So we FINALLY have a SEC approved BTC ETF!

[37andhappy]

No "precious bits" for me.

Talk about the "bits" production being limited hence guaranteeing the value of the "bits", that limitation is artificial. People already find ways to generate different kinds of bits beyond the original Bitcoin. Following is the list of the largest "bits" among the long list of more than 6,000.

1) Bitcoin
2) Ethereum
3) Binance Coin
4) Cardano
5) Tether
6) XRP
7) Solana
8) Polkadot
9) USD Coin
10) Dogecoin
...
6594) Tails
6595) Imperial Obelisk

There's more intrinsic value in collectibles. For example, the supply of artwork by Monet or Renoir or any artist is truly limited. Same with Ming vases, or Egyptian artifacts.

But bits? Bits? Any guy with a computer can create a new type of bits. The bits are not worth the power it takes to run the PC to create them.

This FUD was dealt with years ago. During the 5000 years of history of gold, people also used feathers and seashells etc as a store of value. All failed, and over time the world gravitated towards a single and universal store of value, namely gold. Same thing now being played out with Bitcoin, only much much faster due to modern technology.

For this reason, its best ignore the "next new coin", (sometimes called an "alt" or "**** coin" (which as you point is infinite in number), and if anything, simply buy and HODL some Bitcoin. Further, bear in mind that the SEC has stated they consider almost all alts to be illegal securities, hence we can soon expect, combined with an acceptance of Bitcoin, that the SEC will take much stronger action on alts which operate as unregistered securities.

 

[Time2]

I caught a talk late at night, half awake and heard there is a company putting out machines that you can put cash into and load up your bitcoin wallet.
I just now did a little search and see there are many of them around.
https://en.wikipedia.org/wiki/Bitcoin_ATM
Also search >bitcoin machine [your state]< to see all the locations.

 

[37andhappy]

I want to make money and have a fear of missing out (FOMO). Bitcoin is:

A decade+ old bit of computer code. I usually don’t buy those.

Bad for the environment, due to the massive energy consumption required to mine and sustain it. I usually avoid such choices when possible.

Favored by criminals, like Russian ransomeware thieves. Same as above.

Not a company and it has no earnings. Ok. I also don’t own gold for that reason.

I don’t play in the global currency markets, so why would I start speculating in digital currency markets……

…..Especially a speculation with thousands of digital competitors, some of them intended a jokes (Dogecoin) that are presently worth billions. Hmmm. I remember when I felt stupid not to own Pets.com, Webvan, Netscape, Altavista, Yahoo…

Illegal to use, so far, among 20% of the global population living in the world’s second largest economy.

Not really useable for commerce, or if it is, I’m seeing Bitcoin used exactly nowhere in my daily existence.

If the world realizes the explosive potential of block chain, and if some of the thousands of digital currencies become useful and thrive, I know that all of that growth will be reflected organically and in the proper proportions in the 28,000 securities I’m exposed to in my portfolio of global index funds, just like the advent of the internet itself made us all richer.

Pretty much all of the above is FUD, long since disproven and resolved.

However you are correct on 1 thing. Yes, Bitcoin is not a company (just like gold is not). This is once of its huge attractions. Bitcoin is a mathematical algorithm, that does its thing irrespective of any human interference or intent.

And you are partially correct with your comment that "all of that growth will be reflected organically and in the proper proportions in the 28,000 securities I’m exposed to in my portfolio of global index funds, just like the advent of the internet itself made us all richer."

I say partially, because Bitcoin is not a security, But yes over time, if Bitcoin continues to grow in importance, numerous companies will put in on their balance sheets (banks, insurance companies, pension funds, retail stores etc), and thus you will have an indirect exposure (albeit "behind the curve" in terms of price, assuming that price continues to rise during such an adoption process). Such index funds might over time also hold some BTC ETFs in their indexes.

