Bitcoin - steer clear or not?

3CC said:
OK, it takes loads of energy to keep them frozen, but boy when the sun is gone, I'll be the one that is laughing then. Like you, I can't say when it will happen and it may not be in my lifetime, but when you think about it, it just makes sense.
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I think it was Eddie Murphy on Trading Places who taught me that orange commodities should be sold before breakfast. Much like Honest Simpson taught me to sell pumpkin futures before Halloween
 
Duke of Marmalade said:
You are in a very comfortable position that a V.S.P. of your net wealth provides a meaningful safety net. Even as duke I could not possibly make the same claim for myself.
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That vsp is quite valuable now. Not life-changing, unfortunately I am not and would never proclaim to be one of vaunted BTC millionaires.

Shaving a year or two of my need to continue paid employment is a real prospect right now though, and without any sleep lost if it all goes pear-shaped. :)
 
Brendan Burgess said:
Doesn't make sense. If you are worried about the demise of the euro, then don't have any cash denominated in euro. Buy shares. Buy gold. Buy property.
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As it happens very little of Irish households' net wealth is in bare euro.
I happen to be the exception as I do have a substantial portion of my NW in govies (though even there I trust that a demise of the euro would at least lead to some realistic and fair restatement of government debt in the new currency, hopefully not bitcoin :) ).
The vast majority of knowledgeable contributors on this site would recommend holding any investible wealth in "real assets".
 
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Sister Sara said:
The supply of BTC is fixed at 21m units.
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For many of the "use" cases there is effectively an unlimited supply of bitcoin or its lookalikes. For example I am interpreting your main "use" is as an insurance against the demise of the euro. You had a choice of 10,000 cryptos at my last check a couple of years ago, not to mention a few dozen fiat alternatives.
There is one "use" case where bitcoin has cornered the market - ask Josephine Bloggs what comes to mind when you mention "crypto millionaire" and she will almost certainly say "bitcoin".
 
Sister Sara said:
The supply of euro is flexible, depending on what ECB dictates.
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That is true. I know you fully understand these things but for the benefit of those that might interpret the term "dictates" as pejorative or in some way implying a malevolent elitist force at work bear with me on a short lesson.
A fiat currency is NOT and is not intended to be an asset or an investment. It is a utility like water or electricity. It needs careful central management to meet the best needs of the people and their economy. The trickiest part of the job of the ECB is to maintain confidence in the short term price at which it can be exchanged for goods/services whilst dispelling any sense that it is long term a good investment - hoarding of a currency would not be in the best interests of an efficient economy. An inflation target of 2% p.a. is set as experience suggests this is the sweet spot for managing these conflicting objectives. Note that bitcoin would be hopelessly unable to fulfil this role in a modern economy - the volume of the medium of exchange utility must flex for maximum efficiency.
So with the euro project it is somewhat like all these countries working off the same electricity grid - clearly that must bring large advantages. But if the communal (mainly political) infrastructure is no longer fit for purpose, that is not the end of the world; just back to the inefficient delivery of the utility at a national level or maybe some countries like Ireland latching on to another grid like maybe Sterling.
***End of Lesson***
 
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Duke of Marmalade said:
You had a choice of 10,000 cryptos at my last check a couple of years ago
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Indeed. And I did for a period hold some Litecoin, a decade ago, when I was trying to understand all this stuff.
Litecoin is often referred to as 'digital silver' due to its similarities to bitcoin - limited supply, blockchain etc. The tech stuff is modified somewhat.

Litecoin is $55 today having reached a peak of $221.
So why not Litecoin over Bitcoin? I would actually not go against anyone opting to buy Litecoin over Bitcoin, I do think from a consumers perspective it pretty much mirrors bitcoin. Only bitcoin has emerged first and stolen the march.

Of the other thousands of crytpo's, to be honest I think most of them are trash and wouldn't touch with a barge-pole.

I'm always amused at how the price of bitcoin keeps turning people's heads, whether it is a price rise or price fall. Notably, this thread came alive again when BTC price fall hit 50% from its high prompting a surge of "told you so" posts from the Bitcoin-to-zero posters.

This demonstrates a lack of understanding of BTC price in my opinion and I think I may know why now.

You see, at $70k or $120K the price of bitcoin does not really matter.

I get the impression that those BTC-to-zero posters are thinking it costs $70K to own BTC? Certainly to own 1 BTC that is what is costs, but to own any BTC its cost is actually negligble.

