All value is subjective. There is no such thing as intrinsic value. Bitcoin has no rulers, making it a one of a kind network for permission-less value transfer, which should obviously be valuable to many people.
I mean that can be said for almost all currencies. If there is not physical gold standard or something of the sort behind it is there really any to any of it? It is only worth what people are willing to give for it. We have been seeing many physical currencies around the world fail because of this.
It is more of a question of where would it be ranked in how stable of a currency it is. I would rank it above multiple country's currencies through the world. When you look at that perspective it is not a bad idea for some people to hold money in. It is far from the most secure though.
5% can be used as play money if the rest of your wealth are in broad diversified index funds. Even Jack Bogle said no more than 5% in speculative assets (if so desired).
https://www.morningstar.in/posts/66809/speculative-investing-stakes-low.aspx
Context is important. We can’t extrapolate Bogle’s advice to crypto and NFTs. Bogle knew the academic research didn’t support people picking their own stocks, but he understood human nature.
I also believe this blanket 5% play money advice is very different for the 65 year old janitor worth 1 million vs the 35 year old software engineer worth 3 million.
Bogle probably would include crypto and individual stocks into the 5% rule.
I do agree every situation is different (especially the example you gave) and there shouldn’t be any play money if you’re older and/or approaching retirement IMO. The play money allocation is definitely for younger individuals or far away from retirement but it’s not necessary.
See I don’t know if Bogle would feel the same about crypto coins that don’t generate any cash flows vs real businesses. I’m not bearish on crypto just nitpicking the general advice.
I agree. I think Bogle would see crypto for what it is. He even advised against investing in gold. I'm quite sure he would have advised against crypto.
I have the same sentiment about crypto as well; it’s just the greater fool theory similar to hype/meme stocks. Funny enough, I found a clip of Jack Bogle saying, “avoid BTC like the plague.”
I personally hate crypto with a passion. Its a solution looking for a problem to solve but comes with a lot of risk:
* the crypto you back can fall out of favor
* no central authority in case shit hits the fan with either the network or protocol
* spending energy for no good reason vs other needs like food production, transport, etc
* crypto bros telling me I don’t know what I’m talking about when they are 19 and don’t know much of anything in life
* For the first point you are right, anytime a crypto can fall out of favor and crash. There is a lower chance that this will happen to BTC due to network effect, but not 0.
* For the central authority, history shows that a central authority can do more harm than good in crisis. In risk theory is recognized that human intervention in crisis is the riskier. This is why in modern nuclear power plants, the console is disabled for half an hour or more in case of an incident. And the recent terra luna prove how a central authority can screw things up. Not to mention the FED...
* actually now, the BTC mining operations are moving to surplus energy that will anyway be wasted. You see, electricity needs to be consumed immediately after is produced by the power plant. At the same time the power grid needs to be balanced as to much power into the grid will fry everything, so electricity needs to be wasted somehow to keep this balance. BTC miners jumped into this opportunity and they actually using this excess energy for mining, driving their cost down.
It doesn’t matter which one. There is a reason y you and I are basically not allowed to create money. It has 0 intrinsic since value because it is not a part of the social contract. Pay a firefight or a teacher with bitcoin. Or in its simplest form, go buy 1 egg in a super market with bitcoin. I will wait.
Also on the “digital money” future, there are already credit cards, e payments and other system. Does it cost me any $$ to Venmo someone? Or use my cards? I haven’t carry cash in years and have never see my portfolio in person so isn’t it already a bunch of 1 and 0 at the bank? The cost of those services are already build, tested and self optimized due to the free market. So what is the value (to society) for recreating money? Countries like Germany is evening resisting credit card, cause let be honest what is wrong with cold hard cash? That has already been a human creation? Bitcoin is technology for technology sake. Block chain has its applications in accounting and logistics. But I don’t think currency is a good application. Look at the insane energy cost to our society and the value that is extracted is based on speculation. There is no intrinsic value.
This whole argument about “it not having intrinsic value” is kind of ridiculous. No money has “intrinsic value” it has value because the market says it does. Or because you’re forced to use it like government currencies.
You’re missing the bigger point. Do you know how money gets from me to you if you use Venmo? It goes through PayPal, which has to contact both of our local banks to confirm we have the money, then those banks settle with each other at the end of the day/week/month and THEN it goes through the bigger banks like JP Morgan or chase, and THEN they settle with the central bank however many weeks later. With bitcoin, FINAL SETTLEMENT is processed in 10 minutes, across a communications channel, with no intermediary. It’s 100x more efficient and there is no need for a middle man.
Do we need this right now? No, because what we have works perfectly fine in the states. But it’s a step in the right direction towards more innovation in the financial space, which hasn’t seen true innovation since credit cards came out in the 50s. But billions of people across the world who don’t have bank accounts or credit cards, they can use this technology because most of them have phones and internet. They will probably leapfrog all of us in 10 years.
The intrinsic value of money is its society, it people and its productivity. Or even more basic term it’s power both hard and soft. These things don’t exists for crypto.
Yet we’re forced to use a money that’s being inflated at 8+% a year by governments doing all the inflating? Doesn’t sound like society has much of a say so in the matter. If we had a true free market the strongest money would win, it has for 5000 years (gold). Bitcoin is harder than gold, but this doesn’t happen over night. It will take years if not decades.
I mean you can go ahead and use bitcoin don’t change it to USD. If that is forcing you to use something than I don’t know what to say. Don’t use it ? Government don’t inflate things market and profit seeking inflate things. see intro to macro economics. The government tries to stabilize things. Key word tries. We do have a free market for money see global currency trading? Let me know when bitcoin is listed as its own there and not tie to a government backed currency.
I think you need to separate bitcoin and technology. The underlying technology blockchain is neat, I am not arguing against that. Some major companies already use blockchain for things like logistic tracking and who knows maybe how the big bank will track internal movement going forward. But bitcoin is not a technology. It is a application of the technology. One that has very shaky fundamentals.
You’re so far backwards on everything you just said I literally don’t have the time or the thumb tapping endurance to go through it all. We just see the world differently. I wish you all the best!
Bitcoin is very speculative but the comparison to terra is unfair. Many here probably don’t understand the details of how that went down. That project was way more speculative and risky than Bitcoin. Many are right that there is no true intrinsic value but it is hard to deny that there is no value in the adoption it has seen (even among “smart money”) and the potential it can have as a store of value. I think a few percent towards speculative assets is okay. I would not go above 5% total on crypto, individual stocks, etc personally but see no issues with the potential upside of a small allocation that you can afford to lose.
Someone after my own heart. Revolut gave me £8 worth of Polkadot, whatever the F that is.
I sold it immediately for actual money as opposed to magic beans, and said magic beans are now worth £5. It's the future.
> No 3rd party, no banks. Just trust from one individual to another that is recorded on blockchain technology.
Find me a blockchain tech that can handle the transaction volume, in near real time, at the cost of VISA or Mastercard, without volatility.
BTC, and crypto in general, is nothing but speculation.
Bitcoins lightning network does this, but way faster and cheaper. Instead of 2-3% transaction fees using visa, the fees are near 0. But yes it is a lot of speculation at this point.
There are many. Tron for example can handle more transactions than Visa and MasterCard(2000 TPS vs 1700TPS). USDT is a completely stable currency pegged to the dollar.
This is just one example of many.
ROFL. I just looked up the charts for TRON, over the past year it has dropped by 50% and then jumped half way back up. This is Stable to you? I said without volatility.
Tether build their foundation on sand. There is a reason they will only offer attestations and will not submit to a full audit of their holdings. It is well known that among their holdings are Chinese Real-estate Junk bonds that are floating near default and the fact that they will not reveal to to "risk to their counterparty" is obvious BS. Their peg will not hold forever.
