OT: Crypto Currency Discussion

I thought it might be interesting to start a discussion thread on crypto currencies. Feel free to share questions, thoughts, strategies, links, info, etc. Please limit comments on burying your money in a coffee can in the backyard, I know there are plenty of folks who think crypto is a waste of time and money. I'm looking to hear from folks who have diamond hands, HODL, or are day traders. It really seems like crypto is here to stay.

NFT discussion welcome as well. I don't understand why people would buy those or digital real estate, but it seems to be booming, and I'm interested in learning more.

The market is currently way down, crypto is on sale. I just picked up some Solana. What are you buying?

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I just own a small amount of ETH but I'm interested in learning more about it all this year.

My biggest question is what's the risk/reward difference than the market? I understand it fluctuates more and you can operate it all yourself, but is it best to invest in the big reliable currencies or to take a chance on a couple smaller ones to take off? Again, all coming from a noob perspective

I just sit on my couch and b*tch. - HokieChemE2016

I invested about $500 in crypto back in the boom of 2017, pretty much as an experiment and at an amount I wouldn't be depressed about losing entirely (wise investing advice in general).

Currently own mostly Tron (TRX) and Stellar (XLM). TRX because it was high concept, XLM because it was already being used in transactions. Obviously, markets are way down right now. I just figured it'd be fun to buy a little crypto, forget about it for a few years, and see where it's at.

I love the tickle of Dickel in my belly

Bitcoin in the mid 30k is a steal.

Buying more every paycheck

My opinion on it is that it is currently an unregulated speculation market which is costing the planet in terms of energy generation.

NFTs are a scam in current form and currently being memed because of that.

It's becoming extremely similar to boiler room/penny stock grifting.

My opinion on it is that it is currently an unregulated speculation market which is costing the planet in terms of energy generation.

NFTs are a scam in current form and currently being memed because of that.

from an 59 yr. old guy that is retiring- these are the ways I made money-start a business - use your profession and your trade to become rich. Write off everything and anything- working for someone else is not going to get you to the promised land. Buy real estate- buy and rent - when the market is conducive, and pay down the mortgage with the profits, retire with passive income and live for free by getting rent monthly. Get a financial advisor- and not a crappy one- and invest in the market . take the emotion out of investing by having your advisor learn your level of risk, and let him win you money while you make money in your own trade. Emotion sucks your money out of the market. Invest like Buffet, let it ride with the top companies, leave the cheap shit alone- get rich quick schemes are just what they sound like- crap. Yeah, now you can tell me to get off your lawn, I don't know shit. But, I will leave this world richer than I am today. Money that compounds , and passive investing is the key to success. OK bye.

When you say invest like buffet, the one thing that stands out with him is that he has never invested in a tech stock/company. He will only invest in what he knows and he doesn't know technology.

Buffet has made a mint on apple

There's slightly more to it than that. His investment strategy is to focus on "value" (dividend producing stocks) over "growth" stocks which tech companies tend to more be. He doesn't like speculating on the potential growth of a company, mostly likes companies he sees as being stable and producing good profits.

For his own family he set up a fund that invests only in an index of the S&P 500. The implication being, he sees that as the best option for the everyman who doesn't have the time to research every potential investment.

How I Learned to Stop Worrying and Love the Jet Sweep

Buffett has admitted he would have done far more with index funds if he was starting over today.

Crypto is some weird market that can never grow to replace currencies owned and backed by governments. The maximum transactions per minute is orders of magnitude lower than what Mastercard does every day which is way less than Visa.

Not really, there are quite a few countries developing their own digital currencies. So State backed but still Crypto.

State back crypto is virtually an oxymoron. In the same way that zombies and humans aren't synonymous just because they both take the form of a human body.

The central value proposition in crypto is a decentralized, rules based protocol for ownership of some good. Anything that originates from the State automatically violates this notion.

maybe so, but they will happen and they are the future.

Decentralization is the original purpose of Blockchain and bitcoin, but it does not preclude the state from creating a digital currency with a centralized authority for a functional state issued stable coin. It goes against the ethos of where Blockchain originated, but has nothing to do with the technology.

Again, what's the point?

Free Hugh

We (in the US) have a very stable currency. Not the case in some developing countries (eg; Venezuela). Will be interesting to see if crypto finds a foothold there.

Twitter me

I mean this has to be the dream of the US, Russia and China as they will have quantum computing, if possible, before anyone else (they'll spend money on building it)

Which means they will break all the crypto and basically own/influence these countries for their benefit.

Eh there are already chains out there that are quantum secure or quantum resistant, so I imagine it's just a matter of time before the major blockchains incorporate that technology, especially once quantum computing becomes more of a reality.

stick it in, stick it in, stick it in!

Most of the papers I've read about them seem to highly suspect most of them are quantum secure. (I have not dug in really deep to this because I dont have thay kind of time) There are 1-2 that look like they could be. But they are still making assumptions that alogorthims they are implementing are quantum resistant which the research on those algorithms vs quantum hasn't been done yet.

The other thing is these schemes add a lot of complexity, which no one breaks AES-128, its all side channel attacks because people implement key handling poorly. So it will be interesting to see how many mistakes will be made. And I am not sure how you really fix those mistakes in a distributed ledger.

digital currencies, much like standard currencies, will be as valuable as the economies they come from. So something from Latin America will not have much impact. The difference for the big boys (USA, China, etc) is whose digital currency becomes the swap much like the almighty dollar is now worldwide. And to be honest China is far, far ahead of other countries at the moment. USA is the only country that has chance to catch and keep ahead.

Ah yes the chinese digital currency that is controlled by the party and can be disappeared from your wallet quicker than a Uighur dissident.

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Lol. Was gonna say the same thing. State backed crypto is nothing but a control mechanism for your population that dovetails perfectly with a social credit system.

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Let's not go there

"Why gobble gobble chumps asks such good questions, I will never know." - TheFifthFuller

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China banned the usage and creation of all forms of crypto last year, and all the mining moved to Kazakhstan bc they have (state backed) insanely cheap electricity. Crypto dropped like crazy bc Kazakhstan took the country's Internet down due to protests, stopping ~15% of BTC mining. China has tried to get a digital yuan going (for reasons people are getting into here re. controlling mechanism) but people have resisted. China (and several other communist/dictator led countries) hate / have banned crypto bc the decentralization nature is counter to their authority/desire to control every aspect of their citizens lives. China will very much not be big in crypto in the global economy.

The Cup is going nowhere Mikey!

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China will very much not be big in crypto in the global economy

unless they can control it.

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Anyone foolish enough to invest in a crypto created and maintained by the PRC deserves their imminent losses. Most people in crypto (in my experience) are a bit more learned than that.

The Cup is going nowhere Mikey!

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digital currencies, much like standard currencies, will be as valuable as the economies they come from. So something from Latin America will not have much impact.

Isn't that the point though? Bitcoin is more stable than the bol穩var right now (which says more about the bolivar than it does about bitcoin), and there is no social trust in the bolivar, so it could make sense to move to crypto. Check out what El Salvador has done.

Twitter me

You might be right, but I also think you're highly biased with any opinion related to China

Free Hugh

The time to invest was about a decade ago. I wouldn't touch it with a ten foot pole myself.

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

How I Learned to Stop Worrying and Love the Jet Sweep

disagree. If you're a casual investor and have 100 dollars to spare a month that you may just waste on food\entertainment then it's definitely worth it. Just put it into a Bitcoin or Ethereum. Personally I recommend Ethereum.

The question is going to be how these currencies react once State controlled digital currencies are launched. Though it's expected Ethereum will remain a stable pass through crypto for trades.

I read a quote that was really good that I think puts a good perspective on the markets:

Bitcoin's value comes from the coins itself.
Ethereum's value comes from the network.

(it is a quote from the guy who started Ethereum, but it still holds true in my opinion)

I think the fact that you're recommending only spending your beer money on it, kind of betrays what you really think of it, TBH.

The underlying technology is cool. My issue with it is too many people seem to treat it as a serious investment. In it's current form, stuff like bitcoin or dogecoin are a get rich quick scheme on a massive scale, more akin to a pyramid scheme than a stock market. Yeah you can make a lot of money on it, but you can just as easily lose your shirt.

How I Learned to Stop Worrying and Love the Jet Sweep

How so? I'm not saying not to invest millions. I'm just replying to the original comment that it's not the right time. If you have some spare money then it's a good bet. If you have millions then invest and enjoy the swings if you're smart enough.

I think you misunderstood my comment to mean "the timing to invest is bad" when what I meant is more like "it's nothing more than a speculative bubble that's been forming for a decade and hasn't popped yet." An analogy: getting a winning lottery ticket is not proof that the lottery is a good investment for everyone else.

How I Learned to Stop Worrying and Love the Jet Sweep

there have been many bubbles already. crypto in general sense is still trending up and will continue to do so. Don't agree with the lottery analogy but happy to agree to disagree

I think the fact that you're recommending only spending your beer money on it, kind of betrays what you really think of it, TBH.

I know a couple people that spend a hella lot of money on beer and it's worked into their planned budget.

Sure, but at least you get something out of beer.

All you get out of crypto is the hope that someone else will come along later and pay more for yours than you paid.

Which does make it kind of a pyramid scheme, by design.

the hope that someone else will come along later and pay more for yours than you paid

This is true for any growth stock and is not what makes something a pyramid scheme. The point of all investing is to buy an asset that the buyer perceives will appreciate in value. The only way something appreciates in value is if at some future point another person is willing to pay more to own the same asset. What people have difficulty reconciling is the fact that with a stock they can see and point to tangible plant, property, equipment, service, IP, and build an investment case as to why they think something will appreciate whereas with Bitcoin the investment case is only built on intangibles.

What people fail to understand is that most investment decisions are not built on a fundamental analysis of prospective investment returns but are built on a narrative the investor believes in. I bring up Tesla again because it is a perfect example of this. No one buys Tesla because they think it represents good present value based on any fundamental analysis of assets, cash flow, earnings, etc. They buy Tesla because they believe in a narrative about the future that they believe Tesla will help fulfill and therefore appreciate in value.

I guess here is my fundamental question - what will drive the value of Bitcoin up besides the belief that someone might pay more for it later? I don't understand bitcoin well enough, so this is a serious question.

For stocks, even TSLA, which you reference, there is some fundamental return (dividend, cashflow) either now or in the future that drives its growth. Companies like TSLA have done an excellent job selling the vision of those future fundamentals to realize extremely high market cap relative to their fundamentals.

I'm not a bitcoin expert nor do I own any but I guess you could say I'm bit-curious.
Let's call the belief that someone might pay more for it later the "effect belief". The "cause belief" that underpins this would be that bitcoin has not only replaced gold as a store of value and a hedge against the debasement of fiat currencies but is a better hedge and a more function asset. The debasement of the currencies is indisputable. Whether or not bitcoin holds up or is even allowed to hold up as a hedge against this is unknown.

For Tesla, you illustrated my point exactly.
TSLA have done an excellent job selling the vision of those future fundamentals to realize extremely high market cap relative to their fundamentals.
What you just said is that Tesla is wildly overvalued based on the current economics of the business and yet people still love the stock. People buy Tesla not because the current price is rational based on what Tesla is today but because they believe a narrative about Tesla's future. To be clear, I'm not saying there is no distinction between Tesla and bitcoin. I am saying the investment rational for buying either one is the same.
It's interesting because it is easier for me to make a case that throws cold water on Tesla's future than it is for me to do with bitcoin. This is why a number of famous activist investors have gotten burned shorting Tesla. These guys aren't dumb but they underestimated the madness of crowds and the power of a narrative. The numbers bear out that Tesla can't sustain its valuation and it is highly unlikely it ever will. The amount of Teslas that would need to be sold to generate enough earnings to remotely justify the P/E ratio would add so much demand to the power grid that the price of electricity would increase so much that a Tesla would be more expensive to use than traditional combustion engine vehicles.

Hokie CFA I reached out to a good friend of mine who ran purchasing operations at the NY Fed during 2020-21 and asked him about his thoughts on the "currency debasement" argument. His response gave me a chuckle:

People who use that term in the 21st century likely don't understand economics, monetary policy, or how to find the clitoris.

Interestingly enough, you guys are in lock step with your views on Tesla and would probably drain endless beers trashing Elon Musk. He's an interesting, and obviously opinionated, guy.

Haha gotta have a good sense of humor to keep sane these days. I'd say given the Fed's role in all of the bubbles in recent history there is strong evidence that the Federal Reserve doesn't know as much about those things as they seem to think they do. Currency debasement refers to the centralized process of increasing the money supply with no corresponding output in goods thus making the currency less valuable. Take a look at the Fed's own data. Hopefully this shows up correctly. It is a graph of M2 and Real GDP over time. You can see M2 grows at a faster rate than Real GDP. What is that if not debasement?

https://fred.stlouisfed.org/graph/?g=Lqfo

The austrians say the keynesians don't understand economics and vice versa. There is also the problem of balancing the fundamental assumptions inherent in economic theories about individuals being rational economic actors making the optimal decision with the knowledge they have.... with the reality that most economic actors make suboptimal, impulsive, irrational decisions on a consistent basis. So in full disclosure I agree with much of what the austrian economic theory professes but as I have gotten older I recognize the limitation of trying to implement some of these ideas in practice and have become more of a pragmatist. It doesn't matter if the ideas are right if the majority of people will never accept them. This pretty much sums up how I feel about Bitcoin. I think most of Matt7's points are correct but I don't think there is any way the US govt allows its power to be usurped without a real fight.

Elon saw a need and filled it. What rich person wanted to virtue signal in an ugly old prius? An exclusive luxury EV subsidized by the taxpayer is much more appealing.

edit: updated link

Yeah. He's a really smart guy and is usually right over the long run. But I find myself occasionally reminding him that the only person more full of shit than a politician is an economist.

Thanks. I updated to show Real GDP vs M2

Was gonna let this die but I see some new posts.

Looking at your chart a few things come to mind. First, it looks a lot like inflation which is generally good because the right amount of inflation keeps capital moving around. Second, assuming everybody appreciates that liquidity should generally track with productivity, you show GDP but with a global currency like the dollar, global productivity matters, not just domestic productivity. Third, the hyperinflation "disastrous monetary policy" narrative is a form of conspiracy theory and every conspiracy theory that resonates has that kernel of truth. In this case that kernel is the "too much money chasing too few goods" that was a result of the global drop in productivity thanks to the pandemic. But those numbers seem to be going back up (also good).

This last bit brings us back around to a previous point about the burn-it-down crowd driving crypto discussions and to whom conspiracy theories like this are appealing. There's a reason that a devolved economic theory like the Austrian School resonates with this crowd. It's because the Austrians were anarchists. You don't seem like an anarchist to me, nor do you seem like a burn-it-all-down bomb thrower. So given your reluctant pragmatism, what is your take on mechanisms for removing capital from circulation?

Finally, the more I think about it, the more I tend to agree that a market fiat currency like BTC aspires to be (BTC would also be a fiat currency because people have to agree it has value right? It's not a potato.) will have a difficult time co-existing with the central banking system. And, as has been mentioned elsewhere in the thread, the central banks are going to create their own crypto/digital currencies. This seems like the most likely demise for crypto like Bitcoin no?

OK, there are some similarities in that they're both speculative.

What makes Bitcoin similar to pyramid scheme is that its ONLY value is speculative. You're betting some idiot will pay more than you did. That's its ONLY value. A business like Tesla is speculative at higher valuations, but the underlying asset has value that is likely to increase.

What stops someone else from creating their own cryptocurrency? Nothing. The barrier to entry is low. Someone might create one that reminds you of a pet.

Eventually, Tesla's value will reflect its ability to make a profit producing cars. You can come up with some ways to project a future value. Bitcoin's only value is that there are a limited number of them. But not of other cryptocurrencies.

Edit: and let me clarify, Bitcoin isn't REALLY a pyramid scheme, as a pyramid scheme has a pretty specific definition. I'm using that expression in a general sense to indicate that its pretty dependent on you getting there first, and selling yours to some other greedy person before it crashes and burns. I guess in some ways it is like buying an overpriced stock that's hot.

Bitcoin is valuable because its attributes (both Bitcoin itself and the network) make it a superior form of money in many ways to gold and fiat currency. The below are notes from parts of this article.

Things can naturally (i.e., not by fiat/decree) become money by going through the following stages (or obtaining the following functions):
1. Collectible demanded solely based on its peculiar properties, such as its rarity and symbolic value
2. Store of value recognized as a means of keeping and storing value over a long period of time
3. Medium of exchange when purchasing power stabilizes, the opportunity cost becomes low enough to use for everyday purchases and sales
4. Unit of account after becoming widely used in trades, the exchange ratio of it against most goods becomes available and pricing in it becomes intuitive for a society

(I would not argue that Bitcoin is a medium of exchange or unit of account right now. There needs to be a lot more infrastructure and adoption for those to come.)

But it's not arbitrary what kinds of items happen to make it through all of the above stages. Society tends to select things that maximize for the following attributes (think of gold as you read some of these):
Durable is not perishable or easily destroyed
Portable is easy to transport (facilitating long-distance trade) and store securely against loss or theft
Fungible is interchangeable in equal quantities; no irregularities or degrees of quality that affect its value
Verifiable is quickly identified and authenticated; is difficult to produce a counterfeit
Divisible is easy to subdivide (facilitating more precise exchanges of smaller quantities)
Scarce is neither abundant nor easy to obtain or produce in quantity; is rare
Established history is perceived to have value by society; the longer the better
Censorship-resistant is difficult for an external party to prevent an owner from keeping and using it

We could discuss at length any of the above attributes or stages/functions with respect to Bitcoin. Some of that would involve getting into the technical details of Bitcoin, its network, and the infrastructure being developed around it. Bitcoin isn't perfect but it is at least competitive as a form of money because of its unique properties and because of the current deficiencies of fiat currencies (such as in portability, scarcity, or censorship-resistance).

It's true that nothing stops anyone from creating their own cryptocurrency. But does it make them all equally valuable to Bitcoin?

1. Bitcoin represents, by far, the most decentralized and most censorship-resistant monetary system in the world today, whether compared to traditional currencies, other digital currencies or commodity monies like gold.
2. Bitcoin derives its value because it is decentralized and because it is censorship-resistant; it is these properties which secure and reinforce the credibility of bitcoin's fixed 21 million supply (i.e. why it is an effective store of value).
3. Bitcoin becomes increasingly decentralized and increasingly censorship-resistant as its value increases and as it scales at all levels of the network.
4. Repeat.

from Bitcoin Can't Be Copied

Well, you're right, of course. There are some good arguments for it. Some of its features are very attractive. Bitcoin, in particular, has value because of its uniqueness. But that's rather thin, isnt' it?

The problem is that it's value fluctuates so much that it's difficult to actually use for it's intended purpose - as currency. And it is at risk of being replaced if there is a more stable crypto currency, which could happen.

Also, doesn't it fail criteria 2 & 3? Is it really a good store of value? Or a good medium of exchange? Seems too volatile for either of those.

There will always be speculation in Bitcoin because it was the first of its breed, but its subject to the whims of a fickle crowd. You don't know who owns it or how much they own.