However, you would likely gain much more from such a phenomenon if you acquired Bitcoin early and directly (which is why some of big money will for sure soon try to front run this phenomenon). On the other hand, of course if Bitcoin were to fail, you would suffer more on the downside. So from my perspective, allocating 1% of your total wealth to Bitcoin directly, and then simply HODLing, could be a very good strategy. If you don't want to do this via a direct purchase, the BTC EFT structure may be of interest to you.

 

[Markola]

^^^ So Bitcoin does not use massive electricity, is not banned in China, is not demanded by Russian ransomeware goons, is used in regular commerce (by everyone but me), etc. Just because you say these problems are resolved does not mean they are resolved.

 

[37andhappy]

^^^ So Bitcoin does not use massive electricity, is not banned in China, is not demanded by Russian ransomeware goons, is used in regular commerce (by everyone but me), etc. Just because you say these problems are resolved does not mean they are resolved.

Not quite correct.

Yes, electricity is used to mine BTC and process transaction. Such electricity is increasingly coming from sustainable sources (if anything, purely as a function of economics). Also, for most things we do, where we pay for electricity we need to consider if we are receiving good benefits for that spending - whether its to use the internet, a phone, a fridge, an aircoin, electric cars, the electronic banking system, etc. Clearly there are many people who see HUGE utility in having a decentralized and permissionless currency - hence the desire to expend energy to achieve the benefits its provides (both to the unbanked, as well as those who wish to receive the benefits of its monetary properties). As investors we need to figure out what others are willing to pay for such an asset (not necessarily whether you personally see utility in it). The perspective of an elderly and comfortably well off person in America, might be quite different to the housewife in Columbia, or a hard working teenager in Spain (who might for example see a far faster declining currency, might not have a bank account or a bank they can trust, and who might not have as much faith in their Government as you do).

A mathematical algorithm cannot be "banned". Bitcoin's immutability has been one of its biggest strengths, and so what we are seeing over time is an acceptance of reality by more progressive countries - "if you can't beat'em, join'em" so the saying goes.

Any asset of value will be used by some for bad purposes. Indeed, by applying your logic, as the internet can be used for crime we should "ban" the internet too. (This was actually a commonly held believe by some people, 20+ years ago lol!)

Although it may not be obvious to you, Bitcoin is very much apart of ANY "regular commerce" in that it provides a global base reference point of value to a declining currency. Many still prefer to transact in fiat currencies, others use Bitcoin exclusively (including via the Lightning Network). But have now doubts about it - at a high level there is always a decision arbitrage that technically takes place - do I accept or retain my value in cash, or do I convert to Sats. May not be obvious on a day to day level, as the decline in value of the USE is insidious and to many not overly "apparent", but it will become increasingly obvious if we are ever in a phase of declining confidence in the USD and/or hyperinflation.

Some countries already recognize it as an official currency. And many banks and credit card providers are providing services where you own BTC, but seamlessly transact in amounts converted to fiat currencies.

Further, as investors, especially with an asset like BTC, we need to look at not only the current state, but likely future developments. The very simple equation for us to consider is will demand and adoption increase over time. If so, the price of BTC will rise.

You can do a little research - there is plenty of good info out there on these topics.

 

[Markola]

Why do I get the feeling it is pointless to raise any objections to Bitcoin? Moving on.

 

[SecondAttempt]

If the world realizes the explosive potential of block chain, and if some of the thousands of digital currencies become useful and thrive, I know that all of that growth will be reflected organically and in the proper proportions in the 28,000 securities I’m exposed to in my portfolio of global index funds, just like the advent of the internet itself made us all richer.

Blockchain technology has enormous potential beyond bitcoin or other digital currencies. There are funds investing in blockchain technolgy companies and that is something I might consider investing in. But not bitcoin itself or any other digital currency.

 

[SecondAttempt]

Pretty much all of the above is FUD, long since disproven and resolved.

Umm, have you been in a cave for the last few years. The stuff you are calling fud is completely true. Maybe you have been in a bitcoin mine for a while.

...because Bitcoin is not a security...

