively "mined" and created, whereas there's a limit to how many Bitcoins can ever exist. So as more and more Euros and Dollars are created, you can spend more of those to buy the same Bitcoin. Granted, this is very much at face value and some of the mechanics aren't quite there - it's actually very expensive right now to move Bitcoin around and it appears to make for a pretty bad currency, but I think this should at least touch on the mechanics or logic. tl;dr it's like gold.
  - namaria 4y ago
    Prices don't rise 'due to inflation'. Inflation is just another name for price rise. This 'transmutability' you speak of is called currency. Bitcoin has some but very little compared to cash. Also the so-called 'deflacionary' nature of bitcoin, supposedly caused by the supply cap assumes a constant or growing demand for it, which is far from assured. Bitcoin only needs to collapse once to become worthless forever, there will be no cold re-start. Whereas precious metals don't need one. That, IMHO, is the crucial difference that advocates seem to forget.
FabHK 4y ago
> if you target 2% inflation every year it's all but guaranteed that $BTC will simply be "worth" a lot of dollars (or $0). FWIW, the BTC money supply increases at 1.7% p.a. right now (until the next halving).

mumblemumble 4y ago

Long term I'm bearish because it's a deflationary asset. Deflationary value stores have a tendency to cause all sorts of social ills by encouraging hoarding. There's a reasonable line of thought that observes that it's no coincidence that the end of the age of European colonialism coincided with the demise of the gold standard. More concretely: if crypto is deflationary, then its value works similarly to how an Amway or Herbalife membership's value does. You get rich by getting in first and then convincing others to join after you.

bombcar 4y ago
More importantly it's only "bitcoin" because it's the first; even if everything crypto takes off the world could collectively decide to use something else (Etherium being an obvious choice, but there could be others).
imtringued 4y ago
In my opinion mixing the functions of medium of exchange and store of value has caused untold amounts of needless suffering. You see 2% inflation is the middle ground. Rich people may want to save and increase their wealth but my mom just wants a job to pay rent and buy groceries, she has no grand ambitions to become super wealthy. When you mix the two functions into cash, one of the two is going to dominate the economy and with gold it was the rich, with fiat it is mostly average people because having a job is more important than maintaining purchasing power.
- ericmay 4y ago
  Maybe the issue is just that we no longer have a store of wealth that isn't tied to a speculative asset? Fiat currency is a fantastic currency - even terrorists who hate America use dollars. But it's a terrible store of wealth because it loses at least 2% of its value by intention (this fluctuates - just going off the stated Federal Reserve targets). I think this is where things like houses becoming collateralized assets start coming into the picture. You can buy stocks or index funds, but those can lose value and they're definitely not guaranteed to increase in value. Houses are a pretty "hard" asset in physical reality and with inflation basically they go up in value while also providing utility. And to buy a house you need fiat currency so they're somewhat liquid in that sense. So what do you do? Buy gold? Maybe. Bitcoin is another option similar in some ways to gold (in function at least). Other cryptocurrencies are assets in my view more similar to a stock with products or platforms behind them. I'm just not sure what to do. If you make cash inflation neutral or deflationary that sounds ideal, but how do you do that? And would people be likely to take risk in such an environment? Do we need to? Is it bad that we are encouraging the use of fiat currency by threatening to devalue it over time? I'm not sure.
  - saalweachter 4y ago
    > Maybe the issue is just that we no longer have a store of wealth that isn't tied to a speculative asset? You say speculative, I say productive. Is a non-productive store of value actually a thing which exists in nature? For most things, you can't store a thing itself: grain rots, chickens die, houses decay, iron rusts, water is fouled. If you want to have a thing in the future, you need a way to produce the thing: fields of grains, lineages of chickens, maintenance and construction of houses, refinement of iron, the purification of water. All investment in these future means of production is speculative; you have no guarantee the bet you made on how you will obtain a chicken in 20 years will play out.
ericmay 4y ago
> Long term I'm bearish because it's a deflationary asset. Deflationary value stores have a tendency to cause all sorts of social ills by encouraging hoarding. There's a reasonable line of thought that observes that it's no coincidence that the end of the age of European colonialism coincided with the demise of the gold standard. It's definitely an interesting theory - any particular articles or books you've read on the subject? I find the story of money fascinating. On the other hand, however, States are no longer constrained by how much gold they have. In the past you could wage war until you ran out of gold and then that was that - you couldn't print money out of thin air. Now you can just print money and at least up until some point (which we don't know yet) it works. I guess you could argue back to your first point that this is what caused wars - you needed to accumulate resources in order to have wealth so you'd start wars and take stuff. I think deflationary economies have bad attributes - like why take risks when you can do nothing and the value of your assets goes up? On the other hand, (and someone else mentioned something related to this) inflation literally destroys wealth so how can someone working a non-high paying job store wealth when the value of that wealth is destroyed at a minimum of 2% per year?
- vel0city 4y ago
  > inflation literally destroys wealth Inflation doesn't destroy wealth, inflation erodes the value of money. Wealth and money are two separate but related ideas. One shouldn't tie up the majority of their wealth in money, its non-productive. > how can someone working a non-high paying job store wealth when the value of that wealth is destroyed at a minimum of 2% per year? By investing in productive assets instead of holding pieces of paper under their mattress.
Geee 4y ago
That's a common fallacy. Hoarding, saving, preparing for the future is one of most fundamental human needs and the bedrock for a functioning economy and society. There's no fundamental economic principle which would indicate that an inflationary money would do any good to a society. It destroys savings, which is opposite of what is good for an individual and a society. Also, because you mentioned colonialism, read this to understand how colonialism and slave trade was enabled by inflation (counterfeit money): https://breedlove22.medium.com/masters-and-slaves-of-money-255ecc93404f https://breedlove22.medium.com/masters-and-slaves-of-money-2...
- lolc 4y ago
  Money isn't wealth. What you can get for it is. Hoarding casino chips does not prepare you for the future. It just makes the people running the casino richer with goods you traded for the chips. Oh you say, I can trade the chips with other people. Also the chips are numbered and we have an agreement to never accept a casino chip numbered over 1 trillion. Then we pay the casino one chip every time we trade. So the casino always has some chips to trade. The casino always wins. You're even paying their horrendous electricity bill.
  - Geee 4y ago
    Money allows optionality - instead of hoarding food and fuel, you can hoard money and buy the things you need in the future. If you know for sure that you need food and fuel, and hoard them in advance, they will rot and evaporate by the time you need them. Inflationary money is like rotting food, instead of canned food. It makes no sense at all to store your wealth in rotting and evaporating things.
    - lolc 4y ago
      How do you know people will want to trade fuel for casino chips in the future?
      - Geee 4y ago
        Well, you don't really know, but you can make certain assumptions. Money is like a social network with network effects, which means that people want to hoard casino chips which are most popular, and thus they also want to accept them in trade and reject everything else. This keeps them in the most popular economic network, and also keeps the casino chips valuable. However, if there's something wrong in the casino chips itself (like inflation), people start to switch to a better version of casino chips, and they can assume that everyone switches, sooner or later, to the best alternative available, with least issues and largest network. Network effects will keep the new casino chips valuable as long as there's no better alternative.

