SURVEY: Cryptocurrencies -- wave of the future or disaster waiting to happen?

[allanos]

Quote: The final Bitcoin will be mined in 2040. I think this may have been a typo.  In point of fact, as halving events take place and future mining difficulty is adjusted, it is expected that the last of 21 million Bitcoins will be mined exactly one hundred years later, in 2140.

 

One poster has constantly been stating that the price of Bitcoin is simply a function of too much demand chasing too little supply. As things stand, there is enough supply, so the argument doesn't hold water. This position will however, change, going forward, as greater adoption of Bitcoin takes place, by individuals, corporates and institutions, and maybe even some (smaller) central banks.  Those who are prepared to hold on to their, perhaps speculative investment in the digital currency, like myself, are taking a calculated risk, that's all.

 

Bitcoin is fast embedding into the mainstream, largely because it is the most trusted of all the crypto's. It is trusted in the same way gold is, which is why it now carries the appellation of "digital gold". But its utility is far greater than gold, other than in jewellery manufacture and certain industrial uses for the precious metal. What they both have in common is that there is no counter-party risk, unlike property rental, stocks and shares, bonds, Treasuries, etc. Think about it!
 

Those that claim that it consumes too much energy during the mining process have not applied that same averment to the energy which resides in fiat currency, through all the stages of its creation and use. That same fiat currrency in circulation, inflated on the somewhat questionable foundation of the Chinese Communist Party virus running amok, is surely losing value and purchasing power. Bitcoin is volatile, no question, although the volatility is predicted to decrease over time. Stock and share traders make the most money with volatility.

 

So, what is the mainstream that Bitcoin is now occupying? Some point to the funds and institutions, like MassGen, a major US insurance company, that "gambled" (surely not?) with $100m of investors' money a few months ago. Today worth 3x or 4x more, probably.

 

Microstrategy ($1.6bn invested, so far, and another $600m on the way). Not to be left out of Bitcoin, the huge bank which is JP Morgan Chase recently invested a chunk of cash into Microstrategy. Other listed corporates include Square, Grayscale, and now, Tesla, and many other corporates. To me, probably the most influential of them all in terms of reaching the man-in-the street, is PayPal, with over 322 million customers and 20 million merchants, and for whom they are allowing the buying, selling and holding of Bitcoin. PayPal has a market cap of over $300bn, by the way; they are no small player! And, not to be overlooked, they are assuring  their users of no Bitcoin volatility, by immediately converting to fiat, if desired. Their impact for Bitcoin is being felt, and will be enormous over time. They are expecting to work with the US Government on how to integrate Bitcoin within the financial world.

 

The FANG companies may feel they are above the Bitcoin "fray", but are they? The value of the fiat in their treasuries is being eroded by anywhere up to 20% per annum, through inflation. How are they going to generate sufficient shareholder returns, in future, if they don't embrace Bitcoin, like a number of shrewd CEO's have done?

 

Lastly, a word on nefarious, underworld uses of the so-called Bitcoin anonymity. First, Bitcoin is exactly the opposite. Each and every transaction can be found on the open-source block chain on which it runs. There are examples of criminals being brought to book by following the necessary trail of crypto activity. Christine Lagarde, herself under the shadow of money-laundering charges in France, says that Bitcoin has been used for "funny business". This is a joke, surely? Think of all of the bad things which take place in the world: child/human trafficking, drug smuggling, arms dealing, terrorism, revolutions,  among others, and how do you think they are funded?

 

Certainly not by Bitcoin. They are funded by fiat washed and laundered through banks and other financial institutions, some offshore, but not always, often with a nod and a wink by senior executives in these same organisations, looking to their pay-cheques and eye-watering annual bonuses for "performance and share appreciation"!

 

 

 

 

Edited February 17, 2021 by allanos
typo

[ukrules]

7 hours ago, nobodysfriend said:

This crypto boom is , after all , backed by nothing but the limited availability and someones greed .

Don't underestimate greed, it's infinite.

 

[ukrules]

4 hours ago, OneMoreFarang said:

I remember I read an article about a coffee shop which allowed payment with Bitcoins. Some customers liked it, a modern payment system, fine.

