The Bitcoin network teaches us that there's safety in numbers. Now, what could bring people together in numbers to mass-adopt it further than they have?
Good morning Chris, loved the insightfulness of the article. I believe in bitcoin. I've made some money on bitcoin. I do have a fear that bitcoin has been hijacked by the financial system. I would like you to address what I consider the elephant in the room around bitcoin which is Tether. There are many that believe the ponzi scheme lives in Tether. And if Tether falls, bitcoin takes a serious beat down. I'm personally on the sideline waiting for tether to fall. I've heard you on prior podcasts express the same tether doubts that I have. How do reconcile tether in the bitcoin equation?
What happens when you can't convert BTC into dollars? It would not be hard to make that happen. You think millions are going to flock to what they can't convert to dollars?
How do you pay bills, buy things, or even value something that is not convertible into dollars?
It is amazing to me that you guys think BTC can stand on its own with the conversion factor.
If BTC becomes a haven of safety, remains convertible, and is accepted by utilities, retail giants, insurance giants,, and other mainstream corporate entities, then we will know that BTC was the digital Trojan horse all along.
Do you believe regulated exchanges in America will be shut down by the government? Is there precedent for a public company (like Coinbase) operating legally with lots of regulation having the government do a 180 and shut it down? Would this be via executive branch action?
And if that were to happen, do you think black-market exchanges would emerge? Surely bitcoin's value would take a big hit if it were officially outlawed, but entrepreneurs tend to spring up wherever there's money to be made. Surely it'd be easy enough to find your local illicit bitcoin dealer.
Bitcoin need not be a daily medium-of-exchange to be a success. I've been in for nearly a decade and while I "use" it in commerce occasionally, I find 99% of its value to be in its Store-of-Value function (albeit volatile).
I posed a hypothetical to illustrate how easy it would be to shut it down.......or virtually destroy any interest in it. If you couldn't convert it to dollars, would you be holding it as a "store of value"? No, no you wouldn't.
Would they ever make such a move? Not likely, but the point is they could. Which brings us to the logical conclusion that they haven't because they are not against BTC.........neither do they "fear" it........but rather they are encouraging it for various reasons, not the least of which, is to get everyone hooked on using digital money the way everyone is hooked on using smart phones.
They could destroy it + but they haven't even tried + they are doing everything they can to promote and facilitate it = it was their plan all along = not a plan to facilitate your freedom and individuality = a plan to destroy personal freedom and ability to dissent.
You guys just won't accept that your fascination, infatuation, and outright worship of all things technology is leading down the road of your final prison cell. You can see the insatiable desire for power and control by these psychopaths.......and as long as you think there's a profit to be made.........you'll go right along with them.
Like sheeple following a bucket of feed to the slaughterhouse.
Bitcoin seems like another grand Ponzi scheme to me.
I guess I am too old and set in my ways. I want those hard assets that I can see and hold, even if it is a stock certificate. I can look at the balance sheet and it gives me some type of comfort, one way or another.
The only thing I see with Bitcoin is a daily valuation, in US dollars. Not sure how safe a bet that is. Kinda of like “Where’s the beef?”.
I would hope at some point our great country would return to the gold standard. I know that would cause great pain, but every thing is so overvalued. At some point we are going to have to take the medicine.
To me Bitcoin doesn’t pass the smell test. I am waiting for the shoe to drop. I will be aggressive with gold and silver and energy.
Ponzi's have a central operator, yes? Someone to keep the schtick going, taking money in and making sure participants are happy with juicy returns until the operator finally skips town.
Where is the operator in Bitcoin? It's a global distributed system, and its unit of account (bitcoin) has a market-set price. Who is promoting it for their own benefit? Who loses?
Gold is not a ponzi. It is a globally distributed metal that people hold for various reasons, mostly as a Store of Value. Who promotes gold? Does anyone lose from gold?
I mean to draw the analogy because the more you learn about bitcoin as a SoV, the closer it resembles gold as an SoV, albeit on a much shorter and more volatile timeframe.
If gold could be made digital, and anyone in the world with a smartphone could acquire it and hold it, would that be useful? If you could be certain this gold wasn't counterfeit, and you could easily send it to anyone as easily as sending an email, would those be useful characteristics?
Of course bitcoin is volatile. Few understand it. Price appreciation leads to mania which leads to bubbles which pop.
If gold interests you, and you're a regular user of the internet, consider learning more about Bitcoin. Michael Saylor's bitcoin series on Robert Breedlove's "What is Money" podcast is a great place to start for someone like you.
Perfect answer! Hard assets that one can hold in their hands is real money, Gold / Silver / Land etc. Bitcoin is part of smoke show just like every other digital and paper illusion out there.
While I think you may have identified some of the zeitgeist, if anything, it makes the creation of Bitcoin ETF's that much more important. If you have bought bitcoin straight up, not through an exchange, you know how difficult it is to do so. the ETF allows the masses to access whatever value exists without the headaches. This is very likely to be the path that most of those pissed off masses take given their newly found familiarity with Robinhood and on-line trading. but those ETFs are not actually owning bitcoin, are they? so there will very likely be a great deal of sturm und drang but no mass adoption in any form.
I have said all along that the ETF is the worst thing for BTC as it takes its inherent advantage of decentralization and puts it all under one umbrella, the federal government.
Since I can't buy/pay ANYTHING (services & goods) just for basic survival in the Plantation where I slave around with BTC... Can't see why my fellow modern moron slaves are so happy with a WWW set of code! I guess the clue is in the "moron" part!
As for the rest the MONETARY SYSTEM has been under control for the few past Centuries for a few Families that surely don't seem at all worried about the lasted MMS delusion.
It's just sad to watch MMS behaving always in the same matter... Zero ability to Learn.
Still no answer to the fundamental question of "why?". Why "invest" your money in an "asset" which does not earn anything vs. investing in a fractional share of a real business, the value of which will increase with inflation plus provide a real return?
