Bitcoins/Litecoins/Virtual Currencies

maskedmelon · Nov 2, 2020

Ravishing said:
There was a streak where bitcoin beat the market every year for like 10 years or something. The streak was broken, I forget when exactly, I know 2018 was pretty bad, and now it closely correlates with the markets. Some years it'll outperform, like last year since it spiked up from the 2018 low, I wouldn't expect massive outperforms like it use to have.

I can see 20k soon but not 100k in 3 years. I've been in btc for about 9 years now. The early years were insane but no way can we see 10x gain in 3 years now.

It’s value doubles every year. Just because it has been grossly inflated at times and suffered from ridiculous volatility doesn’t mean it has matured in any sense of the term. The market is still in its infancy and there is significant growth remaining. You’ve lived a world of a handful of nerds, criminals and insecurity coupled with significant barriers to entry. Institutional investors are getting on board now though, exchanges have matured into legitimate enterprises and retail is coming. There is a tidal wave of fiat ready to pour in. BTC will be 15k+ by year end and 30k+ end of 2021. 2022, 60k+ and 2023, 120k+

Ravishing · Nov 2, 2020

maskedmelon said:
It’s value doubles every year. Just because it has been grossly inflated at times and suffered from ridiculous volatility doesn’t mean it has matured in any sense of the term. The market is still in its infancy and there is significant growth remaining. You’ve lived a world of a handful of nerds, criminals and insecurity coupled with significant barriers to entry. Institutional investors are getting on board now though, exchanges have matured into legitimate enterprises and retail is coming. There is a tidal wave of fiat ready to pour in. BTC will be 15k+ by year end and 30k+ end of 2021. 2022, 60k+ and 2023, 120k+

It doesn't double every year anymore.

Ravishing · Nov 2, 2020

maskedmelon said:
It’s value doubles every year. Just because it has been grossly inflated at times and suffered from ridiculous volatility doesn’t mean it has matured in any sense of the term. The market is still in its infancy and there is significant growth remaining. You’ve lived a world of a handful of nerds, criminals and insecurity coupled with significant barriers to entry. Institutional investors are getting on board now though, exchanges have matured into legitimate enterprises and retail is coming. There is a tidal wave of fiat ready to pour in. BTC will be 15k+ by year end and 30k+ end of 2021. 2022, 60k+ and 2023, 120k+

The reason you think it doubles every year is because you have been looking at the dips & highs the past 2 years.

March 2019: $4K March 2020: $6.5K
June 2019: $9.5K June 2020: 13.2K

The halvening happened May 2020 btw, which always leads to a price increase, and is why I can see 20K happening short term.

Since 2017, when it exploded above the 10K mark for the first time, and it became mainstream, bitcoin has not increased substantially at all and has actually flattened.

The only way you're making huge $$$ is if you're actively trading it. But that doesn't have anything to do with it actually reaching 100K /coin.

Arative · Nov 2, 2020

I'll probably get out at anything above 20k. I'm sure 15 years from now I'll kick myself when btc hits $500k

Flobee · Nov 3, 2020

I've covered a number of large institutions putting money into Bitcoin over the past few pages here. I don't have a crystal ball, but I do believe that selling at 20k will be foolish if you do so with the expectation of that being as high as it goes. The data just doesn't support that.

Personally I don't expect to sell at any price in the short term. Sure, I'll take profits on ETH and some alts, but will likely hold BTC for the foreseeable future. Time will tell which strategy is best!

Ravishing · Nov 3, 2020

I don't want to actively trade bitcoin but I do always want to hold some bitcoin.
But if it hits 20K I have high hopes of buying back in at a lower price point. If it hits 20K, it's not going to maintain that price easily, if it even gets back to 20K.
We might still be 3 years or more away from getting back to that point.
Some new recession will come along that wipes out 50%-75% of the value again (along with the Markets) which will be the buying opportunity.

Flobee · Nov 3, 2020

Ravishing said:
I don't want to actively trade bitcoin but I do always want to hold some bitcoin.
But if it hits 20K I have high hopes of buying back in at a lower price point. If it hits 20K, it's not going to maintain that price easily, if it even gets back to 20K.
We might still be 3 years or more away from getting back to that point.
Some new recession will come along that wipes out 50%-75% of the value again (along with the Markets) which will be the buying opportunity.