But soon later the owner didn't accept Bitcoins payments anymore because it was just too volatile. Every day different prices (or exchange rates, every day changing money because tomorrow the exchange rate will be different. Or maybe keeping the money because soon the price will go up....

Crypto currencies might be interesting for people to speculate or gamble. But for everyday payments they don't make much sense - except people want to hide what they pay for or where the money comes from.

For "normal people" it's a lot of headache without advantage. 

 

Think of a Bitcoin as a gold bar, would you pay for your coffee with a big lump of gold?

 

It was never going to be a day to day currency to pay for your groceries. Many thought it would be but they were wrong.

[dcpo]

Bitcoin is functionally a decentralized ponzi scheme at the moment. It generates no wealth. It does not function as a currency. It costs a lot to keep the system going. There are profits to be made, but it's pure greater fool. Some will win, most will lose. The price is heavily manipulated by Tether and Elon Musk <deleted>posting on Twitter. There's a use for truly anonymous cryptos like Monero in darknet trading and ransomware attacks. I guess in theory you could use an anonymous coin for something more worthwhile like funding anti-government activity in dictatorships, but this is very fringe in comparison to the actual interest in crypto, which for the vast majority of people comes down to wanting to get rich quick.    

[Surelynot]

11 minutes ago, ukrules said:

Don't underestimate greed, it's infinite.

 

Along with FOMO....it is what drives the market.

[Peter Denis]

38 minutes ago, allanos said:

...

One poster has constantly been stating that the price of Bitcoin is simply a function of too much demand chasing too little supply. As things stand, there is enough supply, so the argument doesn't hold water. This position will however, change, going forward, as greater adoption of Bitcoin takes place, by individuals, corporates and institutions, and maybe even some (smaller) central banks.  Those who are prepared to hold on to their, perhaps speculative investment in the digital currency, like myself, are taking a calculated risk, that's all.

...

You were probably referring to my earlier posts, in which I stated that the bying-rate for Bitcoin is solely determined by supply-demand for the coin.

Since the underlying value of Bitcoin is 'moot', supply-demand for the coin is the only available mechanism by which Bitcoin exchanges determine the selling/buying price.

And it are the 'whales' - those holding large amounts of Bitcoin - that play this Game of buying/offering Bitcoins to hike the price up or down (in both cases they win).  There are even clubs of Bitcoin-holders, that join forces to manipulate the price-level for their advantage.

 

You wrote As things stand, there is enough supply, so the argument doesn't hold water.

If there is enough supply (which means those holding or mining Bitcoin looking for buyers) how then can the price go up?

But with large organizations now embracing Bitcoin, there is more demand than supply and this hikes up the price.

 

It is not because you did buy Bitcoin and the price went up, providing you with big gains when selling them again, that you necessarily understand the pricing mechanism.

Also be aware that if you are a 'hodler' (holding your coins and not selling them), that it is only when you actually sell them against 'real world fiat-money' that you are actually making a profit.  When not selling but holding them, you only have some 'numbers on the Blockchain' which are currently in demand, but that might change virtually overnight. 

Edited February 17, 2021 by Peter Denis

[ukrules]

The worlds largest investment banks are now getting publicly involved.

 

I suspect they have been quietly acquiring holdings for some time (like a few years).

When you hear names like Morgan Stanley, BNY Mellon, etc linked with SEC filings then you know it's hit the big time.

[Sametboy2019]

Started reading about coins lately and read about XRP and their court case.

Price is very low now and if they succeed people are saying it could make some serious money.

Obviously bitcoin and Eurethem are the big boys but is it possible for another to come through with big numbers or is this a coke and Pepsi thing?

[OneMoreFarang]

3 hours ago, Mr Meeseeks said:

I wouldn't trust hedge fund managers, bankers or financial advisors.

 

But they still keep calling me selling their services even though I have told them to f off several times. ????

I wouldn't trust them if they want to sell me something.

But if I have friends with many years expertise in investing money I would be stupid to ignore their expert advice.

[OneMoreFarang]

2 hours ago, bkk6060 said:

Good for you knowing one banker and a hedge fund manager. ????

There are many more out there that recommend it and are now making it a small part of their portfolios.

 

Blackrock is the worlds largest asset management company:

BlackRock is set to dip its considerably massive toes into the world of cryptoassets, according to public filings and reports by a number of outlets.

