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comment by rene
rene  ·  1468 days ago  ·  link  ·    ·  parent  ·  post: Michael Saylor on Bitcoin's Next Billion HODLers

I’ve never understood the mechanism behind bitcoin’s rise as an asset. Is it a currency? Then it’s value is in relation to other currencies by arbitrage which means small returns on small scales. Is it a commodity like gold? Then it’s value is when global currencies lose value and the global system slows down, but then it has to compete with gold as a form of exchange and maintain the technological infrastructure it needs to work at all. I don’t see the value and it makes me think it’s just a big Ponzi scheme, which is risky and requires a lot of attention as an investment. Personally I think that Bitcoin has been a successful subsidization for building huge data centers that will power our digital future, but I don’t think it will exist past that purpose.





mk  ·  1468 days ago  ·  link  ·  

Bitcoin has value simply because it has the qualities that enable people to attribute value to it. It is transferrable, scarce, somewhat fungible, and used by enough people. Paper currency is similar. The systems that create these qualities are very different between BTC and paper currency, but the product is similar. Of course, paper currencies fail. Bitcoin could too.

    Personally I think that Bitcoin has been a successful subsidization for building huge data centers that will power our digital future, but I don’t think it will exist past that purpose.

As all that hardware is ASIC, I don't think they are useful beyond the walls, roof, and cooling systems.

ooli  ·  1468 days ago  ·  link  ·  

    Bitcoin has the qualities that enable people to attribute value to it. It is transferrable, scarce, somewhat fungible, and used by enough people

How that description don't apply to tulip bulb?

For what I heard BTC is used (as a currency) by criminals, period. for the first few month you could barely buy coffee, and now it is not even a thing

So it is not a mean of exchange. Without that, it is not a currency

Edit: But i'm not a theorist. My real question is: If I want to short BTC, what am I suppose to do? Sell Electricity?

kleinbl00  ·  1467 days ago  ·  link  ·  

Fund a Coinbase Pro account.

Seriously. All this pearl-clutching and high dudgeon is ridiculous. "I can't buy coffee with it therefore it isn't a currency." Go to Starbuck's with a Krugerrand and tell me how that works out.

mk  ·  1468 days ago  ·  link  ·  

Tulip bulbs were a store of value beyond utility for a short while.

I used BTC last month, not for criminal activity. However, now I am using USDC for the same purpose, USDC is an Ethereum token pegged to the USD.

rene  ·  1468 days ago  ·  link  ·  

Pardon the snark, but sounds like a fancy gift card rather than a revolution in currency.

Last time I used BTC was to buy LSD off the Silk Road 10 years ago. After that the rest I converted into dollars so I could pay the rent in college, made 80 bucks off the price swing.

kleinbl00  ·  1467 days ago  ·  link  ·  

I own zero BTC. I think. No, I believe I have some fraction of BTC left in Coinbase. At the time it was a rounding error, now it's probably worth a couple pizzas. My BTC holdings were never worth more than like $700, and that's back when that was like 3 BTC.

But I also don't pretend that the idea of a blockchain is irrelevant because it makes me mad.

mk  ·  1468 days ago  ·  link  ·  

USDC is a legit revolution in currency. DAI (which has no currency reserve) is even more so.

I use Ethereum a few times a week. My usage has definitely grown over time.

steve  ·  1468 days ago  ·  link  ·  

    I use Ethereum a few times a week

please feel free to send me ETH at any time during those few times a week.

.

Joking aside - I did buy a car with ETH a few years ago.

ButterflyEffect  ·  1467 days ago  ·  link  ·  

Yeah...I don’t think there enough lengths I could make to thank people like mk, insomniasexx, and kleinbl00 for all the crypto discussions years ago when ETH was just breaking into news cycles. Fundamentally altered the course of my life.

kleinbl00  ·  1467 days ago  ·  link  ·  

And for the record, my viewpoint has largely been contrarian.

rene  ·  1468 days ago  ·  link  ·  

I’m sorry, I still don’t get it. I don’t dispute blockchain is valuable technology and here to stay, but I set my eyes on Bitcoin specifically as an unknown factor. Is it meant sit in vaults, like gold? Or is it meant to transact regularly, like a currency? I don’t think you can have both at the same time and it be a stable investment vehicle with better returns than real asset classes.