That’s the beauty of Bitcoin. It took me two years to be able to understand and answer this question, and to provide an adequate answer would probably be a 30 minute phone call.
However, the short answer is simple: supply and demand. On the most basic level. A little more technical answer is Bitcoin is deflationary while everything else tied to fiat currency is inflationary. In that sense, most everything is falling in price in relation to the price of Bitcoin.
In other words, "greater fool theory". You hope that someone will pay more for your bitcoin than you did. Anything that takes two years to understand and 30 minutes to explain is a non-answer.
Pyramid scam like so many others (including in the fiat scam!)... The main attraction of this one is that it is digital and morons can do it on a "smart"phone.
Let's imagine there's a global savings account with a fixed number of shares. Anyone with a smartphone can buy shares and hold them, as well as send them to anyone else as easily as sending email.
This system runs for a decade and doesn't break, people who are properly informed don't lose their shares for any technical reasons, and the system persists unfailingly.
Would you anticipate this system proving useful in the future? A big global pie that anyone can buy a slice of and keep their wealth in it via their smartphone.
Seems useful to me! Perhaps you disagree because it doesn't cashflow, because it's speculative (like gold), or believe that all current holders are just salivating at a rising price and planning to get out as soon as they're 'rich' and let the suckers ride it to 0.
So, I own a piece of this global pie (POTGP). Then what? Would I use it to buy shares in, say, Apple? If so, what difference does it make whether I use a POTGP or fiat currency to buy shares of Apple? The value of the Apple stock will appreciate based on the exit value determined by Apple's earnings and p/e.
Apple's earnings will likely benefit from inflation plus real growth. So investors aren't overly concerned about a depreciating fiat currency. People with wealth don't keep it invested in "cash", and POTGP is essentially an alternate form of "cash". As it stands now, POTGP's value is too volatile for 99.9% of investors to agree to a payout in POTGP when they want to cash in an investment. And I don't see that changing anytime in the near future.
Think of owning a POTGP like owning shares in an index fund. Yes yes, I agree, they're not the same! One is a pile of equities, and the other is not.
But let's say you have a chunk of money you'd like to preserve and hopefully grow over the years so it's worth more when you retire and need to spend down your savings/investments.
You can buy a POTGP, you can buy apple shares, you can hold it in cash, among many other things. POTGP is "cashlike" in that it is a bearer instrument, but it is extremely not cashlike because it's not a fiat currency that's guaranteed to go down slowly over time.
I have an investment hypothesis for this POTGP and it's that it will prove useful to the world, and many will adopt it, and therefore over a long timeframe the price will go up. Short term is volatile, sometimes extremely so (also not cash-like).
See how that compares to: I have an investment hypothesis for the American economy at large, and it's that it will continue to grow and prosper, and I can own a slice of this via an S&P500 index fund. Sure I have to pay a small management fee, but I believe in growing American prosperity, and I believe this will be reflected in share prices over the next decades (Sorry about people who thought the same about Japan starting in the 90's).
That's it! The Global Pie is an investable asset, and you can have an investment hypothesis, and treat it like an investment. I don't "do anything" with my index fund. Holding it is its purpose, holding it is the 'doing.' I don't think "gee I should spend these index fund shares on lunch, or on Apple stock..."
I came to this conclusion (the POTGP investment hypothesis) a while back, and when I did I bought a bunch. And I've just held it ever since. And I plan to for a long long time. That's what I do with it. And if I'm wrong it's going to $0. It's a beautiful thing, free markets and free choice etc
The key to our disagreement is that you believe that bitcoin will be the POTGP which prevails. IMO, governments will suppress the use of bitcoin in favor of CBDC's. The powers-that-be may not be able to eliminate bitcoin, but they will be able to regulate it to a point where it is no longer a "defi" instrument. Bitcoin's sole purpose would then be as an alternate form of "cash" that wouldn't depreciate the way that fiat currencies are likely to continue doing. But I don't believe that we will ever get to a point where bitcoin is widely used for transactions, which will greatly reduce its value and appeal. The one thing that might change my mind is if Congress approves a law which would exempt transactions in bitcoin below a certain $ amount from being taxable on the gain/loss in the change in value which the bitcoin used in the transaction experienced. I don't believe that will ever happen due to the complexities of implementing such a system (you would still have to track the cost basis of all your bitcoin transactions so that any larger bitcoin trades would have an accurate cost basis for tax purposes). Bitcoin will remain like digital gold, except that gold actually can be untraceable and central banks prefer to hold gold as a substitute for fiat over bitcoin, to the degree that they want to hold such a substitute.
Younger Consumers are being wiped out with debt and inflation.
You think when the Big 6 Tech stocks are repriced for zero growth, everyone will turn to BTC?
BTC, because it is a speculative investment AS WELL as a currency, will get hit in a big way.
What will your reaction be when BTC/USD gets cut in half (again). Will you still feel the same? Will you still be glad you bought at $50K when it's $20K?
It could be the best idea on the planet, but people can ruin a good idea with irrational thought.
Like you, I have come around in the last couple years to the idea Bitcoin could be a game changer. As a 30 year goldbug, I believe it is easier for us sound money guys to see the merits of Bitcoin. The GameStoppers were too distracted by dollar signs to recognize the system itself is the problem. While I am still not 100% convinced Bitcoin is the answer to what ails us, The more time I spend trying to understand it - the harder it becomes to deny the genius inherent in Bitcoin....
Also good luck cashing in when all fiat currencies shit the bed. Who will be foolish enough to trade Bitcoin for anything. Another ploy by the powers that be to have all of us holding the bag when the shit goes down. Sad but true
Bitcoin has been hijacked and will just be another way for the crooks to steal our wealth. The sickness is in the system and Bitcoin, even more so now that it has an ETF, is a part of that system.
