Bitcoin - steer clear or not?
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Sister Sara
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Sister Sara
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It was proposed for transactions without the need for a third trusted party. A trustless transaction system. You can now transact with others directly using bitcoin. Whether anyone chooses to do so or not is a separate point. The trustless digital transaction has been validated through bitcoin.
Isn't this just picking two points of the graph that suit the narrative?
Ditto.
I don't think there is any substantive evidence of this.
and all those ETF's are not speculative spins? What can I do with an ounce of gold?
Brendan Burgess
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Wear it? Use it in your phone? Gild a painting or frame? Lots of industrial uses?
Hoard it in anticipation of an Irish Reich?
www.theguardian.com
Ireland’s far-right party in crisis amid claims of stolen gold
Confusion over whether Justin Barrett remains leader of National party after his allegations of theft
www.theguardian.com
Sister Sara
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You could wear it, but you could also wear a 'gold' sticker. What odds? why would that make it worth $4,000+ per ounce?
I think it would be very cumbersome to use my ounce of gold in my phone - for what purpose? It works just fine without gold, it would just go to waste.
Wasnt the idea that adoption FOR payments would drive demand for BTC - payments was central (early) thesis on why BTC was going to be $1m per coin.
Transaction layer thesis - invalidated
Nope BTC was hailed as new digital gold, a more seamless way to protect yourself from currency debasement.....the only issue is that as concerns around currency debasement have risen (mainly around USD).....Gold has gone up........and BTC has gone down.....this is not what is supposed to happen according to one of the core BTC stories I hear frequrently.
Ditto for 2021 - 2023 period.......inflation way up, BTC way down
Inflation hedge thesis - invalidated.
Bitcoin suffers from classic retail trader behaviour.......people pile in at tops and exit at the bottom. Its
Retail investors have chased prices, and most have lost money. BLS data shows 80%+ of BTC buyers are underwater from their initial investment.
https://www.bis.org/publ/bisbull69.pdf
You mean ETF's that give you fractional ownership of say 500 of the worlds largest companies (S&P 500 ETF) producing products and services you likely pay for in your everyday life, companies that produce profits every year & send some back to investors as dividends annually and re-invest the remaining profits in expansionary projects all inside an ETF vehicle that charges 0.02% (€2 on €10,000 invested) and can be bought using 0% commission brokerage for €0.
That isnt speculating.....its called investing.
LarryScott
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This was central to the "block size" debate (2016/2017). One side wanted to keep expanding the number of transactions as demand rose (to keep transaction fees low) and the other side felt that limiting the number of transactions (so the blockchain would be small enough to be audited by the public) was more prudent.
The big block side felt that expanding the number of transactions would mean less fees per transaction but that the extra transactions would make up for it.
The small block side won the "war" and now control the Bitcoin protocol and Bitcoin targets "store-of-value" rather than being a low cost transaction layer.
In fairness, the losers of the war created alternative coins and Bitcoin with its small block size is still the most valuable one.
Sister Sara
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Certainly I think I recall that being touted by proponents of Bitcoin. But I don't think you will find that in the Whitepaper?
Lots of things are said about bitcoin that appear outlandish, both for and against - going to the moon, $1m per coin, replacing central banks etc...equally, the US gov will ban it, the Chinese will crush it, it will boil the oceans, its going to zero!
None of which have happened so best to stick with what the Whitepaper says:
"A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution...
We propose a solution to the double-spending problem using a peer-to-peer network.
The network timestamps transactions by hashing them into an ongoing chain of
hash-based proof-of-work, forming a record that cannot be changed without redoing
the proof-of-work. "
This has been validated. This is fact, truth. If it were not bitcoin would return to zero before you have had time to finish reading this sentence.
I have had a brief run-through that report (from Feb 2023!!) and nowhere can I read what it is your claiming it says.
"...in our sample, a majority of investors probably lost money on their bitcoin." This is pure speculation.