I would argue that the past 2-3 years have been the buying opportunity and that a large pullback like that will come, but after the next big run and probably sit above 20k. We could be another 2-3 years out from that run though certainly so you may be correct in the near term! I wouldn't be shocked if we touch 20k and drop significantly on our way up, but bulls are strong right now and every dip is being bought up aggressively.

I have the philosophy that BTC will always increase in value due to its properties and will only sell it if I need to buy something with that $$$. Why hold those funds in USD which I believe will devalue faster than BTC in the medium/long term. Its the ultimate piggy bank.

Crypto is still speculative but I genuinely feel like it gets less risky every time a public company adds BTC to their treasury, Central Bank announces their CBDC plans, or a nation adds BTC to their sovereign wealth funds. Number go up.

Flobee · Nov 3, 2020

So $500 million has moved out of Huobi. Their leadership is allegedly under investigation. China appears to be cracking down on exchanges. Will be interesting to see how/if this affects price. Market has been disregarding these regulatory moves so far. (Bitmex and Okex under investigation as well)

Ravishing · Nov 3, 2020

Flobee said:
I would argue that the past 2-3 years have been the buying opportunity and that a large pullback like that will come, but after the next big run and probably sit above 20k. We could be another 2-3 years out from that run though certainly so you may be correct in the near term! I wouldn't be shocked if we touch 20k and drop significantly on our way up, but bulls are strong right now and every dip is being bought up aggressively.

I have the philosophy that BTC will always increase in value due to its properties and will only sell it if I need to buy something with that $$$. Why hold those funds in USD which I believe will devalue faster than BTC in the medium/long term. Its the ultimate piggy bank.

Crypto is still speculative but I genuinely feel like it gets less risky every time a public company adds BTC to their treasury, Central Bank announces their CBDC plans, or a nation adds BTC to their sovereign wealth funds. Number go up.

When Bitcoin was skyrocketing like crazy I also believed it could go infinitely. Due to its nature, but we have problems to work through.

It will not grow like we want:

1.) while the USD is the reserve currency. BTC would need to be the reserve currency.

2.) Using it day-to-day is still very difficult and not mainstream

3.) As the Value of the currency grows, it becomes more and more difficult to move the price up. It's currently a $160 Billion currency. You want it to be $1.6 trillion in 3 years or something. The total value of USD in circulation is $1.5 trillion btw. Inflating BTC would cause hyper-inflation in the world economy. You can't just pump the value of something infinitely like that.

4.) Institutional investors aren't buying in because of some pipe-dream $100K coin, they buy in because it's STABLE and will consistently make whatever expected gains they look for. Be it 5%, 10%, 15%.. etc. Nobody is throwing money in thinking $100K except dreamers. And I was a dreamer at one point too, but after watching this for so long, I've come to understand it much more.

5.) The value of a Bitcoin is very closely tied to the cost of the mining operations. Since the halvening, cost *should* have doubled, but that also depends on the difficulty level, current tech & cost of energy. Before it halved, it was really struggling to maintain a $10K price. Since it's halved & also with a higher difficulty level now, $20K does seem reachable. The Mining operations are really the only people that have an interest in selling the coin consistently, since they need to cover their costs. For anything to be worth anything, there needs to be a buyer & a seller.

6.) We will need another 2-3 Halvenings to occur before this coin reaches $100K+

Flobee · Nov 3, 2020

Ravishing said:
When Bitcoin was skyrocketing like crazy I also believed it could go infinitely. Due to its nature, but we have problems to work through.

It will not grow like we want:

I wonder if you're considering the value of a currency where the monetary policy cannot by altered by any one group or confederation? Governments around the world have committed to synchronized money printing which is moving us toward MMT. This being the idea that debt and sovereign deficits do not matter due to the government's ability to just print more money. See Japan. Regardless of how you feel about this schemes chances of succeeding I don't think its unreasonable to expect that some percentage of people will be skeptical.

