What are your thoughts on BitCoin?

[yung.carl.jung]

The problem is anyone can do it.

The entire concept is easily watered down.
At one point there were more virtual currencies than real currencies.

I wouldn't buy in now, the time for that was 5 years ago.

people been saying that for a long time now. fact is if you bought bitcoin less than a year ago you would still have doubled your investment, which is an incredibly return that basically no other investment gets you.

it's a real shame the only people who can really take advantage of this are the kind of people that can lose tens of thousands of dollars without it hurting them too much. as always..

for me, even the thought of holding BTC with the money I've worked very hard for makes me extremely tense and anxious. but then again, so does holding stocks. Things were, in a way, much nicer when I didn't have any money.

 

[Zardnaar]

people been saying that for a long time now. fact is if you bought bitcoin less than a year ago you would still have doubled your investment, which is an incredibly return that basically no other investment gets you.

it's a real shame the only people who can really take advantage of this are the kind of people that can lose tens of thousands of dollars without it hurting them too much. as always..

for me, even the thought of holding BTC with the money I've worked very hard for makes me extremely tense and anxious. but then again, so does holding stocks. Things were, in a way, much nicer when I didn't have any money.

It's not worth the stress though.

 

[yung.carl.jung]

It's not worth the stress though.

what, holding BTC or holding stocks?

 

[Zardnaar]

what, holding BTC or holding stocks?

BTC.

Stocks are fairly reliable as long as you can afford to hold and not be forced to sell.

9 or 10% average returns iirc each year.

I would consider bitcoin but not any of the others.

Lands good.

 

[Zardnaar]

I like this guy's closure.

If you need to ask a YouTuber don't invest in it.

 

[Moriarte]

The biggest challenge the crypto guys are facing is taxation. A cryptocurrency is a form of money, but also a commodity (an asset, some might say), which fluctuates in value, subject to mining, speculation and relative tech superiority compared to another cryptocurrency. With future upgrades to the code and partial centralization it can become (and in some instances already is) dirt cheap to transact, instantaneous, secure value transfer. Conventional currencies will struggle to compete, since they're encumbered by city districts full of staff and electricity they burn, by various government expenditure and subject to market fluctuations, which can erode value (hello, brexit). But. Gold only became gold, because it's everywhere, a widely held and regulated medium of transfer of value. Crypto isn't everywhere, far from it. And the main obstruction to adoption is the fact that government can't tax it nor can it reach out and freeze it, provided crypto owner knows what he is doing. And here we arrive at fundamental paradox -- Crypto owners want to spend their crypto. Governments also don't mind dealing with crypto, provided they can track it, tax it and heavily regulate it. Which would be the right thing to do, imo. We usually regulate things for a Reason. But fundamental nature of crypto prohibits the very idea of it being monitored at the deep level. So.. how do you solve this one? It's not a trivial task. Until someone does solve this, crypto will remain in perpetual stagnation with rare speculative "spikes" every now and again.

Here's the Chinese take on it: https://cointelegraph.com/news/china-passes-first-ever-crypto-law-going-into-effect-january-2020

 

[Modder_Mode]

The biggest challenge the crypto guys are facing is taxation. A cryptocurrency is a form of money, but also a commodity (an asset, some might say), which fluctuates in value, subject to mining, speculation and relative tech superiority compared to another cryptocurrency. With future upgrades to the code and partial centralization it can become (and in some instances already is) dirt cheap to transact, instantaneous, secure value transfer. Conventional currencies will struggle to compete, since they're encumbered by city districts full of staff and electricity they burn, by various government expenditure and subject to market fluctuations, which can erode value (hello, brexit). But. Gold only became gold, because it's everywhere, a widely held and regulated medium of transfer of value. Crypto isn't everywhere, far from it. And the main obstruction to adoption is the fact that government can't tax it nor can it reach out and freeze it, provided crypto owner knows what he is doing. And here we arrive at fundamental paradox -- Crypto owners want to spend their crypto. Governments also don't mind dealing with crypto, provided they can track it, tax it and heavily regulate it. Which would be the right thing to do, imo. We usually regulate things for a Reason. But fundamental nature of crypto prohibits the very idea of it being monitored at the deep level. So.. how do you solve this one? It's not a trivial task. Until someone does solve this, crypto will remain in perpetual stagnation with rare speculative "spikes" every now and again.

Here's the Chinese take on it: https://cointelegraph.com/news/china-passes-first-ever-crypto-law-going-into-effect-january-2020

True, and don't forget the more sinister side of Bitcoin; the dark web.

 

[cardgame]

Most of what you say is true, but cryptocurrency isn't a ponzi or pyramid scheme because it doesn't promise you anything in return which is the fundamental principle with ponzi and pyramid schemes.

Yes, it does promise it. The phrasing is not "use bitcoin! bitcoin is better than real currencies!" no, the phrase is "INVEST in bitcoin!" explicitly implying returns on that investment.

 

[Modder_Mode]

Yes, it does promise it. The phrasing is not "use bitcoin! bitcoin is better than real currencies!" no, the phrase is "INVEST in bitcoin!" explicitly implying returns on that investment.

That doesn't promise a return though?

 

[Samson]

Are the crypto people here worried about google's quantum supremacy? As I understand it, a functioning quantum computer would pretty much break bitcoin, along with all asymmetric encryption schemes.

