I own some bitcoin and Ethereum based upon just having some diversity for asymmetric returns, but the one question I've never been able to answer with crypto is "How does this make my life easier or better?". Most of the answers I get are rather fuzzy and unspecific, and don't seem particularly better, just different. Like why bitcoin over just using Paypal, credit cards, etc? Maybe I can see the attraction in places like Venezuela where there is hyperinflation, harder to see in the more modernized economies.

20 year chart of gold vs stock market (gold is gold line):
gold-price-vs-stock-market-20-year-chart-2021-05-05-macrotrends (resized).png

That's fine if it's not designed for daily use, then why are so many companies trying to promote it as such? That's why I think the message is confusing. I don't try and buy Tesla's with gold coins. Like I said, I own it, but I'm still a skeptic on whether there's real value there longer term.

I'm not sure what's going on but the excuse they came up with is just bs in my opinion. Something else happened, like they got pressure from some outside presence to remove their bitcoin support.

Tesla has tons of cash. And taxes are of no concern because they don't actually make any money selling cars (and probably never will, lol). There's no legit reason for them to have backpedaled on this.

I will say though that Elon continues to be bearish on Bitcoin, I might reduce my position or remove it entirely. He basically single handedly got dogecoin from 0 to 70 cents, so he has the power to raise dogecoin, he probably has the power to sink bitcoin (for now). I wouldn't be surprised if it doesn't drive money into more energy efficient coins.

The irony is there has to be some sort of internal conflict for most crypto/tesla supporters as they've kind of been hand in hand as the 'things people just don't get'. So for Elon to turn on crypto is kind of surprising considering a lot of his biggest supporters are probably also crypto investors. I was at some graduation party this weekend and the graduating kid was all about Elon and crypto, lol. The whole thing is rather weird, and reminds me of his behavior from a couple years ago with the buyout stuff and the SEC.

I'm going to watch here closely, and if it starts to go any farther down I'm going to bail for now as I think it's going to collapse quite a ways due to overleverage short term (kind of like how the stock market did last March). Michael Burry warned about overleverage in the crypto market, and he's typically right.

According the RSI, bitcoin has probably bottomed for now (unless the RSI remains super depressed for multiple weeks, which is possible). Technicals point to it probably rising or staying steady at least, barring some other really bad news or tweet.

I saw this article for the first time today:

https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3

I found it pretty interesting since there have been possible warnings about Tether going around.

I think you're going to have a chance at it still. I think it's going to bounce off the low from a few days ago but probably not to as high as it did before (lower highs) and then on the 3rd retest probably break through it. When it bounces the second time it's getting fresh buyers who didn't get the first bounce, but by the 3rd bounce there's usually buying exhaustion.

Also, for those of you on coinbase, why is Tether's volume $137.3 billion when there's only $59.4 billion in existance? By comparison, Bitcoin's volume is only $64 billion. Seems a little off, kind of like that article I posted above said.

Here's a helpful video that might help you decide when to buy and sell:

Looks like the price is recovering tonight. The question is whether it will go back to retest a 3rd time in a couple days. Tether volume is off the charts today, you can add the volume of the next 4 highest coins in volume and it doesn't add up to what Tether did today. I did not buy back in today, I thought about it but didn't. I sold everything a few days ago except for a little in my IRA through that trust. Something is wrong fundamentally in the whole thing, the Tether volume is too high to make sense...so even though there's only 59 Billion in Tether, it did 180 billion in volume today? Nobody cares about Tether. Nobody uses Tether. So why is the volume excessively high?

I feel like there may be some other major issue in the mix as well. The repo market is having issues too again, almost at the same time. It's like people are being forced to sell their riskier assets which is causing some sort of domino effect.

I don't know, I have some sort of bad feeling about all of this, like there are some issues going on behind the scenes that are on the edge of collapsing. Not necessarily in the crypto space, but that family office collapsed like 2 months ago in the middle of a market runup...that just doesn't happen when the market is good.

I mean, you could really say that about almost all the crypto’s at this point since their values are all basically to a degree ‘made up’ and highly speculative. Frankly Dogecoin, even though it was made as a joke, honestly makes as much sense as anything else. The fact that it’s not rare or collectible makes it more viable in my opinion. Too much of the crypto space operates like collecting art or Stern LE’s, maybe the Stern pro option that nobody cares about really is the best option for adoption. I’m honestly not sure if any of the current crypto’s on the exchanges are going to make it longer term except for maybe Ethereum, the companies that are building infrastructure are not using any of these except it.

I understand money and have probably listened to 500 hours of macro economic podcasts in the last year. I understand the arguments for store of value and other things, but most crypto’s aren’t stores of value, that’s just bitcoin. And why is bitcoin any more special than if someone made a bitcoin 2.0 that only had 5 million units? Or 1 million? Because it’s first? It’s just manufactured rarity where the early adopters (like a stock) get rich while nobody else does. Hard to see why that is that much better than gold, fiat, etc, you’re just making a different set of people Uber wealthy and nobody else. To me bitcoin is just a stock with a predefined number of shares that is selling at a large speculative value that people will value it longer term. Decentralization is the popular buzzword right now but people don’t talk about the downsides of that either.

The dollar is in decline, but I’m not 100% sure bitcoin or any of the other existing crypto’s is the answer. Bitcoins value is 100% based on upon other people valuing it. So if people start valuing dogecoin, how is it not possible for it to be the standard for commerce? Just because crypto people hate it? Lots of times the inferior solution ends up winning. It’s all about adoption, and if 500 companies start supporting dogecoin before anything else, it may run away with it.

Dogecoin is now a more popular search term than bitcoin, if you can believe that.

Here’s what I know about crypto and banking. In theory it could completely remove the need for a bank...however, when you really start thinking about it, it’s not really 100% feasible. Who’s going approve mortgages, car loans, etc? The defi concept works to make those things so they don’t go through a central point like a bank.

And then you have the safety aspect. Credit cards and bank accounts have safety guaranteed for the most part. Nobody is going to put their life savings into something until those safety options are matched, and that basically means that the government would have to stand behind it. Does any believe that any government is going to back the current crypto’s in existence? I don’t. So that is going to hold back widespread adoption, despite that fact that the interest rate is much higher which is appealing(for now, it will probably drop as time goes on).

Credit cards took a long time to become popular for payment. Crypto might be the same. I do not disagree though that fiat money is a problem longer term, and that decentralization may be the key.

Is there even that big of a market for 'store of value'? Just realistically, the total gold value is only about 10 trillion, not like 100 trillion. There are other metals, art, etc that are also things like this, but gold is probably the biggest equivalent. So that kind of means the market cap of all crypto stores is value is probably capped at around 10 trillion (once it gets out of this hyper speculation phase). So a 10x gain from here is like 'best case' and probably only has a small chance of happening. To expect it to be higher than gold seems unlikely barring some sort of critical adoption from governments, kind of the law of large numbers issue that companies have when they get too big...Berkshire can't grow like they want anymore because in order to move the needle they need to make very large acquisitions now, small companies just don't help.

