OT: Sens Lounge: "Pleeease won't you be.....my neighboµr"

[darude]

Bitcoin's initial value proposition was not to become gold, but to replace PayPal and other inter-bank transfers. It became an investment because the 'value' of coins generally keeps going up as more and more people buy and hold onto them. This has had the reverse effect than was intended. Nobody wants to use a highly volatile currency as a way of exchanging money quickly wherever you want.

A decade or more ago there were pubs you could pay directly in bitcoin, I paid for web hosting for awhile with it, etc. Once it started to swing wildly day to day, then jump 50-60% in a week before going back to swinging wildly day to day, nobody wanted to use it for that anymore. You wouldn't want to say "we'll accept BTC for Y service" then find out that in the time between agreeing to that and actually being able to cash out the BTC it had dropped 40%. Likewise, you wouldn't want to pay a service BTC knowing that a week from now the service will be worth 40% less.

 

[Micklebot]

Bitcoin's initial value proposition was not to become gold, but to replace PayPal and other inter-bank transfers. It became an investment because the 'value' of coins generally keeps going up as more and more people buy and hold onto them. This has had the reverse effect than was intended. Nobody wants to use a highly volatile currency as a way of exchanging money quickly wherever you want.

A decade or more ago there were pubs you could pay directly in bitcoin, I paid for web hosting for awhile with it, etc. Once it started to swing wildly day to day, then jump 50-60% in a week before going back to swinging wildly day to day, nobody wanted to use it for that anymore. You wouldn't want to say "we'll accept BTC for Y service" then find out that in the time between agreeing to that and actually being able to cash out the BTC it had dropped 40%. Likewise, you wouldn't want to pay a service BTC knowing that a week from now the service will be worth 40% less.

Even as a replacement for Pay-Pal and interbank transfers, I'm not sure where the value proposition really exists, like, what added value would a stable coin have over an E-transfer, in particular with smaller transactions?

The only obvious advantages that come to mind wrt Crypto currency tend to be the ones that are less scrupulous. Things like tax evasion, and hiding transactions from authorities. I guess they also appeal to those that don't trust the gov't at all and want something that is not controlled by them.

 

[BankStreetParade]

Even as a replacement for Pay-Pal and interbank transfers, I'm not sure where the value proposition really exists, like, what added value would a stable coin have over an E-transfer, in particular with smaller transactions?

The only obvious advantages that come to mind wrt Crypto currency tend to be the ones that are less scrupulous. Things like tax evasion, and hiding transactions from authorities. I guess they also appeal to those that don't trust the gov't at all and want something that is not controlled by them.

Bingo. #1 asset for illegal activities.

 

[2CHAINZ]

Even as a replacement for Pay-Pal and interbank transfers, I'm not sure where the value proposition really exists, like, what added value would a stable coin have over an E-transfer, in particular with smaller transactions?

The only obvious advantages that come to mind wrt Crypto currency tend to be the ones that are less scrupulous. Things like tax evasion, and hiding transactions from authorities. I guess they also appeal to those that don't trust the gov't at all and want something that is not controlled by them.

You literally cannot hide your transactions they are public on the block chain. Bitcoin is terrible for tax evasion and illegal activity. There are other anonymous cryptos that are good for illegal things but bitcoin is not one of those.

I will get around to responding to all the posts just been really busy today give me a bit.

Bingo. #1 asset for illegal activities.

Funny stuff it's like I'm living in 2015 again

 

[Micklebot]

You literally cannot hide your transactions they are public on the block chain. Bitcoin is terrible for tax evasion and illegal activity. There are other anonymous cryptos that are good for illegal things but bitcoin is not one of those.

I will get around to responding to all the posts just been really busy today give me a bit.

Well, I did say Crypto currencies, not bitcoin, they get thrown around interchangeably, so I understand why you might assume I was doing so, but I was in fact speaking from a more general perspective when referencing potential use cases for Crypto that come to mind.

In terms of Bitcoin being public, while true there are still anonymous wallets and exchanges without KYC processes, though as you say, there are other crypto currencies that are likely less of a hassle for that use case.

 

[2CHAINZ]

Yeah, I've never read the original bitcoin whitepaper that @2CHAINZ referenced, but I have read online tutorials on blockchain. I have a degree in Comp Eng, so I understand it pretty well.

But I will admit that I "don't understand bitcoin". In the sense that I don't understand why it has value, and in particular why it would go up (or down) in value at any time. If I buy stock in a company, purchase a bond, or even exchange money from one currency to another (say Cdn$ to US$) I understand what each of those things represents and why they have value and (mostly) why that value might change over time. IE, when that stuff might go down, I can understand why and therefore can decide on my own whether I think that will happen. With Bitcoin, I have no clue so can't possibly predict.