One definition of a security is "a fungible, negotiable financial instrument that holds some type of monetary value"

So are you saying bitcoins are not fungible (identical to each other), that they are not negotiable (spendable) or are you admitting that they have no monetary value?

And in the United States they are being treated just like securities for tax purposses (transactions must be reported and capital gains taxes paid) and are now being regulated by the SEC (SECURITIES and Exchange Commission.)

 

[SecondAttempt]

A mathematical algorithm cannot be "banned".

Finally you make a true statement. Mathematical algorithms cannot be banned. But people who use them can be taxed, imprisoned, and even executed but countries that go that route.

 

[37andhappy]

Why do I get the feeling it is pointless to raise any objections to Bitcoin? Moving on.

If you want to make a legitimate objection, you could state that it has no intrinsic value, and/or produces no yield. These are legitimate issues to ponder

There is of course a good answer to such questions, (the ultimate summary being that its ultimately demand that will dictate price), but either way the are good topics to consider.

Being skeptical of anything new (especially in the areas of finance) is not a but trait to have. But it can also become a bad trait if it becomes an illogical hinderance in one assessing new trends or asset classes.

You might find people are a little impatient with historical Bitcoin FUD being posted, as its been well settled. But still, I also recognize that we are here to help each other and so should be patient. But again, I urge you to do some basic research (a little deeper that what you might hear in very simplistic mainstream media).

 

[37andhappy]

Finally you make a true statement. Mathematical algorithms cannot be banned. But people who use them can be taxed, imprisoned, and even executed but countries that go that route.

Correct - and so as investors we need to figure out how realistic such a scenario would be to occur globally. And then even if it did, how long it would last for. And then ultimately how all of this playing out would factor into demand and price.

 

[37andhappy]

Umm, have you been in a cave for the last few years. The stuff you are calling fud is completely true. Maybe you have been in a bitcoin mine for a while.



One definition of a security is "a fungible, negotiable financial instrument that holds some type of monetary value"

So are you saying bitcoins are not fungible (identical to each other), that they are not negotiable (spendable) or are you admitting that they have no monetary value?

And in the United States they are being treated just like securities for tax purposses (transactions must be reported and capital gains taxes paid) and are now being regulated by the SEC (SECURITIES and Exchange Commission.)

The SEC has specifically stated that bitcoin is not a security.

The so called Howey Test is the standard to determine whether a financial instrument is an investment contract, and is therefore subject to SEC Regulation. This is a three-part test in which the Supreme Court determined that an investment contract exists when there is (1) an investment of money; (2) in a common enterprise; (3) with a reasonable expectation of profit derived from the entrepreneurial or managerial efforts of others. If an asset does not meet all three prongs, it is not an investment contract, and not a security.

f the asset, the investor funds, or the control over the asset is not held by a central entity; or there is not one person to whom the success of the asset can be tied to, the second prong of the Howey Test is not met.

https://www.jdsupra.com/legalnews/c...y, the SEC has stated,is being sold or resold.

 

[SecondAttempt]

Some countries already recognize it as an official currency.

"Some" is used to refer to more than one. As of your post date and time there is exactly one country on the entire planet that recognizes bitcoin as an official currency, El Salvador. That country is not exactly a global trendsetter or economic powerhouse.

(It should be noted that El Salvador is largely controlled by criminal gangs. Maybe those criminals have some influence on the government. I think El Salvadore adopting bitcoin only strengthens the belief that bitcoin is primarily used by criminals.)

 

[SecondAttempt]

Correct - and so as investors we need to figure out how realistic such a scenario would be to occur globally. And then even if it did, how long it would last for. And then ultimately how all of this playing out would factor into demand and price.

One very important factor for investors is the existence of a strong legal system to enforce contracts, eliminate corruption, and so forth. This is one of the main reasons the US, UK, EU and a few other regions/countries are where the vast majority of the world's investments are held. Even China has made great strides in establishing a solid legal system for business law in the last couple of decades and that is one reason it has prospered. (Yes, we could debate IP rights and other issues, their system is not perfect.)

