Do you plan to pay for your TM3 with Bitcoins?

[timk225]

YES. The fundamentals of blockchain make a lot of sense compared to a fiat currency that can be infinitely devalued.

I think there's a difference between a coin becoming a universally accepted medium of exchange, and blockchain technology becoming widely used. I can see the use case for anything financial being done on a blockchain, but I don't think that guarantees that any one coin will become THE coin, or even rise substantially in value.

So I'm letting the big money investors, speculators, and the average small investor pump the prices up for me to make my profits on. There's been talk that the big price boom of late 2017 was arranged by people using Tether and other stablecoins and artificially pumping the price. I don't care if they did or not, as long as I can make a nice profit out of it.

 

[dhanson865]

Look at how much the FDIC has set aside for account protection compared to how many accounts (and the sum of their values).. if there was a bank run (which has happened multiple times in the history of our country) the FDIC will be woefully inadequate and incapable of protrctipr of all the accounts they say they protect. Your example is a single situation. My example is systemic bank run... Which is not unheard of.

FDIC is to banks what health insurance is to an individual. Your example is death of the system.

Your example is like saying Blue Cross is worthless if someone kills everyone in the world. My example is insurance paying for something like a measles outbreak.

If the whole system goes down I'm not going to be worrying about FDIC, I'm going to be worrying about the zombies or the nuclear bombs or whatever.

 

[kbecks13]

FDIC is to banks what health insurance is to an individual. Your example is death of the system. My example is insurance for keeping things going after a non life threatening incident.

If the whole system goes down I'm not going to be worrying about FDIC, I'm going to be worrying about the zombies or the nuclear bombs or whatever.

The problem with that comparison is that a bank run has a ridiculously positive feedback loop from people getting scared when they hear the news about a singular bank or organization. That can quickly turn a small run/collapse into a massive one and it's happened many times before.

I can't really think of a similar snowball effect with healthcare and the only real similarities are that both FDIC and Health Insurance are a form of insurance, but the failure modes for the things which they cover are quite different.

 

[dhanson865]

The problem with that comparison is that a bank run has a ridiculously positive feedback loop from people getting scared when they hear the news about a singular bank or organization. That can quickly turn a small run/collapse into a massive one and it's happened many times before.

I can't really think of a similar snowball effect with healthcare and the only real similarities are that both FDIC and Health Insurance are a form of insurance, but the failure modes for the things which they cover are quite different.

FDIC protects me from a corrupt or failing bank. Fees I pay to the banks indirectly pay FDIC.

My health insurance will similarly protect me from a corrupt or failing hospital. If one started billing me crazy amounts the health insurance covers anything above my deductible and has lawyers on staff to defend against fraud and ineptitude. I pay the fees to the insurance company instead of the hospital for that protection so it differs in structure but the effect is similar.

It's not a perfect 1:1 correlation but they do protect me in similar ways.

 

[SeminoleFSU]

FDIC is to banks what health insurance is to an individual. Your example is death of the system.

Your example is like saying Blue Cross is worthless if someone kills everyone in the world. My example is insurance paying for something like a measles outbreak.

If the whole system goes down I'm not going to be worrying about FDIC, I'm going to be worrying about the zombies or the nuclear bombs or whatever.

The point is systemic or not the FDIC is woefully underfunded compared to the value of all the accounts out there it is set up to protect. It wouldn't take a full financial meltdown, a partial would do it because it's only funded to cover a tiny fraction of all the accounts. It's just another confidence builder for folks when the walk into the bank and see the sticker on the door

 

[kbecks13]

It's just another confidence builder for folks when the walk into the bank and see the sticker on the door

Unfortunately i'm of the belief that most people have no idea what the FDIC is, how fractional reserve banking works and probably also still think the gold standard is a thing. I put my money in this place and they just hold it for me, what could go wrong!

 

[dhanson865]

The point is systemic or not the FDIC is woefully underfunded compared to the value of all the accounts out there it is set up to protect. It wouldn't take a full financial meltdown, a partial would do it because it's only funded to cover a tiny fraction of all the accounts. It's just another confidence builder for folks when the walk into the bank and see the sticker on the door

Same goes for any other insurance in the world. Maybe you haven't seen what happens to home owners insurance companies in hurricane zones. Any large change in the expected behavior can overload any insurance company. They run on averages, statistics, probability, but they aren't impervious to a run that will flush out the reserves.

Policyholders in Limbo After Rare Failure of Insurer

Saying that you can make a run on the banks and flush them well past FDIC coverage is no new idea and doesn't negate the value that FDIC has in the current system.

