Call me old school, or maybe no school, but investing in things that have no intrinsic value is a contradiction in terms. Investing in food, housing, healthcare, energy, transportation, etc makes sense because they will always have value. Granted, the challenge to the investor is to outguess the market concerning what those values will be.
But investing in nothing? That's what Bitcoins is; it's nothing.
I have Napkincoin. I take a paper napkin write $250000 on it and sell it to some gullible person telling them they can get $500000 for it. Napkincoin...get yours today....
Once, banks across the West issued currency. I imagine the amount in circulation was a multiple of the bank's actual cash reserves. So long as everybody bought into the deal, all was well. It's when they suspected their paper wouldn't be accepted anymore (because others lose faith in a snowball effect) that the shit hits the fan. So a crypto collapse would probably look like a run on a bank only at a 10,000x scale. $1.5T is the capitalization of 10,000 $150 million net asset banks. Pretty big hole...
You couldn't be more wrong about this, and you are too stubborn to learn about it. Spend 100 hours on the topic and then comment. In the 100 hours, you will have to come to terms with what "fiat" money is(latin for "by decree"), what fractional reserve banking means, why is there always 2% inflation, and why your house REALLY has gone up in value. Until you understand all of this, you will continue to sound like the old fool you are.
Yes. That is not unlike collecting art, coins, baseball cards, antiques or the like. These items have been known to build bubbles that burst. But at least there's something there.
Im not sure I agree with that entirely. BTC is not nothing. Question is, what is its true value.
There is something there. I equate it to spectrum (bandwidth over airways) one used to be able to privately own spectrum. If you do privately own it and bought it when only a few HAM radio operators were privy...well...you are rich.
Bitcoin has intrinsic value as trust less peer to peer payment ledger. That tech in itself is immensely valuable. The only way to participate in that tech is buy holding satoshis.
Does that mean an individual Bitcoin is intrisically worth $100,000? No. But the more money is printed, the more valuable Bitcoin becomes.
Do you have a checking or savings account? If you are invested in fiat, that is no different in the long term as crypto. It will also eventually go to zero.
You won't find anyplace where I've been a supporter of the federal government's money printing system. Which is why I, like a lot of people, keep minimal amounts of money in bank accounts. I have very little cash. Mostly I have equity in my home and in equities. If holding cash constituted a good investment, I would hold it. It isn't, and we all know it.
Thoughtful and well balanced post, Chris. BTC is not different than any other speculative asset. It’s never different this or any other time. It might crash, and while doing so massive amounts of other assets will have to be dumped to cover margins. It stops at some point, where, who knows. Treat it with respect, like Manticore. FWIW, I never knew the “Rest of the Story’ as Paul Harvey used to say. Boy, I am a dinosaur. Here it is.
Trump allowing Crypto and Private Equity into 401k plans is an awful idea. Majority of 401k participants have no clue how investments work - let alone PE and Crypto. There is a reason the regulations require you to have $5MM in investable assets to get into PE funds.
401K balances are already not able support majority of retirees and now you are going give them access to one of the most volatile sector (crypto). What could go wrong.
Something your article makes me think about is… even ignoring any potential for manipulation— bitcoin actually has a lot more risk than other assets: if it crashes there are no circuit breakers like stocks. Or even a reset like FDR did with gold, in this case bitcoin is just dropping. Are there even any countries that would care to step for a bailout/support? Would Saylor?
Doesn't have to be Bitcoin. What say you about the $1T+ in garbage crypto that trades in addition to Bitcoin? That's enough of an airpocket on its own, especially if it brings down BTC 20% in tandem, for example...
Redemptions of BTC would drag it down, too. 401k people won't be in coins directly, they'll be in funds that invest in a basket of crypto issues. So redemptions will hit the most liquid as well as the garbage.
Bitcoin will cause the end of western civilization, and frankly i don't care. The billionaire class is going to get reshuffled, and I say good riddance. Gates, for example, can rot in hell as far as I am concerned. The entire banking industry is going to implode over BTC. Whatever your expectations are for the ATH, they are too low. At $1M/coin everything will unravel, and at $10M, there will be some currently unknown, new sheriff in town. I say let it burn. The current gov't of the US is controlled by the medical industrial complex, the military industrial complex, and the banking industry. They don't deserve to survive.
The total insanity of a "mania" ("digital" supposed assets) is fascinating to observe. It really does confirm my belief that humans are only "rational" as an absolute last resort. You want speculative returns to the moon over the next 3 - 5 years? Buy common ammo, survival food and bathroom needs. And, of course, "junk" silver and 1-ounce silver rounds.
