On Bitcoin...
Posted by CaptainKirk 4 months, 3 weeks ago to Economics
I said BTC would hit $100K long before it hit ZERO.
The link I am referencing to is worth watching. Michael Saylor says it best.
When you spend little to no time looking into BTC, you know it's a ponzi scheme.
Then after a good 10-20 hrs of actually studying what BTC is. you start to realize...
BTC is the digitization of MONEY. Just like Digital Cameras destroyed Kodak.
Digital Money will destroy paper currency.
He goes on to say, nobody who spends 100hrs actually researching/studying BTC,
Walks away a critic of BTC.
I know the Gulch is stock full of older patrons who shall not believe.
And I am okay with that. If I can get a few of you to LIKEN this "concept" to
the concepts of Harnessing Fire, or Electricity, or the Internal Combustion Engine.
You might wake up that part of you that realize that this "creates future opportunities",
that can be done without MIDDLEMEN (bankers, or government). [Okay, the reality
is that the middlemen are the many miners who make the network work... But they are 100% decentralized. And they are not going to take lightly to being asked to steal from someone like them, to help a central government somewhere].
Anyways. Flame me all you want. There were CROWDS admonishing Tesla/Edison for electricity. For 20yrs, everyone thought automobiles were STUPID and unreliable.
But getting someone from the Gulch to dig in, and ask... What will this change?
Because, as Mr. Saylor says... Nobody who spends the 100hrs researching this is still a skeptic.
Personally, MSTR (his stock) is booming because of him converting his cash holdings into BTC.
Also, the "bankers" told him "cash is trash" and that "you need to carry lots of debt to get better valuations". I mention this, because MANY of you naysayers are fully invested in the stock/bond market, a system that is PROVABLY a ponzi scheme with Counter-Party Risks, and subject to the Great Taking... (your deposits in your bank... COME LAST to the borrowing the bank has done at the Fed Window or with other banking institutions. Yes, the FDIC protects you).
Now, I am not saying it will be SMOOTH sailing for BTC. it will continue to chop around.
But if we are at $100K / BTC now. And the USA starts to accumulate, And 50 other companies are starting to do what MSTR did, so that they can hold BTC instead of depreciating cash.
You owe it to yourself to consider having some as a hedge against the coming inflation.
If you want to play around. Consider using IBIT. I have this in an IRA. For months, I traded it (long bias only), on the swings up and down. When it broke out, I bought a bunch and I will hold until I think we switch to sideways action. Probably 100-200 days from now. These are LONG SLOW Cycles. Don't try to get rich quick.
But IBIT makes it easy to play with. With very low fees if you do trade it.
(FWIW, I won't trade my BTC, never have). I just use IBIT to capture the volatility.
Because I am CONFIDENT that 3,5,9, 15 years from now. It will be higher than it is today!
From a market guessing standpoint. I could be 100% wrong. But I assume they will push this to about 125K and then we will get a big correction. At least down to 100K. And then the market will go sideways for 180+ days, maybe longer.
Does it require Electricity and Internet? Yeah... That's why it's not for the Mad Max Future.
That's what gives it a downside risk to $0.
But quite frankly, in the Mad Max future... I am not sure how much your gold will buy you when you run out of ammo to protect it.
The link I am referencing to is worth watching. Michael Saylor says it best.
When you spend little to no time looking into BTC, you know it's a ponzi scheme.
Then after a good 10-20 hrs of actually studying what BTC is. you start to realize...
BTC is the digitization of MONEY. Just like Digital Cameras destroyed Kodak.
Digital Money will destroy paper currency.
He goes on to say, nobody who spends 100hrs actually researching/studying BTC,
Walks away a critic of BTC.
I know the Gulch is stock full of older patrons who shall not believe.
And I am okay with that. If I can get a few of you to LIKEN this "concept" to
the concepts of Harnessing Fire, or Electricity, or the Internal Combustion Engine.
You might wake up that part of you that realize that this "creates future opportunities",
that can be done without MIDDLEMEN (bankers, or government). [Okay, the reality
is that the middlemen are the many miners who make the network work... But they are 100% decentralized. And they are not going to take lightly to being asked to steal from someone like them, to help a central government somewhere].