Now you take that percentage of people and you ask them "How will you preserve the value of your wealth in this environment?". Many will answer with the OG response, gold. However Bitcoin is objectively better than gold for EVERY single role it plays besides

a) jewelry + manufacturing uses

b) history as a store of value. Historical trust

We can argue about gold vs Bitcoin but I'm happy to concede that gold is better in some ways. However do you think that as a group, Millennials and Zoomers are going to choose to buy pretty rocks that needs to be held by a custodian as a "trusted" third party and can't be easily/safely moved, or a digital asset that they can control that functions natively on the internet, where they spend almost all of their time?

Bitcoin is also highly divisible (0.00000001 BTC), portable, nearly instant transmissions, durable, can't be affordably counterfeited while gold can. Bitcoin is literally better gold.

Gold's current market cap is approximately $10.9 trillion
Bitcoin's current market cap is $253 billion

That means bitcoin is ~2% of gold's marketcap. If you don't think that Bitcoin is going to close that gap by more than another 2% I'd say you're not paying attention to the macro economic environment that we're entering.

The pro Bitcoin argument is no longer about technology or the future, its about the realities of the world economy and where people can and will store their wealth to avoid what appears to be a world-wide recession incoming. I would suggest reading the Winklevoss capital article I posted a page or so back if you haven't already. They do a good job of going over the economic argument for $500k Bitcoin which is quite conservative honestly.

There are more arguments to be had on this topic. I think the old narrative of Bitcoin as a currency is actually premature. It will act as a store of value before it actually has use as a currency. Gresham's law states that people spend their less valuable money before their more valuable money. A money with a limited supply and hard coded monetary policy will simply be worth more over time than one that can be printed at will. It will be hoarded in the near-term.

This all completely ignores the value being created on Ethereum and with other alt-coins that will bring more money into Bitcoin simply by bringing more people into the crypto ecosystem. Remember, people thought the internet was overrated when it first came out too.

LachiusTZ · Nov 3, 2020

Flobee

I love you, but BTC is not better than gold.

You are quickly becoming the BTC version of the 3am gold seller commercials on local access tv.

Just calm down.

It's great, and likely will increase in value. But it's not some God currency. And everything that would make it so, would likely result in a different crypto currency being created to replace it.

maskedmelon · Nov 3, 2020

I generally agree with Flobee’s assessment. With regard to BTC’s year-over-year growth, it is difficult to isolate real growth from speculative meanderings. If you do though, there is a very strong argument for sustained real growth of 100% a year, which places it around $15k at year-end. I would like to see it more around 120% a year, but for that to be the case BTC would have to have been systemically undervalued despite its erratic fluctuations. That is why I don’t think 20k by year-end will happen. If it does, I think that we will see a sharp correction.

Also, 2017 was not BTC or crypto going mainstream. It was a bubble created by high enthusiasm in a small unregulated market by a small number of people. We don’t look back at the tech bubble of 99 and use that as any kind of indicator that growth in tech has halted. Tech as a sector continued to grow and many individual tech firms including the largest saw exponential growth since then. Only around 5-10% of the US population has ever owned BTC. That is still a very small market. And when you take a look at institutional investment, penetration is even less. Crypto still has massive growth and like Flobee said, it is not at all unreasonable to see BTC reach the market cap of gold at around $ 9 trillion within 5-10 years or even less with the massive amounts of quantitative easing we are seeing from the Fed.$ 9 trillion market cap for BTC would place one coin at around 400-500k.

As more people come on board, I think that we will see volatility continue to diminish. In the near term, I am sure that we will continue to see sizable swings, but less like we have seen in the past and the sustained uptrend will become more apparent throughout the next year as we climb to $30k BTC.

Ravishing · Nov 3, 2020

Flobee said:
I wonder if you're considering the value of a currency where the monetary policy cannot by altered by any one group or confederation? Governments around the world have committed to synchronized money printing which is moving us toward MMT. This being the idea that debt and sovereign deficits do not matter due to the government's ability to just print more money. See Japan. Regardless of how you feel about this schemes chances of succeeding I don't think its unreasonable to expect that some percentage of people will be skeptical.

