Bitcoin on the rise

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Freedom_2018
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Re: Bitcoin on the rise

Post by Freedom_2018 »

ertyu wrote:
Thu Feb 11, 2021 3:56 pm
If you don't want money supply to be "the stress valve," the real economy will be.
Indeed, hence my concern about Bitcoin etc performing the role of money in society.

It seems to me more like how an engineer would design something with some excellent technical properties but the customer usability aspect is not well thought out (so I say while typing on my Android phone 🙂)

giskard
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Re: Bitcoin on the rise

Post by giskard »

Freedom_2018 wrote:
Thu Feb 11, 2021 2:28 pm
Admittedly I don't understand a whole lot about cryptocurrency and bitcoin.

However the part I struggle with is considering potential implications of a cryptocurrency like bitcoin on the Monetary and indirectly the Fiscal policy powers of the Central Bank and Governments respectively.

....

Cryptocurrency would also mean that money is completely immune to human intervention and our finances will live under the ecosystem provided by the crypto software. Won't we need human intervention occasionally via Fiscal and Monetary policy at least to provide the needs of society (loosening or tightening credit etc as the case may be, or providing handouts to homeowners, jobless, child bearers and rearers etc?
I think a lot people are overhyping that bitcoin could become the "reserve currency". I don't think that, and I don't think that was the original design intention. It's not a currency, it's a value store. It was always meant to be something exactly like gold, which we build on top of. Everything about bitcoin's mechanics to it's vocabulary is meant to emulate gold, which we have and the current monetary systems exist on top of that just fine.

A government should still have their own currency citizens pay taxes in and they can devalue that against gold / bitcoin / oil / whatever to stop deflationary pressures as needed. If they want to decrease inflation they can raise taxes and or increase rates.
Freedom_2018 wrote:
Thu Feb 11, 2021 2:28 pm

Also what if someone hacks (supposedly virtually unhackable due to crypotology on huge numbers) and then spreads through the network like Mr Smith in the Matrix movie and rewrites the blockchain. Couldn't that bring down the integrity of the entire network with Global consequences versus perhaps in the current system where damage might be more local/country level ?

These are some of the things that make me a bit hesitant to hand over money management to cryptography software.
A lot of people dismiss this. I think to some degree it is should be dismissed because it's open source code and the miners give the network strength from attacks and many people have been thinking about this for a long time making sure the network can have longevity.

But nevertheless it seems like a real risk that if bitcoin became worth trillions of dollars and all of sudden it broke and became worthless overnight while a large percentage of wealth was stored on the network it could cause an incredible deflationary depression. A reverse wealth-effect.

There was a famous even example of this. A ship called the SS Central America was carrying a large quantity of gold and it crashed in September of 1857 setting of the "Panic of 1857". https://en.wikipedia.org/wiki/SS_Central_America

According to wikipedia "American banks did not recover until after the civil war".

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Ego
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Re: Bitcoin on the rise

Post by Ego »

Gradually then suddenly.

https://www.wsj.com/articles/bitcoin-to ... 1613044810

BNY Mellon, the world's largest custodian bank with $38.6 trillion in assets under custody, said Thursday it will hold, transfer and issue bitcoin and other cryptocurrencies on behalf of its asset-management clients. Custodians like BNY Mellon keep track of money managers’ assets—whether they are physical things like real estate or cash housed in an account with another bank—storing some themselves while attesting to the existence of others.

BNY Mellon said it would allow digital assets to pass through the same plumbing used by managers’ other, more traditional holdings—from Treasurys to technology stocks—using a platform that is now in prototype.

-----------------

Mastercard is adding stablecoins and expects to add central bank stable coins soon.

Amazon is working on launching their own crypto currency.
https://www.techradar.com/news/amazon-s ... coin-rival

How long until a country adds crypto to their central bank reserves?

Alphaville
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Re: Bitcoin on the rise

Post by Alphaville »

was reading this weekends "the economist"

ran into this sentence:
"The amount of computer energy needed to mine bitcoin accounts for 0.56% of the world’s total electricity consumption, according to the Cambridge Centre for Alternative Finance."
not gonna go find out right now, but just wanted to leave that note here for further examination, cuz, ooof...

giskard
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Re: Bitcoin on the rise

Post by giskard »

Alphaville wrote:
Sat Feb 13, 2021 11:48 am
was reading this weekends "the economist"

ran into this sentence:

"The amount of computer energy needed to mine bitcoin accounts for 0.56% of the world’s total electricity consumption, according to the Cambridge Centre for Alternative Finance."

not gonna go find out right now, but just wanted to leave that note here for further examination, cuz, ooof...
I think that this is going to be the next focus of FUD for a while. Looking into further people will realize that close to half of the energy usage is coming from renewable sources like hydroelectric and in general the electricity usage is low cost marginal stuff would otherwise just not be getting used. It's definitely true that it costs energy to run bitcoin. It's also true that it takes an incredible amount of energy to power your cellphone and do google searches.