But your sales pitch for bitcoin is based on the lack of any legal system. That is a huge red flag to any real investor!

 

[37andhappy]

"Some" is used to refer to more than one. As of your post date and time there is exactly one country on the entire planet that recognizes bitcoin as an official currency, El Salvador. That country is not exactly a global trendsetter or economic powerhouse.

(It should be noted that El Salvador is largely controlled by criminal gangs. Maybe those criminals have some influence on the government. I think El Salvador adopting bitcoin only strengthens the belief that bitcoin is primarily used by criminals.)

Most countries permit Bitcoin to be used as a medium of exchange and as a store of value. No countries in the world specify physical gold as a currency anymore I believe. Yes, correct about El Salvador - the first to officially adopt it as legal tender. There will be others.

As for being "controlled by criminal gangs" many would actually say the same thing about our own country! (Bitcoin of course being our protection against that...)

 

[37andhappy]

Banks (or the GOvernment) could seize our money?

Sounds somewhat apocalyptic and alarmist, but don't think this could not happen. Indeed it already is happening (only via stealth), and it has happened in many countries, in various ways, at various times in history.

Bitcoin is our defense against this.

There is also a very real chance of a cyber attack on our decades only banking system IT infrastructure, which could completely bring the system down. Again, do not think it could not happen especially initiated by Chinese hackers during times of war.

1% allocated to Bitcoin could provide a HUGE protection in such a case, and any event like this could MASSIVELY increase and accelerate adoption (much like how Covid massively accelerated tech trends).

 

[freedom2022]

It is a good discussion to have about pro and con about bitcoin.
The world abandoned Bretton Woods agreement, every country keeps printing money.
At certain point, the word monetary system may not be sustainable. When that happens, one or two of the crypto currencies will emerge as alternate currency.
Many old timer-billionaire investors and bankers admit crypto is a good idea.
They just don't want to endorse bitcoin because they didn't take part in bitcoin development. It is kind of the ego thing.

The government can't rule bitcoin as illegal now. Because it is too late, the total worth of bitcoin is over 700 billion dollars now. People who invest and use bitcoin will challenge, and it will become an open war. The results will not be good either for paper currencies. The government will let it run its course and just hope the value will go down to zero.

Another side story is the young generation come to think they have better chance supporting crypto currency. Everybody is on the same level of playing field.

Again, time will tell.

 

[captain3d]

Ok, I truly do not mean this as any kind of attack. But could you please explain to me the value of bitcoin if you do not have criminal intentions? It seems to me that the only reason to use bitcoin would be if I were trying to buy something illegal like drugs or a hitman so it could not be traced back to me or to evade taxes.

I get that some people are trying to make money mining bitcoin and that is perfectly fine. They can find the blockchain codes and sell them so criminals can use them I guess. The ethics are questionable but I won't go there.

But why would anyone invest in a bitcoin ETF? That's a legitimate question. What are the upsides? downsides? risks? Can you explain those quantitatively?

Ok let me have a go at this.

Let us accept that there are advantages for criminals to send money all around the world with out the interference of banks or governments and also accept that this freedom is as beneficial for non criminals also. If I want to send money to a person in another country it would be great to do it securely and directly without relying on a 3rd party. So what is good for criminals is also good for us. Maybe.

Anyway set that aside let's think about more important things.

Most people that support and invest in the idea of Bitcoin/Ethereum/Blockchain see a future where the technology replaces many of todays systems and compare it to the way the internet has replaced many older systems

Library - Google search
Shopping Mall - Amazon
Physical bank - Online Bank
Travel Agent - Expedia/Priceline etc
Phone Broker - Online trading
+1000 other examples

The underlying technology/code that makes all of that possible is mostly TCP/IP. The language of interment communication.

What is backing TCP/IP? It is just a bunch of old code. What is the value?

In the case of TCP/IP it is not an investable technology but it clearly has an immense value in todays internet communications and business.