Good morning from the ADKs! Fucking love it up here. Thank you Elon for Starkink. Fuck the local cable co up here.
Listened to that podcast w 2 of my old timer contemporaries. Dont know their names but gotta say thanks man. Glad I'm catching what I can of your knowledge and experience. The explanation on the passive bid and the options gambling cying equities ever higher made perfect sense. 👌 clarity helps alot. Still learning here even though I'm 50!
1/4 of the way through this drop and I was thinking exactly what you proceeded to expand upon. We have the last 3 asset bubbles wrapped into 1 big one now. You can just feel it.
Anyone remember Ashford.com? Pets.com? Bid.com? I do...thats where I got my first lesson in margin calls.
I also remember every channel on TV being a real estate flip show. Everyone and their mom was flipping homes.
I managed to put together and hang on to a small RE portfolio in that bubble that got clobbered to shit in the 08 meltdown. Lost 2 homes (the 2 that happened to be the ones had I managed to hold on, I would be retired)
I've been adding to this portfolio with abandoned homes and camps around and in the ADK region..whatever I can buy in cash, that I'm going to renovate and rent/hold for the kids to have when I'm gone.
I cant begin to share the innumerable yields I have pulled out of this little shit real estate hustle. Its been the ONLY certain thing for me and has hedged me against almost any calamity.
I've missed many many recent millionaire making events. But I know what's coming. And I'm preparing.
Every time I read a post like this I have the urge to run to Walmart and buy big bags of rice and beans. I tend to side with Munger's (rat poison)² take on crypto (unless the Feds really go lollipops and back it somehow). I'm not sure if the economy collapses in some way that people will be desiring something with no intrinsic value...it seems kind of like a 'good times' party thing.
Which actor do you want to be you in the 'The Big Short 2.0'? China is my bet as the new Michael Berry, but backed with a big military. And you have China experience. Apply your English language skills to the book / movie script ?
I'm not one who posts comments very much. But this discussion strikes me as important and there is one key fact that was left out of the original article that needs to be addressed. That point is:
Since 2000 (when the dot come bubble burst), the M2 supply of US$ has increased by almost 5x. (The USD money supply was about $4.6T in 2000 and is it about $22T today.) This fact bears directly on both the article's claim about the size of the cryptocurrency market and one the various comments to this article that posit that Bitcoin is "based on nothing".
Specific to the article, QTR (who I like and respect very much, so this is said with friendliness and affection) greatly overestimates the size of the crypto market today relative to the NASDAQ in the year 2000. If you adjust for the 5x increase in the money supply. today's crypto market is not one-third the size of the NASDAQ (as the article claims), but more like 1/15th the size. That's important to note. Further, if you distinguish between the BTC market and the market for all other cryptos, you'll see that they are each something more like 1/30th the size of the NASDAQ in 2000. I'm not saying a crash of some sort would have no effect, but we should get the scale right.
Now, as to Bitcoin being based on nothing. There are many, many, many better places to study BTC that my silly post, but allow me to briefly try. The ability for two individuals located anywhere in the world to be able to transact with one another privately without any intermediary (like a bank) or a government issued fiat currency is a useful ability. Its an especially useful ability if you live in a country where authoritarian governments monitor transactions and/or in countries where the local currency is being greatly debased. (Side note, these days, almost EVERY local currency is being greatly debased. To wit, see above paragraph about the increase in the supply of USD since the year 2000.) Thus, to many people around the world, Bitcoin is based on something, namely a safe, reliable, and private way to transact with other individuals in a world where governments both suveil their citizens and inflate their currency.
Reasonable people can differ with regard to how valuable the ability to transact safely, reliably and privately is. But it is something. So much so, that many people are starting to think that BTC will be a good store of value since it does indeed serve a useful need. If you happen to think this need is small, then you probably don't want to own BTC. That's fine. Like I said, reasonable people will disagree. But, if you think that the need to transact without surveillance and using a currency that cannot be inflated is important, than you'll start to be bullish on BTC. The point is, there is a use case, it is based on something and if you talk to people who live in countries with heavy surveillance and hyper inflated currencies, you'll quickly see the case for BTC. (Its sad to say, but there are many places in the world that are at war right now. Talk to someone fleeing a war zone with a local currency that has been hyperinflated to dust and ask yourself how they get what money they have out of the war zone. Then see if you still think BTC is based on nothing.)
