There’s some very heady rhetoric in this thread, so it might be helpful to remind members that just because everyone talks about something does not mean that topic is worth talking about. This is not something anyone “needs” to own or invest it.
Bitcoin and other cryptos have no intrinsic value, they only have imputed value. This is not like the California gold rush in one important way - gold had intrinsic value, while cryptos have none.
They are not part of our regulated financial system. They are not a regulated means of payment or store of value. This new ETF may be a baby step in that direction, but it does not mean there is any regulation of crypto.
No major US bank has endorsed any crypto, treats or acknowledges it as anything other than a speculative trading option. Their traders may be promoting crypto, but then again, they would endorse investing in mud if there was a profit to be made.
Over the next year a crypto may increase in value by 10X or lose 100%, and neither outcome should surprise anyone. Only one thing is certain. As a speculative asset, it’s price will not remain stable; speculative asset prices are always moving toward the extremes.
To believe the financial system could collapse and currency loses it value yet these cryptos retain their value is silly. If currency loses its value due to excess, what holds value is food, land, energy and other commodities, perhaps precious metals, and most importantly, the means of production. This is why intrinsic value matters.
So go ahead and buy if you are so inclined, because these cryptos may be an opportunity to make some money. Just don’t get caught up by the rhetoric and be fully aware of the risks. Caveat emptor.
"Need" is subjective word. No one "needs" to own gold, or stock, or a house either. The issue we are all trying to figure out is whether as a sensible investor who wants to preserve (or grow) our wealth, we
should have some exposure to Bitcoin.
You are correct that Bitcoin has no intrinsic value. It does not produce a yield. Similar to gold, its "value" is dependent on others are willing to pay for it. So, as investors we really just need to make one simple assessment and ask -
will Bitcoin see broader adoption and demand over time?. If so, the price will go up (as supply is limited).
The USD also has no intrinsic value either by the way. The paper (or now primarily money owed to you by a bank as recorded on their IT system), is worth only the value others are prepared to ascribe to it. And as we can see, that value being ascribed to it has continuously declined and eroded over time, hence the continued decrease in purchasing power that the USD has experienced over time. This decline has also continued to gather pace, hence the recent more rapid increase in inflation.
You are muddling the concept of Bitcoin and other crypto's in your statements (commonly done to obfuscate the discussion, or maybe out of innocent ignorance?). To be clear, there is only one Bitcoin, just as when we discuss currencies there is only one USD, and just like when we discuss gold, there is only one gold. However, you are making the point that we should stay away from alt-coins (essentially all infinite attempts at being a "new Bitcoin" as an investment by a promotor who leaves others holding the bag, then I am inclined to agree with you (for many reasons, both technical, legal, economic, and philosophical).
As for Bitcoin not being "part of our regulated financial system", Bitcoin is deeply integrated into US (and global) financial systems and markets already. Existing principles such as the law of contract, freedom of speech, freedom to contract, combined with the immutable application of mathematics is all that Bitcoin needs to exist and thrive just fine. Over time, as we are already seeing, more and more banks, financial institutions etc are embracing Bitcoin. We see Bloomberg presenting a BTC ticker along with other global currencies, etc etc - existing and established financial institutions really have no choice but to embrace, as if not, Bitcoin simply goes around them.
As for being a volatile asset, if we wanted zero vol to the USD we could of course just own USD. If we wanted slightly more opportunity of upside perhaps US treasuries. Further out the vol vs potential return would be corporate bonds. Then blue chips. Then smaller caps and then growth tech growth stocks. Etc.
Correct, we don’t know where Bitcoin will go in the future. But we do know that volatility can be your friend if timed right, and indeed that sometimes the most volatile assets can actually be the best performing over time. Of course this doesn’t mean we should buy something simply because it is volatile. (An asset in a long term decline can also be volatile along the way down). What it does mean though, is that we should not be put off by volatility when considering investing in an asset with an overall upward trend. In such a case (other than timing) the key is appropriate percentage of allocation.
A good example to explain this, is that despite Bitcoins vol over the last year it up 8% over the last week, 27% last month, 108% YTD, and 432% YoY. This shows the benefit of so called “hodling” - ie if you are buying something with a long term trend in mind, ignoring the short term “noise” and simply let the long term trend play out. This is what I would suggest we do, allocation a small % of our funds to a BTC hodl as a hedge of a multitude of future risks and scenarios.
As for "if we believe the financial system collapse...", you should understand that it has been exactly the collapse of value in the USD that has lead people to seek alternatives to preserve value in the first place. Hence the rise in equities, property, and the interest most of all in Bitcoin (hence its obvious outperformance of all classes). If we ever have a serious systemic collapse, either due to the archaic IT systems that power banks being hacked, or simply due to banks going bankrupt and customers making runs on cash, or hyper money printing that may occur as a result, the MASSIVE winner would be an asset with no counter party risk, which functional as a global store of value (with a public ledger, and with perfectly limited supply). This is the reason why interest and demand keeps growing for Bitcoin and why it may make sense to own some.
