The reason Big Players are into Crypto

[bruncher]

Big banks and insurers have loads of debt. They would prefer not to pay it back. Suppose the world of finance 'moves on' from Fiat currencies? If all the action is in new blockchain instruments, then those legacy currencies are part of 'yesterday's world' and maybe, just maybe, at one point all the transactions and debt could be left behind and unenforceable.

Just a thought, but as a friend once said to me "you can't be too paranoid"

[bungeejumper]

If all the action is in new blockchain instruments, then those legacy currencies are part of 'yesterday's world' and maybe, just maybe, at one point all the transactions and debt could be left behind and unenforceable.

Just a thought, but as a friend once said to me "you can't be too paranoid"

The day that debts in fiat currencies become "unenforceable" will be the day that we'll have bigger things on our minds than just blockchain.

Never mind that your mortgage, your tax bill, your credit card balance and your pension will be zapped away into thin air. Never mind that the weight of the country's foreign trade will yo-yo wildly in cyberspace from one day to the next, having become permanently detached from what we currently think of as boring old economic fundamentals. Never mind that the daily vagaries of crypto demand will be pulling the business earth off its axis, unencumbered by any vestige of a relationship to the physical world.

And never mind that the quantum computers of the nearish future will be able to unpick the underlying algorithms of the current cryptos in the blink of an eye, and the famed super-security of blockchain will start to look a bit sick. (Or that's what the FT said the other day. Personally, it goes right over my poor spinning head. )

I can see why institutions with a lot of debts might want to dip a couple of toes into a potential line of safety. But as another friend once said to me, a fool and his money are soon parted. In the meantime, I have a 50,000 acre ranch and luxury apartment project for sale in the metaverse, and all I want for it is a million bitcoins. Will be worth more than Elon Musk this time next year. But shhhh, don't tell everybody.

BJ

[Urbandreamer]

If all the action is in new blockchain instruments, then those legacy currencies are part of 'yesterday's world' and maybe, just maybe, at one point all the transactions and debt could be left behind and unenforceable.

Just a thought, but as a friend once said to me "you can't be too paranoid"

The day that debts in fiat currencies become "unenforceable" will be the day that we'll have bigger things on our minds than just blockchain.

Never mind that your mortgage, your tax bill, your credit card balance and your pension will be zapped away into thin air. Never mind that the weight of the country's foreign trade will yo-yo wildly in cyberspace from one day to the next, having become permanently detached from what we currently think of as boring old economic fundamentals. Never mind that the daily vagaries of crypto demand will be pulling the business earth off its axis, unencumbered by any vestige of a relationship to the physical world.
....
BJ

It has actually happened before, as in before Bitcoin was invented. When? Well the clue is that the big institution with the most debt in any country is it's government.

What happened to our governments war bond? Yes I do know that our government repaid it in the 90's, but what happened in 1927? Oh, that's right, the existing stock paying 5% was refinanced at a lower interest rate.
Other governments have defaulted on such debt in the past.
Of course then there is the aspect of the capital value of such debt. Normally it is inflated away. As one wag stated, "stealing from the old, slowly". Alternatively you devalue the currency, as happened throughout Europe and arguably happened here in 1967.

As for foreign trade, yes that happened to. Indeed isn't that currently happening in Russia?

What did people do before Bitcoin? Well the US and UK governments passed laws about private gold ownership. Not everyone complied. In the UK we had currency controls. I recommend the fictional book "Travels with my Aunt" by Graham Green to get a taste of it. Published in 1969 currency controls were part of life for another decade. Note that you need savings that YOU have, not held for you. If it's currency in the bank or notes hidden in your house it can become worthless.

So yes I agree with you, things will be bad indeed if most people here feel a NEED to own something other than savings in a bank account. Of course there are countries where citizens have good reason to distrust the state currency. Other countries who have no control of the currency used in their state.

Ps, this is not to say that cryptocurrency is "safe", just that it may have as much a place as fiat in some peoples lives.

[bungeejumper]

It has actually happened before, as in before Bitcoin was invented. When? Well the clue is that the big institution with the most debt in any country is it's government.

What happened to our governments war bond? Yes I do know that our government repaid it in the 90's, but what happened in 1927? Oh, that's right, the existing stock paying 5% was refinanced at a lower interest rate.
Other governments have defaulted on such debt in the past.

