Are members invested in Bitcoin/crypto?

Archer · Feb 22, 2021

Observer
I can’t find a definition anywhere that indicates a currency must be government issued.

“Currency” is a term that can apply to anything really, as long as at least a few people agree on it’s value.

I think the distinction here is more about what is considered “legal tender” that by law businesses must accept as payment. It’s the governments that decide this...

sgrenald · Feb 22, 2021

Observer
I’ll have to disagree with the part about not meeting my retirement goals. I’m sitting on once in a lifetime gains already, and it just keeps going up. I also think it’s a great idea to put 5% of a portfolio into gold. Preserving wealth is just as important as investing.

Not that I’m a genius or necessarily any good at this. Everyone should be sitting on gains in the greatest bull market in history.

I wasn't specifically saying "don't put money into bitcoin" in my example. But I was saying that looking at Buffet (or some other zillionaire) buying a large amount of gold shouldn't necessarily inform your own investing choices. Past performance yadda yadda, but if you put $10k into gold ten years ago, and the other $490k of your assets into an S&P index fund or ETF, you'd have about $13-15k of gold today, while you'd have around $1.5m in the mutual fund. IMHO, when you're wealthy, your investment strategy is more about preserving wealth than building it. Just like a typical Omega watch collector has a more aggressive investment strategy at 45 than he does at 65.

Of course, I'm a greedy bastard, so all of my money is in equities and will probably stay that way long after I should move to bonds or PMs. 😗

Observer · Feb 22, 2021

sgrenald
I wasn't specifically saying "don't put money into bitcoin" in my example. But I was saying that looking at Buffet (or some other zillionaire) buying a large amount of gold shouldn't necessarily inform your own investing choices. Past performance yadda yadda, but if you put $10k into gold ten years ago, and the other $490k of your assets into an S&P index fund or ETF, you'd have about $13-15k of gold today, while you'd have around $1.5m in the mutual fund. IMHO, when you're wealthy, your investment strategy is more about preserving wealth than building it. Just like a typical Omega watch collector has a more aggressive investment strategy at 45 than he does at 65.

Of course, I'm a greedy bastard, so all of my money is in equities and will probably stay that way long after I should move to bonds or PMs. 😗

Knowing the rules is easier than following them. 😉

While I don’t model all of my behavior after Buffet and friends, when it’s raining money on rich people, I think there’s a lot to be said for opening my trick-or-treat bag and standing next to them.

Walrus · Feb 22, 2021

Archer
And the next mystery I suppose I need to understand is this...

Dragon - CryptoKitties | OpenSea

If you ever figure it out let me know it clogged up the ethereum network fortunately I think that fad died a while back

Andi · Feb 22, 2021

Observer
Knowing the rules is easier than following them. 😉

While I don’t model all of my behavior after Buffet and friends, when it’s raining money on rich people, I think there’s a lot to be said for opening my trick-or-treat

Observer
Knowing the rules is easier than following them. 😉

While I don’t model all of my behavior after Buffet and friends, when it’s raining money on rich people, I think there’s a lot to be said for opening my trick-or-treat bag and standing next to them.

Buffet knows bitcoin is worthless: https://markets.businessinsider.com...nvesting-rat-poison-squared-2021-1-1029974898

Observer · Feb 22, 2021

Buffet felt the same way about Amazon and Google. He’s still reading Graham and Dodd while the world has moved on.

Walrus · Feb 22, 2021

How Much was Bitcoin Worth When it Started in 2009? When Bitcoin started out there wasn’t really a price for it since no one was willing to buy it. The first time Bitcoin actually gained value was on October 12, 2009 when Martti Malmi, a Finnish developer that helped Satoshi work on Bitcoin, sold 5050 Bitcoins for $5.02. This gave 1 Bitcoin the value of $0.0009.
Read more: 100% Complete Bitcoin Price History Graph + Related
Events 2009 - 2021 | 99Bitcoinsm

Say what you will, perfectly understandable people don’t like or question bitcoin, look for it’s faults, make predictions of doom and who knows they may all be right. But still in 2009 1 bitcoin had a value of .0009 of one penny. It is quite an amazing thing that took place. Along with that blockchain was given to the world. It wasn’t that long ago you couldn’t give bitcoin away today, the same banks that were calling it a Ponzi scheme are putting billions into it. MasterCard and visa which banned the purchase of it are now accepting it and letting people use it for payment. Happened to me my credit card blocked my purchases years ago now I get a letter telling me they are setting up a crypto payment. The oldest bank in the US is now holding it for their clients. Bitcoin ETF’s, Bitcoin on the CME, just an amazing thing to see. Who knows maybe it will go poof and be worth nothing, countries are starting their own digital currency I can’t tell the future but bitcoin has had a really cool past, even with its energy issues, anonymity issues etc, pretty damn cool.