So what about cryptocurrency and blockchain technology?

Is it possible that blockchain communication could become the TCP/IP of global finance?

Bitcoin was the first to demonstrate that the mathematical 'checks' could allow two people unknown to each other could safely transact financially without relying on a third party bank of government. Etherium came along some years later providing a base layer of blockchain technology that would allow other business ideas and financial services to be built on top and plug in. Maybe Etherium is more closely related to the TCP/IP analogy in this case.

Several others have come along to compete with Etherium since and have a good chance of getting ahead...maybe. Solano?

Anyway the point being...if you can imagine a future where stock trades, property sales, bank transactions, fourex trading, oil pricing or international money transaction of any kind might be better running through a blockchain based system than a legacy third party bank/government system then you may see why you might want to invest in a Bitcoin or Ethereum or even a crypto index fund (Crypto 20).

The question you should ask yourself...

Is crypto technology the 'internet' of today for finances.

And this 1995 Bill Gates interview on Letterman is maybe where we are today for crypto...

or maybe not. You decide. But do listen to this interview and see how you feel about it 26 years later.

phil

 

[37andhappy]

It is a good discussion to have about pro and con about bitcoin.
The world abandoned Bretton Woods agreement, every country keeps printing money.
At certain point, the word monetary system may not be sustainable. When that happens, one or two of the crypto currencies will emerge as alternate currency.
Many old timer-billionaire investors and bankers admit crypto is a good idea.
They just don't want to endorse bitcoin because they didn't take part in bitcoin development. It is kind of the ego thing.

The government can't rule bitcoin as illegal now. Because it is too late, the total worth of bitcoin is over 700 billion dollars now. People who invest and use bitcoin will challenge, and it will become an open war. The results will not be good either for paper currencies. The government will let it run its course and just hope the value will go down to zero.

Another side story is the young generation come to think they have better chance supporting crypto currency. Everybody is on the same level of playing field.

Again, time will tell.

Fully agree!

Speaking of the "old timers" its interesting to see how many went through the same mental anguish that some are going through publicly here as they grapple with a new investment asset class. We saw the same thing with all the legendary fund managers and investors.

There are really only a small handfull of big investing names left to fall - Charlie Munger (and watch this space on that one, as they still have the face-saving "out" of allowing the younger managers of Birkshire to "do their own thing", and then Jamie Dimon (the CEO of a company whose younger executives already are endorsing Bitcoin, but who is one of the very entrenched old generation who benefitted massively from being close to the USD printing machine and hence viewed BTC as a threat to that entrenched power).

 

[AbbA]

Total supply of bitcoins is capped at 21 millions. There are 2,250,000 bitcoins left.
More people own bitcoin nowadays. A lot more people still have faith in greenback.
If a lot of people want to sell bitcoin, the price will drop. It may go down to zero. Time will tell what will happen.

I wondered how many bitcoins were left, thanks for sharing. But how do we know for sure that 21M bitcoins are indeed the final number? How are we sure the supply cannot be increased by some kind of hack in the code?

Since I still do not understand crypto or blockchain I don't trust myself to touch or put any money in a bitcoin ETF either. Plus, I'm not thrilled doing my taxes as is and so I don't want to complicate that activity further by spending money on digital coins.

 

[USGrant1962]

In the Gold Rush it is commonly said that the folks who sold supplies to the miners made more money than the miners. For sure the early movers in actual mining did great. Seems a lot like crypto to me. So my tiny play in the field (aside from whatever crypto value resides in my equities in total stock MFs) is some recent play money positions in Coinbase (COIN) and ARKK. I really don't care if Bitcoin or Ethereum or Dogecoin or Radicle or Sapphire wins. The last two are the 99th and 100th biggest as of today.

 

[SecondAttempt]

In the Gold Rush it is commonly said that the folks who sold supplies to the miners made more money than the miners.

You mean like Levi Srauss, Wells Fargo, and American Express?

 

[SecondAttempt]

So what is good for criminals is also good for us. Maybe.