Completely agree with that point, as far as it goes. Russia, Argentina and a fair few other countries have reneged on government debt at various times in the past, although in most cases they've managed to sort out some sort of a partial payback mechanism in the end. Where we differ is where you said:

If all the action is in new blockchain instruments, then those legacy currencies are part of 'yesterday's world' and maybe, just maybe, at one point all the transactions and debt could be left behind and unenforceable.

All? That seems to be pushing the apocalypse scenario to a universal extreme. IMHO, anyway.

BJ

[Mike4]

I think I heard someone on the steam wireless say money is a living thing, constantly evolving, always has done.

They pointed out it started as handfuls of grain or bits of rock, and as technology advanced became bags of salt, coins, bits of paper and eventually balances on your computer screen. There is no reason to expect it to stop now and blockchain might yet be the next step in its evolution.

Good point, I thought. Just need to find a fix for the excessive power consumption.

[CliffEdge]

Bitcoin seems to have lost value recently. I'm not sure now whether a Bitcoin would be a good investment for the future.

[GoSeigen]

Just need to find a fix for the excessive power consumption.

Sorry but just how do you propose that will happen? Not sure you really understand how bitcoin works! It can't be fixed, it's the way it is by design.

GS

[scotview]

Bitcoin seems to have lost value recently. I'm not sure now whether a Bitcoin would be a good investment for the future.

Bitcoin might get below $19000 this afternoon, the way it is ramping down.

Gold seems to be holding it's value.

[Urbandreamer]

Bitcoin seems to have lost value recently. I'm not sure now whether a Bitcoin would be a good investment for the future.

Again, it's happened before.

In 2018 it fell 80%. Between 2013 and 2015 it also fell over 80%, finishing at $127 per coin*.

The cyrstal ball watchers are predicting this bottom somewhere between $10k and $14k, while others are still DCA'ing (Dollar Cost Averaging) on the way down.

My most recent purchase was at £20,682 but I'm not unhappy. There are specific properties of bitcoin that cause me to think that it's not going to trend to 0. I'm also only buying and saving tiny amounts. I do however self custody rather than keeping them on the exchange. The difference is between keeping gold coins in your sock draw or in the bank.

*Data from Wiki
https://en.wikipedia.org/wiki/Cryptocurrency_bubble

[Itsallaguess]

There are specific properties of bitcoin that cause me to think that it's not going to trend to 0.

Are you able to articulate what those 'properties' might be?

I ask as someone with little understanding of them, and whilst I can grasp investments in companies having some level of 'intrinsic value' in terms of either underlying assets, or ongoing sales and profitability, which, even after large market falls, begin to push-back somewhat in terms of largely stopping company investments to drop to absolutely 'zero', so what is it that ultimately begins to 'push back' bitcoin and other types of crypto from doing that?

Cheers,

Itsallaguess

[scotview]

Bitcoin might get below $19000 this afternoon, the way it is ramping down.

Now $18946 and looks like a down trajectory, kind of like a peregrine falcon.

Not sure what gold is going to do on Monday morning though but it sure is behaving better as a store of value than a bunch of numbers in a server.

[Urbandreamer]

There are specific properties of bitcoin that cause me to think that it's not going to trend to 0.

Are you able to articulate what those 'properties' might be?

I ask as someone with little understanding of them, and whilst I can grasp investments in companies having some level of 'intrinsic value' in terms of either underlying assets, or ongoing sales and profitability, which, even after large market falls, begin to push-back somewhat in terms of largely stopping company investments to drop to absolutely 'zero', so what is it that ultimately begins to 'push back' bitcoin and other types of crypto from doing that?

Cheers,

Itsallaguess

Bitcoin isn't a company! People who quote Mr Gates or Mr Buffet often fail to understand that they are usually talking about wanting to invest in productive assets. Some argue that it should be viewed as a commodity. Something like gold.

Ok they do actually mine gold and Bitcoin, but there are serious constraints upon the total supply. Any push back will be based upon it's desirability and the desirability of the alternatives.

Bitcoin isn't really like other types of crypto. Consider the difference between Bitcoin and Ethereum. Bitcoin is robust and doesn't change on a whim. Ethereum changed to reverse a single transaction (most who hold it support that fact). Ethereum is supposed to change from proof of work to proof of stake soon. That's a future event that affects what it actually IS. It also affects finance products based upon it. The fact that it was delayed caused serious conniptions. Some claim that it has lead to the downfall of certain companies.
https://www.coindesk.com/markets/2022/0 ... ee-arrows/

Pick some other crypto to compare and you will find other differences.

