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Bitcoins/Litecoins/Virtual Currencies
- Thread starter Tripamang
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Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!
Go here and give us your nominations!Who's been the biggest Asshat in the last year? Give us your worst ones!
Tuco
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Isn't BTC defensible as a currency and store of value because unless its cryptography cracks it can't be devalued the same way fiat can? It becoming more or less valuable relative to other currencies has no bearing on that.
I'm happy using USD as a currency and store of value because the US government has some 11 aircraft carriers to project stability wherever the USA needs it for its economy and we have enough citizen control over politics to mitigate devaluing of our currency, but other currencies can't say the same.
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I'm not sure I would agree with that. You're saying that ridiculous M1 spike since COVID would have been even worse?
Tuco
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Would have been even worse if the strongest voting bloc in this country wasn't boomers watching their savings get eaten away by politicians, yes. Many other countries with their own currency don't have that in the same way the USA does.
Doesn't stop politicians from printing $$$ for short-term boosts to their election chances, of course, just mitigates it.
Flobee
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There are a lot of factors to this, but at the simplest level yea that's right. If you make a few basic arguments this can be a bit easier to understand.
- Money is, among other things, an agreed upon medium of exchange that represents value creation that can be traded for goods and services.
- Nobody should be able to create money for free. Stated another way creation of money without creation of value is fundamentally robbing everyone else that holds that money via dilution
- The value of anything is determined by:
- Demand - people want it or want more of it.
- Scarcity - There is a finite supply available or accessible
Setting aside the argument about whether or not the USD being used as the primary unit of exchange in the world is a good thing, lets look at BTC.
- Bitcoin allows peer-to-peer transactions that finalize within 10-60 minutes (depending on how paranoid you want to be) in such a way that a transaction can occur between enemies and both sides have confidence that the transaction is legitimate once finalized. No rug pulls, no asset seizing; No trust required
- Bitcoin requires Proof of Work (PoW) to generate "new" coins. PoW is not actually creating new coins but essentially rolling a random number via an algorithm to "win" a block and be rewarded with the scheduled issuance plus fees collected during the time that block was being solved for. There is no way to fake this, in order to get "new" coins you MUST solve for this equation and doing so requires electricity via hashing. Creation, or more accurately issuance, of new coins requires input costs and cannot be done for free. Not by anyone individual, nation state or anything in between.
- Bitcoin is scarce due to its finite supply (21 million, unchangeable without universal consent). As of right now I would argue most demand is speculative surrounding the belief that Bitcoin is the best option to replace the current monetary regime. There are plenty of other reasons (security, privacy, accessibility) many of which I think are probably more important in the long run than number go up, but they're not driving demand right now. Additional scarcity comes from "HODLers" or people like myself that genuinely believe that BTC is going to disrupt the current monetary system. If people aren't willing to sell at a low price and demand exists, then the price has to go up. See Gresham's Law above to help understand why number go up is inevitable for the period of time when both "bad" money and "good" money are circulating.
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The way I see it, bitcoin is a speculative investment device until the moment USD becomes inherently less valuable/trustable than bitcoin. The way things are going, this seems increasingly likely to happen eventually.
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Arden
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I agree it's still mostly a speculative investment, but 1 USD has been less valuable than 1 BTC since 2011. Even if you want to use a different formula than a simple 1:1 comparison, there isn't any question that the buying power of the dollar has dropped drastically in that time and the buying power of BTC has majorly increased. USD is less valuable than BTC by pretty much any definition you want to use, and it honestly isn't very close.
The "trustable" question is a little more difficult, but if we use the same pattern we've since 2011 we can trust that two things will happen: USD will continue to lose value, and BTC will continue to gain value. So in that way it's trustable too.
The reason I think BTC still kind of qualifies as a speculative investment is because of its volatility. If that's what you mean by trustable, I agree with you there. BTC is obviously way more volatile than USD, and that probably won't change in the near future. That said, the combination of volatility and a steadily (and significantly) increasing value is what has made BTC such a lucrative investment. Volatility is how traders make money, after all.
The steady increase in value combined with the durability and fidelity of the asset by way of things like blockchain tech, the halving process, immutability, etc., is what makes BTC a great store of value. Don't get me wrong- it isn't a perfect or totally risk-free asset, but then again what is?
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I guess “value” isn’t the right word. Being the world reserve currency, usable everywhere, and respected everywhere is a value that’s isn’t captured in a 1:1 monetary value comparison. Until the dollar, at the very least has competition on these fronts, bitcoin will remain an investment not a currency. The primary use case of bitcoin right now is changing it back into dollars for a profit. Until that changes, it cannot be considered a currency.