The gargantuan money manager headed by Larry Fink has filed to offer its clients exposure to bitcoin futures BTC.1, 4.64% through funds, BlackRock Strategic Income Opportunities BSIIX,

 

If Blackrock thought it was some scam or bogus I doubt they would make this commitment.

 

Who should you trust?  Not me, I am just some know nothing on TVF.

But, do your research and education and of course my recommendation from there would be: trust your judgement and yourself.

Maybe I should have written that a little different.

The people I talked about are my friends and I know them not because I invested any money with them.

They personally with their own money don't touch Bitcoin or any other cryptocurrency. That is reason enough for me to stay away from those "investments". 

[OneMoreFarang]

59 minutes ago, ukrules said:

Think of a Bitcoin as a gold bar, would you pay for your coffee with a big lump of gold?

It was never going to be a day to day currency to pay for your groceries. Many thought it would be but they were wrong.

Does it really matter if you buy a coffee or a car or a house?

If you decide today you buy and tomorrow you want to pay you have to worry about the exchange rate for tomorrow. One day might make the difference between a good deal and a bad deal. That doesn't make much sense.

[allanos]

1 hour ago, Peter Denis said:

You were probably referring to my earlier posts, in which I stated that the bying-rate for Bitcoin is solely determined by supply-demand for the coin.

Since the underlying value of Bitcoin is 'moot', supply-demand for the coin is the only available mechanism by which Bitcoin exchanges determine the selling/buying price.

And it are the 'whales' - those holding large amounts of Bitcoin - that play this Game of buying/offering Bitcoins to hike the price up or down (in both cases they win).  There are even clubs of Bitcoin-holders, that join forces to manipulate the price-level for their advantage.

 

You wrote As things stand, there is enough supply, so the argument doesn't hold water.

If there is enough supply (which means those holding or mining Bitcoin looking for buyers) how then can the price go up?

But with large organizations now embracing Bitcoin, there is more demand than supply and this hikes up the price.

 

It is not because you did buy Bitcoin and the price went up, providing you with big gains when selling them again, that you necessarily understand the pricing mechanism.

Also be aware that if you are a 'hodler' (holding your coins and not selling them), that it is only when you actually sell them against 'real world fiat-money' that you are actually making a profit.  When not selling but holding them, you only have some 'numbers on the Blockchain' which are currently in demand, but that might change virtually overnight. 

Having read all of your posts on this subject, it would seem that your "world view" is clouded by much too much subjectivity. Please do not take this as a criticism; it is an outsider's observation, that's all.

 

And not to say that you are wrong, but simply that I can't agree with you. I believe my thoughts have been founded in objectivity.

 

Supply and demand can simply be one factor in the rise of Bitcoin, but where is the lack of supply? There is a ready availability on exchanges, it's clear.  Personally, I have had no problem in buying BTC. Many miners have been holding on to the Bitcoin mined years ago, waiting for moments like this to sell into the market, for example.

 

Then, there is FOMO - the fear of missing out.  As the price rises, and early adopters of Bitcoin are able to achieve large profits, so human nature decrees that others will "chase the price" higher, trying to get on the bandwagon. (It has been observed that by the time one even sees the bandwagon, it is already too late)!

 

I would point to perceived value as being a driver of price. People who believe that the spot price of Bitcoin represents fair value, at any stage of its being, will be prepared to pay the asked price.  Of course, they should understand that the price may drop, but, should it do so, they don't have to sell. They will have relied on their own judgement. How does one place a value on anything? It is the value in the eyes of the beholder prepared to pay a particular price at a particular point in time. Although there are certain other influencing factors we  could look to, art auctions are an example, but by no means the only one. We mustn't believed that a painting is bought only because it looks pretty!

 

Large entities who have bought into the Bitcoin narrative have determined the long-term value of Bitcoin to them, and their corporate goals and aims is worth the present, and ever-rising spot price. One has to assume, in the absence of any absolute mechanism to decide what is fair value, that they have some idea of what they are doing.

 

A lesser mortal, like me, doesn't really need to debate the issues of what is driving the Bitcoin price, be it supply and demand factors, or something arcane which may be unknown to any of us. 

