Coinbase Onramp Now Supports Buying Crypto With Apple Pay

[Analog Kid]

I think it's less energy than you think. Bitcoin's global use of energy is less than the energy the U.S. banking system uses. Bitcoin is also the 7th most valuable asset by market cap. That's not wasteful.

The 7th most valuable asset taking as much energy as the entire banking industry?

Bitcoin market cap: $2T
Assets managed by US banks: $24T

Meanwhile banks fund actual businesses that employ actual people and sell actual products-- that is the do useful things, they don't just play music as people circle the chairs hoping they'll have a place to sit when the music stops.

Yes, that sounds wasteful.

 

[flmmkr]

The 7th most valuable asset taking as much energy as the entire banking industry?

Bitcoin market cap: $2T
Assets managed by US banks: $24T

Meanwhile banks fund actual businesses that employ actual people and sell actual products-- that is the do useful things, they don't just play music as people circle the chairs hoping they'll have a place to sit when the music stops.

Yes, that sounds wasteful.

I think you need to learn how to read. Read what I typed again.

"Bitcoin's global use of energy is less than the energy the U.S. banking system uses." "Less than" is not the same as "as much as". Do you understand the difference?

There are entire businesses being built on top of the layer 1 blockchains, and we're still early into this whole thing.

The issue here is that people lack vision. People lacked vision in the 90s when they thought the Internet was a scam, that it should be banned, and that it was going to imminently die. Now essentially the same thing is being said about Bitcoin and crypto. Total lack of vision.

 

[flmmkr]

Let's say your 4 year theory has any validity to it and that it's something about crypto driving it (halving festivals or what have you) and not either random or tied to something else that's on a 4 year cycle like US presidential elections. How does this play out?

Bitcoin has no use other than speculation. When you buy at the bottom and predictably sell at the top, you're taking someone else's money out. As I've said before, if you're making gains you've set someone else up for a loss. As the price tanks and they're watching their investment collapse, they panic and do one of two things: they sell with everyone else and take the loss or follow your advice and hold on hoping for another peak in 4 years. If they sell, they're accelerating the crash. If they hold, they're synchronizing to the cycle. Either way, you can bet that the next time it peaks they'll be in the don't-get-fooled-again crowd and will start selling at the next higher peak setting someone else up for a greater loss. As more and more people fall in sync, the cycles become more and more severe. Eventually people realize that you don't even need to hold coins at the peak, you can sell them short and buy them back at the trough. And the cycles become more and more severe. Then it starts siphoning investment from the real economy because the potential returns seem enormous if you ride this cycle, and business stalls, people lose their jobs, and the cycles become more and more severe. There is no lower bound to the value like there is on a stock or bond that represents ownership of something-- the lower bound is zero because that's what crypto is intrinsically worth.

At some point those cycles become so severe and so volatile that bitcoin loses any semblance of coherency. What's the point of mining the ledgers if your payout is worth zero? But until that time, a lot of people get hurt every 4 years.

I guess it's all ok because, in the words of Milo Minderbinder, "everyone has a share"...

The 4-year cycle has held true since the beginning. Could it fall apart at some point? Sure. That would probably be welcomed because it would probably also mean an end to the 50% to 90% bear market drawdowns and reduced volatility. I don't see that happening for a long time, but you never know.

Check out Raoul Pal's theories. He think the Bitcoin 4-year cycle is linked not to the halving or presidential elections, but to a global liquidity cycle. It's pretty interesting, and makes a lot of sense the way he presents it. I think we'd need to see some more cycles to really know for sure why and how the cycles work they way they do.

The point though is that so far the cycles have held. You have the bull market that starts, then the halving occurs, a new all-time high is reached after the halving, then a new all-time high and market cycle high reached 12-18 months after the halving, followed by the bear market.

"Wait!", you say... Bitcoin reached a new all-time high before the halving this time. Actually, it didn't because you need to adjust for inflation to know what the new all-time high would have to be to actually be higher than the previous all-time high. If you do that, you find the new all-time high wasn't actually reached until after the halving.

So, yeah the 4-year cycle still holds true... so far.

How does it play out? In your example you're assuming everyone would sell it all the way to zero. Why and how? When there's a bear market and Bitcoin has fallen far from it's high, eventually there are people who still see value in it and will start buying at a certain price. It may fall to a very very low price, but it should be clear at this point that there will always be people who will buy no matter what. Once they start buying, others will see that it's not dead as the price starts to climb again. It's not going to zero, so they buy more. And then more people buy because Bitcoin survived. That's what has happened before, many times, and will keep happening. At least that's as long as Bitcoin keeps doing what it's supposed to. The only thing I see stopping it at this point is some unknown flaw or bug in the code that causes it to stop or if the security of the network is compromised and the immutable ledger is no longer immutable. Is that possible? Maybe. Quantum computing is coming and that presents some serious security issues for something like Bitcoin. We'll have to see how that's handled by Bitcoin devs and miners.