 

[kbecks13]

Same goes for any other insurance in the world. Maybe you haven't seen what happens to home owners insurance companies in hurricane zones. Any large change in the expected behavior can overload any insurance company.

But here's a key difference - does one person submitting a claim for hurricane damage on their home cause additional claims to be created? It does not. However this definitely happens with a bank run. If enough people "submit claims" (ask for their money back), then it can cause additional people to do the same as panic sets in. This is the positive feedback loop i referenced before, it creates an exponential rate of withdrawals.

 

[dhanson865]

But here's a key difference - does one person submitting a claim for hurricane damage on their home cause additional claims to be created? It does not. However this definitely happens with a bank run. If enough people "submit claims" (ask for their money back), then it can cause additional people to do the same as panic sets in.

no because if the confidence in the institution hits that point it fails either way (bank or other types of insurance).

Tell me what situation is going to cause the run on the bank that is also going to cause a run on all of the banks? That also somehow doesn't turn the world upside down to the point that it's a non issue.

Not just the concept of a feedback loop. But a scenario I'm supposed to worry about that takes out my bank, enough other banks such that FDIC folds, and yet my house, city, and job are OK and I'm still worried about my bank and the fact that I lost funds. That some how makes me say "darn if only I didn't trust banks, I'd be just rich as could be during this disaster".

I'm thinking if FDIC went under all my stocks and 401k investments are pretty much worthless too. Is there rioting is the streets, did my house burn down? Am I looking for a place to sleep after this disaster?

 

[SageBrush]

Policyholders in Limbo After Rare Failure of Insurer

LTC "insurance" is, and always has been, an oxymoron.
There is no risk dispersal if everybody submits a claim; the only game afoot is how big a claim and that uncertainty is drowned by market dynamics.

 

[dhanson865]

sold in december or now? better to wait a month or two. i think 1 btc == 1 M3 is soonish.

(i admit to being a bit of a bitcoin maximalist)

You think bitcoin (BTC) will be above $30,000 any time in 2018?

If it even got to $20,000 again I'd sell another chunk, and again at $25,000. But since it's under $10,000 right now I'm not holding my breath.

Looks like BTC is getting closer to parity with a Model 3 price. Still no guarantee on that ratio. Might have to use between 1 and 2 BTC to buy one Tesla.

 

[RobRain]

Haven’t read the whole of this thread, so maybe this has been suggested before.

Put some of your coins into Celsius (BTC Rewards | 1% Loan | Crypto Lending | Celsius) and take a USD loan. Your coins are used as collateral (and changes in their value are taken into account, on request) and are returned to you at the end of the loan. Minimum period is six months.

Any coins not used for collateral earn interest either in CEL (Celsius’ token) or in kind. Better rates of interest (on loans and deposits) are offered if your ratio of CEL holdings to other coins goes above several thresholds, starting at 5%. Currently CEL is gaining value rapidly in its own right, so the opportunity cost of converting BTC to CEL is minimal.

Do your own research, but I’ve found them to be a solid operation. Restrictions do apply to US customers and the UK government has recently made crypto loans deeply unattractive (basically turned them into tax events). But for some crypto-rich people this is a good way to use your appreciating coins without losing them. You’ve obviously got to pay off the loan!

I’ve got a referral code if anyone does choose to go down that route. Full disclosure: I’m a reasonably large customer of Celsius (only deposits, no loans currently) and all customers gain as more people join (price of CEL rises, inter alia). That probably triggers some people’s “It’s a Ponzi scheme “ alert. Take a look at their materials, especially their weekly AMAs with the CEO before judging, but no worries either way.

 

[kbecks13]

Looks like BTC is getting closer to parity with a Model 3 price. Still no guarantee on that ratio. Might have to use between 1 and 2 BTC to buy one Tesla.

Amazing how high Bitcoin is climbing without too much coverage or general awareness, check Google Trends over last 5 years and you can see this quantifiably.

Really wish Tesla would less us pay with it too, unless i'm mistaken paying for a car with BTC would let you realize their current market value without paying capital gains tax.

 

[Gasman23]

Really wish Tesla would less us pay with it too, unless i'm mistaken paying for a car with BTC would let you realize their current market value without paying capital gains tax.

pretty sure this would be taxable as you are disposing of your Bitcoin

 

[kbecks13]

pretty sure this would be taxable as you are disposing of your Bitcoin

Yea thinking more about it i think you're right, though with smaller transactions people typically don't report or pay the gains i would imagine. For a car, that's a bit different.

