80 Comments
Feb 4Liked by Quoth the Raven

Lots to think about here, but aside from the substance of the post, tons of respect for anyone willing to challenge their own priors, especially when those priors are on public record.

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author

Let’s chat about it on a pod for sure.

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Any comment as to why you deleted your public record on this topic and everything else on X?

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author

I usually delete all my tweets on X after a while (see, there are no others) - meanwhile this post is still here, right?

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Feb 4Liked by Quoth the Raven

Can you imagine someone saying 'why I gold' or 'why I Apple'? Or talking about a pivot on an investment thesis as a 'mea culpa'?

This note reads less like an investment treatise and more like a religious awakening.

I'm not saying you're wrong or that you're making a mistake. I'm saying this sounds very different from your other writing on investing topics.

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it is a religion, for better or worse

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It can be. There are some very rational heads in BTC, however they are definitely a very small minority.

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Feb 4Liked by Quoth the Raven

For what it is worth, I have BTC just as a hedge.

The US dollar is quickly becoming worthless and BTC has more of a chance to be a workable currency than gold.

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Feb 4Liked by Quoth the Raven

Ring me up on the sat phone when the US govt takes down the grid and blames China. Your BTC on your hard wallet will be as useless the dead fish in the barrel. The reason they allowed the ETFs wasn’t to give it legitimacy. It was to start the regulation train. With the rabid green push, where they even want to ban gas stoves, you seriously think they will allow the miners to continue operation? You think that people who can’t heat their homes due to grid failure are going to be fine with a mining operation that can power a small city. Think again.

BTC. Is nothing but hopium. Your problem, IMO, as with the others, is you are confusing the beauty of blockchain with actual wealth preservation. There is zero logic there. Zero.

Besides, something that was created by the govt will ultimately be destroyed by the govt. Anyone who believes they don’t have the ability to shut it all down simply doesn’t get it.

But I still love you. Your just wrong here.

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You should watch how Gridless, a Bitcoin miner, is enabling rural African villages to get access to cheap and affordable power.

https://www.whatbitcoindid.com/podcast/powering-africa-with-bitcoin-mining

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Watch the MARA pomp interview. You are wrong. Mining will be free eventually and the grid will only get stronger.

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We shall see I suppose. I neglected to mention, that I do own a small amount of BTC and ETH. Just 1% NAV. I view it as a hedge and not an investment or a store of value. If I’m wrong and it goes to a million, I’ll admit I was wrong with a smile. If it goes to zero, I won’t lose much, and I’ll still have a smile. LOL. Good luck to all. We are likely to need that one way or the other.

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The interesting thing about bitcoin is that it is stateless and can be taken across borders. Thus, if the US government sabotages its' own electricity grid there are still 160 other jurisdictions where bitcoin can be mined.

It can also be taken across borders as long as you remember a 12 word passphrase, so it is very resistant to government regulation. Consider China, who mine the 2nd most bitcoins in the world despite the CCP banning it.

Of course, the bitcoin bull case is contingent on the network effect and folks continuing to adopt it/hold it. But the case gets stronger with every passing year, the Lindy Principle in full effect. Gold has 5000 years, BTC has 14.

I, like QTR, have come around to BTC as an inflation hedge and store of value over the last few years after listening to Larry Lepard and Lyn Alden especially.

QTR, I appreciate your ability to stay open-minded and avoid dogmatic thinking. Thanks for sharing the article.

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Nice write up. Thanks. To me, it’s a commodity. It has most of the elements of a commodity. It’s scarce. It’s mined. It has a futures market. It can be bought, sold, or stockpiled. It can be a store of value. But like all commodities it is totally speculative in nature. Thats not necessarily bad. But when I am assessing risk, both short and long term, do I want to store my value in something that has 1000s of years of doing that, and that central banks are buying? Or do I want to store my value in something that has just 14 years of use, has not fulfilled its original purpose, was developed in secret by an unknown entity, does not have wide retail investment adoption, and is subject to the potential of massive regulation?

How about no.

What sealed the deal for me were the ETFs. BTC was supposed to be the thing, the alternative to the system, allowing add facilitating peer to peer transactions outside the system. It has mostly failed in that regard. And now, it has embraced the system, and been embraced by the system.