Stocks have the same lower bound as crypto. You've never seen a company go out of business and their stock go to zero?

 

[onenorth]

When someone said the miners were stabilizing the Texas power grid, I knew that we were being punked. Texas power customers are paying the miners to stop mining. How is that a stabilizing force? It's the complete opposite of stabilizing.

https://www.nytimes.com/2023/04/09/business/bitcoin-mining-electricity-pollution.html

 

[Analog Kid]

Volatility is fine if the price is moving up and down, but generally in a more up direction over time, just like in Bitcoin. In case you didn't realize it, currency values do fluctuate and do have volatility. Gold is considered a hedge against inflation, and it also has volatility. Is Bitcoin's volatility higher? Yes. But that doesn't mean it can't be a hedge against inflation.

Tell me a time since in recent memory when gold lost half its value in a year? The definition of a hedge is that it tends to run counter to the variable you're trying to protect against-- bitcoin typically loses value during periods when inflation rises and gains value when inflation falls. More likely it's running counter to interest rates which go up when inflation rises.

Having a 4-year cycle has nothing to do with efficiency. Again, you don't understand Bitcoin.

You don't understand the efficient market hypothesis.

I do know what ad hominem means, but I don't think you do. I have not made any personal attacks against anyone here.

Every time you defend a statement by saying someone doesn't understand some broad area of knowledge or needs to educate themselves, you're making it about them, not the ideas of the argument. Ad hominem. To the person.

If continue trying to distract from the points made by me and others by trying to discredit us personally, I'm happy to continue comparing relative credibility in the same terms. If you choose to focus on the facts of the matter and what is correct and incorrect without personal disparagement, I'm happy to follow.

EVERYONE who has bought Bitcoin in the past and held their investment is currently in the profit

If everyone held, no one could buy and the price wouldn't have gone up at all.

I never said Bitcoin's value is solely because of blockchain. If it was then you'd have any crypto on any blockchain be tremendously valuable. That's not the case. The value of Bitcoin comes from the immutable ledger, security, monetary policy, etc. that I described before.

blockchain is the immutable ledger and to some extent the security. There's no monetary policy for crypto because it's decentralized.

You surprise me in how little you appear to know about economics. I even explained the concept.

Not ad hominem?

You're absolutely right though, a lot of people will be employed building levies and treating asthma because of the energy used so people can have their pretend money. I'd never thought of that as a public good before, but you make a strong case.

You are the one who needs to read your history. Why don't you read the whole article? Maybe you'll actually realize the truth and how much you actually don't know. It was a temporary "suspension" of the gold standard. About 8 months later the gold standard was reinstated and the dollar was again fully backed by gold. Again, another example that you don't understand the subject matter and need to educate yourself better.

*sigh*

I'm assuming you're referring to the Gold Reserve Act? The one that let the President set the value of gold by fiat? The one that Roosevelt used to devalue ("debase" in your goldbuggery) the dollar by 70%, taking the dollar from about $20 an ounce to $35 an ounce in one step? That's not any gold standard I can recognize.

From the St. Louis Fed:

The U.S. came off the gold standard for domestic transactions in 1933 under President Franklin Roosevelt and ended international convertibility of the dollar to gold in 1971 under President Richard Nixon, effectively ending the gold standard in the U.S.

So, going back to your original statement that we survived the Great Depression just fine without printing money-- we did not.

I never said anything about poverty. Read again what I said.

Ok:

It's only made the richer more rich and the poorer more poor

If there's one thing I always enjoyed about reading Charles Dickens, it's how everyone seemed so equal back in the days of the gold standard.

I never said anything about stabilizing prices. Do you think debasement of the currency is going to be a good thing? We should all care.

Ok, then maybe this is where to start. What do you think "debasement" means?

It's the intentional reduction of a currency value, which is what the U.S. government is going to need to do to get out the the debt crisis that is looming. It's a bigger issue, because it will cause much greater inflation than from other normal factors.

Ok, so you never said anything about stabilizing prices, only about currency losing value and inflation. You do see why your arguments are so hard to follow, right?

Each quote has a little link in the upper left, which is how I can trace back your comments to what you actually said. Using it might help you maintain a more consistent line of argument and see any flaws rather than simply trying to contradict each of my responses.