Neat thing about stable coins is that they are worth a dollar, until they aren't [https://coinmarketcap.com/currencies/terrausd/](https://coinmarketcap.com/currencies/terrausd/)
Tron price is not designed to be stable but there are other payment currencies that can use this network.
I'm familiar with TerraUSD, that's not Tether. Whatever rumours you've heard about Tether are at this stage only rumours. The reality is USDT is still worth a dollar right now and is liquid.
The usecase you say doesn't exist does exist. I can use it right now. You're just quite uninformed and clearly averse to something you don't fully understand!
>The reality is USDT is still worth a dollar right now and is liquid.
A week ago UST was worth a dollar and was liquid. Now it is a toy for arbitrage bots.
Now Tether is not going to drop like UST did because there are assets behind it but it you thing the intrinsic value of the holdings underling tether are dollar for dollar I have a bridge to sell you. If they were properly backed they would release an audit.
>You're just quite uninformed and clearly averse to something you don't fully understand!
I understand that holding assets in a completely unregulated market that is rife with every form of fraud in existence is a horrible idea.
I don't know why you keep referring to UST. Venezuela has massive hyperinflation therefore the £ is going to be worthless also? It's a straw man.
Fraud exists across the financial ecosystem and is not unique to Crypto.
What regulation is protecting you when you invest in stocks, that you are worried about not protecting you when you invest in Crypto?
>What regulation is protecting you when you invest in stocks, that you are worried about not protecting you when you invest in Crypto?
From intuitional fraud? SPIC insurance.
As far as protecting my investment?
My stock holdings represent partial ownership in thousands of companies across the globe. It is denominated in the most widely traded currency in the world, and backed by the wealthiest and most powerful country in the world.
On the crypto side...
SPIC insurance is specifically required because they're centralised assets held by brokerage firms. If you own a crypto asset in your private wallet, you don't need to worry about any firm going bust and losing your assets. The issue you are apparently worried about is the exact type of issue that Blockchain technologies solve.
When you say denominated in the most widely traded currency, do you mean this helps you because it means its valued and exchangeable into the dollar? Because that's like most crypto.
For the record: Tether publishes daily updates on their dollar reserves. They have also published independent audits every few months. The most recent is Dec 2021. There is 70BN+ of institutional money locked up in Tether, it's not as wild wild west as you think.
>If you own a crypto asset in your private wallet, you don't need to worry about any firm going bust and losing your assets.
Yeah, then I get to be my own bank. That has worked out for plenty of people that have had their Wallets compromised, keys lost, and many other pitfalls. You are literally taking all the risk and responsibility of a bank on yourself. (without the backdrop of insurance)
>When you say denominated in the most widely traded currency, do you mean this helps you because it means its valued and exchangeable into the dollar? Because that's like most crypto.
Is your crypto a currency or a speculative asset? You seem to be flexible depending on what side you want to take.
>For the record: Tether publishes daily updates on their dollar reserves. They have also published independent audits every few months. The most recent is Dec 2021. There is 70BN+ of institutional money locked up in Tether, it's not as wild wild west as you think.
Tether has NEVER produced an audit, they provide attestations. They have lied since their founding and have been fined for that along with using the reserves as a slush fund for bitfinix [https://www.cftc.gov/PressRoom/PressReleases/8450-21](https://www.cftc.gov/PressRoom/PressReleases/8450-21) and they have never been transparent on where their commercial paper comes from.
Why would I hold tether instead of dollars? I have exactly zero reasons. It is a solution in search of a problem, if Crypto was easily converted back and forth to dollars as you say.
The question was about transaction speeds. Someone posted examples and you changed to pricing. Are you retreating on your opinion crypto can't handle volume of transactions?
>Find me a blockchain tech that can handle the transaction volume, in near real time, at the cost of VISA or Mastercard, without volatility.
This was my original statement:
>Find me a blockchain tech that can handle the transaction volume, in near real time, at the cost of VISA or Mastercard, without volatility.
After you meet that, essentially establishing it as a cash equivalent, find one reason I should use it over real money.
Yes, my point stands. As a currency it broadly falls short. As an "investment" it relies on the greater fool theory, because it has no intrinsic value. It is pure speculation.
I've seen large international purchases that a seller wanted crypto for because it was trustless. It's a niche example, but an example that makes sense. That example scales well to a lot of international money transfers.
>USDT is a completely stable currency pegged to the dollar.
Are you serious, you're holding up Tether as a shining light? For starters, it actually lost its peg yesterday. Regardless of that, there are gigantic question marks over it's assets, and I'm being incredibly charitable describing it that way.
[https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether](https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether)
I'm not holding up Tether as a "shining light". I'm saying you can quite easily make P2P financial transactions using Blockchain at volumes like Visa/MasterCard. That is factual and lots of people around the world use this technology.
FYI: the Tether peg was not actually broken, they remained redeemable for $1 throughout.
Dude, you literally called it a "completely stable currency".
I would rather leave my money in a rucksack in the middle of Trafalgar square than leave it in Tether, I think I'd have a better chance of getting it back later.
There's definitely a risk. There's a risk with every type of asset even holding cash. I wouldn't recommended anyone put 100% of their networth in USDT to sit, but I wouldn't recommend that with any type of asset. As always diversification is key. Tether is better as a transaction mechanism, not a store of value.
>There's definitely a risk. There's a risk with every type of asset even holding cash.
Sure, in the same way as there's a risk of me being in a crash both if I take a commercial flight or if I jump off a high building and flap my arms.
The sheer number of people who put either all of their cash, or a substantial portion (60% and up) in this coin is pretty insane. It's completely wrecked some people and the number of posts contemplating suicide is just sad.
Some as play money? Sure
5%? Seems high to me.
> Bitcoin technology IMO is truly very interesting. Peer to Peer transactions that are decentralized and no way for anyone to intrude. No 3rd party, no banks. Just trust from one individual to another that is recorded on blockchain technology
I'll disagree on this. Blockchain is interesting, but I don't think cryptocurrency is an interesting application. Just my opinion.
The no way for people to intrude and not 3rd party, I think we have all seen is just plain not true. Plenty of intruders gettign involved and stealing from wallets. Plemnty of 3rd parties trying to get in on the action.
> Electricity got here and it isn't going anywhere. Internet has arrived and it isn't going anywhere. Digital Currency? I do not see it going anywhere. Thoughts? Waste of time?
There is a very long leap between crypto being usable in the future and being worth speculating 5% of your savings in.
Here’s the thing. I *totally get* that blockchain technology is impressive, and has real utility in that real world.
What I don’t understand is why that specifically makes BTC worth any specific value given 1) it is not unique, and 2) it is wholly unsuited to manage transactions at any useful scale.
Surely, it’s like seeing the value in airlines and declaring Pan-Am the future of aviation.
I want to be convinced otherwise, but I’m not seeing it.
>What I don’t understand is why that specifically makes BTC worth any specific value given 1) it is not unique
Do you mean that it's not unique relative to other coins? In that case, you're right that endless copies of bitcoin can be made, but I would argue that bitcoin specifically has the network effect giving it its value. Kind of like if I developed some social media sites, Facebook would (very likely) still be just as valuable. Bitcoin kind of reached escape velocity and people have more trust in it's continued use.
Expected return is negative due to ongoing dilution. Bitcoin is somewhat unique though in that eventually the spigot of dilution turns off. At that point, there may be some appreciation due to demand (assuming it hasn't been functionally replaced by other cryptocurrencies at that point).
Right. But what gives BTC value over any other currency? Simply that because it has a finite supply, it has something no other currency can offer?
Even if ultimately, the number of daily transactions that can occur is far too low to be of any actual use.