candiddevmike 4y ago

What does Bitcoin provide that a cheaper coin doesn't? The only thing pushing the price up is speculation, all digital coins are worth pennies as they're all completely interchangeable from an end user perspective.

RestlessMind 4y ago
> What does Bitcoin provide that a cheaper coin doesn't? Longer track record than the rest. More buy-in from people. Just like Gold vs other shiny metals.
- lumost 4y ago
  The network effect is strong, if BTC actually was to take over for USD then people would have to have trust that BTC wouldn't evaporate the next day. BTC's incentive model and network effect provide that. Assuming of course that BTC could outplace USD.
  - RestlessMind 4y ago
    I see BTC in the same class as Gold (hard assets without any intrinsic value and valued only because everyone else values it). USD is a different asset type - Fiat currencies which are essentially debts owed by various governments to the holders of those currencies. So BTC won't be replacing USD, imo.
    - tiborsaas 4y ago
      Gold has some intrinsic value, you can turn it into fancy jewelry, teeth replacement or cutlery :)
      - RestlessMind 4y ago
        And yet its market cap, >10T USD, is not at all commensurate to the uses you cited. Governments hold gold in their reserves because they see it as a hard asset.

lovingCranberry 4y ago

> which will necessitate $BTC being "worth" hundreds of thousands of dollars You'd need a two trillion dollar market cap in bitcoin to make each unit worth more than 100k USD. (Currently there are 19m out of 21m coins minted; two trillion / 19million = ~105k)

jtbayly 4y ago

It sounds to me like you’ve said that BTC will both go up and not go up in an inflationary environment. I’ve been wondering why a hedge wouldn’t be for this exact environment, so can you explain your thinking a bit more?

yunohn 4y ago

> It's more of a hedge against low interest rates and the central banks printing money in that environment IMO. Could you explain how /exactly/ it functions as a hedge? I don’t care about price, just the mechanics/logic.

ericmay 4y ago
From what I gather, and certainly someone may come in with a much better explanation or refutation is that Bitcoin is in a sense a finite resource (let's just look at the mechanics right now) and if appetite for Bitcoins increases you can't make more of them. If a central bank is inflating a currency, it means each year that more of that currency exists than it did previously, so people can effectively bid for resources with more currency which increases the relative price. A pack of gum used to cost $.05. Now it's like $2.99 (or whatever). This is primarily due to inflation as far as I can tell. Likewise the same is true for Bitcoin, except that it has an additional feature in that it's transmutable into a pack of gum, or a share of JPMorgan stock, or a house, or a car, or some service. It's also transferrable - you can move it (again let's ignore how well it works right now) from place to place without having to actually ship it anywhere. So because Bitcoin is transmutable like a Euro or Dollar it can do similar things, except the difference is that more Euros and Dollars are effectively "mined" and created, whereas there's a limit to how many Bitcoins can ever exist. So as more and more Euros and Dollars are created, you can spend more of those to buy the same Bitcoin. Granted, this is very much at face value and some of the mechanics aren't quite there - it's actually very expensive right now to move Bitcoin around and it appears to make for a pretty bad currency, but I think this should at least touch on the mechanics or logic. tl;dr it's like gold.
- namaria 4y ago
  Prices don't rise 'due to inflation'. Inflation is just another name for price rise. This 'transmutability' you speak of is called currency. Bitcoin has some but very little compared to cash. Also the so-called 'deflacionary' nature of bitcoin, supposedly caused by the supply cap assumes a constant or growing demand for it, which is far from assured. Bitcoin only needs to collapse once to become worthless forever, there will be no cold re-start. Whereas precious metals don't need one. That, IMHO, is the crucial difference that advocates seem to forget.

FabHK 4y ago

> if you target 2% inflation every year it's all but guaranteed that $BTC will simply be "worth" a lot of dollars (or $0). FWIW, the BTC money supply increases at 1.7% p.a. right now (until the next halving).