Bitcoin is more than its ledger, and I've explained where there value is. I keep asserting you don't know what you're talking about because you keep demonstrating that you don't.

Bitcoin is less than its ledger. The blockchain is the thing of value.

You haven't explained anything, you just list adjectives and attack the credibility of anyone who disagrees with you.

Again, in aggregate, people who have bought Bitcoin and held it for more than a couple weeks right now can get more out of it than they put into it.

So, right now the winners are winning... Tautological arguments are tautological.

Then don't spread lies and misinformation. It's not a scam, and you haven't been able to prove it's a scam because it isn't a scam.

Bitcoin as an investment is a scam the moment it claims someone can win without someone else losing.

Totally different. No one knew what was in those CDOs. Even the credit rating companies didn't know and gave A ratings when they were full of junk. It was all masked so no one knew what was really going on. With Bitcoin it's different. You can look at the code since it's open source. You can view all the transactions that have ever occurred on the network. You can even see the transactions in real time, including those that haven't been confirmed yet. It has transparency, which is something CDOs didn't have.

CDOs had transparency, their contents were fully documented. You only had to look-- but the people making money discouraged anyone from looking because it's complicated and people don't understand. The argument was the same as you're making: "if it was a bad investment, it wouldn't be such a big market."

So, here I am looking and using the transparency of the crypto market to point out its flaws and here you are just repeating over and over again that I don't understand.

Bitcoin is in a speculative bubble just like the mortgage market was.

You're repeating something that's been said for more than 10 years. Bubbles don't last that long.

By your reasoning, anything in the stock market that is growing at a high growth rate is a bubble. This includes top companies like Nvidia, Apple, Microsoft, Google, Amazon, Tesla, etc. Such nonsense.

I'm sorry, what's the maximum duration of a bubble?

By my reasoning, anything that is seeing a growing divergence between price and value for an extended period of time is a bubble. There was indeed a stock market bubble of technology stocks in the 2000's. There's an argument to be made that there's a bubble around AI at the moment.

Those bubbles burst more easily though because there is a measurable value to the underlying companies that people can compare to-- the bubble is around growth expectations and when the underlying value doesn't grow to match those expectations the bubble eventually collapses.

Here's a prime example from the reporting around TSMC today:

Taiwan Semi reported November net revenue of NT$276 billion ($8.48 billion), compared with NT$206 billion in November 2023. However, sales were down 12.2% from October this year, which may be cause for concern for investors as the stock has almost doubled this year, indicating high expectations.

Measurable value by which to recognize a potential bubble.

There is no such metric for bitcoin. Saying that, in the past, holding for 4 years means profit is not a metric. It's steering by one's wake.. The conversation here is all about extrapolating past trends, not about tying that to any true value. As long as the cult remains as insular as it is, creating it's own language and mythology and breathing its own exhaust, the bubble can remain in place for quite a while because this kind of faith means belief without regard to evidence.

 

[turbineseaplane]

I would so love to eliminate "crypto" and "AI" from ever existing or having to be heard about

Ugh

 

[Analog Kid]

Your illustration is complete nonsense. If everyone tries to sell their stock of a company at the same time then some are going to lose.

That is not what happened in my example. Everyone sold at the same time and they all walked away winners.

Create a scenario where that can happen with crypto. I don't believe it's possible. It works with the stock market and the bond market because that represents ownership of a profit making or interest bearing asset. It can not happen with crypto because it's zero sum. Every winner creates a loser by definition.

If I'm wrong, construct a counter example.

However, if you're saying that over time no one would be able to sell their Bitcoin for more than they paid for it, well you're wrong.

I am not saying that. I've never said "no one" wins. I'm saying that selling it for more than you paid for necessitates someone selling it for less than they paid for it. Every winner creates a loser.

 

[flmmkr]

When someone said the miners were stabilizing the Texas power grid, I knew that we were being punked. Texas power customers are paying the miners to stop mining. How is that a stabilizing force? It's the complete opposite of stabilizing.

https://www.nytimes.com/2023/04/09/business/bitcoin-mining-electricity-pollution.html

I'm unable to read the article as it's behind a paywall. However, customers are not paying the miners. That is simply not true. The miners are being incentivized to shut down or reduce their operations during high demand periods. Here is another article that explains how the system works.

Environmental group blasts ERCOT policy to pay cryptocurrency mining companies to stop operations during peak power demand

The executive director of the group Environment Texas believes the state power grid operator should pay residential customers for conservation instead.

www.kvue.com

Those programs are available to any company, not just miners. There are residential applications as well where residential customers receive credits for shutting off things like AC during high demand periods, or giving the power company the ability to shut it off for them. A lot of states have similar programs. You can't really blame miners for taking advantage of it.

