Bitcoin, Cryptocurrency and Blockchain Discussion Thread

[pz1975]

Just resurrecting this thread. Someone posted a nice ARK analysis of Bitcoin today (sorry I didn't keep track of who it was so I can't reference you).

https://research.ark-invest.com/hub...4ccf80ec|07365ce1-0ed3-4835-9c3c-ac33c030cd70

I have been contemplating investing 5-10% of my portfolio in Bitcoin as a long-term diversification and hedge to my TSLA and real estate investments. ARK is quite bullish on it in this report and predicts a 5-25x return in the next 5 years.

I am a newbie about this, however, and with the amount I want to invest, I want to make sure I do it properly in terms of safety, security and minimizing fees. Can anyone recommend the best/safest (while still not being overly complicated) method to buy and hold Bitcoin (I am Canadian - not sure if that makes a difference)? I assume this info could be useful for others on the forum here.

 

[Sanny]

Not a new to bitcoin or crypto, but sold it all when decided for myself that it is not what crypto people hype it to be, and often the opposite.
1) My biggest concern is that I believe now it is super centralized and owned by whales that created some form of oligopoly. An opposite to decentralised dreams of the crypto community.
Also, the infrastructure is super centralized also - all remaining large exchanges are centralised, so basically you invest in a mix of bitfinex, kraken, coinbase, etc - not sure all of those exist now
2) Also, I do not find ARK's 10 year correlation charts convincing - there were no crypto to speek of 10 years ago. For me the fact that it dropped with the markets and shoot back with the markets in March 2020 says that bitcoin is not a asset for the day when economy collapses (which was always a big part of the hype).
3) The last part is network scaling and transactions cost - but I did not update myself on this for the last 2 years and I know that there were some developments on that front. Last time I checked it was cheaper to settle on Visa network then on bitcoin blockchain, maybe it changed.

Overall, position on crypto is what makes me to stay away from ARK - to me their analysis looks shallow, not sure they even understand the right questions (imo of course).
Prove me wrong, will be happy to be wrong on this one, I want to beilive in Kathy Woods because we both want TSLA to hit $7000 at least

 

[Az_Rael]

Just resurrecting this thread. Someone posted a nice ARK analysis of Bitcoin today (sorry I didn't keep track of who it was so I can't reference you).

https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARKinvest_091729_Whitepaper_Bitcoin_II_An Investment.pdf?hsCtaTracking=71be7529-9a39-404e-97b3-04fd4ccf80ec|07365ce1-0ed3-4835-9c3c-ac33c030cd70

I have been contemplating investing 5-10% of my portfolio in Bitcoin as a long-term diversification and hedge to my TSLA and real estate investments. ARK is quite bullish on it in this report and predicts a 5-25x return in the next 5 years.

I am a newbie about this, however, and with the amount I want to invest, I want to make sure I do it properly in terms of safety, security and minimizing fees. Can anyone recommend the best/safest (while still not being overly complicated) method to buy and hold Bitcoin (I am Canadian - not sure if that makes a difference)? I assume this info could be useful for others on the forum here.

I am no expert, but I recommend a hardware wallet for coin storage. I use Ledger for mine. To buy and sell, I normally just use Coinbase. I transfer the coins to/from my hardware wallet from coinbase. You kinda have to do the equivalent of keeping your coins in your mattress (hardware wallet) because of all the rampant hacking and fraud.

One of the biggest things to watch out for is fake websites - never click the Google Ad link to a big website which usually shows first in the search. Oh, and buy your hardware wallet from the source. Not eBay, etc.

 

[adiggs]

Maybe I'm missing something - I know that bitcoin isn't exactly the same as currency investing, but aren't most of the same currency investing dynamics present here?

If so, then I'd be sure I understood currency investment dynamics before I partook. And I know up front that currency investing is definitely something I don't know, so I don't partake.

 

[bkp_duke]

Maybe I'm missing something - I know that bitcoin isn't exactly the same as currency investing, but aren't most of the same currency investing dynamics present here?

If so, then I'd be sure I understood currency investment dynamics before I partook. And I know up front that currency investing is definitely something I don't know, so I don't partake.

More like currency dynamics of the 1800s.

BTC is so volatile, it's like a hot mess mix of stocks and currency. The smallest rumor can cause a 30% swing (see those 1-2 times per year it seems).

 

[Lloyd]

I believe that the United States needs to develop its own crypto currency in two forms. 1. US crypto backed by the US government. 2. US crypto backed by Gold.

This will sort of put us back on the gold standard, and help the US keep its Dollar as being the primary monitary currency.

