OT: Ray, how's your Bitcoin investment going?

[verticaldoug]

If you want another case let's examine DeFi. The ability of DeFi to pay high yields is a huge drag and not sustainable. This kind of risk is not new.

I had a friend in Prime Brokerage business in the mid-90's, and he thought he was a genius taking the extra customers cash balances and buying Indonesian Rupiah paper which paid high yields and was stable.

It traded around 2000 IDR/$ for a long time paying higher rates. Then one day in 1997, it all started to go wrong until spring of 1998 when IDR went to 16,000 / $. And my friend went poof.

I knew another person who was doing practically the same thing in Egyptian Pound. It was very stable because the gov managed it, and paid a higher yield. So my friend would borrow yen, borrow euro, borrow dollar and buy EGP. It traded 6/dollar from 2003-2014, then one day it started leaking and it finally collapsed to 16/$.

Therefore, even if crypto is some very cool technology, it doesn't change the rules of finance. That's the issue. There is nothing new in finance and everything is just a replay of a previous scam, con or economic principle.

SBF understands that crypto is probably rip with fraud, but he doesn't care. His plan is just to try to arb the stupidity, and try to make as much money as he can. He has no other aim except maybe if he holds true to donating his money to charitable causes.

Speculation and scams have been around for as long as people have been trading even predated money..... Why do you think horse traders are universally hated. I don't think human behavior has changed in at least 10,000 years.

[Tony T]

Last time Bitcoin crashed 50% 4 yrs ago from a High of ~20k, it later recovered and tripped from that high.
https://forums.thepaceline.net/showp...&postcount=387
We’ll see what happens this time (didn’t buy Bitcoin then, not buying now)

[reuben]

Originally Posted by Tony T

Last time Bitcoin crashed 50% 4 yrs ago from a High of ~20k, it later recovered and tripped from that high.
https://forums.thepaceline.net/showp...&postcount=387
We’ll see what happens this time (didn’t buy Bitcoin then, not buying now)

Every 4 years the amount of mineable bitcoins is cut in half. Every time (so far) it has gone up after that.

[Michael D]

Originally Posted by verticaldoug

If your 'currency' is volatile, it just introduces more volatility into the economic system. If you think about the economy long term, people want a relatively stable system so they can plan and make rational decisions.

With a volatile currency, this becomes impossible. It's why currency crisis are so destructive to economies.

All you have to do is watch the El Salvador experiment with crypto, and you realize what a unmitigated disaster this is. You layered a volatile speculative currency over a country with economic problems and incinerated it.

I understand but is this bitcoins fault?

[verticaldoug]

Originally Posted by Michael D

I understand but is this bitcoins fault?

bitcoin which is ****, meet El Salvador Gov which is ****, and you get one big pile of steaming ****.

Like I said, there is nothing new in finance. Bitcoin is just the latest unregulated scam. It needs to be regulated.

[Michael D]

Originally Posted by verticaldoug

bitcoin which is ****, meet El Salvador Gov which is ****, and you get one big pile of steaming ****.

Like I said, there is nothing new in finance. Bitcoin is just the latest unregulated scam. It needs to be regulated.

I would be inclined to try to learn something from you but how can you say bitcoin is a scam? I feel like there’s a big gap between older and younger generations about how they view cryptocurrency. Personally I think regulation defeats the point, and gamification of the currency (misuse) is ruining its potential.

Lastly cryptocurrency is new in finance. There’s never been anything exactly like it. It’s called technology.

[Michael D]

Originally Posted by thegunner

this is a bad take.

They are both a crypto currency

That said Etherium has a lot more functionality than bitcoin. You can argue bitcoin is more of a store of value than eth but I would contend that is just changing technology not because bitcoin was intended to work that way.

[Michael D]

Originally Posted by goonster

I was being snarky.

The currency use case boils down to:
- Somebody makes you (e.g. to buy this NFT it has to be with ETH)
- Evasion of law & regulation

Yes, we know you can buy lots of things with cryptocurrency, but why would you want to? There are also people who trade conch shells, or barter labor for livestock.

The technology remains a brilliant solution in search of the right problem.

A lot of people blame Wall Street for our financial woes and wealth disparity, so to many, bypassing regulation is the entire point. Just becaus you guys who frankly sound like ( sounds like, no offense meant) typical retirement age finance bros don’t care about that doesn’t mean a billion people under the age of 21 aren’t super stoked on the idea.

[mstateglfr]

Originally Posted by Michael D

I would be inclined to try to learn something from you but how can you say bitcoin is a scam? I feel like there’s a big gap between older and younger generations about how they view cryptocurrency. Personally I think regulation defeats the point, and gamification of the currency (misuse) is ruining its potential.

Lastly cryptocurrency is new in finance. There’s never been anything exactly like it. It’s called technology.

Yes I agree there is a large variation in how older gens and younger gens view cryptocurrency.

The older gens seem to recognize it is based on nothing and since it is entirely speculative, it is subject to increased volatility.
The younger gens either dont understand the relationship between speculation and volatility or dont care. If they understand and dont care, I am guessing it is largely based on the same outlook that causes younger people to take more risk in sports and activities.