Chris... You're getting there, but I'd really like to hear your thoughts on "private legal tender." If Congress says we are to pay taxes in USD, and it otherwise borrows and redeems in USD, fine - that is public legal tender. Beyond that, Bitcoin offers no offramp as long as we are forced to accept USD as a "...tender in payment of (private) debts." Until the raw materials of the earth AND the labor needed to make them useful can be priced in Bitcoin - with eventual disputes adjudicated in Bitcoin - there is no offramp here. You'll still be pricing your crypto in USD and suffering from the "stupidity crisis" that results.
It's another angle on the topic, but Bitcoin's design - especially after the supply limit it hit - will end up incentivizing holding onto it. Bitcoin as a store of value will work so well that the transaction-based credit needed for an economy to grow will simply not be there. Bitcoin's design prefers the value of Bitcoin over its broad utility as money in which credit can be issued.
Not so with ETH. The ultimate Blockchain-based money will be ETH on Ethereum v2.0 because it allows competitive monetary alternatives. The one I want to see is where a notional "auETH" and an "agETH" can be created on a staking pool where gold (Au) and silver (Ag) are staked instead of USD. It will be possible to have any number of Level 2 Blockchains with varying prices - only the "price" is measured in a weight of gold and silver (just like the USD once was). Having multiple Blockchains with competing price points allows the market to discover the best prices for various purposes.
lol. The Bitcoin Standard and Softwar are must reads for even Bitcoin minimalists, let alone maximalists. It is a true immutable and centralized power projection that requires no bankers or middlemen.
I think the emergence of the bitcoin ETFs indicates that the US Govt. has decided it would rather participate in the crypto world, in the form of taxes, than try to ban it.
So, IMO, the key now is to fully understand how your crypto holdings are taxed.
Re: US Gov deciding it would rather participate...
"In August, a federal court ruled that the SEC's decision to approve two bitcoin futures funds, but to deny Grayscale's application to convert its bitcoin trust GBTC product into a bitcoin spot ETF, was “arbitrary and capricious” and in violation of federal administrative law."
The courts admonished the SEC (executive branch) for not upholding the law.
Crypto taxation is extremely simple. You bought it, you later sell it. OK calculate your short or long term cap gains and pay up. God have mercy on any crypto folks trying to evade taxes on their trading activity which is preserved as if in amber for eternity.
It is important to get past "usefulness" and "scarcity" (which are second-order perceptions) to the underlying first-order principles. Gold and silver are perceived as useful stores of value for a very simple chemical (read: mathematical) reason: they do not rust. The weight of a non-Noble Metal will dissipate over time as it loses electrons to Oxygen atoms - oxidization. Not so with Noble Metals like gold and silver (platinum and palladium also share this trait). This is, and always has been, the underlying math of why gold and silver have been used as money for all recorded history.
Bitcoin enjoys some of this: Ultimately, it is backed by math. The 20K nodes are - once again - a second-order feature. The first-order principles all derive from math: Bitcoin cannot be debased because its creation cannot be divorced from its transaction-based impetus. This means the increase in Bitcoin supply tracks the increase in transactions in a mathematically deterministic way. That means the supply can increase without the increase being inflationary. (Inflation = % increase in the supply of a monetary unit MINUS % increase in volume & value of transactions in that unit.)
Bitcoin cannot be forged. Combining digital signatures and transaction digests (also called hashes) guarantees its integrity. And, if held in cold-wallet storage, Bitcoin cannot be confiscated.
Having said all of this, Bitcoin cannot be the off-ramp Chris envisions as long as the only way to extinguish a debt is to tender payment in USD. The USD monopoly on private legal tender simply must be broken.
Bitcoin is an asset. There are exchanges. You take it to the exchange and get dollars. And now you can pay your taxes or buy a house etc.
If someone's willing to take payment in USDC or USDT you can literally send bitcoin to Coinbase, swap for USDC, and send it to your counterparty in less time than it takes to send a traditional wire.
The offramps are started by entrepreneurs who realize it can be a lucrative business. There's loads of exchanges in the US and abroad, and plenty of folks who will meet in person to transact.
Why would you value your assets in USD if you want an off-ramp from the USD? Now, I understand you'll need something to convert to USD to pay taxes... That's a PUBLIC debt, and Congress can retain the authority to determine how PUBLIC debts are accounted for. But if you want an off-ramp from USD, you simply have to be able to demand something other than USD for your labor.
Right now, it is futile to think you'll be paid wages in Bitcoin because your wages are considered a debt owed to you by your employer. The Constitution forbids the States from making any thing other than gold and silver coin a tender in payment of debts. The Constitution does not differentiate between PUBLIC and PRIVATE debt. But the USD does - see the upper left area of your Dollar: "This note is legal tender for all debts, public and private."
As for private debts, there is no way to legally extinguish a debt other than by payment of the debt being tendered in a unit recognized as a "tender in the payment of debts." You have to understand the whole monetary arrangement established in the Constitution arose from abuses suffered by former Revolutionary Army soldiers who rose up against various states in the Daniel Shays Rebellion.
So if I work for you, you agree to pay in Bitcoin, but then you fail to pay my wages, I go to court, I am not going to recover Bitcoin from you. The court will determine a point in time at which the USD/BTC market rate will be used to measure the debt in USD and then order payment tendered in USD to extinguish the debt.
But we wanted an off-ramp, right? What difference does it make trying to conduct commerce in Bitcoin when the eventual disputes will have to be settled in USD?
You're absolutely right John that a fantasy of a pure-bitcoin-only circular economy no-more-dollars future is both impractical and ludicrous. However that's not the future I'm advocating for, nor QTR's position.