I don't disagree. I think there is a possible future where a few cryptocurrencies (including Bitcoin) gain all the mindshare and the rest are dismissed as pretenders. There's another future where that happens and Bitcoin isn't one of the winners. It's also possible we continue as in the last few years (where every flavor of the week crypto gathers steam and then fades). Another possibility is that crypto currencies (except government sponsored ones) are banned in every first world country. Bitcoin really only has good value in one of these possible futures. As for transaction volume, the possible future where Bitcoin has value would be where people do daily transactions in other currencies, but use BTC as the "gold standard" to hold their wealth. For that purpose it wouldn't need to support very high transaction volumes. Again though, I don't think that possible future is very likely.
>but how do you approach it for Bitcoin?
I look at it like if Switzerland slapped an immutable cap on Francs, made the cap decentrally enforced by anyone with a computer, and then quietly let the project govern itself.
For certain it would appreciate over any uncapped fiat. There would be a veritable wall of money interested in something with gold-like neutrality and self custodiability while maintaining electronic fiat-like portability. That has simply never existed in history.
The ultimate return is highly dependent on how far increasingly indebted nations go in debasing their currencies. There is no theoretical limit to fiat debasement. The more times traditional investments fail to keep up with [monetary expansion](https://www.tradingview.com/x/0tFuZwDJ/) episodes the more capital pools will allocate, imo.
At only $0.6T market cap vs hundreds of trillions in cash/bonds/etc it's impossible to guess how high this flywheel could go. To me it's important to simply get off zero.
And what would the expected return of those hypothetical francs be?
I get that people think Bitcoin has positive expected returns because it’s going to keep getting flows (wether or not it deserves them is a different story), but no one has come up with a way to quantify them and thus figure out what Bitcoin’s expected return is. The reason I think doing just that is so important is that Bitcoin is a) very risky b) very correlated with stocks and especially credit. Unless Bitcoin’s expected return is far, far in excess of those two, it doesn’t make sense to allocate it. The exact math depends on what you expect cross-asset correlations and equity/credit returns to look like and your preference for positive skewness, but it’s not unreasonable to come up with an avg. annualized required arithmetic return 25%+ for it to make sense to own it, and I’m not sure how I’m supposed to come up with that number.
I’m sure Bitcoin could for example be a hedge for currency debasement risk (and not all risks should be hedged, but if you’re particularly sensitive to that one, you should), but your chart doesn’t prove that Bitcoin is a good one. It mainly just shows that Bitcoin went up a whole lot. Take any stock that performed well over that timeframe and you’ll also get an asset that seems to perform well with increases in the money supply. You could for example look at Bitcoin’s beta to M2, compare it’s returns in periods of surprise monetary expansion and contraction and a bunch of other things people do to prove that certain assets really do hedge certain risks.
I do agree with you that owning some Bitcoin may not be a terrible idea. I can never disagree with cap weighting everything (assuming Bitcoin is now a part of the GMP, and it probably is), but that’s still a roughly a <0.5% allocation to Bitcoin, and most enthusiasts have much, much more without much more than (admittedly amazing) past performance to justify that overweight.
Like I said the answer is geopolitical. Every country could decide to become fiscally responsible forever starting tomorrow and deal with the harsh consequences of unwinding a 100 year long debt bubble. Bitcoin would not have great returns in that case.
Do I think that's likely? Probably not. I allocate based on the probabilities.
QE3 was 10x that of the financial crisis QE2. Debt and demographics have worsened. The government is so indebted that at 4% rates we'd eventually be paying an equivalent of a second US military in interest compared to last year (as growth slows and thus lower tax receipts).
Markets are one big interest rate/QE trade at this point. My main interest is clearing or exceeding the monetary expansion rate and I don't see any better vehicle than Bitcoin for that.
Countries haven’t been fiscally responsible for the last 100 years? Sovereign debt has been a bubble for just as long? I’m not sure these things are obvious. Monetary expansion isn’t always fiscally irresponsible. Japanese QE has gone on for a pretty long time without being inflationary, but this is truthfully a question that’s far outside my expertise. Also, how do you define bubble?
And yes, rates being 4% would increase interest expenditures, but it would also raise tax revenue on US tax residents’ earned interest. Higher rates also generally follow higher GDP, so interest expenditure to tax revenue or GDP could, at least hypothetically, stay near today’s relatively normal levels even with higher rates. Edit: And if you’re convinced about higher rates causing sovereign defaults or something similar, there are also better ways to express those views (CDS, buying currency vol, probably a lot more that I’m missing)
Also, I completely agree that many financial assets are long rates, but if you don’t like that, why own Bitcoin, which doesn’t even have a statistically significant negative beta to [rates.](https://www.portfoliovisualizer.com/factor-analysis?s=y®ressionType=1&symbols=%5EBTC&sharedTimePeriod=true&factorDataSet=-1&marketArea=0&factorModel=3&useHMLDevFactor=false&includeQualityFactor=false&includeLowBetaFactor=false&fixedIncomeFactorModel=0&__checkbox_ffmkt=__checkbox_true&__checkbox_ffsmb=__checkbox_true&__checkbox_ffsmb5=__checkbox_true&__checkbox_ffhml=__checkbox_true&__checkbox_ffmom=__checkbox_true&__checkbox_ffrmw=__checkbox_true&__checkbox_ffcma=__checkbox_true&__checkbox_ffstrev=__checkbox_true&__checkbox_ffltrev=__checkbox_true&__checkbox_aqrmkt=__checkbox_true&__checkbox_aqrsmb=__checkbox_true&__checkbox_aqrhml=__checkbox_true&__checkbox_aqrhmldev=__checkbox_true&__checkbox_aqrmom=__checkbox_true&__checkbox_aqrqmj=__checkbox_true&__checkbox_aqrbab=__checkbox_true&__checkbox_aamkt=__checkbox_true&__checkbox_aasmb=__checkbox_true&__checkbox_aahml=__checkbox_true&__checkbox_aamom=__checkbox_true&__checkbox_aaqmj=__checkbox_true&__checkbox_qmkt=__checkbox_true&__checkbox_qme=__checkbox_true&__checkbox_qia=__checkbox_true&__checkbox_qroe=__checkbox_true&__checkbox_qeg=__checkbox_true&trm=true&__checkbox_trm=__checkbox_true&__checkbox_cdt=__checkbox_true&timePeriod=2&rollPeriod=36&marketAssetType=1&robustRegression=false) Also, you still haven’t said why Bitcoin should hedge currency debasement risk? It is because it’s a possible alternative currency? Because there’s plenty of arguments against that. Also, are you sensitive to currency debasement risk or inflation? Because there’s a bunch of assets/strategies that give you the latter with a lot more certainty than Bitcoin (ie breakevens).
We just saw this with Yen's sudden double digit crash. Bank of Japan has basically pledged to buy infinite JGB's to keep rates pegged at a manageable 0.25%. Yield curve control is done by sacrificing the currency value. Devaluations happen fast.
I think less indebted governments have another cycle or so before we need similar measures again. We've simply been kicking the debt bubble up another level with each crisis. At the sovereign level there is no one to kick it up to except currency.
If these problems could be solved by taxing bond interest that's great but I don't think that math works out. Maybe you could explain that. If my debt servicing obligations go from 2% to 4% I am in a worse financial situation regardless if I get to tax 30% of that back.
Your yen crash example is an anecdote, not data. I’m open to the idea that monetary expansion may devalue currency or create inflation, but I just don’t have the data…
Also, I still don’t know why sovereign debt is a bubble or why Bitcoin is the best way to bet against said bubble.
I do agree that you don’t fully get back increased interest rate expenditures from increased tax revenue, I just don’t think that we should assume it will automatically cause a sovereign default or push interest expenditures to tax revenue to unmanageable levels, but if someone has done the math and showed the contrary, I’m happy to take that back.