BTC is divisible to 100,000,000 so the actual price of owning any BTC priced at $70k is $0.0007c

It costs just $0.0007c to buy one Sat (Satoshi). You need to fork out €10 just to own 0.0007% of a bitcoin.

Assuming that is all you have, then if the price doubles or falls by 50% your $10 falls or doubles in tandem.
This is the same as if BTC was priced at $120 and $60.

The only difference being the quantity of BTC that $10 will buy you at the price level.

But! As BTC has not materialised (yet) into the medium of exchange that was proposed it really does not matter how much BTC you own at any price. The price fluctuation is measured in % terms and a 50% from $100 to $50 is the exact same as a 50% fall from $120k to $60k.

A loss of $5.

Only if BTC does ever materialise into a prominent medium of exchange (nowhere on the horizon) will the quantity of BTC that you hold matter.
And in that circumstance (and I assuming the price level will be a multiple of what it is now) those without BTC may feel a little silly not having bought any at negligible cost.
 
Sister Sara said:
You see, at $70k or $120K the price of bitcoin does not really matter.
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Oh but it does or rather the market cap of bitcoin does matter.
Let's mull for a moment on that market cap. At a price of $120k per bitcoin it is about $2.4 trillion. The custodians of the US economy are taking notice. As an aside, they were forced last week to reject any possibility of a crypto bail out.
They recognise this as perceived wealth of $2.4tr with no backing whatsoever. If it went to zero that would be a pretty big kick in the stomach to the perceived wealth in the economy. Yet it would only be equivalent to a 3.4% fall in the US stockmarket value of $70tr.
I have already mentioned RFK's key speech in July 2024 where he set out the strategy of the subsequently elected administration. He predicted that under their watch its market cap would rise to 100s of trillions of US$ (the whole of the World's stockmarket has just passed the $100tr mark). This translated to a price of between $10million to $15million per bitcoin - "heck! I'll see your $500k and raise you".
I was actually surprised that against this backdrop the price of bitcoin only rose to $120k on the back of Trump 2. It has now slipped back to pre Trump 2 levels.
Now you can view these matters either of two opposite ways:
1. There is still enormous headroom for bitcoin given the RFK target of $15m per BTC, OR
2. The credibility of the whole project is in serious doo-dah.
 
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Duke of Marmalade said:
A fiat currency is NOT and is not intended to be an asset or an investment. It is a utility like water or electricity. It needs careful central management to meet the best needs of the people and their economy.
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I would agree 100% with this and I think the water and electricity are excellent descripts of monetary 'currency'.
Where it gets complicated and verves into ideology is the meeting the "best needs of the people and the economy". This is the "greater good theory" and in the absence of a theory that can improve on that for the best needs of the people then I wholeheartedly embrace the theory.

However, the "greater good theory" is effectively political decisions on behalf of the people.

The question is, will you always be on the side of the greater good when those political decisions are made?

If not, best to have alternative options.

I'm not going to entertain anything to with RFK. His impact on BTC is an irrelevance.
 
I'm really enjoying this thread. Solid thoughts and opinions. Don't stop!
8-9 years ago a colleague - who had more experienced of financial markets than I - recommended that I put 1% of my income into bitcoin. If it tanked, nothing significant lost, but a big potential upside. I didn't follow his advice, but in hindsight it was good advice and still is. While I personally think it's backed by nothing except market confidence and therefore set up for a heavy fall some day, that doesn't mean it isn't worth investing in.
 
Sister Sara said:
"best needs of the people and the economy".
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I suppose that was a tad hubristic. The ECB's mandate is probably much more prosaic, something like "help maintain the economy at full capacity and smooth out cyclical excesses". What people spend their money on would be no more their business than what people use electricity for would be the concern of the electricity supply people.
 
From the horses mouth

https://www.ecb.europa.eu/mopo/intro/html/index.en.html

Primary objective​

The primary objective of the ECB’s monetary policy is to maintain price stability. This means making sure that inflation – the rate at which the prices for goods and services change over time – remains low, stable and predictable. To succeed, we seek to anchor inflation expectations and influence the “temperature” of the economy, making sure the conditions are just right – not too hot, and not too cold. We do this through our monetary policy.

The Governing Council considers that price stability is best maintained by aiming for 2% inflation over the medium term. "

patfert1 said:
I personally think it's backed by nothing except market confidence
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A timely interjection @patfert1.

I would argue that currency and monetary systems are backed by nothing other than market confidence.