Let's simplify it to "Bitcoin exists, it's a digital asset, and it's likely to persist for a while." From there one can construct an investment hypothesis. Mine goes something like "this thing appears to be a useful global savings account, it's hard money on the internet, and like gold's hard money attraction (as a SoV) I think Bitcoin will act similarly. If that's right, then bitcoin's going to be worth a lot more than it is today, perhaps matching the market cap of gold."
That's it. That's all it needs to be. If someone insisted to you that bitcoin's only future is a dollar-free utopia... well, maybe that's that person's vision. But using that as a strawman to fight against doesn't defeat bitcoin. You appear to have reasoned yourself into dismissing bitcoin entirely on this hill, and that's A-OK! You don't need it. Virtually nobody does today. Perhaps one day you'll find a use for it, or develop an investment hypothesis to go long or short on.
What do I do with my bitcoin? I just sit on it. I hold it. It's fine. I don't get paid in it, but do occasionally pay others bitcoin for goods. I think it'll be worth more in 10 years.
Two responses: First, a pure Bitcoin-only circular economy is absolutely NOT a fantasy - it is exactly what is needed. I just do not think Bitcoin's design is up to it precisely because of the BTC21M hard cap. That will cripple the use case for Bitcoin as credit. But let's not get bogged down in that... When you understand the dynamics that preceded the first Constitutional Convention and understand that the Daniel Shays rebellion was the last straw that broke the back of the Articles of Confederation, then you will understand where the decision-making authority lies as to what we use to measure economic activity (hint: We the People) and why the decision was made (by We the People) to confer in Article I to the Congress the authority to coin money and regulate its value and to forbid the States from making any thing other the gold/silver coin a tender in payment of debts, then you will realize that Bitcoin can, in fact, replace the USD for private matters. All the way down to how raw materials (like oil) and human labor are priced. The idea that this is a fantasy is a failure of imagination and understanding of the interplay between money and law.
You have entirely missed my point if you think this is a dismissal of Bitcoin. I think the Ethereum v2.0 Proof of Stake model is far superior to Bitcoin's original model (which I think will be a historic, revolutionary proof of concept). The ultimate in freedom is being able to create a staking pool where the parties prove to each other they have physical position of gold and silver, and then on that basis, "create" auETH and agETH - which a price in silver/gold.
This returns us to a digital version of the Coinage Act of 1792. Please google that and read it. Hopefully, you will at least realize that gold and silver as "assets" priced in USD is an Alice in Wonderland bullshit upside-down arrangement. You once could "create" USD by bringing silver to the mint, where it would be assayed, struck into coins, and returned to you for your use. USD had a price in silver, not the other way around.
This is why I argue against the premise that Bitcoin is an asset... That is the whole problem. Under the Coinage Act, gold and silver were not viewed as "assets" - they were viewed as "money." - man, please stop and think about that! Bitcoin (and Ether) should not be viewed as an asset but as a unit of measure by which we value assets!!!
Using Ethereum v2.0 as a Level 1 Blockchain, we can create Level 2 Blockchains (as many as we like) that price the creation of ETH in gold and silver (i.e., auETH and agETH). The relationship between the metals, the monetary unit, its creation, and its hypothecation, can all be governed by smart contracts. And if a given Level 2 smart contract arrangement proved suboptimal, we create a new, competing alternative.
But what MUST happen is we MUST be free to contract with one another privately where we measure our mutual obligations in that preferred crypto unit and authorize the courts to adjudicate disputes in the same unit.
What happens next is the government will not be able to obtain goods and services from the private sector unless they do what they are supposed to have been doing all along - protecting the purchasing power of the USD! If they want to debase the USD, and I am free to engage in commerce in another unit, that other unit will become stronger vis-a-vis the USD, making it easier for me to pay my public obligations!
If you want and we can exchange email addresses securely (DM me at @CraftBeerSnob on X) I'll send a PDF to you in exchange for an honest review on Amazon.
Man, it's too much. You know your stuff, but I think you're getting caught up in it all. It's a few too many layers of if-this-then-that, and therefore this-then-that...
Zoom out. What is bitcoin today? What is Ether today? It's just this network with a native unit, which behaves and is used primarily as if it's a digitally native asset. It has a market price, it trades around the world, and people hodl it.
I don't care about Shay's rebellion and the coinage act of the 1700's. Surely there's some notable details from them that may give one a deeper understanding of monetary systems.
But no. I reject it. I won't engage in that argument. It's not first-principles thinking.
Bitcoin can coexist happily alongside the dollar and other world currencies. It can also coexist with Apple stock, gold ETFs, real estate in London, and any other assets out there. It's another one, albeit a new one with different properties and a new technological twist.
I admit I don't run in ETH circles anymore, but from back in the day and the little I see today there ain't no interest in ag/auETH as a new paradigm. Perhaps it is the answer, and I wish you luck in building it or helping to get it built. Surely the world could benefit if it could do what you expect it can.
Good morning Chris, loved the insightfulness of the article. I believe in bitcoin. I've made some money on bitcoin. I do have a fear that bitcoin has been hijacked by the financial system. I would like you to address what I consider the elephant in the room around bitcoin which is Tether. There are many that believe the ponzi scheme lives in Tether. And if Tether falls, bitcoin takes a serious beat down. I'm personally on the sideline waiting for tether to fall. I've heard you on prior podcasts express the same tether doubts that I have. How do reconcile tether in the bitcoin equation?
Tremendous article. Feels good to be a bitcoiner doesn't it 😌
What happens when you can't convert BTC into dollars? It would not be hard to make that happen. You think millions are going to flock to what they can't convert to dollars?
How do you pay bills, buy things, or even value something that is not convertible into dollars?
It is amazing to me that you guys think BTC can stand on its own with the conversion factor.
If BTC becomes a haven of safety, remains convertible, and is accepted by utilities, retail giants, insurance giants,, and other mainstream corporate entities, then we will know that BTC was the digital Trojan horse all along.