 

[dhanson865]

Maybe I'm missing something - I know that bitcoin isn't exactly the same as currency investing, but aren't most of the same currency investing dynamics present here?

If so, then I'd be sure I understood currency investment dynamics before I partook. And I know up front that currency investing is definitely something I don't know, so I don't partake.

That depends on if you mine or buy. Either way you have to Sell at some point and bkp_duke covered that well enough.

I mined in 2011/2012 so my basis is very low, but I didn't do much because I had no reason to believe it would ever be worth the effort. So my tiny stake I just hold until the price is super high and sell. I can't imagine trying to buy and time the market.

 

[Xepa777]

Several months after the halfening and Bitcoin is making its moves again. Been holding BTC on Coinbase and GBTC in my IRA.

Corporations holding bitcoin instead of letting their cash decay. What's happening with Microstrategy will be followed by many corporations soon, and that's when the next great Bitcoin run will start. It will be institution led -

And that's the Starship that will take Bitcoin (and its hodlers) to the moon.

 

[heltok]

 

[corduroy]

Bitcoin Could Hit $500,000, the Founder and CEO of Ark Invest Says

 

[SpeedyEddy]

you can not take that seriously , considering the falsehood of this other Barron's advice; Buy Nikola Stock Because It’s When, Not If, Hydrogen Tech Is Adopted

 

[corduroy]

you can not take that seriously , considering the falsehood of this other Barron's advice; Buy Nikola Stock Because It’s When, Not If, Hydrogen Tech Is Adopted

Agreed about Barron's, but they was quoting Cathie Wood, who I do take seriously.

I did buy some BTC and Ethereum in Nov and up 40% right now!

 

[SpeedyEddy]

Tesla up 60% in the same period...

 

[BigPeePee]

Tesla up 60% in the same period...

TSLA won't go up 50X from here while bitcoin can.
I view TSLA as a safe 6-8X return + small dividends. It is no longer a 'risky asset' since it's almost guaranteed now that they'll dominate the EV market and robotaxis, so expecting 50X returns is not reasonable.

Bitcoin is still viewed as monopoly money by the masses, so it's still in the beginning stages of adoption. Its price has been incredibly stable for the past few months, so I sense some change that I can't quite quantify yet.

 

[MC3OZ]

I can't understand how bitcon is valued, the market is simply supply and demand, like the real estate market or the art market.

I don't see what stops other crypto currencies disrupting the valuation by providing an alternative supply.

Supply is simply constrained by artificial rules, which I doubt can prevent competition.

Real Estate is limited by physical resource.

Quality art constrained by unique talent, laws which prevent forgeries, and long standing recognition of the artist. At anytime in history the number of living recognized great painters is limited.

Also any unique way of doing financial transactions cheaply, efficently, transparently and securely might be something designed specifically for that purpose.

 

[SpeedyEddy]

Indeed...
Maybe it is about time to talk about the environmental cost of Bitcoin too..
CO2 cost of 88 TERAWATTHOUR a year at this moment, to sustain the blockchain. Ridiculous!
Enough power to run all EV's that exist for 5 years.
Cambridge Bitcoin Electricity Consumption Index (CBECI)

 

[heltok]

I can't understand how bitcon is valued, the market is simply supply and demand, like the real estate market or the art market.

I don't see what stops other crypto currencies disrupting the valuation by providing an alternative supply.

For many crypto currencies there are a fixed supply. You can always fork cryptocurrency, the problem is convincing other people to use your fork. The value of crypto comes from the fact that
1. They are useful
2. They are scarce

Bitcoin and Ethereum happen to be the most useful cryptocurrencies right now, thus they have the most value. Any fork would first have to become useful before they get valuable. I recommend this video to understand money:

 

[MC3OZ]

For many crypto currencies there are a fixed supply. You can always fork cryptocurrency, the problem is convincing other people to use your fork. The value of crypto comes from the fact that
1. They are useful
2. They are scarce

Bitcoin and Ethereum happen to be the most useful cryptocurrencies right now, thus they have the most value. Any fork would first have to become useful before they get valuable. I recommend this video to understand money:

I'm not concerned about inflation / printing money for 3 reasons:-
1. We are entering an era where deflation is more likely than inflation.
2. Inflation only matters between acquiring the money, or investing or spending that money. Typically a short time period...
3. There are many factors in the growth of the money supply..one is the circulation rate of money where a dollar can be deposited in a bank and lent out many times in a short period of time. Printing money is currently probably mostly counteracting a contraction in the money supply.

While it might be useful IMO Bitcon has limited factors which make it more useful than money... I don't think an inflation hedge is one of those properties, .security and high authenticity might be useful properties...