 

[flmmkr]

That is not what happened in my example. Everyone sold at the same time and they all walked away winners.

Create a scenario where that can happen with crypto. I don't believe it's possible. It works with the stock market and the bond market because that represents ownership of a profit making or interest bearing asset. It can not happen with crypto because it's zero sum. Every winner creates a loser by definition.

If I'm wrong, construct a counter example.

Your scenario is not realistic. Provide me with an example where a company went out of business and all the stockholders walked away as winners. It can't happen. Someone always ends up with less than they put in.

I am not saying that. I've never said "no one" wins. I'm saying that selling it for more than you paid for necessitates someone selling it for less than they paid for it. Every winner creates a loser.

Exactly, except you can have more winners than losers, or more losers than winners, depending on how much they win or lose. The same goes for stocks.

 

[Analog Kid]

From 2010 to 2015 gold lost 40% of its value. It took until 2020 before it gained back those losses. Now it's risen 50% since then. It was choppy all along the way. Volatility isn't unique to Bitcoin. He could easily have been talking about gold, or Bitcoin, or both.

40% over 5 years versus 60+% in one year. 50% in 4 or 5 years versus 600% in 2 years. Are they both volatile? Sure. Are they comparable? I find that difference to be massive.

Here's another point of interest: From 2010 to 2015, inflation was low and the price of gold fell. From 2020 to now, inflation was high and the price of gold rose. When people talk about gold being a hedge against inflation, that's what they mean. Bitcoin generally runs in the opposite direction. While I think people are a bit deluded in the value of gold as a hedge, historically it does a much better job of it.

You really think the U.S. government is holding onto trillions of dollars of hold simply because they don't want to take the value of gold? Again, you have no idea what you're talking about.

Simply? No. I think they also hold it to support the dollar, as you've also quoted but for some reason ignored here in an attempt to go ad hominem again. Do I think tanking the market price of gold is part of the thinking? Sure. Do you think tanking the price of gold would be well received by everyone under the illusion it's a good store of value? I don't.

The U.S. is holding gold as a strategic reserve for emergency use should something happen to the economy and the U.S. dollar. The problem is that it's not enough fix anything because of all the money printing and the debt is so high.

The U.S. government does not hod gold to stabilize gold prices. That's nonsense. If that was the case then the U.S. government would have bought more gold between 2010 and 2105 to keep the gold price from dropping 40%.

They hold strategic reserves to back the dollar-- not to stabilize gold prices, but to stabilize the price of the dollar and through that the prices of everything.

Like I said before, it's a strategic reserve for emergency economic recovery should something happen to the dollar.

Yes, we agree. It backs up the dollar. It backs the dollar. The dollar is defacto, at least in part, backed by gold.

Now a Bitcoin strategic reserve is being considered because Bitcoin is seen by many as a legit store of value that would be easier to manage than gold bars if/when the time comes to need to utilize such a reserve. It also seen as a potential tool that could help resolve the debt issue facing this country should the value of Bitcoin rise as much as some projections show that it could.

The strategic reserve is being seen as a way of transferring taxpayer dollars to the crypto community. We managed gold bars in the 17th century, I think we've got that kinda dialed in.

I have no idea why anyone thinks a bitcoin reserve would resolve a debt issue. For one thing, don't have a debt problem we have a deficit problem: a rate of debt problem. Second, this just seems like a great way to give the rest of the world a means to amplify the debt problem through timed market transactions on bitcoin.

 

[Analog Kid]

You're probably right about more of the crypto transactions involving fiat. You know what? So are most stock and bond transactions. It's an investment. People invest with their fiat because they what to grow their wealth. Bitcoin and crypto are no different.

It's very different from stocks and bonds. Stocks and bonds provide a source of income through profits and interest. Crypto has no source of income, only the fickleness of other people. Crypto as in investment is like "investing" in black when the wheel spins-- if you win 3 times roughly 4 years apart you can call it a predictable trend!