It might go to 100k. Who knows. But eventually a lot of people are going to lose a lot of fiat once again when te rug pull comes. And it will. It’s just a matter of time. Best of luck.

Full disclosure. I do own some Ethereum as a purely speculative play. I have no BTC and no interest.

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You're clearly an astute investor and have deployed your money carefully. I agree with the first part of your argument whole heartedly (bitcoin is commodity-like, can be used as a SoV, and is inherently speculative).

Re: bitcoin's youth, of course it's young compared to gold. The internet is a fleeting blip on gold's timeline. The internet has created vast sums of wealth via its usefulness to humanity. This doesn't mean one should avoid speculating on internet-adjacent investments, from domain names to various hard/software equities.

Seen through this lens, bitcoin is a money-layer added to the internet. Similar to how email, social media, search, and other basic infrastructural layers have been added over time.

Pivoting to ETF's and bitcoin's "purpose." Bitcoin could not stop wall street if it wanted to. It's an open protocol. Nobody controls it fully. Pure profit incentives of wall street and crypto firms are responsible for bringing the ETFs into existence. "We can sell this to clients and earn fees on it." Bitcoin doesn't care, it simply exists.

Likewise, bitcoin simply goes on existing without any "shoulds" or "supposed-to's." People use it a SoV. It's marvelous at that. Anyone with a smartphone can get a free wallet, buy bitcoin, and custody this asset forever. And they can send it to anyone as easily as sending email. People aren't widely using it as a Medium of Exchange, yet, and perhaps they never will.

When you stop viewing bitcoin as having some originally inscribed 'outsider'/anti-system purpose, and simply see it as a neutral technology that is stubbornly unfailing in its regular and boring operation, you may reconsider your current objections. I wish you well in your allocations!

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Agreed, it is very risky and volatile – it would be a bold move to put a meaningful allocation of your wealth into such a speculative asset.

Why not put money into gold AND bitcoin though? Both are hedges against the money supply that grows at 7% per year consistently.

Gold increases its’ supply at ~1.5% per year, BTC is similar to that (and will be less than 1.5% after the April 2024 halving).

To your government regulation point, it seems to me that this is a technology that can evade government control. If the core group of people that have adopted bitcoin since 2009 remain committed to it, it would be hard to stop.

If it is regulated in say, the US, it will just be mined/used in another country. On an individual level, your wealth can be taken across borders with a password that you can carry in your head – that is hard to stop.

It may have been created by the deep state, but why does that matter now that it is out in the wild? The information on the block chain is all open source and can be verified by anyone at any time.

It is essentially an open-source ledger with 20,000 copies around the world, I can’t see how 160 nation states could coordinate to “shut it down”. How do you shut down information sharing?

As mentioned though, everything is contingent on the people running the network remaining committed to it – people such as Michael Saylor and the Winklevoss twins. Will be interesting to see how it all plays out.

But, as you say, it is irrelevant how beautiful the blockchain is if nobody understands it or uses it. If it is just a bunch of cryptography geeks sending messages to each other in some dark corner of the internet, then there will be zero real-world impact.

There is a decent amount of uptake just going off the price action, more than just a few nerds in their Mom’s basement. It has survived multiple 80% drawdowns and still exists.

Also on a personal level, I lived through a totalitarian nightmare in Australia through 2021 which was a real eye-opener. THAT experience has definitely motivated me to look for ways to hedge against government overreach and maintain individual sovereignty! :)

I’m not sure what the next few decades are going to bring in terms of 4th Turnings and end of long term debt cycles, but it definitely seems like a good move to keep your options open on that front.

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I really relate to this. I ignored Bitcoin for years. I eventually matched my gold holdings with Bitcoin. I now only own RE, Bitcoin, and my business.

It's hard because crypto is filled with charlatans, but I couldn't ignore all the people I respect proclaiming Bitcoin’s benefits.

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Here is the problem with bitcoin in a ETF. If the us goes to shit - you sell your bitcoin etf for huge profits- but profits in US dollars.

Every year I teach an Econ class to 8th graders - 2 years ago they all had the obsession with bitcoin.