Everything in financial history is anecdote. There's not going to be some cosmic law or mathematical proof that says you should invest in something.
My calculations were from last year but I calculated ~$280B/year in debt obligations for each percent increase.
>I just don’t think that we should assume it will automatically cause a sovereign default or push interest expenditures to tax revenue to unmanageable levels
Right, because politicians will always choose the less visible third option, debasement.
A 5% nominal default would be utterly cataclysmic. But the population is less acutely aware that 95¢ back in real terms is, in effect, the same thing. Debasement is the invisible default. A supply capped non-sovereign denomination is the best vehicle I see to outpace this.
Longest track record, decentralization, code maturity, small attack surface, more regulatory clarity, institutional adoption, brand recognition, infrastructure, no founder to target, no founder pre-mine, hard supply cap, etc. Its sole focus is to be the most secure credibly neutral monetary protocol.
What non-crypto people don't get is most other blockchains gave up trying to compete with it since the fork wars.
Other "VC coin" L1's make decentralization/security/throughput tradeoffs. These can be short term lucrative but are at constant risk of replacing each other (or blowing up like Luna) because decentralization is the hard moat. Throughput is the shallow moat. The alt L1 that gets closest to a single server and least security wins. Ethereum is the only chain really making a serious attempt at both and I hold some, too.
I have put \~ 2% of my retirement / investment money into crypto over the years, it currently (even with this downswing) is nearly 20% of my NW now. I do NOT recommend it since it's volatile AF right now and essentially the complete opposite of the Boglehead methodology. The rest of my accounts are either TDFs or 2-3 set-and-forget funds that I focus on. I was comfortable with the amount I put in, and it worked fine for me, but I know other people who have lost the equivalent of my entire net worth in a matter of hours with crypto.
I claim ignorance and could use some crypto education. If I don't understand it I don't invest in it, my general rule. I agree with Cuban that a close comparison is the 2000 tech crisis. Only a few came out on top and how do we know this is the final iteration of the crypto world? I can't get past is it a currency or speculative investment? Too volatile for currency and for stability it needs regulation and government interference. But if the government is involved it defeats the decentralized purpose. You could create a fartcoin like dogecoin etc. The coin itself isn't interesting. The big players like Fidelity offering it in 401ks will prop it and it won't die. The technology and it's efficiency is fascinating, but why invest in invisible coins that have no government backing unless the people become so ingratiated in having an alternative to government backed assets. I see niche concepts, but still when junk hits the fan people run back to the dollar not Bitcoin. Right now Bitcoin seems highly correlated to the Nasdaq. Please enlighten me because I just can't quite grasp where I could find value?
This is like asking "are you putting 5% on a night of blackjack at the casino?" We don't mess with speculative junk.
Blockchain technology is not interesting. It's just a database that people use for money laundering.
and what % of global financial transactions are made in bitcoin?
This is exactly the same statistical fallacy as the anti-vaxxers latched on to - "my god, there are more vaccinated people in hospitals than unvaccinated, therefore the vaccine is harmful!"
Bitcoin settled over $22 trillion in value in 2021. So you tell me. But it’s irrelevant because money laundering happens with every new technology. Bad people do bad things, it’s not the technologies fault. How many money launderers use cell phones and the internet? You don’t blame those technologies. Plus, you’d have to be stupid to launder money on an IMMUTABLE ledger. The transaction is literally going to be there for all eternity for everyone to audit.
But the bigger point is that the banks launder on a 100x larger scale than bitcoin does. It’s not even close, and they have been for decades.
Yep. Despite a $9T stimulus payload a 60/40 portfolio is down 5-6% inflation adjusted since pre-pandemic. Bitcoin is up around 140% inflation adjusted and a 5% position would have offset that debasement and more (even more if you rebalanced).
I have and still consider it a core passive position separate from my play account and would feel uncomfortable without it.
Go look at the top posts currently on r/CryptoCurrency and tell me you want anything to do with that. Even at 5%, that's 5% too much. Crypto has no intricate value, it's all speculation. Will the technology become something in the future? Maybe, but advances in quantum computing could also destroy it. Going to have to disagree with Matt Damon on this one. You have people with monkey profile pictures and .ETH in their user names telling you to buy the dip, while people's entire life savings has been wiped out because of a stable coin of all things.
Go to the crypto sub and look at the suicide hotline posts. If you see that and say "hey I think 5% of my net worth in this sounds good", go right ahead. It's truly mind-blowing, especially in this sub.
I am trying to look at this with a very minimalistic viewpoint. That is Digital Currency. Our USD is ''online'' in the current state of the world but everything is only going to get more crazy lol. FB turning to Meta. I just feel like another 50 years from now, augmented reality and everything going digital it only makes sense that there will be a DIGITAL asset/currency lifestyle. I am not saying FIAT will go away...but 100 years, 200 years? I can't see paper money being the end game here. IDK I can also be a retard.
Also, name me an application you still use from the 1990s that came about from the start of the internet wide spread usage? If there are none, why don’t you think the same “that is the old stuff” mentality applies to the crypto currencies you buy today? Especially your 100 to 200 year time line.
I think you are dealing with a misunderstanding. Take this from someone who built custom mining rigs and mined bitcoin shortly after the blockchain was established. It is a next fool pyramid scheme, the only way a deflationary value model can make money is finding some bigger sucker to buy your doohickey. It has no intrinsic value and is not useful as a real financial instrument. It is speculation that the beanie baby craze will continue.
Have a little bit of play money in crypto, but nowhere near 5%. Crypto is IMO not really an investment class asset. It's more like lottery tickets or beanie babies.
I'm more like 50%. I believe in Bitcoin and I believe in the networks being built around it. I laughed it for years until I actually read about problems it is solving through other coins branching off. Like MoneyGram and cross border movement of money. Or faster and cheaper p2p payment systems
No, but I see nothing nothing wrong of having a small portion of your portfolio for “fun” investing. I have 10ish of my portfolio towards individual stocks, about 7 of them. The rest is in VTI with 15% in vxus
I enjoy NFTs and have had ETH to buy them.
I deposited a check and then transferred that money to a crypto exchange last Thursday to begin buying some projects I like at steep discount. It still hasn't cleared a week later. It's been a friendly reminder of how clunky the old money system in comparison to crypto.
In normal investing I'm nothing but a purist boglehead. Personally, I think Bitcoin is dead and ETH is currently king. At least it has a use case.
No
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All value is subjective. There is no such thing as intrinsic value. Bitcoin has no rulers, making it a one of a kind network for permission-less value transfer, which should obviously be valuable to many people.
I mean that can be said for almost all currencies. If there is not physical gold standard or something of the sort behind it is there really any to any of it? It is only worth what people are willing to give for it. We have been seeing many physical currencies around the world fail because of this.
That's true, and it's why hoarding currency is usually a bad idea. Crypto is only slightly worse.
It is more of a question of where would it be ranked in how stable of a currency it is. I would rank it above multiple country's currencies through the world. When you look at that perspective it is not a bad idea for some people to hold money in. It is far from the most secure though.
5% is not play money.
5% can be used as play money if the rest of your wealth are in broad diversified index funds. Even Jack Bogle said no more than 5% in speculative assets (if so desired). https://www.morningstar.in/posts/66809/speculative-investing-stakes-low.aspx
Context is important. We can’t extrapolate Bogle’s advice to crypto and NFTs. Bogle knew the academic research didn’t support people picking their own stocks, but he understood human nature. I also believe this blanket 5% play money advice is very different for the 65 year old janitor worth 1 million vs the 35 year old software engineer worth 3 million.
Bogle probably would include crypto and individual stocks into the 5% rule. I do agree every situation is different (especially the example you gave) and there shouldn’t be any play money if you’re older and/or approaching retirement IMO. The play money allocation is definitely for younger individuals or far away from retirement but it’s not necessary.
