It appears you're trying to play both sides of this, but let me repeat this again for clarity:
If you'd bought bitcoin in late 2021 or 2022 to hedge against the inflation surge around that time you'd have seen prices double as you tried to avoid an 8% increase. It's volatile, pro-cyclic, untied to fundamentals, and historically a bad hedge against inflation.
Umm no. You're cherry-picking a bad year from a cycle bear market. If you bought Bitcoin in 2021 or 2022 to hedge against inflation you should not have sold it. Bitcoin is not meant to be a short term investment. Bitcoin runs in 4-year cycles, and the bear market was part of the cycle. It does it every 4 years. You should not invest in Bitcoin with the intention of selling it in less than 4 years. If you invest in anything as a hedge against inflation, that should be a long-term investment. Look at a chart. There has never been a more than 3-year period where you could invest at any point and be in the negative.
Bitcoin's average annual return since inception is 3,502%. Take out the earlier years that had much larger gains and it's 118% over the past 5 years.
The dollar on the other hand has lost
October 2024 YOY inflation rate: 2.6%
October 2023 YOY inflation rate: 3.2%
October 2022 YOY inflation rate: 8.2%
October 2021 YOY inflation rate: 6.2%
October 2020 YOY inflation rate: 1.2%
Something that would have cost $1 5 years ago, now costs $1.23 ($1 x 2.6% x 3.2% x 8.2% x 6.2% x 1.2%). The dollar has lost 23% of its purchasing power in the last 5 years. I think/hope we could all agree that the true inflation rate was actually even higher than that, so we've actually lost even more of the purchasing power of the dollar than that. If you had put your money in Bitcoin then you would have done even better than hedged against the inflation, even with the roller coaster ride of 2021-2022.
Part of the reason when Bitcoin surged in 2021, and subsequently went into a bear market in 2022, was partly due to the exorbitant money printing and rising inflation and the subsequent swift hiking of interest rates to control the inflation. That started a snowball effect that crashed the market due to all the overly leveraged positions that got washed out.
I understand it just fine and continue making my case. Your only counter argument is ad hominem: you claim I'm ignorant. I see no evidence that you understand crypto. Don't respond with random buzzwords, provide a cogent argument beyond simply saying I'm wrong and uneducated.
When you try to make a point like you did above, then yes it appears that you don't know what you're talking about and need to learn more about it. My argument is not ad hominem because I've consistently explained how it actually works and why and how it's not what you're saying it is, correcting you all along the way.
Yes, there are use cases-- that's an argument for it being a tool, not an investment. My Visa card is also a tool, but the value of it doesn't really change much with time.
If there was no use case for Nvidia chips, then Nvidia it would not be a worthy investment. There always needs to be a use case of some kind. With Apple, there is a use case for its products. People buy them and Apple makes money. So people invest in Apple.
There are use cases for crypto. With Bitcoin there is money being spent on energy, which helps the economy, as those businesses are receiving revenue. That revenue goes to employees which goes back into the economy. There are also transaction fees that the miners receive. Those are just an example. There are entire business running on crypto and blockchain.
Now you're comparing your Visa card to Bitcoin? I don't really get your point here. This just sounds foolish. A credit card is a debt instrument to make it easy to purchase things.
Again, you've avoiding my point. You say crypto has value because it's not reliant on government because government can't be trusted. That argument would hold more weight if people didn't run to the government for protection and support when their crypto investments go bad.
Who has run to the government because their crypto investments went bad? Not sure what you're talking about here. There is no FDIC or SIPC insurance with crypto. Also isn't part of the government's duty to its citizens to investigate and prosecute crime? Fraud is a crime, so when there is fraud, even in crypto, the government should investigate and prosecute, just like they do with traditional finance.
I think you're missing the difference between centralized vs decentralized and what that actually means. It doesn't mean there shouldn't be regulations or any government oversight at all. There's a difference between control and oversight.
They did not get out of the Great Depression with the gold standard intact. Attempting to maintain convertibility to gold is what turned the panics and recessions of the late 20's and early 30's into the Great Depression. The large nations of the world essentially all abandoned the gold standard as a means of recovery.
Again, no. That's not correct. The gold standard was not abandoned until 1971. In 1933, what changed was there was an expectation that dollars could be exchanged for gold by the U.S. It wasn't until decades later, when France decided to call in that exchange, and the U.S. did not actually hold enough gold to back all the cash currency that had been distributed. When this was realized the gold standard was finally officially abandoned in 1971. From 1933 until 1971, the world still assumed there was enough gold, when there wasn't.
And when you say they did "just fine", what does that mean exactly? Banks were collapsing, people were losing their savings, the system was being bailed out by private individuals as Rockefeller and Morgan were personally providing solvency to other banks and the US government itself giving themselves massive personal power in the process.