I asked why they wanted it - none of them could explain - it is just a mass marketing scheme. I also told them if our government does go belly up - you think bitcoin is going to save you?

Nope - having land and being able to develop food and having more guns and ammo is going to be worth a lot more than your digit wallet.

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There are many stages of “going to shit” before we reach Mad Max.

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"Nope - having land and being able to develop food and having more guns and ammo is going to be worth a lot more than your digit wallet."

Ammo is the investment that no one is really talking about outside of 2A and gun owner circles. I buy some every weekend.

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Bitcoin is amazing !!

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Congrats on taking the first step a year or so ago. It's a journey.

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Many people seem to go very binary on these topics. I am soon to finally shed my stock portfolio as I don’t see the point of maintaining assets in a falling denominator. The funds will be reallocated to physical gold, a small part in silver and the rest topping up my bitcoin wallets. Then rearrange the wallets a little for UTXO management and put away for long term. The reason for this is that I feel that a principal house and two additional plots being developed is sufficient in real estate and my stakes in businesses I have set up or assisted with are sufficient to provide income that hopefully keeps up with inflation. The point am making is Bitcoin shouldn’t be a binary decision, just part of rational savings strategy. As well as that, I live in a country where I can pay for everything apart from utility bills using bitcoin. I choose when to use it according to markets to try to keep spending deflationary for my every day needs. Bitcoin up, buy groceries in bitcoin I bought years ago and am paying couple buck per kilo of rib eye. Works for me!

I should add that if one does consider that to be the case, one should also think on what it is. Once one realises it’s the first immutable human technology for information through time, it becomes obvious that assisting to maintain is an obligation. This is why I run a node and also miners. It also becomes very obvious quickly that buying ETF is just a way of saying “I am not ready to take personal responsibility”. It might be considered foolish to store gold in custody. It is no different with bitcoin.

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I think Bitcoin is not going to survive long, gold is much better option.

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author

I like them both, gold more than bitcoin.

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That's good, I think it's proper time for anyone who is not millionaire secure atleast few of their gains in gold and then, if you have enough spare money to reinvest again.

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founding

The video on how it all works is the best I have seen. Not too impressed with some of the other stuff... Here is a long response:

QTR: "I was, and in some degree still am, in the camp that sees gold as having intrinsic value that Bitcoin does not, because of its commodity bid and far superior and longer record as a store of value. This is why, despite coming around to the idea of Bitcoin, my gold position is still larger than my Bitcoin position."

ME: You're right, but you absolutely MUST understand why. On a cold-storage wallet, Bitcoin are particles on magnetic media positively charged (1) or negatively (0). In order for that to be accessible, you must convert the +/- media state to an electrical circuit state (open=0, closed=1). So, you can "store" Bitcoin without electricity. But you cannot convert that stored state into usable currency without electricity. With gold/silver all two parties need is some form of scale both trust to attest to the weight of the metal in order to make decisions about buying and selling. What gold/silver and Bitcoin have in common, though, is mathematics. The mathematics of the chemistry of Noble Metals guarantees the metal's weight (which is what will be measured on the scale) does not dissipate over time due to rust. The same rules of math guarantee that Bitcoin's supply cannot be manipulated and is always tied to transactional volume. Here, it helps to go back to Milton Friedman (Money Mischief), where he explains that inflation is always the growth of the supply of the monetary unit minus the growth in the volume and value of transactions in that unit. Where fiat units can be created without reference to underlying transactions, Bitcoin cannot.

QTR: "In other words, it’s as much reserving a spot on the ledger as it is an investment in the invention of Bitcoin itself. It’s a really big idea — and my brain is really small — which is why it has taken me this long to wrap my head around it. But, as they say, “once you see it, you can’t unsee it."

ME: Yes, BUT... What is the point of making that reservation when the USD has a monopoly on legal tender and all disputes have to be converted to USD in order to be settled? (See the FTX bankruptcy case for a perfect example.) Beyond using that place on the ledger to speculate in currency pairs, there is no other point as long as the USD has its monopoly on legal tender. Bitcoin is a stateless, digital, foreign exchange play as long as the USD has a monopoly on legal tender.

