Finally gave in….first crypto purchase today

[SecondAttempt]

Nothing criminal about wanting to store and preserve wealth against a declining currency. Some people prefer gold or TIPS, but far more people are moving towards Bitcoin due to is numerous advantages over other assets that one would traditionally use for this purpose.

Can you explain wha the advantages of bitcoin are for storing value, i.e. maintaing a stable price over time? Seems like you are conflating speculative gains (rising price) with value stability (stable price).

 

[SecondAttempt]

I do not think many people agree that the US dollar (or other currencies) has been a good store of value lately. Do you not consider inflation to be a problem?

The US dollar has not maintained a stable price against many goods and services. It is clearly losing value dont you think?

I am not convinced we face long term inflation. Everything is screwed up right now but I expect things to settle down in a couple more years for reasons explained in another thread.

If you believe the price of gold reveals true inflation (and I don't) then it is NOT suggesting significan inflation right now.

But even if we have inflation, money market fund has been much more stable than the wild swings of bitcoin.

 

[MichaelB]

I do not think many people agree that the US dollar (or other currencies) has been a good store of value lately. Do you not consider inflation to be a problem?

The US dollar has not maintained a stable price against many goods and services. It is clearly losing value dont you think?

Over the past 50 years more people have enjoyed greater prosperity than any other time in human history, and one of the critical factors contributing to this has been the US$. It currently is the most widely held means to store value in the world and it’s performance in that role has been magnificent and unparalleled.

Just throwing out terms like inflation and monetary collapse is no substitute for hard fact and data based analysis. The case for cryptocurrency made in this thread sounds more evangelical than financial and is still unsupported. Despite all the rhetoric, hipster language, and generational shaming, the case for owning cryptocurrency has not been made and is certainly not compelling, If anything, the risk is totally unsuitable for retired people.

 

[steelyman]

I hold a small amount of crypto. About enough that I wouldn’t care if its value went to zero.

 

[SecondAttempt]

It is actually are very smart "Ponzi like" scheme. The creators of a "coin" have the easiest time mining the coin. Hopefully it gains traction and they can dump out for large gains. There is a huge incentive to create alt coins in crypto. Eventually the entire space gets diluted with new alts hoping to unseat the established "coins". Supply is basically unlimited.

That's how I am beginning to see the situation. There are over 13,000 different crypto currencies now. Each draws real money at some point and most will collapsee for lack of interest. Bitcoin will likely survive for a while and probably will be the last one standing.

But once governments figure out how to trace transactions (and there is good reason to believe the US already has) there will be little reason to own crypto and the bottom will fall out.

Unlimited supply + no demand = 0 value.

 

[captain3d]

I am not convinced we face long term inflation. Everything is screwed up right now but I expect things to settle down in a couple more years for reasons explained in another thread.

If you believe the price of gold reveals true inflation (and I don't) then it is NOT suggesting significan inflation right now.

But even if we have inflation, money market fund has been much more stable than the wild swings of bitcoin.

But inflation is long term. I do not mean hyper. I just mean looking back in time prices are always cheaper. No one on this forum would recommend holding your retirement money in cash long term.

When you talk about stability you are measuring $ against $. Of course that is stable. If you took Bitcoin and measure it with Bitcoin it is stable also.

If you take the $ and measure it against anything else it is not very stable and is losing value all the time. That is why we all buy stocks, bonds etc to counteract the loss of value.

 

[captain3d]

Over the past 50 years more people have enjoyed greater prosperity than any other time in human history, and one of the critical factors contributing to this has been the US$.

But I know you are not recommending that people stay in an all cash position for 50 years. That would have been a terrible idea.

 

[SecondAttempt]

But inflation is long term. I do not mean hyper. I just mean looking back in time prices are always cheaper. No one on this forum would recommend holding your retirement money in cash long term.

When you talk about stability you are measuring $ against $. Of course that is stable. If you took Bitcoin and measure it with Bitcoin it is stable also.

If you take the $ and measure it against anything else it is not very stable and is losing value all the time. That is why we all buy stocks, bonds etc to counteract the loss of value.

I think going forward we will see inflation at around 2-3%. Compared to the wild swings of bitcoin (declined ~30% over 2 weeks this past May) 2-3% is manageable. And in any case, a basket of stocks will save you from inflation. Bitcoin is not a reliable hedge.

 

[Andre1969]

Well, after reading through these posts, I took the plunge today, and bought some BRPHF. So, if I lose my shirt, I have nobody to blame but.... MYSELF!!

Seriously though, I only bought 50 shares, so I'm into it for about $1,325. If I lose it all, it's a tax writeoff. And if it soars, well, let it fly!

 

[captain3d]

But once governments figure out how to trace transactions (and there is good reason to believe the US already has) there will be little reason to own crypto and the bottom will fall out.