Yes, many hail bitcoin as 'digital gold' to protect from currency debasement. I would espouse that view. Not with 100% certainty, guarantee...but as an option. I would be inclined to buy bitcoin when interest rates fall and money supply is increasing. I would tend to consider that rising interesting rates would threaten bitcoin's value as the fiat system tightens (or hardens) supply on money.
The problem with your views here is that you are deliberately citing time-frames that fit neatly into the narrative you want to push.
There is no correlation with the rate of inflation and the price of bitcoin. The rate of inflation is statement of events that have already occurred. It is a record of transactions that have already passed and not what is occurring. So a better gauge would be the period of money-printing known as QE from 10yrs ago and compare the price of bitcoin over that period.
I agree, but all investing is a form of speculation to some level I'm sure you would agree? High levels of speculation and low levels.
Certainly the S&P 500 would appear to be an attractive investment in the way you have laid it out. Not a bad sales pitch, im genuinely tempted.
But there must be some risk? Or is there no risk at all? Is your investment guaranteed returns?
Using your selective timeframe approach, if I bought into the S&P in the last month I would be slightly down on my speculation.
But then again, I don't agree with selecting time-frames just to suit a narrative.
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great so transaction layer is gone as a story.....store of value against currency debasement is the key story now then.?....that story was invalidated over the 2021-2023 inflation period (BTC went down, as inflation went up)....and most recently now into the 2025-2026 currency debasement anxiety period that has seen gold rise by alot while BTC fell.
The only story that remains validated by the evidence.....is that BTC most resembles pre-profit or even pre-product tech stocks.....which is to say that BTC moves in lockstep with the most speculative parts of the financial markets.....its not a store of value, its not a new transaction currency....in the same way that a publicly traded moonshot nuclear fusion company trading on Nasdaq is not a store of value...its a speculation.....folks should be intellectually honest with themselves....when any investment has a central thesis and that thesis is invlaidated numerous times you need to take a step back reset your framework.
You hold an asset such that you hope it goes up in value over time......BTC's numerous stories and narratives on why it will go up over time have been systematically disproven in the real world over its 17yr lifespan.....it has never acted in a way consistent with the narrative....its gone up alot but never in a way consistent with the stories that we're told to attract participants into the story which is a MAJOR investing red flag IMO.
Sister Sara
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But which narrative are you talking about? There are many. Both in favour and against bitcoin, most have not materialised.
What has been validated is that the proposal to create a peer-to-peer trustless system for transacting. If you cannot acknowledge that then you are living in denial.
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LarryScott
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I think that is fair.
There is a possible future where some cryptocurrency is the world's reserve currency (or currency of the internet or something) and in many of those futures Bitcoin is the one that achieves that status.
In such a future, a single Bitcoin would be very valuable.
The current price is the price in those future times the odds of it happening, plus the actual value in the present.
I think you are right that that the future value is the dominant portion of the coin's value.
It has a present value, since it is useful for paying for things/store-of-value, but that probably adds less to its market price, then future potential.
Acknowledged....but you must also acknowledge that the BTC story, the dominant one is the price will go up over time and you should own it.....there are many sub-stories as we've discussed on why the price will go up over time.....all of which IMO have been invalidated by reality. I dont know why BTC is down this week, this month, this year what I do know is that humans are attracted to compelling narratives and BTC has/had one of the best I've heard......the issue is the narrative is not comporting with reality over time and when that happens you start to lose your audience....like a sitcom that starts going of the rails plot wise, folks begin to switch off. BTC increasingly feels like a show running out of compelling storylines.....what I would say is that the BTC salespeople are nothing if not inventive so I suspect a narrative re-boot attempt soon.
Sister Sara
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Yes I will acknowledge that. But turn on any financial TV show and you will have commentators speculating on why they believe certain stocks will go up or down.
It's all opinion. The Bitcoin saga is less dominant now as its price is routinely cited on mainstream financials. It will become news again if it reaches 100,00 again and above.