QTR: "And so, when Saylor asks a question like, “How long do you think it’ll be before all cell phones and computers are bundled with Bitcoin wallets?”

ME: Holy shit. Once you do that, your wallet will be sync'd to your provider's cloud servers and the data will be considered a "third party business record" under current SCOTUS precedents. Meaning the government can look anytime they want and you'll never know. You might as well just go with a CBDC at that point.

QTR: "But the fact that regulatory agencies have blessed Bitcoin by allowing the spot ETFs, and that I can go on Twitter and literally see commercials from super serious asset managers like Franklin Templeton and Fidelity, talking about Bitcoin as a sound money hedge, and a way to step outside of the central bank-run global monetary system, is stunning."

ME: Are you buying paper gold? If not, why not? Same question with Bitcoin spot ETFs. NEVER forget when you hear something out of the mouth of a finance sector CEO that he/she is talking their book. Why, all of a sudden, are execs who badmouthed Bitcoin all of a sudden OK with Bitcoin ETFs? Because they know the USD is a piece of shit breathing its last and they want to front run and otherwise manipulate everything Bitcoin like they do with paper gold/silver.

QTR: "Just last week, I heard somebody say that all Bitcoin buyers are speculators, not people looking to seriously opt out of the monetary system as it exists today for the long term — and I simply don’t think that’s the truth. I think there are a lot of people out there, like me, that are just looking to diversify their way out of a broken fiat system, and Bitcoin is just one of several ways to do that."

ME: Too bad as long as the USD has a monopoly on legal tender there is no way to opt out.

QTR: "And you can’t tell me that a country like El Salvador adopting bitcoin as legal tender is “speculation.” To me, that falls closer to “adoption.”

ME: "Adoption = A legal system in which courts adjudicate disputes in the unit of the agreement. Any legal system where you have to convert a crypto unit of agreement into a fiat unit to settle the dispute is simply not "adoption."

QTR: "The price will continue to be volatile, but it’s also pretty easy to make a case for why it will go up."

ME: Respectfully, this is the worst observation in your article. The price in what? Volatility as measured in USD simply means you're still stuck on stupid fiat.

There is simply no way out of fiat via crypto that does not require the Constitution to be amended to permit crypto to be used as legal tender.

https://www.amazon.com/dp/B0CL2HLC3N

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Welcome.

Every time I've listened to and read your work, my takeaway has been "Chris gets it."

You were one of the "Non-Bitcoiners" that I've respected and followed closely.

I really enjoyed reading about your intellectual journey on the matter.

It's great to have you with us.

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Its just simply awesome. Its doesnt go through the fed printers 🖨️ ...

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Here's the reason why I don't "invest" in bitcoin: without price appreciation, there is no return on your "investment". If I hold bitcoin, I'm not earning interest or dividends. This is why the argument that bitcoin is protection against $ devaluation via inflation falls flat. That protection is not enough.

Most people hold as little cash in their non-interest-bearing checking accounts as possible. They invest their excess cash in stocks, bonds, CD's, real-estate, etc, all of which offer protection against a depreciating currency, plus a real return. The initial investment is made with cash and the termination of the investment returns cash. Until bitcoin achieves the ability to be accepted directly for the purchase of stocks, bonds, etc. with the return of bitcoin at the end of the investment period, it will only serve to increase the transaction costs of investing in real assets. And b/c of price volatility that time is a long way off.

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founding

You're most of the way to the truth. As long as the USD has a monopoly on legal tender, all transactions ultimately have to be settled in USD. Why bother pricing stocks, bonds, etc., in crypto when any associated debt can't be extinguished unless payment is tendered in USD? The real pricing issue is our wages. Unless we are free to work for wages tendered in crypto - and the courts will adjudicate the eventual dispute in that same crypto unit - crypto cannot be anything other than a stateless, digital foreign exchange play.

https://www.amazon.com/dp/B0CL2HLC3N

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Welcome brother.

As times goes by your conviction will grow and the amount of gold you hold will get less and less lol.