Do you believe regulated exchanges in America will be shut down by the government? Is there precedent for a public company (like Coinbase) operating legally with lots of regulation having the government do a 180 and shut it down? Would this be via executive branch action?
And if that were to happen, do you think black-market exchanges would emerge? Surely bitcoin's value would take a big hit if it were officially outlawed, but entrepreneurs tend to spring up wherever there's money to be made. Surely it'd be easy enough to find your local illicit bitcoin dealer.
Bitcoin need not be a daily medium-of-exchange to be a success. I've been in for nearly a decade and while I "use" it in commerce occasionally, I find 99% of its value to be in its Store-of-Value function (albeit volatile).
I posed a hypothetical to illustrate how easy it would be to shut it down.......or virtually destroy any interest in it. If you couldn't convert it to dollars, would you be holding it as a "store of value"? No, no you wouldn't.
Would they ever make such a move? Not likely, but the point is they could. Which brings us to the logical conclusion that they haven't because they are not against BTC.........neither do they "fear" it........but rather they are encouraging it for various reasons, not the least of which, is to get everyone hooked on using digital money the way everyone is hooked on using smart phones.
They could destroy it + but they haven't even tried + they are doing everything they can to promote and facilitate it = it was their plan all along = not a plan to facilitate your freedom and individuality = a plan to destroy personal freedom and ability to dissent.
You guys just won't accept that your fascination, infatuation, and outright worship of all things technology is leading down the road of your final prison cell. You can see the insatiable desire for power and control by these psychopaths.......and as long as you think there's a profit to be made.........you'll go right along with them.
Like sheeple following a bucket of feed to the slaughterhouse.
Love you QTR, but
Bitcoin seems like another grand Ponzi scheme to me.
I guess I am too old and set in my ways. I want those hard assets that I can see and hold, even if it is a stock certificate. I can look at the balance sheet and it gives me some type of comfort, one way or another.
The only thing I see with Bitcoin is a daily valuation, in US dollars. Not sure how safe a bet that is. Kinda of like “Where’s the beef?”.
I would hope at some point our great country would return to the gold standard. I know that would cause great pain, but every thing is so overvalued. At some point we are going to have to take the medicine.
To me Bitcoin doesn’t pass the smell test. I am waiting for the shoe to drop. I will be aggressive with gold and silver and energy.
I do appreciate your thoughts. Keep them coming.
Ponzi's have a central operator, yes? Someone to keep the schtick going, taking money in and making sure participants are happy with juicy returns until the operator finally skips town.
Where is the operator in Bitcoin? It's a global distributed system, and its unit of account (bitcoin) has a market-set price. Who is promoting it for their own benefit? Who loses?
Gold is not a ponzi. It is a globally distributed metal that people hold for various reasons, mostly as a Store of Value. Who promotes gold? Does anyone lose from gold?
I mean to draw the analogy because the more you learn about bitcoin as a SoV, the closer it resembles gold as an SoV, albeit on a much shorter and more volatile timeframe.
If gold could be made digital, and anyone in the world with a smartphone could acquire it and hold it, would that be useful? If you could be certain this gold wasn't counterfeit, and you could easily send it to anyone as easily as sending an email, would those be useful characteristics?
Of course bitcoin is volatile. Few understand it. Price appreciation leads to mania which leads to bubbles which pop.
If gold interests you, and you're a regular user of the internet, consider learning more about Bitcoin. Michael Saylor's bitcoin series on Robert Breedlove's "What is Money" podcast is a great place to start for someone like you.
Perfect answer! Hard assets that one can hold in their hands is real money, Gold / Silver / Land etc. Bitcoin is part of smoke show just like every other digital and paper illusion out there.
While I think you may have identified some of the zeitgeist, if anything, it makes the creation of Bitcoin ETF's that much more important. If you have bought bitcoin straight up, not through an exchange, you know how difficult it is to do so. the ETF allows the masses to access whatever value exists without the headaches. This is very likely to be the path that most of those pissed off masses take given their newly found familiarity with Robinhood and on-line trading. but those ETFs are not actually owning bitcoin, are they? so there will very likely be a great deal of sturm und drang but no mass adoption in any form.
I have said all along that the ETF is the worst thing for BTC as it takes its inherent advantage of decentralization and puts it all under one umbrella, the federal government.
Since I can't buy/pay ANYTHING (services & goods) just for basic survival in the Plantation where I slave around with BTC... Can't see why my fellow modern moron slaves are so happy with a WWW set of code! I guess the clue is in the "moron" part!
As for the rest the MONETARY SYSTEM has been under control for the few past Centuries for a few Families that surely don't seem at all worried about the lasted MMS delusion.
It's just sad to watch MMS behaving always in the same matter... Zero ability to Learn.
Still no answer to the fundamental question of "why?". Why "invest" your money in an "asset" which does not earn anything vs. investing in a fractional share of a real business, the value of which will increase with inflation plus provide a real return?
BTC is at the same level as Sports Card Investing! All the rest is just WWW gospel and delusions.
That’s the beauty of Bitcoin. It took me two years to be able to understand and answer this question, and to provide an adequate answer would probably be a 30 minute phone call.
However, the short answer is simple: supply and demand. On the most basic level. A little more technical answer is Bitcoin is deflationary while everything else tied to fiat currency is inflationary. In that sense, most everything is falling in price in relation to the price of Bitcoin.
In other words, "greater fool theory". You hope that someone will pay more for your bitcoin than you did. Anything that takes two years to understand and 30 minutes to explain is a non-answer.
U.S dollar M2 goes up around 6-7% per year, which debases everyone. Most other countries are worse.
You certainly may be correct, but you also might be wrong.
I see almost no downside to owning 1% of a new tech that may go to zero or 10x.
You do you.
Pyramid scam like so many others (including in the fiat scam!)... The main attraction of this one is that it is digital and morons can do it on a "smart"phone.