Now you take that percentage of people and you ask them "How will you preserve the value of your wealth in this environment?". Many will answer with the OG response, gold. However Bitcoin is objectively better than gold for EVERY single role it plays besides

a) jewelry + manufacturing uses
b) history as a store of value. Historical trust

We can argue about gold vs Bitcoin but I'm happy to concede that gold is better in some ways. However do you think that as a group, Millennials and Zoomers are going to choose to buy pretty rocks that needs to be held by a custodian as a "trusted" third party and can't be easily/safely moved, or a digital asset that they can control that functions natively on the internet, where they spend almost all of their time?

Bitcoin is also highly divisible (0.00000001 BTC), portable, nearly instant transmissions, durable, can't be affordably counterfeited while gold can. Bitcoin is literally better gold.

Gold's current market cap is approximately $10.9 trillion
Bitcoin's current market cap is $253 billion

That means bitcoin is ~2% of gold's marketcap. If you don't think that Bitcoin is going to close that gap by more than another 2% I'd say you're not paying attention to the macro economic environment that we're entering.

The pro Bitcoin argument is no longer about technology or the future, its about the realities of the world economy and where people can and will store their wealth to avoid what appears to be a world-wide recession incoming. I would suggest reading the Winklevoss capital article I posted a page or so back if you haven't already. They do a good job of going over the economic argument for $500k Bitcoin which is quite conservative honestly.

There are more arguments to be had on this topic. I think the old narrative of Bitcoin as a currency is actually premature. It will act as a store of value before it actually has use as a currency. Gresham's law states that people spend their less valuable money before their more valuable money. A money with a limited supply and hard coded monetary policy will simply be worth more over time than one that can be printed at will. It will be hoarded in the near-term.

This all completely ignores the value being created on Ethereum and with other alt-coins that will bring more money into Bitcoin simply by bringing more people into the crypto ecosystem. Remember, people thought the internet was overrated when it first came out too.

I understand the properties of Bitcoin, but again, the current state of the world economy does not support a 100k, 500k, etc Bitcoin *IN OUR LIFETIME*

In the future, 100-200 years from now, sure, I can see it. Especially as the world economies continue to inflate their currencies.
As much as you tout all these articles & papers from various sources, fact of the matter is we're still talking price of BTC in USD.
That alone should tell you something.

One day when USD collapses, we could theoretically see a $1 trillion / coin price. It'll be like spending Venezuelan/Zimbabwe dollars for a BTC today.

My points above still stand, BTC needs to survive collapsing economies and become the reserve currency to hit what you want.

maskedmelon · Nov 3, 2020

LachiusTZ said:
Flobee

I love you, but BTC is not better than gold.

You are quickly becoming the BTC version of the 3am gold seller commercials on local access tv.

Just calm down.

It's great, and likely will increase in value. But it's not some God currency. And everything that would make it so, would likely result in a different crypto currency being created to replace it.

It really is though. The supply of gold increases by around 2-3% every year along with being difficult to protect and transport. It’s value in fiat increases, but that is only because the value of fiat decreases. The absolute value of gold year-over-year diminishes. BTC has a hard cap of 21 million, is immediately accessible from anywhere in the world and has no maintenance/protection costs.

Tmac · Nov 3, 2020

I still don't get it.

I own like 1/3 of a bitcoin, got into pretty heavy for months back in 2017/2018, but I just don't understand where it derives value, how to move it around without paying huge premiums, and why it will become to go-to for storing value.

I don't understand the fundamentals enough to get why people invest in it. And typically, if I don't understand the big picture around something, I avoid it until I do.

You guys discuss a lot of numbers, but noone has done a good job of explaining why this growth is happening or why certain trends occur. It seems like a lot of good guess work.

Flobee · Nov 3, 2020

LachiusTZ said:
Flobee

I love you, but BTC is not better than gold.

You are quickly becoming the BTC version of the 3am gold seller commercials on local access tv.

Just calm down.

It's great, and likely will increase in value. But it's not some God currency. And everything that would make it so, would likely result in a different crypto currency being created to replace it.

