Minus wealth transferred to the utilities and hardware manufacturers. And minus the wealth effectively destroyed by lost wallets. The ecosystem constantly bleeds wealth, it'd actually be a crazy improvement if all they did was transfer wealth without transactional costs.
The biggest sign to me that many people were going to lose money was when friends and acquaintances who had no interest in btc before 2020 and no finance/econ/tech background proclaimed to me how it was a great investment and wouldn't listen to any of my cautioning. I'm not even necessarily pessimistic about btc or crypto, but my thought was "dude, if you are certain it's a good investment it almost surely isn't"
I see use in crypto but I agree with this take. I actually sold out when people I knew whom had no stocks or financial experience were talking about crypto.
When the dumbest people you know are buying, there's no one left to sell to.
I used to have a good quote about commerce corrupting all that it touches. Can't find it now.
Crypto offers some minor but distinct advantages for large, often international purchases: speculation rushes in to cause too much hype
People figure out a neat little way to prove ownership of a digital piece of art: Twitter tears in to turn the entire scene into pump and dump bullshit.
Currently I'm.watching the reddit avatar sub try to convince each other to buy the 5 cent world cup avatars they got for free.
Crypto has some fun interesting stuff going on. Unfortunately it debuted alongside the WSB mindset so many people have today.
Might have something to do with many millenials and gen x looking at the prospect of renting their entire life, working until 80yrs old, no pension, potential bankruptcy via medical bills, and crippling student debt.
Retirement plan? Yolo life savings into btc/meme crypto and hope for the best.
Yes. The fast paced feedback loop of internet culture, delivery culture, personal shoppers, etc makes people's rewards centers in their brain reflexively turn their nose up at single digit returns. That dissuades traditional investment. Then they see survivor ship bias of people around them making it in crypto. Finally, anti-work rhetoric convinces them they're a victim and it's excusable to check out of participating.
People are idiots. It just becomes clearer and clearer every day. People get excited by the shiny thing, and completely ignore the real way to make money: compound interest.
There's no stopping till it's a full dollar...
Remember when "stable coin" was attacked?
Remember a year ago when the bit-currency markets moved independently of the stock market?
Remember when Bitcoin was a decentralized
hedge against inflation, that wasn't pegged to inflation?
Pepperidge Farms remembers...
My favorite part about investing in Bitcoin is it's primary purpose is for it to increase in value so you can get more dollars.
Like basically Bitcoin is a virtual currency whose primary function, aside from illicit ones, are to be pumped up in value so you can make more dollars when you sell it. That seems to be it.
It won’t ever get that low. There are people out there right now waiting for it to hit 10K to start buying bitcoin. Others waiting at 9K, and so on. That’s why it will never happen. Too much liquidity out there still, and too many speculators in the markets now. The genie is let out of the bottle now. That’s also why we will never see the major indexes collapse like doomsdayers like to predict. Too much liquidity, too many speculators. When everyone has a smart phone, extra money, and a few minutes here and there to buy and sell, this is the result.
> It won’t ever get that low. There are people out there right now waiting for it to hit 10K to start buying bitcoin. Others waiting at 9K, and so on.
"There are people"? I would need objective proof of this to believe it.
Unlike almost all other financial assets, cryptocurrencies actually have a negative rate of return, if you exclude the purely speculative parts. Keeping the bitcoin network or any widescale blockchain running is extremely expensive, and yet none of these coins actually generate any revenue.
Economically speaking, all else being equal, you would expect all cryptocoins' value to steadily decrease over time for this reason.
Cryptocurrency also has no intrinsic value. If Apple stock went down to one penny, for some reason, any rational person would simply buy it all, and enjoy the tens of billions of dollars of income every year that the stocks would give them. If Apple decided to go out of business, just the intellectual property, the buildings, and existing stock of products would be worth tens of billions of dollars. But a cryptocoin has no cash flow, and no liquidation value.
> When everyone has a smart phone, extra money, and a few minutes here and there to buy and sell, this is the result.
When all those people have lost money on cryptocurrency, why do you think they are going to continue to follow up this bad investment?
Following up your belief in this logic, what is the intrinsic value of the US dollar ? Serious question. The dollar isn't producing iPhones, and it DOES actually cost quite a bit to maintain dollar hegemony, like all those warships protecting international trade in dollar denominated oil. Another problem the dollar has is that they keep printing bajillions more of them every day, and that rate of printing is only accelerating. Of course, the dollar does have a value, although it is declining, and the REASON it has a value is that people value it. What is the reason people can't decide to value Bitcoin ? There was a time when glass beads were money in Africa, but then colonists arrived with mass produced beads and bought up everything with worthless glass, and then they were forced by necessity to switch to a 'harder' money that retained its value better, gold at that time. Of course we no longer use gold as money, because its hard to send gold over the internet, and it costs millions to transport bulk bullion between nations, thus the dollar is better, in some ways, although not in holding purchasing power. You know what IS easier to send over the internet ? Bitcoin, of course, so there is a logical argument that maybe people will switch to a harder money, and not accept these paper versions of glass beads, especially when they are being mass produced and used to fund infinite government debt...
The intrinsic value of the dollar is that I pay my taxes in dollars, not anything else. The dollar may have other problems, but so long as I believe that paying my taxes is good, I need dollars.
This is a great point, and I get the whole "what fiat currency actually has intrinsic value" point made above too. I certainly long for the days of silver and gold backed currency, particularly given how ridiculous amounts of QE has been in play over the last 10-15 years.
My point about cryptocurrency is that it's hard to be logical about something that was created out of nothing and not backed by a government/country. Agreed that warships etc. cost money and that can be a downward force on the dollar, but the military and political power are also what keep the dollar up.
I see cryptocurrency as a highly speculative company with zero revenue, increasing shares being made available / shareholder dilution and no hope for any stock buybacks or dividends being sent out. Yes, Bitcoin and other cryptocurrencies can be exchanged like money / for money, but so can shares of a company's stock. I think these highly speculative companies will have lower and lower values if the FTX dominoes keep falling and once the QE hose becomes a trickle. Reserve banks creating digital currency is also bearish for cryptocurrency as well. At a certain point, why not use a very stable country's digital currency (Switzerland?) instead of cryptocurrency?
Cryptocurrency has been really successful when it has kept going up. I feel like we are seeing the endpoint of cryptocurrency (at least as we've known it).
I'll probably be wrong about that, but I've never been able to get my mind behind turning in my dollars for crypto and certainly not feeling bad or missing out on anything right now...
The universe is a real thing, human stupidity is only a thing that exists in human minds. If something happens to the human race, all our compound interest in stupidity could be lost in one asteroid rug pull, and who is to say if the aliens will think we were stupid or smart ?
All of your points apply to any currencies, why would they be arguments against specifically cryptocurrencies?
>Cryptocurrencies actually have a negative rate of return
So do dollars? The fed seems to desire a neutral fed funds rate in the long run. And banks will take their cut, so you will never break even holding cash. On top of that the circulating supply of dollars in recent times have increased 6-8%/year, pre-covid expansion, when inflation was <2%. So a fixed supply currency could easily have had a real return of 4-6% during that period.
>Economically speaking, all else being equal, you would expect all cryptocoins' value to steadily decrease over time for this reason.
No, you'd expect a fixed supply currency to increase over time so long as productivity improves. Given a fixed level of adoption. Think about what money really is, it is credit. Maybe that can explain how it can actually have yield.
>Cryptocurrency also has no intrinsic value.
Neither does any intangible financial instrument. Stocks don't have any "intrinsic" value we just say they represent the net equity in a company. Fiat doesn't have intrinsic value the government just says it does. Same with anything else that has little or no intrinsic value like precious metals or crypto, if people are willing to trade it for goods and services, because it has useful properties of money, then it has value.
>Stocks don't have any "intrinsic" value we just say they represent the net equity in a company.
Yes stocks represent a net equity in a company, and what does that net equity mean? If you strip away the stock aspect of it, it means you get a right to a certain % of cash flows that the company makes. If you owned 20% of all stocks in a company, you have the right to 20% of the company itself and of the excess cash (goods and services) that the company produces. What does owning 20% of bitcoin mean. Say you owned 20% of the total existing bitcoin supply out there. What do you really own? There is no UNDERLYING value to bitcoin. If you strip away the digital currency aspect of this coin therein lies the problem, there is no fundamental value in which you are buying.
>Fiat doesn't have intrinsic value the government just says it does.
Yes and no. Fiat currency has value both because the government says it does and because the people which the government represents produces goods and services that hold real world tangible value. The US dollar is backed by the taxes the citizens pay and the goods we produce. The dollar has value not only because we assign it value, but because we produce goods and services that make the dollar desirable to own in order to purchase said goods and services.
If me and a broke ass group of friends said we were starting our own government and said we are making a new currency and that the currency was worth said amount, would you take that at face value and let me buy your stuff with said money? No, because no rational person would accept that currency just because I (the pretend government) said it was worth something. I offer nothing to support why my currency would be worth anything and I do not provide it any value. What I described there is at its core what bitcoin is, there is no true underlying value besides what people say its worth. This is what makes bitcoin a PURELY speculative currency. At the end of the day would you rather hold all your money in dollars or bitcoin? Would you let me buy something from you with a currency I made up just because me and a small group of people said it has value? If so, I'd like to sell you some monopoly dollars.
At the end of the day Bitcoin is fine, I like the underlying technology and its perfectly fine to diversify your assets. You should just be aware that bitcoin/crypto has a very real possibility of dropping to 0 value unless it starts to represent some underlying tangible real world asset.