Sorry to keep pumping a lot of info into this thread but I'm doing so because I genuinely want to give answers to the various questions, concerns, and criticisms I see here. In my defense you did use a lot of '?'s!

Just being unique in and of itself is not what makes it valuable. It's the unique monetary properties it possesses: it is a digital asset (portable, fungible, divisible, verifiable) with a finite supply auditable by anyone (scarce, verifiable) secured by a global, decentralized cryptography network (durable, censorship-resistant, confiscation-resistant). If that sounds "thin" to you then you don't have to invest or pay any attention to it. But I think there is something really big here when you consider our historical context and the legacy of basically all fiat currencies.

Bitcoin has been an exceptional store of value for literally everyone with a time horizon greater than 4 years. Every person who has bought some and didn't sell for 4 years has been in profit. From the charts it seems that most people only had to wait ~2 years. (Here's a cool visualization.) When you filter out the noise, the all-time price chart shows a very clear trend: up and to the right. Yearly candle chart (note log scale on price). Obvious disclaimer: past performance doesn't guarantee future performance, but we can take some educated guesses based on current trends. Is adoption increasing or decreasing? Today's climate (from the perspective of someone who thinks they generally understand this thing) feels like those old videos of people on talk shows in the 90s asking what "electronic-mail" and "the world-wide web" is all about.

Bitcoin's current volatility is definitely a disincentive to using it as a medium of exchange for everyday transactions. I would say Bitcoin is still in infancy with respect to being a medium of exchange, but things are moving fast in this area. Have you noticed any Bitcoin ATMs where you live? Adoption certainly won't magically erase volatility though. It will take time. From Vijay Boyapati: "establishment economists deride the fact that bitcoin is volatile, as if you can go from something that didn't exist to a stable form of money overnight; it's completely ludicrous."

Because the blockchain is fully public and distributed, there is actually a lot of information you can glean about market participants and their behavior. (Try doing that with stocks.) There is a whole new field called "on-chain analysis" where they look at aggregate market behavior and can even separate out "long-term holders" from the short-term holders and traders.

It seems to me that all the things that you describe in paragraph 2 are reasons that it will stabilize. It also seems to me that when that happens, it will cease to be a "growth" investment vehicle and only a hedge against currency fluctuation (like gold is today.)

Anybody can invent anything of a finite supply. A finite supply does not give it value. Only your BELIEF that it has value gives it value. And sentiment can always change. People once traded tulip bulbs as currency. If I were a business, the volatility alone makes it unattractive to transact with.

A country's fiat currency is backed by assets, the ability to tax citizens, and sovereignty that supports the value. This keeps the value pretty stable. Bitcoin has none of these attributes.

I didn't say that Bitcoin has value because it has a finite supply. I said that Bitcoin has value because it is a digital asset with a finite supply auditable by anyone and secured by a global, decentralized cryptography network. You isolated one of its features (granted, its central feature) and claimed that just because anything can have that particular feature, Bitcoin has no value.

Businesses interested in Bitcoin should take a look at the Lightning network, where transactions settle instantly and fees are virtually zero. Quite different from credit card fees and chargebacks. More infrastructure is needed here to make it more approachable though, based on my understanding of Lightning.

Bitcoin is the asset. Gold was the world reserve asset for centuries (millennia?) because of its unique physical properties that made it the best form of money. It would be absurd to argue that gold had no value because it had no ability (in itself) to tax citizens and had no sovereignty.

Note that the best form of money in any given era is related to the technological capacity of that era. For centuries it was metallurgy, so civilizations converged on the most scarce, durable, fungible, divisible, etc. metal... gold. Gold isn't supreme in every category but on balance it is the best. Then humanity moved to using paper claims on physical assets because this was extremely advantageous (massive increase in portability, divisibility, etc.). What is the technology of our era? We are barely into the digital and information age. It makes sense for our technology to drive (be able to produce) a harder, stronger, sounder form of money. Money is technology. Bitcoin is money.

I don't expect to make anyone believe anything, especially if they think there is nothing wrong with the US dollar. Just offering a perspective I didn't see represented much in this thread.

Which does make it kind of a pyramid scheme, by design.

Every company in America is a pyramid scheme by design.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Technically, no. If I am at the bottom of the company, my ability to earn is not related to me finding two (or more) other suckers to join "under me".

While it is true that your work benefits those above you in the organization, that's not the crux of a pyramid scheme.

Crypto is here to stay in my opinion . I do like ETH and ADA. Cardano is going to have a lot of projects coming out this year . I'm long on both of these . Keep an eye on market as it's been down after this bull run just like the stock market been slowing going down .

ADA was the first one i purchased. i don't think their network has ever had downtime. seems really solid, just takes them a long time to roll things out because they are so diligent in their research in an effort to ensure no network interruptions.

Charles Hoskinson Seems like a stand up guy . I love hearing this guy talk about not just about cardano but about everything crypto . Great technology , I think they are ahead of the game and doing things the right way . I just think cardano doesn't get hyped as much as let's say ETH. Which is why I value cardano as a stock myself . I think long term this is a great investment

I've been out of the crypto space for awhile, but the recent dip has me wanting to get back in. Which crypto website is the best if I just want to set up a recurring buy transaction and pay as little fees as possible?

My suggestion is Coinbase. I find their fees to be low and I do recurring transactions through them. I'd be happy to email you a link and if you sign up with the link we both get free crypto.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

I second Coinbase. Do not under any circumstances use Paypal. It may seem like a great entryway into crypto but you can never move it off that platform so you don't truly have ownership of your coins.

I found TKP after two rails from TOTS then walking back to my apartment and re-watching the 2012 Sugar Bowl. I woke up the next day with this username.

Agree.

Also, Paypal now does this insane thing with small businesses where they withhold your money for three weeks for literally no reason. They have done this to me twice with both of my businesses. I was told I had to prove that I sent the products to my customers and then they would send me the money in 3 weeks. When I asked how much interest I would be paid on the withheld money, I was told zero. I'll never, ever use Paypal for anything again. Way too sketchy.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Yup I've sold some parts on the internet via Paypal becasue back in the ole eBay day it was the most secure transaction platform but recently they held 1000's of dollars until my tracking numbers showed delivered. Over the past 18 months I've had 7 outgoing packages stolen either by carrier or porch pirates, I insure all my stuff but it's such a mess if Paypal is going to hang that money up and take forever to deal with insurance.

TL;DR Paypal is starting to feel really scammy

Gemini has low fees (better than Coinbase I believe) and let's you move up to 10 transactions a month with no gas fees. So if you have a cold wallet you don't lose half your coin in transfers.

i started researching in Fall 2020, and started investing in maybe February 2021. i don't really look at them as currencies, i look at them more like stocks (they are essentially software companies). and i am talking hundreds of dollars here, i don't invest a lot in them. i just invest in them for fun.

i own cardano, polygon, polkadot, and solana. and will likely buy into a few more tonight, since the market is in a big dip at the moment. i have stayed away from bitcoin, because it just doesn't do anything. blockchain technology has evolved a ton since btc started, so i have only invested in blockchains that have a usable function, or are headed in that direction. maybe i get some btc tonight though, because people seem to love it, and it will likely start climbing again soon, even if it doesn't make sense to me.

i asked in one of the video game threads about anyone playing any blockchain games...decentraland, sandbox, axie infinity...because i think that has definite potential (pay to play). but looking into those, it is very expensive to get started, so i haven't bought into any of those yet. their prices really ran up when facebook changed to meta, and the metaverse became a mainstream term.

one thing that is pretty obvious once you start doing some research...almost every website that covers crypto, is run by people who are obviously heavily invested in it, and the writers are heavily invested...so they are always overly optimistic. you have to take any articles with a grain of salt.

i check coinmarketcap.com a few times a day to get the latest prices. if you click any crypto from their main page, they give a pretty good overview of each one...it's purpose, who created it, what is different about it, how secure it is, etc...

I own ETH and XTZ.

My biggest issue with cryptocurrency is simple: there is no other measure of value outside of its market value. It has no intrinsic value. A share of stock has the intrinsic value of dividend from a companies future cash flow. Real Estate has intrinsic value.

Feels like the best use for cryptocurrency right now is as a medium to avoid capital controls. But it can't function as a currency because it follows the stock market and is not stable enough.

NFTs are beyond stupid.

The entire thing was started as a practical joke and to me it still really is. I can see some people who want it to be successful, but at this point there are too many types out there for me to even consider investing. They are all different, and most places won't take payment in them.

It is a strictly growth market, and I like my investments to have some yield as well.

I disagree . Crypto started out of wanting change . People that didn't trust these big banks and institutions that control our market . It was an idea to create defi for the people . Nobody knew it people would invest into it . There are a lot of BS cryptos out there though . Just like anything else you invest in be smart . Do your research .

The only thing I own is $LUNA and $UST. Research them; created by TerraForm Labs.

LUNA is a dynamic coin that acts as the algorithmic reserve currency for the Terra blockchain's stablecoins. I could write a lot of words describing it and why I believe in it, but just go read about it and research how it works. It is completely differentiated in how it works, and the primary developers and advocates are people who keep the spirit of crypto at the forefront.

The stablecoins allow for real economic activity and transactions to occur alongside and as part of the economies of our current daily lives. Bitcoin price will never be stable enough to support large scale economic transactions (i.e. concessions/beers at VT games, ordering new pair of sunglasses, etc.) But stablecoins can do that. LUNA is the asset backing the stablecoins, and the supply of LUNA is controlled by a transparent algorithm, not a central power. Governance is community based with all proposals voted on. Biggest weakness is potential for voting power to get too concentrated, but there are ways to mitigate this, and still better then a central power.

I love LUNA. Check it out! Would love to hear what others think of it.

The stable coins are really interesting to me. Blockfi is offering an absurd interest rate (8% a few months ago) on their platform on stable coins which are equal to one US dollar. It's almost a no brainer than keeping it with any of our overlords, aka big banks, at their paltry .25% interest rate. Only issue is getting your cash out of Blockfi and stable coins would take a few days versus at a bank. One thing I do love about Blockfi versus all of the stupid big banks, I call and someone picks up the phone. None of this "oh we have more call volume than usual during the pandemic" bullshit. I'll take that type of customer service over anything the banks can do.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

20% when you deposit $UST (USD stablecoin) with anchor protocol on Terra Blockchain. You can stake $LUNA on Terra for a variable staking reward that hovers between 5% and 12% based on the delegator you choose. Staking rewards also include air drops for other coins, which you can keep or swap immediately into $LUNA or $UST.

It's at 9% now. Fluctuates based on liquidity and risk on their end but hasn't dropped below 8% in the last year. I stash a good portion over there, but have to understand it's not FDIC insured, so if blockfi goes tits up it's too bad for you.

Thank you! I'll probably put some in there.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Beyond the blockchain / distributed ledger technology which is revolutionary, the Best thing about crypto is that it forced our ossified and schlerotic but otherwise very sound central banking system to recalibrate. Results still tbd but better than nothing. Other than that, I suppose it's great for criminals and legal grifters and con artists. And crypto bros of course. Gives them something to shout about between frozen pizza reviews and stonking.

Haha, Yes, TBD. The more serious and not pump and dump crypto assets deserve their existence for the sole purpose of trying to hold central banking and money printing policies accountable. Alternatives and choices are a net positive in my opinion.

The crypto bros definitely add a lot of noise to the crypto discussion. Haha

I still have not found a good answer to this so I figured this as good of a place to post it.

I was under the impression that smart contracts were active, secure through the blockchain currently, but saw some tweets from the guy that started Ethereum that made it sound like they were still just theoretical.

My question:

Are there currently smart contracts that are secure, through blockchain technology, on the Ethereum network? It doesnt have to be Ether, it can be any coin, but are there actual working contracts currently deployed, or is it still only theoretical?

Perhaps we are talking about different things, but yes, smart contracts are active - extremely so - on Ethereum's network. There are thousands of dApps currently using the Ethereum network that are secure (insofar as they haven't been knowingly breached/hacked/broken) using code written into a smart contract and executed on the blockchain.

One such simple smart contract: wETH (wrapped Ether) is a smart contract that tokenizes ETH as an ERC-20 token on a one-for-one basis. The smart contract is such: you send ETH to the specific smart contract, the smart contract processes the transaction and sends back to your address an equivalent amount of wETH. You actually have to call a "withdrawal" function in the wETH smart contract via a blockchain transaction if you'd like to convert wETH back to ETH.

Also see, for instance, MakerDAO's smart contract control over a stablecoin (value affixed to $1.00) called DAI. The value of DAI is controlled by storing many different forms of collateral and (I'm generalizing) burning or generating DAI to keep the underlying value of a single DAI as close to $1.00 as possible, all done within a smart contract.

It's a ponzi scheme. For every person that you hear about catching lightning in a bottle there are dozens that lose their shirt.

I'm not talking about buy the shit, I'm talking about I need to figure out how to make some and put 'em out there, like the kid who sold his selfies and is now a millionaire

Now finish up them taters; I'm gonna go fondle my sweaters.

I have a few $$ in Crypto, but I actually enjoy swing plays in the penny stock world. I never invest more than I care to lose and I always, always take profits early... It's been pretty good.

Is coronavirus over yet?

So I'm a straight shooter and not one for the bullshit but everytime I try and understand the concepts of NFT's and crypto I leave more confused then when I started. Does anyone have a way of explaining crypto and NFT's in a simple form? I get investing in companies and stocks etc but why would I invest in some new unused currency that as far as I know is unrecognized by most places?

Everyone I talk to is either very against the idea or is part of the pyramid scheme and only has good things to say and tries to get you to buy as much as you can.

Directions from Blacksburg to whoville, go north till you smell it then go east until you step in it

Bitcoin = decentralized accounting ledger that verifies itself

Ethereum = sort of the same as Bitcoin but has is working on/towards smart contract capability (see my ? above) that would allow autonomous contracts that bypass middlemen (ie finance, savings accounts, real estate transactions, stock exchanges etc)

NFT = a unique coin that represents either a digital or real world asset (ie jpeg, digital music, or something tangible like a concert/event ticket)

Feel free for anyone to embellish/give better descriptions

I think this is pretty good summation.

Adding to NFT, the value is in the uniqueness of it. It is one of one. So every NFT is potentially the next Mona Lisa (potentially, not really). I think the current values on NFTs are ludicrous but likely they will come down as NFTs and Metaverse platforms become more common place for larger amounts of people.

The NFT as concert/event ticket is the simplest explanation and use case. VT could issue tickets as an NFT. The NFT would exist or be hosted on the blockchain and a ticket holder would hold the private key to access it and claim as ownership. So you'd be able to see your ticket in an app on your phone, just like Apple Wallet, but that NFT is tied to a smart contract. So should scalpers or ticket sellers go to sell tickets in the secondary market, the transfer of ownership gets recorded on the blockchain. For the ownership to transfer, the smart contract would have to be executed. VT could put a fee into the smart contract. Should you sell your NFT game ticket, then a %fee goes straight back to VT athletic department.

Therefore, games that are in high demand could get a high fee, games that are in low demand would be given a much lower fee. VT now has ability to minimize secondary market sales and to profit off of any sales that may occur.

Musicians/artists can do something similar to earn profits as their digital content is distributed and sold.

This makes sense, but the garbage NFT art coming out is just a fad/trend, I think.

Okay so lets start slow here as I'm still a bit lost on bitcoin but we can table that and focus on NFT.
So how am I actually investing in an NFT that say is a jpeg file?
Am I buying pixels in the file?
How can I own a share of a digital picture that could accidentally be deleted or simply copied?

Directions from Blacksburg to whoville, go north till you smell it then go east until you step in it

You seem to understand it exactly.

That's basically the argument of "what's the point" a lot of people are saying about digital art. They can literally just be completely duplicated, copied, pasted, erased.

It's not like people have copyright access to these memes and can gain royalty checks anytime they're being used.

I don't know if that was originally the point? And they can't enforce it? I don't know.

I've heard arguments that it's like having a Van Gogh or something and people pay for those even though they could technically be copied.

But I don't think it's a very good argument, it's more like you have a picture of a Van Gogh saved as a xerox file that everyone in the world has access to that can just click a button and print the exact picture you own.

Completely agree as far as NFT art goes. It is hard to argue that owning the original/official digital file vs a copy is the same as owning the original canvas painting that the artist actually touched and painted.

NFT's have some narrow and specific use cases that are value. But the digital artwork is a stretch, because as you say a copy truly is just as good as the original, unlike a canvas painting, where you can legitimately argue that a forgery or print is not of the same value as the original.

Okay so then Im not being an old nay sayer when I look at NFTs that makes way more sense now and makes me even more skeptical of the idea. I get investing in physical painted/drawn art etc as you can prove ownership and legitimacy but the NFT thing is bonkers. Maybe I'm old school but I dont see the fun in investing in something I cant put in my hand or see or prove I own etc.

As far as the crypto stuff goes I can see why people would want to mine it as its kind of like your acquiring it incase it ever gets legitimized so you can spend it if that happens. Buying in large shares though feels really shady or high risk to me especially when you look at how volatile it is now how do we know if it will ever stabilize when its accepted in more places? I saw where some NFL players had parts of their contract paid as crypto and with the dip they will take a sizeable hit which to me seems a pretty bad move to me. I have a friend who has sunk immense and I'm talking 6 figures into crypto and hes not in a good place at the moment. I get the stick it to the man kind of mentality but I dont see the reward truly being worth all the risk unless you're mining it really least thats how I see it.

Directions from Blacksburg to whoville, go north till you smell it then go east until you step in it

dmcross gives a good example of how NFTs could work in current form. VT would have to still setup the infrastructure to create and assign tokens and then validate those tokens against the blockchain ledger. Can this infrastructure handle the surge of token validation and the secondary market write plus then validation after the ledger update right before kickoff?

If this becomes a thing, then Vt would pay a 3rd party to handle the ticketing and issuance of NFT's. It would just be a service that VT pays for. Mark Cuban was talking about doing this for MAverick's games; not sure if they actually did or not. I think they may have experimented with it for a few games. Not sure.

to circle back to bitcoin,

its paypal. but instead of paypal verifying that Account A is an actual account and has $10 to send to Account B (and that Account B also exists), the process is crowdsourced, where multiple people are incentivized to verify a transaction in order to be the first to verify and solve a password that gives them newly minted bitcoins (mining).

i probably have some of the technicals wrong - but thats essentially what it is. Its a giant accounting ledger with credits and debits

Whatever NFT you buy is blockchained giving it a unique identification of one of one. So you may own just a jpg, gif or other digital product but it is coded as one of one. Or you could own an NFT that is associated to a real world item, for example say VT sold Mike Vick's Sugar Bowl Helmet with a block chained NFT. You now own that item in the real world and in digital domain. It is one of one in both cases.

Why is it valuable to own anything in digital domain? Because the next trend is the creation of metaverse platforms that is essentially SIMS game in real life. You live, work, own, etc in digital worlds that have their own economies. Companies can sell their goods and products in both real and metaverse, creating both direct and decentralized returns. Similarly you can live and make a living both directly in real world or decentralized in digital. So that Mike Vick helmet that is associated with an NFT is now potentially a lot more valuable because it lives in both worlds.

Other things like Art can live wholly in the digital domain and be sold for real world values, but owned, traded and sold only in digital format.