So it still seems to me that most of the value is derived from scarcity, scarcity and relevance don't always last.

He did have some good arguments, I'm still unconvinced, but at least I understand more about it..

In the end all that matters about currency is the social consensus about the value of that currency, at present the social acceptance of Bitcon is a minority view... It doesn't really matter how passionately the minority believe in the currency, what matters is if that minority grows overtime and eventually becomes a majority.

Growing the minority when the value of the currency is rising is easy... What part is inherent demand and what part is speculation? It seems opinions on that can vary from time to time, and values can fluctuate.

 

[heltok]

I'm not concerned about inflation / printing money for 3 reasons:-
1. We are entering an era where deflation is more likely than inflation.
2. Inflation only matters between acquiring the money, or investing or spending that money. Typically a short time period...
3. There are many factors in the growth of the money supply..one is the circulation rate of money where a dollar can be deposited in a bank and lent out many times in a short period of time. Printing money is currently probably mostly counteracting a contraction in the money supply.

While it might be useful IMO Bitcon has limited factors which make it more useful than money... I don't think an inflation hedge is one of those properties, .security and high authenticity might be useful properties...

So it still seems to me that most of the value is derived from scarcity, scarcity and relevance don't always last.

He did have some good arguments, I'm still unconvinced, but at least I understand more about it..

In the end all that matters about currency is the social consensus about the value of that currency, at present the social acceptance of Bitcon is a minority view... It doesn't really matter how passionately the minority believe in the currency, what matters is if that minority grows overtime and eventually becomes a majority.

Growing the minority when the value of the currency is rising is easy... What part is inherent demand and what part is speculation? It seems opinions on that can vary from time to time, and values can fluctuate.

According to Austrian Economics inflation = increase in money supply, Disinflation = slowing down increase of money supply, Deflation = decrease in supply. Thus Bitcoin right now is disinflationary, but will at some point become deflationary(when more new coins are burnt/lost than mined).

I doubt that we will see monetary deflation with USD anytime soon:

(USD M0)

Deflation is good, when prices fall on transistors etc people consume more transistors and are better off for it. It’s a common myth that people consume less as their purchasing power increases. What is not good is events that cause deflation in fiat money, but deflation in itself is good. See for example the 19th century where there was deflation and the economy still grow:

 

[MC3OZ]

According to Austrian Economics inflation = increase in money supply, Disinflation = slowing down increase of money supply, Deflation = decrease in supply. Thus Bitcoin right now is disinflationary, but will at some point become deflationary(when more new coins are burnt/lost than mined).

I doubt that we will see monetary deflation with USD anytime soon:
View attachment 620019
(USD M0)

Deflation is good, when prices fall on transistors etc people consume more transistors and are better off for it. It’s a common myth that people consume less as their purchasing power increases. What is not good is events that cause deflation in fiat money, but deflation in itself is good. See for example the 19th century where there was deflation and the economy still grow:
View attachment 620020

The reasons I'm expecting deflation rather than inflation are:-
1) Wage inflation has largely been tamed and it is hard to see that changing,.
2) Asset values are already inflated - specifically shares and housing.
3) Money is in plentiful supply. - there is no credit crunch
4) The level of household debt is high.- household ability to take on higher debt to fund spending is limited
5) The move to clean energy and transport, lowers the cost of embedded energy in al products.

Households will eek out higher expenditure, not because their income has increased, or their level of debt has gone down, but because the cost of many of their purchases but specifically energy and transport will go down...

Regardless changes in the value of money are transitory unless people are sitting on a big pile of cash.

Most people know they need to invest their cash, those that don't tend to spend their cash..

People are thinking in terms of boom and bust cycles that commodifies Fossil Fuels have, Because the supply can't be increased quickly, so when demand exceeds supply, prices rise and that induces inflation in other prices.

Clean energy is naturally abundant closer to a surplus than an shortage, what is needed are efficient ways to turn that energy into products and food.. Excess is deflationary and a good thing, as everyone is more likely to get a share.

I only like scarcity in things that are truly exceptional, which is fine art, fine wine and food, exceptionally well made hand made goods or quality antiques. The exceptional quality of the good fully justifies the scarcity.

My view on Bitcon is it may be scarce, but it is not exceptional.

We are in an era of rapid change unlike any previous era of human history, being able to think for ourselves, and carefully consider where our money is invested is a useful tool.

Deflation and abundance is a hard concept for people to understand, in all of human history it is very rare, that is because there was always a resource that was rare. A lot of that rarity was due to the cost of energy, transport and work.
When cheap energy powers robots, and transport costs are lower, there is an opportunity to lower prices.