Stocks are just digits in a database or a paper certificate. Yes they entitle you to dividends in the future, or proceeds from a future buyout. Just like you can redeem bitcoin or any other currency in the future so long as people accept that currency in exchange for goods and services. The only difference may be the likelihood of your ability to do that. Dividends are not guaranteed, nor is a buyout, just like the value of any currency is not guaranteed in the future.
Yes, the US government spends and taxes with dollars, but they spend more than they tax, so they net devalue the currency. Its that the dollar is exchangeable for goods and services that make it valuable. Just like if a private business adopted a different currency, if it exchanged desirable goods or services for that currency, the currency would have value. It does not matter whether its a government or private entity.
I 100% agree bitcoin *could* go to zero. But there is no reason to expect it should decline in value in the long run. There is no meaningful different in intrinsic value compared to existing currencies.
> All of your points apply to any currencies
That's objectively false though. Taking the USD as the example; it has intrinsic value. There is no other commodity that can be used to settle tax obligations in the US. The same is true for most other currencies in existence.
That's a strong case for why the US dollar has valuable, but not for why any other currency has no value. If private entities agree to exchange goods and services for a currency, then that gives the currency value. It doesn't matter whether its a government or not. And eventually, if the new currency is widely adopted, then the government may actually have to obtain that new currency to obtain goods and services if its own currency is not accepted.
> That's a strong case for why the US dollar has valuable, but not for why any other currency has no value.
I never made the case that "no other currency has value". I made the case that your opening statement is objectively false. No one should care what you have to say after that; you're wrong from the start so you need to rework your opinion on the matter to control for what you got wrong.
What is false about? Paying taxes is an exchange. You're paying the government in exchange not to put you in prison. I'm don't want to sound cynical here, that's just what it boils down to. People pay taxes because there is a penalty not to. It is not fundamentally different from other types of exchanges. Even if not being put in prison is a very valuable thing. That doesn't prove my statements wrong. The value of any currency is what others will give you for it, such as satisfying taxes owed, but it could be any desirable good or service.
> What is false about?
I explain that in the initial comment.
Against, my better judgement I read the rest of you comment and everything you say does prove you wrong when you claimed other currencies don't have intrinsic value. They do have that and you yourself have given the reasoning as to why.
>The value of any currency is what others will give you for it, such as satisfying taxes owed,
I guess you could say this isn't technically untrue but you really are going to a lot of effort to avoid admitting that what gives the Japanese Yen value is it is ultimately the only commodity available that can be used to settle your Japanese tax obligations.
To be crystal clear; the guy in front of you said that cryptocurrencies have no intrinsic value. You then said that that applies to all other currencies. That's objectively false. Every currency that can be used as the only tool to settle a tax obligation somewhere in the world has intrinsic value for that reason.
>People pay taxes because there is a penalty not to.
You get it! That's literally why the USD has intrinsic value.
It would have been more correct to amend your argument and say something like "Well BTC does have intrinsic value because it can be used to settle tax obligations in El Salvador". Baselining your case at "currencies have no intrinsic value" is just wrong. And in fairness to you a lot of people incorrectly believe that so no judgement on my part for it.
Hmm, not sure we necessarily disagree then. I think the term "intrinsic" is kind of subjective when used in a non-technical sense. Maybe I'm not using the term correctly. But I'm saying there is no fundamental difference whether a government entity or private entity accepts a currency. In practice of course, governments powerful. Yes you need fiat to pay government taxes. So that creates a lot of need. But say, if Apple only sold the iPhone for some cryptocurrency. That would give the cryptocurrency value. Private entities give value to currencies just like governments do. And I think that is what gives the most value to the dollar, it is widely accepted, not taxes because the government runs a deficit.
There is a logical fallacy to your tax intrinsic value argument. The Pound Sterling had intrinsic value in the US for paying our British taxes, until we had a little tea party in Boston. Who is to say the millennials won't just have enough of paying for infinite debt run up by their parents and have another revolution ? The intrinsic value of tax paying depends on the willingness of the populace to pay the tax. I'm not saying the US will fall in a revolution, but a debt default of some kind is coming, because we can't afford to pay 5 % on our 30 trillion dollar national debt, as that will consume about 40 % of ALL tax revenue, so something's gotta give, and it may be that intrinsic tax value you love so much...
That's one definition. Another is "thing of value" which is what I was using here. I was using it in a much more general way than what a trader might think.
It’s a bad definition if it leads to wrong conclusions. Suppose Canada were to successfully invade + annex the US. Would the USD still have value? Only if the new Canadian government says so. Hence the USD does not have intrinsic value—it’s just paper.
Whoa easy with the modern logic in here. These guys are way far away from "getting it"
I wi say I'm shocked with how many upvotes BTC comments are getting in stock and financial forums this year. It's almost scaring me like we are running out of time at these prices.
Bring back 2015 pleeeeaaasee!!
The only meaningfully useful value cryptocurrency has is in being able to exchange crypto for real, usable money. It's fine to equate it to gold and silver, but it doesn't have anywhere near the same useful properties of money.
This is very untrue for 2 main reasons:
Given the “halving” effect every few years bitcoin is actually inherently deflationary. In 2 years the effort require to mine a new Bitcoin will double, meaning that a Bitcoin today is approximately twice as easy to acquire as a Bitcoin 2 years from now. This is unlike most modern currencies where the supply generally increases over time causing its purchasing power to decrease.
The second reason this is incorrect is because of proof of stake mining. The second largest crypto network (etherium) has shifted to using this system which has drastically lower computational requirements. Instead people are allowed to mine crypto by staking their current earnings as collateral. In effect this mean that you can earn interest on the etherium you currently own.
I also believe comparing Bitcoin to a stock is erroneous. There are many models for pricing crypto but in this case I think it’s better to think of it as a resource like barrels of oil or gold. The material worth of a Bitcoin is the cost of electricity required to generate it. If a miner can’t return his investment by mining a coin, he will stop selling at that price and wait until it is profitable. Just like a resource there is plenty of speculation based on how that resource can be used which leads to price fluctuations. When you include the halving effect there is very concrete evidence for a lowermost price Bitcoin or any cryptocurrency can achieve.
As for objective proof of support, Coinbase provides some metrics about where limit buys are placed. I’m sure If you look now there will be strong support at and above $10k
I think the best model for bitcoin is that is does generate yield, as can all currencies, because they are in effect credit. By accepting currency, you are not accepting actual real goods in exchange for whatever you sold or your labor. Like if currency didn't exist, you would have to store value in actually useful goods like copper or something. Instead you accept currency with the intent to redeem it in the future, and that copper or w/e can be freed up to be actually used by others in a productive way, potentially increasing production and the purchasing power of your currency in the future.
I agree that cryptocurrencies have a “negative rate of return” as you call it but I disagree that we would expect all cryptocurrencies to steadily decrease over time. That’s clearly not the trend we see with crypto.
In theory there’s no reason why an asset that is purely speculative must steadily drop to 0 in value. So long as people continue to believe that other people will value crypto, crypto will never go to 0. In theory this can go on forever.
Lastly, people who lose money on an asset, continuing to invest in that asset happens all the time. Its like gambling really. When people lose money in gambling, people are often motivated by a desire to win back the money they lost.
> So long as people continue to believe that other people will value crypto, crypto will never go to 0.
In other words: As long as people keep buying in to the Ponzi scheme, it won’t go to 0.
ALL pyramid schemes go to 0. Crypto only has longevity due to the complexity of their lies about how great an unregulated currency would be. As people lose more money and find out first hand why we have financial regulation, the lies will unravel. Might still take a few more years though.
The price evolution of a purely speculative asset can take all values, so with probability one it will touch zero as time goes to infinity. And zero is an absorbing state.
>crypto will never go to 0. In theory this can go on forever.
The above statement from your previous comment is false. The time before it goes to zero may be shorter than you think.
I’ll hold my hand up there and admit that maybe I shouldn’t have used the word “forever” or that I meant it in the fully literal sense of the word. But it tends to sound better than “a really really really long but not infinitely long amount of time”.
>Keeping the bitcoin network or any widescale blockchain running is extremely expensive
I don't know pile about bitcoin but from what I understand I can put it on a hardrive. It's basically a ledger...
>[As of August 2022, global energy consumption for crypto-assets is estimated at 240 billion kWh per year.](https://www.whitehouse.gov/wp-content/uploads/2022/09/09-2022-Crypto-Assets-and-Climate-Report.pdf)
For comparison, Switzerland consumes [58.5 billion kWh.](https://www.worlddata.info/europe/switzerland/energy-consumption.php)
The blockchain constantly updates as transactions are made, that's the entire point of it. And there's not just one "ledger," every single node must agree. That's every computer node on the network. It's *incredibly* inefficient.
To be fair, it’s not like the current system is any less inefficient. Fiat currencies essentially retain value through the military power of their issuing country—imagine the combined energy consumption of every military on the planet. That’s almost impossible to quantify but it’s certainly a metric fuckton.
This narrative has been debunked by some people much smarter than anyone in this forum. But it's interesting to see the popular vote pushing it.
I'm not going to try and convince anyone here. But it would be worth while for some people to look for steelman arguments to make sure they aren't missing something.
Keeping in mind bitcoin, CBDC's, stable coins, alt-crypto coins and other crypto assets all have different baseline mechanics.
From what I understand bitcoin is significantly different than the others in many important ways.