Bitcoin will run into the same issue eventually here, 1 Trillion to 2 Trillion basically will require all of the money that's gone into bitcoin in the past 10 years to double to get it to 100k. And then another Trillion to get it to 150k probably. So it starts to become harder and harder to move the needle for % gains. It's the same reason that Amazon, Microsoft, Apple, etc doubled over and over again until they got so large that doubling is very hard to do. People are using extreme leverage into Bitcoin to move the needle but eventually that reaches a point where it doesn't work, kind of like where Telsa has gotten to now.

I don’t think that the repo market flux is helping either. Usually when there are problems there risk assets have issues. Which may be the reason the whole thing started collapsing a few weeks ago.

I've been looking into this more and more, and is there really a reason to own bitcoin over Ethereum at this point? Bitcoin has been depreciating vs Ethereum for a while now, and the use cases for Ethereum are a lot more. I get the 'store of value' thing but if its goal is to store value vs Ethereum and other cryptos then it seems like owning 'the market' is more diversified and appreciating more. Bitcoin also has the energy use headwind which I think limits it.

It looks like ethereum has been outperforming since September of 2019, when it was still in the bear market. So does that mean you expect that to continue should the market take off again here?

I'm starting to wonder if the next leg up for crypto could be coming here. There's a theory going around that all of this meme stock/crypto stuff is related, and that they're just rotating from one sector to the next. So it went tesla and other tech stocks->meme stocks->bitcoin->dogecoin->meme stocks...could it be time for bitcoin again? Basically young investors are piling into highly speculative assets that have no basis for value, and just taking the money they made on one trade and doubling down on the next thing, and when they pull out the value drops a ton.

I think bitcoin will go back up too...I would feel better about it though if we would have reached ‘capitulation’ which we never did. The fact that people aren’t fearful tells me that there’s a decent chance we didn’t reach the bottom yet.

Doesn’t the high transaction cost and slow speed make it kind of useless as an actual currency unless you’re doing some sort of high dollar transaction?

The thing I wonder is how they're going to handle the volatility. You could be shopping for a TV, and literally while you're in the store it could cost 5% more or 5% less, lol. The volatility makes it very hard to be usable on a day to day basis for the stores. Just look at the last month, if you didn't immediately change your bitcoin into cash after sales, it may have sent your business into bankruptcy if it operates on small margins but big revenue.

It's too tied into the rest of the market, it will get flogged along with everything else in a major correction. But even things like gold get flogged in a major correction initially, then recover. I made big profits last year on silver when it crashed way down to stupidly low levels. Something like IVOL might do well in a correction since it's designed to do better in high volatility environments.

Looking back at last year's crash, it doesn't appear like it really acted any different than the rest of the market. Went way down and then had mostly recovered by May/Juneish. Probably has the most correlation with the Nasdaq. Anything that uses leverage is going to wash out in a crash.

By what metric? Of course it's a different asset class, but he was asking about how it will act in a crash, and last March it acted EXACTLY like the rest of the stock market. Gold was about the only thing that didn't have a major selloff, it only moved down 5% to 10% before moving higher much faster than everything else (silver though went from $18 to $12, which is why I bought a large amount of it there...I couldn't see any downside at that low of price).

It's because the same people who are pumping meme stocks, growth stocks, etc, are also pumping crypto, all part of the get rich quick thing that's currently in the market. They're just rotating between the sectors. It doesn't mean that there isn't value there, it's just that the same related strategies are being used in all of them, so in a liquidity crunch situation like last March they're all going to suffer in the same manor.

Now something like real estate, there's an asset that has a pretty big disconnect from the rest of the market. Moves very slow because the market is inefficient.

Why are all the crypto’s selling off right now except bitcoin? It’s a little weird. They’ve
pretty much been moving together for a while.

I don't believe that can be true. Because if someone made a super efficient power way to mine it, that would mean it would be worth less.

The power usage currently is a drawback in my opinion that hurts it in current world where energy conservation is becoming more important. It may have been intentional at the time but 10 years later it's probably not the best approach.

1971 was the first year gold wasn't pegged to $35 anymore. If you look back over the past 50 years, the S&P has gone from 91 to 4250 and gold from $35 to $1900. Gold has actually outperformed the S&P. It just seems like crap to most people because it went to this unloved ditch for like 20 years after the 70's inflation went away, but when it takes off it really takes off. Now silver, that really hasn't gone anywhere forever. Gold, like most commodities, go in cycles. It's done really poorly the past 10 years.

Have you thought that through completely? Like really thought it through? For example, let’s say there were twenty one million houses and each one was worth one bitcoin. Population grows, now there are 42 million homes, so each is worth 1/2 a bitcoin. What happens is a deflationary spiral where nobody wants to buy anything because it’s always cheaper tomorrow.

It just wouldn’t work as long as the population is growing or producing more product. The stock market would never grow as the deflationary effects would kill any gains. In fact you’d never want to invest because a bitcoin sitting on the sidelines would gain more in value than investing it, so all investment would go to zero.

Ironically in a bitcoin only world this forum wouldn’t exist as pinball machines would still depreciate like the 90’s and all the companies would be gone, lol. Nobody would want to own a house as they would lose value every year like a car, we’d all be renters. 401k’s would just be savings accounts.

Deflation by increased productivity is good. Forced deflation through scarcity isn’t though in my opinion.

Here's a question, is there any crypto addressing the issue of game, movie, music digital rights? Like what I'm talking about is something that would allow users to buy and sell their digital copies of things, much like we did with games, dvd's, records, etc in the past. That's like the killer app for some of this stuff, but searching didn't turn up anything.

Isn’t staking in general kind of pointless in an asset that moves 10% a day? We all know that most crypto’s are going to zero eventually, it just seems pointless even worry about staking because if you bet on the right crypto, you’re going to make out like a bandit even without staking, and if you don’t then you’re going to zero anyways.

It’s like investing in GameStop because they all of a sudden offered a 6% dividend, the dividend is pointless because you’re either going to be very rich or very poor long before that dividend amounts to anything.

Staking seems like it would only be worth it once the asset has stopped the high volatility.

There are like 1000 crypto’s...how could most of them not eventually go to zero? I’m surprised I’m getting pushback on that. In every new industry there are 1000s of players that eventually reduce to very few. Look at the auto industry that went from 1900 to 3 in the US. First wave of internet companies too. First wave of solar companies. Etc...

It’s just like the gold rushes of the past, most of the miners just ended up broke.