Because the next trend is the creation of metaverse platforms that is essentially SIMS game in real life.

So Second Life 2: The Capitalism Boogaloo, which is only being heavily pushed by Facebook.

Doyle has accumulated 111,646 polkacity coins, which have gained almost 500% in price in the past 12 months. At Friday's price of $0.8719, they are worth $97,344.15.

Hasn't made money just the value of the digital coin has raised.

The NFTs that represent assets in the metaverse were not cheap. The car repair shop cost Doyle $23,000, and the bank cost $3,500, he said. These (assets) are really for the end-game. So this will pay off for years to come.

Spent real money to gain digital assets that don't exist without electricity. Game isn't live yet so there are no real customers to make money from. Assets only for the end game but the game isn't live so what are they for in the next couple years?

The whole metaverse really feels like the next 'I'll sell you a beach house in Kansas' scam.

Actually it feels more like the the $10 chain letters that were popular in the 80's.

part of the pyramid scheme

It's so ironic to me that folks bash various ways of making money for being a "pyramid scheme" when in reality 95% of America works in one, but it's not a pyramid scheme because it is called a job...

Crypto is far from a pyramid scheme, as you aren't using someone else to make money for you. I liken it to as a much different way to invest, and much riskier. Crypto is weird because it is used like a currency in some regards. I think of it more of as stocks. People are scared because they don't understand it, but people also spend lots of money on weird things like kitchen China and baseball cards. They hold some value to someone much like crypto does.

In it's most simple form, I think of NFT as digital artwork and I kind of just stop there. You can buy the rights to a Michael Vick highlight. The highlight is the artwork. Now anyone can send it around on youtube, but if you buy the "nft" of it, you technically own it. Kind of like owning the Mona Lisa but anyone else could have a print hanging of it in their house. Why anyone actually would want to buy and sell NFTs, I do not understand. But its certainly booming.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

I honestly don't see how "investing" in crypto is substantively different from being a commodities / currency trader. That role has been around since the invention of money.

I totally agree.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

I didnt mean anything bad just a joke really I had one friend try to sell the hell out of it to me and it just made me think of when the office is all. We all have our safe bets or things we trust for our investments. Some love physical stuff like gold and collectibles while some love wall street and playing that game. Others like what bitcoin and crypto have and how we all want to invest really should be up to us and I'm all for it. Crypto might not be for me but that doesnt mean it wont work for others. I like land personally as its a solid commodity to me and feels safest even if its a low to slow returns kind of game I like that aspect. As with all forms of investing as long as you do your diligence and feel good about it no reason not to we all should be able to invest how we want not in a single method only world.

Mining made my life hell trying to find a new graphics card all last year due to the mining frenzy. Mining is the only method I can see as plausable when the coins are at a higher value but to me I dont know if the energy costs are truly worth it and as someone who isnt to thrilled to see how much energy we continue to use needlessly I dont know if its a trend I really can get behind in that aspect.

Directions from Blacksburg to whoville, go north till you smell it then go east until you step in it

I mean crypto is definitely legal and its not a complete scam, but lets just say there are strong parallels to its following and the business model of Mary Kay or Amway. Yeah I mean its legit and you can definitely make money, but it all depends on people after (below) you investing and hodling for as long as possible. Its basically become a digital form of multi-level marketing for tech bros.

As for mining, its genuinely terrible for the environment, and is a massive drain on power grid wherever the data miners pop up.

This is my school
This is home

lets just say there are strong parallels to its following and the business model of Mary Kay or Amway.

Huh? How so?

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

No worries. I don't see why anyone would be pushing you to jump in on buying crypto. It doesn't make sense to me how it would benefit them for you to be buying it too. I guess to drive the price u[? But you're just one person in a sea of millions. The whales (people who own tons of the coins) or Elon are people that can make a difference with telling folks to buy, or trading it themselves.

Mining definitely made sense if you got into it years ago like my friend did, and was using BTC to buy pizza on Friday nights. No clue how many he mined but it was a lot to buy pizza with over and over. He had 27 BTC leftover on his hard drive that his fiancee, now wife, threw in the trash. He can't talk about it. Gets too angry.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Yea, no. I could convince every single one of you on TKP to throw $500 on Bitcoin and it wouldn't make one iota of noticeable difference. It would require an enormous amount of people to do so. Hence my statement above saying it would take a whale or someone with insane influence to do so, like Elon Musk.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

I don't think you get what I'm telling you.

lets just say there are strong parallels to its following and the business model of Mary Kay or Amway.

Huh? How so?

Greater fool theory is "how so". That is how the entire scheme propels itself, whether it's individual participants are aware or not (by definition most aren't).

It would require an enormous amount of people to do so.

Yes, a lot of people invest in crypto, and hype each other up in a thousand different places. The scale is massive.

How I Learned to Stop Worrying and Love the Jet Sweep

I fully get it. I disagree that this greater fool theory is the key to growing crypto. I'm not purchasing crypto and thinking to myself, alright, time to get Bob Jim and Steve to "sign up" so it will drive the price up.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Right. That's why it's called "Greater Fool Theory" not "Greater Shark Theory". Only a handful of basically assholes (Elon Musk, is a good example you brought up) are intentionally scamming people here. What drives it forward is a large supply of useful pawns, and sometimes (but not always) a few bad actors sprinkled in.

How I Learned to Stop Worrying and Love the Jet Sweep

I have a small amount in the below. It would be nice if it grew in to something but I'm not counting on it or anything.

Bitcoin BTC
Ethereum2 ETH2 staked so I can't trade it but earning 4.5%
Tezos XTC - earning 4.65%
XRP - trading suspended by Coin base due to SEC action
Cartesi CTSI
Stellar Lumens XLM

I keep clicking that button on my Pi Network once a day. I have over 500 of worthless nothings.

If you're not sure if my comment warrants a "/s", it probably does.

My comment is on the decentralized security aspect of any crypto. I understand that in order for a blockchain to remain uncompromised 50% or more of the computing power cannot be controlled by a single entity. As smaller mining operations get acquired by larger mining operations and more and more computing power becomes consolidated is it inevitable that the blockchain can be controlled and manipulated? My knowledge of this is basic at best.

"Two things are infinite, the universe and human stupidity, and I am not yet completely sure about the universe. -Einstein

To back on that, which I think is a good question...

what incentive does a miner have in doing the work as their expenses grow to compete for an asset that's extremely volatile during a massive devaluation period?

At what point on the flip side would it become not worth it for miners to continue verifying the network, causing miners to leave the system, creating a situation where there's a reduced amount of computing power, so even with 50% it's a significantly reduced amount of power and easier to manipulate?

Like if you came into mining, which apparently now requires a significant amount of capital to compete when it was $70k a coin, are you still incentivized to continue mining when it's $10k?

That would be in the hands of the market. In a large downturn it may not be cost effective for some operations to continue mining and they may exit. This would reduce the hash rate and energy required for the remaining miners so in theory would balance out based on supply/demand. It is very unlikely the market ever exists where 50% control is achievable and if it were I imagine the price of btc would be so low as to not matter if it was overtaken, but that is a broad assumption on my part.

I buy ten bucks of Bitcoin and ten bucks of Cardano every month 仄儭

"Why gobble gobble chumps asks such good questions, I will never know." - TheFifthFuller

I would claim to be moderately invested in crypto; used to have the same reservations or misconceptions that a lot of people here have displayed in their comments and jokes, but after spending a lot of time reading and educating myself on the terminology and utility, I became a huge fan and supporter. Don't think it's going anywhere and as others have pointed out a government run crypto would go over like a wet fart as that is the antithesis of most crypto. In respect to its value over the current currency used in the US I would say the differences would arise in the lack of dilution from the government that is trillions of dollars in the hole printing more and more unbacked bills vs a currency that is inflationary or fixed. Utility, speed of transaction, and price per transaction also a major talking point for projects expected to survive. Throw in the ability to execute smart contracts that automate escrow and there's really no comparison in utility.

For the sake of sparking discussion; what do the nay sayers think their current cash is backed by and who decides what it is worth?

This sub-thread was locked by a moderator.

The dollar is backed by the US government. The more stable and prosperous my society is, the more stable and valuable the dollar will be. Seems like a win/win. It's also the currency of record globally which is exceedingly advantageous to America. Anything that destabilizes king dollar is bad for Americans. So crypto is cool and all and probably going to be with us for the foreseeable. But a global financial system dominated by crypto rather than the dollar is a prostate-gasm for guys like Putin, Kim jong un, and Xi Jinping and for any aspiring thug.

The technology your referencing as most useful is all still useful without crypto currency.

This sub-thread was locked by a moderator.

Not sure why the thread got locked but awesome answer! While that is all true, therein lies the entryway for those believing in crypto currency. The only worth to your cash in hand is what the government tells you it's worth; thus there is the need to have 100% trust in the government to keep its worth even in the midst of a financial crisis and the constantly accruing debt. Outside of our country it offers a means of safeguarding money or investing in projects separate from government interference. So for people with even less government trust than myself this is massive.

Personally, I couldn't trust elected officials as far as I could throw them to act in my best interest before their own. Having seen how politicians make big moves in the market prior to big momentum shifting swings or news that bankrupt others but pads their pockets, I don't think we'd get much warning in the event of turmoil.

When it comes to utility, sure the technology could be adapted to be used in our current system; but why wasn't it done prior to outside innovation stepping in? I think it's great to have competition to promote innovation in an area that had no reason to change other than to keep printing paper and collecting fees prior. I can take out a 0.5% interest loan against my crypto currency without any lengthy paperwork or abhorrent fees. No bank is going to give me that. I can keep my money invested in an asset known as a stable coin that will earn 3-4% interest a year with little to no volatility.

I completely understand the fear in disrupting the USD and imagining scenarios in which price was manipulated by ultra rich powers, but if the right autonomous system was in place it should safeguard against price manipulation by taking the power out of peoples hands and strictly operating based on preprogrammed rules.

The magnitude of the inaccuracies, misinformation, distortion, short sightedness, contradictions, and paranoia contained within this post is breathtaking. Russian bots are jealous.

I get crypto speculating but hooo-boy, you definitely lose me after that.

Come on now. Articulate a real response to address one of your assertions. Leave the "I'm too smart to even have a discussion with you so I'll spare myself the effort and just insult you" to Twitter.

Yeah, I started to but honestly couldn't even decide where to begin. And I would really struggle to do so without violating TOS topics. I will say that there seems to a real lack of understanding about the financial system (I myself am certainly no expert) that leads to what I'll call "stinkin' thinkin." Some of this "thinkin" is due to the inherent complexity and opacity of the system, some is due to legitimate complaints about it. But some, arguably most these days, is due to intentional dis/mis-information. So here's about what I feel like mustering in response for the sake of due deference to the forum.

  • The government doesn't tell you the value of cash, the market does.
  • The Fed isn't the government. It's a quasi independent institution with some key (but not dominant) political, overlapping term appointments that are historically expertise-based and non-partisan.
  • The Fed doesn't print money, nor does it dictate the value of a dollar. It sets interest rates. Elected officials are intentionally far removed from this process.
  • Interest rates fluctuate. They have definitely been as high as "3-4%" before. "With little to no volatility."
  • The US Treasury Department prints paper currency. It IS a government organization. I'm not sure how they extract fees but I suppose tax dollars do fund their operations... if you want to consider that a fee structure.
  • It is 100% false that 100% faith in "the government" is required to successfully utilize the existing financial system to hedge against risk. We're a democracy, having less than 100% faith is a foundational assumption. And frankly I don't really understand this thinking because if the government falters, your crypto currency will be about as valuable as Piggy's conch.
  • Asking why the established financial system didn't invent the blockchain is like asking why don't Imus just learn to fly.

You're right it is tough to have this discussion within CGs unfortunately. And this was so well said. I will say that there seems to a real lack of understanding about the financial system (I myself am certainly no expert) that leads to what I'll call "stinkin' thinkin." Some of this "thinkin" is due to the inherent complexity and opacity of the system, some is due to legitimate complaints about it.

I've worked in finance my whole career and have come to feel trapped in a paradigm where the more I know the less I know. It's frustrating but also why I enjoy it. I agree with some points but will offer a counter to the following while tiptoeing as close to the CG as can reasonably be done.

The Fed isn't the government. It's a quasi independent institution with some key (but not dominant) political, overlapping term appointments that are historically expertise-based and non-partisan.

This is the answer you will find in an introductory economics or civics textbook but in reality is is not true anymore. The blurring of the lines began with Greenspan and his view that the Fed played a role in smoothing out the business cycle. The veil was pierced for good during the housing crisis when the Fed became an active participant in the securities markets buying mortgage bonds, credit default swaps, and other toxic instruments from the commercial banks to help remove them from their balance sheets. Then they introduced Quantitative Easing (QE) which monetized the debt. Essentially the Fed purchased US treasury bonds directly from the treasury to help finance the government debt at ultra low interest rates. Without the Fed acting as a buyer at Treasury auctions the Treasury would have to depend on foreign govts and institutional buyers to buy all of its debt. However, in a real market buyers would demand higher rates on this long term debt to make up for the increased risk premium associated with a country's debt to GDP exceeding certain levels. Recall Moody's downgraded US treasuries from AAA to AA in 2011. See the increase of the Federal Reserve's balance sheet since 2009. This essentially gives a blank check to the federal govt to spend because the central bank will finance the deficit with the money it creates and allow the treasuries it buys to mature off the balance sheet over time. The treasury doesn't have to bear the higher rates that real market participants would demand (creating a debt spiral it can't afford) nor does it have to go to the tax payer and raise taxes to cover spending. This is Modern Monetary Theory.

The Fed doesn't print money, nor does it dictate the value of a dollar. It sets interest rates. Elected officials are intentionally far removed from this process.

The Fed controls the money supply. While you are correct that the Treasury actually physically prints the hard dollars in circulation they are a fraction of the actual money supply. The Fed electronically creates money and uses this money to purchase Treasuries in open market operations to either expand or contract the money supply. This expansion/contraction is the tool they use to influence interest rates. More dollars in circulation equal lower interest rates as the supply of dollars to lend is higher and vice versa.

I could go on but no one wants to read 1000 words about the money supply on TKP. I think your notion that the Fed is apolitical and removed from the influence of Washington is incredibly na簿ve. Yellen just went from Fed chair to Treasury secretary. The revolving door exists at the Fed the same as every other institution.

I tried to do this without making any value judgements but merely explaining how the system works. I would ask others to do the same out of respect for the CGs. I apologize if I did overstep.

This is why I was reluctant to wade in to the discussion with more than a curt, snarky response.

You present excellent information and have me outclassed in knowledge and experience for sure.

You didn't mention the following (and I'm curious why):

But some, arguably most these days, is due to intentional dis/mis-information.

It's the reason for my reply in the first place.

From my bunker, there seems to be a lot of misinformation and propaganda out there about the Fed, MMT, austerity, root causes of inflation, etc... fueling interest in crypto. I've no interest in hashing that out here, nor am I qualified. But I think it's important to say so when you believe you see it.

I also don't think the Fed is free of political influence (hence quasi-independent). But they aren't an executive agency or a congressional subcommittee and any agenda they have has to navigate the financial industry. In my experience, it's industry influencing the appointees and subsequent policy rather than the other way around. Industry runs the revolving door. I think this is an important distinction to make in the face of the "burn it down" anti-statist crowd driving crypto discussions these days. If you're going to grab the pitchforks and torches, they should at least be pointed in the right direction.

And you tease about Civics 101 knowledge, but it seems to me that even that bare minimum of awareness is absent in much of the zeitgeist these days.

Fantastic reply. We would have fun in the basement at the Cellar. Que the archer phrasing gif..

But some, arguably most these days, is due to intentional dis/mis-information.

The term mis/disinformation is such an engima these days I am hesitant to attribute malice to what is equally likely to be ignorance. It is so often used in context coming from the dreaded fact checkers who in my opinion are not acting in a capacity of objective truth seeking but to serve their own political interests. There have been so many cases over the past 2 years of something that is factually true and objective being labeled disinformation because it was inconvenient to the other side. So instead of contending with a valid critique, some weaselly fact checker sites some non-sensical reason to why it lacks proper context and slaps disinformation on it. Basically I left it out because I didn't think we would even agree on what is dis/mis-information without going down a rabbit hole that we can't go down on TKP not because I don't think what you said isn't relevant and worth exploring.

In my experience, it's industry influencing the political appointees and subsequent policy rather than the other way around. Industry runs the revolving door, not the politicians.

100% agree. This is why the decentralization narrative is so compelling to the crypto enthusiasts.

I think this is an important distinction to make in the face of the "burn it down" anti-statist crowd driving crypto discussions these days. If you're going to grab the pitchforks and torches, they should at least be pointed in the right direction.

This is such an important point in general these days not just in reference to crypto. People who have not studied revolutions should tread lightly before they romanticize one. Having studied the French and Russian revolutions, burning it down ain't the hard part, its managing what come next. Like the dog chasing the car be careful because you might just catch it. Then what.

Really enjoyed this discussion.

Edited: grammar

Same to you. And fwiw, my understanding is that disinformation is intentional. Misinformation isn't.

And I enjoyed reading both of your responses! Learned a lot in the process

it seems to me that even that bare minimum of awareness is absent

I don't know what's currently taught in middle or high school (my oldest is in 5th grade) but I know that when I graduated from VT the only real-world financial knowledge I had was what I got on my own. It's absolutely criminal that the basics of finance weren't taught to all high schoolers then, hopefully that has changed. Maybe I shouldn't be, but I'm regularly shocked at the number of people I run into who have no clue how even basic elements of the financial system work -- literally, people who don't know how mortgages work, what/who the Fed is, essential retirement planning, etc.

"Those who jump into the void owe no explanation to those who stand and watch."
--unknown

The only worth to your cash in hand is what the government tells you it's worth; thus there is the need to have 100% trust in the government to keep its worth even in the midst of a financial crisis and the constantly accruing debt.

All fiat currency has a relative valuation. It is incorrect to say it is worth what the government tells you it is worth. The US dollar is worth what others will exchange it for as payment for goods, services, or other currencies. The govt can't assign it a value but its actions can influence the perceived worth by participants. This is where global currencies are a bit of a circular experiment. Is the US govt debasing the dollar? Yes but so is every other government with its own fiat currency. Would you rather own Yen or EUR? No way. Yuan, no way. CAD, no chance. Gold? You can't exactly shave off some gold onto a scale to pay for your groceries. The differentiator for the dollar is what is dubbed the "petrodollar". Oil has to be purchased in US dollars. So when Japan wants to buy oil from the Saudis they must first use Yen to buy US Treasuries which can then be used to purchase oil. This creates an enormous global demand for US dollars by foreign governments and allows the US govt to finance its debt with relative ease over the last 50 years. This gives the dollar hegemony over other currencies.

The people dunking on Bitcoin as a safe haven from govt destruction of their currency clearly didn't grow in Argentina where their currency collapsed 3 times in the past two decades. It is a western luxury to dump on any alternative to a fiat currency. I don't own any crypto but I have followed it over the years and am intrigued by the arguments on both sides.
Unfortunately I think people are fooling themselves if they believe it is free from government interference. When governments ban it, that is interference. My opinion has always been that cryptos success carries with it the seeds of its own failure. It is a direct threat to confidence in central banking and govt managed currency. The govt will either make it so difficult to own through regulatory measures or will bastardize it via state backed crypto that it will be difficult to persist in its current form. That is not to say it will all be a bust. I tend to think of it similarly to the tech bubble of the late 90s. People were convinced all tech companies would revolutionize the world and suspended rationality in order to convince themselves that they could get rich quick. In the end, 95% of the companies were worthless but those that survived and had real utility did have a major impact.