Try doing that without spewing out false statements and misinformation about it. Use facts. I tell people all the time that you have to understand that it is a highly volatile and high risk asset. You could make a lot of money with it, but if you do it's going to be a roller coaster ride. You could invest today and tomorrow your investment will be worth only 10% of what you invested. Then a couple years later it could be double what you invested. Then a couple years later it will go down by 80% again. Then it could 5x. And so on. Because that's what's happened with its 4 year cycles. Could it go to zero? Sure, anything is possible. Could it go to a $1 million next year? Sure, anything is possible. Don't invest more than you're willing to lose. Don't invest more than you're able to stomach seeing your investment drop by 90% in a matter of months. Don't invest more than you able to stomach seeing your investment drop by 50% in a matter of hours. I say that because all of that has happened. And that comes after explaining what Bitcoin is, why it was created, and how it works, especially the limited supply and monetary policy. I also say you should dollar cost average in and dollar cost average out (if possible), as well as set a portfolio percentage invested in Bitcoin and stick with it, with rebalancing to sell some when it's up and buy more when it's down. That reduces the risk and allows for locking in gains.

Yeah, I give people the same advice. Never gamble more than you can afford to lose. It can be fun, but it's risky and the only guarantee is with the house. Unlike you, I also recommend against trying to win back losses. When you've lost your limit, leave the table.

Let people decide for themselves with the facts instead of saying it's a scam when it's not a scam.

It's a scam the moment you say you can win without someone else losing. It's a scam when you keep repeating "just like stocks" or "blue chip" to give the false impression that these are more like traditional investments and less like the game of chicken that it is. Those are facts. You don't like those facts, but they are facts none the less. Be factual about what is actually happening and it won't appear as a scam, it will just go back to good old fashioned gambling.

 

[wbeasley]

I would so love to eliminate "crypto" and "AI" from ever existing or having to be heard about

Ugh

actually AI the buzz word will probably fall away soon when they hype dies down. It's overused and misunderstood.

BUT the things AI can do when applied for a good cause is amazing.

My partner suddenly (over a three hour period) lost hearing 18 months ago. Hearing aids have become better over the years and tailoring frequencies to those lost much better. But the latest AI powered models look at sound and environments in a different way and add something new to the mix: the ability to evaluate the input and work to clear up and enhance the sounds that are speech. The ability to communicate again and feel part of the world is priceless.

AI will be able to assist people and address their limitations. Especially as we age.

 

[Analog Kid]

The same principle holds for stocks. This has already been explained. Apple is valued at $3.6T. Apple doesn't own anywhere remotely close to $3.6T in assets. If everyone wanted to sell their Apple stock the price would tank and some people would lose. There wouldn't even be enough assets for Apple to liquidate to compensate the stockholders.

To begin with, we've made progress in your recognition that when you own stocks there are some corporate assets that provide a floor for losses. Apple's reported assets are about 10% of their marketshare at the moment, so the floor is already 10% higher than it is for bitcoin.

Typically intellectual property, brand value, and relationships are undervalued on a balance sheet if they're recorded at all, so the true assets of Apple are probably quite a bit more than that 10%, but I don't have an easy way to know what the actual number should be for the sake of this conversation-- I assure you that investment houses have estimates close at hand though.

For a company like Apple, a large part of their value is their income stream. If Apple's earnings continue as a constant, then it would take 30ish years for Apple to pay off their nominal market cap through their earnings. All these calculations are nominal so if the stock price stays constant and income grows with inflation, by the definition of inflation, then it will take less than 20 years if the Fed keeps inflation at their 2% target. If the company continues growing, then it will take less time yet, but I said 20 years for the smaller company in my parable.

So the current share price is supported by the accumulated assets of the company, some harder to measure intangible assets, and years of income. Bitcoin has none of that.

You're wrong. I can sell my Bitcoin on the market. The person buying my Bitcoin can hold it for a week, a few days, a few years, whatever, until the price goes up. They haven't lost anything. The same concept works for stocks.

The same goes for stocks. If there is enough selling the price will go down. Simple order book mechanics.

You clearly don't understand how markets work. There is value that someone could look at a company and say "I think the stock is worth $x". However, the actual stock price won't be reflective of that until someone actually pays that much for the stock. You must have a buyer at that price for the stock price on the market to change to that pice. That's the new money coming in to set the price. Just because Nvidia doubled their profits doesn't mean the stock price will double. If stock prices were set that way then Nvidia would be worth A LOT LESS than it's currently valued at, along with a lot (probably most) companies in the S&P 500.

No. While the money in the stock jar includes assets, income and intangibles, the money in the bitcoin jar is only investment dollars.

The more you keep claiming I don't understand economics or the stock market while refuting this simple point, the more you undermine your own credibility in this discussion.

You can take more out of the stock jar than you put in without hurting another investor because the business is also putting money in the jar. You cannot take more out of the bitcoin jar than you put in without hurting another investor because theirs is the only other money you can take. They can find another sucker to pass along the loss to, but the truth remains that someone down the line will lose. With all the certainty of addition and subtraction.