Opinion's are like assholes. I could certainly be wrong on this, I don't claim to have a crystal ball. I'll continue to plead my case here because if I'm right I'd like to have some of you here along for the ride. Maybe crypto isn't a once in a lifetime investment opportunity. If it is though, I'd like to see more normal folks along for the ride rather than wait for institutions to buy it all.

I'm consistently seeing news that pushes me towards this opinion and actively share it here. I am however happy to see counter arguments as I do worry that I could be caught up in a narrative that proves false. I enjoy talking about it regardless.

I'm honestly more excited about Ethereum's progress but the Bitcoin case is both more prescient and more certain in my mind. I don't think anything replaces Bitcoin, although other coins may have bigger use cases long term.

Ravishing · Nov 3, 2020

maskedmelon said:
It really is though. The supply of gold increases by around 2-3% every year along with being difficult to protect and transport. It’s value in fiat increases, but that is only because the value of fiat decreases. The absolute value of gold year-over-year diminishes. BTC has a hard cap of 21 million, is immediately accessible from anywhere in the world and has no maintenance/protection costs.

"Mainstream" meaning people finding out about it.
When it spiked to 20K is when everyone started talking about it. I'm not saying people jumped into it or anything. But the most non-tech people I know started asking about it.

LOL @ "No Maintenance/protection costs"

Good old article: Bitcoin Halving 2020, Explained

But for a long time, Bitcoin researchers have been considering the possibility transaction fees won’t suffice. For one thing, it means transactions might need to grow more expensive over time to keep the network as secure.

“This cannot really work without very expensive transaction costs because Bitcoin cannot process huge quantities of transactions on-chain,” Dubrovsky said.
And, as discussed above, it is mining rewards that draw more computing power to Bitcoin, hardening it against attacks that try to circumvent the network’s rules. It’s unclear whether a future attenuated block reward will have the same allure for miners, even when supplemented with fees.

“I don’t think this halving will make Bitcoin significantly less secure, but in eight to 12 years we could find ourselves in hot water,” Hasu said.
Part of the problem is that more than a decade after Bitcoin’s birth the market is still figuring out the true cost of protecting the network from attackers.

“Nobody knows the correct level of security needed to keep Bitcoin safe. Currently, Bitcoin pays out something like $5 billion per year and there are no successful attacks; however, there has been no price discovery. Bitcoin may be overpaying. To really find out the minimum level of security needed to avoid attacks, the mining rewards would need to be dropped to the point where attacks start happening and then increased until the attacks stop,” Dubrovsky argued.

“Of course, this would be catastrophic for Bitcoin as it’s designed now, but it could really come to some kind of scenario like this if rewards dwindle and the Bitcoin community doesn’t do anything about it,” he added.

Hasu said he “hopes” transaction fees will be enough to incentivize the security of Bitcoin in the end, but he thinks it’s worth anticipating the “worst case.”

“It should be clear that the incentive to attack Bitcoin today is larger than it was five years ago. We now have [U.S. President Donald] Trump, [China President Xi Jinping] and other world leaders talking critically about it. The more Bitcoin grows, the more they might see it as a threat and might eventually feel forced to react. That would be the worst case, anyway,” Hasu said.

This question is an interesting one to ponder when thinking about Bitcoin’s future prospects, though it might sound like a far-off matter in 2020.

“It’s impossible to predict what will happen, but if we want a system that could last 100 years, we should be ready for the worst case,” Hasu said. “The worst case is demand for blockspace does not increase in the dramatic fashion that would be needed. As a result, block rewards would eventually trend toward zero.”

maskedmelon · Nov 3, 2020

Ravishing said:
I understand the properties of Bitcoin, but again, the current state of the world economy does not support a 100k, 500k, etc Bitcoin *IN OUR LIFETIME*

In the future, 100-200 years from now, sure, I can see it. Especially as the world economies continue to inflate their currencies.
As much as you tout all these articles & papers from various sources, fact of the matter is we're still talking price of BTC in USD.
That alone should tell you something.

One day when USD collapses, we could theoretically see a $1 trillion / coin price. It'll be like spending Venezuelan/Zimbabwe dollars for a BTC today.

My points above still stand, BTC needs to survive collapsing economies and become the reserve currency to hit you want.

