You could very well be right. In your opinion, what will force the governments to accept it as money? Or do you think governments would voluntarily choose to declare in money? Efficiency would not be a factor in a government's decision because it never is, and even though all fiat money fails no government has ever accepted an alternative. If they have no choice, what would force them to have no choice?
Widespread adoption by the masses will leave the governments without a choice. The adoption curve is growing exponentially, and I would argue is past the tipping point. When you compare other asset classes (Gold, stocks, bonds, RE) to Bitcoin… they are all flawed in some way which inhibits their ability to store wealth free from debasement. Simply put, BTC is a friction free method to store & grow purchasing power - and the best part is it’s still in its infancy.
What happens when the "value" of a Bitcoin drops from its lofty perch to half its present value?
Seems to me that Bitcoin isn't money (currency), nor an investment, but rather a speculative gamble...
Bitcoin appears to have trouble sustaining/ maintaining a consistant value. From what I gather, the majority of Bitcoins are owned by "whales" who continually manipulate/ move the "market" by buying UP the price, then selling -- causing a crash they can profit from... which they have done, repeatedly!
I want to share your enthusiasm, Bag. But I just can't help from thinking the whole crypto-game is one big ponzie scheme. It sure doesn't seem like an investment to me. Do you think it makes sense to sell 31 or 32 gold coins to buy a $67K digital notation speculation?
The blockchain process of transacting and moving money around the world, at minimal cost, out of the reach of governments, is certainly something of Value! But that is just a better accounting/ transfering system. When buying Bitcoin, what we are doing is transferring our excess earnings (savings) of say, $60,000 on Monday... What is it that Bitcoin did, to make it worth $67,000 on Thursday? Or worse, $55,000 on Friday? Clearly, I am missing something.
Thanks for the thoughts .... I would argue it's not Bitcoin which is volatile, Its the dollars you are using to measure BTC that are volatile. BTC is far and away the best-performing asset class on the planet whether you are talking 1-year, 5 year, 10-year, or 15-year - and it's not even close. Will there be pullbacks, sure, just like there were with Amazon or Google, etc... The important thing to recognize is BTC has a network monopoly - and it is still in it's infancy. I wasn't smart enough to buy Amazon or Google in their early days, but those who did and held through the inevitable roller coaster ride, added zeroes to their net worth. BTC will do the same for the early adopters.
Tulips are a "product" ... and products come and go. BTC is not a product, it is a network, and its here to stay.
I too, was very skeptical of BTC. I wrote negative articles a couple years back:
But once I took the time to FULLY understand the meaning and implications of a "decentralized" network - my tune has changed. Admittedly, it wasn't easy to grasp it, as it took 2500+ hours of books, podcasts, and research. Eventually the light bulb went on, and for me, there is no going back. If BTC goes the way of Tulips, I will get buried with it....
Thank you for the response Bag. I remember reading and agreeing with much of that article from two years ago. I too, would like to understand Bitcoin, and so I will also do a deep dive. If you wouldn't mind sharing... were there any books, articles or websites that you found particularly helpful during your research? Thanks in advance! I truly enjoy & value your writing... everytime I see a notice in my email that another of your articles has dropped, I know it's going to be a wonderful day!
The “Bitcoin Standard” is a good read. Robert Breedlove’s podcast called “What is money” -particularly the first 9 episodes with Michael Saylor. I’ve listened to those episodes at least three times …. I’ve also watched almost everything put out by the following two YouTube channels in the last 18 months …. “Whatbitcoindid” and “investanswers” …if you can look past the hype, I’ve found their content to contain some very important ideas….
Almost forgot, congrats on being humble enough to recognize your first instinct on Btc may not be correct…and subsequently taking the time to further understand it. That is trait a lot of people just don’t have.
Here’s what I genuinely don’t understand. The IRS now requires reporting sale, exchange, or receipt of any digital asset. So, any dollar appreciation in Bitcoin is treated as capital gains. Of course that’s no different than other appreciating assets. But the problem is that the government can change the rules at any time. They could levy a windfall profits tax for example, or a fee for using crypto as a medium of exchange, which could make it effectively useless as a true currency for law abiding people.
They absolutely could change the rules....but consider these two things: The approval of the Btc ETFs shows the world exactly what Government is thinking with regard to Crypto. Secondly, when you have an asset that has appreciated greatly, you have two choices - sell and pay capital gains....or.... borrow against the asset, pay some tax deductible interest on the loan, maintain ownership of the asset, and pay back the loan with depreciated dollars. The Uber-wealthy choose the latter as they recognize capital gains taxes are for the plebes.
Late to reading, but my question about this line of reasoning is if BTC is capable of doing all these network things, why hasn't a killer app been found yet? Surely there is enough money and interest in the ecosystem. What will change in the next decade to make it different from the last one?
The network is still in its infancy - its only a matter of time for the apps to show up. There is a massive use case for decentralized & secure. I discussed in detail a couple of the best applications in my previous article "The Money War". Check it out.