Argentina's currency didn't underpin the global financial system. Not apples to apples. But I agree Americans can be pretty myopic.

Edit: I also agree with this analysis:

I tend to think of it similarly to the tech bubble of the late 90s. People were convinced all tech companies would revolutionize the world and suspended rationality in order to convince themselves that they could get rich quick. In the end, 95% of the companies were worthless but those that survived and had real utility did have a major impact.

Great responses! I wish I was as eloquent in my explanation as you guys!

I'm not here to convince anyone to buy into crypto. Only presenting my rationale (speaking as someone in healthcare, not finance). I'm sure I misspeak or mislabel concepts when trying to explain my arguments in favor but I'm glad there are people that can. I appreciate and understand most of the arguments against and likely won't offer any valuable keys to convince you otherwise, as it seems most peoples minds are already made up. It seems like a very polarizing discussion but is great hearing everyone's responses and I'm excited to see which way it goes in the future.

Don't sweat it. I wouldn't sound very articulate talking about your field of expertise. I appreciate your candor and sincerity for discussion. A lot of the people who are trashing crypto are frankly just envious that other people they deem to be less intelligent than themselves made money in it and they didn't. This is common behavior in all of investing. People dismiss what they didn't participate in as foolish. The same people will trash crypto and turn around and use the same narrative bull thesis as to why Tesla is a great investment. Their argument will sounds exactly like a crypto bull argument using effusive language about changing the world, solving global problems, blah blah blah while ignoring that they are paying for earnings that wont be realized until the year 3000. They believe in a narrative and that is their investment thesis. I'm crypto neutral. I've never bought any but am not opposed to buying anything if the price is attractive enough.

To further explore your implied question about what makes a currency a desirable safe haven asset:

A currency that appreciates when things are tough. Mainly this means people can use it to cover liabilities and have safe liquid investable assets. You can pay taxes with it. The value is stable. There is a liquid market for it. It can be held as foreign exchange reserves.

Crypto currently has none of these features.

It's illiquid. Volatile. Dominated by speculators. Can't pay liabilities in it. Not held as reserves. Market is opaque and small.

Swiss franc is your best bet.

If you need to smuggle money or conduct crimes. Bitcoin is your asset.

Jury is still out on whether it's a viable reserve (or safe haven) currency.

100% agree. Crypto is no way a substitute for currency. It is an investment asset.

Great explanation. Another thing that kills me about crypto bros is a long explanation about why they think crypto is a great alternative to currency (in spite of the objections you lay out here), but then spin around and say "and that's why crypto is a great investment". As if just somehow naturally follows that good currency also means good investment.

I really think that a lot of the pro-crypto hype boils down to "this technology is so cutting edge it HAS to be useful, right?" And then any objections, no matter how reasonable, are met with vague theoretical questions like "what is money" or conspiracy theories about big finance/government.

How I Learned to Stop Worrying and Love the Jet Sweep

Ha, I just re-read this and wanted to emphasize my agreement:

any objections, no matter how reasonable, are met with vague theoretical questions like "what is money" or conspiracy theories about big finance/government.

That's the playbook, most definitely.

I'm aware that you feel this away about the views I've presented, so I'll say to this is that I welcome any critiques and challenges. I hope anyone reading notices that I have responded to substance with substance rather than get caught up in disparaging remarks.

I'm not in here to execute a playbook. I just like the exchange of ideas and putting my own to the test. (I'm still hoping to get a reply to my longer post on Bitcoin's energy usage.) I'm open to revising or changing my views, especially concerning something where I have some financial investment. Dismissive comments that presume to know my motivations won't get me there, though.

If it looks like a duck, quacks like a duck... etc... And I'm not sure copying and pasting Bitcoin marketing materials is the substance you seem to believe it is.

I don't have much to say about BTC's energy usage beyond what's already been covered. And I've asked previously why you think BTC is a good hedge against inflation and as far as I can tell received no response. But I do have something to say about conspiracy theories... which I've said about as diplomatically as I can say it.

FYI - The energy usage comment wasn't directed to you, just to the thread in general. I know you weren't engaged in that part of the discussion.

As for the inflation hedge response, I admit I became a bit weary of our discussion, and I considered the answer to basically already be there in the preceding discussion, albeit a bit scattered. I'll reply to that post and give you as condensed a response as I can.

It's all a scam. The blockchain complicates things rather than simplifies. "Cryptocurrency" is a misnomer - It's either a currency that can't be easily spent/transacted without time delays and excessive costs, or it's an asset without any intrinsic value that backs it. It's also rife with fraud - just investigate tether. It's also easily lost - countless stories of folks who've lost their hard wallet or the password key and have lost access to their "coins", how absurd. And if you're transacting through an intermediary like Coinbase then you're not decentralized - what if Coinbase goes bankrupt or is seized by the government? At the end of the day, most "investors" in crypto are just operating on the bigger fool/Ponzi theory, hoping to buy some and then sell later for fiat to someone who will pay more for it than they paid. There's really no other actual everyday practical uses.

NFTs are even more worthless and an even bigger scam. Why do I need an NFT for a contract? The world conducts business with contracts by the millions on a daily basis and it operates perfectly fine. It's a solution without a problem.

As if banks and cash flow wasn't rife with fraud? Coinbase doesn't own the investments, you do. Just like if robinhood, TD ameritrade, whoever were seized or went bankrupt, investments would still be owned by individuals and transferred or returned to investor.

Could very well eat crow on this ten years from now, and I'm not here to convince you rather just engage in discussion.

I could post eerily similar quotes regarding peoples view of "the internet" prior to its widespread adoption.

Only time will tell at this point but I'm bullish and doesn't take much for me to hedge my bets and avoid missing early opportunity. But understand your apprehension as it's still a very new idea for how large it has become.

If Bank of America goes bankrupt, your savings/checking account is insured by the FDIC(the federal government) up to a value of $250K. If Coinbase goes bankrupt there's no backstop and no insurance. You could potentially lose everything. Crypto is not a recognized currency by the federal government - its classified as an asset. Also, you're going to pay short term capital gains tax on any money you've made last year, and I'm not sure if people understand that.

But Coinbase is an exchange that is insured just like robinhood and Bank of America is a bank. My cold wallet where I keep my assets offline isn't going to go bankrupt and have no need for keeping those assets in a bank.
Aware about capital gains (avid options trader) as are most in the market although there's still many loopholes and new entrants to the area so much so that the government is working on tightening up so they can get their cut. A lot of defi is strictly trust based reporting if you are buying outside of central exchanges, but this is for the more advanced as their is more room for error being completely decentralized and uninsured.

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insured but not SPIC insured because not recognized by government.

No exact figures given makes it a guess what their insurance claims could reach to so definite ambiguity for the risk averse where at least robinhood tells you they can only cover up to certain amounts.

Coinbase is an exchange. Every crypto you purchase is valid because it is maintained on the Blockchain itself, Coinbase is just a means for interacting with the Blockchain. Your crypto does not disappear if Coinbase goes insolvent.

If you lose your private key to access the wallet though, then you're in trouble.

But if the exchange is shut down and your account is on the exchange, what happens then?

Read about Mt. Gox, the world's largest Bitcoin exchange in 2014 that was hacked and drained. They are still resolving things to this day. People are only getting back fractions of what they had stored in the exchange.

If you keep your Bitcoin (or whatever cypto) on the exchange then you are trusting the exchange. If you withdraw it to your own wallet (which actually creates a transaction on the blockchain) then you are trusting yourself.

Please re-read my comment here from 4+ months ago as it now relates to Celsius, Luna/Luna2, DoKwon, and countless other frauds ongoing but yet to be unearthed. Tether will be next IMO

A new grift every day...

Also fuck this nonsense about Bitcoin, I would use that shit under my dead body:
" Since Bitcoin transactions are anonymous and unregulated, another disadvantage is the lack of security. Transactions done through Bitcoin are irreversible and final, so nothing can be done if the wrong amount is sent or if it's sent to the wrong recipient."
https://mint.intuit.com/blog/investments/pros-and-cons-of-bitcoin/

Hokie Club member since 2017

Well Bitcoin seems to have struck a nerve. Perhaps you're one of the folks who would rather bury their cash in a coffee can in their backyard?

Bitcoin and crypto may be new and have its disadvantages, but I for one don't trust anything from Intuit, given their record of lobbying Congress to keep tax filings difficult so they can maintain their multi billion dollar business during tax season. Talk about grift...

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

ATOM and SOL, most likely to challenge ETH. DOT as well, NFTs could replace license keys and have much more utility. I am honestly surprised the entire legal marijuana industry is not running on some crypto since the federal govt prohibits then from using banking. Treat it like Vegas, don't put in what you can't afford to lose. Stay away from the meme coins like DOGE and SHIB. Someday there will be a culling of the herd and 75% of the current market will consolidate into the remaining useful 25%

I am not sure what to do with my hands now

I don't know anything about ATOM but SOL could definitely challenge ETH by being much, much faster.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

$LUNA! Why? because it is reserve currency for Terra stablecoins. And $UST is the Terra stablecoin pegged tot he USD. $UST will eventually become the stablecoin of choice for taking profits into USD, moving between crypto and fiat, bridging between blockchains, etc. $UST will challenge BUSD, USDC, and USDT as the top stablecoin. As that happens, $LUNA will become a top 2 or 3 crypto asset. Terra blockchain will become a central hub of crypto activity as they continue to build bridges to other blockchains, called Inter-Blockchain Connectivity (IBC).

$LUNA/$UST

Also, you have to question the reserves backing these other stablecoins like USDC and USDT. Tether was in the news recently with many questioning the legitimacy of the reserves. The beauty of $UST is that it is backed very transparently by $LUNA. The tokenomics between LUNA and UST are algorithmic and cannot be manipulated in suspicious manners like Tether and USDC.

The only downside risk for LUNA/UST is government regulation of stablecoins, which is probably inevitable. But we won't go there, that is what it is, and no one knows exactly what will happen.

When you say "treat it like Vegas, don't put in more than you can afford to lose" - that's gambling not investing. Basically admitting the price can go to zero or be a complete scam. Investing is much more stable - the price of your house is not going to zero. The values of well run businesses producing cash flows are not going to zero. Yes the values may fluctuate from day to day or month to month, but Apple as an example is not a scam going to zero. They produce products, have assets, and make money. What does Bitcoin or any crypto own, produce, and what is the cash flow projection?

Buy Eth and just wait, currently holding 121, including when it hit near 5k never sold. This is going to 50k+ down the road. Eth will be bigger than Bitcoin no doubt in my mind.

Go for it

wow that's awesome! How long have you been buying Eth for?

Since 2017, I've never sold any, kicking myself for not loading up more last year when it was near $300-400 range

Go for it

Haha well dang, congrats! I managed to grab a bit of ETH around the $200ish mark a couple years back and got some nice 5x profits but unfortunately didn't grab much. Good luck with your hodl! You've got some crazy discipline.

Every time I hear someone talk about crypto, they come off sounding cultish with an end result of trying to get you to invest in their product so they can make more money. If you're a billionaire with money to burn, by all means, invest enough to keep the product stable, but for everyone else, good luck.

As for NFTs, what a ridiculous scam that whole thing is. If you waste money in those things, you deserve the realization of 'why the f did I spend that on this' that will be coming down the line. Oh, cool, you invested to have a unique certificate to an image online that gives you exclusive access to... what, exactly? And the whole thing can be bypassed with a simple right click or print screen? LOL. That is a money laundering scheme if I've ever seen one.

This is my school
This is home

This is the big disconnect I see everywhere. I'm not a crypto bro or a NFT (nonfungible tool), but right click copy or "just watch the highlight on youtube" is like saying "just print a picture of a mickey mantle rookie card".

The "collectible" is the digital token, it's represented by a picture or a highlight clip to make it tangible. Obviously, physical items have more perceived value than digital ones, but the people buying into NFT art/memorabilia/metaverse items are bullish that over time, the perceived value of physical and digital collectibles will align more closely as more and more of social interaction plays out in the metaverse.

The whole thing feels to me like people paying real dollars for a blue p hat on runescape in 2005. Sure you could save an image of a runescape rare to your hard drive, make it your profile picture, etc. But it's not the same as having the digital item to show off in a digital setting. Same as people buying Fortnite skins. But imagine there were a finite amount available, and you could turn around and sell that to another player.

But the real bottom line for me is that we're headed for the plot of Wall-E faster than anyone realized in 2008 when that movie came out.

Edit: just gonna put this here. Digital "rare items" have had real world "value" for a while now. Just within a given specific platform. https://www.rpgstash.com/runescape/rs3-rares

"Why gobble gobble chumps asks such good questions, I will never know." - TheFifthFuller

Reading Fernley's post above, all I could think about was Wall-e.
I had a conversation with a guy years ago (2007 or so) where he told me he didn't see the point in traveling or getting out to see things. He could just do VR as that technology developed and let other people do all the leg work. The conversation has stuck with me for years. I generally fear the day when this is a normal line of thinking. It will really be a time when others tell us what to value and what we should experience. It will be nearly impossible for the random discovery of talent or experience to take place. None of that can be good.

I long for the day when people think they can just pop on a VR headset and be able to travel the world. It'll make it that much better when the crowds are smaller when my wife and I are actually going to those places.

This is my school
This is home

NFTs are like paying for a PS4 Theme. And ooh, the NFT aspect makes it so you are the technical owner of the theme, so cool! And then technology changed, Sony scrapped themes with the PS5 and now they're all completely worthless.

And then problem is that we're not talking about a $2 theme or avatar, these NFTs are stupidly expensive.

This is my school
This is home

Everyone is too hung up on the idea of NFT as buying rights to a digital image. NFTs can serve as expanded licenses or tickets or other means of granting access. They can be updated, have content added, expand across platforms, etc. Imagine a video game access code the gets in game content dropped, let's you access other games or creates interaction between multiple games, becomes a ticket to comicon, one NFT. I don't buy them, but I buy the coins of the chains hosting them. Sell the picks and shovels during the gold rush

I am not sure what to do with my hands now

Using the NFT technology as a tool to facilitate transactions/licensing might be a good application.

However, up till now, all the press has been around "owning" some digital "collectible" which seems a bit sterile to me. If that's something you want to invest in, fine, but having been through the ups and downs of the sports card/collectible market for a few decades, collectibles aren't appealing investments.

what, you mean my beanie baby collection is worthless? Dammit, I was told this would be able to send my kids to college!

This is my school
This is home

Same with my old comic books.

Crypto value is measured in debt-based counterfeit fiat printed out of thin air. Paper money always returns to its intrinsic value - zero, according to Voltaire (so they say). People are going to lose their shirts in Crypto. Just know when to get out.

via GIPHY

Lots of different opinions in here. I hope this discussion continues. I've been persuaded that Bitcoin is the only thing worth investing in long term. All other cryptocurrencies are either competing with Bitcoin to be a form of money (even if they don't admit or realize it) or they are a solution in search of a problem (their utility has little to no demand in the market).

I really like the Unchained Capital blog series Gradually, Then Suddenly for explaining the 'why' of Bitcoin and responding to common criticisms (like its volatility, energy usage, slow transaction speed, etc.):

Gradually, Then Suddenly - Bitcoin is money designed to provide a solution to the money problem that is global QE, which Bitcoin achieves primarily because it's supply is fixed and cannot be manipulated.
Bitcoin Can't Be Copied - Bitcoin's value is tied to the emergent properties of its network and the level of decentralization and censorship-resistance it has achieved, which no other cryptocurrency can replicate.
Bitcoin Is Not Too Volatile - Bitcoin is still very young, so volatility can be expected, and volatility doesn't rule it out as a long-term store of value.
Bitcoin Does Not Waste Energy - The energy expended is the cost of having money that cannot be inflated, censored, or confiscated. This is extremely valuable and therefore not a waste of energy.
Bitcoin Is Not Too Slow - Bitcoin functions exceptionally at currency issuance and final settlement, which are the most important functions at the base layer. It does not function as well as a payments rail, but transaction speed and volume can scale using second layers that operate on top of the base layer (e.g., the Lightning network).

There are more blog entries if you continue clicking the "Next week" link at the bottom.

3Blue1Brown's video is very helpful for visualizing and understanding the basics of the blockchain (a distributed, public ledger) and the cryptography involved (hash functions and private/public keys).

Video: But how does Bitcoin actually work?

I think the Bitcoin does not waste energy and cannot be inflated is a bit of a stretch. The money and expenses that are going into mining smaller and smaller portions of bitcoins are a waste of both real money and electrical energy.

As for the cannot be inflated, isn't the point of bitcoin that it has or will become more valuable as time moves on like any investment? Those $300 bit coins are theoretically much more valuable now.

I too was skeptical that something digital could actually be finite (uninflatable). I ignored it in 2014 when I heard about it and didn't properly look into it in detail until last year! But convincing yourself that this is true requires you to read up on some of the more technical details about Bitcoin, the incentive structure built into its design, and how the network is secured. Read here for a brief explanation about how new Bitcoin is added to the total supply and why the total amount that will ever exist is absolutely finite: https://www.bitcoinblockhalf.com/.

Whether or not the energy is "wasted" is a matter of opinion. When you understand how devastating US monetary policy is (endless QE, bailouts, and stimulus that perpetually debases the dollar and robs everyone holding dollars of their purchasing power) and combine that with the unique properties of Bitcoin that attempt to fix this problem (largely by removing control over currency issuance from the government), only then you are equipped to recognize the value of Bitcoin and the value of securing it, even if it involves a high energy cost. Some see the energy as wasted, others see it as incredibly well spent. The Unchained Capital blog series I linked to is a good place to start.

Also, it's true that miners are mining smaller and smaller amounts of Bitcoin, both due to the block rewards halving every 210,000 blocks and due to more miners constantly being added to the network. But those smaller amounts of Bitcoin are, overall on a long-term time frame, increasing in value.

If we're calling out opinions, this one's a whopper:

When you understand how devastating US monetary policy is (endless QE, bailouts, and stimulus that perpetually debases the dollar and robs everyone holding dollars of their purchasing power) and combine that with the unique properties of Bitcoin that attempt to fix this problem (largely by removing control over currency issuance from the government), only then you are equipped to recognize the value of Bitcoin and the value of securing it, even if it involves a high energy cost. Some see the energy as wasted, others see it as incredibly well spent. The Unchained Capital blog series I linked to is a good place to start.

And it follows a pretty dishonest narrative about cause and effect. You know what else impacts "purchasing power?" Unemployment. Homelessness. And affordability. What exactly do you think Fed inaction during 08 and 20 would have done to your "purchasing power?"

Bitcoin is a speculation vehicle. And having the opinion that it's a waste of energy is frankly a much more well informed opinion than yours.

And I think that is where we stop this part of the discussion and keep things civil.