But... when I state that Bitcoin is higher risk than a broad based stock ETF, that is based purely on actual historical financial data. When professional investors consider any investment, be it an individual stock or ETF or managed fund, there are a handful of metrics that define it's "risk". One of them is its "drawdown" -- basically the amount it goes down from it's peak price to lowest price in a given timeframe.

In the last 40 years the S&P 500 has had 4 major drawdown events: the 1987 Black Monday crash (-30%), the 2001 dot com bubble burst (-45%), the 2008 financial crisis (-48%) and the 2020 Covid crash (-20%).

Just eyeballing the returns for Bitcoin, it has had 4 drawdowns of similar or larger magnitude in the last 7 years.

That is, major drawdowns happen in Bitcoin almost 6 times more often than the S&P 500.

Bitcoin has value because of it's scarcity; there will only ever be 21 million; it is decentralized (although Blackrock, Saylor, and Vanguard are getting a hold of lots). Yes, bitcoin has volatility, and yes, it could crash, but at this point, do people really still think this is going to 0? As bitcoin does more halving's over the next 10 years till it reaches the 20 million and slows way down to mine the last 1 million bitcoin will then find it's top as a store of value, there will be volatility along the way. If you read the white paper and understand the philosophy behind bitcoin essentially as a hedge vs. government over spending, bank collusion, and inflation, it starts to make sense. If I can find the original bitcoin forum posts and discussion, I will post it; it will really open people's minds to what bitcoin stands for and what it means.

I just have a hard time understanding what I'm investing in if I put my money in Bitcoin,

Like, it's value is purely based on demand and scarcity, but it doesn't do anything beyond provide an "asset" you can eventually sell.

If I buy into a company, I'm investing in that companies growth, the company produces a good or service that adds value to society but Bitcoin seems to be positioned against Fiat currency but without any linkage to the economy. It's a resource intensive "money" without any regulatory guardrails,

None of that means you can't make money from it, but it seems like the economic equivalent of empty calories...

Generally speaking, I see a lot of societal bad that comes from the way stock market is run too, so this isn't me saying Crypto bad, stock market good,

If you buy a stock of a company, that stock doesn't grow because the company grows or turns a profit. A stock is only worth what someone is willing to pay for it. Also, more stocks can be issued, just like fiat currency. Again, with bitcoin, there are no more than 21 million; you can't print more bitcoin.

Bitcoin.....still lost lol....I have a better chance of learning to speak Mandarin fluently....and I am Italian so go figure.

I am Italian and understand bitcoin

I figure bitcoin (and all digital currencies) are just the new generation of MLMs. Get in early and win, or be the losers stuck jumping on at the end and being the one that gets butchered.

If I were to invest, it would be in the energy sector. Humans will always need energy.

I mean, when is it late to invest in Bitcoin? I was told it was too late at 1k, 5k, 10k, 15k, 20k, 25k, 30k, and so on and so on.

I mean, you get something tangible in all those cases, you can appreciate the art, or the car for whatever that is worth to you. You own a piece of history, as opposed to a decentralized sting of binary code.

Beyond that, those things mostly started off with a societal purpose, a stamp is proof of payment for mailing something, art aims to communicate sentiments, and elicit emotional responses, cars are built to be driven, these all were initially made for a purpose that adds to societal benefit, idk that Crypto currency does that at least not when you look at it relative to the resources required to produce it, despite some attempts to articulate use cases.

Crypto currency isn't a commodity, it isn't a collectable, it's not a pokemon where you've got to catch'em all, it's an alternative form of currency that is harder to use in real life, takes more resources to produce and use, and seems to lack any form of oversight, or tie in to anything tangible; at least fiat currency is tied to the gov't that issues it, and by that to that country's economy.

This is why I bet on Bitcoin

The bolded is why I'm staying away from it, couldn't articulate it better myself

See above

Value is assigned. It is assigned to what we want. Regardless of being physical or not. It can also be spiritual. Your most precious thing is not your child. It his love for you and your love for him. A parent can live in one corner of the world and his child in another. Rarely see one another. Yet the emotional value is priceless.

value is meaningless as it applies to anything. My most valuable thing is the memory of my dead wife!!!

Bitcoin is gambling.. no different. You bet on black or red. Bitcoin is saying here is this game, Invest with us and play the numbers. Be clever and predict black or red accurately. Keep doubling down, etc.