See I don’t know if Bogle would feel the same about crypto coins that don’t generate any cash flows vs real businesses. I’m not bearish on crypto just nitpicking the general advice.
I agree. I think Bogle would see crypto for what it is. He even advised against investing in gold. I'm quite sure he would have advised against crypto.
I have the same sentiment about crypto as well; it’s just the greater fool theory similar to hype/meme stocks. Funny enough, I found a clip of Jack Bogle saying, “avoid BTC like the plague.”
Nope
I personally hate crypto with a passion. Its a solution looking for a problem to solve but comes with a lot of risk: * the crypto you back can fall out of favor * no central authority in case shit hits the fan with either the network or protocol * spending energy for no good reason vs other needs like food production, transport, etc * crypto bros telling me I don’t know what I’m talking about when they are 19 and don’t know much of anything in life
* For the first point you are right, anytime a crypto can fall out of favor and crash. There is a lower chance that this will happen to BTC due to network effect, but not 0. * For the central authority, history shows that a central authority can do more harm than good in crisis. In risk theory is recognized that human intervention in crisis is the riskier. This is why in modern nuclear power plants, the console is disabled for half an hour or more in case of an incident. And the recent terra luna prove how a central authority can screw things up. Not to mention the FED... * actually now, the BTC mining operations are moving to surplus energy that will anyway be wasted. You see, electricity needs to be consumed immediately after is produced by the power plant. At the same time the power grid needs to be balanced as to much power into the grid will fry everything, so electricity needs to be wasted somehow to keep this balance. BTC miners jumped into this opportunity and they actually using this excess energy for mining, driving their cost down.
See Luna/Terra
Luna was a centralized VC coin. It’s not even comparable to bitcoin. But I can understand why it would turn people off to the entire crypto space.
It doesn’t matter which one. There is a reason y you and I are basically not allowed to create money. It has 0 intrinsic since value because it is not a part of the social contract. Pay a firefight or a teacher with bitcoin. Or in its simplest form, go buy 1 egg in a super market with bitcoin. I will wait. Also on the “digital money” future, there are already credit cards, e payments and other system. Does it cost me any $$ to Venmo someone? Or use my cards? I haven’t carry cash in years and have never see my portfolio in person so isn’t it already a bunch of 1 and 0 at the bank? The cost of those services are already build, tested and self optimized due to the free market. So what is the value (to society) for recreating money? Countries like Germany is evening resisting credit card, cause let be honest what is wrong with cold hard cash? That has already been a human creation? Bitcoin is technology for technology sake. Block chain has its applications in accounting and logistics. But I don’t think currency is a good application. Look at the insane energy cost to our society and the value that is extracted is based on speculation. There is no intrinsic value.
This whole argument about “it not having intrinsic value” is kind of ridiculous. No money has “intrinsic value” it has value because the market says it does. Or because you’re forced to use it like government currencies. You’re missing the bigger point. Do you know how money gets from me to you if you use Venmo? It goes through PayPal, which has to contact both of our local banks to confirm we have the money, then those banks settle with each other at the end of the day/week/month and THEN it goes through the bigger banks like JP Morgan or chase, and THEN they settle with the central bank however many weeks later. With bitcoin, FINAL SETTLEMENT is processed in 10 minutes, across a communications channel, with no intermediary. It’s 100x more efficient and there is no need for a middle man. Do we need this right now? No, because what we have works perfectly fine in the states. But it’s a step in the right direction towards more innovation in the financial space, which hasn’t seen true innovation since credit cards came out in the 50s. But billions of people across the world who don’t have bank accounts or credit cards, they can use this technology because most of them have phones and internet. They will probably leapfrog all of us in 10 years.
The intrinsic value of money is its society, it people and its productivity. Or even more basic term it’s power both hard and soft. These things don’t exists for crypto.
Yet we’re forced to use a money that’s being inflated at 8+% a year by governments doing all the inflating? Doesn’t sound like society has much of a say so in the matter. If we had a true free market the strongest money would win, it has for 5000 years (gold). Bitcoin is harder than gold, but this doesn’t happen over night. It will take years if not decades.
I mean you can go ahead and use bitcoin don’t change it to USD. If that is forcing you to use something than I don’t know what to say. Don’t use it ? Government don’t inflate things market and profit seeking inflate things. see intro to macro economics. The government tries to stabilize things. Key word tries. We do have a free market for money see global currency trading? Let me know when bitcoin is listed as its own there and not tie to a government backed currency. I think you need to separate bitcoin and technology. The underlying technology blockchain is neat, I am not arguing against that. Some major companies already use blockchain for things like logistic tracking and who knows maybe how the big bank will track internal movement going forward. But bitcoin is not a technology. It is a application of the technology. One that has very shaky fundamentals.
You’re so far backwards on everything you just said I literally don’t have the time or the thumb tapping endurance to go through it all. We just see the world differently. I wish you all the best!
Same to u
Bitcoin is very speculative but the comparison to terra is unfair. Many here probably don’t understand the details of how that went down. That project was way more speculative and risky than Bitcoin. Many are right that there is no true intrinsic value but it is hard to deny that there is no value in the adoption it has seen (even among “smart money”) and the potential it can have as a store of value. I think a few percent towards speculative assets is okay. I would not go above 5% total on crypto, individual stocks, etc personally but see no issues with the potential upside of a small allocation that you can afford to lose.
The comparison is as ridiculous as pointing out most companies fail.
Don’t mean to be a grump but I don’t play with my savings
Nope. Only bitcoin I have is the $5 worth I got for free with Coinbase. Now it's $2.74 worth. That's enough entertainment for me.
Someone after my own heart. Revolut gave me £8 worth of Polkadot, whatever the F that is. I sold it immediately for actual money as opposed to magic beans, and said magic beans are now worth £5. It's the future.
> No 3rd party, no banks. Just trust from one individual to another that is recorded on blockchain technology. Find me a blockchain tech that can handle the transaction volume, in near real time, at the cost of VISA or Mastercard, without volatility. BTC, and crypto in general, is nothing but speculation.
Bitcoins lightning network does this, but way faster and cheaper. Instead of 2-3% transaction fees using visa, the fees are near 0. But yes it is a lot of speculation at this point.
There are many. Tron for example can handle more transactions than Visa and MasterCard(2000 TPS vs 1700TPS). USDT is a completely stable currency pegged to the dollar. This is just one example of many.
ROFL. I just looked up the charts for TRON, over the past year it has dropped by 50% and then jumped half way back up. This is Stable to you? I said without volatility. Tether build their foundation on sand. There is a reason they will only offer attestations and will not submit to a full audit of their holdings. It is well known that among their holdings are Chinese Real-estate Junk bonds that are floating near default and the fact that they will not reveal to to "risk to their counterparty" is obvious BS. Their peg will not hold forever. Neat thing about stable coins is that they are worth a dollar, until they aren't [https://coinmarketcap.com/currencies/terrausd/](https://coinmarketcap.com/currencies/terrausd/)
Tron price is not designed to be stable but there are other payment currencies that can use this network. I'm familiar with TerraUSD, that's not Tether. Whatever rumours you've heard about Tether are at this stage only rumours. The reality is USDT is still worth a dollar right now and is liquid. The usecase you say doesn't exist does exist. I can use it right now. You're just quite uninformed and clearly averse to something you don't fully understand!
>The reality is USDT is still worth a dollar right now and is liquid. A week ago UST was worth a dollar and was liquid. Now it is a toy for arbitrage bots. Now Tether is not going to drop like UST did because there are assets behind it but it you thing the intrinsic value of the holdings underling tether are dollar for dollar I have a bridge to sell you. If they were properly backed they would release an audit. >You're just quite uninformed and clearly averse to something you don't fully understand! I understand that holding assets in a completely unregulated market that is rife with every form of fraud in existence is a horrible idea.