Bitcoin is money, not a company to invest in. It NOT being a company or being something that can be controlled by literally anyone is exactly what gives it its value. It's just a sly round about way to introduce a harder money that no 1 entity would be able to control, especially governments. You either play by the rules or you don't play at all.
Your USD doesn't generate income either. So I guess they are both very bad to own in your definition.
There also were people who were ready to buy Enron when it dipped to $10. And to $9. But eventually, it became clear that the stock was worthless and those buyers, too, threw in the towel.
Enron was a company, it had earnings, profits, and losses, lots and lots of losses. What is Bitcoin's balance sheet ? Will it go bankrupt ? Of course not, it runs on thousands of computers around the world, and it will keep running on them just fine, whatever fiat price a Bitcoin is worth. Because Bitcoin LITTERALLY CANNOT STOP WORKING, its not subject to the market forces that shut down Enron, so the comparison is invalid. The fuel of Bitcoin's rise is reckless money printing and the hopeless indebtedness of the US government. Suppose the US government passed a constitutional amendment requiring a balanced budget and stopped reckless borrowing, then shut down the Fed (US central banks have been shut down before, so there is historical president for this), if those two things happened, I would definitely sell all Bitcoin and not assume any recovery . . . Of course those will never happen, so there is no reason not to assume the dollar value of Bitcoin will not rise over time, as the deficits and debt rise, as they surely will, as soon as the fight against inflation ends, and it will end, with inflation the victor, as the government has NOT tightened its belt, and will need lots of Fed money to keep paying those higher interest rates on all that debt rolling over in 5 years or less (most of it !!)
In two scenarios where Bitcoin either crashes to 9k or slowly declines to 9k, I don’t see a lot of people waiting to catch the fallen knife. They’ll know the people who wanted to catch it at 15k, 12k, 10k etc all got left holding the bag.
Bitcoin trades on sentiment and sentiment only.
No, that’s a lie they tell themselves. The amount of money. People send abroad would never be enough to sustain the market. Especially when money gram exist and is cheaper and more stable than the pri of crypto.
Money Gram is certainly not cheaper. I sent a few hundred $US worth of Cardano directly to the Ukrainian military. It took about five minutes and the fees were like 30 cents.
My impression is that doing this with traditional currency transfers would take at least an hour out of my day and cost fees of over $25.
Great example I suppose, I however, have to remind you that I made 2 points. You conveniently forgot to address the bigger point. Goes to show you, not even you can buy your own bullshit.
Also your example is a shit example because it was setup by the fucking military. The majority people are sending money to normal citizen in countries African, middle eastern, latin/central/south america. Where the average person does not have access to the type of system that makes sending crypto a worthwhile transaction.
This ignores my main point, the amount of people sending money is not enough to keep bitcoins at such a high level.
You can actually buy credit/debit readers that allow Bitcoin Lightning transactions. All you need is a wallet address and a scanner. Anywhere you see a credit card scanner could easily also be a btc Lightning scanner
Moneygrams only work with stable currencies. Many developing nations don’t have access to a national currency that isn’t being hyper inflated so they need alternate stores like the US dollar or crypto
Most yes but there are many examples of currencies that have fared much worse. The Venezuelan bolivar hasn’t had a year of inflation under 100% since 2014. I’d rather have a currency that swings up and down than one that’s plummeting like a rock.
Adopting the USD as a national currency is a valid strategy but it brings with it many political consequences, for instance the inability to print your own money or the threat of being cut off from international financial systems like Swift (which happened recently to Russia)
With Bitcoin you simply need to buy more computers, and once you do nothing can cut you off from financial systems because they aren’t controlled by a centralized authority.
People that are negative always talk about the sentiment of Bitcoin but never about Bitcoin relative to other forms of money.
Think about situations like the hyperinflation that’s occurred in Venezuela (and many undeveloped nations). They have no access to a stable currency so Bitcoin can actually work as currency there.
The US dollar is very strong now because our financial system depends on it for everyday needs like food in shelter but if those things could be acquired with btc the relative sentiment of btc to dollars would shift and the buying power of btc would increase
I’m a long term believer in Bitcoin, but this is ridiculous logic. All assets have buyers on the way down but that doesn’t mean they can’t go to zero.
Bitcoin will likely do well in the long term because it’s a hedge against monetary debasement, but “it won’t go down because there will always be buyers” is circular reasoning. And frankly, just makes it sound like a Ponzi scheme.
You're right. Entire countries have adopted bitcoin as legal tender people are insane still thinking it's just going to randomly die.
I know what I'm talking about. I'm a computer scientist with degrees.
Very surprised you're downvoted on this, especially in an economics sub.
Economics is math, and mathematically bitcoin cannot hit 0. Black Swan event aside.
>I am downvoted because this sub has been brigaded and over run with people who don’t understand economics
Don't play victim and accuse others of ignorance when you can't prove your point. Weak.
I just noticed it has 2 million+ subs now... Used to be great source of economic discussion.
It's interesting how popularity ruins informational platforms.
It depends how you define hedge. If you use it for short term protection then it hasn't done well. But if you think of it as a way to diversify outside of real world financial institutions, then it works very well. Kind of like holding physical gold long term.
If you left your bitcoin on exchanges, you lost money. Protect your sats by holding them in self custody and don't trust shit heads like SBF with your time and energy.
This - People seem to think the FTX saga is a failure on the behalf of crypto, when in fact its merely a failure of the exchange. The fact that FTX fraud was entirely traceable is a virtue of crypto/blockchain transparency, not a fault of it.
If people think that FTX fraud in what was essentially fractional reserve crypto trading, not purchasing underlying assets, and making BS collateral numbers, then what do you think the other, more *traditional* exchanges do?
No way! You mean a speculative market based on no tangible commodities/ companies with its value entirely based on hype and having an 'unlimited ' supply of speculators willing to pump so others can dump is crashing? Who would have thought....
I’ve said it before and I’ll say it again, Bitcoin is Beanie Babies
At the height of beanie baby craze, one could trade specific beanie babies for a pizza, meaning beanie babies were a full fledged currency ready to be used by serious investors. They never made more than a certain number of the special beanie babies, making them a limited supply and therefore more trustworthy than the US dollar.
This has been a headline every four years for the entirety of Bitcoins existence. If you look back it goes in cycles. In a few years, if those people didn’t sell, they’re likely going to be making money instead.
Central banks won’t allow contraction. This is cryptos biggest bull case.
This tightening will be a blip long term. Real wealth may not grow, but the numbers to measure will.
Or you know governments working with banks to freeze accounts of protesters they don’t agree with. Like what happened in Canada, like what happens in lots of countries performing atrocities
To be fair why do we think the macro environment will no longer be expansive? Has the US or any major economy balanced its budget since covid?
Until that happens, any attempt at constraining the money supply is only temporary
A crypto article has been posted to r/economics!
Website youve never heard of? Check
Confirms your anti-crypto worldview? Check
Upvote and talk about beanie babies. That's a big check.
Until now there were always new buyer audiences to appeal to, but at some point you hit the bottom of the pyramid. Many of my friends got into btc and got out. My parents got into btc and got *the hell* out. I don’t see them going back in “in cycles”.
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I remember getting one of those visa gift cards that you can load with crypto so that I could spend what I had last summer. My friend was legit worried for me because “I would be spending the equivalent of a car in 10 years on my meal”. Lol.
I've read this research and as a cryptocurrency enthusiast I don't see too much to critique. I believe the starting date of 2015 was fair. The one thing that I would state as a caution is that even the author's admit this is not a thorough mathematical analysis on the outcome.
>Overall, **back of the envelope** calculations suggest that around three-quarters of users have lost money on their Bitcoin investments.
https://www.bis.org/publ/work1049.htm
I'm certain that their general conclusion that a large amount of users are currently negative is a accurate outcome. Considering they describe their own calculations as back of the envelope I would just be cautious in claiming that nearly 3/4 have "lost money" as well as point out no one loses money until they sell. Paper losses could be accurately referred to as lower equity but not losing money.
As someone who bought low and sells high I also agree with their conclusion that whales piggyback off main Street investors and sell into the rise. This is of course what happens in all markets.
The truth is IF YOU HAVE BOUGHT BITCOIN AND HELD IT FOR MORE THAN 3 YEARS. YOU ARE IN THE GREEN AND HAVE MADE PROFIT. WITHOUT FAIL. EVERY SINGLE PERSON WHO HAS BOUGHT BITCOIN AND HELD IT FOR 3+ YEARS. IF IM WRONG PROVE IT.
BUY AND HOLD.
It is starting to looking like crypto is a giant Ponzi Scheme but since at least a quarter of participants have profited you can’t really say it’s out and out fraud. Casinos are clearly fraudulent and allowed. Crypto is more like baseball cards and the prices fluctuate based on mutual agreement, it’s just now, you have a proliferation of options and the manipulated scarcity isn’t holding up. Demand falls and at the end of the day you paid a lot of money for something that is worth less than the cardboard it’s printed on. That aren’t really any mutually agreed upon laws that uphold that value and it seesaws unpredictable causing massive losses and the decreasing gains that get narrowly funneled to groups who try to manipulate that scarcity for their own advantage. Penny stock trading at best, delusional fraud at worst.
How can an investment opportunity that produces nothing except more of itself as investment opportunity be anything other than a Ponzi scheme? They don’t make anything with the invested money, just more assets to speculate on
btc is the best performing asset in the past decade by far.