What will make the next decade different than the last one is the money flowing into Btc. The new ETFs alone have been averaging 500 mil a day, and that's without RIA money, pension funds, and sovereign wealth. Nor does it include US corporations who have to be looking at what Microstrategy (MSTR) has been doing the last couple years, and thinking maybe we should put some Btc on our balance sheet as well. Once all that RIA/corporate/pension/soveriegn money shows up, it will add zeroes to the price - of course I could be wrong, but my money is where my mouth is...
Seriously, as open source, anyone can create in identically-functioning clone (you only need to convince people to use it).
In my view, Bitcoin will end up as most of the past monopolies you listed - completely overtaken by more technologically advanced alternatives (faster, cheaper, more private).
I have listed the reasons why Bitcoin can't survive in its current form in a number of comments to the post where I found the link to this article (I won't repeat my reasoning here, but if you want to challenge my assertion, you might want to review them):
Basically Bitcoin has limited use cases with transactions slow and expensive. The developers have attempted to get around that by blowing up the entire Bitcoin ethos (peer-to-peer transactions without any intermediaries) by adding a second layer where sending value goes through one or more intermediaries (each of which rakes off a fee).
While Bitcoin averages a new block every 10 minutes (with random intervals between them - once every couple of weeks the time between blocks exceeds an hour), alternatives has much faster (and regular) intervals between blocks (Ethereum 12 seconds, Tron 3 seconds, Solana 400 milliseconds).
Ethereum definitely looks like a long-term winner. This year, the network will transfer over 15 TRILLION dollars worth of stablecoin payments. Most of DeFi runs on Ethereum. Most NFTs exist on Ethereum.
Bitcoin does have the "first-mover" advantage, but (again, like most of the companies listed in your post) it won't last due to the difficulty of making improvements to the protocol (the validators, or "miners," won't accept anything that harms their interest, even if it benefits the ecosystem as a whole).
I read your comment thread linked above. IMHO, you fail to recognize the value of a proof-of-work system. Its why ETH (a proof of stake system) will go to zero in my lifetime. Proof of stake Guarantees centralized control, ever-rising transaction costs, and of course single points of failure - while proof of work can allow for decentralization, falling transaction costs, no single points of failure, and thus NO control by any one entity.....as for use cases, well there is no better, or bigger use case than store of value....While there are tens of thousands of cryptos, there are NONE with even 1/1000th of the BTC market cap that are proof-of-work AND decentralized.... Decentralization is what makes BTC a unicorn, there are none like it...
You could very well be right. In your opinion, what will force the governments to accept it as money? Or do you think governments would voluntarily choose to declare in money? Efficiency would not be a factor in a government's decision because it never is, and even though all fiat money fails no government has ever accepted an alternative. If they have no choice, what would force them to have no choice?
Widespread adoption by the masses will leave the governments without a choice. The adoption curve is growing exponentially, and I would argue is past the tipping point. When you compare other asset classes (Gold, stocks, bonds, RE) to Bitcoin… they are all flawed in some way which inhibits their ability to store wealth free from debasement. Simply put, BTC is a friction free method to store & grow purchasing power - and the best part is it’s still in its infancy.
Good read
To store & grow purchasing power?
What happens when the "value" of a Bitcoin drops from its lofty perch to half its present value?
Seems to me that Bitcoin isn't money (currency), nor an investment, but rather a speculative gamble...
Bitcoin appears to have trouble sustaining/ maintaining a consistant value. From what I gather, the majority of Bitcoins are owned by "whales" who continually manipulate/ move the "market" by buying UP the price, then selling -- causing a crash they can profit from... which they have done, repeatedly!
I want to share your enthusiasm, Bag. But I just can't help from thinking the whole crypto-game is one big ponzie scheme. It sure doesn't seem like an investment to me. Do you think it makes sense to sell 31 or 32 gold coins to buy a $67K digital notation speculation?
The blockchain process of transacting and moving money around the world, at minimal cost, out of the reach of governments, is certainly something of Value! But that is just a better accounting/ transfering system. When buying Bitcoin, what we are doing is transferring our excess earnings (savings) of say, $60,000 on Monday... What is it that Bitcoin did, to make it worth $67,000 on Thursday? Or worse, $55,000 on Friday? Clearly, I am missing something.
Looks like tulips to me.
Thanks for the thoughts .... I would argue it's not Bitcoin which is volatile, Its the dollars you are using to measure BTC that are volatile. BTC is far and away the best-performing asset class on the planet whether you are talking 1-year, 5 year, 10-year, or 15-year - and it's not even close. Will there be pullbacks, sure, just like there were with Amazon or Google, etc... The important thing to recognize is BTC has a network monopoly - and it is still in it's infancy. I wasn't smart enough to buy Amazon or Google in their early days, but those who did and held through the inevitable roller coaster ride, added zeroes to their net worth. BTC will do the same for the early adopters.
Tulips are a "product" ... and products come and go. BTC is not a product, it is a network, and its here to stay.
I too, was very skeptical of BTC. I wrote negative articles a couple years back:
https://bagholder.substack.com/p/is-it-bitcoin-or-bit-con.
