Monday, December 04, 2017

I think it's sort of funny that in all probability the same people who told you that you shouldn't trust a currency that wasn't back by a physical item - i.e. GOLD, are now investing in an item that is backed by absolutely NOTHING. I.e. bitcoin.


  1. Capital of Texas RefugeeMonday, December 04, 2017 4:24:00 PM

    Bitcoin's utility comes from not having to pay forex fees or deal with bitchy bankers and regulators ...

    Now that the valuation is much higher, you can move much more money with it.

    That's pretty much the only reason I don't see the price of it going down within an order of magnitude, and it may yet climb from "absurd" (thousands of dollars) to "hilarious" (tens of thousands of dollars) and stay there.

    Bitcoin is just too useful to let the price of it crash because of this.

  2. But there are only a finite amount of coins. Right? That's the whole point?

    I think this is a fad like all other fads. Currency really doesn't trade this way. People chose currencies for their stability, and bitcoin is not a stable currency. It's a hyperinflated one. No one would put up with that if it were the dollar and people would scream about it being Zimbabwe. It takes decades to see if a currency is stable enough for mass adoption. It may climb to absurd levels, but that only works to destroy it as a currency. Because.....People tend to not like hyper inflated currencies.

  3. Bitcoin isn't really a currency -- it never has been one, and it probably will never be one.

    It used to be a profitable form of gambling, and for some people it still is, but now it's more of a trading pivot point.

    Bitcoin doesn't have to be stable when you do this:

    1. Take $2k USD and convert it to Bitcoin.
    2. Pay a minuscule trading fee.
    3. Convert the Bitcoin quickly into GBP.
    4. Pay a minuscule trading fee again.
    5. Repeat 1000 times until you've converted $2 million USD into GBP.

    If the valuation keeps going up, it's the same as being paid to trade using Bitcoin, provided you keep your in-flight money down to an amount you can afford to have devalued in the event of a sudden valuation snap.

    If you're trading in currencies with conversion limits through the official channels, it's even better because you're exposed to less regulation.

    Bitcoin isn't a "currency" to sell or to hold now -- that's the entire point.

    Its utility in jumping over financial regulation is far greater than its intrinsic value.

    But this is really no different than what we used to do with parking money in NZD many years ago when we could get insanely good interest rates down in The Shire over what we could expect in the majors (USD, EUR, CHF, GBP, JPY, etc.).

    We were in effect getting paid to park our money in a sometimes inconvenient currency. That's what cryptocurrencies are for at this particular moment. Traders who are able to move quickly are in essence being paid to trade in Bitcoins.

  4. But they are ~trying~ to make it a currency. Right? They are calling it a basket of "assets" I guess. And people are exchanging goods and services so for it, so for all intents and purposes - it's a currency I think. And really trading fees are dirt cheap. I thought bitcoin fees were not 0. Right? So how much are people really saving for all that risk?

    I haven't been paying too much attention because until bitcoin has been tested by a recession we don't know it's true value. If you can't sell something - it is not an asset. That's what I learned from the housing bubble.

    Honestly last week I was at a conference that was suppose to be about A.I. and I got there and it was nothing but bitcoin. So I'm a little tired of both of them. I think they are both overhyped right now. I didn't even ask any questions.