It's pretty civil to say that US inflation has been about as close to the model of stability as you can get over the long term (definitely over the past 30 years) thanks in large part to US monetary policy. Now, some may think we've come to the end of that reality and some are actively betting on it. But that, much like the value of Bitcoin, is:

What exactly do you think Fed inaction during 08 and 20 would have done to your "purchasing power?"

It definitely would have been painful. It almost always is painful when an addict goes cold turkey in order to get healthy. The US is addicted to easy money, and the Fed's solution to the problem in 2008 (that as far as I understand, they created) was to inject even more debt into the system, ensuring that the root problem remains unaddressed. You either keep the money flowing and eventually get inflation and possibly hyperinflation or you cut it off and get a market recession or possibly a full-blown 1929-style crash (extraordinarily painful, but arguably necessary).

US inflation has been about as close to the model of stability as you can get over the long term (definitely over the past 30 years) thanks in large part to US monetary policy

The US has made a valiant effort to keep things going ever since it defaulted on its debt in 1971. Nixon was forced to take us (i.e., the whole world) off the gold standard because there was effectively a global bank run on all the gold. The US abused its position by creating more paper claims to gold than there was gold in existence.

What we're seeing with Bitcoin and fiat currencies is a clash of Keynesian central-control economics with Austrian free-market economics. If discussion on the history and these economic theories is too political then I can drop it, but in my opinion without it I don't think you can fully understand and appreciate the value of Bitcoin.

It almost always is painful when an addict goes cold turkey in order to get healthy. The US is addicted to easy money,

This is directly from the Bitcoin acolyte (as well as the pro- gold standard) script and it's always interesting because it's a moralistic argument (tough but fair) based on a naturalistic fallacy (what happens naturally is therefore good).

What we're seeing with Bitcoin and fiat currencies is a clash of Keynesian central-control economics with Austrian free-market economics. If discussion on the history and these economic theories is too political then I can drop it, but in my opinion without it I don't think you can fully understand and appreciate the value of Bitcoin.

No, you don't need any secret, tribunal, or thetan level 24 knowledge to understand or appreciate Bitcoin (edit: or the narrative your selling).

I would ground my assessment in Austrian business cycle theory, which basically maintains that corrections in markets are healthy because suppressing them inevitably results in more violent corrections down the road. Central planners might have the best of intentions when they try to artificially dampen or prevent corrections, but the reality is that this causes risk to build up, and that pressure needs to be released one way or another. Austrians hold that more frequent but also milder growth and recession cycles are better, not because they are "natural" but because they mitigate the destruction caused by busts that follow the artificial booms.

Austrian economics also understands that market participants in aggregate are more knowledgeable and more efficient than any central planner can ever hope to be. Let there be winners and losers who bear the consequences (gains and losses) appropriate to the level of risk they take on. Let individuals learn to hold institutions accountable and demand transparency so that they themselves can know what risk they are indirectly taking on when they choose to trust a certain business with their finances.

But here we are, and I admit that it is a difficult question about what the best course is given our current position. I don't want them to crash the market on purpose, for it would certainly be devastating in ways we haven't seen this century, but I'm just not sure what alternatives there are. Can everything always go up forever? Hyperinflation seems worse to me.

I'm also not appealing to secret knowledge. I'm only pointing out that the problem Bitcoin was designed to solve is historical and economic in nature. It is a direct response to the loose monetary policy of governments and their fiat currencies. You can ignore or dismiss it, but this is vital context to understanding why Bitcoin was created and, in my opinion, a big part of the reason why it has been so successful to date. From Satoshi Nakamoto himself:

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. (source)

I try to ground my assessments in experience, not theory. And in my experience there are lot's of actors out there pushing narratives that, either for personal or "geostrategic" reasons, serve to sew distrust in institutions and appeal to fear and ignorance. So when you start lobbing absurd ideological straw men like:

If we want a central bank digital currency (CBDC) that gives our government CCP-style social credit system powers, then we don't need it. But many people don't want that, hence they do see Bitcoin as something we need.

You start to seem like one of them.

And while it's great that you've found a group of folks with ideas that resonate, the Austrians aren't the only ones who understand the value of market corrections or want downside risk present for investors. These aren't novel or proprietary ideas, nor have they disappeared from the financial system. So unless you're an idealogical purist (and that's about the nicest way I can say that without Godwining the thread), you understand that the real world isn't binary and everything is a negotiation balancing myriad interests (particularly for policy makers).

That said, a discussion about the viability of BTC as a hedge against inflation (which as far as I can tell is the same thing these days as "currency debasement") seems perfectly consistent with the thread topic and is definitely interesting. But talk of hyperinflation as though it's anything other than speculation at this point is just fear mongering that reeks of agenda. So if you can present your ideas on BTC as a hedge as tho you're actually wrestling with them rather than just quoting scripture or propagating ideological talking points I'd love to hear them.

The short version is that Bitcoin is an inflation hedge because it strongly resists centralized control and manipulation and thus avoids the central pitfall of fiat currency, debasement from hands of the issuing authority. Bitcoin is freedom money; it can't be censored or debased, and if you secure it properly it can't be confiscated.

The long version that backs up the above assertions involves looking at all of the following:
1) the theory/philosophy of money (forms, attributes, functions, and relationship to technology and energy)
2) the history of money (for informing/confirming #1 and as context to #3)
3) the modern history of centrally-controlled fiat currencies (how they violate #1 as well as basic logic/physics and how they have been abused to enrich a select few at the expense of many)
4) the technical workings of Bitcoin and its network
5) how #4 bestows Bitcoin with unique properties well suited to circumvent the ills that arise from #3

I recognize that for many the force of the argument depends on the degree to which one distrusts the reigning political and economic authorities on the subject of the money supply. The question to ask is: Should we trust them or is there good reason to distrust them? Maybe my information does look like it is designed to sow distrust and fear, but in my mind I'm only trying to be as factual as possible and provide as correct an interpretation as possible of the relevant history (in a thread about cryptocurrency where I am contending for Bitcoin). If someone reads what I write and the result is that their trust in the legacy financial system is lowered, that might mean their trust was too high to begin with.

Debating a conspiracy theory is like trying to disprove witchcraft. As imperfect as we/they are, I generally have faith in humans and human institutions to solve human problems and meet human challenges. Because I don't believe in magic.

I'm reminded of this piece of Bitcoin history:

+1

I legitimately appreciate the humor here.

Some see the energy as wasted, others see it as incredibly well spent.

I'm not sure "waste" quite captures what people are worried about. On a planet hurtling towards climate catastrophe, how smart is it to create new energy demand equivalent to a mid-sized country for something that society doesn't really need? That incremental electricity production is coming largely from fossil energy sources. The environmental impact associated with crypto is pretty yikes.

Get your ass on the ground and we'll party

for something that society doesn't really need

This is again a matter of perspective or opinion. If we want a central bank digital currency (CBDC) that gives our government CCP-style social credit system powers, then we don't need it. But many people don't want that, hence they do see Bitcoin as something we need. I'm not sure what else to say other than to encourage you to read the Gradually, Then Suddenly blog series with an open mind.

Much of the energy used by the Bitcoin network is renewable, btw. (Maybe >50% at this point, I'm not sure.) I can't speak to other cryptocurrencies, which I don't think are anywhere near as important as Bitcoin. I'm happy to agree that securing JPEG ownership on a Proof of Work blockchain is a waste of energy, haha.

"Much of the energy used by the Bitcoin network is renewable". That's patently untrue and I challenge you to come up with any shred of evidence to back up that claim. In the US, energy production is 60% fossil fuels, 20% nuclear, 20% renewables. And I can guarantee that the US is further along on renewable utilization than China, the EU, and certainly any developing nations

https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

Rob Chang and Gryphon Mining have apparently secured a 100% renewable energy source for their operation using hydroelectric power. They claim to even have a negative carbon footprint through carbon credits they have purchased. They have been trying to merge with Sphere 3D (ANY) to get on Nasdaq for months now, but it keeps getting delayed. Very innovating business model but not nearly enough of this going on in the bitmining world.

Unless they created a renewable source, then they are simply taking power from renewable sources requiring other users to get power from elsewhere. Chances are that 'elsewhere' is not renewable. It's a nice way to pat yourself on the back and claim you're being environmentally friendly. But, the industry added power demand. And unless they are creating power supply, somewhere fossil fuel is offsetting their increase.

And carbon credits are another nice pat on the back... The intent is good. But, it's like the least you can do. "I'm going to pay my neighbor to not use his extra toilet, and keep it clean, so I don't have to clean mine." Eventually your toilet still ends up a giant mess.

I should have said "sustainable" (hydro, wind, solar, nuclear, geothermal), not "renewable." That is my mistake. Also, sorry for the long post, but the energy issue is clearly on the minds of many in this thread. Keep in mind that I'm arguing for Bitcoin, not crypto as a whole.

From Bitcoin's Energy Usage Isn't a Problem. Here's Why. (Section: How Bitcoin Uses Otherwise-Wasted Energy):

People often imagine bitcoin miners competing with other industries for electricity, as though bitcoin mining must push out some other use of electricity. However, because bitcoin miners inherently require extremely cheap electricity sources, they can't normally compete with normal users of electricity. As a result, bitcoin miners seek out inefficiencies around the world where electricity is being underutilized and wasted.

The vast majority of energy consumers can't go to where the energy is; the energy has to be brought to them. Humans organize themselves based on geography, mainly around shipping channels. We live in coastal or riverside cities, and in the suburbs of those areas, and around rural areas of fertile land. Not around energy.

We don't move to where the oil and gas and uranium deposits are; we send folks out to go get the oil and gas and uranium and bring it back to us for consumption in our homes and at gas stations and nearby nuclear stations.

Bitcoin miners are unusual energy consumers in the sense that they can go to wherever the energy source is, as long as they can get some sort of basic internet connection, including a cellular or satellite connection if needed. That means they use energy in quite efficient and unusual ways.

That section goes on to discuss each of the following:
1) Stranded Hydroelectric Power in China
2) Flared Gas Bitcoin Mining
3) Bitcoin Mining as a Grid Battery
4) Advancing New Energy Technologies
5) Old Power Plant Refurbishment
6) Bootstrapping Developing Country Electricity

For some actual numbers, see:
Bitcoin Mining Council - Global Bitcoin Mining Data Review Q4 2022

Yes, I'm aware that this is produced by the Bitcoin Mining Council (BMC). I'm not aware of any alternative source for this kind of info (I'd be interested to see something from the DOE). Alas, there's not a global energy meter we can just check, so these things have to be estimated. Obviously, you can question the BMC's methodology and the motives of mining companies to report accurately. If there is a problem with their data or analysis, there are many people out there highly motivated to uncover it.

The executive summary states that Bitcoin:
1. Uses an inconsequential amount of energy.
2. Is rapidly becoming more efficient.
3. Is powered by a higher mix of sustainable energy than any major country or industry.

I think people also need to consider the possibility that environmental FUD might come from entities that do not want Bitcoin to be embraced, like central banks or competing cryptocurrencies. As it's stated in the first article linked above: "Bitcoin's energy usage is a rounding error as far as global energy usage is concerned."

Examples:
Bitcoin Fracking Converts Wasted Energy into Power for Bitcoin Mining

The Bitcoin mining industry has paired up with natural gas and oil companies in a new practice called Bitcoin fracking. The process involves recapturing wasted energy from oil and gas drillers and repurposing it to power Bitcoin mining operations.

The result is arguably beneficial for the environment and can lower the carbon emissions from both industries. This is an exciting development in the Bitcoin mining industry and is a small step toward helping cryptocurrencies become more sustainable.

Bitcoin operation ignites debate around the waste from coal mining in Pennsylvania

Under fire for their emissions and reliance on fuels like coal and natural gas, some bitcoin mining companies in the U.S. are transitioning to more renewable types of power like solar or wind.

Stronghold Digital Mining, which owns the Scrubgrass plant, has found its power source in the form of coal waste, which is abundant at this 221-acre pit just outside of Pittsburgh. Coal waste is a combination of rock, coal, and other materials that were deemed unsuitable for burning and left abandoned since the 1970s when coal mines in the area were closed.

There are 220 million cubic yards of waste coal pits like the one in Russellton across 9,000 acres in Pennsylvania, according to testimony from Pennsylvania Department of Environmental Protection Director Patrick McDonnell. The agency says the pits cause environmental problems like leaching acid into nearby rivers and streams. There are also 40 continual fires in waste coal pits across the state that can release carbon dioxide and other pollutants as they burn, according to a document from a waste coal industry group.

The entrepreneur behind Stronghold, Bill Spence, said that while burning waste coal isn't the cheapest form of energy, the bitcoin operation keeps the plant viable through its constant demand for power. This helps achieve his goal of reducing the toxic waste piles across the state, Spence said.

"What cryptocurrency and bitcoin has done for us is, it's enabled us to sustain the work that this power plant does as an environmental plant cleaning up the waste coal, the remnants of the mining industry here in the state of Pennsylvania," he told ABC.

My best friend who is as far down the crypto rabbit hole as anyone I know just sent me a graph showing the BTC mining uses less energy than gaming and far far less than traditional banking. If crypto can replace traditional banks, it will certainly be a net positive on the energy front.

I'm waiting on my friend to send me the link to share.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

I don't see Bitcoin or crypto replacing banks, nor should it. Not everyone wants to be their own bank. Most people in my estimation value convenience and insurance against theft/mistakes more than having total sovereignty over their funds. And I completely understand why most people have that perspective. Right now to "be your own bank" and hold your own keys does have a learning curve and is intimidating.

The banks will have to change and reorient themselves in the digital asset landscape. They will still be there to offer custodial services and financial instruments to clients. Its just that the underlying reserve assets (singular asset, in my opinion) will be different. Also note in this system the US dollar still can have a role to play, as long as those who control its supply don't inflate it into worthlessness.

I don't think they will replace banks completely either, but it will certainly put a dent in their business. There are those not smart or brave enough to step away from the bs that is our major financial institutions. The younger generation are adopting crypto more and more and banks are the ones that could be hurting severely from it. They won't completely disappear but there is a reason they are scared shitless of crypto and buying BTC. Hopefully, it makes everything greener from a climate perspective as well.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

As crypto doesn't replace the function of traditional banks, it's not an apt comparison.

As crypto doesn't replace the function of traditional banks, it's not an apt comparison.

You're completely wrong. I can go to my Blockfi account and apply for a Blockfi credit card and apply for a crypto backed loan today. I can also go to my Blockfi account and buy stablecoin and get 8% interest back on it versus whatever paltry percent any of the banks want to give on a savings account. Even my boomer father is interested. Many things that banks do will be replaced by crypto, that is why they are scared of it and institutions are buying it for themselves.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Can you get a mortgage? Is your account insured?

The site you posted says "up to" 9.25%, and it's in cryptocurrency, which is worth about 55% of what it was worth in November in U.S. dollars. So how much did you really gain?

As far as borrowing, you can borrow against your crypto account. Which is like saying your cash is good at the bar.

So I'm seeing it more as a speculative asset than a currency at this time. Once it has stabilized in value, and has more competition, the speculative value will be greatly diminished.

I'm not against speculating in Bitcoin, but it has a long way to go as an actual currency.

Yes, my account is insured. No, I can't get a mortgage and I don't need one. You flat out said it's not an apt comparison and I gave a litany of reasons it is. Can it do everything (i.e. a mortgage) a bank does? No, but it does plenty of what a bank does without the bs of trying to screw everyone over with fees. I look forward to working with an exchange and block chain technology to rid myself of the banking insanity.

EDIT: Yes, I can get a crypto mortgage. https://www.insurancejournal.com/magazines/mag-features/2022/02/07/65255...

The site you posted says "up to" 9.25%, and it's in cryptocurrency, which is worth about 55% of what it was worth in November in U.S. dollars. So how much did you really gain?

Stable coin is equal to one US dollar. It's always equal to a dollar. Stable coins only follow what the dollar does. So when the dollar inflates, so does the stable coin. You can say it's 55% of what it was in November and be referencing anything other than a stable coin, but I'll go ahead and look at my stable coins and see that they are in fact, still the exact same amount as dollars I put in, but have grown much more so than dollars in my typical bank account.

I'm glad you view it as speculative. That's great, my suggestion would be to not get over your head with it. I view it differently.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Stable coin isn't bitcoin, and has no investment advantage over a dollar bill. The value of Bitcoin, on the other hand (relative to a dollar), did drop 55%. Sorry I missed your stablecoin reference, as that's a different discussion.

Nobody is saying that the technology isn't valid, but if you're using a digital coin that's pegged in value to a dollar, you lose any speculative or investing advantage. A mortgage in a cryptocurrency that's pegged to the dollar would likely be similar to one denominated in dollars, so I'm not sure I would see the advantage.

I'm not sure how your bank can offer an interest rate that's a lot higher than any other bank, but that would make me want to do some more research, as it would be a pretty bad business model for a bank. Any bank is ultimately going to have to make money somehow. Eventually, they will need to charge fees.

I'm not against the technology. I don't really have any emotions about it at all. I'm just saying that the speculative nature of most crypto currencies make them un-investable for me right now. I can't predict if their value will be double or half of their current value next year.

YMMV

I have to say I've enjoyed this discussion, and seeing everyone's opinions. Plenty of disagreement, without anyone being too disagreeable.

This is my school
This is home

From HokieCFA above:

I don't think there is any way the US govt allows its power to be usurped without a real fight.

HokieCFA, how familiar are you with the technical side of the Bitcoin network, its decentralization, and the cryptography it utilizes? What about its built-in incentive structure and the game theory it creates?

I agree that the US and other world powers will want to put up a fight once they more fully realize the threat it poses to their monopoly on currency controls. Honestly, they are probably already aware, but our political system is designed to work slowly and the current level of polarization doesn't help. Anyway, even if they could move quickly, I'm just not sure they can contain this thing at this point. They could have killed it in its infancy but the network is showing itself to be more and more anti-fragile each time it is attacked or stressed. One of the keys here is Bitcoin's decentralization. Napster was pretty easily shut down, while BitTorrent persists to this day.

I need to do more in-depth study about the different ways it theoretically could be killed. Maybe the NSA has already cracked SHA256 and the secp256k1 curve or can hack over 51% of the network's mining power (currently ~190 EH/s). Also, maybe instead of killing it all they need to do is suffocate it and make it unappealing with regulations or bans and by manipulating the derivatives and futures markets. But this might only drive innovation and talent to other countries and result in the US essentially shooting itself in the foot.

Side note: I appreciate the detailed info you provided above about the Fed and the money supply. I was vaguely aware of some of it but your explanation is phenomenal. Count me as at least one guy on TKP that would read your 1000-word post if you ever wanted to write one, haha.

I'm not very familiar with the technical aspects you mentioned. I read the white papers for bitcoin and ethereum but I'm so ignorant when it comes to programming/coding/computing in general haha that I just tried to understand the big picture stuff. The suffocating method you mentioned is what I am referring too. It wouldn't be difficult to smother it with reporting requirements, prohibiting crypto proceeds from being used to purchase real estate, requiring banks to identify the source of proceeds for deposits over X amount and then discouraging them from accepting deposits that are the result of crypto proceeds for fear of money laundering, etc. You could be right though that the genie is out of the bottle and govts have to find a way to coexist with it.