 

I remain pleased that I bought into BTC when I did and am now showing a "notional profit", )it's true, of close to 400%.

 

 

Edited February 17, 2021 by allanos
typo

[ukrules]

26 minutes ago, OneMoreFarang said:

Does it really matter if you buy a coffee or a car or a house?

If you decide today you buy and tomorrow you want to pay you have to worry about the exchange rate for tomorrow. One day might make the difference between a good deal and a bad deal. That doesn't make much sense.

Yes, it's about the transaction fee being more than the transaction.

[Peter Denis]

1 hour ago, allanos said:

...

Supply and demand can simply be one factor in the rise of Bitcoin, but where is the lack of supply? There is a ready availability on exchanges, it's clear.  Personally, I have had no problem in buying BTC. Many miners have been holding on to the Bitcoin mined years ago, waiting for moments like this to sell into the market, for example.

...

Unless you mine Bitcoin yourself, you normally buy they from an exchange.

When you do some research on how these exchanges determine the selling/buying price of Bitcoin, you will have your answer...

[allanos]

13 minutes ago, Peter Denis said:

Unless you mine Bitcoin yourself, you normally buy they from an exchange.

When you do some research on how these exchanges determine the selling/buying price of Bitcoin, you will have your answer...

Indeed, and it is clear to me that you have never, yourself, bought Bitcoin, but like to sit on the sidelines and input from a theoretical or hypothetical viewpoint, rather than a real-world one. Perhaps you should have followed your brother's example . . 

Edited February 17, 2021 by allanos
typo

[mjnaus]

11 hours ago, jesimps said:

It's just a fad, like telephones, airplanes, TVs, microwave cookers etc.

 

Let's not forget about the Internet and smart phones. These were all horrible ideas; only used by scammers, drug dealers and other unsavory people. It's all going to come crashing down any day now, mark my words!

[Sharp]

Take a quick look at the economist "Saifedeans" book about Bitcoin and the Fiat system

 

very enlightening 

[talahtnut]

Its based on FIAT currency, and we know where that going, down the plughole.

I still have a 50,000,000 Mark note from the Weimar Republic, enough to buy

a carrot I believe.

Edited February 17, 2021 by talahtnut
spelling

[martin81]

As far as I understand Bitcoins are only some data-files stored on computers that has no real value and is backed up by nobody.

Yes I know there are some complex keys involved and there is a maximum no of bitcoins possible.

 

The value is that people believe in it and you may be able to buy some things for it but not everyday small things as there are too expensive fees involved for small amounts.

 

Even if goes well for a long time I think a problem may be that there are more and more digital currencies created.

 

Time will tell if people will continue to make money from rising prices of Bitcoins. I bet some will end up losing.

[donnacha]

12 hours ago, Misty said:

 

Point simply being that there's no price stability.  Impossible to use as currency with that type of expected deflation.

We don't care about price stability as long as, overall, it retains its value better than fiat currencies.

The dollar loses value. The prices of most products rise. The value of Bitcoin rises more. I don't care if the current price of Bitcoin, $52k, drops overnight to $48k. The important thing is that I can still use it to buy more Mars Bars than if, back in March, I had just left $5k in my bank.

Bitcoin's volatility is a good thing. While the swings in a given week may feel unnerving, the whole point is that these unique market conditions make it inevitable that the price will continue to rise. Perhaps not as much as some pundits are claiming, but the fundamentals are sound and it is highly unlikely that anyone willing to hold their Bitcoin for more than 3 months is going to lose money.

People are understandably worried about buying at a high but, so far, despite short-term fallbacks, every high has been superseded by new highs. You just need a little patience. People buying right now at 52k might see it fall 10% the next day (or, indeed, rise 10%) but that only matters if they were planning to sell the next day.

As I keep saying to everyone, take a hundred dollars, convert it to Bitcoin and, then, forget about it. Ignore the highs, ignore the lows, just leave it there and give yourself a nice surprise at the end of the year.

As for using my Bitcoin, at anytime, night or day, I can press a button and instantly sell any amount of it for my choice of fiat currency. I can then press another button and, ten minutes later, that fiat currency is sitting in my bank account, ready to be spent. We all keep money in our bank accounts. Think of Bitcoin as being a different, higher-yield section of your bank account, but one that allows near-immediate withdrawal.