It’s not a know it all thing, seriously, it’s just realistic. I mean even in the biggest market caps everyone thinks dogecoin is going to zero eventually.

I never implied Cardano was bottom of the barrel. I just said that staking (regardless of what crypto it is) is rather pointless currently due to volatility. Mining on the other hand, isn't pointless, and doing your own stake pool isn't pointless, as both of those can generate a very steady stream of income per money invested.

Just look at it from a math point of view. Cardano was 8 cents a year ago, and is $1.26 now.

If you put 1k in Cardano a year ago, you now have about $16k. Your staking part of that is another $960 on top of that at most. However, if you just would have sold your Cardano instead of continuing to stake in the past 2 months, you could have 50% more. Even today, Cardano is down what an entire years of staking would bring in (6.14%).

I just think it's not even worth thinking about when the price moves enough to equal or erase an entire year of staking per day.

Well, let's just say I start with $1000 to invest for a year.

Option A is buying my favorite crypto, stake it, and just hope that it goes up over time.
Option B is buying a top of the line video card, mine and sell the proceeds.

If crypto doubles in price, both options are about the same. One has 2060 to 2120 worth of crypto, the other has the video card and around $1200.
If crypto stays the same, option B wins easily.
If crypto goes down, option b win easily
If crypto goes up by 300% or more, then option A wins easily (in between 200% and 300% the increased profits from mining would probably even it out).

Option B is an investment, option A is speculation because there are no fundamentals for the value. Similar to the housing market, you can buy a house in Cali and hope that appreciation continues like it has, or your can get a rental house that makes money every month regardless of what the market does. Option A will make you wealthier for sure over time if you pick correctly but you can just as easily go broke if the market turns south, but option B is playing the odds over time to earn income. Doing a 3rd option where you don't actually sell all the mining proceeds is probably the best 'blended' approached.

I haven’t commented in this thread for a long time. I think the last time I commented it was something about staking not making much sense due to the highly volatile nature of coins, and although I took a ton of flack at the time, I don’t think I was totally incorrect on that, people have lost way more money than they’ve made over the past year from staking.

Bitcoin is going to have to decide what it wants to be at some point, it can’t be both a currency and a store of value. I don’t think it makes much sense as a currency because of its deflationary nature, meaning things will cost less and less bitcoin over time…so why buy things now when they will be cheaper later? It would destroy the economy of anyone who tried to use it in that way. You can’t price things in bitcoin, it wouldn’t work as the base system.

But as a store of value currently it’s way too volatile. Can’t be a store of value when you can go up 10% or down 10% a day. It has to get to gold like stability before anyone would even consider it a real store of value. Also it’s way too concentrated in too few owners, so I don’t know how that makes it any better than gold or fiat in that regard.

I can see a use case for cross border transactions and I think it would work great for that. But for that the volatility also needs to go down more.

It’s funny because I think the thing that all crypto people are against (regulation) is probably what is needed for it to be viable longer term. And bitcoin probably needs to go sub $10k to shake out all of the excess, much like the dot com bust had to happen to shake out all of the weak companies. Michael Saylor probably needs to go bust for bitcoin to have a future.

Not on the deflationary issue? I can explain this pretty easy on why this makes unusable as a main currency.

Say everything is priced in bitcoin. There are 21 million houses, and every house is worth 1 bitcoin. Say the population expands like normal, and now you need 2 million more houses. Well, more houses means that all existing houses have to go down in value because the money supply doesn’t expand.

This would go for cars, houses, even your job…you wouldn’t get raises, you would make less over time instead of more. Stocks would get cheaper over time as well if they didn’t outpace the deflation rate.

Spending would plummet and the country would go into a deep recession that there would be no way to pull out of. It would be a deflationary death spiral.

That’s why it can’t be used as the main currency of a country.

You would think that, but that only works if the things are actually cheaper to make (productivity gains).

Having your money appreciate sounds good on paper, but really think it through. Right now, you earn interest on your money through loans. People take out loans for cars, houses, investments, etc. If the collateral for every single loan is losing significant value, how many loans would a bank make? Almost None. So how could they pay interest? They couldn’t. So the banking system would collapse.

Then move to business. When you start your business for one bitcoin, you’re guaranteed that you will make less and less over time unless you’re super successful. Who would invest in that rather than just keeping their bitcoin? They wouldn’t. So business creation would collapse, and jobs would collapse as well.

That’s why the government charges less taxes on investments and more on savings accounts, to encourage job creation and investment in business. Money on the sideline produces no value other than for loans. The economy runs on goods and services, and the medium of exchange has to be something that encourages that or the economy would collapse.

I agree that the current monetary system leaves a lot to be desired, and inflates assets too much, hurting those who don’t have assets. I don’t see how switching to a currency system where 10000 people control 1/3rd of the total supply is the answer, that doesn’t seem to be good for those people either.

Back to the currency thing, can you imagine buying the s&p index in your 401k for 1 bitcoin and then 20 years later it’s worth .1 bitcoin? Would you do it? Maybe your buying power would be higher, but why even invest it? Just leave the bitcoin doing nothing, it would perform better. So because nobody would want to invest in the stock markets, businesses and companies would be unable to expand. In fact they’d be fighting deflation all along too, make 100 bitcoin investment in a new factory to make cars, well the cars devalue so fast that you can’t make back your original 100.

Store of value, sure, maybe eventually. Currency, impossible. If the supply wasn’t fixed and could slightly increase each year like gold did, that would help it immensely in being a currency.

Can you imagine trying to pay back debt where you’re making less and less money every year? You think debt traps lower income now, just wait until they make less and less, the lender becomes even more powerful.

I totally get that things will cost less and that you can buy more, but what I’m saying is that deflation destroys economies.

What happened in 2008/2009? That’s right, massive asset deflation. Should have been good for everyone, right, money was buying more of everything asset wise…stocks, real estate, businesses, vehicles, etc. Great time had by all right?

Or the early 1930’s when we had 25% deflation over 3 or 4 years. Should have been great, right? Lower prices, gold buying more, best time ever right?

When deflation takes hold it destroys businesses and everything else (jobs, prosperity, etc). You can have small deflation on prices with optimized processes which can be good (tvs, computers, etc) but if you have large across the board deflation it can be devastating.

I’m giving deflation examples. We’re on a pinball site, how many pinball machines would people own if they went down in value every year, and how many companies would exist?

Think about that…I own 7, but if they weren’t appreciating I probably would only own one or none. Would people be chasing after games? No, they’d just wait for them to get cheaper, you’re guaranteed that they’d lose value due to currency appreciation.

It does if you use it as a currency.