But, you exclaim, Keynes said in the long run we're all dead. If bitcoin never collapses, as long as there's always some greater fool to buy the coin from the last person, then the sun explodes and nobody is here to suffer the losses. Can't we just wait until then?

I think you said bitcoin has been growing in price at an annual rate of over 100% per year. Probably more, but that's close enough for the numbers I have available. The current bitcoin market cap is something like $2T. Total global wealth is something like $600T. log2(600/2) is about 8 years. If bitcoin keeps growing in price at its current rate it will consume all the wealth in the world in about 6 years.

I'll have to ask an astronomer friend for more exact numbers, but bitcoin will run out of room for growth roughly 5 billion years before the sun dies. So ignoring the problem hoping it will go away won't work.

Obviously the rate of growth will have to slow. When that happens, it will no longer be an attractive investment because there's more money to be made elsewhere. When that happens the price will start to fall and there will be no prospect for the remaining investors holding the bag to ever reap a profit.

Apple's stock price can't grow forever either. Eventually this will be reflected in the fact that the price is at a much smaller multiple of earnings and most of the income will come in the form of dividends. But there will be income, because the company makes money.

Bitcoin can only flame out.

 

[Analog Kid]

Immutable is correct. It is what is used by the industry. If you knew as much about crypto as you claim to you would know that is the correct term that has been used since the very beginning. This is what I'm talking about. You do not really know or understand Bitcoin and crypto.

Immutable as an actual word can't be correct. It means unchangeable. It would mean the ledger is read only and can never be written to. Cults tend to slowly evolve language as a way to steer people's thinking. I don't care what the crypto industry means by immutable, I care what that word means as a word. If you understood it, you'd see my point and how it relates to the phrase append-only. But you don't, so your response is to go ad hominem to hide that lack of understanding.

 

[Analog Kid]

What's your point? You are still wrong.

Also, that's not what you said. Plus

Lol! 😄

 

[flmmkr]

40% over 5 years versus 60+% in one year. 50% in 4 or 5 years versus 600% in 2 years. Are they both volatile? Sure. Are they comparable? I find that difference to be massive.
It really depends on your risk tolerance, but personally I'd take the 60%+ since the upside potential is much greater. If I know I'm going to lose 40% to 60% (temporarily), and I can stomach the 60% unrealized loss, but the upside is 600% instead of just 50%, I'll take the upside potential. It's a better risk-adjusted return.

Now not everyone has that risk tolerance, so it may not be the right asset investment for anyone that can't stomach the volatility.

Here's another point of interest: From 2010 to 2015, inflation was low and the price of gold fell. From 2020 to now, inflation was high and the price of gold rose. When people talk about gold being a hedge against inflation, that's what they mean. Bitcoin generally runs in the opposite direction. While I think people are a bit deluded in the value of gold as a hedge, historically it does a much better job of it.

Bitcoin did not run in the opposite direction. At the start of 2020 Bitcoin was about $7,000. Today it's near $100,000. Did it see volatility in that period? Yes. But overall it did not run in the opposite direction. Although Bitcoin is considered a hedge against inflation, it also is still a risk asset. When interest rates started rising it was a risk-off environment, so all risk assets saw declines in value. Even gold declined in value. From March 2022 until September 2022 Gold declined over 20%, while inflation was still high.

Simply? No. I think they also hold it to support the dollar, as you've also quoted but for some reason ignored here in an attempt to go ad hominem again. Do I think tanking the market price of gold is part of the thinking? Sure. Do you think tanking the price of gold would be well received by everyone under the illusion it's a good store of value? I don't.

They hold strategic reserves to back the dollar-- not to stabilize gold prices, but to stabilize the price of the dollar and through that the prices of everything.

Yes, we agree. It backs up the dollar. It backs the dollar. The dollar is defacto, at least in part, backed by gold.

No, we don't agree. The U.S. gold reserve does not support the value of the U.S. dollar, or back it up. The U.S. gold reserve is only about $700 billion. That's only 12.5% of M0. And monetary base isn't the only thing that needs to be accounted for because the U.S. owes more than $36T. Even if you only use M2, which is the best measure of all the available money available to the economy, then gold only backs 3.3%.

The U.S. gold strategic reserve is there to allow the government to still function among the global economy in case of emergency. If the dollar were to collapse, other nations would stop using the dollar, and would not accept it as a form of payment. In that case, the U.S. government could send gold instead of dollars. That's it.

The strategic reserve is being seen as a way of transferring taxpayer dollars to the crypto community. We managed gold bars in the 17th century, I think we've got that kinda dialed in.