A fully developed prefrontal cortex combined with a decade or more of post college employment tends to change how many of us approach finances.

[Ozz]

Originally Posted by Michael D

A lot of people blame Wall Street for our financial woes and wealth disparity, so to many, bypassing regulation is the entire point. Just becaus you guys who frankly sound like ( sounds like, no offense meant) typical retirement age finance bros don’t care about that doesn’t mean a billion people under the age of 21 aren’t super stoked on the idea.

Maybe some aspects of "Wall Street" contribute to wealth disparity...it is pretty complicated, but really has nothing to do with crypto currencies....

Going ad hominem with "retirement age finance bros" also has nothing to do with crypto currencies....despite the "no offense"....it is condescending and offensive.

Viewing crypto as a means of revolution to right the disparity (by pass regulations, avoid transations fees, stick-it-to-the-man, or whatever) is odd, and also has nothing to do with crypto currencies....

The underlying problem is that Bitcoin, Etherium, et al has, is the same that all fiat currencies have....the only underlying value it has, is that people will accept it has medium of exchange because they believe it has value. If people lost that belief, then it becomes worthless.

At this point in history, the headwinds it faces are:

• seen as speculative by both investors and critics
• it is not widely accepted
• not backed by any underlying value (at least the USD has US Fed Govt & taxpayers)
• Incredibly volatile

Because of these, it is not useful as a currency - mostly becuase it is not widely accepted, and the value changes too quickly....that leaves it only as a speculative investment vehicle....past performance does not guarantee future results and all that.

I am sure there are others.....

At the end of the day, people don't like to see their wealth diminish....this causes them to lose faith in the assets they hold and want to get out of them...human nature.

For those who still have faith in crypto, I am certain they see the current situation as a buying opportunity....for the critics, they see the scam falling apart.

I don't know the future of crypto (tend towards the latter for now) but the tech is interesting and has other applications beyond currency. I even suspect at some point the USD could be a crypto style currency (tax man will know where every dollar goes!).

Cheers.

[Michael D]

Originally Posted by mstateglfr

Yes I agree there is a large variation in how older gens and younger gens view cryptocurrency.

The older gens seem to recognize it is based on nothing and since it is entirely speculative, it is subject to increased volatility.
The younger gens either dont understand the relationship between speculation and volatility or dont care. If they understand and dont care, I am guessing it is largely based on the same outlook that causes younger people to take more risk in sports and activities.




A fully developed prefrontal cortex combined with a decade or more of post college employment tends to change how many of us approach finances.

Thanks for the civil response and I will think about it.

I have to point out though that among certain people I’ve noticed a huge lack of imagination when it comes to NFTs. They literally think an NFT is a monkey jpeg and can’t imagine the implication of tying ownership of a thing to the blockchain.

Then the same people swoop in and call bitcoin a scam, which it probably seems like some pump and dump Ponzi scam if you don’t understand the history and technology, but man, it’s so hard to take people seriously that don’t seem to understand technology.

[Michael D]

Originally Posted by Ozz

Maybe some aspects of "Wall Street" contribute to wealth disparity...it is pretty complicated, but really has nothing to do with crypto currencies....

Going ad hominem with "retirement age finance bros" also has nothing to do with crypto currencies....despite the "no offense"....it is condescending and offensive.

Viewing crypto as a means of revolution to right the disparity (by pass regulations, avoid transations fees, stick-it-to-the-man, or whatever) is odd, and also has nothing to do with crypto currencies....

The underlying problem is that Bitcoin, Etherium, et al has, is the same that all fiat currencies have....the only underlying value it has, is that people will accept it has medium of exchange because they believe it has value. If people lost that belief, then it becomes worthless.

At this point in history, the headwinds it faces are:

• seen as speculative by both investors and critics
• it is not widely accepted
• not backed by any underlying value (at least the USD has US Fed Govt & taxpayers)
• Incredibly volatile

Because of these, it is not useful as a currency - mostly becuase it is not widely accepted, and the value changes too quickly....that leaves it only as a speculative investment vehicle....past performance does not guarantee future results and all that.

I am sure there are others.....

At the end of the day, people don't like to see their wealth diminish....this causes them to lose faith in the assets they hold and want to get out of them...human nature.

For those who still have faith in crypto, I am certain they see the current situation as a buying opportunity....for the critics, they see the scam falling apart.

I don't know the future of crypto (tend towards the latter for now) but the tech is interesting and has other applications beyond currency. I even suspect at some point the USD could be a crypto style currency (tax man will know where every dollar goes!).

Cheers.

Again thanks for the civil response but in the beginning of your post you specifically note things that “don’t have anything to do with crypto” which is like, your opinion man, but I disagree because I think those things have a lot to do with crypto and if you can’t understand that many people feel that way; I can’t help but wonder if you have a blind spot.

To be fair i THINK i understand your perspective. You’ve described al of the cons of a fiat currency while ignoring or dismissing the potential benefits that have made bitcoin so popular to begin with, and the reason we’re posting in a multi year multi page thread about it. It’s not going away.