I do like pinball, but if they lost value I’d only play on location. I wouldn’t want to own anything, I’d only want to own bitcoin. No house, nothing besides basics, would rent. The opposite of what I do now for a currency which is devaluing. So right now I(currency devaluing):

Own stocks
Own real estate
Own businesses
Own anything that benefits from a currency which is devaluing
Take out loans at low rates where the currency devaluing would benefit me
Own bitcoin

If bitcoin was the currency(currency appreciating) :

I would own bitcoin. Nothing else from above.

That’s why I say it wouldn’t work. That doesn’t sound like an improvement in quality of life, and would discourage investment in housing, businesses, etc.

The best case scenario for bitcoin in my opinion is about 600k. That puts it at the same market cap as gold. Past that I think it would be very difficult to go anywhere as a store of value. And honestly it would probably be less than that, unless you get every country to buy into it like gold (unlikely) it won’t get that high. If they regulate stable coins it will cause a massive deleveraging probably in the short term, as Terra showed that when stable coins are shown as not being as backed as well as was thought, the whole market crumbles. If they don’t regulate stable coins then I could see bitcoin doing a blowoff top where it goes higher than it should shorter term.

I think the times of bitcoin going 10x in a short time period are probably over unless it melts down to $5k and back to $50k. Law of large numbers makes it really hard for it to grow fast once it gets to like that 1 trillion market cap. Same thing happens to all assets, you just run out of money to run the asset higher unless you highly leverage it up (see GameStop).

I think most alts are probably going to zero other than Ethereum. Too many of them are just hot air and/or useless, and like the dot com bust 20 years ago, most of them are going to zero or close to zero in the next couple years. Bitcoin and Ethereum will be left and then whoever out of the rest survives (like possibly Solana).

Lyn Alden is great. I find I agree with her on almost everything. The only thing I don’t agree with her on is the energy use of bitcoin. She doesn’t think it’s an issue, but I think it’s a huge issue considering our current grid and energy issues. Basically maybe not a big deal 10 years ago, but now it’s a lot bigger of an issue. Basically, our grid can’t support all of the electric cars coming online, and bitcoin just makes that even worse. Basically, it’s solving one issue (store of value) but creating an issue that’s just as large somewhere else (energy).

That graph is a bunch of crap in my opinion, lol. It’s selecting all the most massive energy stuff and then trying to make bitcoin look small. It’s a graph you’d make if you had to support an agenda.

The truth is it uses more electricity than all the fridges in the US, or would rank like 28th in the world for energy usage…for something that produces very little value for how much energy it uses.

I should clarify my energy opinion, my thought is if something that uses that much energy isn’t providing value to the average citizen, then it’s a net negative on the economy. Basically, if it’s not as valuable as a refrigerator to the average person (or computer, air conditioning, electric car, etc, whatever is using that much electricity as well) then it is not increasing the quality of life for the average person and may well be decreasing it (increased utility bills, power grid issues).

80 million retailers? Where is that number from? When I googled it said 15000.

I don’t know if proof of work or stake will win, but from an pure theoretical standpoint proof of stake would be better if they could work out all the issues. Proof of work is more resilient but inherently more inefficient. It’s basically wasting a bunch of energy betting that no one else can amass that much energy and computing power to screw it up.

I don’t think that the average person would own bitcoin as a store of value anymore than they would own physical gold now. How many own physical gold now? Like 10.8%. So it doesn’t seem like it would ever be something that an average person would own, just a small minority. Bitcoin is already at that percentage approximately, so I’m not sure it’s really going to make much more headway there other than those 10% owning more.

Maybe in the future bitcoin would be worth more than a clothes dryer, but it you’ve ever hung clothes out to dry on a line you’d realize that the clothes dryer is way more helpful at the current time.

Is there a possible flaw in the system if energy remains highly elevated and the bitcoin price suppressed, making it unprofitable for mining? Like say electricity went 2x or 3x, and bitcoin went down to less than $5k, would the solvency or security of the network be at risk?

This is just a theoretical question, I never really thought about it until the recent energy spike. It seems like there would be a point where if the energy cost is greater than the value of the bitcoin produced, the network would become basically 'insolvent'. Is this possible?

It’s going to need to recover fast or the next iPhone will actually cost more bitcoin than the last one.

The emissions chart is just ridiculous for something as little used as bitcoin transactionally. Bitcoin currently uses a ton of energy for around 250,000 transactions a day. Just credit cards alone do over a billion transactions a day. And the transactions are actually falling over time instead of increasing, like less people are using bitcoin for transactions now than they were a few years ago.

To me, those charts say "if you switch to bitcoin, your savings account will use more energy than your clothes dryer"...which seems insane, lol.

If the energy situation doesn't improve, I could see a large movement to ban the mining of it outright coming. Not saying that it's fair, but if you're having a power shortage and the choice is between having air conditioning and bitcoin, pretty sure politically that bitcoin is going to get axed. If there are any rolling blackouts this summer in the midwest, south, or other areas that don't normally have them, I wouldn't surprised if some states don't go after it as a low hanging fruit. Kind of like if bitcoin was using 1% of the gas in the US right now, there would probably be calls to ban it due to the current supply issues.

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I'd still rather play video games than use that power on bitcoin security.

That's basically what the power is used for, security, by making it super expensive monetarily and power wise to hack it. If I told you one of the smallest banks in the New York City area needed to use 1% of the area's power just for security, would you think that is reasonable?

I believe that it's a good idea but the energy thing is a big drawback. It's kind of like having a car make a one mile trip, but to verify that it actually made the trip you need to burn 5000 gallons of gasoline to verify. You don't need the 5000 gallons to actually make the trip, just for security.

Let's not go off the hyperbole deep end here, lol. People have been making decentralized things for a long time. Not in the same way as Bitcoin with computer power, but let's not act like decentralization is a new thing here. We've been able to send the same information everywhere in the world for 100+ years, Bitcoin is just improved formula on that. It's no different than the data storage centers that are located around the globe that constantly back up each other and keep in sync from a ledger standpoint, those just don't spend massive energy securing their ledger.

Bitcoin is far far more secure? From a centralized hacking attack sure, everyday use? I'd take the credit card, because if something goes wrong the credit card will back me up. Something goes wrong with my bitcoin transaction (likely going through some secondary network for speed), there isn't anyone who is going to help.

The energy consumption is an issue no matter which way you slice. You can't say the energy is what makes it secure, and then claim it isn't using much energy, lol, those two things are at direct odds with one another. Bitcoin trying to claim it isn't affecting the energy industry is like crytpo miners claiming they aren't affecting the video card market. Whether they're driving up local energy prices or making solar panels more expensive (solar panel prices have jumped up a lot), bitcoin mining is causing things to be more expensive for non-mining people without a doubt.