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Arden
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Don't disagree. Others in this thread would disagree, but I personally don't think it will ever be a currency (as such). So far, it's been a super lucrative but volatile investment and people are beginning to realize that it's one of the best stores of value in the world. Most people would consider gold more of a store of value than a currency, and I think BTC is the exact same.
Flobee
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Bitcoin is a speculative asset mostly due to Gresham's law playing out. Why spend Bitcoin when you can spend USD? Opinions aside it is objectively a currency its just not commonly used as a unit of account.
The dollar is volatile, Bitcoin just makes visible how volatile it is. You think you can create $1 trillion in three months without creating volatility? How much money has been printed since BTC gained a USD value?
What is inflation, and why do we "need" it? What if instead of your savings going down in value by 2% every year (lol) it stayed stable or even appreciated? Did you know that's how money has worked for most of western history? Most people are incredibly backwards in how they think about money because our monetary system is backwards and its all we've ever know. Especially true the more traditional education you have on the subject it seems.
Even if this all seems retarded you should buy some and self custody it... Just in case we're right
The dollar is volatile, Bitcoin just makes visible how volatile it is. You think you can create $1 trillion in three months without creating volatility? How much money has been printed since BTC gained a USD value?
What is inflation, and why do we "need" it? What if instead of your savings going down in value by 2% every year (lol) it stayed stable or even appreciated? Did you know that's how money has worked for most of western history? Most people are incredibly backwards in how they think about money because our monetary system is backwards and its all we've ever know. Especially true the more traditional education you have on the subject it seems.
Even if this all seems retarded you should buy some and self custody it... Just in case we're right
Ravishing
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Inflation spurs growth and investment. Instead of hoarding worthless paper, you buy deflationary assets like property and businesses. Sitting on USD is not the best investment, as it is worth less over time.
That's why the government says we need inflation. Now to the individual, of course we would want a deflationary currency, and we've had that in Gold and Silver already.
I believe BTC will continue to be relevant, and I continue to invest in it, but it's never going to be a day- to-day currency. It's a store of value like gold. I can see layers built on top of it that allows easier financial transactions, and it may be used to back currencies, but there's no way you will be transacting in BTC consistently.
They will call it BTC but nothing will actually hit the ledger at time of transaction, BTC wouldn't be able to handle the billions of transactions per second.
That's why the government says we need inflation. Now to the individual, of course we would want a deflationary currency, and we've had that in Gold and Silver already.
I believe BTC will continue to be relevant, and I continue to invest in it, but it's never going to be a day- to-day currency. It's a store of value like gold. I can see layers built on top of it that allows easier financial transactions, and it may be used to back currencies, but there's no way you will be transacting in BTC consistently.
They will call it BTC but nothing will actually hit the ledger at time of transaction, BTC wouldn't be able to handle the billions of transactions per second.
Tmac
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Ravishing
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Tmac
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Layer 2 fam. The protocol doesn’t have to change. Do you know what layer 2 is?
Ravishing
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Flobee
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This video isn't really about Bitcoin, but it does a great job of explaining why denominating things in USD is misleading and why using something like BTC as your unit of account gives a much clearer picture as to what is actually going on. Definitely recommend if you're struggling to understand this.
TL : DW - If your investing in the S&P you're actually losing purchase power over time when adjusting for the money supply.
TL : DW - If your investing in the S&P you're actually losing purchase power over time when adjusting for the money supply.
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Tuco
I got Tuco'd!
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If I were to chart my home's value as denominated in BTC over the last ten years, would it not primarily just be a chart of BTC's price and mostly obscure real-estate value fluctuations?
This guy is a fucking scam artist. Don't trust him.
Look at this fucking chart:
Just look at the axes:
Left - S&P: 1100 to 5100 = 360% increase
Right - "Global Liquidity": 90 - 170 = 90% increase
And this piece of shit is trying to convince people that the value of the assets of the largest 500 companies in the US aren't growing over... the size of the global money supply? What does that even mean?
No one who abuses the axes of a chart to lie about slopes by taking two generally upwards trending lines and forcing the same start and end point visually is doing that shit by accident. And to tell uneducated passive investors "Look! You gain nothing!" He should be sent to prison in Hell.
This is what his fucking shit chart should actually look like:
Fuck him.
No offense to you, Flobee. I enjoy reading your discussions in this thread.
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