If you want to do an honest comparison you need to compare it to the cost of the Iraq war the lives lost in our oil related conflicts and running America's Navy since the dollar system is supported by oil consumption. Kinda hard to get real numbers there though.

Lucky C
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Re: Bitcoin on the rise

Post by Lucky C »

Uh wouldn't an honest comparison be energy consumption per BTC transaction vs. energy consumption per credit card transaction?

One Bitcoin transaction = 741 kWh vs. 1 Visa transaction = 0.00149 kWh.
https://www.statista.com/statistics/881 ... ison-visa/

Suppose Visa were as energy-efficient as realistically possible. Then Bitcoin's energy efficiency would be 0.0002%.

An incredible amount of energy to do Google searches? OK but does one Google search consume enough power to provide a month's worth of electricity to a typical house? That is the type of energy waste we're talking about here. It would be hard to deliberately engineer something to be as wasteful as Bitcoin.

giskard
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Re: Bitcoin on the rise

Post by giskard »

Lucky C wrote:
Sat Feb 13, 2021 1:51 pm
Uh wouldn't an honest comparison be energy consumption per BTC transaction vs. energy consumption per credit card transaction?
Not really because it's apples and oranges and credit cards are just a small system on top of the USD system. What about the huge infrastructure to operate SWIFT, do credit reporting, run all the banks and the Navy to defend the primacy of the USD as the world's reserve currency? You can't decouple any of this to make an honest comparison.

Lucky C
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Re: Bitcoin on the rise

Post by Lucky C »

To me that sounds like "you can't compare incandescent bulbs to LEDs because LEDs rely on the infrastructure of semiconductor foundries which use tons of energy." OK so LED bulbs are part of an energy-intense industry, but I'm still going to keep using them since incandescent bulbs burn 10x the energy for the same result.

I mean no offense but just trying to think about this critically, your "what about..." arguments sound to me like whataboutism. I think it's a bad idea for people to use a lot of energy per financial transaction even if there are other big wastes of energy in our lives. Like the military and Google being wasteful doesn't make it OK for us to be as wasteful as we want to be, you know?

Anyway I hope that if Bitcoin doesn't die, its energy consumption falls dramatically. I am ignorant as to how that will go (or how the Bitcoin community hopes that will go) in the future.

bostonimproper
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Re: Bitcoin on the rise

Post by bostonimproper »

FWIW, regarding energy consumption, I think the Bitcoin maxi community expects:
1. energy for mining to come from renewables or otherwise would-be off-gassed methane (i.e. less climate change impact methods of energy consumption)
2. for high volume transactions to happen in L2 or otherwise off-chain

I’m curious how many people will hit their FIRE number (at least temporarily) over the course of this bull run.

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Ego
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Re: Bitcoin on the rise

Post by Ego »

Motivated reasoning makes me like the argument that bitcoin's inherent funding mechanism has begun financing renewable generation at the source from places that have been ignored until now because they are too far from the grid and the amount lost in transmission too great. Up to now governments were unwilling to fund generation projects too far from the grid and people were unwilling to move closer to generation sources. Mining bitcoins in the middle of nowhere is easy so they will move close to the generation sites. Then people will follow.

giskard
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Re: Bitcoin on the rise

Post by giskard »

Lucky C wrote:
Sat Feb 13, 2021 5:21 pm
I mean no offense but just trying to think about this critically, your "what about..." arguments sound to me like whataboutism. I think it's a bad idea for people to use a lot of energy per financial transaction even if there are other big wastes of energy in our lives. Like the military and Google being wasteful doesn't make it OK for us to be as wasteful as we want to be, you know?
I agree this is true if you frame bitcoin only as a payments network. But that's no longer the purpose people are using it for. They are using at as a "treasury reserve asset", e.g a replacement for US Treasury bonds. Or gold. Then it really is appropriate to compare the cost to the entire US Dollar system. Or the cost of mining gold.

Anyway, I agree with you that bitcoin for payments in it's current form is incredible wasteful. I think for payments you need to use a proof-of-stake system if you want to use a blockchain. I'm not even sure you should use a blockchain... Ethereum will be moving to proof of stake and competing projects like Cardano are already using proof of stake. These are the projects that will be innovating on payments and financial instruments in the future.

Bitcoin is just bitcoin at this point and it probably will just be used to hoard value and avoid inflation. It's as efficient as gold, which is not very efficient at all and that's not the point imo.

nomadscientist
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Re: Bitcoin on the rise

Post by nomadscientist »

My guess is BTC will become "a" reserve currency, but not "the" reserve currency. There are currencies belonging to less important states that are traded out of proportion to the state's importance, because they have some other attributes that are appealing to investors and traders. The CHF and SGD fit in this category. Arguably the GBP (not a very large economy) and JPY (not a military power) sit on the border of this category.

