@nomad999 - there are no fundamentals to what you are describing - you are describing speculation - there is no wealth underpinning it.
I have been in crypto since 2013 and have timed entries in and out at peaks and lows very well, because I know what is going on - wild speculative bubbles with little if anything backing them.
The backing of a currency is essentially the goods and services people will exchange for them. As the goods and services a currency is traded against change, so do the prices. If you are holding money it means someone, somewhere has produced real wealth. Currency is just a fascia for this wealth. In the case of Bitcoin, people produce wealth (do work) and then buy Bitcoin. The backing of Bitcoin is that wealth. But they are not buying Bitcoin to use as currency. They are buying it in the hopes they can sell it higher. That is not a currency. If it was a physical item, you could call it a commodity. But it is not.
In the case of Bitcoin it has an annual real economy of about $10 billion - that is people using it as a currency, for exchange, not speculation. As a currency, every single dollar above that is pure 100% speculation. It has no economic fundamentals. As of writing that means Bitcoin is 1.5% a currency and 98.5% speculation. And most of the people using BTC as currency are doing so in the black and grey economies or they are full-time traders who don't have fiat.
Further, Bitcoin is fundamentally unusable as a currency. There are examples of private money in the 19th century US that were deflationary. That is, the prices of goods and services went down against them. Sounds good to economically illiterate people. But when a currency deflates at about 10%, then most businesses with profits margins of no more than 10% have no reason to do any work. You cannot price things in a considerably inflationary of deflationary currency. With 10% inflation and deflation by the time a business has produced a good or service all the profit may be eaten up. In either case the economy grinds to a whimper. Economies need stable means of exchange. Currencies cannot have deflation or inflation over about 5% and even that is bad. A fair currency would be one that never inflates or deflates in relation to the economy. A crypto could be made like this, but it has no ponzi, so there is not interest.
Bitcoinists (who are economically illiterate) like to criticise fiat currency for transferring wealth to bankers. They are right in this. But Bitcoin transfers wealth to early adopters. There isn't a huge difference. In both cases purchasing power is redistributed to the privileged, rather than those who are economically productive - the most fair way. Gold bugs are exactly the same and they even criticise Bitcoin with a criticism that is true for gold. Bitcoinists want a huge speculative bubble to be blown on the back of Bitcoin's minuscule currency use. While gold bugs want a huge speculative bubble to be blown up on the back of gold's fundamental economic value. They want central banks to buy gold up 5-10X, so they can make huge gains, not through the result of economic output, but via sitting on an asset. It's wealth transfer far beyond 3% inflation.
Bitcoin can never be used as currency, ever, because it's deflationary, currently insanely deflationary. If you think it's so good - use it as a currency.
There are those who refer to Bitcoin's properties, such as being hard to control, hard to counterfeit, easy to transact. These are positive attributes. However, as mentioned there is only about $10 billion / year taking advantage of them. This will not change much, as Bitcoin is not currency, a commodity, a security or any form of wealth. It's something used for primarily black/grey purposes, skirting currency controls and gambling (primarily by people who are wildly economically literate). There are no more fundamentals than the USD ultimately has.
All the money anyone makes from holding Bitcoin is from someone, somewhere producing wealth. If I put in $10,000 and it's now $100,000. It's because someone performed $90,000 of economic activity and by virtue of wild gambling it ended up being redistributed to me. No one who wants a fair economy would be championing it as some sort of great liberator of the people. I will be using it, as I did in Dec 2013 and Dec 2017, by dumping all my coins on the economically illiterate when the ponzi has reached its zenith.
As an anecdote. Two of my friends had bought in about February 2013, in the range of $40-100. I remember one day, one friend who had made about $100,000 on a rise to $260 was cheering,
"Bitcoin! Bitcoin guys! It's going to the moon! We're going to end the state in three years."
The next morning it had kerplunked and he was in the red. When I called him to ask what happened he was shell-shocked, speaking like a baby,
"I don't know, 4br. I don't know."
Given the content and tone of your posts, this will be you sometime this year.
To the user on institutional money. This is a good point. But I can give you an anecdote. I bought ETHE (Ethereum Greyscale ETN) in March 2020 at about $50. One or two months later it was at $250. A 5X gain, while the spot market was only 2X. One share in ETHE was worth 0.1 ETH. So I bought at $500 and it was now $2,500. While the spot market was only at $250. So, seeing the ponzi had run its course for now I pulled my ripcord with a market sell, not realising the books were ultra thin and kerplunked the price down about $30. The market then crashed back down to about $50 again and is still not back to the levels I sold at.
ETHE has been buying up ETH like crazy. So there is nothing necessarily making institutional retardant. Given the prices they have been buying in, the mentioned taxable events are as likely to be tax write-offs.
With all this said, I am excited for the potential developments in crypto, but right now 90% of the attention is economic illiterates salivating over ponzi gains, rather than trying to attach crypto to real wealth, which is the only way it could ever have any value.
Two tips for projects that could do that: MYST (decentralised VPN), Presearch (decentralised search engine). I'm 12X on the former and it's my best pick for a 100X.