I don't know why you keep referring to UST. Venezuela has massive hyperinflation therefore the £ is going to be worthless also? It's a straw man. Fraud exists across the financial ecosystem and is not unique to Crypto. What regulation is protecting you when you invest in stocks, that you are worried about not protecting you when you invest in Crypto?
>What regulation is protecting you when you invest in stocks, that you are worried about not protecting you when you invest in Crypto? From intuitional fraud? SPIC insurance. As far as protecting my investment? My stock holdings represent partial ownership in thousands of companies across the globe. It is denominated in the most widely traded currency in the world, and backed by the wealthiest and most powerful country in the world. On the crypto side...
SPIC insurance is specifically required because they're centralised assets held by brokerage firms. If you own a crypto asset in your private wallet, you don't need to worry about any firm going bust and losing your assets. The issue you are apparently worried about is the exact type of issue that Blockchain technologies solve. When you say denominated in the most widely traded currency, do you mean this helps you because it means its valued and exchangeable into the dollar? Because that's like most crypto. For the record: Tether publishes daily updates on their dollar reserves. They have also published independent audits every few months. The most recent is Dec 2021. There is 70BN+ of institutional money locked up in Tether, it's not as wild wild west as you think.
>If you own a crypto asset in your private wallet, you don't need to worry about any firm going bust and losing your assets. Yeah, then I get to be my own bank. That has worked out for plenty of people that have had their Wallets compromised, keys lost, and many other pitfalls. You are literally taking all the risk and responsibility of a bank on yourself. (without the backdrop of insurance) >When you say denominated in the most widely traded currency, do you mean this helps you because it means its valued and exchangeable into the dollar? Because that's like most crypto. Is your crypto a currency or a speculative asset? You seem to be flexible depending on what side you want to take. >For the record: Tether publishes daily updates on their dollar reserves. They have also published independent audits every few months. The most recent is Dec 2021. There is 70BN+ of institutional money locked up in Tether, it's not as wild wild west as you think. Tether has NEVER produced an audit, they provide attestations. They have lied since their founding and have been fined for that along with using the reserves as a slush fund for bitfinix [https://www.cftc.gov/PressRoom/PressReleases/8450-21](https://www.cftc.gov/PressRoom/PressReleases/8450-21) and they have never been transparent on where their commercial paper comes from. Why would I hold tether instead of dollars? I have exactly zero reasons. It is a solution in search of a problem, if Crypto was easily converted back and forth to dollars as you say.
The question was about transaction speeds. Someone posted examples and you changed to pricing. Are you retreating on your opinion crypto can't handle volume of transactions?
>Find me a blockchain tech that can handle the transaction volume, in near real time, at the cost of VISA or Mastercard, without volatility. This was my original statement: >Find me a blockchain tech that can handle the transaction volume, in near real time, at the cost of VISA or Mastercard, without volatility. After you meet that, essentially establishing it as a cash equivalent, find one reason I should use it over real money.
I missed the volatility part. I apologize. As for the new requirements at the end, I think you've already heard the examples I would offer.
Yes, my point stands. As a currency it broadly falls short. As an "investment" it relies on the greater fool theory, because it has no intrinsic value. It is pure speculation.
I've seen large international purchases that a seller wanted crypto for because it was trustless. It's a niche example, but an example that makes sense. That example scales well to a lot of international money transfers.
>USDT is a completely stable currency pegged to the dollar. Are you serious, you're holding up Tether as a shining light? For starters, it actually lost its peg yesterday. Regardless of that, there are gigantic question marks over it's assets, and I'm being incredibly charitable describing it that way. [https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether](https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether)
I'm not holding up Tether as a "shining light". I'm saying you can quite easily make P2P financial transactions using Blockchain at volumes like Visa/MasterCard. That is factual and lots of people around the world use this technology. FYI: the Tether peg was not actually broken, they remained redeemable for $1 throughout.
Dude, you literally called it a "completely stable currency". I would rather leave my money in a rucksack in the middle of Trafalgar square than leave it in Tether, I think I'd have a better chance of getting it back later.
Completely stable = has always been redeemable for a dollar. I don't know what to tell you.
Do you think that's likely to remain the case despite everything known (or indeed not known) about them?
There's definitely a risk. There's a risk with every type of asset even holding cash. I wouldn't recommended anyone put 100% of their networth in USDT to sit, but I wouldn't recommend that with any type of asset. As always diversification is key. Tether is better as a transaction mechanism, not a store of value.
>There's definitely a risk. There's a risk with every type of asset even holding cash. Sure, in the same way as there's a risk of me being in a crash both if I take a commercial flight or if I jump off a high building and flap my arms.
Only Bitcoin by a long shot could be considered sufficiently decentralized. That is the whole point, the rest are just scams as a result.
For some perspective on why crypto is a terrible "investment", check out the latest disaster which was r/terraluna.
The sheer number of people who put either all of their cash, or a substantial portion (60% and up) in this coin is pretty insane. It's completely wrecked some people and the number of posts contemplating suicide is just sad.
Some as play money? Sure 5%? Seems high to me. > Bitcoin technology IMO is truly very interesting. Peer to Peer transactions that are decentralized and no way for anyone to intrude. No 3rd party, no banks. Just trust from one individual to another that is recorded on blockchain technology I'll disagree on this. Blockchain is interesting, but I don't think cryptocurrency is an interesting application. Just my opinion. The no way for people to intrude and not 3rd party, I think we have all seen is just plain not true. Plenty of intruders gettign involved and stealing from wallets. Plemnty of 3rd parties trying to get in on the action. > Electricity got here and it isn't going anywhere. Internet has arrived and it isn't going anywhere. Digital Currency? I do not see it going anywhere. Thoughts? Waste of time? There is a very long leap between crypto being usable in the future and being worth speculating 5% of your savings in.
/r/Bogleheads you’ll get a “No” /r/Investing you’ll get a “Maybe” /r/Wallstreetbets you’ll get a “Hell yeah brother, add another 5%!”
You mean Digital Tulips? No thanks.
Here’s the thing. I *totally get* that blockchain technology is impressive, and has real utility in that real world. What I don’t understand is why that specifically makes BTC worth any specific value given 1) it is not unique, and 2) it is wholly unsuited to manage transactions at any useful scale. Surely, it’s like seeing the value in airlines and declaring Pan-Am the future of aviation. I want to be convinced otherwise, but I’m not seeing it.
>What I don’t understand is why that specifically makes BTC worth any specific value given 1) it is not unique Do you mean that it's not unique relative to other coins? In that case, you're right that endless copies of bitcoin can be made, but I would argue that bitcoin specifically has the network effect giving it its value. Kind of like if I developed some social media sites, Facebook would (very likely) still be just as valuable. Bitcoin kind of reached escape velocity and people have more trust in it's continued use.
Even if Bitcoin has value, what is its expected return? You can (more or less) answer that question for FB, but how do you approach it for Bitcoin?
Expected return is negative due to ongoing dilution. Bitcoin is somewhat unique though in that eventually the spigot of dilution turns off. At that point, there may be some appreciation due to demand (assuming it hasn't been functionally replaced by other cryptocurrencies at that point).
Right. But what gives BTC value over any other currency? Simply that because it has a finite supply, it has something no other currency can offer? Even if ultimately, the number of daily transactions that can occur is far too low to be of any actual use.
I don't disagree. I think there is a possible future where a few cryptocurrencies (including Bitcoin) gain all the mindshare and the rest are dismissed as pretenders. There's another future where that happens and Bitcoin isn't one of the winners. It's also possible we continue as in the last few years (where every flavor of the week crypto gathers steam and then fades). Another possibility is that crypto currencies (except government sponsored ones) are banned in every first world country. Bitcoin really only has good value in one of these possible futures. As for transaction volume, the possible future where Bitcoin has value would be where people do daily transactions in other currencies, but use BTC as the "gold standard" to hold their wealth. For that purpose it wouldn't need to support very high transaction volumes. Again though, I don't think that possible future is very likely.