If states coordinate against BTC in a strong way, it is likely to die. Making a credible attempt to become "the" reserve currency is the most likely cause of BTC's death, just like the (much less threatening) Liberty Dollar jacob referred to much earlier in the thread.

BTC is much more likely to survive - and enjoy 10x but not 1,000x further appreciation - if it accepts becoming just one (important) part of the world financial system, alongside state currencies, with beneficiaries of that system as owners and users of BTC. Recent developments point in this direction.

This is my theory of value justifying holding BTC, as a small percentage of NW. If BTC saturates at such a level and in such a role, I will probably sell it for securities in productive businesses. If it does not, I will probably lose that small percentage of my NW.

giskard
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Re: Bitcoin on the rise

Post by giskard »

nomadscientist wrote:
Mon Feb 15, 2021 7:36 am
BTC is much more likely to survive - and enjoy 10x but not 1,000x further appreciation - if it accepts becoming just one (important) part of the world financial system, alongside state currencies, with beneficiaries of that system as owners and users of BTC. Recent developments point in this direction.

This is my theory of value justifying holding BTC, as a small percentage of NW. If BTC saturates at such a level and in such a role, I will probably sell it for securities in productive businesses. If it does not, I will probably lose that small percentage of my NW.
Agreed, it's a bearer asset with no yield and has a bunch of downsides. If US Treasuries did not have a negative real yield it would be less appealing. It's similar to gold but with more minimal storage costs and more deflationary. It also has the downside of depending on the electricity grid & internet.

Bitcoin should not be the main reserve asset, I think people arguing for that are really overselling it. It could definitely end up with a huge market cap in this negative yielding world, but it should not be made to be an attack on states. I think it's a little dangerous when I see people pushing that narrative of it being the next world reserve currency or something. There will be a time when it is way less attractive and bonds have a yield again.

Anwyay, same here on your plans to diversify away. I have a relatively large percentage of my NW in it now but I will be reducing exposure as it increases. I think interestingly enough bitcoin is LESS risky than it was 8 months ago, even at the current price. Elon Musk put a price floor under the asset. Michael Saylor has proven he will buy the dips and basically turned his company into a bitcoin vehicle. There will be a point soon where it stops increasing in value but I actually think we have more stable and linear trajectory to the 100k or 150k mark than ever before.

iopsi
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Re: Bitcoin on the rise

Post by iopsi »

Prediction: the crypto market is MASSIVELY undervalued (and i mean it, in terms of many many trillions).

This because with cryptos you can tokenize ANYTHING and make it tradable on the internet 24/7 with no central organization acting as a bottleneck for access & functionality.

You can tokenize (the property right of) equities, bonds, real estate, commodities, art, and whatever you can think of.

On an infrastructure that is already BETTER and has FAR more potential than what we have for these assets.

So it's very likely that sooner or later all these assets will be ENGULFED by cryptos, becoming tokens themselves working on crypto platforms such as Ethereum or Cardano.

You also unlock insane amounts of value by opening capital market funding to private small/medium businesses.
Sooner or later someone will make a d-app on these platforms with which you can easily create and issue "token stocks" for your own small private business (if it doesn't exist already).
Which will require virtually zero management from anyone since everything will be handled by the already built underlying platform.


So i'm extremely bullish on Ethereum, Cardano (the former depends if they manage to upgrade to Proof of Stake algorithm, since at this moment ETH cannot scale) and the likes.


Bitcoin itself might become the world's reserve asset/store of value.
Obviously it cannot be used as an everyday method of payment as we all know (cannot scale).


There are already cryptos that are massively better than BTC to act as everyday currencies like Nano (can scale infinitely, has 0 fees and virtually instant transactions, so it's already better than any other centralized payment system).


Stellar seems to be one of the crypto of choice for transfer between institutions (XRP too).


XMR is the crypto of the darknet markets, so the use case here is already strong.


But overall yeah i would say platform cryptos have the most return potential by far, followed by BTC/store of value cryptos and then by payment systems.


Lastly the FUD from energy consumption is completely uncalled for, energy is on the cusp of reaching zero marginal cost with the renewable revolution and cryptos themselves consume a tiny amount of global electricity production (vastly less than what we already produce with renewable btw).
This also doesn't take into account the new and more energy efficient algorithms that new cryptos use (PoS etc) which are orders of magnitude less energy expensive than Bitcoin's proof of work.


Overall, if the tokenization-of-assets prediction comes to fruit (and i think it's more likely than not), we are talking about 100 trillion at least in marketcap for the long term (although at that point we might not even measure value with dollar/euro).