That is all that it is.

there is simply game theory, number theory behind it. Ands as the world pushes billions of dollars into gambling, it is doing the same here. Zero value in gambling. Zero value in lotteries.

The difference is, in Bitcoin, you are obliged to double down. Unless you pullout. The next game does not reset, it functions on doubling down. So buy in higher and higher, making the next fail, a massive hit. And making the last fail, catastrophic.

understanding Bitcoin is understanding gambling.. It is why I am not surprised at the one who started this conversation @2CHAINZ ....

Bitcoin is gambling for the financial community. the way fanduel is gambling for the working class.

and your last paragraph..think how skewed gambling is. How low probability the lotto is.. yet we rush in.


he was talking about the rest of us. Not you

2Chainz doesn't gamble; he wins

Bitcoin's initial value proposition was not to become gold, but to replace PayPal and other inter-bank transfers. It became an investment because the 'value' of coins generally keeps going up as more and more people buy and hold onto them. This has had the reverse effect than was intended. Nobody wants to use a highly volatile currency as a way of exchanging money quickly wherever you want.

A decade or more ago there were pubs you could pay directly in bitcoin, I paid for web hosting for awhile with it, etc. Once it started to swing wildly day to day, then jump 50-60% in a week before going back to swinging wildly day to day, nobody wanted to use it for that anymore. You wouldn't want to say "we'll accept BTC for Y service" then find out that in the time between agreeing to that and actually being able to cash out the BTC it had dropped 40%. Likewise, you wouldn't want to pay a service BTC knowing that a week from now the service will be worth 40% less.

Bitcoin's initial proposition was actually to become digital gold once the mining rewards got down to the last million set in the code. In it's early days, yes, it was a simple peer-to-peer transfer, but it's design cap of 21 million is what makes it so valuable. In countries like El Salvador, bitcoin is used daily for purchases and payments. If someone is taking payment in BTC, it's so they can stack BTC. They don't care that it might drop 40% in the next month because they know in 5 years it will be worth significantly more than when they first received it.

 

[2CHAINZ]

Well, I did say Crypto currencies, not bitcoin, they get thrown around interchangeably, so I understand why you might assume I was doing so, but I was in fact speaking from a more general perspective when referencing potential use cases for Crypto that come to mind.

In terms of Bitcoin being public, while true there are still anonymous wallets and exchanges without KYC processes, though as you say, there are other crypto currencies that are likely less of a hassle for that use case.

A lot of people want self-custody of their money, and with the defi sector, crypto is changing banking maybe for the better. I think in the coming years we will see banks adopt crypto a lot more, and you will probably be able to hold your bitcoin at your local bank. There are still anonymous things that do allow for illegal transfers of money, but look at the TD Bank 3 billion dollar fine for allowing cartels to launder money. It's not like people doing illegal things aren't doing them with the current systems in place. Drug dealers, gun runners, pimps still use cash.

 

[Micklebot]

you buy a stock of a company, that stock doesn't grow because the company grows or turns a profit. A stock is only worth what someone is willing to pay for it. Also, more stocks can be issued, just like fiat currency. Again, with bitcoin, there are no more than 21 million; you can't print more bitcoin.

And someone is typically willing to pay more for it because the company is turning a profit, and producing value. They have confidence the company will continue to be productive, fueling speculative buys that it will continue to be profitable. When a company issues more stocks, that is an investment into the company, those funds are used to grow the business further,

This is unlike Crypto, where the only value seems to be in the fact that it will remain limited to a finite amount, but I don't see a value to society, it's not useful as a currency if it's value isn't stable, it's not valuable in the sense that it creates goods or service, it's only use seems to be the ability to entice people to pay more for it than what you purchased it for, but why? Is it a good investment, well it certainly has been so far. does it add any value to the world through it's existence? That I'm not so sure about.

 

[Micklebot]

A lot of people want self-custody of their money, and with the defi sector, crypto is changing banking maybe for the better. I think in the coming years we will see banks adopt crypto a lot more, and you will probably be able to hold your bitcoin at your local bank. There are still anonymous things that do allow for illegal transfers of money, but look at the TD Bank 3 billion dollar fine for allowing cartels to launder money. It's not like people doing illegal things aren't doing them with the current systems in place. Drug dealers, gun runners, pimps still use cash.

Ok, so yes, people will always try to cheat, TD got caught, so we have the means to catch those situations. If the value proposition of a crypto currency is adding the difficulty in tracing cash transactions to a digital world, I don't see that as a positive.

 

[FunkySeeFunkyDoo]

Bitcoin has value because of it's scarcity; there will only ever be 21 million; it is decentralized (although Blackrock, Saylor, and Vanguard are getting a hold of lots).