[goonster]

Originally Posted by Michael D

A lot of people blame Wall Street for our financial woes and wealth disparity, so to many, bypassing regulation is the entire point. Just becaus you guys who frankly sound like ( sounds like, no offense meant) typical retirement age finance bros don’t care about that doesn’t mean a billion people under the age of 21 aren’t super stoked on the idea.

Not close enough to retirement age, and I'm the furthest thing from a finance bro. Yes, age can breed complacency, but also brings the benefit of having seen speculative bubbles play out time and again. Hearing coworkers devote more and more time to trading crypto sure rhymed with the story about hairdressers in CA quitting their jobs to flip houses in AZ, circa 2007.

Wealth disparity is real, the capital markets are rife with unfairness, corruption and risk, the disaffection and mistrust you describe is growing. But I can smell a hype merchant exploiting an unsupervised space, and get-rich-quick schemes are not the answer.

[Ozz]

Originally Posted by Michael D

Again thanks for the civil response but in the beginning of your post you specifically note things that “don’t have anything to do with crypto” which is like, your opinion man, but I disagree because I think those things have a lot to do with crypto and if you can’t understand that many people feel that way; I can’t help but wonder if you have a blind spot.

To be fair i THINK i understand your perspective. You’ve described al of the cons of a fiat currency while ignoring or dismissing the potential benefits that have made bitcoin so popular to begin with, and the reason we’re posting in a multi year multi page thread about it. It’s not going away.

It's a worthwhile discussion, cuz like I said....I don't know the future of crypto....I will say that my "spidey-sense" tingles when I see celebrities pitching "investment opportunities" in an instrument most don't understand.

My blind spot was that I was viewing crypto as a financial instrument and not as a means to social change....revolutionary does not equate financial soundness.

Crypto needs to be financially sound, before it can be revolutionary.

Oh, and the environmental issues need to be dealt with...we can't go backwards on that front.

Cheers.

[Mark McM]

Originally Posted by Michael D

Again thanks for the civil response but in the beginning of your post you specifically note things that “don’t have anything to do with crypto” which is like, your opinion man, but I disagree because I think those things have a lot to do with crypto and if you can’t understand that many people feel that way; I can’t help but wonder if you have a blind spot.

To be fair i THINK i understand your perspective. You’ve described al of the cons of a fiat currency while ignoring or dismissing the potential benefits that have made bitcoin so popular to begin with, and the reason we’re posting in a multi year multi page thread about it. It’s not going away.

This conversation reminds me a lot of a recent discussion of financial bubbles on the NPR Planet Money Podcast. One of the bubbles discussed is Great British Bicycle Bubble of the 1890s. But first they discuss some of the common themes of all financial bubbles:

CARDIFF GARCIA, HOST:

Hey, everybody. This is Season 2 of PLANET MONEY Summer School, the investing education that goes in one ear and then stays between both ears. Today is Class 5 - bubbles, bikes and biases. A financial bubble can form in pretty much anything that can be bought and sold. Could be a single stock or the whole stock market, bonds, houses, bikes, flowers, Pokemon cards, whatever. All you need is for the price of that thing to go up and up and up beyond what seems justified. And all that happens before the bubble bursts and the price collapses.

But financial bubbles are also quite mysterious. Why do they form in the first place? And how do you know that something is even in a bubble? Because sometimes a thing does just get popular and then stays popular - like, you know, podcasts, we hope. And what traits do most bubbles have in common?

Well, joining us once again is PLANET MONEY Summer School professor Vicki Bogan. Vicki also happens to be a non-podcasting professor at the SC Johnson College of Business at Cornell University. Vicki, I think we should make this a short class - just one question and one answer. So here it is; what causes financial bubbles?

VICKI BOGAN: So you've asked the bazillion dollar question.

(LAUGHTER)

GARCIA: So if we find a way to answer it, then we are owed a bazillion dollars, right?

BOGAN: (Laughter) Exactly. There's no general consensus. You ask 10 people in the finance world, you may get 10 different answers.

GARCIA: All right. Well, I guess we'll stick around for a full class then. So Vicki, the price of an asset might shoot up quickly and massively. And for any one specific bubble, we might even be able to guess the reason. But we don't have a good answer as to why bubbles happen in general is what you're saying.

BOGAN: Yes. The other issue that I would point out is that in almost every bubble, there seems to be some form of innovation that forces people to rapidly debate the creation of new economic value. There's this uncertainty regarding the innovation. We saw that with the tech stock bubble, where we had the internet stocks go up precipitously. And some of these companies really had no track record, no cash flows, no revenues, to support the price that was being traded on the markets.

GARCIA: Yeah. What I remember about that tech stock bubble from the late 1990s - and which, by the way, collapsed spectacularly in the early 2000s - is that there were plenty of warnings that it was a bubble even as it was happening, warnings that these stock prices could not possibly be justified. But people who got swept away by it and invested their money in all these terrible companies would say, oh, well, you just don't understand these new companies. You just don't get it. These companies eventually will make a lot of money. But of course, they did not. And it collapsed, and it was very dramatic.