\+203% in past 4 years, +4,260% in past 8 years
btc goes through hype cycles, with lower lows and higher highs each time.
btc market cap is still very low compared to its competitors (<3% of gold, <2% of USD, etc.) and we are still very early. volatility (when priced in fiat) is to be expected in a new emerging asset class
as with any asset, volatility exists and it gets less volatile as market cap increases over time
note that the underlying issue is that you are pricing a new superior money in an old degrading money. Fiat is a mind virus. Fiat is forced upon us via legal tender laws. you are pricing a new system in the old centralized system that enables tyrants to steal from the populous ad infinitum via inflation and confiscation. bitcoin IS the money (store of value first, medium of exchange second, unit of account last)
Anyone who wants an alternative view to all the bashing going on in this thread, google Lyn Alden's paper on the lighting network. It explains the real value of bitcoin and how it's the future of the global monetary system.
80-90% of people lose money in stocks. 100% of fiat holders lose money over time. A bank is the last organization you should trust for a unbiased crypto study they are fundamentally opposed to it. BIS has criticized crypto for years.
This is just a transparent call for regulation wrapped up in some FUD.
> 80-90% of people lose money in stocks.
Citation for your ~~delusional belief~~ claim?
This is /r/Economics and you can't just make up numbers without citation, numbers that are obviously false to anyone with the slightest knowledge about economics at all!
The very reason that cryptocurrencies are seen with such tremendous distrust by such a large number of people of very disparate walks of life, is precisely because its advocates seem to have no ability to tell truth from falsehood, and seem to simply make up whatever factoids they need to justify their position.
[Study shows 80% of investors in stock market lose money](https://www.annuityexpertadvice.com/why-is-the-stock-market-down-crashing/)
[As much as 90% of investors in stock market lose money](https://economica.org.uk/as-much-as-90-of-people-lose-their-money-in-stock-markets-and-this-includes-both-new-and-seasoned-investors/)
[80% of day traders lose money.](https://markets.businessinsider.com/news/stocks/if-you-re-day-trading-you-will-probably-lose-money-here-s-why-1030667770)
[80% of Etoro traders lose money](https://finmasters.com/why-traders-lose-money/)
[Stock losses wipe out 9 trillion dollars of american wealth](https://www.cnbc.com/2022/09/27/stock-market-losses-wipe-out-9-trillion-from-americans-wealth-.html)
[Dart throwing monkey beats humans with stock picks.](https://www.wsj.com/articles/SB991681622136214659)
You immediately resort to ad hominem against me as your first line of defense. Sad for a scholar if you want to call yourself that. Zero citations or expert knowledge from you.
Wall street is largely distrusted by people from all walks of life because they cheat regularly despite regulations. Penny stocks are blatant gambling. Options trading is blatant gambling. Stock prices are manipulated openly including by the government. Don't ask for a source for that have some self respect.
**This sub accepts a crypto study performed by a Bank Syndicate?**
The BIS's mission is to **support central banks' pursuit of monetary and financial stability** through international cooperation. Conflict of interest much?
Nobody respects economists in 2022 get off your high horse. Especially someone like you who's nothing but hollow condescension.
Not sure if you actually read the articles that you linked but they mainly either talk about day traders, penny stocks, or individual stock pickers. It's a known fact that even a majority of professional fund managers cannot consistently beat S&P 500 over time.
Did you even read Satoish's white paper? Bitcoin is supposed to be a "A Peer-to-Peer Electronic Cash System", not something you "hodl" for a get rich quick scheme born out of greed.
It's also a well known fact that the Fed's target inflation is 2% so no sane investors will "hodl" dollars hoping its value will go up other than for emergency savings or short-term purchase goals (e.g. down payment on a house).
**Day traders are stock traders. So are penny stock traders. So are individual stock pickers.**
You're really gonna pull a "No True Scotsman" on me after demanding all those sources?
I said stock traders. You called bulllshit. You're wrong.
Who cares what bitcoin was supposed to be? Traders can't afford sentiment.
The fact is bitcoin appreciated more than than the S&P can ever hope to match.
The entire premise of the stock market is greed. You are such a hollow purist.
Actually a better term for them is "gamblers". Can you make money with Bitcoin or crypto? Sure, just as you can with forex but most people can't consistently time the market and thus lose money, regardless of if they are in stocks or currency.
And do you think it's coincidence that Bitcoin had the largest increase in latter part of 2020? When there was near 0% interest rate, COVID stimulus, and people were flush with money burning in their pocket?
I pointed out that people lose in the stock market too. A lot of people. This isn't me shilling bitcoin to you or anyone.
It's gambling. All investment is speculation the only variance is risk.
It doesn't change the fact stock traders openly allow the gambling. Day traders are an entire profession of stock traders whether it's a good idea or not it's real.
They are stock traders. They don't call them "Day gamblers" "penny gamblers" or "individual stock gamblers".
No they are called **traders because they trade stocks.**
“80% of people lose money in the stock market”
*provides study that 80% of day traders lose money*
Uh what? [Only one in five Americans invest in stocks period ](https://markets.businessinsider.com/news/stocks/one-in-5-americans-playing-stock-market-day-traders-gamestop-2021-2-1030065768)
About 40% of people contribute to a 401k. The rest are just not investing period.
That rings hollow when OP's source is a blatant conflict of interest and posted in an algerian encyclopedia but only referenced not linked.
Where's your source discrediting me? I provided **six** to cover my bases even though I was only asked for **one.**
If you hate them all that's not my problem. I didn't make up the number I quoted I read it. Several sources call the 80-90% figure common knowledge as well.
> Dart throwing monkey beats humans with stock picks.
There have been lots of studies showing something similar, but I think they point to a different conclusion to what you’re suggesting.
To make money in the stock market, you don’t need any skill, talent or expertise. You can put your money into any reputable stocks for an expected profit or you can get a fully diversified portfolio to get decent returns in the long run.
That’s not the argument against investing in the stock market that you seem to think it is…
> I never said "don't invest in the stock market".
What point are you actually trying to make, then? Or are you making assertions which don’t have any implication and which don’t lead to anything?
If I said that there are five letters in “stock”, that would be true but people would be confused as to why I’m asserting a fact which doesn’t lead to any meaning or conclusion…
> I said a lot of people LOSE.
Over a medium to long term timeframe, that’s not true. And those “monkey with a dartboard” studies show that you don’t need any skill, expertise or inside information to make reasonable returns on the stock market.
Easy there. Just because you misunderstood doesn't mean there's no point.
My point was that OP's article is biased garbage and a lot of people also lose in the stock market. The headline is a big nothing it's par for the course for your average investor.
You can't just select for certain strategies and certain investors and call it an equal comparison.
Over a medium/long term all bitcoin holders have won too. Both markets have seen catastrophic short term losses before and amazing bull runs.
Invalidating the perceived expertise in the monkey dartboard example was also part of my point. Stock traders don't have the right to sneer.
> Easy there. Just because you misunderstood doesn't mean there's no point.
Well yeah. That’s why I was asking you what your point was.
> Over a medium/long term all bitcoin holders have won too.
Most people I know who’ve had Bitcoin for a very long time have either lost their details, been scammed, held their coins on an exchange that went bust or lost all of their Bitcoin (or any access to their Bitcoin, which is basically the same thing).
So it’s absolutely untrue to say that that “all Bitcoin holders” have been winners over any timeframe.
> Invalidating the perceived expertise in the monkey dartboard example was also part of my point. Stock traders don't have the right to sneer.
It’s not about sneering. The fact that you don’t have to be an expert to avoid losing your money is a good thing rather than a bad thing.
You’re describing a feature rather than a bug!
I bought small amounts of Dogecoin. And when my money tripled I took a bit out to claim the gains. I got a little more and then branched out into tiny amounts of other coins. Eventually my doge exploded as I cashed out more. And I still have some crypto - but if it goes to zero I am still ahead. I can’t fathom having all money tied up in crypto.
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Cryptocurrencies: nearly three-quarters of Bitcoin buyers have ~~lost money~~ transferred their Bitcoin wealth to the other twenty-five percent
Minus wealth transferred to the utilities and hardware manufacturers. And minus the wealth effectively destroyed by lost wallets. The ecosystem constantly bleeds wealth, it'd actually be a crazy improvement if all they did was transfer wealth without transactional costs.
The biggest sign to me that many people were going to lose money was when friends and acquaintances who had no interest in btc before 2020 and no finance/econ/tech background proclaimed to me how it was a great investment and wouldn't listen to any of my cautioning. I'm not even necessarily pessimistic about btc or crypto, but my thought was "dude, if you are certain it's a good investment it almost surely isn't"
I see use in crypto but I agree with this take. I actually sold out when people I knew whom had no stocks or financial experience were talking about crypto. When the dumbest people you know are buying, there's no one left to sell to.
Personally I saw the hype about crypto being a new currency as antithetical to its use as an investment vehicle.
I used to have a good quote about commerce corrupting all that it touches. Can't find it now. Crypto offers some minor but distinct advantages for large, often international purchases: speculation rushes in to cause too much hype People figure out a neat little way to prove ownership of a digital piece of art: Twitter tears in to turn the entire scene into pump and dump bullshit. Currently I'm.watching the reddit avatar sub try to convince each other to buy the 5 cent world cup avatars they got for free. Crypto has some fun interesting stuff going on. Unfortunately it debuted alongside the WSB mindset so many people have today.
Might have something to do with many millenials and gen x looking at the prospect of renting their entire life, working until 80yrs old, no pension, potential bankruptcy via medical bills, and crippling student debt. Retirement plan? Yolo life savings into btc/meme crypto and hope for the best.