 

[donnacha]

13 hours ago, Pravda said:

I never understood this limited supply argument. It's very unlimited as bitcoin can be satoshed, forked and lose value as new crypto becomes available. 

Other coins are not Bitcoin. Forks of Bitcoin are not Bitcoin.

A satoshi is just a division of an existing Bitcoin, in the same way that a satang is a division of an existing Baht. No new Bitcoins are created.

In the coming years, most people will count their Bitcoin in Satoshis, with one Satoshi being worth a millionth of a Bitcoin. Very few individuals will own an entire Bitcoin, in the same way that only one human in 4 million is a billionaire, but nation states, banks, and large companies will hold entire Bitcoins as part of their reserves.

Fiat currencies work the other way around. In the past, an individual dollar could buy more than it does today. Just a few decades ago, it was a mark of distinction to be known as a millionaire but, today, practically everyone on this forum (apart from the English teachers) is a millionaire if you include the total value of their properties, investments, and pensions.

Currencies whose supply can be expanded without limit lose value. Currencies whose supply has a hard limit gain value.
 

[donnacha]

13 hours ago, runamok27 said:

Will hang on for now but will be watching carefully for the power elite stepping in and destroying Bitcoin.

How? The whole point is that no one can touch it.
 

13 hours ago, runamok27 said:

Bitcoin will not be allowed to go mainstream.

Too late.

 

[Misty]

4 hours ago, donnacha said:

We don't care about price stability as long as, overall, it retains its value better than fiat currencies.

The dollar loses value. The prices of most products rise. The value of Bitcoin rises more. I don't care if the current price of Bitcoin, $52k, drops overnight to $48k. The important thing is that I can still use it to buy more Mars Bars than if, back in March, I had just left $5k in my bank.

Bitcoin's volatility is a good thing. While the swings in a given week may feel unnerving, the whole point is that these unique market conditions make it inevitable that the price will continue to rise. Perhaps not as much as some pundits are claiming, but the fundamentals are sound and it is highly unlikely that anyone willing to hold their Bitcoin for more than 3 months is going to lose money.

People are understandably worried about buying at a high but, so far, despite short-term fallbacks, every high has been superseded by new highs. You just need a little patience. People buying right now at 52k might see it fall 10% the next day (or, indeed, rise 10%) but that only matters if they were planning to sell the next day.

As I keep saying to everyone, take a hundred dollars, convert it to Bitcoin and, then, forget about it. Ignore the highs, ignore the lows, just leave it there and give yourself a nice surprise at the end of the year.

As for using my Bitcoin, at anytime, night or day, I can press a button and instantly sell any amount of it for my choice of fiat currency. I can then press another button and, ten minutes later, that fiat currency is sitting in my bank account, ready to be spent. We all keep money in our bank accounts. Think of Bitcoin as being a different, higher-yield section of your bank account, but one that allows near-immediate withdrawal.

 

 

Price stability is a requirement for economies to work. That's a fact, and why bitcoin can never be a currency - it is structurally flawed.  Right now the interest in it is because the market price has gone up - either FOMO or maybe Greater Fool Theory at play.

 

[Sharp]

50 minutes ago, Misty said:

 

Price stability is a requirement for economies to work. That's a fact, and why bitcoin can never be a currency - it is structurally flawed.  Right now the interest in it is because the market price has gone up - either FOMO or maybe Greater Fool Theory at play.

 

At present Bitcoin is classed mostly as a store of value with height yield not a day to day currency but as more and more institutions are investing/buying in , it will by definition get less volatile and stability will come only then will the Satoshis become more relevant as a day to day currency. People still today don't realize they cant start saving Bitcoin with small amounts of investment weekly ,monthly etc.

Volatility is generally acceptable if its in a upward trajectory. 

[patman30]

"Crypto" will collapse
Only Bitcoin will survive
and BTC is NOT Bitcoin

DYOR.

[Peter Denis]

5 hours ago, donnacha said:

Other coins are not Bitcoin. Forks of Bitcoin are not Bitcoin.

A satoshi is just a division of an existing Bitcoin, in the same way that a satang is a division of an existing Baht. No new Bitcoins are created.