Check out this report from Fidelity Digital Assets, just released yesterday:

Current Encryption technology could become obsolete with quantum computing. Will be an interesting development.

#Let's Go - Hokies

I think one of the interesting things will be how the government records/tracks and taxes crypto. I thought I read an article that they are going to be taxed as capital gains.

Isn't that how it's already taxed?

They already tax it as capital gains

DOJ getting in the mix - confiscation of 94,000 Bitcoin

I told him Id crawl on my hands and knees to be the DL coach at Virginia Tech. Now, all of a sudden, Im sitting in this chair and I told him Id still crawl on my hands and knees to work here. I just want to be here.
JC Price

A married couple has been arrested and charged with laundering billions in Bitcoin stolen during the 2016 Bitfinex hack, as the Justice Department announced its largest financial seizure ever.

Ilya 'Dutch' Lichtenstein, 34, and his wife, Heather Rhiannon Morgan, 31, who raps under the name Razzlekhan, were arrested on Tuesday in Manhattan on federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States.

Justice Department officials said the transactions at the time were valued at $71 million in Bitcoin, but with the rise in the currency's value, it is now valued at over $4.5 billion.

I thought this was in interesting tidbit: The August 2016 Bitfinex hack itself was one of the largest crypto heists ever recorded - so massive that news of the theft knocked 20 percent off Bitcoin's value

.

i am at work...youtube blocked...someone needs to post a link to Razzlekhan's rap videos. they are...something.

from https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-4...

The criminal complaint alleges that Lichtenstein and Morgan employed numerous sophisticated laundering techniques, including using fictitious identities to set up online accounts; utilizing computer programs to automate transactions, a laundering technique that allows for many transactions to take place in a short period of time; depositing the stolen funds into accounts at a variety of virtual currency exchanges and darknet markets and then withdrawing the funds, which obfuscates the trail of the transaction history by breaking up the fund flow; converting bitcoin to other forms of virtual currency, including anonymity-enhanced virtual currency (AEC), in a practice known as "chain hopping"; and using U.S.-based business accounts to legitimize their banking activity.

No matter how much you obfuscate, you'll leave a trail. This is a good case study for anyone who thinks Bitcoin is bad because it is used for money laundering and other illegal activities (as if fiat isn't). Addresses on the blockchain are pseudonymous, not fully anonymous. Your identity can be linked to addresses by third parties or even by those who can associate you with an IP address.

Bitcoin was around $600 at the time of the hack in Aug 2016. They would have been better off buying and hodling!

At a minimum, they controlled accounts that held 25,000 bitcoins. So $15 million at the time of the heist, when the coins were worth $600 each.

The question is whether they did the original hack, or were others involved as well. Will be an interesting story to watch.

Edit: Overall, it seems they had 119,000 Bitcoins.

The fact that these two were able to (apparently) steal what is now valued at $4.5 billion of it may not be all that confidence-inspiring.

Took the Feds five years to make this arrest. Will be interesting to find out how they did that.

it may not be all that confidence-inspiring

There are definitely risks. (There's no Bitcoin printer to bail anyone out.) But notice that they didn't compromise the security of the Bitcoin network. They compromised the security of the exchange, which is just a website. This is why many say, "Not your keys, not your coin."

"Not your keys, not your coin."

I think you're right.

The only reason the Feds were able to get access to their bitcoin was by decrypting a file to get Lichtenstein's key. Interestingly, now they know every single transaction they ever made with those coins, which is really bad if you're trying to launder money.

The part that doesn't inspire confidence is that those two (or someone they knew) were able to steal $3.5 billion of it. They don't come across as the brightest people. There are millions that the Feds haven't recovered yet.

This is a good case study for anyone who thinks Bitcoin is bad because it is used for money laundering and other illegal activities (as if fiat isn't).

This strikes me as a very odd thing to say. I'm not sure any of this proves what you're claiming it does? It seems like you're referring to how bitcoin is the popular currency to use on online black markets... which is true but isn't really what I think of as one of the central anti-bitcoin arguments either. Money laundering for example is the practice of disguising the origin of money that was earned through illegal means, which bitcoin is certainly used for (as is other high value property like jewelry and real estate). Which again, I wouldn't say is a central argument against bitcoin, but is also undeniably true nonetheless.

How I Learned to Stop Worrying and Love the Jet Sweep

Saw a meme today and I can find no better description...

"Imagine you are married and your spouse is getting drilled by every other guy in the neighborhood. You can't do anything about it but you have the marriage certificate. That's an NFT."

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

I laughed out load at this :-). Thank you sir!

Recovering scientist working in business consulting

Well, they certainly did market crypto in superbowl ads.

One of the better ads was Larry David.

Though I think it would have been better as pyramid schemes through the ages, with Larry David avoiding disasterous investments.

Tulips in the 1600s, Charles Ponzi in the 1920s, Bernie Madoff, Razzlekhan, Bitcoin

Between that, the electric car commercials, and streaming service commercials, I felt VERY reminded of what year it was lol.

How I Learned to Stop Worrying and Love the Jet Sweep

I'm the proud owner of $15 of Bitcoin thanks to Coinbase!

If crypto is a currency, why do they have to market it? I don't see any ads for Euros, Dollars, Rubles, or Yen. I think we've reached peak crypto at this point, people have piled into the pyramid, and the ability to find new suckers jumping in to sell it to for more will be compromised.

I've been lurking in this thread for a while but haven't contributed (mostly due to work stuff). But I think you might be right. You probably can make a few bucks trading the dips and rises, but I think the major booms are probably done for the most part.

I don't own any more crypto at this time. I may grab some if I see something enticing, but the Shiba run late 2021 was more or less my farewell to crypto (without knowing it)

Warning- Filter lost.

"Look at this... This is just spectacular.... These people are losing their minds"

Crypto is a new industry, so companies are marketing their financial product/service for engaging in it. There were no ads for specific cryptocurrencies as far as I remember.

So they are only encouraging people to get into crypto in order to get them into it on their platform. It's a race right now for market dominance and building network effects. They could care less whether you buy Bitcoin or whatever coin matches your favorite dog breed.

How do the platforms make money? Exchange rates?

every time you buy, sell, or transfer, they charge a small fee. coinbase typically charges $2.99 for buying or selling. that might increase for large amounts, not sure.

Again, why it's a scam. If I take dollars out of my pocket and buy something at WalMart, no one charges me a fee for the ability to use my own money. Which is why Bitcoin is not a currency. It's a gambling/trading instrument to try and sell for more than you bought.

Based on this logic any investment that charges a commission or fee when you buy or sell (e.g. stocks at a lot of sites) are scams. If you exchange Yen for dollars or dollars for Yen at a bank, they will also charge a fee (built into the exchange rate). By your definition, that would be a scam too.

And Walmart does charge a fee for some transactions, it's just buried in the price.

While I don't think crypto is the be all end all that some on here think, the fact that exchanges are charging fees doesn't make it a scam.

In short, yes.

Lots of ways for exchanges to collect fees. Most common are trading fees (0.1%3%). Sometimes the trading fee is hidden by being baked into the exchange's "spread." For example, coins might always trade about 1% higher on an exchange that claims it has no trading fee. There are also deposit and withdrawal fees (whether USD to/from banks or crypto to/from private wallets).

Also, these exchanges can operate like banks. People leave their funds sitting in them and the exchanges can use them for their own risk taking purposes (loans, futures and options, others?). This is especially the case when you are promised staking rewards.

Read the user agreement if you want to develop a healthy fear of leaving your money in them. I don't keep much Bitcoin on exchanges, only as much as I'm willing to lose. Some do have FDIC insurance for USD balances though.

i assume you use a wallet of some kind? what do you use...hot, cold? i use a ledger nano x.

I have a Coldcard (made by Coinkite in Canada). I like that it is Bitcoin-only and because it prioritizes security. The main security feature is that it is air-gapped; no USB connection with a computer is required. I haven't used a Ledger or Trezor, but my impression from others online is that the Coldcard is geared more for the power user. It has more advanced features but that might make it more intimidating for some. Its form factor is neat, but the buttons can be poor in terms of responsiveness and the screen is a bit small.

The Passport (made by Foundation in the US) also looks good (also Bitcoin-only and also air-gapped). It has a Nokia-style form factor and adds QR-code support.

So these are physical devices? Is there a provision for non-cloud backups?

Yes. A physical hardware wallet is currently considered the most secure way to hold your own keys, but there are multiple ways to do both hot and cold storage and there are tradeoffs to each. Here's a good overview: What is a Crypto Wallet? Software, Hardware, and Paper Wallets Explained

If by "provision" you're referring to backups/redundancy, then yes there are provisions you can make. It is crucial to back up the wallet's seed phrase and any other relevant information (such as optional passphrases). Otherwise, you may not be able to recover funds if your hardware wallet is lost, broken, stolen, etc. The idea is that your seed phrase can be imported into any wallet (hardware or software) to regain full access to funds.

Yes, that answers my question.

I'd hate to be out of a bitcoin because the wallet was misplaced or stolen. So that seed phrase is going to be pretty critical.

I guess that brings up another question, if someone got a hold of your seed phrase, what stops them from duplicating (and thereby stealing) your wallet?

Nothing...

...at least for the default case. So you are correct to recognize how critical it is to back up the seed phrase in a durable, secure, and secret manner. There is a ton we could discuss related to this: physical vs. digital (encrypted) backups, metal backups that are waterproof and fire-resilient, what makes a good hiding place, backups in multiple geographic locations, inheritance planning, . . .

The situation you bring up is exactly why it is advisable to use a passphrase. Passphrases What/Why/How?

The TL;DR on passphrases is that they add an extra step to the derivation of your wallet, so someone would need your seed and the passphrase to control your coins. They also let you create multiple wallets from a single seed, and each wallet is completely separate from ones that use another passphrase. This way, you can put a lot of energy and attention into securing that one seed rather than multiple seeds.

Posting here as someone who is genuinely interested in crypto and even recently applied to positions at Coinbase. How does any crypto currency become the currency of choice without some sort of government backing or endorsement? My main concern for the growth of crypto long term is the lack of insurance that you have in case things go awry. The treasury backs the US dollar and provides stability, but what mechanisms are there in place to stabilize crypto? I love the idea of a decentralized currency, especially for the implications it can have for developing nations, but I am becoming increasingly concerned with how volatility is handled. Can anyone provide any insight on this or a path forward for these cryptocurrencies to become more stable?

How does any crypto currency become the currency of choice without some sort of government backing or endorsement?

We can look to history for the answer. Societies converge on the most sound form of money available: assets that protect their purchasing power over time and are easily stored, traded, divided, etc. See my earlier comments here, here, and here that touch somewhat on this and what it is that makes something sound money. The Bitcoin Standard by Saifedean Ammous is an excellent resource on this subject.

The treasury backs the US dollar and provides stability, but what mechanisms are there in place to stabilize crypto?

I would say that the US dollar seeks short-term stability and prosperity at the expense of long-term stability and purchasing power. The federal government initially convinced (forced?) the US and eventually the rest of the world to accept paper dollars because paper dollars would be backed by real (silver) dollars or the equivalent in gold coin. But the US abused its position and eventually declared (fiat) that paper dollars are the monetary good; there is nothing needed to back it other than the "full faith and credit" of the US Government.

The mechanisms that stabilize Bitcoin (I can't offer a defense for crypto broadly) are its finite supply, predictable issuance schedule, decentralized and thus permissionless governance, and the incentive structure that creates its game theory. It is a superior form of money and it is far more costly to oppose the network than it is to participate in it. Further, because there are no bail outs for mistakes or misfortune, participants are incentivized to not take on as much risk. That said, stability will not come fully until adoption is much higher and more financial infrastructure has been built on top of the base layer. It will probably take decades.

But speaking of crypto broadly, I worry too about volatility and pump and dump schemes that deprive unknowing participants. I think there are many parallels between cryptocurrencies and the dot-com bubble.

And if you don't trust me I'd refer you to the Fidelity Digital Assets report I linked to earlier in this thread: Bitcoin First

You're comparing assets to currency, there are some subtle differences. Real assets (that is a class of assets which is different from intangible assets such as brand value) appreciate over time - there's only so much land. Currency is a method of exchange which has value to buy and sell goods and services and assets, but in and of itself a currency is not going to appreciate over time. You can't easily trade assets - currency is the conversion. How many cars is your house worth? How many barrels of oil for your acre of land?
Is it a decline in the value of currency, or an increase in the value of assets, which are finite?

That was very well written as if you were a shill for crypto.

The US has had a fiat currency for several decades since we went off of the gold standard. But I'd take a dollar any days over a crypto "coin". Where can I truly spend the crypto? What grocery store accepts it? Can I pay for a house with it? Go down to the local Honda dealership? Part of the purpose of money is to exchange it for goods and services. How can I readily do that with crypto?
Further, can I exchange it for cash without taking a haircut on buy/sell prices plus a fixed fee? Crypto feels like silver and gold for this decade. Its the new version of some fat guy on TV saying "Cash sucks, stocks are risky b.s., so buy silver coins at $20/oz to protect yourself" (with the arguments of finite supply, bars in your safe are tangible not fiat, etc). And then when you try to sell the $20 coins, you only get $18. So you need the price to appreciate above what you paid to break even.
I haven't seen any crypto actually be used as a currency. People buy it because it is going to be worth more later (due to continuation of the greater fool theory) rather than to spend at a store.

If the value of crypto ever stabilizes enough to be used in normal transactions, it will no longer be appealing for new adopters.

Loving all the Crypto chat here on TKP! From a personal investment standpoint, I am keeping about 10-20% of my investment holdings in Crypto... primarily I am buying Bitcoin, Ethereum and then also dabbing in some of the Meta Verse related Crypto like Mana and Sand. For all the haters on Crypto, I understand why you are saying what you are saying... what is it tethered to? Who is backing it? Isn't it just a pyramid scheme at the end of the day that simply has value because of supply/demand which can disappear at any moment? Yes, all that is true but I believe Crypto has now transcended many of those arguments. There is now something bigger happening like a global currency that is not subject to the political and economic movements of governments. It allows fair play among consumers from anywhere on earth. The new generation is digital by nature and Crypto feels natural to them, holding pieces of paper with arbitrary denominations on them do not. I'm buying. :)

The second you say "Yes, all that is true" to the question "Isn't it just a pyramid scheme?", you lost me chief.

Outspoken team cake advocate. Hates terrapins. Resident Macho Man Gif Poster. Distant cousin to Dork Magic. Frequently misspells words.

Well at least you got past the part where you either invest in crypto or are a "hater".

The part where I chuckled was "fair play by consumers". Fair play in the world of crypto means everyone gets to do what they want as long as they have the keys, which means theft is just as valid as any transaction.

2022 Season Challenge: Wrasslin'
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If anyone is interested in an informed, long-form discussion on Bitcoin that's bearish, See here:

https://www.lawfareblog.com/lawfare-podcast-nick-weaver-why-you-should-sell-your-bitcoin

I try to be crypto-neutral so I don't endorse every statement made, and informed listeners will no doubt notice some weaknesses in the discussion. But Weaver has the technical chops and subject matter expertise to proffer an informed, substantial opinion. And Wittes is generally a good interviewer.

For me, most pro-crypto arguments boil down to political statements when examined closely. And I generally think that's a poor investment approach, especially for assets as speculative as crypto. So if anyone is looking for a better hedge against inflation that's liquid enough to sell, I'd offer this:

https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

Yeah..... that's about right.

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I'm confused, they say most Americans haven't heard of US savings bonds? Do they not teach about that in schools any more?

Did they ever teach it? I went to school in the 80's and don't ever remember a class where they talked about savings bonds. I learned about them because I won a couple as prizes for various things.

I remember them being promoted at something in school as a "yay america" thing. This was back when "buy American" or "made in america" was being pushed so it might just be an expierence for 90s kids, I dont know.

Went to public school from 94-01 and savings bonds were never brought up. My parents taught me about them through owning them, but that's the only exposure I had. I still have a few that I sell each year as they mature.

2022 Season Challenge: Wrasslin'
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People as old as 35 have never lived in a world where a savings bond was a good investment. I can't imagine having not heard of one, but they would be far from a practical concern for most people. That said, I bonds are giving 7-10% right now, if we continue resembling the 80s they could come back in a big way.

It will be interesting to see as I miss the days of savings accounts making 5%. Now you have to mess with treasury stuff to have a place to get real interest on rainy day money. So having 1 extre layer of managing stuff would be nice.

Though will absolutely suck for anyone thinking about buying a house.

Keep in mind, there is a limit on how much you can buy in I Bonds on an annual basis.

I get clients asking me about them constantly wanting to invest large sums, and they are not designed for that, intentionally.

Limit is 10 grand a year plus your IRS return.

There's a meta joke in there about "if you have an IRS refund you're giving the government the interest you get back later" or some such thing.

2022 Season Challenge: Wrasslin'
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I-Bonds weren't a thing until 1998... and there's talk of upping the maximum to 100k from 10k so...

Can't anybody just look up that post on twitter, or use the screen capture to see it...

Makes me wonder if they were doing this with a second account to decrease their taxes since they sold at such an insane loss.

did they actually sell it though?

Onward and upward

Warning: this post occasionally contains strong language (which may be unsuitable for children), unusual humor (which may be unsuitable for adults), and advanced mathematics (which may be unsuitable for liberal-arts majors)..

I'm confused, why would you trust someone that has lost half their money this year, seems like people should take advise from people who have made money not lost it.

Edit: wow I really read that incorrectly ... thanks rocket!

This is what's commonly referred to as a joke

There's always a lighthouse. There's always a man. There's always a city.

Some interesting developments in the crypto game these days and here's a great place to track them:

Web3 Is Going Great!

It's a paywalled article but you can read enough to learn about the creator of the above stream:

Molly White

Annnnd from the "You just can't make this shit up" file:

$90k/week Crypto Rehab

This is pretty helpful guide if any lurkers want to get into some crypto.

"Two things are infinite, the universe and human stupidity, and I am not yet completely sure about the universe. -Einstein

There are two important security features this guide does not mention that I strongly recommend when setting up an account with an exhange: Two-Factor Authentication (2FA) and Address Whitelisting.

If the exchange doesn't provide these features then find one that does. Don't set up 2FA to use texts. Instead, use an authenticator app on your phone. Address whitelisting should be enabled even if you never intend to withdraw Bitcoin or crypto to your own wallet. This will protect your funds in your account if someone does gain access. They shouldn't if you make a good password and enable 2FA like I suggest, but just in case they do, they will be limited in the damage they can do with address whitelisting enabled.

Actually, there is one more thing people should consider. I highly recommend finding an exchange where you can manually link your bank account using a routing and account number. That is, without providing Plaid with your bank's login information. Unfortunately, I've only found a few exchanges that support this. It is outrageous to me that Plaid is allowed to have a business model where they get your login information and scrape all your financial information and statements and save it on their own servers. I recommend only linking bank accounts manually, even if it means it takes longer for your USD deposits to clear.

To your last point, I picked up an additional account just to link to exchanges and transfer into only when ready to move to exchanges

I am not sure what to do with my hands now

Looks like the bubble is popping on this scam

Doubtful. It has been crypto winter for several weeks now. Unless you mean NFT values.