Anyways. Flame me all you want. There were CROWDS admonishing Tesla/Edison for electricity. For 20yrs, everyone thought automobiles were STUPID and unreliable.
But getting someone from the Gulch to dig in, and ask... What will this change?
Because, as Mr. Saylor says... Nobody who spends the 100hrs researching this is still a skeptic.
Personally, MSTR (his stock) is booming because of him converting his cash holdings into BTC.
Also, the "bankers" told him "cash is trash" and that "you need to carry lots of debt to get better valuations". I mention this, because MANY of you naysayers are fully invested in the stock/bond market, a system that is PROVABLY a ponzi scheme with Counter-Party Risks, and subject to the Great Taking... (your deposits in your bank... COME LAST to the borrowing the bank has done at the Fed Window or with other banking institutions. Yes, the FDIC protects you).
Now, I am not saying it will be SMOOTH sailing for BTC. it will continue to chop around.
But if we are at $100K / BTC now. And the USA starts to accumulate, And 50 other companies are starting to do what MSTR did, so that they can hold BTC instead of depreciating cash.
You owe it to yourself to consider having some as a hedge against the coming inflation.
If you want to play around. Consider using IBIT. I have this in an IRA. For months, I traded it (long bias only), on the swings up and down. When it broke out, I bought a bunch and I will hold until I think we switch to sideways action. Probably 100-200 days from now. These are LONG SLOW Cycles. Don't try to get rich quick.
But IBIT makes it easy to play with. With very low fees if you do trade it.
(FWIW, I won't trade my BTC, never have). I just use IBIT to capture the volatility.
Because I am CONFIDENT that 3,5,9, 15 years from now. It will be higher than it is today!
From a market guessing standpoint. I could be 100% wrong. But I assume they will push this to about 125K and then we will get a big correction. At least down to 100K. And then the market will go sideways for 180+ days, maybe longer.
Does it require Electricity and Internet? Yeah... That's why it's not for the Mad Max Future.
That's what gives it a downside risk to $0.
But quite frankly, in the Mad Max future... I am not sure how much your gold will buy you when you run out of ammo to protect it.
Previous comments... You are currently on page 2.
Yes, there is economic driven deflation.
That's usually "bad", but I think we have been mis-educated on that, by bankers who profit from inflation.
But the point is. Over time, processes improve and costs come down.
Look at the price of a bushel of corn for the last 30 years. BEFORE you do. Ask yourself how much HIGHER or LOWER you expect it was in the past?
Innovation will drive the cost of production lower. It's a COMPLAINT of many about Capitalism destroying things. It destroys inefficiencies.
It rewards innovation.
FWIW, sounds money means the interest rate is your signal. Risky things cost more to borrow than non-risky things. All of this is lost in todays world.
My entire DB is nothing but Zeroes and Ones.
It is the people in the network of consumer/users that give information any value (and anything else) value.
This is the point. We have Digitized Photos and replaced Kodak with instagram/facebook.
We digitized Office Memos with Emails.
We now sign Digital Documents instead of overnighting packages around (having been in the Mortgage Business).
Now, we are talking about Digitizing Money and Money Transfer. I pay people throughout the world. It's a NIGHTMARE and frought with fees.
I look forward to sending them payments via Crypto. Unfortunately, it's illegal in many places, and it's impossible to convert out of in other places.
The Old Bankers will not give up control easily.
This is the beginning of the change.
The price of BTC certainly impacts the number of people who will MINE BTC. As the price rises, it attracts more miners. But if mining cannot break even, then people will do what I did. Just buy BTC. Like any investment, there are a range of people who do it, all with different RETURNS in mind.
But you are 100% correct. The difficulty changes, it's an adaptive system. It strives to find an equilibrium. I think it is genius. If it failed to do this, it would be too easy to game the system.
The floor, again, shows up virtually. If miners are stubborn because BTC is at some crazy low. They will pull the BTC and sit on it for a few months. I don't know many miners who are living in such a way, that they NEED the BTC payment to cover the electricity each month. Maybe it was just me... But I considered Mining as a way of DCA (Dollar Cost Averaging) into BTC via Electricity Purchases. I was buying energy, getting BTC.
As someone with SOME market experience. I want to collect this when others are selling (through lows), and sell this when it is rising.
Or, I just want to hold it.