 

[hobbsyoyo]

This-

but cryptocurrency isn't a ponzi or pyramid scheme

Doesn't really square with this:

Very true, the early adopters were the real winners

 

[El_Machinae]

Buying bitcoin doesn't fund the creation of bitcoin, so it's not really an investment. In a normal investment scheme, the speculator is taking on the risk of funding the creation, hoping that the initial creation turns out to be more valuable than the market predicted.

The farmer took on the risk of producing wheat. The speculator buys the wheat, hoping that its market value will justify the effort. Bitcoin breaks away from the model, because the coin was going to drop whether or not the individual farmer was active. Whereas, the wheat farmer is creating wheat that would not have happened anyway.

Not sure 'ponzi scheme' is the right word, though. Right now, it is, you're hoping a new speculator is more optimistic than a previous one. Remember, there's no real value added to bitcoin as it goes up in price. A 50 cent bitcoin is just as useful to someone needing dark currency as a $5000 one, since you'll just buy enough to conduct the transaction that you want.

In wheat, the speculator is buying wheat hoping that the user will have want for it. And they're carrying the risk of the initial creation of the wheat from the farmer. With bitcoin, we have farmers and speculators and users. So, it looks a lot like a commodity market. But until there's an actual user base and where the value goes up because people are using bitcoin rather than hoarding it, it feels pretty ponzi.

 

[Farm Boy]

Processors buy wheat futures to secure their supply chain and have costs they can plan around. Meat producers do with feed. Airlines do with fuel. Producers sell wheat futures contracts to lock in prices as insurance against market collapse and have income they can plan costs around. Speculators create no wheat, they juice and crack out the already present swings in the market. The thing they fund the creation of is volatility. You're going to have to sell me on how they aren't a tax on the system, funded yet again by already having capital to throw around and suck capital out of nearby systems.

 

[El_Machinae]

What do speculators do that disrupts the system? Don't get me wrong, I understand the damage is done by having high amounts of external capital, but that's a function of the current rich being too rich.

If speculators are a burden, and wholly a burden, then why do people sell to speculators or buy off of speculators?

Who does the producer sell wheat futures to?

 

[Farm Boy]

Follow the wheat. There is so much that is contracted to be sold by producers. Those contracts are filled by delivery of wheat. There is so much that is contracted to be bought by processors. Those contracts are filled by payment for wheat delivered. Those, year over year, season over season impact storage, use, and production. They determine long running price. Then there are the people who fill futures contracts by covering them with other contracts. No delivery. No use. No storage. No production. Only amplification of current market trends up, and down. If you're in the market with them, you have to play the market with them, or you're bust. They speculate on all your inputs too, not just your outputs. They're a hazard. Like tornadoes, or floods.

 

[El_Machinae]

You're closer to the process than I am, so I have no reference. I've never really understood how the options Market really adds any benefit. It would be the same with speculators around real commodity. In my more classical understanding, the Speculator is taking ownership hoping that the producer and user were incorrect in their pricing estimates or can't handle the risk of waiting

 

[Farm Boy]

I'd guess fluidity is provided at the cost of volatility.

Waiting isn't simply market risk for non-speculators, nor is it just opportunity cost(the price of a speculator "holding"). Holding thousands of bushels in storage in a way that does not destroy them(well, retards their destruction is more accurate) costs money every day. The field is not flat.

 

[yung.carl.jung]

This-

Doesn't really square with this:

why? people who bought google and windows and apple stocks in the 90s were the real winners. doesn't make stocks a ponzi scheme in any way.

 

[Moriarte]

Buying bitcoin doesn't fund the creation of bitcoin, so it's not really an investment. In a normal investment scheme, the speculator is taking on the risk of funding the creation, hoping that the initial creation turns out to be more valuable than the market predicted.

The farmer took on the risk of producing wheat. The speculator buys the wheat, hoping that its market value will justify the effort. Bitcoin breaks away from the model, because the coin was going to drop whether or not the individual farmer was active. Whereas, the wheat farmer is creating wheat that would not have happened anyway.

Not sure 'ponzi scheme' is the right word, though. Right now, it is, you're hoping a new speculator is more optimistic than a previous one. Remember, there's no real value added to bitcoin as it goes up in price. A 50 cent bitcoin is just as useful to someone needing dark currency as a $5000 one, since you'll just buy enough to conduct the transaction that you want.

In wheat, the speculator is buying wheat hoping that the user will have want for it. And they're carrying the risk of the initial creation of the wheat from the farmer. With bitcoin, we have farmers and speculators and users. So, it looks a lot like a commodity market. But until there's an actual user base and where the value goes up because people are using bitcoin rather than hoarding it, it feels pretty ponzi.

But that's characteristic to the system. Speculative "virtual" market for commodities is sometimes 10 times larger than the physical one. Initially people speculate on wheat and gold and then big money flow into synthetic contracts, which mirror asset/commodity fluctuation but bear a very complicated relation to it's physical source. This "investment-speculation" money then become another lever to control prices in the free market, as they did during 2008 housing bubble. Like any other commodity, btc followed the exact same path, where speculative funds comprise the majority of btc value. Options and futures are initially tools for regulating efficiency, but eventually (always) become a field for speculation double, triple+ the size of the underlying asset/commodity. That's capitalism. We can't control this aspect meaningfully without terminally disrupting the free market. When calling btc a ponzi scheme we shouldn't forget that most other commodities/assets are also a pyramid in the way -- we never know when the big money will jump ship and as such destroy the market.

I would call it loosely-regulated digitalized commodity at this point.

 

[Farm Boy]

I think we could. Vastly different tax brackets perhaps. Aim for starting with "punitive" and take it from there.