Bitcoin in the PP?

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
bitcoininthevp
Executive Member
Executive Member
Posts: 158
Joined: Fri Sep 25, 2015 8:30 pm

Re: Bitcoin in the PP?

Post by bitcoininthevp » Fri Mar 27, 2020 7:32 am

Did someone flash the Bitcoin signal in the sky?!

I proposed a version of the PP with 24/24/24/24/4 allocation (with 4% being in Bitcoin). But it is really more for fun and also the same as a normal PP with a Bitcoin sidecar in the VP. Im a huge long term Bitcoin bull, but the only way it makes any sense in the PP context is putting the Bitcoin in the variable portfolio.

viewtopic.php?f=1&t=9347&p=167356&hilit=name#p167356

Even if you think of Bitcoin as the worlds "third favorite money" (which it isnt yet) and it eating out of some of golds value proposition, it is still a speculation.

To be completely clear Im talking specifically about Bitcoin here. Stablecoins (USD equivalents), utility tokens (like ETH), and less sound
cryptocurrency attempts at "money" (like LTC) are not valuable long term IMHO.
User avatar
bitcoininthevp
Executive Member
Executive Member
Posts: 158
Joined: Fri Sep 25, 2015 8:30 pm

Re: Bitcoin in the PP?

Post by bitcoininthevp » Fri Mar 27, 2020 7:40 am

europeanwizard wrote:
Thu Mar 26, 2020 1:34 am
Medolark Lemon wrote:
Wed Mar 25, 2020 6:57 pm
I am honestly curious what the thought process of the risk/reward ratio is of putting 0.5%-1.0% bitcoin in one's portfolio?
Well, I for one think it's a very good idea. The PP provides for this, in some sense. Besides the Permanent Portfolio, it's advised to keep a VP = Variable Portfolio, if you would like to take up other investments.

So if I consider my PP 100%, then my additional VP consists of 2% peer-to-peer lending and 2% Bitcoin.
In the radio shows or elsewhere Harry mentioned that if you are going to speculate in the VP it is best to be outsized bets with high potential returns.

via An (Institutional) Investor’s Take on Cryptoassets
https://s3.eu-west-2.amazonaws.com/john ... ets+v6.pdf

Regarding risk, an investment with a 20x – 60x upside only requires a probability of
success of between 2% to 5% to be a positive net expected value investment. Each of us can
reflect on his own view of what that the probability is of the foregoing scenario materialising.
I’m personally pretty comfortable that, given where we are today in Bitcoin’s development
and adoption, that the probability is higher than 2 – 5%, likely much higher. While there are
many technical, political, regulatory and psychological hurdles ahead, the store-of-value use
case is by far the simplest one, and already closest to reality. I would argue therefore that
here you have an investment with a downside:upside skew of -1x : 60x and a positive net
expected value. Investments with both those characteristics are extremely rare.


He is specifically talking about Bitcoin replacing a certain % of gold here. Recommended reading the full PDF if you are curious.
User avatar
bitcoininthevp
Executive Member
Executive Member
Posts: 158
Joined: Fri Sep 25, 2015 8:30 pm

Re: Bitcoin in the PP?

Post by bitcoininthevp » Fri Mar 27, 2020 7:46 am

technovelist wrote:
Thu Mar 26, 2020 1:16 pm
I'd rather add Beanie Babies to the PP.
Still waiting for an intellectual criticism from you.

Every thread on Bitcoin you spin the wheel-of-bitcoin-attempted-insults-from-2013 and pull out tulips or beanie babies or some nonsense without adding any value to the thread.

Reminds me of close-minded Boglers trying to insult gold as a useless shiny rock without ever trying to understand it.

And I would add you are also devaluing any of the contributions you make elsewhere on the forum doing this.
User avatar
technovelist
Executive Member
Executive Member
Posts: 5959
Joined: Wed Sep 15, 2010 11:20 pm

Re: Bitcoin in the PP?

Post by technovelist » Fri Mar 27, 2020 7:50 am

bitcoininthevp wrote:
Fri Mar 27, 2020 7:46 am
technovelist wrote:
Thu Mar 26, 2020 1:16 pm
I'd rather add Beanie Babies to the PP.
Still waiting for an intellectual criticism from you.

Every thread on Bitcoin you spin the wheel-of-bitcoin-attempted-insults-from-2013 and pull out tulips or beanie babies or some nonsense without adding any value to the thread.

Reminds me of close-minded Boglers trying to insult gold as a useless shiny rock without ever trying to understand it.