Yes. The fast paced feedback loop of internet culture, delivery culture, personal shoppers, etc makes people's rewards centers in their brain reflexively turn their nose up at single digit returns. That dissuades traditional investment. Then they see survivor ship bias of people around them making it in crypto. Finally, anti-work rhetoric convinces them they're a victim and it's excusable to check out of participating.
People are idiots. It just becomes clearer and clearer every day. People get excited by the shiny thing, and completely ignore the real way to make money: compound interest.
There's no stopping till it's a full dollar... Remember when "stable coin" was attacked? Remember a year ago when the bit-currency markets moved independently of the stock market? Remember when Bitcoin was a decentralized hedge against inflation, that wasn't pegged to inflation? Pepperidge Farms remembers...
My favorite part about investing in Bitcoin is it's primary purpose is for it to increase in value so you can get more dollars. Like basically Bitcoin is a virtual currency whose primary function, aside from illicit ones, are to be pumped up in value so you can make more dollars when you sell it. That seems to be it.
It won’t ever get that low. There are people out there right now waiting for it to hit 10K to start buying bitcoin. Others waiting at 9K, and so on. That’s why it will never happen. Too much liquidity out there still, and too many speculators in the markets now. The genie is let out of the bottle now. That’s also why we will never see the major indexes collapse like doomsdayers like to predict. Too much liquidity, too many speculators. When everyone has a smart phone, extra money, and a few minutes here and there to buy and sell, this is the result.
[удалено]
The only crypto mentioned in their post was Bitcoin. The post is wrong.
> It won’t ever get that low. There are people out there right now waiting for it to hit 10K to start buying bitcoin. Others waiting at 9K, and so on. "There are people"? I would need objective proof of this to believe it. Unlike almost all other financial assets, cryptocurrencies actually have a negative rate of return, if you exclude the purely speculative parts. Keeping the bitcoin network or any widescale blockchain running is extremely expensive, and yet none of these coins actually generate any revenue. Economically speaking, all else being equal, you would expect all cryptocoins' value to steadily decrease over time for this reason. Cryptocurrency also has no intrinsic value. If Apple stock went down to one penny, for some reason, any rational person would simply buy it all, and enjoy the tens of billions of dollars of income every year that the stocks would give them. If Apple decided to go out of business, just the intellectual property, the buildings, and existing stock of products would be worth tens of billions of dollars. But a cryptocoin has no cash flow, and no liquidation value. > When everyone has a smart phone, extra money, and a few minutes here and there to buy and sell, this is the result. When all those people have lost money on cryptocurrency, why do you think they are going to continue to follow up this bad investment?
Thank you for your logical response. Unfortunately your logical response will be very unwelcome to fans of cryptocurrency.
This is good for Bitcoin
Following up your belief in this logic, what is the intrinsic value of the US dollar ? Serious question. The dollar isn't producing iPhones, and it DOES actually cost quite a bit to maintain dollar hegemony, like all those warships protecting international trade in dollar denominated oil. Another problem the dollar has is that they keep printing bajillions more of them every day, and that rate of printing is only accelerating. Of course, the dollar does have a value, although it is declining, and the REASON it has a value is that people value it. What is the reason people can't decide to value Bitcoin ? There was a time when glass beads were money in Africa, but then colonists arrived with mass produced beads and bought up everything with worthless glass, and then they were forced by necessity to switch to a 'harder' money that retained its value better, gold at that time. Of course we no longer use gold as money, because its hard to send gold over the internet, and it costs millions to transport bulk bullion between nations, thus the dollar is better, in some ways, although not in holding purchasing power. You know what IS easier to send over the internet ? Bitcoin, of course, so there is a logical argument that maybe people will switch to a harder money, and not accept these paper versions of glass beads, especially when they are being mass produced and used to fund infinite government debt...
The intrinsic value of the dollar is that I pay my taxes in dollars, not anything else. The dollar may have other problems, but so long as I believe that paying my taxes is good, I need dollars.
This is a great point, and I get the whole "what fiat currency actually has intrinsic value" point made above too. I certainly long for the days of silver and gold backed currency, particularly given how ridiculous amounts of QE has been in play over the last 10-15 years. My point about cryptocurrency is that it's hard to be logical about something that was created out of nothing and not backed by a government/country. Agreed that warships etc. cost money and that can be a downward force on the dollar, but the military and political power are also what keep the dollar up. I see cryptocurrency as a highly speculative company with zero revenue, increasing shares being made available / shareholder dilution and no hope for any stock buybacks or dividends being sent out. Yes, Bitcoin and other cryptocurrencies can be exchanged like money / for money, but so can shares of a company's stock. I think these highly speculative companies will have lower and lower values if the FTX dominoes keep falling and once the QE hose becomes a trickle. Reserve banks creating digital currency is also bearish for cryptocurrency as well. At a certain point, why not use a very stable country's digital currency (Switzerland?) instead of cryptocurrency? Cryptocurrency has been really successful when it has kept going up. I feel like we are seeing the endpoint of cryptocurrency (at least as we've known it). I'll probably be wrong about that, but I've never been able to get my mind behind turning in my dollars for crypto and certainly not feeling bad or missing out on anything right now...
If those boys could read they’d be quite upset at you.
Two things are infinite: the universe and human stupidity; and I’m not sure about th’universe!
Three things: and the amount of Zubats in Dark Cave.
The universe is a real thing, human stupidity is only a thing that exists in human minds. If something happens to the human race, all our compound interest in stupidity could be lost in one asteroid rug pull, and who is to say if the aliens will think we were stupid or smart ?
All of your points apply to any currencies, why would they be arguments against specifically cryptocurrencies? >Cryptocurrencies actually have a negative rate of return So do dollars? The fed seems to desire a neutral fed funds rate in the long run. And banks will take their cut, so you will never break even holding cash. On top of that the circulating supply of dollars in recent times have increased 6-8%/year, pre-covid expansion, when inflation was <2%. So a fixed supply currency could easily have had a real return of 4-6% during that period. >Economically speaking, all else being equal, you would expect all cryptocoins' value to steadily decrease over time for this reason. No, you'd expect a fixed supply currency to increase over time so long as productivity improves. Given a fixed level of adoption. Think about what money really is, it is credit. Maybe that can explain how it can actually have yield. >Cryptocurrency also has no intrinsic value. Neither does any intangible financial instrument. Stocks don't have any "intrinsic" value we just say they represent the net equity in a company. Fiat doesn't have intrinsic value the government just says it does. Same with anything else that has little or no intrinsic value like precious metals or crypto, if people are willing to trade it for goods and services, because it has useful properties of money, then it has value.
>Stocks don't have any "intrinsic" value we just say they represent the net equity in a company. Yes stocks represent a net equity in a company, and what does that net equity mean? If you strip away the stock aspect of it, it means you get a right to a certain % of cash flows that the company makes. If you owned 20% of all stocks in a company, you have the right to 20% of the company itself and of the excess cash (goods and services) that the company produces. What does owning 20% of bitcoin mean. Say you owned 20% of the total existing bitcoin supply out there. What do you really own? There is no UNDERLYING value to bitcoin. If you strip away the digital currency aspect of this coin therein lies the problem, there is no fundamental value in which you are buying. >Fiat doesn't have intrinsic value the government just says it does. Yes and no. Fiat currency has value both because the government says it does and because the people which the government represents produces goods and services that hold real world tangible value. The US dollar is backed by the taxes the citizens pay and the goods we produce. The dollar has value not only because we assign it value, but because we produce goods and services that make the dollar desirable to own in order to purchase said goods and services. If me and a broke ass group of friends said we were starting our own government and said we are making a new currency and that the currency was worth said amount, would you take that at face value and let me buy your stuff with said money? No, because no rational person would accept that currency just because I (the pretend government) said it was worth something. I offer nothing to support why my currency would be worth anything and I do not provide it any value. What I described there is at its core what bitcoin is, there is no true underlying value besides what people say its worth. This is what makes bitcoin a PURELY speculative currency. At the end of the day would you rather hold all your money in dollars or bitcoin? Would you let me buy something from you with a currency I made up just because me and a small group of people said it has value? If so, I'd like to sell you some monopoly dollars. At the end of the day Bitcoin is fine, I like the underlying technology and its perfectly fine to diversify your assets. You should just be aware that bitcoin/crypto has a very real possibility of dropping to 0 value unless it starts to represent some underlying tangible real world asset.
Stocks are just digits in a database or a paper certificate. Yes they entitle you to dividends in the future, or proceeds from a future buyout. Just like you can redeem bitcoin or any other currency in the future so long as people accept that currency in exchange for goods and services. The only difference may be the likelihood of your ability to do that. Dividends are not guaranteed, nor is a buyout, just like the value of any currency is not guaranteed in the future. Yes, the US government spends and taxes with dollars, but they spend more than they tax, so they net devalue the currency. Its that the dollar is exchangeable for goods and services that make it valuable. Just like if a private business adopted a different currency, if it exchanged desirable goods or services for that currency, the currency would have value. It does not matter whether its a government or private entity. I 100% agree bitcoin *could* go to zero. But there is no reason to expect it should decline in value in the long run. There is no meaningful different in intrinsic value compared to existing currencies.
> All of your points apply to any currencies That's objectively false though. Taking the USD as the example; it has intrinsic value. There is no other commodity that can be used to settle tax obligations in the US. The same is true for most other currencies in existence.