I'm interested to see where things go here. Things are starting to melt down a little, the MBS market went no bid on Friday for a little bit after the CPI report, and that's indicates that things could be hitting the fan here. You really need a washout of all the speculation (aka Michael Saylor) to clean the slate a little, it's impossible to take it seriously as a currency or store of value with people trying to set million dollar price targets on it on TV, that's bubble behavior. There's a future for it somewhere, but the speculation and video game console like religion has to be knocked down to more reasonable levels so legit conversations can be held, not bitcoin to the moon and it's the 8th wonder of the world, lol.

The trusted 3rd party is energy. It's not a person/entity, but it's required just like a title company escrow is required for a real estate transaction in most places. Without energy providing the backbone, there is no transaction.

I don't know what problems it's solved for me personally. It's made computer hardware and solar power more expensive, and probably my electric bill in general. So 10 years in, it's been a net drain on me and anyone who isn't in it...even though I've been in it, I haven't made enough to counter the having to buy video cards for my kid's pc's and my own stuff being jacked as a result. Eventually it may solve problems for me, I don't know what those would be currently, but maybe eventually. It could become a store of value at some point, but I think when it comes down to it, hard assets (coal, oil, metals, food, products, etc) are the real currency/hard assets and everything else is fluff because you can't eat dollars or crypto. The whole Russia/Ukraine situation shows that if you have stuff other people need, it doesn't matter how crappy your currency is, people are going to use it if they want stuff.

I'm thinking about buying some more at some point, but it's not cheap yet, and there's still hysteria out there. Need capitulation and fear. From this thread I can measure that somewhat, and I don't see fear yet (not even close). Michael Saylor gets wiped out, Microstrategy goes bankrupt, Greyscale fund goes belly up, those kind of things would be where I would think there's a good entry point. Kind of like the stock market right now, it's gone down but it's been kind of orderly, no capitulation like 2020 or 2008. Gamestop is still above $100. Market still has too much liquidity.

I don't know if I'd agree with that completely. On a normal transaction, I agree. But your counterparty risk doesn't come from the transaction part, it come from the country/government part. Countries do weird things sometimes to protect themselves, like even banning the ownership of gold like the US did.

Like bitcoin is probably worthless in North Korea because the network doesn't exist there. And there may countries in the future that do weird things as well as a result of this crypto meltdown.

Basically, what I'm saying is that you're correct that there is no transaction risk. But there is a non zero risk of it becoming unusable at some point in the future in some locations.

I can’t see a way for the volatility to ever go down unless it’s a token where its value is determined by the income it produces. Things where the value isn’t mathematically quantifiable will always be super volatile. Even things like oil go through periods of high volatility.

The real risk factor is tether in my opinion. It’s collateral is completely hidden, and there could be a complete blowup if it starts having issues. If their collateral was rock solid they would have shown it by now. It’s already had issues once with depegging, and if that happens again it may spell the end.

This stuff is just crazy to me. If you know what you're doing, you can make a boatload of money, but it seems a little like the beanie baby thing only times a factor of 100. I'm just never going to understand these picture NFT's, lol, guess things have just passed me by. I think I'd have the same feeling towards any metaverse item too, I'd have a hard time spending $100k on a virtual house when I could just buy a real one.

But that's probably my own deal, I don't get into LE pinball machines or other limited edition stuff, it's all about the function or utility to me. It's why I have a hard time valuing crypto right now, I see potential but also where it could be and where it is are like an ocean apart.

Does it act like the key to a new free Porsche? Or maybe 14 new pinball machines? Then I understand. Otherwise, one is a Porsche, the other is a monkey pic, and they both cost the same, lol. What I’m guessing the monkey pic buys you is more chances to buy more monkey pics and flip them to more people who can try and flip more monkey pics, gradually forming the base of a nice pyramid of monkey pic holders.

I would kind of agree with that. Anytime someone has tried to short something that has laser eye type support (bitcoin, Tesla, GameStop, etc) it hasn’t worked out well for them longer term. I wouldn’t short it for the simple fact that one tweet from Elon could send the market up 10% like it did this weekend, I wouldn’t want to short in a market that can be driven up and down 10% by a stupid tweet.

The power of blind support makes those things very dangerous to short, as you could be 100% right that GameStop is going bankrupt but still lose a ton of money on the short due to gamma squeezes. I wouldn’t be surprised if they don’t try and gamma squeeze bitcoin next as more products become available.

I agree that reading up on Bitcoin is a good idea if you're going to invest in it. But I'd also suggest reading counter Bitcoin articles, so you get a view from both perspectives. Something like:

https://www.yanisvaroufakis.eu/2021/08/02/what-is-money/

Just so you understand all the views on it.

https://compassmining.io/education/compass-mining-announces-ceo-resignation-and-naming-of-interim-leadership/

Miners having issues. Didn’t pay power bills.

This isn't bullish in my opinion. It's what you do when you have no other option. Either Bitcoin goes to the moon or Microstrategy goes bankrupt, there is no plan B, so he has to keep buying in order to avoid a margin call. He's underwater hundreds of millions in his investment, he's just lucky he hasn't been margin called yet...if this was a house, they already would have forced the owner to put up more collateral or take on PMI.

It's also not bullish that so much is concentrated in one place. It can't be money for the people or whatever if one small company owns 1% of it. People are ok with it because it's Michael Saylor, but what if this was Facebook? Or Amazon? Would people like those companies holding large amounts of bitcoin? Probably not.

This is similar to what happened with the airlines, they used all their profits and took out loans to buy their own stock, then got margin called by covid.

His only hope is to spend what little money and influence he has to stabilize the price. Anyone in his position would do the same thing, there’s no choice.

I see some indicators that say that buyers are incredibly bearish right now, I don’t see it. Everyone that was buying before is still buying or is long term bullish.

I’m sure he’s not the only one over leveraged long. The thing is, at this point, I think most of the big gains are gone from bitcoin longer term. The highs it’s making are smaller and smaller multiples, so realistically the next up cycle 3 or 4 years from now will be to around $120k to $140k, then probably $200k to $250k 4 years after that if things continue as they have been.

Just looking at the past performance, that would be the overarching returns. Not really my opinion, that’s just historical data trends. It would have to break out of that to go higher…which it could do, but hasn’t historically really done that. Basically, your total gain will be higher, but lower on a percentage basis.

It's funny that there's a Bitcoin meme thing making fun of inflation when it's been the worst performing inflation asset.

Stocks down like 25% from high
Bonds down like 10% to 20%
Bitcoin down like 75% from high
Oil way up
Gold flat
Dollar up against other currencies

It's like making fun of someone for getting a C when you got an F, lol.

This is the first time in 40 years that inflation has been an issue, so it’s the only relevant timeframe. So regardless of halving, it has not done well compared to other assets in the same timeframe. 5 year timeframe it has performed outstanding, but if interest rates stay high and inflation persists will bitcoin perform? Hard to say currently.