Given the explosive growth in the money supply here in the US and the increasing likelihood of more government deficits, more Federal Reserve bail outs and all the rest, many people are reasonably concluding the BTC use case will only grow stronger. So, if something happens and there is a crash in market including crypto, my bet is there will absolutely still be a strong bid for BTC. If the price of BTC dropped 50% tomorrow as part of some crazy market sell-off, many BTC supporters will gladly buy the supply at the new lower price. When the price went from over $50k to under $20k a few years ago, a bid remained. And, if its falls again, that bid will return. Because the need for safe, reliable, private transactions will remain.
Of course, if BTC crashes because it ceases to be a safe, reliable, private means of transaction, then sure, BTC could go to zero. Maybe a heretofore not found hole in the protocol or a new challenge from quantum computing might cause such a situation. Or maybe someone will invent a safer, more reliable, more private way for individuals to transact. But lacking a fundamental flaw in the product, BTC will survive and possibly even thrive in a market sell-off.
BTC serves a very important purpose and that purpose is only growing more important with the global increase in fiat currency supply.
Anytime you get the government fully embracing (and promoting) something and telling you it’s for your own good, while at the same time the media is carrying the message, you should be heading for the hills.
Let’s see. The parellels and trajectory of Operation Warp Speed and the BTC/Crypto push are all there, for anyone who takes the time to lay them out.
People just don’t know how to ask the right questions.
And RealID conveniently came out as platforms are starting to push for age verification to comply with government regulations. Governments want more control over the digital online sphere.
it's quite amazing after all these years you have a very difficult time separating bitcoin from the rest of "crypto". A much more likely scenario is that the crypto market does crash and burn but the exit valve is bitcoin.
Call me old school, or maybe no school, but investing in things that have no intrinsic value is a contradiction in terms. Investing in food, housing, healthcare, energy, transportation, etc makes sense because they will always have value. Granted, the challenge to the investor is to outguess the market concerning what those values will be.
But investing in nothing? That's what Bitcoins is; it's nothing.
I have Napkincoin. I take a paper napkin write $250000 on it and sell it to some gullible person telling them they can get $500000 for it. Napkincoin...get yours today....
Once, banks across the West issued currency. I imagine the amount in circulation was a multiple of the bank's actual cash reserves. So long as everybody bought into the deal, all was well. It's when they suspected their paper wouldn't be accepted anymore (because others lose faith in a snowball effect) that the shit hits the fan. So a crypto collapse would probably look like a run on a bank only at a 10,000x scale. $1.5T is the capitalization of 10,000 $150 million net asset banks. Pretty big hole...
You couldn't be more wrong about this, and you are too stubborn to learn about it. Spend 100 hours on the topic and then comment. In the 100 hours, you will have to come to terms with what "fiat" money is(latin for "by decree"), what fractional reserve banking means, why is there always 2% inflation, and why your house REALLY has gone up in value. Until you understand all of this, you will continue to sound like the old fool you are.
You could argue that it is a store of excess productivity beyond immediate need, just like dollars.
Yes. That is not unlike collecting art, coins, baseball cards, antiques or the like. These items have been known to build bubbles that burst. But at least there's something there.
Im not sure I agree with that entirely. BTC is not nothing. Question is, what is its true value.
There is something there. I equate it to spectrum (bandwidth over airways) one used to be able to privately own spectrum. If you do privately own it and bought it when only a few HAM radio operators were privy...well...you are rich.
I see some parallels w BTC.
https://youtu.be/GQh9bkT4HHA?si=m9cVj_uqgqyGNMKq
Bitcoin has intrinsic value as trust less peer to peer payment ledger. That tech in itself is immensely valuable. The only way to participate in that tech is buy holding satoshis.
Does that mean an individual Bitcoin is intrisically worth $100,000? No. But the more money is printed, the more valuable Bitcoin becomes.
Do you have a checking or savings account? If you are invested in fiat, that is no different in the long term as crypto. It will also eventually go to zero.
You won't find anyplace where I've been a supporter of the federal government's money printing system. Which is why I, like a lot of people, keep minimal amounts of money in bank accounts. I have very little cash. Mostly I have equity in my home and in equities. If holding cash constituted a good investment, I would hold it. It isn't, and we all know it.
RIGHT ON!! Couldn't have said it better.
Thoughtful and well balanced post, Chris. BTC is not different than any other speculative asset. It’s never different this or any other time. It might crash, and while doing so massive amounts of other assets will have to be dumped to cover margins. It stops at some point, where, who knows. Treat it with respect, like Manticore. FWIW, I never knew the “Rest of the Story’ as Paul Harvey used to say. Boy, I am a dinosaur. Here it is.
https://www.rd.com/article/siegfried-and-roy-tiger-attack/
"it might crash" profound.