The properties that I see of value in Bitcoin are.

1) Inflation. NO, not what you think. There are many uses of the word. In this case I'm talking about an increase in the supply or "Monetary Inflation".
2) Decentralization. This makes the system very robust.
3) Trustless. Even gold has trust issues. That's the purpose of the hallmark or the face on a coin. That's the mark of who claims it's honest.

Bitcoin does slowly change, but the keyword was slowly. The most recent is called taproot.
https://www.realvision.com/blog/what-is-taproot

Ps, re-greater fool theory. The assumption must be that the alternative has merits.
Here is a chart of UK money supply.
https://www.statista.com/statistics/922 ... supply-m2/
I somehow suspect that chart to continue its upward progress.

Be honest, how many of you are trying to avoid the implications of that by buying company shares. I know that I am.

[scotview]

Bitcoin might get below $19000 this afternoon, the way it is ramping down.

Now $18946 and looks like a down trajectory, kind of like a peregrine falcon.

Will be in $17000's in 30 mnutes. Quite historic.

Just saying.

[Aegis]

Bitcoin isn't a company! People who quote Mr Gates or Mr Buffet often fail to understand that they are usually talking about wanting to invest in productive assets. Some argue that it should be viewed as a commodity. Something like gold.

Those people are wrong. If you invest in a commodity, you know that you can exchange your contract for the physical commodity, which has either industrial or commercial use. I would accept that owning a crypto asset is like owning a future of a commodity, but one that cannot be fulfilled in the lifetime of the holder or indeed any future holders. In other words, it's a contract with no underlying asset. I value that at zero, so any value that it is being traded at, to me, is representative of a bubble.

The properties that I see of value in Bitcoin are.

1) Inflation. NO, not what you think. There are many uses of the word. In this case I'm talking about an increase in the supply or "Monetary Inflation".

The argument I see is that Bitcoin is strictly limited in the number of coins that can ever be mined, but there is nothing stopping someone from cloning the whole network and releasing a new coin (say, Citcoin) and then arguing that each of their coins should be worth the exact same as Bitcoin because they would have the exact same utility. As such, the idea that it is a scarce asset just doesn't seem like it is actually the case.

2) Decentralization. This makes the system very robust.

But the existing system is already robust, and processes transactions at a fraction of the cost because the existing systems don't require a huge number of repetitions of the exact same transactions, nor is there any need to artificially ramp up the difficulty of processing such transactions.

3) Trustless. Even gold has trust issues. That's the purpose of the hallmark or the face on a coin. That's the mark of who claims it's honest.

I guess if you think there are genuine trust issues with something like gold, then you might have greater issues than an inability to trust the financial system. I don't think gold is a particularly good investment for most people, but I'm well aware that if you buy gold from a reputable source, you can trust that you have, say, 99.99% pure gold.

Ps, re-greater fool theory. The assumption must be that the alternative has merits.

You say that, but then you look at GBP, i.e. cash, which isn't an investment, it's a method of turning work into assets or means of living. The point of greater fool theory is to identify how the profits for an investment should materialise. If, in the long term, the investment carries out some form of activity which takes some form of intellectual property and turns it into profit, then the majority of returns in the very long run come from the underlying economic activity. On the other hand, if the return is only expected to come from someone eventually paying more for the exact same asset as you are spending money on now, then you are relying on them being more of a fool than you, and the corollary to that is that the person you are buying the same asset from now must have bought it at some point in the past hoping that they would be able to sell it to someone more foolish than them, etc. Eventually the whole system comes to rely on constantly selling assets on to greater and greater fools, i.e. to people who were not smart enough to buy the exact same asset as you are currently trading at a lower price than you originally bought at.

This has nothing whatsoever to do with GBP. I get my wages paid into my bank account in GBP, and I pay my taxes and bills and buy my groceries with GBP. Its sole function is to allow me to do those things, so what it does in terms of inflation in the long run is fairly irrelevant except when it comes to negotiating my salary.

Be honest, how many of you are trying to avoid the implications of that by buying company shares. I know that I am.

That's exactly what I do, but I buy shares in companies that are either doing something already (e.g. the renewable energy companies that I own) or are looking to turn technology patents into large-scale applications. In both cases, there's a very significant economic activity that I become part-owner of and am entitled to profits therefrom.

[Urbandreamer]

You say that, but then you look at GBP, i.e. cash, which isn't an investment, it's a method of turning work into assets or means of living.

You make a point for me! Money, or the use of money, has a productive value.