I like his takes on NFT's. What I'm not entirely sold on is whether someone will be able to make their living as an artist at $80k a year solely on NFT's. And the reason I say that is because if artists struggle now paying bills and selling stuff, it's hard for me to believe that NFT's are going to make their work worth more, it just doesn't work like that normally.

The influencer stuff he talks about I can totally see and think he's right about them making a living on that. NFT's and artists, not so much because it's a crowded market. Influencers are just stealing away advertising dollars from TV/Magazine/Internet to a more targeted audience, what bucket are artist NFT's going to steal from? Nothing that I can see, you'd just have to have more people care about art than currently do, which is a hard sell in my opinion. I think he's right that some NFT from now will be worth millions later.

If it can get through that 23k barrier it has a long ways to run to the upside, like probably up past $30k.

The crypto space doesn't really have facts to be honest as far as value goes, it's all speculation for the most part.

Investing gives you an expected return based upon the income generated by an asset, which is usually backed up by historical data. These are usually businesses that sell or produce a product that generates some sort of return on equity.
Speculation is gambling that an asset is going to increase in value while producing no income or betting that it will in the future.

In other terms, you invest in an apartment complex that makes money every month, you speculate on land that you think will be worth a fortune if a business comes to the area (but the land currently produces no income).

Almost everything in the crypto universe is hypothetical. "If this happens, it will be worth a lot of money". "If governments adopt this, it will be worth a lot of money". "Hold everything, never sell, it's going to go up forever". There is no basis for the value, which is why the values fly all over the place. It's just a giant speculative outlet for extra money. That's why Buffet doesn't invest in it, he can't value it. I do think that there's some value in speculative bets in small amounts that pay an outsized return.

Right now the crypto market is essentially a higher beta version of TQQQ. Very high returns at times with very hard drawdowns as well. TQQQ has a 5 year return of about 3x to 4x currently, most crypto starts at 5x.

I don't know if the report has legit concerns or not, there are very very few people who would be able to say for certain. But I do know that over the past year there have been multiple things happening that "shouldn't have been possible". So I take anything along those lines with a grain of salt now, clearly anything is possible if the right circumstances happen. Things like Celsius collapsing, Luna collapsing, other exchanges looking like they're going to implode, etc.

So while it's likely most of the report is pretty far out there and unlikely, there's probably a certain amount of underlying truth to it, however small that may be.

Does this really matter? Isn’t the end result basically the same for environment, methane either gets burned for nothing or it gets burned for power for bitcoin mining? Seems irrelevant.

There’s no evidence in that article at all, just a claim from the people actually doing the bitcoin mining that it’s still producing the same gasses but it’s cleaner somehow…sounds like a bunch of malarkey to me, lol. It’s probably marginal cleaner but not some big mind blowing achievement.

It all depends on what kind of pollution equipment they have on the miner. Otherwise it’s just burning gas in a barrel vs an engine, and an engine isn’t really going to be much better unless equipped with smog equipment (which most generators do not). Smog equipment generally is more expensive and less efficient, so the miners would lose money using it, so it’s iffy whether they would be using it.

It’s only vastly different if they have the correct smog equipment. Run a generator, a tractor, a 60’s car, and a new car, then report the smell/emissions…vastly different. So until there’s a 3rd party actually confirming this stuff and not energy/mining companies with financial interest, I’m skeptical of the savings.

And your source is the people making money on the mining? I think you know better than to trust the people with financial interests.

I'm not sure if this is a very good rule of thumb. Things like I-bonds are like at 9%+ right now. Lots of reits/energy companies are paying high dividends and have been around a long time. Any legit business will return around a 33% yield on your investment per year. Maybe it's a good rule for things that don't have any history though.

https://pinside.com/pinball/forum/topic/cryptocurrency-and-decentralized-finance-defi/page/54#post-6352705

This whole thing reminds me of the post I made last year before everything collapsed and got ripped for, lol. It just seems like there’s a complete meltdown coming again.

You're right, it doesn't directly deal with staking, but all of this 'chasing yield' stuff with both staking and high interest accounts are all related and core to this meltdown.

The reason I said it was pointless way back then is the same reason I would say so now, it's just financial math...staking is irrelevant in an asset that wobbles in price the value of the entire staking of the year. I say that because you're either going to zero, in which your staking is also zero, or some 3x, 4x, 5x multiple where 10% is just noise. Like when bitcoin went from $10k to $60k, would anyone have cared about a 5% or 10% staking? No. And now that it's gone back the other way, $60k to $18k, would it matter? No. You've either gained or lost a crapload of money, with staking only marginally affecting the result.

It's no different than buying a REIT on the edge of bankruptcy that pays a 15% dividend (due to how low the stock price has been driven), it's either going to survive and be worth 3x to 5x what it is now, or it's going to go under and leave you with nothing. Same concept.

The only time staking would be worth it is in an asset where it's stable and little long term risk going to zero. Otherwise a lot of the time you're locked in when staking and can't sell your coins, leaving you with no way to escape should a meltdown happen. S&P 500 gives a small dividend you can reinvest kind of like staking, but there's basically no risk of going to zero either. It seems like Ethereum and Bitcoin are really the only two legit stable coins out there where you might want to hold them long term.

Bitcoin isn’t a Ponzi scheme. Literally impossible. However, it is possible that it could turn out to be a pyramid scheme if any of the top holders show up and liquidate everything. The base nature of it is similar to other multiple level marketing model stuff to be honest, where early large holders convince people to get on board and they convince more people to get on while the top holders value continually increases much like how the value in an mlm all funnels to the top.

Not necessarily with stocks, lots of times they go down and you can buy more later than you could earlier.

Bitcoin is setup so later adopters are guaranteed to earn less and less bitcoin for their mining than early adopters.

It all depends on whether Saylor gets wiped out. If he gets margin called, the bottom will fall out. Other scenarios I don’t see an issue with it really going much lower unless like binance goes under. Binance goes under, look out below.

If bitcoin does not get back above the acquisition cost ($30k) by the time the loans are due he will be liquidated. .69% of all bitcoin would completely sink the market because it’s not the .69, it’s that the float isn’t that high and .69 would be a huge amount for the market to swallow. In a non zero interest rate environment he will not be able to hold indefinitely without selling to service the debt.

Binance would be a big deal because it’s how most people sell their crypto outside the US. That goes down it’s like the NYSE going under, how do you buy and sell coins if the exchange is gone? All crypto would sink if binance went, just like all stocks would fall if the NYSE collapsed.