Daniel, let's do a quick thought experiment.
Let's imagine there's a global savings account with a fixed number of shares. Anyone with a smartphone can buy shares and hold them, as well as send them to anyone else as easily as sending email.
This system runs for a decade and doesn't break, people who are properly informed don't lose their shares for any technical reasons, and the system persists unfailingly.
Would you anticipate this system proving useful in the future? A big global pie that anyone can buy a slice of and keep their wealth in it via their smartphone.
Seems useful to me! Perhaps you disagree because it doesn't cashflow, because it's speculative (like gold), or believe that all current holders are just salivating at a rising price and planning to get out as soon as they're 'rich' and let the suckers ride it to 0.
So, I own a piece of this global pie (POTGP). Then what? Would I use it to buy shares in, say, Apple? If so, what difference does it make whether I use a POTGP or fiat currency to buy shares of Apple? The value of the Apple stock will appreciate based on the exit value determined by Apple's earnings and p/e.
Apple's earnings will likely benefit from inflation plus real growth. So investors aren't overly concerned about a depreciating fiat currency. People with wealth don't keep it invested in "cash", and POTGP is essentially an alternate form of "cash". As it stands now, POTGP's value is too volatile for 99.9% of investors to agree to a payout in POTGP when they want to cash in an investment. And I don't see that changing anytime in the near future.
Think of owning a POTGP like owning shares in an index fund. Yes yes, I agree, they're not the same! One is a pile of equities, and the other is not.
But let's say you have a chunk of money you'd like to preserve and hopefully grow over the years so it's worth more when you retire and need to spend down your savings/investments.
You can buy a POTGP, you can buy apple shares, you can hold it in cash, among many other things. POTGP is "cashlike" in that it is a bearer instrument, but it is extremely not cashlike because it's not a fiat currency that's guaranteed to go down slowly over time.
I have an investment hypothesis for this POTGP and it's that it will prove useful to the world, and many will adopt it, and therefore over a long timeframe the price will go up. Short term is volatile, sometimes extremely so (also not cash-like).
See how that compares to: I have an investment hypothesis for the American economy at large, and it's that it will continue to grow and prosper, and I can own a slice of this via an S&P500 index fund. Sure I have to pay a small management fee, but I believe in growing American prosperity, and I believe this will be reflected in share prices over the next decades (Sorry about people who thought the same about Japan starting in the 90's).
That's it! The Global Pie is an investable asset, and you can have an investment hypothesis, and treat it like an investment. I don't "do anything" with my index fund. Holding it is its purpose, holding it is the 'doing.' I don't think "gee I should spend these index fund shares on lunch, or on Apple stock..."
I came to this conclusion (the POTGP investment hypothesis) a while back, and when I did I bought a bunch. And I've just held it ever since. And I plan to for a long long time. That's what I do with it. And if I'm wrong it's going to $0. It's a beautiful thing, free markets and free choice etc
The key to our disagreement is that you believe that bitcoin will be the POTGP which prevails. IMO, governments will suppress the use of bitcoin in favor of CBDC's. The powers-that-be may not be able to eliminate bitcoin, but they will be able to regulate it to a point where it is no longer a "defi" instrument. Bitcoin's sole purpose would then be as an alternate form of "cash" that wouldn't depreciate the way that fiat currencies are likely to continue doing. But I don't believe that we will ever get to a point where bitcoin is widely used for transactions, which will greatly reduce its value and appeal. The one thing that might change my mind is if Congress approves a law which would exempt transactions in bitcoin below a certain $ amount from being taxable on the gain/loss in the change in value which the bitcoin used in the transaction experienced. I don't believe that will ever happen due to the complexities of implementing such a system (you would still have to track the cost basis of all your bitcoin transactions so that any larger bitcoin trades would have an accurate cost basis for tax purposes). Bitcoin will remain like digital gold, except that gold actually can be untraceable and central banks prefer to hold gold as a substitute for fiat over bitcoin, to the degree that they want to hold such a substitute.
Younger Consumers are being wiped out with debt and inflation.
You think when the Big 6 Tech stocks are repriced for zero growth, everyone will turn to BTC?
BTC, because it is a speculative investment AS WELL as a currency, will get hit in a big way.
What will your reaction be when BTC/USD gets cut in half (again). Will you still feel the same? Will you still be glad you bought at $50K when it's $20K?
It could be the best idea on the planet, but people can ruin a good idea with irrational thought.
Like you, I have come around in the last couple years to the idea Bitcoin could be a game changer. As a 30 year goldbug, I believe it is easier for us sound money guys to see the merits of Bitcoin. The GameStoppers were too distracted by dollar signs to recognize the system itself is the problem. While I am still not 100% convinced Bitcoin is the answer to what ails us, The more time I spend trying to understand it - the harder it becomes to deny the genius inherent in Bitcoin....
https://bagholder.substack.com/p/the-money-war
Also good luck cashing in when all fiat currencies shit the bed. Who will be foolish enough to trade Bitcoin for anything. Another ploy by the powers that be to have all of us holding the bag when the shit goes down. Sad but true
Bitcoin has been hijacked and will just be another way for the crooks to steal our wealth. The sickness is in the system and Bitcoin, even more so now that it has an ETF, is a part of that system.
DRS is GameStop investor’s exit ramp. Shorts never closed.
Bitcoin is nice too though. 👍😜💜
Chris... You're getting there, but I'd really like to hear your thoughts on "private legal tender." If Congress says we are to pay taxes in USD, and it otherwise borrows and redeems in USD, fine - that is public legal tender. Beyond that, Bitcoin offers no offramp as long as we are forced to accept USD as a "...tender in payment of (private) debts." Until the raw materials of the earth AND the labor needed to make them useful can be priced in Bitcoin - with eventual disputes adjudicated in Bitcoin - there is no offramp here. You'll still be pricing your crypto in USD and suffering from the "stupidity crisis" that results.
