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Crypto Bubble

Any other investment discussions eg. peer to peer lending
justfisk
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Re: Crypto Bubble

#401896

Postby justfisk » April 5th, 2021, 4:56 pm

I'm all for finding value but which one to choose;

https://coinmarketcap.com

At least with gold I know there aren't thousands of alternatives.


As with precious metals, be careful what you choose. It can be detrimental to your Net Worth.
Gold has been superior to other metals and commodities as money due to the properties it possesses. There is a reason the Great civilizations all used Gold. It could be argued that they became great civilizations due to Gold. The Mayans, Aztecs, Egyptian, Greek and Roman civilizations. Other easy, weaker alternatives even chosen by countries over the years proved to be very costly (As the Indians and Chinese found out with the Silver standard)
As those holding Gold may soon find out once Bitcoin replaces it as a store of value.

In the World of "Crypto", Bitcoin stands alone as the Store of Value. There are not many alternatives. In the list you shared, Ethereum is more a platform for smart contracts and even its founders do not market it as a store of value.
Tether and Binancecoin are Stablecoins not stores of value . XRP is a centralized token run by Ripple labs battling lawsuits by the SEC, even "Bitcoin Cash" which is a fork off Bitcoin is designed to be a cup of coffee payment token, not a store of value. Dogecoin was created as a joke.
In addition, do not forget the importance of "Network effects". For example, even if we come up "LemonfoolBook" as a marginally better designed "Facebook", network effects almost doom it to fail. Moving all friends, family and value already stored in Facebook to Lemonfoolbook would prove quite challenging. In the Technology space, Network effects dictate only 1 winner.

Suffice to say all other altcoins trade around the orbit of Bitcoin and its 4 year halving cycle.
The same way I expect tiny online retailers to trade around the orbit of Amazon.


JF

ursaminortaur
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Re: Crypto Bubble

#402626

Postby ursaminortaur » April 8th, 2021, 2:33 pm

justfisk wrote:
I'm all for finding value but which one to choose;

https://coinmarketcap.com

At least with gold I know there aren't thousands of alternatives.


As with precious metals, be careful what you choose. It can be detrimental to your Net Worth.
Gold has been superior to other metals and commodities as money due to the properties it possesses. There is a reason the Great civilizations all used Gold. It could be argued that they became great civilizations due to Gold. The Mayans, Aztecs, Egyptian, Greek and Roman civilizations. Other easy, weaker alternatives even chosen by countries over the years proved to be very costly (As the Indians and Chinese found out with the Silver standard)
As those holding Gold may soon find out once Bitcoin replaces it as a store of value.

In the World of "Crypto", Bitcoin stands alone as the Store of Value. There are not many alternatives. In the list you shared, Ethereum is more a platform for smart contracts and even its founders do not market it as a store of value.
Tether and Binancecoin are Stablecoins not stores of value . XRP is a centralized token run by Ripple labs battling lawsuits by the SEC, even "Bitcoin Cash" which is a fork off Bitcoin is designed to be a cup of coffee payment token, not a store of value. Dogecoin was created as a joke.
In addition, do not forget the importance of "Network effects". For example, even if we come up "LemonfoolBook" as a marginally better designed "Facebook", network effects almost doom it to fail. Moving all friends, family and value already stored in Facebook to Lemonfoolbook would prove quite challenging. In the Technology space, Network effects dictate only 1 winner.

Suffice to say all other altcoins trade around the orbit of Bitcoin and its 4 year halving cycle.
The same way I expect tiny online retailers to trade around the orbit of Amazon.


JF


Silver was the standard from the middle ages right upto the 19th century. In the 19th century european nations experienced a silver shortage one of the causes of which was demand for Chinese goods (the Chinese were happy to sell goods for Silver but didn't have much use for european goods leading to a trade imbalance with China mopping up Europe's silver). This led to european nations switching from silver to gold coinage and to a gold standard though compared to the preceding silver standard this was relatively short lived with countries abandoning the gold standard in the twentieth century.

https://en.wikipedia.org/wiki/Silver_standard

The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century. Following the discovery in the 16th century of large deposits of silver at the Cerro Rico in Potosí, Bolivia, an international silver standard came into existence in conjunction with the Spanish pieces of eight. These silver dollar coins played the role of an international trading currency for nearly four hundred years.
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Great Britain's early use of the silver standard is still reflected in the name of its currency, the pound sterling, which traces its origins to the early Middle Ages (see Anglo-Saxon pound), when King Offa of Mercia introduced the silver penny, which copied the denarius of Charlemagne's Frankish Empire.

The early silver pennies were struck from fine silver (as pure as was available). However, in 1158, King Henry II introduced Tealby penny. English currency was almost exclusively silver until 1344, when the gold noble was put into circulation. However, silver remained the legal basis for sterling until 1816.

In 1663, a new gold coinage was introduced based on the 22 carat fine guinea. Fixed in weight at ​44 1⁄2 to the troy pound from 1670, this coin's value varied considerably until 1717, when it was fixed at 21 shillings (21/-, 1.05 pounds). However, this valuation overvalued gold relative to silver compared to other European countries. British merchants sent silver abroad in payments while exports were paid for with gold. As a consequence, silver flowed out of the country and gold flowed in, leading to a situation where Great Britain was effectively on a gold standard. In 1816, the gold standard was adopted officially, with the silver standard reduced to 66 shillings (66/-, 3.3 pounds), rendering silver coins a "token" issue (i.e., not containing their value in precious metal).