Most people that support and invest in the idea of Bitcoin/Ethereum/Blockchain see a future where the technology replaces many of todays systems and compare it to the way the internet has replaced many older systems

So what about cryptocurrency and blockchain technology?

Is it possible that blockchain communication could become the TCP/IP of global finance?

The question you should ask yourself...

Is crypto technology the 'internet' of today for finances.

Snipped for focus.

I said way upthread that blockchain technology is something I might invest in. I think the technology is revolutionary and will be used widely in finance and commerce.

But bitcoin is not the same as blockchain in the same way that TCP/IP is not the same as internet traffic. Blockchain enables bitcoin and TCP/IP enables internet communication. People can use TCP/IP to spread hate, chat with friends, read early retirement forums and many other things. Similar things can be said for bitcoin.

I realize not everyone using bitcoin is a criminal. I like privacy as much as the next person. I can imagine a situation where I wanted to send someone money discreetly and had no criminal intent. Maybe I would just want to keep my business private.

But then I would have to decide if untraceability is better than traceability. If I'm not doing anything illegal then the none of the professionals involved in the transfer process are going to care. If I am paying my taxes and complying with the law then the government can get a warrant to look ino what I am doing. I don't like that idea but I am not at risk from it.

A far bigger risk for me when sending money is the risk of an error or glitch that cause my money to be lost. This is far too common. I want the traceability of involving financial institutions. And since I am required to maintain financial records for tax purposes, I appreciate the automatic record keeping a bank prrovides through regular statements.

So I don't understand rational people using bitcoin and incurring risks and incoveniences with only intangible benefits. I don't mean the folks who bought a few when they were cheap and novel or to earn a discount as someone mentioned. I just question why a rational person, even someone who deeply values privacy, gets in their head that they need to send bitcoin rather than dollars, pesos, pounds, euros, or whatever.

The guy who needs to use bitcoin is the drug lord who needs to keep his money hidden from the police or the tax evader hiding money from the IRS.

It's a free country. If people want to own bitcoin or invest in it they should be allowed to. It's just not something I have any interest in.

 

[SecondAttempt]

I would also point out that we learned after the recent ransomware attack on that pipeline company that bitcoins CAN be traced and recovered in some cases. Someone said bitcoins can not be made illegal at this point. I think that is basically true in the US. But the government can make it so painful for the exchanges to deal with US persons that they will just stop doing it. The exchanges need access to the banking system. The US government could simply bar banks from working with crypto currency exchanges or with other banks tha do so. Mechanisms are already in place to enforce this kind of thing with cannibis companies, arms-traffickers, and other specific people. I don't actually predict this will happen but it would not be difficult at all.

 

[37andhappy]

I would also point out that we learned after the recent ransomware attack on that pipeline company that bitcoins CAN be traced and recovered in some cases. Someone said bitcoins can not be made illegal at this point. I think that is basically true in the US. But the government can make it so painful for the exchanges to deal with US persons that they will just stop doing it. The exchanges need access to the banking system. The US government could simply bar banks from working with crypto currency exchanges or with other banks tha do so. Mechanisms are already in place to enforce this kind of thing with cannibis companies, arms-traffickers, and other specific people. I don't actually predict this will happen but it would not be difficult at all.

We didn't "learn" this. We knew it. If you can get access to someone's private keys, then of course you can get access to their coins. Just like if you get a code to a person's safe. If you do not disclose your keys, the coins cannot be accessed (although the transactions are public and recorded on the blockchain. If there are transactions which are associated with a known person, then of course that person (whether the sender or the receiver) can be identified.

No exchange is needed to transact in Bitcoin. Bitcoin is decentralized, so all that is needed is a person willing to send and a person willing to receive. This is a universal truth, and also is the case in China where Bitcoin is "banned". Its false to say it would not be difficult to enforce. Quite the opposite. It is actually mathematically impossible to enforce. (And remember, the world is a pretty big place - far greater then just the US...).