Gamma11 · Feb 23, 2021

Here in India they have started taking steps for enforcement of the ban on crypto currencies not issued by the government . The capital markets regulatory body here is planning to debar promoters of listed companies from holding any crypto. They can trace these investments via their social security numbers which would be further linked to their bank accounts.

321Only · Feb 23, 2021

Banning Bitcoin is the most undemocratic thing a government can do.

Banning code means banning speech

STANDY · Feb 23, 2021

321Only
Banning Bitcoin is the most undemocratic thing a government can do.

Banning code means banning speech

undemocratic 😲 government that was voted for by the people democratically

Ummm democracy means you vote for someone to make the rules for you.

Why do so many thinks it means you can do what you want.

Gamma11 · Feb 23, 2021

321Only
Banning Bitcoin is the most undemocratic thing a government can do.

Banning code means banning speech

Would like to respectfully disagree
When it comes to financial matters, Safety is paramount on a macro level.
Companies are vetted by the authorities before listing of equity/debt instruments (Even some of these go bad so the risks in new technologies can be inferred) , for crypto currencies there is no regulatory body, there aren't even any agreed guidelines.
Hence protecting the economy may be the reason for such a decision which is rational in my view.
(Not against bitcoin, just my view)

321Only · Feb 23, 2021

Remember Gold was illegal to privately hold and trade multiple times in history?
The governments argued they wanted to protect citizens from volatility and the dangers of counterfeit bullions. You were forced to hand in your gold at state offices for a fixed rate.

321Only · Feb 23, 2021

Google Executive Order 6102 which is a very prominent example.
In 1933 US citizens had to hand in privately held Gold to the Government because too much of the USD was printed and the currency was devaluated. in 1934, the gold standard was created which pegged the USD to Gold creating a backed currency.

Gold Standard was again rejected in 1971 because the government had to issue more USD than they could back with gold reserves. This led to the fiat standard which we still have today. Now look at the health of our current fiat currencies and ask yourself what would be a smart move from the government perspective. yeah, protecting the citizens from bad goods (that actually hold value). lets ban it

Bugbait · Feb 23, 2021

Observer
The vast majority of financial crimes and money laundering are committed with USD. Most blockchains are transparent public ledgers and there is little to zero anonymity. The argument that crypto facilitates financial crime is baseless. The real issue the government has with crypto is capital control.

Yes, the bulk of financial crime is committed with USD. Why? Because it has a long established, relatively stable, known and accepted value. The vast majority of global financial transactions are also conducted in USD. Not sure why that is relevant to this discussion though?

The public ledger contains an account number or wallet identifier and transaction amount, that's it. This is not considered "transparent" in terms of AML policy. Without controls on who can open a wallet then it's largely meaningless. The same applies to fiat currency accounts now. Even though several countries, US and UK included have implemented some controls (e.g. FinCEN bringing cryptocurrencies under AML regulations) this is only applicable to exchanges that conduct business in or with these countries.

But here lies the problem with that: Assuming CountryA chooses not to comply with US laws (happens now) any crypto exchanges in this country can accept fiat currency in exchange for crypto currency and vice versa. Who the actual recipients are is unknown to others on the cryptocurrency network. Seems fairly open to money laundering, tax evasion and financial crime to me.

So the actual participants in a cryptocurrency transaction are currently not remotely as transparent as fiat currency. Therefore the avenues for financial crime via cryptocurrency are broader than fiat currency due to lack of regulation. Although cryptocurrency is still a small proportion of the estimated overall value of financial crime, its use has been growing over time.

I'm not advocating that people shouldn't buy into or use cryptocurrencies, use your assets as you wish but some of the misinformation floating around could give "you can't swim with a watch that's only 50m WR" a run for its money.

EDIT: Typos.

321Only · Feb 23, 2021

Sorry if I stress this too much but maybe this helps understanding my personal perspective.

Regarding the health of our fiat monetary system. We are currently in a serious economic crisis, just have a look at the balance sheets of our central banks:
FED: M1 Money Stock is currently at 6,812 billion dollars of which 2,849 where created/printed since Jan 2020. That’s an increase of 71% in the M1 money stock of the USD.
ECB: The balance sheet of the ECB blew up by 52% from 4,671 to 7,079 billion EUR in the same time period.

Interest rates on government bonds (short, mid and long term) are almost all negative, the US is one of the few examples with positive interest rates left. This means states basically borrow $100 at the financial market while paying back $99. The Euro zone is worse in that than the USD, we already have real negative interest rates on cash money on bank accounts. Retail banks (e.g. Comdirect bank) ask you to pay -0.5% on all deposits > 100k€. That threshold is coming down retail banks force all sorts of banking fees on private customers.

These are only two signals of massive devaluation. The importance of Bitcoin lays in its deflationary value, contrary to the obviously inflationary nature of fiat. This is where the store of value narrative comes from, driving prices to record highs again and again. Very similar characteristics actually apply to gold, still i personally believe that bitcoin is superior and makes gold redundant as a store of wealth. This is my personal view of course, happy to elaborate if requested.