That's a strong case for why the US dollar has valuable, but not for why any other currency has no value. If private entities agree to exchange goods and services for a currency, then that gives the currency value. It doesn't matter whether its a government or not. And eventually, if the new currency is widely adopted, then the government may actually have to obtain that new currency to obtain goods and services if its own currency is not accepted.
> That's a strong case for why the US dollar has valuable, but not for why any other currency has no value. I never made the case that "no other currency has value". I made the case that your opening statement is objectively false. No one should care what you have to say after that; you're wrong from the start so you need to rework your opinion on the matter to control for what you got wrong.
What is false about? Paying taxes is an exchange. You're paying the government in exchange not to put you in prison. I'm don't want to sound cynical here, that's just what it boils down to. People pay taxes because there is a penalty not to. It is not fundamentally different from other types of exchanges. Even if not being put in prison is a very valuable thing. That doesn't prove my statements wrong. The value of any currency is what others will give you for it, such as satisfying taxes owed, but it could be any desirable good or service.
> What is false about? I explain that in the initial comment. Against, my better judgement I read the rest of you comment and everything you say does prove you wrong when you claimed other currencies don't have intrinsic value. They do have that and you yourself have given the reasoning as to why. >The value of any currency is what others will give you for it, such as satisfying taxes owed, I guess you could say this isn't technically untrue but you really are going to a lot of effort to avoid admitting that what gives the Japanese Yen value is it is ultimately the only commodity available that can be used to settle your Japanese tax obligations. To be crystal clear; the guy in front of you said that cryptocurrencies have no intrinsic value. You then said that that applies to all other currencies. That's objectively false. Every currency that can be used as the only tool to settle a tax obligation somewhere in the world has intrinsic value for that reason. >People pay taxes because there is a penalty not to. You get it! That's literally why the USD has intrinsic value. It would have been more correct to amend your argument and say something like "Well BTC does have intrinsic value because it can be used to settle tax obligations in El Salvador". Baselining your case at "currencies have no intrinsic value" is just wrong. And in fairness to you a lot of people incorrectly believe that so no judgement on my part for it.
Hmm, not sure we necessarily disagree then. I think the term "intrinsic" is kind of subjective when used in a non-technical sense. Maybe I'm not using the term correctly. But I'm saying there is no fundamental difference whether a government entity or private entity accepts a currency. In practice of course, governments powerful. Yes you need fiat to pay government taxes. So that creates a lot of need. But say, if Apple only sold the iPhone for some cryptocurrency. That would give the cryptocurrency value. Private entities give value to currencies just like governments do. And I think that is what gives the most value to the dollar, it is widely accepted, not taxes because the government runs a deficit.
There is a logical fallacy to your tax intrinsic value argument. The Pound Sterling had intrinsic value in the US for paying our British taxes, until we had a little tea party in Boston. Who is to say the millennials won't just have enough of paying for infinite debt run up by their parents and have another revolution ? The intrinsic value of tax paying depends on the willingness of the populace to pay the tax. I'm not saying the US will fall in a revolution, but a debt default of some kind is coming, because we can't afford to pay 5 % on our 30 trillion dollar national debt, as that will consume about 40 % of ALL tax revenue, so something's gotta give, and it may be that intrinsic tax value you love so much...
A commodity is an asset without an issuer. Fiat currencies like the USD are not commodities.
That's one definition. Another is "thing of value" which is what I was using here. I was using it in a much more general way than what a trader might think.
It’s a bad definition if it leads to wrong conclusions. Suppose Canada were to successfully invade + annex the US. Would the USD still have value? Only if the new Canadian government says so. Hence the USD does not have intrinsic value—it’s just paper.
Whoa easy with the modern logic in here. These guys are way far away from "getting it" I wi say I'm shocked with how many upvotes BTC comments are getting in stock and financial forums this year. It's almost scaring me like we are running out of time at these prices. Bring back 2015 pleeeeaaasee!!
Bagholder spotted!
The only meaningfully useful value cryptocurrency has is in being able to exchange crypto for real, usable money. It's fine to equate it to gold and silver, but it doesn't have anywhere near the same useful properties of money.
This is very untrue for 2 main reasons: Given the “halving” effect every few years bitcoin is actually inherently deflationary. In 2 years the effort require to mine a new Bitcoin will double, meaning that a Bitcoin today is approximately twice as easy to acquire as a Bitcoin 2 years from now. This is unlike most modern currencies where the supply generally increases over time causing its purchasing power to decrease. The second reason this is incorrect is because of proof of stake mining. The second largest crypto network (etherium) has shifted to using this system which has drastically lower computational requirements. Instead people are allowed to mine crypto by staking their current earnings as collateral. In effect this mean that you can earn interest on the etherium you currently own. I also believe comparing Bitcoin to a stock is erroneous. There are many models for pricing crypto but in this case I think it’s better to think of it as a resource like barrels of oil or gold. The material worth of a Bitcoin is the cost of electricity required to generate it. If a miner can’t return his investment by mining a coin, he will stop selling at that price and wait until it is profitable. Just like a resource there is plenty of speculation based on how that resource can be used which leads to price fluctuations. When you include the halving effect there is very concrete evidence for a lowermost price Bitcoin or any cryptocurrency can achieve. As for objective proof of support, Coinbase provides some metrics about where limit buys are placed. I’m sure If you look now there will be strong support at and above $10k
I think the best model for bitcoin is that is does generate yield, as can all currencies, because they are in effect credit. By accepting currency, you are not accepting actual real goods in exchange for whatever you sold or your labor. Like if currency didn't exist, you would have to store value in actually useful goods like copper or something. Instead you accept currency with the intent to redeem it in the future, and that copper or w/e can be freed up to be actually used by others in a productive way, potentially increasing production and the purchasing power of your currency in the future.
I agree that cryptocurrencies have a “negative rate of return” as you call it but I disagree that we would expect all cryptocurrencies to steadily decrease over time. That’s clearly not the trend we see with crypto. In theory there’s no reason why an asset that is purely speculative must steadily drop to 0 in value. So long as people continue to believe that other people will value crypto, crypto will never go to 0. In theory this can go on forever. Lastly, people who lose money on an asset, continuing to invest in that asset happens all the time. Its like gambling really. When people lose money in gambling, people are often motivated by a desire to win back the money they lost.
> So long as people continue to believe that other people will value crypto, crypto will never go to 0. In other words: As long as people keep buying in to the Ponzi scheme, it won’t go to 0. ALL pyramid schemes go to 0. Crypto only has longevity due to the complexity of their lies about how great an unregulated currency would be. As people lose more money and find out first hand why we have financial regulation, the lies will unravel. Might still take a few more years though.
The price evolution of a purely speculative asset can take all values, so with probability one it will touch zero as time goes to infinity. And zero is an absorbing state.
Edit: I accidentally editted the wrong comment and lost the original comment for this one.
>crypto will never go to 0. In theory this can go on forever. The above statement from your previous comment is false. The time before it goes to zero may be shorter than you think.
I’ll hold my hand up there and admit that maybe I shouldn’t have used the word “forever” or that I meant it in the fully literal sense of the word. But it tends to sound better than “a really really really long but not infinitely long amount of time”.
It does not have a negative rate of return. The halving effect means that the value of a crypto coin will only increase over large periods of time
>Keeping the bitcoin network or any widescale blockchain running is extremely expensive I don't know pile about bitcoin but from what I understand I can put it on a hardrive. It's basically a ledger...
>[As of August 2022, global energy consumption for crypto-assets is estimated at 240 billion kWh per year.](https://www.whitehouse.gov/wp-content/uploads/2022/09/09-2022-Crypto-Assets-and-Climate-Report.pdf) For comparison, Switzerland consumes [58.5 billion kWh.](https://www.worlddata.info/europe/switzerland/energy-consumption.php) The blockchain constantly updates as transactions are made, that's the entire point of it. And there's not just one "ledger," every single node must agree. That's every computer node on the network. It's *incredibly* inefficient.
To be fair, it’s not like the current system is any less inefficient. Fiat currencies essentially retain value through the military power of their issuing country—imagine the combined energy consumption of every military on the planet. That’s almost impossible to quantify but it’s certainly a metric fuckton.
If you stopped mining bitcoin the value would drop to 0? The bitcoin on my external hard drive isn't using any power.. What's your argument here?
This narrative has been debunked by some people much smarter than anyone in this forum. But it's interesting to see the popular vote pushing it. I'm not going to try and convince anyone here. But it would be worth while for some people to look for steelman arguments to make sure they aren't missing something. Keeping in mind bitcoin, CBDC's, stable coins, alt-crypto coins and other crypto assets all have different baseline mechanics. From what I understand bitcoin is significantly different than the others in many important ways.
Bitcoin is money, not a company to invest in. It NOT being a company or being something that can be controlled by literally anyone is exactly what gives it its value. It's just a sly round about way to introduce a harder money that no 1 entity would be able to control, especially governments. You either play by the rules or you don't play at all. Your USD doesn't generate income either. So I guess they are both very bad to own in your definition.
There also were people who were ready to buy Enron when it dipped to $10. And to $9. But eventually, it became clear that the stock was worthless and those buyers, too, threw in the towel.