I have no idea why anyone thinks a bitcoin reserve would resolve a debt issue.

Let's see. The value of gold in 2010 was about $1,100. It's now about $2,700. That's 145% growth. Not bad.

Bitcoin in 2010 was worth about $0.01 (it was less than that actually). It's now $97,000. That's $9,699,999%.

If you want to take it from just the last 5 years, gold is up only 80%, and Bitcoin is up about 1,300%. If Bitcoin keeps doing what Bitcoin has been doing for the last 15 years, then yes, you could actually use Bitcoin to eliminate the national debt over a long period of time. Is that the best use of the Bitcoin? Probably not. Better to try to monetize the Bitcoin reserve than use it to actually pay off the debt.

For one thing, don't have a debt problem we have a deficit problem: a rate of debt problem. Second, this just seems like a great way to give the rest of the world a means to amplify the debt problem through timed market transactions on bitcoin.

The U.S. has many problems. Two of them are the debt AND the deficit. Even if they eliminate the deficit, there is still more than $36T of debt to deal with. That debt must be serviced. The cost of servicing that debt will wear on the economy even if the deficit is eliminated because many programs that promote economic growth will need to be cut to eliminate the deficit. It's already been analyzed and there's no way to cut enough spending to eliminate the deficit without causing many other problems. The expense of servicing the debt is too high. Of course, the deficit was the root of the problem and allowed the debt to get this high, but now it's more of an issue than just eliminating the deficit.

 

[flmmkr]

Immutable as an actual word can't be correct. It means unchangeable. It would mean the ledger is read only and can never be written to. Cults tend to slowly evolve language as a way to steer people's thinking. I don't care what the crypto industry means by immutable, I care what that word means as a word. If you understood it, you'd see my point and how it relates to the phrase append-only. But you don't, so your response is to go ad hominem to hide that lack of understanding.

It is immutable because you can't append anything to the blocks once they are added to the blockchain. Appendable implies that you could add additional data to each block. Immutable refers to each block, not the entire chain.

Like I said, you don't understand blockchain and crypto.

 

[Analog Kid]

There are entire businesses being built on top of the layer 1 blockchains, and we're still early into this whole thing.

Like I keep saying: the value is in the blockchain, not in the currency riding on it. The number of times in this thread you've called me stupid and agreed with me before the period is remarkable.

The blockchains are where the value is, and there is no scarcity of blockchains or serious barriers to entry. Nothing justifies the current prices of crypto coins.

 

[Analog Kid]

When there's a bear market and Bitcoin has fallen far from it's high, eventually there are people who still see value in it and will start buying at a certain price. It may fall to a very very low price, but it should be clear at this point that there will always be people who will buy no matter what.

Why? At some point people are just going to get fatigued by the get rich quick schemes and move on to other things.

Stocks have the same lower bound as crypto. You've never seen a company go out of business and their stock go to zero?

Bitcoin has a lower bound of zero because it must. Stocks in general do not. There are cases where a company can issue shares and then go out of business without ever turning a profit, but that is not the typical case.

 

[flmmkr]

It's very different from stocks and bonds. Stocks and bonds provide a source of income through profits and interest. Crypto has no source of income, only the fickleness of other people. Crypto as in investment is like "investing" in black when the wheel spins-- if you win 3 times roughly 4 years apart you can call it a predictable trend!

You're bringing up a totally different topic now. What I said is that you were right about most of the crypto transaction involving fiat. I agreed with you and pointed out that people invest in stocks and bonds with fiat too. Now you change the subject.

Not all investments generate income. Commodity investments don't generate income if you just hold them. Gold for example.

There are cryptocurrencies that do generate income though, such as ETH if you stake it.

Yeah, I give people the same advice. Never gamble more than you can afford to lose. It can be fun, but it's risky and the only guarantee is with the house. Unlike you, I also recommend against trying to win back losses. When you've lost your limit, leave the table.

It's not trying to win back losses. It's having a preset investment strategy that you rebalance to. For example:

You invest in 80% stocks and 20% bonds.
The market goes into a downturn and stocks decline in value and bonds hold.
Now your portfolio is 60% stocks and 40% bonds.
Do you leave it and wait for the stocks to gain back what they lost?
No. You're supposed to rebalance. So you rebalance back to 80% stocks and 20% bonds.
On the flip side, let's say the market then rallies and you end up with 90% stocks and 10% bonds.
Do you leave it? No, because now you have a riskier portfolio that's outside of your target allocation.
So you rebalance back to 80/20.