The 'Primary Objective' above was turned on its head during the sovereign debt crisis. The ECB embarked on a primary objective to induce higher inflation through massive QE programs in order to be able to restore interest rates to higher than 0%.


The primary monetary policy instrument is the setting of ECB policy rates, which influence financing conditions and economic developments, thereby contributing to keeping inflation at the ECB’s target level.

The ECB's monetary policy strategy​

The ECB’s monetary policy strategy provides a comprehensive framework within which we take our monetary policy decisions and communicate them to the public.

Nowhere does it state its primary objective and instrument is to use inflation as a means to keeping interest rates at the ECB's target level. Yet that is what they embarked on, and other CB's, during the crisis.
 
Sister Sara said:
The ECB embarked on a primary objective to induce higher inflation
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The primary objective was to target 2% inflation which is thought by the experts to be the sweet spot where people have short term confidence in the price level but don't regard currency as an asset worth hoarding - which is why Bitcoin is totally unsuitable as a currency except for basket cases which have no hope of generating any confidence in a fiat currency.
They were facing huge deflationary forces after the financial crisis which could have produced a repeat of the disastrous experience of the 1930s. With Ireland's hindsight they performed an almost miracle which incidentally has saved Fianna Fail from extinction, but then we can't expect perfection.
I think I will replace the picture of JFK on my mantelpiece with one of Mario Draghi.
 
Duke of Marmalade said:
which is why Bitcoin is totally unsuitable as a currency
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I'm going to throw a curve-ball in here. I'm reading the Bitcoin Whitepaper again and I'm trying to ascertain where the objective was to replace Central Banks and international monetary systems?

1770586698267.webp


I have highlighted in yellow the parts that suggest to me that, in 2008, bitcoin was an invention "allowing any two willing parties to transact directly with each other without the need for a trusted third party."

I know you like a punt on the Betfair markets, as I do, but even still those markets rely on a commission charged third party to mediate and validate the bets.

What if, the vision of Satoshi Nakamoto was simply to circumvent small transactions directly between two willing parties through a digital token without the need for any third party validation, commission-charging, bank-charges etc?

So placing a bet with a pal on a football match, a horse race, a transfer to sibling whose is stuck for cash until payday (avoiding expensive credit card charges), sending a birthday cash gift etc, sending the price of a bus ticket, a train ticket etc, was the vision of Satoshi? And not the fiat currency eating Central Banks of the Bitcoin maximalists?
Just simply a recognisable token transferable peer-to-peer without third party intervention when the situation is suitably fitted for that moment?

This would of course require widespread recognition and adoption amongst the civilian population which has not occurred to date.

The question is however, where in the Bitcoin Whitepaper does it propose to replace fiat currency? Fiat currency is not even mentioned.
"Central authority" is mentioned twice but not with any intended malice to take-over the CB's etc, rather, to provide a digital method for two willing parties to have that bet on Westandtogether in Naas as @Brendan Burgess mentioned and without the need for a central authority, either a bank or Betfair etc to validate the bet, or the transfer of the train-fare, or the birthday gift to your niece?
 
patfert1 said:
I didn't follow his advice, but in hindsight it was good advice and still is.
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"What the wise man does in the beginning, the fool does in the end"

or

"Innovator > Imitator > idiot"

Those two sentences bounce around my head all day as I think about what is a good idea in terms of investing.

BTC for five plus years years now....where its price is essentially flat.....looks alot to me like the idiot phase. Your friend was wise and spotted a cultural meme with distance left to travel....as impossible as it is to judge a trading sardines as I've said up thread it looks like an investment that has run out of plausible narratives (payments, digital gold, institutional adoption) all these things have come to pass or have been invalidated.....and given its price depends on narratives and vibes to attract further believers in the story it looks to me like a television show on Season 16 and the writers on the show are running out of narrative road fast.
 
@Sister Sara Fair point. I am sure Satoshi was a fair minded person. But the whole project has been hijacked by a libertarian cult which despises all central authority with Central Banks being the devil incarnate.
 
letitroll said:
BTC for five plus years years now....where its price is essentially flat.
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no disrespect but BTC is trading at $70,900 as we speak.

08/02/2025 - $96,504
- 2024 - $45335
- 2023 - $22938
- 2022 - $44118
- 2021 - $44089

It's hard to understand how anyone could describe its price essentially flat for five years plus? You come across as someone with an agenda to talkdown bitcoin despite the evidence in front of you.
 
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