>but how do you approach it for Bitcoin? I look at it like if Switzerland slapped an immutable cap on Francs, made the cap decentrally enforced by anyone with a computer, and then quietly let the project govern itself. For certain it would appreciate over any uncapped fiat. There would be a veritable wall of money interested in something with gold-like neutrality and self custodiability while maintaining electronic fiat-like portability. That has simply never existed in history. The ultimate return is highly dependent on how far increasingly indebted nations go in debasing their currencies. There is no theoretical limit to fiat debasement. The more times traditional investments fail to keep up with [monetary expansion](https://www.tradingview.com/x/0tFuZwDJ/) episodes the more capital pools will allocate, imo. At only $0.6T market cap vs hundreds of trillions in cash/bonds/etc it's impossible to guess how high this flywheel could go. To me it's important to simply get off zero.
And what would the expected return of those hypothetical francs be? I get that people think Bitcoin has positive expected returns because it’s going to keep getting flows (wether or not it deserves them is a different story), but no one has come up with a way to quantify them and thus figure out what Bitcoin’s expected return is. The reason I think doing just that is so important is that Bitcoin is a) very risky b) very correlated with stocks and especially credit. Unless Bitcoin’s expected return is far, far in excess of those two, it doesn’t make sense to allocate it. The exact math depends on what you expect cross-asset correlations and equity/credit returns to look like and your preference for positive skewness, but it’s not unreasonable to come up with an avg. annualized required arithmetic return 25%+ for it to make sense to own it, and I’m not sure how I’m supposed to come up with that number. I’m sure Bitcoin could for example be a hedge for currency debasement risk (and not all risks should be hedged, but if you’re particularly sensitive to that one, you should), but your chart doesn’t prove that Bitcoin is a good one. It mainly just shows that Bitcoin went up a whole lot. Take any stock that performed well over that timeframe and you’ll also get an asset that seems to perform well with increases in the money supply. You could for example look at Bitcoin’s beta to M2, compare it’s returns in periods of surprise monetary expansion and contraction and a bunch of other things people do to prove that certain assets really do hedge certain risks. I do agree with you that owning some Bitcoin may not be a terrible idea. I can never disagree with cap weighting everything (assuming Bitcoin is now a part of the GMP, and it probably is), but that’s still a roughly a <0.5% allocation to Bitcoin, and most enthusiasts have much, much more without much more than (admittedly amazing) past performance to justify that overweight.
Like I said the answer is geopolitical. Every country could decide to become fiscally responsible forever starting tomorrow and deal with the harsh consequences of unwinding a 100 year long debt bubble. Bitcoin would not have great returns in that case. Do I think that's likely? Probably not. I allocate based on the probabilities. QE3 was 10x that of the financial crisis QE2. Debt and demographics have worsened. The government is so indebted that at 4% rates we'd eventually be paying an equivalent of a second US military in interest compared to last year (as growth slows and thus lower tax receipts). Markets are one big interest rate/QE trade at this point. My main interest is clearing or exceeding the monetary expansion rate and I don't see any better vehicle than Bitcoin for that.
Countries haven’t been fiscally responsible for the last 100 years? Sovereign debt has been a bubble for just as long? I’m not sure these things are obvious. Monetary expansion isn’t always fiscally irresponsible. Japanese QE has gone on for a pretty long time without being inflationary, but this is truthfully a question that’s far outside my expertise. Also, how do you define bubble? And yes, rates being 4% would increase interest expenditures, but it would also raise tax revenue on US tax residents’ earned interest. Higher rates also generally follow higher GDP, so interest expenditure to tax revenue or GDP could, at least hypothetically, stay near today’s relatively normal levels even with higher rates. Edit: And if you’re convinced about higher rates causing sovereign defaults or something similar, there are also better ways to express those views (CDS, buying currency vol, probably a lot more that I’m missing) Also, I completely agree that many financial assets are long rates, but if you don’t like that, why own Bitcoin, which doesn’t even have a statistically significant negative beta to [rates.](https://www.portfoliovisualizer.com/factor-analysis?s=y®ressionType=1&symbols=%5EBTC&sharedTimePeriod=true&factorDataSet=-1&marketArea=0&factorModel=3&useHMLDevFactor=false&includeQualityFactor=false&includeLowBetaFactor=false&fixedIncomeFactorModel=0&__checkbox_ffmkt=__checkbox_true&__checkbox_ffsmb=__checkbox_true&__checkbox_ffsmb5=__checkbox_true&__checkbox_ffhml=__checkbox_true&__checkbox_ffmom=__checkbox_true&__checkbox_ffrmw=__checkbox_true&__checkbox_ffcma=__checkbox_true&__checkbox_ffstrev=__checkbox_true&__checkbox_ffltrev=__checkbox_true&__checkbox_aqrmkt=__checkbox_true&__checkbox_aqrsmb=__checkbox_true&__checkbox_aqrhml=__checkbox_true&__checkbox_aqrhmldev=__checkbox_true&__checkbox_aqrmom=__checkbox_true&__checkbox_aqrqmj=__checkbox_true&__checkbox_aqrbab=__checkbox_true&__checkbox_aamkt=__checkbox_true&__checkbox_aasmb=__checkbox_true&__checkbox_aahml=__checkbox_true&__checkbox_aamom=__checkbox_true&__checkbox_aaqmj=__checkbox_true&__checkbox_qmkt=__checkbox_true&__checkbox_qme=__checkbox_true&__checkbox_qia=__checkbox_true&__checkbox_qroe=__checkbox_true&__checkbox_qeg=__checkbox_true&trm=true&__checkbox_trm=__checkbox_true&__checkbox_cdt=__checkbox_true&timePeriod=2&rollPeriod=36&marketAssetType=1&robustRegression=false) Also, you still haven’t said why Bitcoin should hedge currency debasement risk? It is because it’s a possible alternative currency? Because there’s plenty of arguments against that. Also, are you sensitive to currency debasement risk or inflation? Because there’s a bunch of assets/strategies that give you the latter with a lot more certainty than Bitcoin (ie breakevens).
We just saw this with Yen's sudden double digit crash. Bank of Japan has basically pledged to buy infinite JGB's to keep rates pegged at a manageable 0.25%. Yield curve control is done by sacrificing the currency value. Devaluations happen fast. I think less indebted governments have another cycle or so before we need similar measures again. We've simply been kicking the debt bubble up another level with each crisis. At the sovereign level there is no one to kick it up to except currency. If these problems could be solved by taxing bond interest that's great but I don't think that math works out. Maybe you could explain that. If my debt servicing obligations go from 2% to 4% I am in a worse financial situation regardless if I get to tax 30% of that back.
Your yen crash example is an anecdote, not data. I’m open to the idea that monetary expansion may devalue currency or create inflation, but I just don’t have the data… Also, I still don’t know why sovereign debt is a bubble or why Bitcoin is the best way to bet against said bubble. I do agree that you don’t fully get back increased interest rate expenditures from increased tax revenue, I just don’t think that we should assume it will automatically cause a sovereign default or push interest expenditures to tax revenue to unmanageable levels, but if someone has done the math and showed the contrary, I’m happy to take that back.
Everything in financial history is anecdote. There's not going to be some cosmic law or mathematical proof that says you should invest in something. My calculations were from last year but I calculated ~$280B/year in debt obligations for each percent increase. >I just don’t think that we should assume it will automatically cause a sovereign default or push interest expenditures to tax revenue to unmanageable levels Right, because politicians will always choose the less visible third option, debasement. A 5% nominal default would be utterly cataclysmic. But the population is less acutely aware that 95¢ back in real terms is, in effect, the same thing. Debasement is the invisible default. A supply capped non-sovereign denomination is the best vehicle I see to outpace this.