This is how professional investment managers manage investment portfolios. And you do the same with an allocation to Bitcoin. If you allocate 3% to Bitcoin and it grows to become a 6% allocation, you would sell some and rebalance to 3% of your portfolio. If Bitcoin goes down and becomes 1% of your portfolio, you would buy some to rebalance back to 3%. This strategy of rebalancing makes it possible to easily buy low and sell high over time.

It's a scam the moment you say you can win without someone else losing. It's a scam when you keep repeating "just like stocks" or "blue chip" to give the false impression that these are more like traditional investments and less like the game of chicken that it is. Those are facts. You don't like those facts, but they are facts none the less. Be factual about what is actually happening and it won't appear as a scam, it will just go back to good old fashioned gambling.

Again, it's not a scam and no one said anyone can win without someone else losing. I don't know where you're getting that from. And it's no different than the stock market. It is just like stocks. Like I said before, give me an example of any company stock in history that went to zero and someone didn't lose. You can't, because if a company goes out of business their stock will tank as people start to sell off. Someone in the end is going to be left with little to nothing.

If Investor A sells their Bitcoin for a 10% gain to Investor B, and Investor B sells their Bitcoin to Investor C when Bitcoin goes down 10%, then Investor B will lose money. Is that what you want to hear? It's the same for stocks.

If Investor A sell Apple stock for a 10% % gain to Investor B, and Investor B sells their Apple stock to Investor C when Apple stock goes down 10%, then Investor B will lose money. Same concept.

Those are facts. You haven't provided any facts for what you're saying.

Also, I didn't say Bitcoin is like traditional stocks. I said the concept of what you're talking about (realized losses, failure of Bitcoin or of a company, the way order books work, etc.) is the same. They are fundamentally different assets and investments, but the way you buy and sell and see gains and losses is the same.

 

[flmmkr]

Lol! 😄

You can laugh all you want because you can't prove me wrong.

 

[flmmkr]

Like I keep saying: the value is in the blockchain, not in the currency riding on it. The number of times in this thread you've called me stupid and agreed with me before the period is remarkable.

The blockchains are where the value is, and there is no scarcity of blockchains or serious barriers to entry. Nothing justifies the current prices of crypto coins.

I never said you were stupid. I said you don't know what you're talking about when it comes to this subject. You are purely completely misinformed about the subject. I'm sure you are smart and know about other things, but I tell you this is not your area of expertise.

Bitcoin exists because of bitcoin, and bitcoin exists because of Bitcoin. They are married together and require each other. You can't have one without the other. Same concept goes for any other blockchain crypto (at least layer 1s and to some extent layer 2s). The uses of them, growth of the network, and many other factors justifies the value that the market has placed on them. Here I am referring to the ones with utility, not the memes and stuff like that.

 

[flmmkr]

Why? At some point people are just going to get fatigued by the get rich quick schemes and move on to other things.

Because the market gets cleaned out and it's safe to re-enter.

Bitcoin has a lower bound of zero because it must. Stocks in general do not. There are cases where a company can issue shares and then go out of business without ever turning a profit, but that is not the typical case.

Stocks also have a lower bound of zero as well. Any company that goes out of business ends up with a value of zero.

Those companies that you refer to, issuing shares and go out of business never turning a profit, they used investor cash raises and debt. People bought those shares as an investment. The debt doesn't get paid back, the investors lose money, and the stockholders who bought the stock lose money because the stock isn't worth anything anymore.

Again, it's the same concept. Both crypto and stocks (and bonds even) have a lower bound of zero.

 

[Analog Kid]

Your scenario is not realistic. Provide me with an example where a company went out of business and all the stockholders walked away as winners. It can't happen. Someone always ends up with less than they put in.

Paypal comes to mind. It was acquired by Ebay and Paypal the company ceased to exist but I'm pretty sure the investors did ok. The name carried on as a brand, but the company did not. If I were to look for real world examples close to my simplified story, I'd look at acquisitions.

 

[flmmkr]

Paypal comes to mind. It was acquired by Ebay and Paypal the company ceased to exist but I'm pretty sure the investors did ok. The name carried on as a brand, but the company did not. If I were to look for real world examples close to my simplified story, I'd look at acquisitions.

What are you talking about?

PayPal didn't go out of business and didn't cease to exist... EVER!

PayPal was not a publicly traded company when eBay acquired it. When eBay acquired PayPal, PayPal remained a separate company that was just owned by eBay. PayPal was still a separate corporation from eBay, just owned by eBay. And now PayPal is still a separate company no longer owned by eBay and is actually publicly traded.

Acquisitions are not remotely similar to how Bitcoin is bought/sold and traded.