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You need to look again. "Stable coins" supposedly pegged to the dollar are below 70 cents. Bitcoin below $30K. This giant Ponzi is collapsing.

People are stupid.

BTC was over $1Kand plummeted to under $150...then people drove it up to just under $20K. Then it plummeted to around $3K...then people drove it up to $60K. Then it plummeted below $30K...then people drove it up to almost $50K. Now it's plummeting below $30K.

People are stupid and will drive it back up to something again.

Warning: this post occasionally contains strong language (which may be unsuitable for children), unusual humor (which may be unsuitable for adults), and advanced mathematics (which may be unsuitable for liberal-arts majors)..

The problem now is that there are so many more coins, so many more people leveraged, so many coins interconnected through the values. This will be a much larger wealth destruction than before.

Yeah, I have a hard time believing this craze is going to just die anytime soon. But in the long term I have no doubt I'll be explaining to my grandkids how I saw crypto currency trading apps in the Super Bowl commercials, and they'll say "Boy people in the past were stupid. Everyone knows the future is to invest in [new fad]".

How I Learned to Stop Worrying and Love the Jet Sweep

"Stable coins" supposedly pegged to the dollar are below 70 cents.

This is definitely weird and concerning. Then again, I look at the dollar and it's value with inflation has dropped precipitously too. Money isn't real, it's just a value assigned to something by humans.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

Stablecoins are just an organization moving around assets to keep the price of a given coin at $1. The one in question now is dropping because the organization behind it is running out of assets.

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I think he means a month ago BTC was $42.8K, a week ago it was ~$38K and right now it just dipped below $30K.

Warning: this post occasionally contains strong language (which may be unsuitable for children), unusual humor (which may be unsuitable for adults), and advanced mathematics (which may be unsuitable for liberal-arts majors)..

LUNA down 40%. They're all tied together. People are leveraged. The value of one coin is "backed" by another coin. Contagion is hitting right now.

This isn't the first time this has happened....it did it in 2017-18 when shit coins erupted out of no where it took one dive to shake them. Pretty much the same thing that will always happen more people jump in when the market is good, it goes down and bad value dies. Just about every market isn't fairing too well in the past month or so - I don't really invest in crypto but I would hardly call what's happening right now a collapse or sign of one.

(add if applicable) /s

Wait, what's the crypto business model again?

I'm probably just not smart enough to understand it.

If you're not sure if my comment warrants a "/s", it probably does.

You could argue the current model is to fleece retail investors.

The thing is this really should be a sign that the crypto business model is actually designed to do this. This is what happens when trading in an asset that really has no value. The whole "Greater Fool" idea. You have to be sure you are not the one holding the bag when the fools run out.

If you can't figure out who the sucker is, it's you. If you don't know what the product is, it's you.

That is what I mean. That is how crypto winters happen. Always been highly volatile (thus far). The usual swing is about 60-70% down before it climbs again. It has been 65-30-68-30 thus far since its last big climb.

The key thing to remember is there are ponzi schemes all over. The latest one is just the latest one and when crypto in general falls, so do the dominoes.

2022 Season Challenge: Wrasslin'
Previous Challenges: Star Wars (2019), Marvel (2020), Batman (2021)

If it crashes down hard, I might pick up some. But it is doubtful.

At least with stocks, my stop loss settings are getting me out mid crash.

Crypto exchanges also offer the same stop loss settings

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

But it's egalitarian and uncensorable!!!

Edit: This is also an interesting bullet from the article:

Bitcoin's close correlation to the Nasdaq challenges the argument that the cryptocurrency functions as an inflation hedge.

I'd venture the number is much higher.

1) $COIN (Coinbase) included new language in latest 10-Q warning crypto investors what might happen to their coins should the company file for bankruptcy

2) "Moreover, because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings...

3) ...and such customers could be treated as our general unsecured creditors..."

Oh that is bad, all the more reason to have cold storage wallet

I am not sure what to do with my hands now

And you have convinced me again, Crypto is just a ponzi scheme and a bad idea.

Not surprising. People are used to using FDIC member banks, and Coinbase is not a member of the FDIC (their partner backs for non-crypto holdings are). Good that this is making waves in the news cycle so that folks realize what they are exposed to if they choose to use the custodian.

2022 Season Challenge: Wrasslin'
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That is really sketch. Thanks for sharing.

You will see this game, this upset and this sign next on ESPN Sportscenter. Virginia Tech 31 Miami 7

His decision was made after a phone call with longtime Virginia Tech assistant coach Bud Foster. All Foster told him was, "We win. They don't."

ELI5 version: If you are invested in Coinbase and they file for bankrupty, they will legally claim your entire crypto wallet as collateral to pay their debtors leaving you with nothing. This is what they just disclosed to the SEC yesterday.

Oh, and their value is trading down 70% year to date.

In the three months ending March 31, Coinbase lost $430M on $1.2B in net revenue. Investors had expected $1.4B in revenue for the quarter, according to Refinitiv. Coinbase's shares tumbled 16% on Tuesday, according to data from Morningstar.

Coinbase's lack of profitability is partly due to capital investments it's making to build out the platform. Operating expenses for the quarter were $1.7B, exceeding its revenue for the first time since Coinbase began reporting its financials.

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Edit: Shortened because I forgot Hokierick already quoted from the quarterly report.

If you are invested in Coinbase and they file for bankrupty, they will legally claim your entire crypto wallet as collateral to pay their debtors leaving you with nothing.

I knew this was the case, but I appreciate now having an official document produced by Coinbase to point to. Hokierick's quotes are from page 83 of the Quarterly Report.

TL;DR - Not your keys, not your coin.

Remember upthread when I said I bought only ten bucks a month in bitcoins and cardano? This selloff is why so little.

"Why gobble gobble chumps asks such good questions, I will never know." - TheFifthFuller

If this isn't a sign of the BTC apocalypse I'm not sure what is.

You want to see your retirement disappear in a poof of smoke? Cause this is how you see your retirement disappear into a poof of smoke. (And yes, I intentionally used "poof" instead of "puff")

Meanwhile my standing orders of sell at 31k and buy at 29k have been yielding a nice steady return for the last two weeks...

Warning: this post occasionally contains strong language (which may be unsuitable for children), unusual humor (which may be unsuitable for adults), and advanced mathematics (which may be unsuitable for liberal-arts majors)..

Poof, puff, give (all of your money away).

Members of the US Congress in 2022 - regardless of which party - are some of the last people I would take financial investment advice from. Unless you are an insider and they are providing you with illegal inside information. But for a regular person, not so much.

Recovering scientist working in business consulting

Idk man,NancyPaul Pelosi seems to do pretty well in his investments.....

Warning- Filter lost.

"Look at this... This is just spectacular.... These people are losing their minds"

No doubt a little bird tells him things.

Bitcoin doesn't care about your politics... or ethnicity, citizenship, theology, philosophy, and on and on. It is neutral because the protocol enforces the rules equally for everyone. There are no privileged authorities in control over supply issuance or transactions. (As I often repeat in this thread: I'm speaking about Bitcoin, not other cryptocurrencies.)

I could leave it there but in response to the content, they are making a fairly modest argument for Bitcoin as part of a diversified investing strategy. They aren't telling people to YOLO everything they have into it. They were asked to comment on Fidelity offering Bitcoin (simply giving people a choice) and the Labor Department saying it was "a terrible idea."

Mocking a store-of-value claim by looking at the last sixth months of price action is laughable, especially when almost everything is down because of macro forces (Fed raising rates and employing QT). If you bought before the pandemic crash in 2020 you'd be very happy with how your Bitcoin has preserved your wealth. Zoom out!

You do you guy. I see a video of at least one US senator with what appears to be blatant conflict of interest in the commission of a potential ethics violation marketing something they're also proposing very industry friendly legislation for. Something that oh by the way can't actually be used for it's supposed intended purpose and is to date, still essentially a solution in search of a problem.

But sure... "freedom money"

Totally NOT a con at this point. I look forward to the comments when we all have to bail the greater fools out.

Also, Fidelity is a broker, they're just selling funds, not providing fiduciary analysis or advice.

The bitcoin space is bothing but current bag holders trying to convince someone else to hold the bag and be their escape plan

Danny is always open

Look, I don't have a problem if companies want to give people the option to invest in crypto. I think that's smart business, and any company that isn't at least investigating their options to do so is just going to hurt their bottom line in the future.

Basically, its a riskier form of investing than stocks. I personally won't do it, and if I did I certainly wouldn't invest any significant portion, but it would be nice to have that opportunity should I want to without needing to go through some trading companies that are.... well... shady

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Sure. You're also not claiming it's a useful or even legitimate currency or making utopian claims about its magical properties. You understand that it's a speculative asset and nothing more ....

As an aside, I heard someone describe Bitcoin as, "freedom from your ability to pay for things." Gave me a chuckle.

Oh, 100%.

Its all a grift. Its a giant ponzi scheme where you only make money by getting others to invest in something whose value is literally only in how much money other people invest into it. Anyone throwing money into it is basically doing little more than putting that same money down on a roulette table and hoping you hit.

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Backed-up by nothing, with no intrinsic value.

Crypto in 60s or less:

Greater Fool Theory

"Those who jump into the void owe no explanation to those who stand and watch."
--unknown

Backed-up by nothing

so, financial n00b here. And I'm not pro-crypto or anything either but what exactly is backing up fiat currency? How is it that much different? Fiat currency also has no intrinsic value.

Onward and upward

The taxing power of the issuing government?

The full faith and credit to honor value of said currency? A dollar will always be worth a dollar as long as the US government exists to say that it does, for example.

People will argue that we used to have the gold standard to provide some backing. But if you really think about it, what "intrinsic" value does gold actually have? I'd argue other metals like silver or copper have much more actual intrinsic and practical value.

There are a number of things that back up the value of fiat currency. There are literally zero that back up cryptocurrency. It is a purely speculative asset with no value other than what someone else is willing to give you for it.

I could go at length, but honestly the answer might start sounding condescending and that is not my intent.

Edit: fixed typo

I think what is helpful here is to conceptually separate different kinds of value. Gold has industrial value and symbolic value (religious or cultural), but I don't believe either of those are the primary reason why gold became the supreme form of money that backed deposits, bills, notes, and other debts.

There is another category: monetary value. Something has monetary value if it has certain properties that allow it to preserve purchasing power over time and be used as a medium of exchange. Something could be far more "practically" valuable in industry or culture and be terrible as money. What are those properties? How do we know this is the case? The argument is inductive and is based on looking at history and comparing it to other forms of money at various times and places. In my comment below I linked back to other long comments I wrote where I discuss those things. I still haven't gotten a substantive response that has challenged my thinking on this subject.

Great point about preserving purchasing power. Obviously things like inflation and deflation can have an effect on the relative purchasing power of a unit of currency, but that unit will be worth "something", assuming the authority that issued it exists to back it.

There is no entity that issued cryptocurrency. And as the value can (and has in many many cases of various coins) drop to zero, it's both an awful way to preserve purchasing power and ultimately as a medium of exchange.

This answer is correct.

To simplify: the Dollar is the only currency defined as legal tender by the USA. When you get taxed, you can't pay in Bitcoin, Euros, Yen, Pounds or Rubles. The government won't accept it. You have to pay in dollars. Period. And when you make money buying and selling crypto, or other assets, you'll have to pony up US Dollars to the IRS. Period.

Furthermore, the US government will tax you even if you move overseas, as long as you retain your US citizenship.

So what if the US government decided to "back" one of the crypto currencies (bitcoin, as an example)? Does it then become just as valuable as other fiat currencies?

Based on what I've read here, there's really no difference between the US dollar and Bitcoin other than one is backed by the US government and the other isn't. If tomorrow the government decided that bitcoin was the new standard then it would swap with the dollar. The dollar is only valuable "because the government says so" so if the government decided to give that value to a crypto currency then we'd just have to accept that. Because the government says so. Fiat currency is wild, man.

Onward and upward

The US government would never do that. What incentive is there to do that?

They are more likely to outlaw Bitcoin than to adopt it.

Based on what I've read here, there's really no difference between the US dollar and Bitcoin other than one is backed by the US government and the other isn't.

I don't even know where to start with this statement! The two couldn't be more different. I recommend you check out the Gradually, Then Suddenly blog posts I linked to here and keep an open mind.

The US government will not back any cryptocurrency, especially Bitcoin (not only because it is out of their control, but because it is designed to be uncontrollable). The US government can't stop it or change it. They can only regulate what American citizens do with it, which if they do poorly could backfire on US global dominance and influence.

Instead, leading countries and central banks are working right now researching and developing their own digital currencies, which they are calling Central Bank Digital Currencies (CBDCs). They want to continue to be in control of the money. There's a lot of talk about CBDCs. Much of it includes doomsday predictions, which can sound dystopian and crazy, but the privacy and freedom concerns are warranted. It also remains to be seen how disruptive they will be to the financial landscape (will they make banks obsolete?).

The U.S. could back a digital dollar. But it would likely just be a digital version of a dollar.

At this point, the U.S. has NO incentive to back any currency they don't have control of. Why would they?

They?

Sure you didn't mean "we?"

I appreciate your feedback. I do think you and hokierick both missed my intent a bit. I'm not advocating for crypto. I'm just pointing out that crypto is a fiat currency, technically, just like the USD. The main difference is that the government backs (and controls) USD. I was responding to a comment claiming crypto had no backing or intrinsic value (which is true) and that implies that the USD does have those. Which, since 1971, isn't really true. The USD is basically just as made up and nebulous as crypto. The difference is our government tells us it has value and we believe them. The government could decide to back a crypto of their own and we'd have to go with it because literally the only reason the dollar has value is because the government says so. If they say something else has value then that something else, whatever it is, has value. Because the government says so. That's my point. It doesn't matter what the currency is (USD, crypto, monkey poop, whatever), if the government says it has value then it has value.

Onward and upward

It's not a currency. It's been classified as an asset by the government.

And the government could just as easily back it as legal tender, if they wanted to (I'm not saying they do).

Onward and upward

I'm just pointing out that crypto is a fiat currency, technically, just like the USD

Except it's not. A defining characteristic of a fiat currency is that its usually declared to be legal tender by government regulation. The value of something like Bitcoin is derived from the blockchain facilitating it, not by anything the government has said or decreed.

I can see the argument you are trying to put together, but but your handle of the details is off.

No government out there has make such a declaration about cryptocurrency. They acknowledge that people have given it value, but that is no where close to declaring it legal tender.

No government out there has make such a declaration about cryptocurrency. They acknowledge that people have given it value, but that is no where close to declaring it legal tender

Bitcoin is legal tender in two countries: El Salvador and the Central African Republic (here's an interesting summary and full translation of their law). Obviously, these aren't financial superpowers or anything, but they are sovereign nation states. (It makes sense that the financially underprivileged and exploited nations who don't have much to lose would attempt to make the move to hard, politically-neutral money.)

Point taken. I guess I was speaking more that no government being reasonable has done so.

If anything, El Salvador serves as a real life case study as to why no government being reasonable ever will given where that countries reserves that were tied to Bitcoin sit. At the moment, they are at losses larger than their current outstanding bond payments for June.

As mentioned above, no serious government will ever make a currency they don't control legal tender. To do something so foolish should have honestly had the (young crypto bro) president of El Salvador impeached. But I have no clue how their government works in that regard. Make an asset that can go to zero AND you can't regulate a component of your national reserves? It is an idea as stupid as it sounds.

It's why if we see a digital currency of some type (and I think that we will) become the accepted currency of a country, it will be one said government creates themselves.

Shouldn't that read 2021 - Only small countries use it to money launder for criminals?

Is it money laundering if it straight up payment for illegal activities?

"Only small countries use it" isn't the flex you think it is. There's a pretty storied history of bad fiscal policy by developing nations. For example, there are a number of countries that de facto use the US dollar as their currency, because the local currency is rendered useless by the local government printing too much of it.

How I Learned to Stop Worrying and Love the Jet Sweep

I'd argue other metals like silver or copper have much more actual intrinsic and practical value.

"You shall not crucify mankind upon a cross of copper!"

;^)

If you're not sure if my comment warrants a "/s", it probably does.

I'm interested to hear how others answer this question. This is from someone who is anti-crypto, pro-Bitcoin.

The US dollar was originally defined in terms of silver (based on the Spanish dollar) but eventually came to be backed by gold. In 1933, it became illegal for American citizens to own physical gold. Nation states could still redeem their gold from the US government, but as nations increasingly did so in the 1960s, the US "temporarily suspended" the convertibility of the dollar into gold in 1971. The US was the world's bank, and there was a world-wide bank run. Depegging the dollar from gold was effectively an admission that the US had defaulted on its debt obligations. The US government had created more claims on gold (dollars) than physical gold that they possessed. Now the dollar is backed by "the full faith and credit of the U.S. government." https://www.sapling.com/5149828/backs-currency What does this mean? I'll let others attempt to answer that. It is far more abstract and nebulous than being backed by a precious metal like gold (which functioned well as money for millennia because of its physical properties in relationship to society's technological capabilities: scarce, durable, divisible, etc... see my earlier comments here and here).

I find it really interesting to look at old dollars and see that they used to read like a legal contract.
Here's what a silver dollar certificate, series of 1923, says on it (image):

SILVER CERTIFICATE
THIS CERTIFIES THAT THERE HAS BEEN DEPOSITED IN THE TREASURY OF
THE UNITED STATES OF AMERICA
ONE SILVER DOLLAR
PAYABLE TO THE BEARER ON DEMAND

THIS CERTIFICATE IS RECEIVABLE FOR ALL PUBLIC DUES AND WHEN SO RECEIVED MAY BE REISSUED

And here's a series of 1928 gold certificate (image):

THIS CERTIFIES THAT THERE HAVE BEEN DEPOSITED IN THE TREASURY OF
THE UNITED STATES OF AMERICA
TWENTY DOLLARS
IN GOLD COIN PAYABLE TO THE BEARER ON DEMAND

GOLD CERTIFICATE
THIS CERTIFICATE IS A LEGAL TENDER IN THE AMOUNT THEREOF IN PAYMENT OF ALL DEBTS AND DUES PUBLIC AND PRIVATE.

The notes have changed over the years, but compare the above grammatically-complete legal guarantee ("certifies that there has been deposited" . . . "payable to the bearer on demand") to what our dollar bills say today:

FEDERAL RESERVE NOTE
THE UNITED STATES OF AMERICA
TWENTY DOLLARS

THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE

Billions in BTC margin calls at ~$23k.

MSTR calls at $21k

If the freedom bit is directed toward what I've been saying, then you still don't get it. Owning Bitcoin means holding your own keys, not holding Bitcoin IOUs from an exchange or some other company. Exchanges should be used as an on-ramp for converting fiat to on-chain BTC. I deposit USD, I exchange USD for BTC, and I withdraw BTC. So the Bitcoin I've withdrawn is free to move wherever I want it to. No spending limits, no administrative banking delays, no weekends, no holidays. The Bitcoin network continues chugging away block by block, unbothered by volatile price action or collapsing shitcoins and Ponzis.

So many people are focused on weekly or monthly price action and FUD. But they're missing the big picture. Watch the first five minutes of this: https://www.youtube.com/watch?v=cR4sMsI8z7U

I've never been able to put a value on bitcoin relative to other investments.