It doesn’t need to become a reserve currency. It isn’t even much of a currency in the traditional sense. While it is very clearly a store of value, I don’t see it as much of a medium of exchange and I don’t think that it needs to be one. We value gold in dollars too, but that does nothing to diminish the value of gold. BTC is valuable because it is scarce, secure and accessible.

The $1.5 trillion dollars that you referenced is just actual paper money. M2 (total US deposits + printed currency) is closer to $19 trillion. That aside, the market cap of gold still sits at $9 trillion despite the $1.5 trillion in paper money. It isn’t the physical printing of money that devalues fiat, it is the generation of new money in general, much of which is already digital in the form of electronic deposits.

Ravishing · Nov 3, 2020

maskedmelon said:
It doesn’t need to become a reserve currency. It isn’t even much of a currency in the traditional sense. While it is very clearly a store of value, I don’t see it as much of a medium of exchange and I don’t think that it needs to be one. We value gold in dollars too, but that does nothing to diminish the value of gold. BTC is valuable because it is scarce, secure and accessible.

The $1.5 trillion dollars that you referenced is just actual paper money. M2 (total US deposits + printed currency) is closer to $19 trillion. That aside, the market cap of gold still sits at $9 trillion despite the $1.5 trillion in paper money. It isn’t the physical printing of money that devalues fiat, it is the generation of new money in general, much of which is already digital in the form of electronic deposits.

Gold is also a currency that's been used far longer than any of the fiat currencies in existence. Expecting Bitcoin to match Gold in such a short timespan is foolish. And Gold is also a commodity, something Bitcoin can never be. USD was backed by Gold originally. Gold value isn't tied to USD or the US economy. It actually trends the opposite way in most cases.

Flobee · Nov 3, 2020

Tmac said:
I still don't get it.

I own like 1/3 of a bitcoin, got into pretty heavy for months back in 2017/2018, but I just don't understand where it derives value, how to move it around without paying huge premiums, and why it will become to go-to for storing value.

I don't understand the fundamentals enough to get why people invest in it. And typically, if I don't understand the big picture around something, I avoid it until I do.

You guys discuss a lot of numbers, but noone has done a good job of explaining why this growth is happening or why certain trends occur. It seems like a lot of good guess work.

When you break it down to the simplest level value is derived from trust and belief. USD is valuable because the world believes and trusts in the United States' economic strength and ability to service its debts.

Bitcoin is a meme in the Darwinian sense. People believe in Bitcoin for the same reason you believe in any other currency, be it shells, gold, coins, dollars, or a number in your bank account.

There are a number of technical reason's that people trust Bitcoin as an accurate ledger of ownership. As

Ravishing correctly points out, there are some reasons that people do not trust Bitcoin's long term viability. I think this is true, but irrelevant for 50+ years and quite possibly solvable.

Regarding the why, I've posted a number of articles over the past months about why it is valuable. I would suggest the below as a good starting point from an economic standpoint.

The Case for $500K Bitcoin

Gold and oil have historically been reliable stores of value. Because they are scarce commodities, they make dependable hedges to the inflation of fiat currencies. As a result, they have commanded price premiums above and beyond the demand for their consumption alone.

winklevosscapital.com

The honest truth is that it takes effort to understand why bitcoin is valuable because you need to get a feel for the overarching economic landscape. I've heard its much easier to explain Bitcoin to someone from Argentina, Nigeria, or Turkey for example than it is to someone in the US. Bottom line is that countries with ruined currencies are going to understand the value first. US will be the last place for people to "get" it because they don't understand how dollar devaluation is affecting them.

Sovereign fiat currencies always go to zero. World reserve currency always changes.

If you want to get into the weeds consider that all fiat currencies are debt-based. This means that every dollar created is actually created as a debt to another entity. If you didn't know, banks actually create money via lending, not the central bank or government. As such, when lending slows such as during a recession money is actually being destroyed when people pay down their debts. This increases each dollars value, thus increasing the value of existing debts. This is why the Central Banks and governments fight so hard to push inflation.

Non-debt based money doesn't have this problem. This is why the IMF and world bank will push for MMT with CBDCs. They've clearly said so themselves.

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