There are two different scenarios with Saylor. One is that bitcoin goes too low and he gets wiped out. The second is that bitcoin stays where it's at and doesn't get back above $30k for multiple years, that also probably wipes him out as when the loan comes due he can't refi and the interest to carry new loans would be way too high to service.

Right now it's like he bought a house that's 50% under the value he bought it for, but the loan repayment isn't due for a couple years. There are a couple issues here. His plan had to be to buy bitcoin at $30k and then sell some of it to pay the loan off. So essentially he's bought a house that he expected to triple but is now under water. If the price only gets back to $30k, he still has to liquidate everything as he has to pay back the loan. And if it's 50% under, he'll have to sell all the bitcoin he used as collateral to pay back the loan. Basically, if the house is the same price as he bought it when the loan comes due, he's going to have to liquidate because you can't refi a previous 2% loan at 7% and still afford it. And if it's under, he has to sell assets to make up the difference.

It's a race against time. I don't think he will get financing the second time after all this blew up and the easy money is gone now. Bitcoin either goes to 60k/100k or he has to sell everything that's on loan.

Regardless, he has loans that are coming due and he's going to need money to repay them. $855 million in 23 months it appears is the first, and there's something before that too (smaller amount). He was using Silvergate which is down like 80% now as a stock, so it's possible they're in trouble too from FTX. I'm just saying that in these situations where it's known that someone has a compromised position, it's pretty typical for those positions to eventually unravel as there's a ton of money to be made shorting. Like even Musk is having issues because it's known that he has to sell Tesla at some low value to cover debt, and the stock is being walked down to that level. If people know there's a huge forced seller at some level, they usually find a way to make it happen...which is how you get those giant market crashes, cascading margin calls/forced selling.

I'm not saying that the price would stay down for long, but I do think at some point Saylor is going to have to sell a large portion of his coins. Even if the price doubles/triples from his 30k average he's still going to have to sell 1/2 or 1/3 to cover the loan probably.

I would assume pretty high chance it will be above 30k. 60k or 90k? Probably slim. Which means that he'd probably have to sell all of it at 30k, 1/2 of it at 60k, 1/3 of it at 90k. I think he just wanted to roll the loans but I think that's going to be pretty much impossible going forward with the higher rates and the risk that's been exposed in the system. It's just a lot of bitcoin that could be dumped on the market when the majority of bitcoin is held by whales that never sell.

This is nonsense. Yes, SVB was really stupid and put 50% of their assets into long duration which is a basic banking no-no if you don't hedge. They also had a very poor deposit pool compared to most banks which left them vulnerable to liquidity issues...if you have 10 million people with accounts giving you 200 billion in deposits, you're a lot less likely to have them pulled then a company or individual who has multiple billions themselves (because they're all insured for the most part, and the company isn't).

Most of these banks are hedged, have very little exposure (10% or less), or are holding much shorter duration, etc. This isn't the canary in the coal mine. However, I do think that it will cause more assets to go to the big 4 and these smaller regional banks may suffer or eventually get bought. Maybe a couple of them will go under who have things that don't qualify for the new fed program (like muni bonds).

Yes, some banks will have issues, but this isn't going to be a major issue barring some other major event.

I agree with Pdxmonkey, Bitcoin can be digital gold, but it can't be the main currency unless you fractional reserve it. A fixed currency can't function unless the population is shrinking.

Also, why do you keep posting Michael Saylor stuff for bitcoin? That's akin to posting Jim Cramer advice in the stock thread, lol.

I do think Bitcoin has the possibility of shooting a lot higher here, however if there's a banking crisis it's going down with everything else probably just like how gold gets crushed in those situations. I'm honestly not even sure if people are investing in bitcoin anymore because they believe in bitcoin or because it's the highest beta most volatile asset which has the highest upside (and downside). Bitcoin's highest correlation is with like ARKK, lol...to me that just signals it's investors are the same ones flooding into meme stocks and other high beta things.

Why would people use them if they paid no interest? The only reason people kept their money in banks to begin with was safety and interest, without the interest part people would just put it somewhere else.

Back to it being used a currency, it would never work because of the disincentive to actually invest/borrow. For example, take a farmer. Now normally they take out a loan, grow crops, the land appreciates and when they hit 60 the land is paid off, is worth a lot more and they can retire by renting the land or selling it.

Now move to the bitcoin way. The farmer actually can't take out a loan on the land because the land is depreciating every year, and crops grown every year are worth less and less...no banker will make that loan. So there's no incentive to actually become a farmer at all. In fact, let's say that you started out in the best possible scenario ever, you owned 1000 acres free and clear to start. Time to start farming, right? No. Because the land depreciating and the crops are depreciating, you sell the land and just sit on the bitcoin instead...it's more profitable to produce nothing than to actually make crops. Why work for no gain?

And there in lies the whole issue, in the current economy assets are everything, the currency is becomes more and more worthless. In what you're proposing, the currency is everything, and assets become more and more worthless. The reason that doesn't make sense (besides the deflationary aspect of it) is because say you have Warren Buffett...he became rich by investing in businesses which produce goods and services which people consumed. In your world, Warren Buffet would become rich by doing nothing, in fact the less he produces/consumes the better. Instead of creating an electric car company (Tesla) or the biggest retailer (Amazon) or the most popular consumer electronic company (apple), he just did nothing and allowed his bitcoin to become more valuable over time. There would be no investing because instead of debt devaluing due to time, it would increase in value over time and become suffocating.

Because when it comes down to it, you need food, shelter, energy, etc and the money is somewhat irrelevant, it's just a medium of exchange. The only thing good about a bitcoin currency is that it would limit government spending, which is the real source of the money issues today, not the 'hardness' of the money.

Everything would depreciate as it's a zero sum game. The more stuff you produce, the more things would depreciate as there's only so much bitcoin to go around. Our salaries would go backwards.

Example: Say there are 1000 bitcoins for 1000 people, one per person to start, and 1000 acres per person, and 1 bitcoin = 1000 acres as they're all farmers with little else at this point. Then over time the population grows to a million with still those same 1000 bitcoins. So now there is 1000 bitcoin providing the salaries for a million people, which means each person is probably earning 1/1000th what they were when the population was smaller. As a result, asset values have plunged by a similar amount as no one could afford anything more. How could farmland still be 1 bitcoin when the average person's wealth has gone from 1 bitcoin to 1/1000th of a bitcoin? The population has gone from farmers with nothing to having houses, cars, food, etc, so there's 1000x more assets to spread the 1000 bitcoin over too. Crops would have plunged to 1/1000th their previous value as well at a minimum.

This is just the thought exercise. And frankly it would be much worse than that, because I'm sure by that point 1% of people will hold 99% of the bitcoin, so the average salary might be 1/1,000,000th of a bitcoin.