I strongly believe that in free markets, resources naturally flow into the most productive goods. Aka, a flow of liquidity to deflationary assets. Just like it did before when people hoarded gold bullions in 1933 which brings me back to previous posts.

Sources (German language, sorry for that):
https://fred.stlouisfed.org/series/M1
https://www.tagesgeldvergleich.net/statistiken/bilanzsummen-der-zentralbanken.html#ezb
http://pigbonds.info
https://www.handelsblatt.com/finanz...ml?ticket=ST-3297615-bPawLxZbqRfwoqdx6KSR-ap4

If required, I am sure I can dig out English sources too.

smoothsecondscom · Feb 23, 2021

Observer
Buffet felt the same way about Amazon and Google. He’s still reading Graham and Dodd while the world has moved on.

I'll talk to you in the next market crash.

smoothsecondscom · Feb 23, 2021

321Only
Sorry if I stress this too much but maybe this helps understanding my personal perspective.

Regarding the health of our fiat monetary system. We are currently in a serious economic crisis, just have a look at the balance sheets of our central banks:
FED: M1 Money Stock is currently at 6,812 billion dollars of which 2,849 where created/printed since Jan 2020. That’s an increase of 71% in the M1 money stock of the USD.
ECB: The balance sheet of the ECB blew up by 52% from 4,671 to 7,079 billion EUR in the same time period.

Interest rates on government bonds (short, mid and long term) are almost all negative, the US is one of the few examples with positive interest rates left. This means states basically borrow $100 at the financial market while paying back $99. The Euro zone is worse in that than the USD, we already have real negative interest rates on cash money on bank accounts. Retail banks (e.g. Comdirect bank) ask you to pay -0.5% on all deposits > 100k€. That threshold is coming down retail banks force all sorts of banking fees on private customers.

These are only two signals of massive devaluation. The importance of Bitcoin lays in its deflationary value, contrary to the obviously inflationary nature of fiat. This is where the store of value narrative comes from, driving prices to record highs again and again. Very similar characteristics actually apply to gold, still i personally believe that bitcoin is superior and makes gold redundant as a store of wealth. This is my personal view of course, happy to elaborate if requested.

I strongly believe that in free markets, resources naturally flow into the most productive goods. Aka, a flow of liquidity to deflationary assets. Just like it did before when people hoarded gold bullions in 1933 which brings me back to previous posts.

Sources (German language, sorry for that):
https://fred.stlouisfed.org/series/M1
https://www.tagesgeldvergleich.net/statistiken/bilanzsummen-der-zentralbanken.html#ezb
http://pigbonds.info
https://www.handelsblatt.com/finanz...ml?ticket=ST-3297615-bPawLxZbqRfwoqdx6KSR-ap4

If required, I am sure I can dig out English sources too.

This is really problematic, and I guess that this is indeed a good reason for many investments, including bitcoin, to rise. But following this logic stocks, real estate, and other non-convential investments (cars and watches perhaps) should skyrocket too. They aren't. They've increased but not as much as bitcoin. While I believe bitcoin has a future in the long term it seams overvalued in the short term.

321Only · Feb 23, 2021

Grant046
This is really problematic, and I guess that this is indeed a good reason for many investments, including bitcoin, to rise. But following this logic stocks, real estate, and other non-convential investments (cars and watches perhaps) should skyrocket too. They aren't. They've increased but not as much as bitcoin. While I believe bitcoin has a future in the long term it seams overvalued in the short term.

There is an interesting indicator referred to as "the buffet indicator" putting global GDP and Market Cap of Stocks into perspective and provides an indication if stocks/companies are overvalued based on the productive output. Not the biggest fan of Buffet and very high level macro-parameters like this one but the message is clear: The indicator value jumped from 1.237 in March 2020 to 1.932 which means
A: Stock market was already overvalued before covid came along. (1.0 being the reference value of the indicator)
B: It got worse by flooding the system with money while reducing productive output.

Regarding Bitcoin: There is an underlaying mechanism called "Halving" that cuts the total number of newly issued bitcoins per block in half every 4 years. These events always initiate a bull run since its a deflationary event (see 2013 and 2017) This event happened in May 2020 so we are in a "natural" bull run wich is even accelerated by the crisis.

Sources/references:
https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/
https://medium.com/coinmonks/how-the-bitcoin-halving-impacts-bitcoins-price-ac7ba87706f1
https://medium.com/swlh/bitcoin-halving-everything-you-need-to-know-4573dc5b528e

STANDY · Feb 23, 2021

Everyone with half a brain knows that Bitcoin will drop back to 5-10k again don’t they.
🍿

Starman71 · Feb 23, 2021

When I bought my bitcoin at $300 every single investment analyst worth his Rolex said bitcoin was garbage and would never amount to anything. When I sold my bitcoin at $20,000 I bought a Rolex. True story.