In the coming years, most people will count their Bitcoin in Satoshis, with one Satoshi being worth a millionth of a Bitcoin. Very few individuals will own an entire Bitcoin, in the same way that only one human in 4 million is a billionaire, but nation states, banks, and large companies will hold entire Bitcoins as part of their reserves.

Fiat currencies work the other way around. In the past, an individual dollar could buy more than it does today. Just a few decades ago, it was a mark of distinction to be known as a millionaire but, today, practically everyone on this forum (apart from the English teachers) is a millionaire if you include the total value of their properties, investments, and pensions.

Currencies whose supply can be expanded without limit lose value. Currencies whose supply has a hard limit gain value.

Although we disagree about the soundness of Bitcoin's fundamentals, I fully agree with your post.

One comment > You wrote: Currencies whose supply can be expanded without limit lose value. Currencies whose supply has a hard limit gain value.

Re that last statement > In the cas.e of Bitcoin that is only correct when demand for the coin is higher than the 'supply' (meaning Bitcoin-holders willing to sell some or all of their Bitcoin at the current price). The combination of

- large organizations buying up Bitcoins;

- the public becoming increasingly aware that the current financial system is 'not sound' (e.g. all the billions of fiat-money being printed to deal with the covid-crisis), and looking for alternatives;

- much easier now to buy Bitcoin, so even a non-techie can now buy Bitcoiins;

makes it a 'no-brainer' that the Bitcoin-price will keep rising.

The main concern would be that national governments could make Bitcoin-trading illegal, but with large organizations now stepping into it, that risk is getting smaller.

Whether the 'sky is the limit' for the Bitcoin-price remains to be seen, but fully agree that there is still plenty of rising potential.

[Peter Denis]

1 hour ago, Misty said:

Price stability is a requirement for economies to work. That's a fact, and why bitcoin can never be a currency - it is structurally flawed.  Right now the interest in it is because the market price has gone up - either FOMO or maybe Greater Fool Theory at play.

I actually was of same conviction until the covid-crisis hit us, all the craziness associated with how governments handled that and the public accepting and even embracing it, made me change my mind.

There seems to be a much larger reservoir of Greater Fools available than I once thought, and many of the non-foolish that do understand that Bitcoin is not based on sound fundamentals do now take an opportunistic stance (Fear of Missing out is also a strong driver there).

[Misty]

1 hour ago, Sharp said:

At present Bitcoin is classed mostly as a store of value with height yield not a day to day currency but as more and more institutions are investing/buying in , it will by definition get less volatile and stability will come only then will the Satoshis become more relevant as a day to day currency. People still today don't realize they cant start saving Bitcoin with small amounts of investment weekly ,monthly etc.

Volatility is generally acceptable if its in a upward trajectory. 

Sorry, but some logic flaws here.  Something with limited, and eventually fixed, supply, will never be stable.  Deflation is built into the bitcoin structure - and why it is flawed.  Deflation - even a little- is toxic to any economy.  Deflation actually results in a currency being used less and less - why pay for something today in bitcoin, when you think it will cost significantly less in the future? 

[Misty]

30 minutes ago, Peter Denis said:

I actually was of same conviction until the covid-crisis hit us, all the craziness associated with how governments handled that and the public accepting and even embracing it, made me change my mind.

There seems to be a much larger reservoir of Greater Fools available than I once thought, and many of the non-foolish that do understand that Bitcoin is not based on sound fundamentals do now take an opportunistic stance (Fear of Missing out is also a strong driver there).

 

Greater Fool Theory and FOMO are both related to speculative trading. The current speculation situation could persist for a long period.  Not all participating are fools, some are simply exploiting the fools.  But make no mistake - there's nothing "fundamental" about bitcoin no matter what blue sky it trades at, and it cannot be a currency. 

[Sharp]

9 minutes ago, Misty said:

Sorry, but some logic flaws here.  Something with limited, and eventually fixed, supply, will never be stable.  Deflation is built into the bitcoin structure - and why it is flawed.  Deflation - even a little- is toxic to any economy.  Deflation actually results in a currency being used less and less - why pay for something today in bitcoin, when you think it will cost significantly less in the future? 

Bitcoin isnt deflationary asset since its total supply doesn't decrease every year but i guess we have differing views on my logic.????