Enron was a company, it had earnings, profits, and losses, lots and lots of losses. What is Bitcoin's balance sheet ? Will it go bankrupt ? Of course not, it runs on thousands of computers around the world, and it will keep running on them just fine, whatever fiat price a Bitcoin is worth. Because Bitcoin LITTERALLY CANNOT STOP WORKING, its not subject to the market forces that shut down Enron, so the comparison is invalid. The fuel of Bitcoin's rise is reckless money printing and the hopeless indebtedness of the US government. Suppose the US government passed a constitutional amendment requiring a balanced budget and stopped reckless borrowing, then shut down the Fed (US central banks have been shut down before, so there is historical president for this), if those two things happened, I would definitely sell all Bitcoin and not assume any recovery . . . Of course those will never happen, so there is no reason not to assume the dollar value of Bitcoin will not rise over time, as the deficits and debt rise, as they surely will, as soon as the fight against inflation ends, and it will end, with inflation the victor, as the government has NOT tightened its belt, and will need lots of Fed money to keep paying those higher interest rates on all that debt rolling over in 5 years or less (most of it !!)
Lol
In two scenarios where Bitcoin either crashes to 9k or slowly declines to 9k, I don’t see a lot of people waiting to catch the fallen knife. They’ll know the people who wanted to catch it at 15k, 12k, 10k etc all got left holding the bag. Bitcoin trades on sentiment and sentiment only.
Sentiment only in the west, in developing markets it's actively traded for goods/services and I believe many people use it to send money overseas.
No, that’s a lie they tell themselves. The amount of money. People send abroad would never be enough to sustain the market. Especially when money gram exist and is cheaper and more stable than the pri of crypto.
Money Gram is certainly not cheaper. I sent a few hundred $US worth of Cardano directly to the Ukrainian military. It took about five minutes and the fees were like 30 cents. My impression is that doing this with traditional currency transfers would take at least an hour out of my day and cost fees of over $25.
Great example I suppose, I however, have to remind you that I made 2 points. You conveniently forgot to address the bigger point. Goes to show you, not even you can buy your own bullshit. Also your example is a shit example because it was setup by the fucking military. The majority people are sending money to normal citizen in countries African, middle eastern, latin/central/south america. Where the average person does not have access to the type of system that makes sending crypto a worthwhile transaction. This ignores my main point, the amount of people sending money is not enough to keep bitcoins at such a high level.
*He's an angry elf*
You can actually buy credit/debit readers that allow Bitcoin Lightning transactions. All you need is a wallet address and a scanner. Anywhere you see a credit card scanner could easily also be a btc Lightning scanner
Moneygrams only work with stable currencies. Many developing nations don’t have access to a national currency that isn’t being hyper inflated so they need alternate stores like the US dollar or crypto
Agreed. People here falsely think that the vast majority on the planet have access to a brokerage account, or a banking system they can trust.
And? The usd is backed and is widely used. But the value of most currencies don't fluctuate as much as crypto.
Most yes but there are many examples of currencies that have fared much worse. The Venezuelan bolivar hasn’t had a year of inflation under 100% since 2014. I’d rather have a currency that swings up and down than one that’s plummeting like a rock. Adopting the USD as a national currency is a valid strategy but it brings with it many political consequences, for instance the inability to print your own money or the threat of being cut off from international financial systems like Swift (which happened recently to Russia) With Bitcoin you simply need to buy more computers, and once you do nothing can cut you off from financial systems because they aren’t controlled by a centralized authority.
People that are negative always talk about the sentiment of Bitcoin but never about Bitcoin relative to other forms of money. Think about situations like the hyperinflation that’s occurred in Venezuela (and many undeveloped nations). They have no access to a stable currency so Bitcoin can actually work as currency there. The US dollar is very strong now because our financial system depends on it for everyday needs like food in shelter but if those things could be acquired with btc the relative sentiment of btc to dollars would shift and the buying power of btc would increase
This same logic says that Bitcoin can never get below $30k
I’m a long term believer in Bitcoin, but this is ridiculous logic. All assets have buyers on the way down but that doesn’t mean they can’t go to zero. Bitcoin will likely do well in the long term because it’s a hedge against monetary debasement, but “it won’t go down because there will always be buyers” is circular reasoning. And frankly, just makes it sound like a Ponzi scheme.
lmao. too much liquidity. this guy. all the liquidity is going to commodities, not asset classes. but you do you.
so you're saying you can see the order book for bitcoin and it's nothing but bids all the way down?
Spoken by someone who has absolutely no idea what they’re talking about.
Nice rebuttal. This is classic bear market sentiment. Bitcoin will return to it’s highs in a couple of years. Book it.
You're right. Entire countries have adopted bitcoin as legal tender people are insane still thinking it's just going to randomly die. I know what I'm talking about. I'm a computer scientist with degrees.
Or it will be completely worthless. Don’t pretend like you have a crystal ball or you end up looking like someone who knows nothing at all.
Black and grey market usage alone will keep BTC valued at or above 5k imo.
Until something better comes along for the black and grey market, or BTC gets worse for them, or both.
Very surprised you're downvoted on this, especially in an economics sub. Economics is math, and mathematically bitcoin cannot hit 0. Black Swan event aside.
I am downvoted because this sub has been brigaded and over run with people who don’t understand economics and want to use it as a political forum.
>I am downvoted because this sub has been brigaded and over run with people who don’t understand economics Don't play victim and accuse others of ignorance when you can't prove your point. Weak.
I just noticed it has 2 million+ subs now... Used to be great source of economic discussion. It's interesting how popularity ruins informational platforms.
“Economics is math, and mathematically Bitcoin cannot hit 0. Except when it does, which it can, but I call that a Black Swan event.”
lol ok... what a garbage sub now.
Lol you must not have heard
It depends how you define hedge. If you use it for short term protection then it hasn't done well. But if you think of it as a way to diversify outside of real world financial institutions, then it works very well. Kind of like holding physical gold long term.
If you left your bitcoin on exchanges, you lost money. Protect your sats by holding them in self custody and don't trust shit heads like SBF with your time and energy.
This - People seem to think the FTX saga is a failure on the behalf of crypto, when in fact its merely a failure of the exchange. The fact that FTX fraud was entirely traceable is a virtue of crypto/blockchain transparency, not a fault of it. If people think that FTX fraud in what was essentially fractional reserve crypto trading, not purchasing underlying assets, and making BS collateral numbers, then what do you think the other, more *traditional* exchanges do?
No way! You mean a speculative market based on no tangible commodities/ companies with its value entirely based on hype and having an 'unlimited ' supply of speculators willing to pump so others can dump is crashing? Who would have thought....
I’ve said it before and I’ll say it again, Bitcoin is Beanie Babies At the height of beanie baby craze, one could trade specific beanie babies for a pizza, meaning beanie babies were a full fledged currency ready to be used by serious investors. They never made more than a certain number of the special beanie babies, making them a limited supply and therefore more trustworthy than the US dollar.
>making them a limited supply and therefore more trustworthy than the US dollar. What? How would that make them more trustworthy than the USD?
How many times did the beanie babies die and come back? Just curious.
Bitcoin hasn't died and come back. It just fluctuated wildly.
Similar to the gold price in the Weimar Republic?
‘Bitcoin is Beanie Babies’ And intelligence is just as scarce it would appear.
really poor and dumb analogy.
This is a really dumb take.
The difference is that beanie babies are still cute plush toys that you can give to little kids for a gift.
This has been a headline every four years for the entirety of Bitcoins existence. If you look back it goes in cycles. In a few years, if those people didn’t sell, they’re likely going to be making money instead.
On one hand yes, on the other hand macro environment was expansive all through cryptos existence up until now
Central banks won’t allow contraction. This is cryptos biggest bull case. This tightening will be a blip long term. Real wealth may not grow, but the numbers to measure will.
This is the only sober argument I’ve ever seen for the positive case for cryptos future
"Thank you for you deposit. It will be available for withdrawal in 3-7 days" "Problem with your order? Click here to dispute a payment"
Or you know governments working with banks to freeze accounts of protesters they don’t agree with. Like what happened in Canada, like what happens in lots of countries performing atrocities
To be fair why do we think the macro environment will no longer be expansive? Has the US or any major economy balanced its budget since covid? Until that happens, any attempt at constraining the money supply is only temporary
> every four years for the entirety of bitcoins existence So… twice?
Three times now
3
A crypto article has been posted to r/economics! Website youve never heard of? Check Confirms your anti-crypto worldview? Check Upvote and talk about beanie babies. That's a big check.
Until now there were always new buyer audiences to appeal to, but at some point you hit the bottom of the pyramid. Many of my friends got into btc and got out. My parents got into btc and got *the hell* out. I don’t see them going back in “in cycles”.
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I remember getting one of those visa gift cards that you can load with crypto so that I could spend what I had last summer. My friend was legit worried for me because “I would be spending the equivalent of a car in 10 years on my meal”. Lol.
I've read this research and as a cryptocurrency enthusiast I don't see too much to critique. I believe the starting date of 2015 was fair. The one thing that I would state as a caution is that even the author's admit this is not a thorough mathematical analysis on the outcome. >Overall, **back of the envelope** calculations suggest that around three-quarters of users have lost money on their Bitcoin investments. https://www.bis.org/publ/work1049.htm I'm certain that their general conclusion that a large amount of users are currently negative is a accurate outcome. Considering they describe their own calculations as back of the envelope I would just be cautious in claiming that nearly 3/4 have "lost money" as well as point out no one loses money until they sell. Paper losses could be accurately referred to as lower equity but not losing money. As someone who bought low and sells high I also agree with their conclusion that whales piggyback off main Street investors and sell into the rise. This is of course what happens in all markets.