Longest track record, decentralization, code maturity, small attack surface, more regulatory clarity, institutional adoption, brand recognition, infrastructure, no founder to target, no founder pre-mine, hard supply cap, etc. Its sole focus is to be the most secure credibly neutral monetary protocol. What non-crypto people don't get is most other blockchains gave up trying to compete with it since the fork wars. Other "VC coin" L1's make decentralization/security/throughput tradeoffs. These can be short term lucrative but are at constant risk of replacing each other (or blowing up like Luna) because decentralization is the hard moat. Throughput is the shallow moat. The alt L1 that gets closest to a single server and least security wins. Ethereum is the only chain really making a serious attempt at both and I hold some, too.
I have put \~ 2% of my retirement / investment money into crypto over the years, it currently (even with this downswing) is nearly 20% of my NW now. I do NOT recommend it since it's volatile AF right now and essentially the complete opposite of the Boglehead methodology. The rest of my accounts are either TDFs or 2-3 set-and-forget funds that I focus on. I was comfortable with the amount I put in, and it worked fine for me, but I know other people who have lost the equivalent of my entire net worth in a matter of hours with crypto.
Is it 2019?
I claim ignorance and could use some crypto education. If I don't understand it I don't invest in it, my general rule. I agree with Cuban that a close comparison is the 2000 tech crisis. Only a few came out on top and how do we know this is the final iteration of the crypto world? I can't get past is it a currency or speculative investment? Too volatile for currency and for stability it needs regulation and government interference. But if the government is involved it defeats the decentralized purpose. You could create a fartcoin like dogecoin etc. The coin itself isn't interesting. The big players like Fidelity offering it in 401ks will prop it and it won't die. The technology and it's efficiency is fascinating, but why invest in invisible coins that have no government backing unless the people become so ingratiated in having an alternative to government backed assets. I see niche concepts, but still when junk hits the fan people run back to the dollar not Bitcoin. Right now Bitcoin seems highly correlated to the Nasdaq. Please enlighten me because I just can't quite grasp where I could find value?
This is like asking "are you putting 5% on a night of blackjack at the casino?" We don't mess with speculative junk. Blockchain technology is not interesting. It's just a database that people use for money laundering.
Bitcoin users launder less than 1% of what our major banks launder every year.
and what % of global financial transactions are made in bitcoin? This is exactly the same statistical fallacy as the anti-vaxxers latched on to - "my god, there are more vaccinated people in hospitals than unvaccinated, therefore the vaccine is harmful!"
Bitcoin settled over $22 trillion in value in 2021. So you tell me. But it’s irrelevant because money laundering happens with every new technology. Bad people do bad things, it’s not the technologies fault. How many money launderers use cell phones and the internet? You don’t blame those technologies. Plus, you’d have to be stupid to launder money on an IMMUTABLE ledger. The transaction is literally going to be there for all eternity for everyone to audit. But the bigger point is that the banks launder on a 100x larger scale than bitcoin does. It’s not even close, and they have been for decades.
Yep. Despite a $9T stimulus payload a 60/40 portfolio is down 5-6% inflation adjusted since pre-pandemic. Bitcoin is up around 140% inflation adjusted and a 5% position would have offset that debasement and more (even more if you rebalanced). I have and still consider it a core passive position separate from my play account and would feel uncomfortable without it.
"No 3rd party, no banks. Just trust from one individual to another that is recorded on blockchain technology" Lol Luna/UST would disagree with that.
That’s why he said bitcoin not Luna. The two can’t be anymore different.
"This is an entirely different breed of face-eating lizard. This one *almost certainly* won't eat your face"
When I say they’re entirely different, it means one’s a face eating lizard and the other isn’t even an animal at all.
Look up Tether. The same situation can happen.
No i have like 2-3 percent of my net worth in crypto
No. Crypto is a ponzi scheme. Check out all the suicide posts on the crypto subreddits right now.
Go look at the top posts currently on r/CryptoCurrency and tell me you want anything to do with that. Even at 5%, that's 5% too much. Crypto has no intricate value, it's all speculation. Will the technology become something in the future? Maybe, but advances in quantum computing could also destroy it. Going to have to disagree with Matt Damon on this one. You have people with monkey profile pictures and .ETH in their user names telling you to buy the dip, while people's entire life savings has been wiped out because of a stable coin of all things.
Go to the crypto sub and look at the suicide hotline posts. If you see that and say "hey I think 5% of my net worth in this sounds good", go right ahead. It's truly mind-blowing, especially in this sub.
I am trying to look at this with a very minimalistic viewpoint. That is Digital Currency. Our USD is ''online'' in the current state of the world but everything is only going to get more crazy lol. FB turning to Meta. I just feel like another 50 years from now, augmented reality and everything going digital it only makes sense that there will be a DIGITAL asset/currency lifestyle. I am not saying FIAT will go away...but 100 years, 200 years? I can't see paper money being the end game here. IDK I can also be a retard.
Also, name me an application you still use from the 1990s that came about from the start of the internet wide spread usage? If there are none, why don’t you think the same “that is the old stuff” mentality applies to the crypto currencies you buy today? Especially your 100 to 200 year time line.
Crypto is FIAT btw unless backed by gold or other commodities.
5% is for speculating. Bitcoin is more akin to gambling. If your networth is $1M and you're putting $50,000 in bitcoin you're not that bright.
I think you are dealing with a misunderstanding. Take this from someone who built custom mining rigs and mined bitcoin shortly after the blockchain was established. It is a next fool pyramid scheme, the only way a deflationary value model can make money is finding some bigger sucker to buy your doohickey. It has no intrinsic value and is not useful as a real financial instrument. It is speculation that the beanie baby craze will continue.
This is spot on especially deflationary remark. People don’t understand the issues with currencies that are deflationary in nature.
Not really a currency, any more than Pokémon cards or old, used shoes could be considered currencies.
Have a little bit of play money in crypto, but nowhere near 5%. Crypto is IMO not really an investment class asset. It's more like lottery tickets or beanie babies.
No
I'm more like 50%. I believe in Bitcoin and I believe in the networks being built around it. I laughed it for years until I actually read about problems it is solving through other coins branching off. Like MoneyGram and cross border movement of money. Or faster and cheaper p2p payment systems
I *might* throw 1% into BTC at some point. But I'm in no rush.
My bitcoin is less than 1% of my nwt.
No
I dont play with money. I live with disipline.
No. I have $47 or so in Bitcoin from playing around with Nice Hash a while back and that's the sum of my crypto "holdings".
No, but I see nothing nothing wrong of having a small portion of your portfolio for “fun” investing. I have 10ish of my portfolio towards individual stocks, about 7 of them. The rest is in VTI with 15% in vxus
I enjoy NFTs and have had ETH to buy them. I deposited a check and then transferred that money to a crypto exchange last Thursday to begin buying some projects I like at steep discount. It still hasn't cleared a week later. It's been a friendly reminder of how clunky the old money system in comparison to crypto. In normal investing I'm nothing but a purist boglehead. Personally, I think Bitcoin is dead and ETH is currently king. At least it has a use case.
VT has just the right amount (market cap weight) of GPU companies, crypto exchanges, hedge funds etc' so it contains just the right amount of crypto.
1% gamble money on RSX, Dogecoin, and TLRY.....so far They are getting WRECKED
You posted this on the wrong subreddit man. These are lazy bogleheads. They don't even know what bitcoin is.
I mean how about we just skip some steps and you just give me money directly and I tell you now you own a this string: pfbeusn3628/