They did just fine getting out of the Great Depression without printing money and giving it away to people. In 2020, there could have been another better way to get out of the recession that had quickly set in (or was about to) without printing trillions of dollars to give away as stimulus, but the government decided to take the easy path out, which ended up hurting people even more in the long run with the high inflation.
During the Great Depression the New Deal provided funding for programs that solely increased production in the country to get it out of the Depression. Money wasn't just given away.
And are you suggesting the 19th and early 20th centuries were eras of class equality? When you think of the late 1800's, do you think of the working class and the robber barons rubbing elbows?
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Do you think standards of living were better then? Median
real income continues to rise.
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Two completely different eras. Look at 1971 until now. Median personal income is skewed because there are people making billions of dollars per year that makes that number go up. Also, there are people making minimum wage, which hasn't kept up with inflation.
Again, why do you care about debasement if you are agreeing that crypto doesn't help stabilize prices?
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.
Here you go again with the "you don't understand" ad hominem attacks.
Yes, characteristics. Color is a characteristic-- that is my point. You've haven't provided any sources of underlying value of the currencies themselves. There are characteristics one may like, just like one may like using a plastic card or electronic transfer over suitcases of paper, but none of them provide any real significant and, even more crucially, growing value to justify the growing price.
Again, these indicate that crypto is a tool, not an investment.
So, leaving aside your non-functional characteristics (blockchain colored dollars, decentralized banking ledgers), you mention one that is a good illustration of my point: programmability. Automated, decentralized, programmable transactions are a pretty neat trick for sure, but is it a justification for the ever rising price of crypto? No, it's not.
A decentralized banking ledger has no function? What in the world are you talking about? You're just spouting nonsense. A decentralized immutable ledger has huge benefits. Again, you need to learn more about it and get a solid understanding of what it is and the benefits. If you really don't understand the benefits and value of a decentralized ledger you're just reinforcing the issue with people being against crypto being that they just don't understand it.
An investment is something that you expect or hope will provide you with more money than you put into it. People invest in Bitcoin and crypto because they see the value it what it brings to the table. Decentralized currency, non-alterable monetary policy, disinflationary monetary policy, store of value, quick settlement of transactions, inexpensive cross-border transactions, smart contracts, and more technological innovations, plus everything else I previously explained. It's right in front of you. Open your eyes so you can see it. If you don't like it still, that's fine. Don't buy it. Don't invest in it. Just stop saying there are no use cases, that it's scam, that there is no value, and that it's not an asset.
There are use cases. It's not a scam. It's not a Ponzi or pyramid scheme. It does have value. And it is an asset. Otherwise Bitcoin wouldn't have a market cap of $2 trillion and be the 7th most valuable asset in the world, and the crypto market wouldn't have a ~$3.7 trillion market cap.
What I am not willing to do is pay a compounding 3% per year for a Visa dollar. There is no investment opportunity here, it's essentially a service charge.
What nonsense are you talking about? Who said anything about paying compounding 3% per year for a Visa dollar. I have no idea what you're talking about or why. You're just introducing gibberish and nonsense now.
It's a service of the blockchain, for one thing, not the currency riding on it. Etherium is the usual example where you can queue code to run on the EVM and it's paid for with Ether-- fee for service just like a normal service. If you need programmability, there's no reason not to buy the coin, run the code, pay the fee, and convert back out of the coin when complete.
And Etherium is open source, so if there is demand for such a service a new blockchain can always be created for that purpose-- plenty of competition.
None of that suggests that the price of crypto should keep bidding up.
It's supply and demand. Yes, someone can start up their own copy of Ethereum. And that has been done. Some of them have failed. Some still exist. The market for the most part has continued to choose Ethereum. The price of ETH is based on supply and demand. If you need or want ETH for a transaction or just to hold, then you pay what others in the market are willing to sell it for. No different than other investments in the market, including stocks, bonds, and commodities.
I'm willing to pay a flat 3% more for a dollar worth of Visa money than I am for paper money because of those benefits which is presented to me as price inflation at the vendor because vendors are getting less per dollar I spend.
You're paying for Visa money? What's "Visa money"? Do you mean you're willing to pay a 3% service charge to pay with your Visa instead of cash or writing a check? That's a fee you're will to pay for a convenience, but you're likely getting 1%-3% back, and sometimes more, anyway. Sure, that's your choice, but this has nothing to do with the Bitcoin and crypto. And it's not "Visa money". It's a revolving debt denominated in U.S. dollars that you're willing to take on with the potential to pay up to 30% interest rates on if you don't pay it off right away.
Again, just a blanket contradiction with no coherent explanation. Given the inability to explain and defend your assertions, your claims that other people don't understand are rather weak.
There's no contradiction. You need to learn how currency markets work, and how the macro economy works, plain and simple. What you've said here makes it clear you lack a full understanding. I'm not going to teach that to you, so you'll have to go learn on your own. It's very clear you don't understand how it works, so go learn.