This hasn't changed.

You're right, I'm probably just not smart enough to understand.

I watched it, I understood it, but I am going with your thoughts because this is not the place for my thoughts on this. So I'm not smart enough either.

To be fair, you have to have a very high IQ to understand Rick and Morty. I mean crypto.

How I Learned to Stop Worrying and Love the Jet Sweep

And now everyone is going to understand why the stock markets got regulated in the first place.

Everything is good when things are going well, but the second things start going down? Welp, hope you don't have too much money in there.

This is my school
This is home

Bought some last night and am already down 5% in 12 hours. Am I doing this right?

Haha but seriously I figured I might as well jump back in now while all I see is red everywhere on coinmarketcap. I'd been out of crypto for a couple of years.

As far a bitcoin is concerned, I won't be jumping in just yet. Or probably ever.

Great idea for a currency. Terrible idea for a speculative investment.

Most of what I bought was at 3K for bitcoin, once we get to 10k I'm selling. That's my stop loss.

Very interested to see what happens

Bruh this is when diamond hands goes wrong.

Not familiar with the term "diamond hands." Is it related to this?

(Full disclosure: I also had to look up "HODL." I kept thinking of Hoda Kotb, and that's obviously not correct in this context.)

Diamond hands - traders who hold a position through downturns and aren't rattled by losses. Consistent with a long term buy and hold strategy.

Paper hands - traders who basically panic sell and exit a position too early, usually taking a loss

My personal favorite stock terminology - slap that ask!

I sold off my principal investment years ago and then some. I'm happy the let the rest ride.

I buy an extra 50 bucks every two weeks and and if I lose it I lose it.

What this thread must feel like for the pro-crypto people:

How I Learned to Stop Worrying and Love the Jet Sweep

Spit my drink out at the matt damon shade

Directions from Blacksburg to whoville, go north till you smell it then go east until you step in it

Of course the stock market on the whole is kind of resembling that same curve right now.

The stock market hasn't lost nearly 70% of it "value" in the last few months.

true but checking my portfolio does make me wince.

The whole bitcoin as a hedge against inflation is obviously wrong.

Correct. That assertion has been blown up

Avocados are the hedge against inflation now

I like avocado's, but blueberry and raspberry's make better hedges.

there's a dad joke in there

Onward and upward

I've typed up a few responses in the last few days and each time decided not to post them, because I don't want to dominate this thread even though I do enjoy the discussion. Here is a final reply from me, at least regarding the above discussions. I'll let whoever wants to reply have the last word, unless I see a direct question looking for a response from me.

My conviction is that Bitcoin is a monetary asset with these properties:

  • Can be self-custodied (a digital bearer-asset; no counterparty risk)
  • Grounded in cryptography, computer science, and networking technologies (math, not magic)
  • Secured by real-world energy costs (computing SHA256 hashes) and defended by the world's most powerful computing network
  • Hosted by a global network of peers, running an established, core set of protocol rules that disincentivize participants from changing them and that cannot be changed by any developer, company, or government
  • Decentralized, as each node validates transactions and blocks independently of one another
  • Transparent, as the history of transactions is auditable by anyone
  • Free and open, as participation is accessible to anyone with an internet connection;
  • Supply issuance occurs on a predictable schedule and on a fair basis, with a predetermined maximum total supply
  • Final settlement occurs every 10 minutes on average (very fast for a base monetary layer)
  • Scalable through higher protocols built on top of the base layer (e.g., Lightning network for virtually free and instant microtransactions)
  • Cannot be destroyed or shut down apart from purging every node from the face of the planet (and those in orbit)

If you doubt the above, my recommendation is that you consider the possibility that you might fundamentally misunderstand what Bitcoin is or that you have made false assumptions about it. I'm not saying anyone here isn't smart enough, but I do recognize that it requires a paradigm shift in your views on money and macroeconomics, which is usually difficult. From the quotes below, note that JPMorgan and Fidelity are no longer dismissing Bitcoin, saying it's only for criminal activity, or comparing it with seventeenth-century tulip bulb mania.

Regarding the idea that this recent price action obviously proves that Bitcoin is not an inflation hedge, I would say that it is not obvious, unless we are only considering time frames of less than four years. But that would be an odd constraint for assessing whether or not something is an inflation hedge, which I think requires looking at 5 or 10+ year trends. But Bitcoin has a short history and has basically grown up in a decade-long bull run, so for now no one can say that Bitcoin is or is not proven as an inflation hedge. I would caution against pronouncing it isn't given that it has recovered from 80+% draw-downs multiple times in its short history.

What do we expect going forward?
Recently, many investors have questioned bitcoin's value propositions of a store of value, uncorrelated asset, and hedge against inflation during this time. Admittedly, if one were only to look at the past few months it would seem bitcoin is failing in this regard. However, this may once again turn out to be a matter of investor time horizon. We believe these core value propositions are ones that will be fulfilled over much longer time frames.
- from Fidelity Digital Assets, Research Round-Up: June (June 8, 2022)

Bitcoin's "fair value" is around 12% below the current price [~$43,400], based on its volatility in comparison with gold, according to JPMorgan Chase & Co. strategists led by Nikolaos Panigirtzoglou. The strategists calculated the fair-value level at around $38,000 based on Bitcoin being roughly four times as volatile as gold, they wrote in a note published Tuesday.
- from https://www.bloomberg.com/news/articles/2022-02-09/bitcoin-s-volatility-... (Feb 8, 2022)

JPMorgan has said bitcoin's fair price is 28% higher than its current level [~$29,700], implying "significant upside from here" after a dramatic sell-off in cryptocurrencies. . . . It said it was sticking to its view that $38,000 was a fair price for bitcoin.
- from https://markets.businessinsider.com/news/currencies/bitcoin-outlook-jpmo... (May 25, 2022)

Regarding nation-state adoption of Bitcoin as legal tender, I somewhat agree that it is ill-advised right now because it is still too early. Bitcoin is still young and needs more retail and institutional adoption. But the game theory may dictate otherwise:

We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future. We therefore wouldn't be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.
- from Fidelity Digital Assets, Research Round-Up: 2021 (Jan 6, 2022)

Very well thought out post with some great information.

I have one question, and I am not asking this facetiously...

I would caution against pronouncing it isn't given that it has recovered from 80+% draw-downs multiple times in its short history.

Did you view that fact as a green flag or a red flag when typing it out? I think the case could be made with varying degrees of success in either direction. In a positive light, it shows a resiliency to the currency and exhibits continued valuation by future investors.

On the other, would anyone view a currency issued in a more traditional manner as a viable store of value if it had multiple SIGNIFICANT valuation decreases within a relatively short time frame? I think its worth discussion.

How you view the volatility is purely down to how you are as an investor. If you're an ever optimist than I'd imagine it's a green flag and more of opportunity if played right you can make alot in dips and rises of these amounts. However if you're more of a safe bet pessimist like myself you'll see a big red flag of uncertainty and as I don't have much money to waste it feels a big warning to the risk it can be if not invested in wisely.

Directions from Blacksburg to whoville, go north till you smell it then go east until you step in it

I appreciate it, and thanks for your questions. (And sorry for another long post... this one is so bad I think I'll chop it into two.)

would anyone view a currency issued in a more traditional manner as a viable store of value if it had multiple SIGNIFICANT valuation decreases within a relatively short time frame?

TL;DR: Fiat currency (currency issued in "the traditional manner") is the antithesis of a store of value. They are intentionally debased to push people to spend or take risks investing rather than save. Bitcoin, although still volatile today, is designed to ultimately offer an alternative.

If you want to store your value on a short time frame, you hold cash. The question of store of value is almost always assuming a long time frame, and no currencies that are issued by authorities (by fiat/decree) are a viable store of value on a long time frame. You can make an argument for commodities or equities (or, I think, Bitcoin), but consider first the legacy of fiat currency. You've likely seen a chart like this of USD purchasing power declining over its history. Here's the same data on a log scale:

The log scale more easily shows you how long it takes for the value to halve. 25 years for $0.50 to $0.25, 8 years for $0.25 to $0.13, 25 years for $0.13 to $0.06. 8 years from ~1975 to ~1983! It has happened and it can happen again. To borrow a link from HokieCFA above, consider what the M2 money supply has done in recent years: https://fred.stlouisfed.org/graph/?g=Lqfo. So maybe shorter time frames are relevant.

Our system disincentivizes saving and incentivizes spending and investing. At the same time, the Keynesian and MMT economists attempt to control the economy, but I believe they do more harm than good. They tamper with the incentives of market participants, which causes pressure and risk to build up in some unexpected or uncontrollable sector of the economy. The result is a big, extremely disruptive correction all at once instead of more frequent, smaller, naturally-induced corrections. I don't believe we should be intentionally debasing the currency to coerce people into taking more risks with their money in an attempt to keep up with inflation.

Bitcoin might look volatile now, but it is created to address the problem described above. It's money that can't be debased because it is decentralized (together with other features). Bitcoin certainly has a long way to go to achieve the title "store of value," but those thinking like me are taking the long view. (Disclaimer: I'm not saying put everything into Bitcoin, only that it is a monetary asset worthy of consideration for the long-term view. It is unlike any other so-called cryptocurrency, or as I am increasingly preferring, cryptosecurities.)

to be continued...

Did you view that fact as a green flag or a red flag when typing it out?

TL;DR: The crashes are big but the pumps are bigger, so the crashes so far are setting higher lows. Bitcoin's price is volatile because it is new and largely unregulated. There are many factors that influence price but when you filter out the noise and irrationally-high price levels, the overall trend is still up and to the right.

My main answer:

I see the draw-downs as less of "significant valuation decreases" and more of returning to a sane/fair/reasonable price range. The draw-down percentages are so staggeringly high because Bitcoin has repeatedly first pumped up to staggeringly high levels. Cycle tops represent irrational prices that can't be sustained. The pumps happen because humans are strange, bandwagon creatures who follow each other in herds, so you get these mania/hype phases that correspond with new waves of adoption. These phases are largely driven by people who are buying simply because they see price going up (so I can admit that there is a great deal of greater fool theory going on, but it is nowhere near an entire explanation for Bitcoin). Lots of people are trading Bitcoin IOUs on exchanges without caring or knowing about, let along participating in, the Bitcoin network that underlies the asset they are trading.

Here is (almost) the entire history of Bitcoin's price. Price is on a log scale, and the bands are derived from a power law (log scale in both axes, which predicts diminishing returns). Suppose Bitcoin was less volatile and stayed mainly in the green band. That is, pretend that the mountains tops were flatter so that you avoid the most irrational phases of the market. The result would be much lower (and more palatable) draw-down percentages, but the overall trend would be exactly the same. It will be interesting to see over the next 6-12 months if that lower green line holds or if we see a major transition in Bitcoin's price action away from a power law relationship. The macro environment is completely different now, so I think it is more likely than most Bitcoiners think.

More info on modeling Bitcoin price using a power-law relationship: article and live chart

Some other related thoughts:

Bitcoin is volatile because it is new. I'll repeat a quote from Vijay Boyapati: "establishment economists deride the fact that bitcoin is volatile, as if you can go from something that didn't exist to a stable form of money overnight; it's completely ludicrous." It is going to take time (decades) as volatility gradually decreases.

Bitcoin is also a very free (unregulated) market. There are no backstops or bailouts. There are no central planners pulling levers and trying to smooth out volatility. (See the first reply to you on Keynsian/MMT.) If the market is manipulated, it is most likely manipulated against Bitcoin. There are many people in power who would prefer Bitcoin to stay volatile and thus unattractive.

It is true that the price of Bitcoin has fallen a lot over the last few months. There are many factors. The main ones I think of right now are: 1. contagion and overleveraging in the broader crypto space that needed to unwind (LUNA/UST, Celsius, and more probably to come), 2. macro pressures affecting all markets (inflation and the Fed funds rate and QT), and 3. probably just the normal bear cycle timing (new waves of hype and adoption can only last so long). But despite this recent decline, the overall trend is still pretty strong in the up direction, as the chart above shows.

Conclusion: When you take all of the above (both of my responses) into consideration, I don't think framing Bitcoin's severe draw-downs as evidence that Bitcoin isn't and never will be a store of value is a very strong argument. I think the store of value thesis still lives and thrives, but mainly because Bitcoin's volatility doesn't affect the technical aspects of the network and the monetary properties I've discussed elsewhere. Price is just a signal telling us what the aggregate is thinking and feeling right now, and right now almost all markets are in fear.

It's digital play asset that has no inherent value or backing, that relies on a Ponzi scheme/greater fool theory that you will be able to sell it to someone else for more than you paid. It has no demonstrable advantages over digital fiat currency and is in fact more difficult to use and easier to lose, and is located in a broader market space that is unregulated and rife with fraud. Scarcity alone does not make something valuable.

I did see a bit coin ATM at the gas station outside the Montgomery County Hospital the other day. So you just need to enter all your information into the atm and it will give you cash...

Thank you for maintaining a conversational tone throughout this thread. However, I still don't follow a lot of what you assert.

Grounded in cryptography, computer science, and networking technologies

My phone uses these technologies, but that doesn't make my phone a monetary asset. I'm not an expert on the SWIFT network, but I presume it also uses cryptography (for encryption) and networking (to transfer information).

Secured by real-world energy costs (computing SHA256 hashes)

How does this secure value? I can't redeem a Bitcoin for energy. Energy was definitely expended to mine the coin, but that doesn't put that energy value into the coin as a fungible asset.

defended by the world's most powerful computing network

What does this mean? The Internet? How do you define the network defending Bitcoin, and why is it "the most powerful"?

To the last point, the network of miners (people with computers running encryption calculations) is more distributed than any other network which in theory makes it secure. To violate the integrity of the coin, you have to control over 50% of the computing power of the network.

Warning: this post occasionally contains strong language (which may be unsuitable for children), unusual humor (which may be unsuitable for adults), and advanced mathematics (which may be unsuitable for liberal-arts majors)..

Thanks. I think his phrasing was a bit off - I consider "defending" to be more active than "has security in distributed numbers", and I'm not comfortable defining "most widely distributed" as "most powerful" - but I can see that as a viable clarification.

First thing to explode when quantum computing finally clicks is the security of bitcoin. When a single quantum computer can outweigh the hundreds of thousands of mining rigs, you can just make up whatever wallet balance you want and no one can do anything about it.

Warning: this post occasionally contains strong language (which may be unsuitable for children), unusual humor (which may be unsuitable for adults), and advanced mathematics (which may be unsuitable for liberal-arts majors)..

Bitcoin itself is over with quantum, as stated above people are working on one's that are resistant to that but it's all a paper exercise right now.

Once quantum is a thing then US, China, and Russia's government will be the first with those capabilities, so they will "control" the digital currency for a while unless the researches are correct in their hypothesis.

Sorry once again to everyone for the long reply. This might be the last time I apologize though, because at this point, if you ask me a question you know what you're going to get! Also, you didn't technically ask a question in your first point, but I'll assume you are interested in a response since you asked questions in your other two points.

  1. My phone uses these technologies, but that doesn't make my phone a monetary asset.

    I agree that simply utilizing cryptography isn't what makes something a monetary asset. There have been multiple instances in this thread where someone has taken one thing I've said about one aspect of Bitcoin and said, "that doesn't make it money/a monetary asset." It's true, there is no one thing about Bitcoin, even its scarcity, that makes it superior money. I've summarized the broader argument for what makes something a good monetary asset here and clarified parts of that argument here and here. I thought this one was a pretty good super-condensed high-level argument too, appealing to a multi-disciplinary approach.

    Back to clarifying what I was intending to mean with that point: Bitcoin is "grounded in" cryptography in the sense that without several technologies from cryptography, it couldn't be a bearer-asset or be censorship-resistant. It couldn't be decentralized, so simply put, it wouldn't exist. This also leads well into the next point on SHA256 (which is a cryptographic hash function).

  2. How does this [computing SHA256 hashes] secure value? I can't redeem a Bitcoin for energy.

    As of right now, you can redeem 1 BTC for approximately $21,000 worth of energy. But I think I see your actual point, that the energy expended into "mining" the coin cannot be extracted back out of the coin magically at some other location on the planet after "sending" the Bitcoin to someone else. But this is how all forms of money work, unless you want to treat energy itself as money. You spend time and exert energy in exchange for monetary compensation. You cannot extract back out of that money your time or energy, but obtaining it does grant you more freedom in the future. You can exchange it later for the fruits of someone else's labor and thus spend your future time in ways you otherwise couldn't.

    But you might respond, "Well, Ok, but when I work, the energy isn't wasted... it actually produces something of value for someone." I am sympathetic to this... I can see the difference in the kind of energy expended. If we lived in a perfect world, a centralized solution like a fiat currency would be the far more energy-efficient solution. But as I've argued elsewhere, the temptation of centralized authorities to debase currencies for their own advantage is too strong. Bitcoin is proposing to fix this problem with a decentralized solution, which to be fair and secure requires a real world energy cost. The problem with fiat is that there is a very low cost (or virtually none, when done digitally) to producing more units of the currency.

    So here is how computing hashes secures Bitcoin's value: Miners are incentivized to mine and earn newly issued Bitcoin. (They can sell it for fiat ASAP or they can hold it if they value it or speculate that it will eventually be worth more.) As more computers mine Bitcoin, blocks will be mined more frequently. But part of the the network protocol (agreed upon in a decentralized fashion by miners and validating nodes) includes a regularly-scheduled, automatic difficulty adjustment. More mining power -> higher difficulty; less mining power -> lower difficulty. This is what causes blocks to be mined on average every 10 minutes (this is the target the network's difficulty adjustment aims to achieve).

    Here is the key concept: Miners are trying to earn Bitcoin from contributing toward (I'm not going to get into mining pools) finding the next block. But when they exert their hashing power, they are simultaneously making it virtually impossible to tamper with the history of transactions. Tampering with a past transaction changes the block hash (cryptography again), which invalidates all blocks that come after it because the blocks are linked with hashes (the "blockchain"). See this excellent video: But how does bitcoin actually work? You can change any transaction you want, but your copy of the blockchain will not be accepted as valid by any other network participant. They will ignore you. Thus, attacking the network is exorbitantly expensive and cannot be sustained. Therefore, it is accurate to say that miners who are computing hashes are incentivized by the block reward to defend my Bitcoin and its value.

  3. How do you define the network defending Bitcoin, and why is it "the most powerful"?

    The last paragraph has already answered part of this. The network is not only working to create new Bitcoin, but it is also at the same time actively protecting the existing Bitcoin held by every participant. So I stand by my choice of wording with "defending."

    What about my claim that it is the world's most powerful computing network? In 2013, the network was more powerful than the world's top 500 supercomputers combined. At that time (according to this chart), the total computing power was ~95 TH/s (tera-hashes per second). Today it is ~209 EH/s (exa-hashes per second).

    So the Bitcoin network is the most powerful in a raw computations-per-second sense. The hardware is dumb though, it's just that it is extraordinarily powerful at performing one thing: SHA256 hashes. If you hold your own keys (meaning you self-custody your own Bitcoin on-chain), you are in control of one of the securest assets in existence.

If anyone reading has made it this far, then wow, and thanks. I hope this was helpful, or at the very least, interesting.