As for "the existing system" being robust, evidence would say otherwise. OH, sorry were you talking about the UK implementation of that system?
Many other countries have proved that it isn't robust, usually by running budget deficits until it breaks. Something that the UK and US seem to think that they can also do.

Trust in gold, you missed the point. Trust in a yellow shiny thing that might be gold, or might not. Got nitric acid in your pocket to do an assay? What of the center of the Bar/coin? I suspect that it didn't occur to you that people have in the past made fakes or "salted" bars.
https://medium.com/@Colinthecrypto1/whe ... f3159963f6

Bitcoin IS bitcoin. You may not value it, but is yellow shiny stuff entirely gold? No need for nitric acid or to chop it up with bitcoin.

It's also BITCOIN! It isn't your "Citcoin", which I for one wouldn't buy. Good luck with you ICO, I won't be subscribing, but as I said, good luck. Despite the fact that no Bitcoiner would subscribe, have you looked into how you will do it?

As for Bitcoin as a commodity, it's not a view I hold myself. If's just "what does snake taste like"? If you have to pick something that people already know, then the answer is not going to be an ideal match. I view it as "money" and am on record of stating the fact on this board. As such I struggle with the term "invest" when used with respect to bitcoin. Then again, can you "invest" in a barrel or tanker of oil? Oil companies or land over which pipelines pass (earning a royalty), yes. But oil it's self, well where would you keep it?

Re your and my point about companies. Of course investing in productive assets is a good idea. However investing in a company to escape a currency is different. Just like investing in a house, that may not provide a real return. It can be just buying something to avoid a devaluing currency. I'm sure that you have come across the concept of Zombie companies. The living dead that are not productive. However as an asset they increase in price, along with the money supply.
https://www.investopedia.com/terms/z/zombies.asp

Consider this article from the IC about house prices.
https://www.investorschronicle.co.uk/ne ... inflation/
The point intended is that houses don't produce a real return, but you could equally argue that they are a real asset, unlike fiat.

[Itsallaguess]

It's always interesting that many of the pro-Bitcoin arguments, in and of themselves, make a lot of sense and contain enough elements of plausibility that ultimately, I can understand why it's gained such a level of popularity.

But then, I suppose communism is like that, to some degree - able to point at all the other 'systems' and give plausible, popular reasoning as to why communism would work better than them all...

And then we see what happens when plausible, popular theories meet the cold, hard touch of human nature...

Perhaps, to paraphrase Churchill -

'Fiat is the worst form of currency, except for all the others that have been tried...'

Cheers,

Itsallaguess

[Urbandreamer]

It's always interesting that many of the pro-Bitcoin arguments, in and of themselves, make a lot of sense and contain enough elements of plausibility that ultimately, I can understand why it's gained such a level of popularity.

To be fair, we didn't come up with those arguments. Many were common years ago.
I suggest that you research Austrian Economics.

Bitcoin is just an implementation. It's also a voluntary one.

Nobody makes me buy Bitcoin, or makes you. I chose to, you chose not to. IMHO it's nothing like communism.

Though there are AnCap aspects.
https://en.wikipedia.org/wiki/Anarcho-capitalism

Of course I am forced to pay for things that I disagree with alongside things I agree with, but that's democracy isn't it?

FWIW, as a holder at the time of RBS shares, can I thank all you tax payers for paying for my mistakes.

[Mike4]

Just need to find a fix for the excessive power consumption.

Sorry but just how do you propose that will happen? Not sure you really understand how bitcoin works! It can't be fixed, it's the way it is by design.

GS

You missed the irony in my post. My point was BC is doomed in the long term my opinion because of the excessive and ever rising power consumption it needs to survive, but something else will evolve to replace it.


(Edit to add my last point.)

[ursaminortaur]

As for Bitcoin as a commodity, it's not a view I hold myself. If's just "what does snake taste like"? If you have to pick something that people already know, then the answer is not going to be an ideal match. I view it as "money" and am on record of stating the fact on this board.

Whatever you may think and however much it was originally pitched as a replacement for fiat money bitcoin isn't money. Money is a medium of exchange and therefore needs to be relatively stable.

[GoSeigen]

Just need to find a fix for the excessive power consumption.

Sorry but just how do you propose that will happen? Not sure you really understand how bitcoin works! It can't be fixed, it's the way it is by design.

GS

You missed the irony in my pos

Fair enough, guilty as charged. But in mitigation, it was cunningly disguised...


GS