It's another angle on the topic, but Bitcoin's design - especially after the supply limit it hit - will end up incentivizing holding onto it. Bitcoin as a store of value will work so well that the transaction-based credit needed for an economy to grow will simply not be there. Bitcoin's design prefers the value of Bitcoin over its broad utility as money in which credit can be issued.
Not so with ETH. The ultimate Blockchain-based money will be ETH on Ethereum v2.0 because it allows competitive monetary alternatives. The one I want to see is where a notional "auETH" and an "agETH" can be created on a staking pool where gold (Au) and silver (Ag) are staked instead of USD. It will be possible to have any number of Level 2 Blockchains with varying prices - only the "price" is measured in a weight of gold and silver (just like the USD once was). Having multiple Blockchains with competing price points allows the market to discover the best prices for various purposes.
https://www.amazon.com/Libertys-Silver-Bullet-Liberties-Constitution-ebook/dp/B0CL2HLC3N
lol. The Bitcoin Standard and Softwar are must reads for even Bitcoin minimalists, let alone maximalists. It is a true immutable and centralized power projection that requires no bankers or middlemen.
I think the emergence of the bitcoin ETFs indicates that the US Govt. has decided it would rather participate in the crypto world, in the form of taxes, than try to ban it.
So, IMO, the key now is to fully understand how your crypto holdings are taxed.
You guys are paying your taxes, right?
Re: US Gov deciding it would rather participate...
"In August, a federal court ruled that the SEC's decision to approve two bitcoin futures funds, but to deny Grayscale's application to convert its bitcoin trust GBTC product into a bitcoin spot ETF, was “arbitrary and capricious” and in violation of federal administrative law."
The courts admonished the SEC (executive branch) for not upholding the law.
Crypto taxation is extremely simple. You bought it, you later sell it. OK calculate your short or long term cap gains and pay up. God have mercy on any crypto folks trying to evade taxes on their trading activity which is preserved as if in amber for eternity.
In general, assets like gold or real estate gain a price because of two␣
qualities: usefulness and scarcity. The more useful and scarce a commodity, the␣
more expensive it becomes. Bitcoin has both.
Its usefulness is that it is decentralized, meaning that nobody can stop you␣
from holding it and transacting with anyone else in the world. In a world where␣
governments increasing try to control how you can earn and spend your money,␣
that is tremendously useful. And of course, you can send any amount of bitcoin␣
anywhere in the world at any time in minutes at low cost with the receiver␣
having complete confidence that the got valid non-diluted bitcoin. Try that␣
with gold. Try that with a wire transfer on Friday night before a long weekend.
Bitcoin is also the worlds first digital asset with enforceable scarcity. That␣
is tremendously useful in a world where governments increasingly fund their␣
operations by printing money; a hidden tax on savings. Bitcoin is also backed␣
by a huge network of nodes and miners. Currently there are 20K nodes that␣
verify every transaction to make sure its valid. This keeps the miners honest.␣␣
The miners spend tremendous amounts of money on mining rigs and power simply so␣
they will pay a price for cheating. That investment comes to nothing if they␣
mine blocks that include invalid transactions (double spends, excessive mining␣
rewards, etc.).
It is important to get past "usefulness" and "scarcity" (which are second-order perceptions) to the underlying first-order principles. Gold and silver are perceived as useful stores of value for a very simple chemical (read: mathematical) reason: they do not rust. The weight of a non-Noble Metal will dissipate over time as it loses electrons to Oxygen atoms - oxidization. Not so with Noble Metals like gold and silver (platinum and palladium also share this trait). This is, and always has been, the underlying math of why gold and silver have been used as money for all recorded history.
Bitcoin enjoys some of this: Ultimately, it is backed by math. The 20K nodes are - once again - a second-order feature. The first-order principles all derive from math: Bitcoin cannot be debased because its creation cannot be divorced from its transaction-based impetus. This means the increase in Bitcoin supply tracks the increase in transactions in a mathematically deterministic way. That means the supply can increase without the increase being inflationary. (Inflation = % increase in the supply of a monetary unit MINUS % increase in volume & value of transactions in that unit.)
Bitcoin cannot be forged. Combining digital signatures and transaction digests (also called hashes) guarantees its integrity. And, if held in cold-wallet storage, Bitcoin cannot be confiscated.
Having said all of this, Bitcoin cannot be the off-ramp Chris envisions as long as the only way to extinguish a debt is to tender payment in USD. The USD monopoly on private legal tender simply must be broken.
https://www.amazon.com/Libertys-Silver-Bullet-Liberties-Constitution-ebook/dp/B0CL2HLC3N
I don't understand your off-ramp objection.
Bitcoin is an asset. There are exchanges. You take it to the exchange and get dollars. And now you can pay your taxes or buy a house etc.
If someone's willing to take payment in USDC or USDT you can literally send bitcoin to Coinbase, swap for USDC, and send it to your counterparty in less time than it takes to send a traditional wire.
The offramps are started by entrepreneurs who realize it can be a lucrative business. There's loads of exchanges in the US and abroad, and plenty of folks who will meet in person to transact.
Why would you value your assets in USD if you want an off-ramp from the USD? Now, I understand you'll need something to convert to USD to pay taxes... That's a PUBLIC debt, and Congress can retain the authority to determine how PUBLIC debts are accounted for. But if you want an off-ramp from USD, you simply have to be able to demand something other than USD for your labor.
Right now, it is futile to think you'll be paid wages in Bitcoin because your wages are considered a debt owed to you by your employer. The Constitution forbids the States from making any thing other than gold and silver coin a tender in payment of debts. The Constitution does not differentiate between PUBLIC and PRIVATE debt. But the USD does - see the upper left area of your Dollar: "This note is legal tender for all debts, public and private."