And I would add you are also devaluing any of the contributions you make elsewhere on the forum doing this.
I understand bitcoin just fine. Blockchain in general has the potential of revolutionizing commerce, but that doesn't mean that bitcoin is worth anything as an investment.

As soon as bitcoin as an investment has 10th of the length of the track record of gold, I'll consider it as an investment.

In the meantime, feel free to ignore my messages on this topic, as I generally ignore yours.
User avatar
bitcoininthevp
Executive Member
Executive Member
Posts: 158
Joined: Fri Sep 25, 2015 8:30 pm

Re: Bitcoin in the PP?

Post by bitcoininthevp » Fri Mar 27, 2020 8:21 am

feel free to ignore my messages on this topic
Ill ignore what has no value. Like your one line beanie baby posts that are a waste of electrons. I dont mind criticisms, discussions, or arguments as perhaps one of us learns something.
Blockchain in general has the potential of revolutionizing commerce
Ok, the blockchain not Bitcoin argument. Help me understand in what context blockchain has or can be applied that is a better context than being applied to money (Bitcoin)?

Blockchain, to me, only makes sense in a censorship resistant context. For Bitcoin (money), that means central banks inflating the money supply against the will of the users, censoring/preventing transactions of users, or confiscating/freezing funds of users. Bitcoin and blockchain "solve" these issues in the money context. (I use "solve" in quotes as I fully and humbly realize Bitcoin is a web of incentives for humans and that at some point those incentives could break down in some way)

In your example, what commerce is being censored that a blockchain will help solve? What comes to my mind are things like black market transactions where the government says you cant sell drugs or something of the sort. But with Bitcoin, as outlined above, can help get around censored transactions.

So help me understand then the context where blockchain can be applied, that isnt money, having to do with commerce being revolutionized?
User avatar
Medolark Lemon
Junior Member
Junior Member
Posts: 5
Joined: Tue Mar 24, 2020 5:31 pm

Re: Bitcoin in the PP?

Post by Medolark Lemon » Fri Mar 27, 2020 1:57 pm

bitcoininthevp wrote:
Fri Mar 27, 2020 8:21 am
feel free to ignore my messages on this topic
Ill ignore what has no value. Like your one line beanie baby posts that are a waste of electrons. I dont mind criticisms, discussions, or arguments as perhaps one of us learns something.
Blockchain in general has the potential of revolutionizing commerce
Ok, the blockchain not Bitcoin argument. Help me understand in what context blockchain has or can be applied that is a better context than being applied to money (Bitcoin)?

Blockchain, to me, only makes sense in a censorship resistant context. For Bitcoin (money), that means central banks inflating the money supply against the will of the users, censoring/preventing transactions of users, or confiscating/freezing funds of users. Bitcoin and blockchain "solve" these issues in the money context. (I use "solve" in quotes as I fully and humbly realize Bitcoin is a web of incentives for humans and that at some point those incentives could break down in some way)

In your example, what commerce is being censored that a blockchain will help solve? What comes to my mind are things like black market transactions where the government says you cant sell drugs or something of the sort. But with Bitcoin, as outlined above, can help get around censored transactions.

So help me understand then the context where blockchain can be applied, that isnt money, having to do with commerce being revolutionized?
Yeah I tend to be of the same thought process. From what I can tell a blockchain is rather inefficient, a centralized third party would probably be better for most online commerce options, but when you need an extremely secure digital ledger like money a blockchain seems useful. Also when it comes to a blockchain you literally need a token/item/money to incentivize security of the network by rewarding the miners with it so the idea of a blockchain that isn't specifically designed towards being a money doesn't make much sense to me.

I like that idea of 24/24/24/24/4.
User avatar
bitcoininthevp
Executive Member
Executive Member
Posts: 158
Joined: Fri Sep 25, 2015 8:30 pm

Re: Bitcoin in the PP?

Post by bitcoininthevp » Sat Mar 28, 2020 5:13 am

I agree with your points. And welcome to the forum! (sorry the others gave such a harsh welcome)

Blockchains are terribly inefficient. The only time youd use one is if the decentralization/censorship resistance that you require absolutely necessitate it.

A group of companies working together can form a (centralized, technologically-efficient) consortium/federation instead. If they largely trust each other.

If there is a question of being able to prove something, there are also cryptographic tools like hashes that can help with that even with a traditional database without needing a blockchain. Such techniques have been around for decades.
Post Reply