Any miner who constantly saved 10% of the BTC forever is probably really happy. But have been pretty sad at times! LOL.
Also, these adjustments are not instantaneous, but I admit, I don't know how quickly they change the difficulty.
My idea was to allow minting of new token ONLY when it is backed by something of value in the real world. The rule would be that it cannot be rehypothicated and must be owned outright by the person minting the token. Its value would need to be insured by a trusted party (insurance provider). In the event that the value falls below the value of the token, the insurance company (first) and the owner of the property (second) would be on the hook to (automatically) replace the devalued token with some other token that has the right amount of value.
The whole idea is rather long and difficult to explain in a short post, however, the reason why it will work is because the value of tokens would be held constant by the fact that there cannot be more tokens than wealth that can be bought and sold for those tokens. Additionally, value insurance providers will (with their contractually obligated actions) hold the token values where they should be, in case there are some fluctuations in the value of wealth backing the tokens. It would work similar to a stablecoin, except for the fact that actual wealth backs it and not USD and that everyone could mint it, provided that they own qualified property and have bought insurance for it. Additionally, minting would just mean that you are using your property as collateral for 'credit'. Once you 'pay back', your tokens will go out of existence.
You wouldn't want it if you needed to borrow some money. You would be destroyed.
You don't want to have these surprises. The best currency is one which has neither deflation or inflation. It is fair to everyone.
That is not really deflation. That is just prices going down for a certain good due to increase in its supply. Prices for other goods will either go up to compensate, or money/people will be freed up to create more goods in the system, making everybody more wealthy. We want this kind of thing to happen.
Deflation is when there is generally less money to go around than there was before. This causes ALL prices to go down more or less at the same time. It also causes economic issues/inefficiencies, which is bad. People get laid off for no good reason, etc. Deflation is a false economic signal.
It's currently worth around $2,200. Not too bad.
Unfortunately what we're really up against here is a paradigm shift. You need to start thinking in Bitcoin in the denominator instead of USD(Federal Reserve Note) in the denominator. We have lived our whole lives thinking the existing way so it's very very difficult to change the underlying thinking. Thomas S. Kuhn wrote a book in the 60's called "The Structure of Scientific Revolutions". In it he discusses WHY it's so hard to change thinking. TLDR; most people who embody the existing thinking must pass away before the new thinking can truly take hold. Worth a read...
I love the way it works now!
I want my SAVINGS to be deflationary. I should not work for 30yrs, saving 1/3rd of my salary, only to find that instead of having 20yrs of "living expenses", I have 3-5.
Eventually, when enough people have some of it, the price will stabilize. The creation of ETFs like IBIT mean that many people can hold a proxy.
But this entire ecosystem would have to be driven to zero. Part of the concept here is that the "network" has the value.
The very people who 5 years ago said it was "garbage", are now investing in it. What changed for Blackrock, Jamie Dimon, etc?
There are thousands of alternative tokens out there. Most are pure junk. Some will link/attach to services and find their niche.
But I believe BTC holds the "Large Scale Network with Scarcity and Trust Niche"...
BTW, I think it's impossible to create something that has neither inflation nor deflation. Whenever the banks do this, they use debt, and borrow against debt. As though that isn't inflationary.
In order for this relocation to happen, you need to find someone to buy it from you. So, somebody is going to be left holding the bag. It will not be like with gold. If you hold gold and its monetary use disappears, at least there is an alternative market to sell it in. Maybe not right way, but eventually. This wouldn't be the case with BTC.
Still, the downward pressure on btc price, if there is one that is significant, does not relate in any way to the cost of energy and hardware. There is a constant amount of new BTC that is added in a given day because there is constant amount of coins that are minted per block and a constant number of blocks that are added per day, and adding or removing mining rigs doesn't change it. So, the btc network might spend a quintillion gigawatts mining bitcoin (and spend all the world resources) but you still end up with the same mount of newly minted coins per unit of time. This is because of automatic difficulty adjustment.
So, again, the effort and energy you put in does not matter to the price of bitcoin. There is no connection between the price of bitcoin and the price of energy and hardware. As price of bitcoin goes up, mining becomes more profitable and more miners join the network, however, that makes the difficulty go up and profitability falls back down because it takes more energy to earn the same amount of bitcoin. So, it used to take x effort to make y bitcoin but now it might take 2*x effort to make y bitcoin. This means that y bitcoin does not equal x effort.