The economic power of Great Britain was such that its adoption of a gold standard put pressure on other countries to follow suit.


https://en.wikipedia.org/wiki/Gold_standard

A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was widely used in the 19th and early part of the 20th century. Most nations abandoned the gold standard as the basis of their monetary systems at some point in the 20th century, although many still hold substantial gold reserves.
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From 1750 to 1870, wars within Europe as well as an ongoing trade deficit with China (which sold to Europe but had little use for European goods) drained silver from the economies of Western Europe and the United States. Coins were struck in smaller and smaller numbers, and there was a proliferation of bank and stock notes used as money.


As to the Aztecs and Mayans they didn't use gold coins

https://www.reddit.com/r/history/comments/7wdubi/did_the_aztecs_use_gold_coins_at_all/

thewhisperinthewind
3 years ago

They mainly used cacao beans and eventually Spanish coins.
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jabberwockxeno
3 years ago

As this post explains, they also used Cloths and copper "Axe Monies" commonly.
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Koloradoh
3 years ago

It's my understanding that no native American cultures used gold as currency. While they believed gold had value, that value was mainly for artistic works and not as money.
4


The Romans, Greeks and Egyptians used a mixture of coinage utilising silver, gold, copper and bronze.

https://en.wikipedia.org/wiki/Ancient_Greek_coinage

https://www.egypttoursportal.com/ancient-egyptian-coins/

https://en.wikipedia.org/wiki/Roman_currency

Bubblesofearth
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Re: Crypto Bubble

#402663

Postby Bubblesofearth » April 8th, 2021, 4:56 pm

justfisk wrote:
In the World of "Crypto", Bitcoin stands alone as the Store of Value. There are not many alternatives. In the list you shared, Ethereum is more a platform for smart contracts and even its founders do not market it as a store of value.
Tether and Binancecoin are Stablecoins not stores of value . XRP is a centralized token run by Ripple labs battling lawsuits by the SEC, even "Bitcoin Cash" which is a fork off Bitcoin is designed to be a cup of coffee payment token, not a store of value. Dogecoin was created as a joke.
In addition, do not forget the importance of "Network effects". For example, even if we come up "LemonfoolBook" as a marginally better designed "Facebook", network effects almost doom it to fail. Moving all friends, family and value already stored in Facebook to Lemonfoolbook would prove quite challenging. In the Technology space, Network effects dictate only 1 winner.

Suffice to say all other altcoins trade around the orbit of Bitcoin and its 4 year halving cycle.
The same way I expect tiny online retailers to trade around the orbit of Amazon.


JF


Seriously, Bitcoin a store of value? For what, a couple of years? I think something needs to have been around a bit longer than that for it to be recognised as a store of value.

Very few people have a significant amount of money in Bitcoin and I cannot see any problem with a better cryptocurrency taking it's place. How about one that didn't need to be mined with all the consequent energy requirements? Just dump X million of the new cryptocurrency into the World and let the market find a price. Bitcoin is a test case for cryptocurrency and carries with it all the flaws that test cases exhibit. It is unlikely IMO to be the final version.

Corporate analogies fail thanks to the huge number of dominant businesses that have gone on to be outcompeted by newcomers. I have plenty of painful share price memories that bear testament to that!

BoE

justfisk
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Re: Crypto Bubble

#402869

Postby justfisk » April 9th, 2021, 11:57 am

Boe, I have held the same concerns as you in the past.

Seriously, Bitcoin a store of value? For what, a couple of years? I think something needs to have been around a bit longer than that for it to be recognised as a store of value.


One advantage Gold has is the length of time it has lasted as a store of value. The new upstart called Bitcoin has only been around for over 12 years. Each day that passes, does validate Bitcoin though. Infection caused by bacteria had been around for thousands of years too, but once Penicillin was invented, each day that passed by, validated Penicillin. For thousands of years we crossed the oceans in wooden ships. Once Steel was invented , each day that passed by validated Steel as superior technology. If more and more people are using Steel ships, at what point do you reconsider that better wooden ships might not be able to compete with the Steel Ships in crossing the Oceans despite the larger energy use in constructing Steel ships?

Just dump X million of the new cryptocurrency into the World and let the market find a price. Bitcoin is a test case for cryptocurrency and carries with it all the flaws that test cases exhibit. It is unlikely IMO to be the final version.

Check the thread below, someone already posted a link to a list of about 5k coins currently competing with Bitcoin. Keep in mind those 5K coins are the ones that have survived, not the total of coins that actually competed with Bitcoin which has been much more. Since its inception , Bitcoin has always been the dominant "Cryptocurrency". The market appears to have clearly chosen its leader with value rising over 200% a year. At what point do you throw in the towel that Namecoin or Akoin may not be a viable alternative to Bitcoin? Bitcoin's marketcap is currently over a Trillion dollars. At what marketcap does Bitcoin reach before it is clear that lovecoin is not a competitor?
The competition of interest to me now is that of Bitcoin's competition with Gold, and Fiat and other assets. (Its been winning that too over 1 year, 5 year and 10 year horizons)

Its now a 1 Trillion dollar 12 year test Case as you suggest. Fiat itself is a 40year "temporary" test case. It was clearly declared to be a temporary measure at inception by Nixon. That particular experiment has led to loss of Real Purchasing value for the world over time. Not only that, but the energy cost and environmental impact of using Fiat currency based on the Petrodollar has been atrocious. I doubt any sane person here can defend the Petrodollars environmental impact.

Corporate analogies fail thanks to the huge number of dominant businesses that have gone on to be outcompeted by newcomers. I have plenty of painful share price memories that bear testament to that!

Of course you are right that Companies/Shares are not the same thing as Money.
What I meant here is more on how Markets trade. My point was one more of market behaviour than the actual example I used. To use another hard asset as an analogy, I could have used the Gold-Silver ratio to describe a similar behaviour. It is not new that constituents of a peer group may trade relative to each other.


It's interesting to see how all this plays out. :-)

JF


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