TLDR; Isn't that what he says? Save your electrons.
Trump allowing Crypto and Private Equity into 401k plans is an awful idea. Majority of 401k participants have no clue how investments work - let alone PE and Crypto. There is a reason the regulations require you to have $5MM in investable assets to get into PE funds.
401K balances are already not able support majority of retirees and now you are going give them access to one of the most volatile sector (crypto). What could go wrong.
Something your article makes me think about is… even ignoring any potential for manipulation— bitcoin actually has a lot more risk than other assets: if it crashes there are no circuit breakers like stocks. Or even a reset like FDR did with gold, in this case bitcoin is just dropping. Are there even any countries that would care to step for a bailout/support? Would Saylor?
lol are you serious with this comment? maybe don't be lazy and put a little effort to learning more about bitcoin
Doesn't have to be Bitcoin. What say you about the $1T+ in garbage crypto that trades in addition to Bitcoin? That's enough of an airpocket on its own, especially if it brings down BTC 20% in tandem, for example...
Bitcoin would be the escape hatch in this scenario.
Even if you’re right it’s only after a mass deleveraging and forced selling of all assets, including BTC, first.
just like we've seen for the past 10+ years. stronger hands will accumulate and then it will 10x from the bottom. The only choice is to be in it.
Redemptions of BTC would drag it down, too. 401k people won't be in coins directly, they'll be in funds that invest in a basket of crypto issues. So redemptions will hit the most liquid as well as the garbage.
it will still eventually flow back to bitcoin, kind of like what you are seeing now from the 2022 FTX fallout.
Bitcoin will cause the end of western civilization, and frankly i don't care. The billionaire class is going to get reshuffled, and I say good riddance. Gates, for example, can rot in hell as far as I am concerned. The entire banking industry is going to implode over BTC. Whatever your expectations are for the ATH, they are too low. At $1M/coin everything will unravel, and at $10M, there will be some currently unknown, new sheriff in town. I say let it burn. The current gov't of the US is controlled by the medical industrial complex, the military industrial complex, and the banking industry. They don't deserve to survive.
Fartcoin mentioned
The total insanity of a "mania" ("digital" supposed assets) is fascinating to observe. It really does confirm my belief that humans are only "rational" as an absolute last resort. You want speculative returns to the moon over the next 3 - 5 years? Buy common ammo, survival food and bathroom needs. And, of course, "junk" silver and 1-ounce silver rounds.
Good morning from the ADKs! Fucking love it up here. Thank you Elon for Starkink. Fuck the local cable co up here.
Listened to that podcast w 2 of my old timer contemporaries. Dont know their names but gotta say thanks man. Glad I'm catching what I can of your knowledge and experience. The explanation on the passive bid and the options gambling cying equities ever higher made perfect sense. 👌 clarity helps alot. Still learning here even though I'm 50!
1/4 of the way through this drop and I was thinking exactly what you proceeded to expand upon. We have the last 3 asset bubbles wrapped into 1 big one now. You can just feel it.
Anyone remember Ashford.com? Pets.com? Bid.com? I do...thats where I got my first lesson in margin calls.
I also remember every channel on TV being a real estate flip show. Everyone and their mom was flipping homes.
I managed to put together and hang on to a small RE portfolio in that bubble that got clobbered to shit in the 08 meltdown. Lost 2 homes (the 2 that happened to be the ones had I managed to hold on, I would be retired)
I've been adding to this portfolio with abandoned homes and camps around and in the ADK region..whatever I can buy in cash, that I'm going to renovate and rent/hold for the kids to have when I'm gone.
I cant begin to share the innumerable yields I have pulled out of this little shit real estate hustle. Its been the ONLY certain thing for me and has hedged me against almost any calamity.
I've missed many many recent millionaire making events. But I know what's coming. And I'm preparing.
Fart coins, Rug pulls. FTX.
I am hearing the phrase "New Economy" again.
Best disclaimer I have ever seen. Only one that made me smile.
Every time I read a post like this I have the urge to run to Walmart and buy big bags of rice and beans. I tend to side with Munger's (rat poison)² take on crypto (unless the Feds really go lollipops and back it somehow). I'm not sure if the economy collapses in some way that people will be desiring something with no intrinsic value...it seems kind of like a 'good times' party thing.
Which actor do you want to be you in the 'The Big Short 2.0'? China is my bet as the new Michael Berry, but backed with a big military. And you have China experience. Apply your English language skills to the book / movie script ?