Scarcity can increase somethings value, but only if it had some value in the first place. Lots of things are scarce, but aren't valuable.

Yes, bitcoin has volatility, and yes, it could crash, but at this point, do people really still think this is going to 0?

Going to 0? No, in my lifetime it'll probably not go to 0.

But something doesn't have to go to 0 for it to be high risk -- which was the original statement that I made; that Bitcoin is definitely a high risk investment.

Once anything drops 30% or 40% or 50%, if the average person has a significant chunk of cash in that investment they will bail. They expect that it will keep going down and cut their losses. A ballsy, sophisticated investor like you may be willing and able to just ride it out, but most people will not.

Which is why the frequency of big drawdowns as I described is most relevant.

 

[2CHAINZ]

Ok, so yes, people will always try to cheat, TD got caught, so we have the means to catch those situations. If the value proposition of a crypto currency is adding the difficulty in tracing cash transactions to a digital world, I don't see that as a positive.

Well, you have to off-ramp your crypto unless you sell your crypto directly to someone for cash, which essentially is the same thing as making an illicit transaction in cash. I agree with you that these are not positives, and I only support Bitcoin and SOL a little bit. I don't advocate for people to buy and use Monero, which is the anonymous crypto. We have the means to catch illegal crypto transactions, and as countries like the US and Canada start to really regulate and be pro-crypto and btc, these things will get even easier to detect.

 

[2CHAINZ]

Scarcity can increase somethings value, but only if it had some value in the first place. Lots of things are scarce, but aren't valuable.


Going to 0? No, in my lifetime it'll probably not go to 0.

But something doesn't have to go to 0 for it to be high risk -- which was the original statement that I made; that Bitcoin is definitely a high risk investment.

Once anything drops 30% or 40% or 50%, if the average person has a significant chunk of cash in that investment they will bail. They expect that it will keep going down and cut their losses. A ballsy, sophisticated investor like you may be willing and able to just ride it out, but most people will not.

Which is why the frequency of big drawdowns as I described is most relevant.

Scarcity plays a pivotal role in BTC vs. fiat. Fiat will always lose value due to money printing, inflation, etc. BTC is a long-term hedge versus those things. BTC will always go up in value vs. fiat. You don't need bitcoin to "rise" in price when fiat is constantly going down.

BTC has volatility, and that volatility can be large. If you invest, you should take profits when you are up huge; you don't have to let it ride when it goes on a massive dip and then trades sideways for months. If you stack BTC little by little over time (dollar cost average), your investment will pay off. That is the approach I told people to take. I never told anyone to go balls deep and have 90% of their net worth in BTC. I actually don't view BTC as high-risk in the long term, and that seems to be proven as time goes on.

 

[darude]

Even as a replacement for Pay-Pal and interbank transfers, I'm not sure where the value proposition really exists, like, what added value would a stable coin have over an E-transfer, in particular with smaller transactions?

The only obvious advantages that come to mind wrt Crypto currency tend to be the ones that are less scrupulous. Things like tax evasion, and hiding transactions from authorities. I guess they also appeal to those that don't trust the gov't at all and want something that is not controlled by them.

E-transfer someone $100 in Germany and Japan, right now, and have them spend it this afternoon with no holds. Now do $100,000. You cannot.

That was kinda the whole original vision for bitcoin. That and eventually we'd be measuring exchanges like that in 1/10000ths of a Bitcoin were effectively the design goals.

 

[2CHAINZ]

And someone is typically willing to pay more for it because the company is turning a profit, and producing value. They have confidence the company will continue to be productive, fueling speculative buys that it will continue to be profitable. When a company issues more stocks, that is an investment into the company, those funds are used to grow the business further,

This is unlike Crypto, where the only value seems to be in the fact that it will remain limited to a finite amount, but I don't see a value to society, it's not useful as a currency if it's value isn't stable, it's not valuable in the sense that it creates goods or service, it's only use seems to be the ability to entice people to pay more for it than what you purchased it for, but why? Is it a good investment, well it certainly has been so far. does it add any value to the world through it's existence? That I'm not so sure about.

Companies turn profits in a bear market all the time; it doesn't mean stock price goes up. I didn't mean a company issues more shares dilutes your stock I just meant it's centralized; someone controls it, and that's a good thing to some people and not a good thing to other people. Bitcoin philosophy was all about freedom, freedom from control of the elites, control of government, banks, etc

Bitcoin is paving the way for so many things built in this new digital age we are entering, and BTC will be the digital gold, foundation that people use to back their company. service, etc.