The problem as I see it is that bitcoin being $50, $75 $100k is transmitting a message that says its out of reach for ordinary people.
When financial markets start talking in Satoshi's then that will be the time bitcoin is being used for transactions on a regular basis. That is my speculation anyway.
David McWilliams weighs in on bitcoin today. "Trading on sentiment alone, crypto is ...the ultimate speculative punt, a tradeable gambling contract". https://www.irishtimes.com/opinion/...ill-never-be-when-it-falls-it-wont-be-pretty/ (paywalled)
My opinion:
BitCoin will likely go down in financial history as one of the great "Emperor has no clothes" moments. Rationally, BitCoin will fail, sooner or later. But as it stands, so many people have so much money invested they can't let it fail. It's lasted a long time and achieved some relative level of stability and respectability. For context, Tulip Mania lasted a few months, and the South Sea Bubble less than a year, and these were in slower moving times than today. So how long will BitCoin take to fail? Or perhaps it won't?
My opinion:
BitCoin will likely go down in financial history as one of the great "Emperor has no clothes" moments. Rationally, BitCoin will fail, sooner or later. But as it stands, so many people have so much money invested they can't let it fail. It's lasted a long time and achieved some relative level of stability and respectability. For context, Tulip Mania lasted a few months, and the South Sea Bubble less than a year, and these were in slower moving times than today. So how long will BitCoin take to fail? Or perhaps it won't?
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Another unsavoury but real narrative with bitcoin is that it can be used by sanctioned regimes like Russia to buy and sell stuff , they can't use the electronic payments or banking systems but they are still using bitcoin. I presume russian oligarchs are using it to get their money out of Russia or as a means to buy things abroad that they cannot do with their russian money. They probably also moved huge amounts into bitcoin from their foreign bank accounts before they were frozen. There is an awful lot of dirty money flowing through bitcoin
CharlieMac
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The same can be seen as a justification for digital currencies. For instance, giving financial options to people who live under tyrannical dictatorships and/or in places with no functioning financial system. They could have access to a currency that doesn't even required them to have identification or official status such as citizenship.
Of course those features end up being abused but aren't they useful features of a digital currency? I don't think bitcoin will ever go away for that reason. There are still beneficial use cases for its existence.
Sister Sara
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There is an awful lot of dirty money flowing through Central Bank issued currency too. Its only dirty if it obtained through illegal means or, as with Russia, is sanctioned at international level.
As long as there is a State hegemony over international monetary system then there will always be a need for bitcoin. If you are an ordinary Russian citizen, an anti-Putinist, anti-Ukraine invasion, you are being punished for the sins of your political masters. Bitcoin may serve as a means, as one option, to preserve your wealth.
In Feb 2022 the Russian ruble was 0.013 USDollars. Its back to that today.
At the same time 1 bitcoin was around $35k , now its $57K.
In the months following the Russian invasion bitcoin price dropped $22k suggesting, to me anyway, there was no surge of Russian money, dirty or otherwise, into bitcoin. On the contrary, as the Russia ruble decline to $0.0007 there may have been a bitcoin sell-off in Russia to cover liabilities.
Sister Sara
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This is a fallacy, I'm surprised McWilliams has descended to this. There are innumerable examples of investments where people 'have so much money invested they can't let it fail', but far less than what is invested in bitcoin, yet fail it did.
The day a bitcoin transaction cannot be verified as valid is the day it will return to zero.
Duke of Marmalade
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This is central. Natoshi envisaged Bitcoin as a "payments" vehicle, as a medium of exchange. Early attempts to impute its "value" started from this utility. A typical argument was that Bitcoin would capture 15% of the World's medium of exchange and ergo they calculated an ultimate value of €500k per BTC.
The medium of exchange motif is long, long dead. 99% of BTC purchases are for the sole purpose of speculation.
@Sister Sara I'm confused. Your persona in Letting Off Steam would suggest you are at the other extreme to the far right Trumpites who worship at the bitcoin shrine.