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There's one thing about Bitcoin that no one addresses and that I cannot get past: The fact that when Bitcoin was initially created, it was created out of thin air. I understand that the expansion of Bitcoin is controlled, but you can't get past the fact that the initial pile of bitcoin was created out of thin air. On the other hand, the US Dollar, though it has been expanded beyond belief, at least had value when it was first created.

Bitcoin is simply a means for facilitating transactions. But the Bitcoin network can only handle 7 transactions per second whereas the VISA network has a capacity of 65,000 transactions per second. So the one thing Bitcoin can be used for, it isn't good at.

Intrinsic value for Bitcoin is easy to calculate. It's zero. It has no earnings so it can't have an intrinsic value. Lynn Alden wrote an article claiming that Bitcoin has an intrinsic value, but in the article she never said what the intrinsic value was or how to calculate it. I cancelled my subscription when I read that article.

I have no idea what the price of Bitcoin does in the future, nor do I care.

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It wasn't though. It was created through proof of work by bitcoin mining software run by individuals that required electricity, however minimal, to bring into legitamate recognition on the ledger. This is the only mechanism by which any and all bitcoin is created in the past and future. Contrast this to fiat, which is generated out of thin air by adjusting a central bank ledger.

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"you can't get past the fact that the initial pile of bitcoin was created out of thin air."

I'm actually not a Bitcoiner, though I own some. What if I changed your statement to: "you can't get past the fact that [Facebook / Twitter / Instagram/ or TikTok] was created out of thin air." Would it make more sense now?

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Facebook, Twitter and Tik Tok have earnings and therefore have an intrinsic value and therefore are an investment, unlike Bitcoin.

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Bitcoin has plenty of earnings. They're called transaction fees. Ask miners why they mine.

Blockchains sell block space. Those who want to transact pay for inclusion in these blocks. Miners compete for the privilege of assembling these transactions into blocks and are paid for their service. More here: https://www.gemini.com/cryptopedia/bitcoin-transaction-fee-ethereum-ether-transaction-fee-gas

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founding

You're both missing the point because you cannot think about "price" without assuming USD.

Let's start with this: The Coinage Act of 1792 (https://www.usmint.gov/learn/history/historical-documents/coinage-act-of-april-2-1792). Take the time to read this - it really explains a lot.

The US Dollar had a fixed price in silver, NOT THE OTHER WAY AROUND. The US Eagle was equivalent to $10 and had a fixed price in gold. The weights of gold and silver were set at 15:1 - fifteen units of silver for one unit of gold. It used to be you could "create" USD simply by bringing your silver bullion to the mint, and it would be assayed, melted, and struck into USD coin. Again, the USD had a price in silver - not this Alice in Wonderland world where silver has a floating price in USD.

If you think of the price of Bitcoin, do tell: its price in what unit? USD? Straight-up claim: If you price your crypto in USD, you do not understand crypto. This makes the whole discussion on intrinsic value/earnings (measured in what unit again?) useless.

The only way to understand the intrinsic value of Bitcoin (it does have intrinsic value) is to understand the mathematical tie between Bitcoin and transactions. That tie is mathematically enforced. Gold and silver (and Palladium and Platinum) are Noble Metals that do not rust. The reasons are also mathematical (chemistry is math).

The intrinsic value of Noble Metals lies in their chemical properties. If value is stored in a weight of silver that does not dissipate due to rust, that chemical property is where the intrinsic utility is found in Noble Metals. That utility as a store of value is where the intrinsic value is found. It is also why gold and silver have been used as money for all of recorded history.

Bitcoin is not a thing that can be weighed. But neither can it be debased, forged, or confiscated. Its intrinsic value lies in its integrity. The supply cannot be increased in a way that is divorced from transactions (i.e., it cannot be debased). It cannot be counterfeited (forged). And it cannot be confiscated (to the extent it is held in a cold storage wallet).

If there is a weakness to Bitcoin (or a strength to gold/silver), it is the prior need for electricity. The bits and bytes, even in a cold wallet device, are inaccessible without electricity. Not so with gold and silver.

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Interesting. But neither of us spoke about price.

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founding

CEO of the Sofa at the beginning of the thread: "I have no idea what the price of Bitcoin does in the future, nor do I care."

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