Per the hardware question, the building and energy management systems are valuable, probably more so than the chips. Chips fail, hard drives fail, and like the Argo they are remade, the result of which has been a market created that supports developing these chips for miners, trains professionals in the maintenance of these data centers and chip fabrication, and identifies geographies amenable to cheap high volume data processing. Regardless, to speak of the specific chips, they can serve institutional backed crypto currencies performing similar operations.

I just can’t shake the feeling Bitcoin is a Ponzi scheme

kleinbl00  ·  1467 days ago  ·  link  ·  

    Is it meant sit in vaults, like gold? Or is it meant to transact regularly, like a currency?

It's meant to launder money.

I say that in all seriousness. Piketty burned an entire chapter in Capital in the 21st Century determining the size of the black market and estimated it at 50% of the white market. If 10% of black market transactions are executed in bitcoin, Bitcoin's market cap would be 70 trillion dollars. There are 18b bitcoin in circulation with a market cap of $430b. There can never be more than 21b BTC. We're looking squarely at Drake's Equation here: we have a stack of bullshit factors that give us a scientific number but "ponzi scheme" or not there's a fair amount of runway even if you presume BTC will never be anything but thermonuclearly illegal.

    I don’t think you can have both at the same time and it be a stable investment vehicle with better returns than real asset classes.

"Stable investment vehicle" is a relative term. No matter how you define it, though, it certainly doesn't apply to Bitcoin at the moment. "Real asset classes" is also a relative term. There was a time when ETFs weren't "real asset classes." The 401(k) is an accidentally-discovered tax loophole. Pets.com is a cautionary tale; Chewy.com has a $43b market cap doing the exact same fucking thing 20 years later. You're effectively saying "it must be bad since I don't understand it, and since it must be bad I don't have to understand it."

mk can talk at length about crypto. So can I. Been there, done that. But you're never going to get more than a beatdown when your basic approach to the discussion is "this is stupid and illegal, and everyone involved in it is a stupid criminal." I've been called a stupid criminal by accountants, financial planners and immediate family members for owning crypto so if I want someone to berate me for making money I can get that job done by far more important opinions than yours.

kleinbl00  ·  1467 days ago  ·  link  ·  

Bitcoin is a bearer instrument. You likely know that term as "bearer bonds" and know "bearer bonds" because Hans Gruber seized Nakatomi Plaza exclusively so he could steal them.

A "bearer instrument" is a document or object that says "whoever is holding this document or instrument is also holding 100 shares of Enron stock" or whatever. 1 share of the LA County Public Library renovation bond. 1 share of Big Brother & The Holding Company Inc. When I incorporated the first time my lovely $700 package included 100 shares of common stock. I gave one to a buddy which served to complicate my taxes so I had to ask it back. It was worth negative money. I bought ETH at 50 cents; theoretically, that one share entitles him to 1% of the ETH I'd bought.

It will not surprise you that municipalities and enforcement agencies frown on bearer instruments because they're portable wealth for purposes of tax evasion and smuggling. It will also not surprise you to learn that tax and accounting practice treats crypto of all kinds as an intangible.

Intangibles can have value. You have no problem with this. If I offered you a 1% share in the rights to the Happy Birthday song in 2015 for $1m you would have jumped at the chance. That song made Warner Chappell something like $70m a year. By 2016, however, credible evidence that Warner Chappell never owned it, the song slipped into public domain, and now your ownership would be worthless.

70% of the Bitcoin miners in the world are in China. They store portable value on the black market for Chinese citizens of means. Every dollar's worth of Bitcoin ties up a real dollar, and most of the people who buy it don't sell it. This makes it the opposite of a Ponzi scheme whereby the people who buy in early subsist off of selling product to people who buy in late.

You can be mad at Bitcoin because it doesn't adhere to your morals or your understanding or your chosen worldview but one thing all cryptohaters have in common is a studied, practiced and vehement insistence that their unexamined worldview is the proper model for something they don't want to understand.

Kodak's marketcap is $750m right now. They haven't made anything for a decade. Earlier this year they were going to make vaccines. Last year they were going to be a cryptocurrency company. yet you can buy that shit with your IRA.