At the end of the day, it doesn't matter if it's dollar based or bitcoin based, assets are what really matter. While I think the 'rewarding savers' aspect is somewhat important, it's the production of goods and services that really matter. There has to be proper incentives to drive innovation or things will stagnate and devolve.

I'm not sure why anyone is arguing over emissions, emissions and carbon credits are a scam basically, they used to be fine but have been corrupted to the point of being worthless. If people really cared about emissions we'd build way more nuclear plants but we're not. Bitcoin uses a crapload of energy for what it currently does (basically nothing currently) but possibly in the future that might pay off. I've been buying more because I'm starting to think there is a higher and higher chance of it going past its previous highs in the next year or two because if this past year didn't do in Michael Saylor, it doesn't appear anything will, and that is what would have pushed Bitcoin into crash territory. Right now the average person is getting hurt by it due to increased energy bills way more than they're being helped by it.

Believe in it? No. Think it uses too much energy? Yep. Think it's going higher? Yep. There are just too many people hoarding and the supply getting cut in half will only make that worse. Plus if the price doesn't rise 1/2 the miners will go under when the amount gets cut.

I'm just looking at it as a very high beta stock with a huge upside and downside potential, and as such it makes sense to allocate a small percentage of my investments towards it. Doesn't pan out? Well at least I don't have to listen about it anymore, lol, might be worth it. I'm doing Eth too along with it, as it's even higher beta and now features artificial scarcity too.

I don't think El Salvador's tourism and crime is related to bitcoin very much, they had a huge year long crackdown on crime that's made it a better place to visit. Microstrategy is just a leveraged bet that bitcoin is going to more valuable, if it isn't the business fails. There's no game changing either place.

People are into crypto because they think they're going to get rich. That's it. There's the narrative about "decentralization" and "power to the people" but at the end of the day those are just narratives used to push an agenda for the biggest holders like Microstrategy. So instead of the top 1% controlling 30% of the overall money like now, we'll just have the top .01% controlling 27% like bitcoin. Sounds great, even more wealth concentrated at the top than before. Does moving to that sound better for the everyday person, where even more wealth is at the top? It's just nonsense in my opinion. Cross border transfers to me is like the one use case where I think it makes sense and where I think it has a future possibly, but any coin would work for that really, so there's not really any advantage there.

I just take it for what it is, a thing that people want to collect like LE pinballs, and it's worth holding because of the huge religious like following around it. People go crazy for it, like Apple, Telsa, etc. Might as well jump on board and see how far it will go, lol.

I'm not even sure why they're still buying since it's been a failure in their country. Usage is declining, not increasing, less than 2% transactions now.

I think the goal was to get the population to use it, and that's not really happening. Usage is falling, and they're not even using it that much to do international payments (126 million of 7 billion). I guess my point is, if it was really solving people's problems, they would latched onto it and usage would be increasing. If it was truly something groundbreaking for the population (like ChatGPT) then you'd see it ramp up in use as well. That just leads me to believe that in real transaction use, it's not providing a better user experience than they currently have, which would indicate it being mostly unsuccessful.

The 92.5% argument is really weird...because if you're arguing for it from a 'use' perspective, that makes it seem terrible. But from a scarcity perspective, it sounds great. It's like if you said when people first came to America, 92.5% of the land has been claimed already...well sure, that last 7.5% is going to be pretty scarce, but the fact that one dude out of 300 million own all of texas isn't a great case for it being put to a good 'use' and seems even more inequitable than stuff is today.

The one thing I’m wondering is if the demand for bitcoin will stay as high if it no longer has the highest likelihood to outperform. Like even though it has doubled this year, there are quite a few stocks that have outperformed it. I own it as an asymmetric holding that can outperform the regular market by a large margin possibly, if that starts to no longer happen (if the performance only equals the regular market or o ly slightly higher) I will have a lot less reasons to hold it, like I would switch to something like TQQQ for extra asymmetric performance. If bitcoin becomes big enough that it can’t 3x or 4x every few years, it may become less desirable.

I just wonder how long it will be before the law of large numbers starts to drag on its performance. Once things get above that trillion dollar market cap it gets really hard to increase in value at a high rate.

Well that would be nice since I own a decent amount, lol.

But before you outright dismiss me, the law of large numbers is why Warren Buffett can't find anything to buy. Growing a business from 1 to 2 to 10 million is very reasonable, but once you start getting into the billions/trillions it gets harder and harder to move the needle. Look at Amazon, from 2013 to 2018 they like 4.5x'd, from 2018 to 2023 they didn't even 2x...company struggled to expand as they'd already taken over most of the market.

Bitcoin could run into the same issue eventually. I don't know where that would be.

Then why don't LE's go to 100k since they're so scarce? Same reason as everything else that's scarce, as the price rises it prices out the buyers and lessens demand.

For Bitcoin to reach a million, it would have to go from 1% of the stock market total value to 25%...that's a lot of money. Basically it means that it would have to be worth more than google, amazon, apple, facebook, nvidia, microsoft, and telsa combined.

There's only 500 LE's of like Ghostbusters, they aren't making anymore. How does that not pass the limited test? They're making other LE's (just like they're making other crypto's) but that doesn't change the amount of that particular LE (or Bitcoin).

Mark to market accounting rules are going to make it very hard for companies to hold it. Tesla had some (not sure if they still do) but it was causing their earnings report to go wonky. Berkshire has the same issue due to the amount of stock they hold. Most companies don't want that in their earnings. If companies haven't bought gold for reserves, it's highly unlikely they would ever buy bitcoin.

50% of the value but only 6% of the volume. 6% volume does not speak to controlling the crypto market. Value wise yes, usage, no. Similar to saying Tesla controls the entire automotive market, it's worth 50% of the entire automotive market but only has 4% of the sales. Does Tesla control the entire car market? Food for thought.

Didn't you lose a bet on Bitcoin hitting 100k like 2 or 3 years ago?

I'm just saying there's a limit on how high something can go no matter how much demand there is because your buyers run out of money. Doesn't matter whether it's stocks, gold, cars, pinball machines, etc, it eventually reaches a ceiling. Most people are buyers in this thread at $40k, are they buyers at $400k? When you get that high, the upside gets so limited that people start to bail for better alpha. Like if it got to a million, what more upside would it have?

I think there's asymmetric upside to bitcoin which is why I own it, but I'm also realistic on how large it can actually grow here unless some sort of dollar crisis occurs. A 2x to 4x gain from here over the next 2 years seems realistic as a possibility. Interest rates are too high for high leverage (plus no fake money from exchanges) so some of the nonsense that was going on the last spike won't happen this time...but that also means the move up will probably be more under control.

There may be higher upside in the crypto's that actually serve a transactional purpose eventually if there's some sort of income generated from owning them. They're smaller so they have more room to run.