I have been in crypto since 2013 and have timed entries in and out at peaks and lows very well, because I know what is going on - wild speculative bubbles with little if anything backing them.
The backing of a currency is essentially the goods and services people will exchange for them. As the goods and services a currency is traded against change, so do the prices. If you are holding money it means someone, somewhere has produced real wealth. Currency is just a fascia for this wealth. In the case of Bitcoin, people produce wealth (do work) and then buy Bitcoin. The backing of Bitcoin is that wealth. But they are not buying Bitcoin to use as currency. They are buying it in the hopes they can sell it higher. That is not a currency. If it was a physical item, you could call it a commodity. But it is not.
In the case of Bitcoin it has an annual real economy of about $10 billion - that is people using it as a currency, for exchange, not speculation. As a currency, every single dollar above that is pure 100% speculation. It has no economic fundamentals. As of writing that means Bitcoin is 1.5% a currency and 98.5% speculation. And most of the people using BTC as currency are doing so in the black and grey economies or they are full-time traders who don't have fiat.
Further, Bitcoin is fundamentally unusable as a currency. There are examples of private money in the 19th century US that were deflationary. That is, the prices of goods and services went down against them. Sounds good to economically illiterate people. But when a currency deflates at about 10%, then most businesses with profits margins of no more than 10% have no reason to do any work. You cannot price things in a considerably inflationary of deflationary currency. With 10% inflation and deflation by the time a business has produced a good or service all the profit may be eaten up. In either case the economy grinds to a whimper. Economies need stable means of exchange. Currencies cannot have deflation or inflation over about 5% and even that is bad. A fair currency would be one that never inflates or deflates in relation to the economy. A crypto could be made like this, but it has no ponzi, so there is not interest.
Bitcoinists (who are economically illiterate) like to criticise fiat currency for transferring wealth to bankers. They are right in this. But Bitcoin transfers wealth to early adopters. There isn't a huge difference. In both cases purchasing power is redistributed to the privileged, rather than those who are economically productive - the most fair way. Gold bugs are exactly the same and they even criticise Bitcoin with a criticism that is true for gold. Bitcoinists want a huge speculative bubble to be blown on the back of Bitcoin's minuscule currency use. While gold bugs want a huge speculative bubble to be blown up on the back of gold's fundamental economic value. They want central banks to buy gold up 5-10X, so they can make huge gains, not through the result of economic output, but via sitting on an asset. It's wealth transfer far beyond 3% inflation.
Bitcoin can never be used as currency, ever, because it's deflationary, currently insanely deflationary. If you think it's so good - use it as a currency.
There are those who refer to Bitcoin's properties, such as being hard to control, hard to counterfeit, easy to transact. These are positive attributes. However, as mentioned there is only about $10 billion / year taking advantage of them. This will not change much, as Bitcoin is not currency, a commodity, a security or any form of wealth. It's something used for primarily black/grey purposes, skirting currency controls and gambling (primarily by people who are wildly economically literate). There are no more fundamentals than the USD ultimately has.
All the money anyone makes from holding Bitcoin is from someone, somewhere producing wealth. If I put in $10,000 and it's now $100,000. It's because someone performed $90,000 of economic activity and by virtue of wild gambling it ended up being redistributed to me. No one who wants a fair economy would be championing it as some sort of great liberator of the people. I will be using it, as I did in Dec 2013 and Dec 2017, by dumping all my coins on the economically illiterate when the ponzi has reached its zenith.
As an anecdote. Two of my friends had bought in about February 2013, in the range of $40-100. I remember one day, one friend who had made about $100,000 on a rise to $260 was cheering,
"Bitcoin! Bitcoin guys! It's going to the moon! We're going to end the state in three years."
The next morning it had kerplunked and he was in the red. When I called him to ask what happened he was shell-shocked, speaking like a baby,
"I don't know, 4br. I don't know."
Given the content and tone of your posts, this will be you sometime this year.
To the user on institutional money. This is a good point. But I can give you an anecdote. I bought ETHE (Ethereum Greyscale ETN) in March 2020 at about $50. One or two months later it was at $250. A 5X gain, while the spot market was only 2X. One share in ETHE was worth 0.1 ETH. So I bought at $500 and it was now $2,500. While the spot market was only at $250. So, seeing the ponzi had run its course for now I pulled my ripcord with a market sell, not realising the books were ultra thin and kerplunked the price down about $30. The market then crashed back down to about $50 again and is still not back to the levels I sold at.
ETHE has been buying up ETH like crazy. So there is nothing necessarily making institutional retardant. Given the prices they have been buying in, the mentioned taxable events are as likely to be tax write-offs.
With all this said, I am excited for the potential developments in crypto, but right now 90% of the attention is economic illiterates salivating over ponzi gains, rather than trying to attach crypto to real wealth, which is the only way it could ever have any value.
Two tips for projects that could do that: MYST (decentralised VPN), Presearch (decentralised search engine). I'm 12X on the former and it's my best pick for a 100X.
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. I am glad there is people that actually understand this all.
)