As for private debts, there is no way to legally extinguish a debt other than by payment of the debt being tendered in a unit recognized as a "tender in the payment of debts." You have to understand the whole monetary arrangement established in the Constitution arose from abuses suffered by former Revolutionary Army soldiers who rose up against various states in the Daniel Shays Rebellion.
So if I work for you, you agree to pay in Bitcoin, but then you fail to pay my wages, I go to court, I am not going to recover Bitcoin from you. The court will determine a point in time at which the USD/BTC market rate will be used to measure the debt in USD and then order payment tendered in USD to extinguish the debt.
But we wanted an off-ramp, right? What difference does it make trying to conduct commerce in Bitcoin when the eventual disputes will have to be settled in USD?
You're absolutely right John that a fantasy of a pure-bitcoin-only circular economy no-more-dollars future is both impractical and ludicrous. However that's not the future I'm advocating for, nor QTR's position.
Let's simplify it to "Bitcoin exists, it's a digital asset, and it's likely to persist for a while." From there one can construct an investment hypothesis. Mine goes something like "this thing appears to be a useful global savings account, it's hard money on the internet, and like gold's hard money attraction (as a SoV) I think Bitcoin will act similarly. If that's right, then bitcoin's going to be worth a lot more than it is today, perhaps matching the market cap of gold."
That's it. That's all it needs to be. If someone insisted to you that bitcoin's only future is a dollar-free utopia... well, maybe that's that person's vision. But using that as a strawman to fight against doesn't defeat bitcoin. You appear to have reasoned yourself into dismissing bitcoin entirely on this hill, and that's A-OK! You don't need it. Virtually nobody does today. Perhaps one day you'll find a use for it, or develop an investment hypothesis to go long or short on.
What do I do with my bitcoin? I just sit on it. I hold it. It's fine. I don't get paid in it, but do occasionally pay others bitcoin for goods. I think it'll be worth more in 10 years.
Two responses: First, a pure Bitcoin-only circular economy is absolutely NOT a fantasy - it is exactly what is needed. I just do not think Bitcoin's design is up to it precisely because of the BTC21M hard cap. That will cripple the use case for Bitcoin as credit. But let's not get bogged down in that... When you understand the dynamics that preceded the first Constitutional Convention and understand that the Daniel Shays rebellion was the last straw that broke the back of the Articles of Confederation, then you will understand where the decision-making authority lies as to what we use to measure economic activity (hint: We the People) and why the decision was made (by We the People) to confer in Article I to the Congress the authority to coin money and regulate its value and to forbid the States from making any thing other the gold/silver coin a tender in payment of debts, then you will realize that Bitcoin can, in fact, replace the USD for private matters. All the way down to how raw materials (like oil) and human labor are priced. The idea that this is a fantasy is a failure of imagination and understanding of the interplay between money and law.
You have entirely missed my point if you think this is a dismissal of Bitcoin. I think the Ethereum v2.0 Proof of Stake model is far superior to Bitcoin's original model (which I think will be a historic, revolutionary proof of concept). The ultimate in freedom is being able to create a staking pool where the parties prove to each other they have physical position of gold and silver, and then on that basis, "create" auETH and agETH - which a price in silver/gold.
This returns us to a digital version of the Coinage Act of 1792. Please google that and read it. Hopefully, you will at least realize that gold and silver as "assets" priced in USD is an Alice in Wonderland bullshit upside-down arrangement. You once could "create" USD by bringing silver to the mint, where it would be assayed, struck into coins, and returned to you for your use. USD had a price in silver, not the other way around.
This is why I argue against the premise that Bitcoin is an asset... That is the whole problem. Under the Coinage Act, gold and silver were not viewed as "assets" - they were viewed as "money." - man, please stop and think about that! Bitcoin (and Ether) should not be viewed as an asset but as a unit of measure by which we value assets!!!
Using Ethereum v2.0 as a Level 1 Blockchain, we can create Level 2 Blockchains (as many as we like) that price the creation of ETH in gold and silver (i.e., auETH and agETH). The relationship between the metals, the monetary unit, its creation, and its hypothecation, can all be governed by smart contracts. And if a given Level 2 smart contract arrangement proved suboptimal, we create a new, competing alternative.
But what MUST happen is we MUST be free to contract with one another privately where we measure our mutual obligations in that preferred crypto unit and authorize the courts to adjudicate disputes in the same unit.
What happens next is the government will not be able to obtain goods and services from the private sector unless they do what they are supposed to have been doing all along - protecting the purchasing power of the USD! If they want to debase the USD, and I am free to engage in commerce in another unit, that other unit will become stronger vis-a-vis the USD, making it easier for me to pay my public obligations!
I spell it all out here: https://www.amazon.com/dp/B0CL2HLC3N
If you want and we can exchange email addresses securely (DM me at @CraftBeerSnob on X) I'll send a PDF to you in exchange for an honest review on Amazon.
Man, it's too much. You know your stuff, but I think you're getting caught up in it all. It's a few too many layers of if-this-then-that, and therefore this-then-that...
Zoom out. What is bitcoin today? What is Ether today? It's just this network with a native unit, which behaves and is used primarily as if it's a digitally native asset. It has a market price, it trades around the world, and people hodl it.
I don't care about Shay's rebellion and the coinage act of the 1700's. Surely there's some notable details from them that may give one a deeper understanding of monetary systems.
But no. I reject it. I won't engage in that argument. It's not first-principles thinking.
Bitcoin can coexist happily alongside the dollar and other world currencies. It can also coexist with Apple stock, gold ETFs, real estate in London, and any other assets out there. It's another one, albeit a new one with different properties and a new technological twist.
I admit I don't run in ETH circles anymore, but from back in the day and the little I see today there ain't no interest in ag/auETH as a new paradigm. Perhaps it is the answer, and I wish you luck in building it or helping to get it built. Surely the world could benefit if it could do what you expect it can.