All transactions are public. You do not have to figure out how to track them it is there in plain view from one wallet to the other.

 

[SecondAttempt]

All transactions are public. You do not have to figure out how to track them it is there in plain view from one wallet to the other.

And those wallets can, or soon will be, traceable to individuals. At that point bitcoin is useless.

I don't see bitcoin widely used in legitimate commerce. But I can go on the dark web and find it widely used for drugs, fake IDs, hitmen, and all sorts of other nefarious purposes because of its anonimity. Take away the anonimity and its value goes away.

 

[captain3d]

And those wallets can, or soon will be, traceable to individuals. At that point bitcoin is useless.

You have your position very clearly established that nothing good will ever come out of crypto.

My position is that many beneficial things will come out of crypto.

What should we do now?

 

[SecondAttempt]

You have your position very clearly established that nothing good will ever come out of crypto.

My position is that many beneficial things will come out of crypto.

What should we do now?

I respect your opinion. We can wait to see who ends up being right.

 

[kcowan]

I must admit that I don't understand how more digital value can be generated through number-crunching. I understand the fundamental value of blockchain transactions but they are competing with heavily established alternatives. So unless they can establsh an added value for the security and traceability of every transaction, I will continue to sit on the sidelines.

 

[captain3d]

I must admit that I don't understand how more digital value can be generated through number-crunching. I understand the fundamental value of blockchain transactions but they are competing with heavily established alternatives. So unless they can establsh an added value for the security and traceability of every transaction, I will continue to sit on the sidelines.

My understanding is that crypto allows secure and permanent transactions between two parties that do not need to know or trust each other or use a 3rd party in the middle to manage trust.

At its simplest the extra value comes from cutting out all the in between transactions, fees and delays.

Crypto transactions themselves do have a small cost.

 

[captain3d]

I respect your opinion. We can wait to see who ends up being right.

It is certainly not guaranteed by a long way but it does seem to be reaching a point where many large financial institutions are now engaging.

eg the Bank of America report...

https://newsroom.bankofamerica.com/...arch-launches-coverage-of-digital-assets.html

"Digital assets represent a $2 trillion+ market value with 200 million+ users, and have the potential to transform every industry by improving efficiency and reducing friction across transactions. Hundreds of companies are forming within this new ecosystem, creating a new asset class.

The primer provides an investment framework for the digital asset landscape, looking through a variety of lenses: tokens that act like operating systems; applications powered by smart contracts; stablecoins pegged to fiat currencies; central bank digital currencies that could replace money; and non-fungible tokens that connect creators and fans in a different way.

“Bitcoin is important,” said Shah, “but the digital asset ecosystem is so much more. Our research aims to explore the implications across industries including finance, technology, supply chains, social media and gaming.”"

 

[SecondAttempt]

My understanding is that crypto allows secure and permanent transactions between two parties that do not need to know or trust each other or use a 3rd party in the middle to manage trust.

That is also basically my understanding. I think that blockchain technology has a lot of potential but only if additional "features" are introduced that directly counter what much of bitcoin is used for.

In business transactions there are needs to create audit trails and to know your cstomer/counterparty. The second requirement has become even more stringent in the last 10 years or so. Anonimity is directly contrary to those needs.

Reversability and being subject to court order is another need. Business disputes happen all the time and mistakes in financial transactions are all too common. You can't operate in a currency that is unrecoverable in the event of an error or dispute.

Even for individuals there are rules about knowing your counterparty. They are more flexible but still exist. For example, it is illegal to send money (or anything of value) to certain countries like North Korea or Iran. If I make some transaction in bitcoin how do I know my counterparty is not a prohibited person? Say I sell my laptop to someone on Craigslist who pays in bitcoin then takes the computer out of the US, I have violated ITAR (International Traffic in Arms Regulations) because of certain encryption technologies on it. ITAR is no joke. I know people who have gone to jail for unintentional violations (in a business context).

So I see blockchain technology as very useful once those problems are solved. But the very features needed to solve those problems makes bitcoin useless for most people who would otherwise use it.

 

[aja8888]

My understanding is that crypto allows secure and permanent transactions between two parties that do not need to know or trust each other or use a 3rd party in the middle to manage trust.

At its simplest the extra value comes from cutting out all the in between transactions, fees and delays.

Crypto transactions themselves do have a small cost.

So there is a third party? the middleman who takes a cut (small cost)? You mean the 3rd party you mention is not in the transaction?

 

[captain3d]

So there is a third party? the middleman who takes a cut (small cost)? You mean the 3rd party you mention is not in the transaction?

There is a cost to running the network (power) so the miners take a fee for completing the transaction. They do not have any control over the transaction. So in that sense there i sno 3rd party involved in the transaction specifics

 

[captain3d]

That is also basically my understanding. I think that blockchain technology has a lot of potential but only if additional "features" are introduced that directly counter what much of bitcoin is used for.