 

[dhanson865]

Yeah, I haven't done my 2020 or 2021 taxes yet but I may end up paying capital gains tax this time around.

It's a shame BTC tanked in 2018 I could have sold some tax free in that year but didn't want to because the price had dropped so much. Better to sell it at ~$20,000 and pay capital gains than to sell it at ~$10,000 tax free.

Someone could live off selling BTC at a rate of $80,000 a year and not pay capital gains on it. In many parts of the country that's a nice retirement income

 

[daniel]

Haven’t read the whole of this thread, so maybe this has been suggested before.

Put some of your coins into Celsius (BTC Rewards | 1% Loan | Crypto Lending | Celsius) and take a USD loan. Your coins are used as collateral (and changes in their value are taken into account, on request) and are returned to you at the end of the loan. Minimum period is six months.

Any coins not used for collateral earn interest either in CEL (Celsius’ token) or in kind. Better rates of interest (on loans and deposits) are offered if your ratio of CEL holdings to other coins goes above several thresholds, starting at 5%. Currently CEL is gaining value rapidly in its own right, so the opportunity cost of converting BTC to CEL is minimal.

Do your own research, but I’ve found them to be a solid operation. Restrictions do apply to US customers and the UK government has recently made crypto loans deeply unattractive (basically turned them into tax events). But for some crypto-rich people this is a good way to use your appreciating coins without losing them. You’ve obviously got to pay off the loan!

I’ve got a referral code if anyone does choose to go down that route. Full disclosure: I’m a reasonably large customer of Celsius (only deposits, no loans currently) and all customers gain as more people join (price of CEL rises, inter alia). That probably triggers some people’s “It’s a Ponzi scheme “ alert. Take a look at their materials, especially their weekly AMAs with the CEO before judging, but no worries either way.

My question is: How are they generating the money for the interest payments on your deposits? Banks do it by lending out money at interest, and paying depositors a portion of that interest. I've seen commentary that Celsius or companies like it are using new deposits to pay interest on older deposits. If true, that's the very definition of a Ponzi scheme.

Here's my concern: Money is used by businesses to buy machinery and raw materials to make finished products which can be sold at a profit, thereby creating value. That value allows payment of interest on the loans of the money used to buy that machinery and raw materials. This works because money is the medium of exchange that allows trade to operate. Consumers borrow money to buy cars, houses, etc., and work to earn money to pay off the loans. Again, this works because people can buy cars and houses with money, and they are paid in money for the work they do.

Bitcoin and other cryptocurrencies are not being used to buy machinery or raw products; it is not being used to buy houses or cars or to pay workers for their labor. Theoretically, it could be, but it isn't. So where is the Bitcoin coming from that pays interest on deposits in companies like Celsius? I've seen commentary that says it's coming from new deposits. They're offering to pay 6.2% APY on Bitcoin deposits. This is junk bond territory. It looks too good to be true, to me. And when something looks too good to be true, it's probably not true.

 

[RobRain]

My question is: How are they generating the money for the interest payments on your deposits? Banks do it by lending out money at interest, and paying depositors a portion of that interest. I've seen commentary that Celsius or companies like it are using new deposits to pay interest on older deposits. If true, that's the very definition of a Ponzi scheme.

Celsius works exactly the same way as banks - they lend the coins out, take interest and pay it out to depositors. They lend a lower proportion of it than banks do typically (ie the ratio is safer) and they pay out more of it in interest. They're less profitable than banks, proportionally, but their depositors get a better rate. One neat wrinkle is that if you take your interest in CEL (and that's where the highest rates are, like the BTC one you quote), then the company has to buy that interest off the market each week, which obviously has a beneficial effect on the CEL price over time (given a fixed total supply).

Other interest-paying products exist and some of them are extremely dodgy. I would be surprised if anyone immediately jumped into Celsius today - skepticism is essential and it took me about six months to satisfy myself and pluck up the courage. Like I say, it's no worries to me either way, DYOR etc. I simply offer it as another option to consider.

 

[AxlxA]

If I start seeing btc mentioned outside of my news feed, it means it is gaining interests again. It's time to buy and hodl. Too bad I don't have much cash around after buying $TSLA.

 

[dhanson865]

If I start seeing btc mentioned outside of my news feed, it means it is gaining interests again. It's time to buy and hodl. Too bad I don't have much cash around after buying $TSLA.

I've never bought bitcoin, I only sell it.

I have bought TSLA, multiple times in fact. Have not sold TSLA yet.