So, there is no "floor". It keeps moving with the price of bitcoin.
Do correct me if I am wrong.
The thing is, the btc is not tied to any value in the physical world whatsoever. So, these miners are not really producing anything of value. Maybe we can create a cryptocurrency that will replace arbitrary 0s-in-hash search with compute jobs from people that attach payments to solving the search itself? I don't know, just a random idea. Still, that will not give 'alternative' value to the produced tokens but at least the energy would be spent more wisely.
So, the problem still stands, there is no non-monetary (alternative) use for these tokens. Nothing is stopping their make-believe value from crashing. As soon as people decide to use something else, the stuff will go to zero.
Who knows, anything can happen. I don't see anything special about bitcoin that would keep it popular forever.
If nuclear war was to happen and the internet was to segment, the blockchain would split into multiple branches. At that toint you might have BTC-North America, BTC- Eurasia, BTC-Africa, BTC-South America.
As a hacker who has hacked on the blockchain for a while... I can tell you why. Because your wallet address is only PART of the hash of your public key. it's impossible to determine which public key created that specific wallet address.
But the moment you transact. You expose your public key. And that is the piece that the Quantum computers will attack. (Although I am doubtful they will ever really work).
Right now BTC uses 256 bit keys. They could always increase this, and have 2 sets of addresses, which would enable the old "hidden/secure" wallets to hold on, until they transfer out. This will be solved. There is too much money to protect.
So, if that doesn't drive people to relocate their assets out of BTC. For me, it would be transaction fees. But aside from that. As it makes it into more peoples hands. As banks start to let people borrow against it as collateral. I think there will be a pretty solid stream of new people using it.
But I could be wrong.
We may wake up one day and find that it went the way of MySpace. And the government will be just as involved in trying to make it happen.
You can if it is jewelry or a watch. Or a paper certificate. Or something like Tether Gold (XAUT).
This is not good. Bitcoin is basically a bit of a ponzi scheme unless you can somehow manage to keep it going forever.
When quantum computers become powerful enough, it is possible everyone will rush to dump btc because it would be possible to steal it out of wallets. I guess maybe by that time the btc devs will switch to quantum-resistant algos, but i'm not sure if that will solve the issue completely.
Anyway, the day of reckoning will eventually arrive.
One thing that will be interesting is see how fees are handled when the last few BTC are mined. Because we need that Army of Computers keeping the register.
I had to do the math. Basically, once you have a MINER you are Dollar Cost Averaging your purchases of BTC by spending Electricity. It takes about 2yrs to recoup the cost of your miner. And you can get another 2yrs out of it with declining returns (hashrate losses).
In the end, I just bought some more BTC.
But I was more than willing to be a miner based on getting low electricity prices. That's some of the stuff that blew up. Turns out, the companies building out server farms were over selling their electricity assuming people do NOT max out. But EVERY Miner runs pretty much maxed out.
FWIW, I believe it's Iceland where there is a building that uses BTC Miners to warm the building. Interesting ideas.
Again, I am very certain that you will have a tough time "finding that replacement". Because, in all honesty, who is going to create it? Someone cloning BTC? What's the "draw?". Who would sell 1 BTC to buy BTC-Black, Red or Blue? Nobody.
I think you understand BTC, but not the future, and simply not the "brand". the US Dollar has value because many people will take it.
Once BTC is more widely used (at about 10x pricing from today), it will shed the volatility. All young markets are volatile.
But we disagree on ONE key point. That someone just "creates another" similar crypto that dethrones BTC. Good luck.
Now, Haderra or other crypto that have different offerings? Oh, yeah. They will come along and grow.
For example. if Brics did a Crypto. MAYBE it could really take off and threaten BTC. Because they could push so much money into it, and it would have value representing their OIL sales/purchases/trade. But I think that stands NEXT to BTC. I would certainly buy some BRICS Crypto if I had the chance.
We are so early in Crypto. Imagine there are less than 22 Million coins. And 7 billion People. There are not enough BTC for each COMPANY in the world to own 1.
It is good that they are paying off debts but it is bad that they didn't earn the funds that they are paying with. There will be bag holders in this situation.
Government payments should not exist because government should not exist.
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