In business transactions there are needs to create audit trails and to know your customer/counterparty. The second requirement has become even more stringent in the last 10 years or so. Anonymity is directly contrary to those needs.

Reversibility and being subject to court order is another need. Business disputes happen all the time and mistakes in financial transactions are all too common. You can't operate in a currency that is unrecoverable in the event of an error or dispute.

Even for individuals there are rules about knowing your counterparty. They are more flexible but still exist. For example, it is illegal to send money (or anything of value) to certain countries like North Korea or Iran. If I make some transaction in bitcoin how do I know my counterparty is not a prohibited person? Say I sell my laptop to someone on Craigslist who pays in bitcoin then takes the computer out of the US, I have violated ITAR (International Traffic in Arms Regulations) because of certain encryption technologies on it. ITAR is no joke. I know people who have gone to jail for unintentional violations (in a business context).

So I see blockchain technology as very useful once those problems are solved. But the very features needed to solve those problems makes bitcoin useless for most people who would otherwise use it.

Fair points.

Bitcoin transactions are not and will not be reversible. The only way to get money back is to have the receiver send it back through a new transaction. The fact it is not reversible is one of its core strengths. Incorruptible transactions. Of course that does punish mistakes severely. If it is a business/court order then I expect returning the funds would be easy enough. But not a reversal transaction.

How reversible is a wire transfer. The bank always tells me to check because once it is gone it is not coming back.

KYC is everywhere in crypto. Open a Coinbase account in the US and there is no doubt who bought the Bitcoin.

I take your point about not knowing your counterparty being a potential issue, but I do not see the difference between selling my laptop on craigslist for cash. Obviously nobody selling on craigslist knows anything about the buyer other that do the have they cash when the show up.

I read someone on another forum describe Bitcoin (crypto) as speculation on a store of value. I think that is pretty good. The speculation and volatility now is all about the possible future or not.

Some people are in it for the potential future. Some are just trading, Some for the tech angle. Most probably a bit of all three.

 

[37andhappy]

That's how I am beginning to see the situation. There are over 13,000 different crypto currencies now. Each draws real money at some point and most will collapsee for lack of interest. Bitcoin will likely survive for a while and probably will be the last one standing.

Correct. This is why many (and especially the big entrenched and institutional money) are realizing that the ultimate conclusion is that collectively we become Bitcoin maximalists (in terms of a global store of value).

But once governments figure out how to trace transactions (and there is good reason to believe the US already has) there will be little reason to own crypto and the bottom will fall out.

The ledger is public. All transactions can be seen. This has been the case since the first ever coin was mined. The reason to own is as a store of wealth and protection against inflation and currency devaluation, as well as global accessibility and transferability of wealth without any intermediary or counterparty risk.

Unlimited supply + no demand = 0 value.

Correct, hence why Bitcoin is perfectly limited in supply, and why you must avoid alts (almost all basically scams).

 

[jim584672]

Correct, hence why Bitcoin is perfectly limited in supply, and why you must avoid alts (almost all basically scams).

Why are alts scams and Bitcoin isn't? Many alts are better, don't have a 360 gigabyte blockchain, transactions confirm faster and cheaper. Bitcoin is far from immune to the alts, and can easily fall out of favor.

 

[37andhappy]

Why are alts scams and Bitcoin isn't? Many alts are better, don't have a 360 gigabyte blockchain, transactions confirm faster and cheaper. Bitcoin is far from immune to the alts, and can easily fall out of favor.

Some really good discussions on this topic here:

and here:

and here:

 

[37andhappy]

Here's an objective video that addresses almost all the concerns/FUD some have asked about. Highly recommend for everyone to watch, especially those curious on some areas as they explore and study this topic. Subjects include:

-What is money?
-How does money fail and what happens when it fails?
-Is Bitcoin "too volatile"?
-Does Bitcoin waste energy?
-Bitcoin and ESG.
-Can Bitcoin be banned?
-Regulatory issues related to Bitcoin.
-Is the Bitcoin blockchain too slow?
-Can new versions of Bitcoin or Bitcoin alternatives be created?
-Do criminals use Bitcoin?
-The future of Bitcoin adoption.

 

[SecondAttempt]

Here's an objective video that addresses almost all the concerns/FUD some have asked about. Highly recommend for everyone to watch, especially those curious on some areas as they explore and study this topic.

Two hours of listening to a guy whose job it is to convince people to borrow money to buy crypto currencies? Are you kidding me. Parker Lewis has absolutely no credibility.

Can you explain why there is a need to "tumble" or "mix" bitcoin? This sounds like bitcoin laundering.

Can you explain why there is a need for "clean, freshly mined" bitcoin? Are the rest of them dirty?