Alphaville
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Re: Bitcoin on the rise

Post by Alphaville »

nouriel rubini was on bloomberg earlier this morning skewering bitcoin and saying the price was being manipulated and that it was more centralized than north korea. im sure the video will be replayed throughout the day.

some of this is not new (but it was new to me)
https://blog.dshr.org/2018/10/gini-coef ... ncies.html

besides he said it was all centralized in russia, belarus and china where "there is no rule of law" (his words).

then they had a trader saying rubini was missing the point :D

giskard
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Re: Bitcoin on the rise

Post by giskard »

Alphaville wrote:
Wed Feb 17, 2021 8:42 am
nouriel rubini was on bloomberg earlier this morning skewering bitcoin and saying the price was being manipulated and that it was more centralized than north korea. im sure the video will be replayed throughout the day.
Permabears gonna permabear. I thought it was hilarious.

Alphaville
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Re: Bitcoin on the rise

Post by Alphaville »

giskard wrote:
Wed Feb 17, 2021 11:30 am
Permabears gonna permabear. I thought it was hilarious.
me too... when jon ferro said "tell us how you really feel" :lol:

anyway it's good points to keep in mind regardless.

i started with crypto on paypal but moved it to robinhood when i noticed i couldn't do advanced orders.

then in robinhood i bought some dips but noticed it wouldn't let me set stop losses :lol:

so im out of crypto till i learn more.

but i'd like to get back into it eventually. maybe something that could become a true currency with low cost transactions... but again i don't know enough. i'm barely getting started on macroeconomics.

white belt
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Re: Bitcoin on the rise

Post by white belt »

I think the current litigation unfolding with the 3rd largest cryptocurrency and "stable coin" Tether is essential to follow for anyone in the crypto space. Here's a surface level overview: https://www.msn.com/en-us/money/markets ... r-BB1dqUAK

It's quite possible that Tether has inflated BTC prices, especially if it comes to fruition that Tether isn't actually backed by reserves. This might ultimately end up as a catalyst for further regulation/government intervention in the crypto space.

If you want to listen to a civil debate between a BTC maximalist and a skeptic, I recommend checking out this discussion with Nic Carter and Mike Green (they also discuss the ramifications of Tether): https://www.grant-williams.com/podcast/ ... ic-carter/

I don't think debates are useful in terms of a winner/loser, but I think it's a great jumping off point for the individual to hear the claims of both sides and as a starting point to further research.

I still maintain my opinion that I think BTC is a great momentum trade at the moment and I think traders and speculators are the one's piling in. I'm just skeptical that it will become a reserve currency or store of wealth over the long term because I don't see sovereign governments rolling over and giving up that power, especially once they start using the same blockchain technology to make their own digital currencies. I think BTC skeptic and maximalist are more accurate terms than BTC bull and bear, because one can be bullish on BTC short term as a trade and bearish on it long term based on fundamentals.

white belt
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Re: Bitcoin on the rise

Post by white belt »

@iopsi

I agree, tokenization is the way of the future and there will be massive structural changes as a result of it. My issue is, I'm not sure how to predict who will be the winners and the losers? We are in the early days of a space race between every cryptocurrency developer. Soon it will also involve every sovereign nation and central bank. Everyone is vying to be the next platform on which this tokenization will be built on top of. Hence why I say the crypto space is largely a speculative trade, with associated risks.

giskard
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Re: Bitcoin on the rise

Post by giskard »

white belt wrote:
Wed Feb 17, 2021 12:19 pm
I think the current litigation unfolding with the 3rd largest cryptocurrency and "stable coin" Tether is essential to follow for anyone in the crypto space. Here's a surface level overview: https://www.msn.com/en-us/money/markets ... r-BB1dqUAK

It's quite possible that Tether has inflated BTC prices, especially if it comes to fruition that Tether isn't actually backed by reserves. This might ultimately end up as a catalyst for further regulation/government intervention in the crypto space.
I'm less concerned about it in terms of BTC because it might actually push people back into BTC for safety. But on the DeFi side it could be catastrophic. The amount of people levered up on something based partially in Tether is huge. This includes decentralized exchanges, and decentralized lending platforms.

Go to Uniswap or Sushiswap and look how large the ETH-USDT (USDT is tether) liquidity pools are and how much volume is on them, and how much value is locked up in these LPs:
https://info.uniswap.org/pair/0x0d4a11d ... 40471f1852

It seems to me like the DEXs will be the ones to get murdered and by extension Ethereum will get hurt. I've actually been holding off investing in this space because of Tether fears. Unfortunately investing into some of these places is the one that really makes sense as far as crypto goes since owners of e.g. SUSHI tokens have a claim on earnings of the fees through Sushiswap exchange via their staking mechanism and these exchanges are starting see huge volume.

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