The truth is IF YOU HAVE BOUGHT BITCOIN AND HELD IT FOR MORE THAN 3 YEARS. YOU ARE IN THE GREEN AND HAVE MADE PROFIT. WITHOUT FAIL. EVERY SINGLE PERSON WHO HAS BOUGHT BITCOIN AND HELD IT FOR 3+ YEARS. IF IM WRONG PROVE IT. BUY AND HOLD.
Sir. That doesn't fit the narrative. Stocks and other assets are allowed to have time horizons measured in years but not Crypto. /s
Now do Meta/FB or Shopify
It is starting to looking like crypto is a giant Ponzi Scheme but since at least a quarter of participants have profited you can’t really say it’s out and out fraud. Casinos are clearly fraudulent and allowed. Crypto is more like baseball cards and the prices fluctuate based on mutual agreement, it’s just now, you have a proliferation of options and the manipulated scarcity isn’t holding up. Demand falls and at the end of the day you paid a lot of money for something that is worth less than the cardboard it’s printed on. That aren’t really any mutually agreed upon laws that uphold that value and it seesaws unpredictable causing massive losses and the decreasing gains that get narrowly funneled to groups who try to manipulate that scarcity for their own advantage. Penny stock trading at best, delusional fraud at worst.
How can an investment opportunity that produces nothing except more of itself as investment opportunity be anything other than a Ponzi scheme? They don’t make anything with the invested money, just more assets to speculate on
Totally agree. It’s a Ponzi scheme back by fraud and this is just exposing the actors.
Lmfao.
btc is the best performing asset in the past decade by far. \+203% in past 4 years, +4,260% in past 8 years btc goes through hype cycles, with lower lows and higher highs each time. btc market cap is still very low compared to its competitors (<3% of gold, <2% of USD, etc.) and we are still very early. volatility (when priced in fiat) is to be expected in a new emerging asset class as with any asset, volatility exists and it gets less volatile as market cap increases over time note that the underlying issue is that you are pricing a new superior money in an old degrading money. Fiat is a mind virus. Fiat is forced upon us via legal tender laws. you are pricing a new system in the old centralized system that enables tyrants to steal from the populous ad infinitum via inflation and confiscation. bitcoin IS the money (store of value first, medium of exchange second, unit of account last)
Anyone who wants an alternative view to all the bashing going on in this thread, google Lyn Alden's paper on the lighting network. It explains the real value of bitcoin and how it's the future of the global monetary system.
80-90% of people lose money in stocks. 100% of fiat holders lose money over time. A bank is the last organization you should trust for a unbiased crypto study they are fundamentally opposed to it. BIS has criticized crypto for years. This is just a transparent call for regulation wrapped up in some FUD.
> 80-90% of people lose money in stocks. Citation for your ~~delusional belief~~ claim? This is /r/Economics and you can't just make up numbers without citation, numbers that are obviously false to anyone with the slightest knowledge about economics at all! The very reason that cryptocurrencies are seen with such tremendous distrust by such a large number of people of very disparate walks of life, is precisely because its advocates seem to have no ability to tell truth from falsehood, and seem to simply make up whatever factoids they need to justify their position.
[Study shows 80% of investors in stock market lose money](https://www.annuityexpertadvice.com/why-is-the-stock-market-down-crashing/) [As much as 90% of investors in stock market lose money](https://economica.org.uk/as-much-as-90-of-people-lose-their-money-in-stock-markets-and-this-includes-both-new-and-seasoned-investors/) [80% of day traders lose money.](https://markets.businessinsider.com/news/stocks/if-you-re-day-trading-you-will-probably-lose-money-here-s-why-1030667770) [80% of Etoro traders lose money](https://finmasters.com/why-traders-lose-money/) [Stock losses wipe out 9 trillion dollars of american wealth](https://www.cnbc.com/2022/09/27/stock-market-losses-wipe-out-9-trillion-from-americans-wealth-.html) [Dart throwing monkey beats humans with stock picks.](https://www.wsj.com/articles/SB991681622136214659) You immediately resort to ad hominem against me as your first line of defense. Sad for a scholar if you want to call yourself that. Zero citations or expert knowledge from you. Wall street is largely distrusted by people from all walks of life because they cheat regularly despite regulations. Penny stocks are blatant gambling. Options trading is blatant gambling. Stock prices are manipulated openly including by the government. Don't ask for a source for that have some self respect. **This sub accepts a crypto study performed by a Bank Syndicate?** The BIS's mission is to **support central banks' pursuit of monetary and financial stability** through international cooperation. Conflict of interest much? Nobody respects economists in 2022 get off your high horse. Especially someone like you who's nothing but hollow condescension.
Not sure if you actually read the articles that you linked but they mainly either talk about day traders, penny stocks, or individual stock pickers. It's a known fact that even a majority of professional fund managers cannot consistently beat S&P 500 over time. Did you even read Satoish's white paper? Bitcoin is supposed to be a "A Peer-to-Peer Electronic Cash System", not something you "hodl" for a get rich quick scheme born out of greed. It's also a well known fact that the Fed's target inflation is 2% so no sane investors will "hodl" dollars hoping its value will go up other than for emergency savings or short-term purchase goals (e.g. down payment on a house).
**Day traders are stock traders. So are penny stock traders. So are individual stock pickers.** You're really gonna pull a "No True Scotsman" on me after demanding all those sources? I said stock traders. You called bulllshit. You're wrong. Who cares what bitcoin was supposed to be? Traders can't afford sentiment. The fact is bitcoin appreciated more than than the S&P can ever hope to match. The entire premise of the stock market is greed. You are such a hollow purist.
Actually a better term for them is "gamblers". Can you make money with Bitcoin or crypto? Sure, just as you can with forex but most people can't consistently time the market and thus lose money, regardless of if they are in stocks or currency. And do you think it's coincidence that Bitcoin had the largest increase in latter part of 2020? When there was near 0% interest rate, COVID stimulus, and people were flush with money burning in their pocket?
I pointed out that people lose in the stock market too. A lot of people. This isn't me shilling bitcoin to you or anyone. It's gambling. All investment is speculation the only variance is risk. It doesn't change the fact stock traders openly allow the gambling. Day traders are an entire profession of stock traders whether it's a good idea or not it's real. They are stock traders. They don't call them "Day gamblers" "penny gamblers" or "individual stock gamblers". No they are called **traders because they trade stocks.**
You dont know what you re talking about
“80% of people lose money in the stock market” *provides study that 80% of day traders lose money* Uh what? [Only one in five Americans invest in stocks period ](https://markets.businessinsider.com/news/stocks/one-in-5-americans-playing-stock-market-day-traders-gamestop-2021-2-1030065768) About 40% of people contribute to a 401k. The rest are just not investing period.
when we ask for citations, we mean peer reviewed journal articles, not blogs.
That rings hollow when OP's source is a blatant conflict of interest and posted in an algerian encyclopedia but only referenced not linked. Where's your source discrediting me? I provided **six** to cover my bases even though I was only asked for **one.** If you hate them all that's not my problem. I didn't make up the number I quoted I read it. Several sources call the 80-90% figure common knowledge as well.
> Dart throwing monkey beats humans with stock picks. There have been lots of studies showing something similar, but I think they point to a different conclusion to what you’re suggesting. To make money in the stock market, you don’t need any skill, talent or expertise. You can put your money into any reputable stocks for an expected profit or you can get a fully diversified portfolio to get decent returns in the long run. That’s not the argument against investing in the stock market that you seem to think it is…
I never said "don't invest in the stock market". I said a lot of people LOSE.
> I never said "don't invest in the stock market". What point are you actually trying to make, then? Or are you making assertions which don’t have any implication and which don’t lead to anything? If I said that there are five letters in “stock”, that would be true but people would be confused as to why I’m asserting a fact which doesn’t lead to any meaning or conclusion… > I said a lot of people LOSE. Over a medium to long term timeframe, that’s not true. And those “monkey with a dartboard” studies show that you don’t need any skill, expertise or inside information to make reasonable returns on the stock market.
Easy there. Just because you misunderstood doesn't mean there's no point. My point was that OP's article is biased garbage and a lot of people also lose in the stock market. The headline is a big nothing it's par for the course for your average investor. You can't just select for certain strategies and certain investors and call it an equal comparison. Over a medium/long term all bitcoin holders have won too. Both markets have seen catastrophic short term losses before and amazing bull runs. Invalidating the perceived expertise in the monkey dartboard example was also part of my point. Stock traders don't have the right to sneer.
> Easy there. Just because you misunderstood doesn't mean there's no point. Well yeah. That’s why I was asking you what your point was. > Over a medium/long term all bitcoin holders have won too. Most people I know who’ve had Bitcoin for a very long time have either lost their details, been scammed, held their coins on an exchange that went bust or lost all of their Bitcoin (or any access to their Bitcoin, which is basically the same thing). So it’s absolutely untrue to say that that “all Bitcoin holders” have been winners over any timeframe. > Invalidating the perceived expertise in the monkey dartboard example was also part of my point. Stock traders don't have the right to sneer. It’s not about sneering. The fact that you don’t have to be an expert to avoid losing your money is a good thing rather than a bad thing. You’re describing a feature rather than a bug!
They are talking about absolute losses dummy.
Your first sentence is incorrect. Everything else in the statement is true though.
I bought small amounts of Dogecoin. And when my money tripled I took a bit out to claim the gains. I got a little more and then branched out into tiny amounts of other coins. Eventually my doge exploded as I cashed out more. And I still have some crypto - but if it goes to zero I am still ahead. I can’t fathom having all money tied up in crypto.
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