Word. 👊
This makes rational sense, thank you once again for you good explanations and insight
I'm not one who posts comments very much. But this discussion strikes me as important and there is one key fact that was left out of the original article that needs to be addressed. That point is:
Since 2000 (when the dot come bubble burst), the M2 supply of US$ has increased by almost 5x. (The USD money supply was about $4.6T in 2000 and is it about $22T today.) This fact bears directly on both the article's claim about the size of the cryptocurrency market and one the various comments to this article that posit that Bitcoin is "based on nothing".
Specific to the article, QTR (who I like and respect very much, so this is said with friendliness and affection) greatly overestimates the size of the crypto market today relative to the NASDAQ in the year 2000. If you adjust for the 5x increase in the money supply. today's crypto market is not one-third the size of the NASDAQ (as the article claims), but more like 1/15th the size. That's important to note. Further, if you distinguish between the BTC market and the market for all other cryptos, you'll see that they are each something more like 1/30th the size of the NASDAQ in 2000. I'm not saying a crash of some sort would have no effect, but we should get the scale right.
Now, as to Bitcoin being based on nothing. There are many, many, many better places to study BTC that my silly post, but allow me to briefly try. The ability for two individuals located anywhere in the world to be able to transact with one another privately without any intermediary (like a bank) or a government issued fiat currency is a useful ability. Its an especially useful ability if you live in a country where authoritarian governments monitor transactions and/or in countries where the local currency is being greatly debased. (Side note, these days, almost EVERY local currency is being greatly debased. To wit, see above paragraph about the increase in the supply of USD since the year 2000.) Thus, to many people around the world, Bitcoin is based on something, namely a safe, reliable, and private way to transact with other individuals in a world where governments both suveil their citizens and inflate their currency.
Reasonable people can differ with regard to how valuable the ability to transact safely, reliably and privately is. But it is something. So much so, that many people are starting to think that BTC will be a good store of value since it does indeed serve a useful need. If you happen to think this need is small, then you probably don't want to own BTC. That's fine. Like I said, reasonable people will disagree. But, if you think that the need to transact without surveillance and using a currency that cannot be inflated is important, than you'll start to be bullish on BTC. The point is, there is a use case, it is based on something and if you talk to people who live in countries with heavy surveillance and hyper inflated currencies, you'll quickly see the case for BTC. (Its sad to say, but there are many places in the world that are at war right now. Talk to someone fleeing a war zone with a local currency that has been hyperinflated to dust and ask yourself how they get what money they have out of the war zone. Then see if you still think BTC is based on nothing.)
Given the explosive growth in the money supply here in the US and the increasing likelihood of more government deficits, more Federal Reserve bail outs and all the rest, many people are reasonably concluding the BTC use case will only grow stronger. So, if something happens and there is a crash in market including crypto, my bet is there will absolutely still be a strong bid for BTC. If the price of BTC dropped 50% tomorrow as part of some crazy market sell-off, many BTC supporters will gladly buy the supply at the new lower price. When the price went from over $50k to under $20k a few years ago, a bid remained. And, if its falls again, that bid will return. Because the need for safe, reliable, private transactions will remain.
Of course, if BTC crashes because it ceases to be a safe, reliable, private means of transaction, then sure, BTC could go to zero. Maybe a heretofore not found hole in the protocol or a new challenge from quantum computing might cause such a situation. Or maybe someone will invent a safer, more reliable, more private way for individuals to transact. But lacking a fundamental flaw in the product, BTC will survive and possibly even thrive in a market sell-off.
BTC serves a very important purpose and that purpose is only growing more important with the global increase in fiat currency supply.
Anytime you get the government fully embracing (and promoting) something and telling you it’s for your own good, while at the same time the media is carrying the message, you should be heading for the hills.
Let’s see. The parellels and trajectory of Operation Warp Speed and the BTC/Crypto push are all there, for anyone who takes the time to lay them out.
People just don’t know how to ask the right questions.
And RealID conveniently came out as platforms are starting to push for age verification to comply with government regulations. Governments want more control over the digital online sphere.
it's quite amazing after all these years you have a very difficult time separating bitcoin from the rest of "crypto". A much more likely scenario is that the crypto market does crash and burn but the exit valve is bitcoin.
Sorry to momentarily puncture the membrane of your confirmation bias. Will try not to do it again :)
Additionally, is there not $1T+ of garbage crypto out there? Even BTC maxis admit this.
yes, I literally admitted that in my original comment