But once I took the time to FULLY understand the meaning and implications of a "decentralized" network - my tune has changed. Admittedly, it wasn't easy to grasp it, as it took 2500+ hours of books, podcasts, and research. Eventually the light bulb went on, and for me, there is no going back. If BTC goes the way of Tulips, I will get buried with it....
Thank you for the response Bag. I remember reading and agreeing with much of that article from two years ago. I too, would like to understand Bitcoin, and so I will also do a deep dive. If you wouldn't mind sharing... were there any books, articles or websites that you found particularly helpful during your research? Thanks in advance! I truly enjoy & value your writing... everytime I see a notice in my email that another of your articles has dropped, I know it's going to be a wonderful day!
The “Bitcoin Standard” is a good read. Robert Breedlove’s podcast called “What is money” -particularly the first 9 episodes with Michael Saylor. I’ve listened to those episodes at least three times …. I’ve also watched almost everything put out by the following two YouTube channels in the last 18 months …. “Whatbitcoindid” and “investanswers” …if you can look past the hype, I’ve found their content to contain some very important ideas….
Almost forgot, congrats on being humble enough to recognize your first instinct on Btc may not be correct…and subsequently taking the time to further understand it. That is trait a lot of people just don’t have.
Here’s what I genuinely don’t understand. The IRS now requires reporting sale, exchange, or receipt of any digital asset. So, any dollar appreciation in Bitcoin is treated as capital gains. Of course that’s no different than other appreciating assets. But the problem is that the government can change the rules at any time. They could levy a windfall profits tax for example, or a fee for using crypto as a medium of exchange, which could make it effectively useless as a true currency for law abiding people.
They absolutely could change the rules....but consider these two things: The approval of the Btc ETFs shows the world exactly what Government is thinking with regard to Crypto. Secondly, when you have an asset that has appreciated greatly, you have two choices - sell and pay capital gains....or.... borrow against the asset, pay some tax deductible interest on the loan, maintain ownership of the asset, and pay back the loan with depreciated dollars. The Uber-wealthy choose the latter as they recognize capital gains taxes are for the plebes.
Late to reading, but my question about this line of reasoning is if BTC is capable of doing all these network things, why hasn't a killer app been found yet? Surely there is enough money and interest in the ecosystem. What will change in the next decade to make it different from the last one?
The network is still in its infancy - its only a matter of time for the apps to show up. There is a massive use case for decentralized & secure. I discussed in detail a couple of the best applications in my previous article "The Money War". Check it out.
What will make the next decade different than the last one is the money flowing into Btc. The new ETFs alone have been averaging 500 mil a day, and that's without RIA money, pension funds, and sovereign wealth. Nor does it include US corporations who have to be looking at what Microstrategy (MSTR) has been doing the last couple years, and thinking maybe we should put some Btc on our balance sheet as well. Once all that RIA/corporate/pension/soveriegn money shows up, it will add zeroes to the price - of course I could be wrong, but my money is where my mouth is...
A bit late to this, but I will take exception to:
> Bitcoin has one, with NO possible competition.
What about the other 10,000 cryptocurrencies? :)
Seriously, as open source, anyone can create in identically-functioning clone (you only need to convince people to use it).
In my view, Bitcoin will end up as most of the past monopolies you listed - completely overtaken by more technologically advanced alternatives (faster, cheaper, more private).
I have listed the reasons why Bitcoin can't survive in its current form in a number of comments to the post where I found the link to this article (I won't repeat my reasoning here, but if you want to challenge my assertion, you might want to review them):
https://quoththeraven.substack.com/p/bitcoin-redundancy-realizations
Basically Bitcoin has limited use cases with transactions slow and expensive. The developers have attempted to get around that by blowing up the entire Bitcoin ethos (peer-to-peer transactions without any intermediaries) by adding a second layer where sending value goes through one or more intermediaries (each of which rakes off a fee).
While Bitcoin averages a new block every 10 minutes (with random intervals between them - once every couple of weeks the time between blocks exceeds an hour), alternatives has much faster (and regular) intervals between blocks (Ethereum 12 seconds, Tron 3 seconds, Solana 400 milliseconds).
Ethereum definitely looks like a long-term winner. This year, the network will transfer over 15 TRILLION dollars worth of stablecoin payments. Most of DeFi runs on Ethereum. Most NFTs exist on Ethereum.
Bitcoin does have the "first-mover" advantage, but (again, like most of the companies listed in your post) it won't last due to the difficulty of making improvements to the protocol (the validators, or "miners," won't accept anything that harms their interest, even if it benefits the ecosystem as a whole).
I read your comment thread linked above. IMHO, you fail to recognize the value of a proof-of-work system. Its why ETH (a proof of stake system) will go to zero in my lifetime. Proof of stake Guarantees centralized control, ever-rising transaction costs, and of course single points of failure - while proof of work can allow for decentralization, falling transaction costs, no single points of failure, and thus NO control by any one entity.....as for use cases, well there is no better, or bigger use case than store of value....While there are tens of thousands of cryptos, there are NONE with even 1/1000th of the BTC market cap that are proof-of-work AND decentralized.... Decentralization is what makes BTC a unicorn, there are none like it...
https://bagholder.substack.com/p/the-power-of-decentralization