Re: Bitcoin as a complement or alternative to gold in the PP
Posted: Fri Mar 12, 2021 3:26 pm
Golds qualities like bitcoins make it an extremely crappy means of exchange.
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https://www.gyroscopicinvesting.com/forum/viewtopic.php?t=11918
Golds qualities like bitcoins make it an extremely crappy means of exchange.
Why are you so certain bitcoin will be the crypto to end up on top?gaddyslapper007 wrote: ↑Sun Mar 14, 2021 11:35 am Good to see this forum moving (even if slightly) to the concept holding a portion of BTC within PP. I’ve been dwelling on this nearly 7yrs....and want help! Addressing the topic of the thread..my initial thoughts were that BTC would eventually (- 20yrs) assume a nice of role of 20% taking 5% from each of the other funds. As this is playing out, and zooming out (1800’s to present) you can clearly see the printed money is flowing into RE, Stonks, and gov. Bonds. Gold really hasn’t reacted anything significant especially as of late! (~$11T mktcap!?). Since people assign value to all things (not the universe or governments)...it appears people’s want for gold is waining. And since BTC inception, BTC has captured ALL of what we would consider “should be” going into gold. Just some observations for thought.
Now if haven’t lost you yet....I’m about too.
I see Bitcoin not only potentially replacing gold, but see strong merit to it in taking on the Gov. bond markets next. As the fiat game of government borrowing money from itself at progressively lower interest rates into negative rates.....the motivation to hold Gov. Bonds wains as well (Hell there already isn’t enough organic demand....they have to print money to buy their own bonds). Why would people buy bonds at these low to negative rates? BTC will slowly step in its place as the new hedge against stonks.
Next....the battery of the state...Real Estate will drain into BTC. Historically land has been good SOV. But the sates abuse of it with taxation, realization that new housing is flooding lands and will eventually dilute the underlying “value”. It’s always been too subjective to value and sell. This is why Harry Browne didn’t include in PP.
Not going to debate any of this....just food for thought!
My current thoughts on the new PP:
-10% cash
-10% gold
-30% BTC (to include RE hedge / new digital RE, replace large portion of gold, consume some of TLT)
-30% stonks
-20% long bond
Bitcoin is many things....Few understand this. It is still early!
There are many such coins. And that is the basis of the argument that I posted in video. Bitcoin will be crowded out by something faster, cheaper, more liquid and that has actual function. Unlike gold or even fiat currency bitcoin doesn't have a price floor...in the former with gold it would be commodity demand for industrial use and in the later with fiat to settle government fees, debts, taxes etc.whatchamacallit wrote: ↑Sun Mar 14, 2021 1:49 pm 2. A new coin is created that makes better use of the processing power. Something that also gives it a higher purpose that would cause people to always prefer it even if growth iniatally seemed lower.
I’ve done something similar and thought it was working as a hedge earlier in the day today. Unfortunately, as stocks declined so did bitcoin...
Sorry everyone, but this is probably going to sound pretty harsh...whatchamacallit wrote: ↑Thu Mar 18, 2021 4:17 pm I think others have stated here that Bitcoin is more like a growth stock and I think that is more accurate.
One thing I can think that will make it more like gold is if you were trying to flee with capital and you thought you could get it across borders.
Maybe it is just my personal sentiment but I feel like Bitcoin is here to stay more than I ever had before. I have such a small sliver that it would never make sense for me to sell at a loss. I would just keep hodling until it was for a profit.
Last year I thought it was still just a fad and could still go to zero. I sure wish I would have bought some at $4000 though.
Couldn’t resist...do you own any bitcoin?ahhrunforthehills wrote: ↑Sat Mar 20, 2021 10:26 amSorry everyone, but this is probably going to sound pretty harsh...whatchamacallit wrote: ↑Thu Mar 18, 2021 4:17 pm I think others have stated here that Bitcoin is more like a growth stock and I think that is more accurate.
One thing I can think that will make it more like gold is if you were trying to flee with capital and you thought you could get it across borders.
Maybe it is just my personal sentiment but I feel like Bitcoin is here to stay more than I ever had before. I have such a small sliver that it would never make sense for me to sell at a loss. I would just keep hodling until it was for a profit.
Last year I thought it was still just a fad and could still go to zero. I sure wish I would have bought some at $4000 though.
I strongly believe that, for many people here, the PP is akin to Alcoholics Anonymous. People walk in the door and are given a set of “rules” to keep them from being a danger to themselves. HB knew that once you are a junkie, you will always be a junkie. Queue the music for the “variable portfolio”. There is no LOGICAL reason for a VP. It is ONLY for a gambler to scratch their itch. It is like a city-funded “safe injection site” for a junkie.
FOMO is strong. Junkies are attracted to FOMO. Saying bitcoin is a “growth stock” sounds a lot like someone with a gambling problem trying to convince themselves that they are not really playing the slots... they are just working on their biceps.
IMHO, bitcoin is clearly like investing in venture capital. Super-high risk with high potential return that are extremely speculative The major hurdles it must overcome are very real and very significant.
If everyone is being honest with themselves, all they would have to do is play out the realistic path of Bitcoin.
The IRS has already made that clear on the 1040. The only way bitcoin can survive is if the masses feel comfortable reporting it (and paying either capital gains taxes, wealth taxes, etc.). This obviously defeats the purpose of side-stepping inflation.
If the masses decide not to comply, then how exactly will you cash your chips out?? Why do you think it will be any easier than having a foreign bank account? Failure to report is a 50% penalty (not including interest). More importantly, the western world works together when it comes to information sharing. Ever open a foreign bank account as a US citizen under the FATCA and “know your customer” framework? Are you really planning on moving to Russia?
People like to pretend that it is “anonymous”. So is a stolen credit card. The problem only pops up when you want to actually buy something. Even worse, for most people, trying to get bitcoin “anonymously” would be more pain than it is worth.
This ignores the REAL problem though. What is the purpose of bitcoin? There are 2 camps, Speculators and the preserve-wealth crowd.
If your goal is to preserve wealth, you need either a stable price (or at least stable in relation to inflation) or a stable correlation with another opposing asset. Bitcoin currently offers neither of these. Even worse, Bitcoin’s future offers neither for reasons noted above.
Imagine what would happen if there was an ETF called “foreign bank accounts”. Imagine what happened to your share value when the governments cracked down on reporting. Regardless of whether YOU decided to declare it... the price simply collapsed around you regardless.
Funny thing about bitcoin. It REQUIRES 2 parties to transact. If 1 person reports it AND is required to collect information on the 2nd party (i.e. think W9 form, backup witholding, etc.) for it to be a legitimate transaction... what do you think will happen to the 2nd person who doesn’t report it?
This is the real world. People that think the masses will be able to adopt bitcoin and be “free from government” are, for lack of a better word, extremely delusional.
People say that the government can’t manipulate it. Surrreeee. The government already gets a ton of it through confiscating it in connection to criminal behavior. How much do you think they will have when they confiscate your 50% for failure to file? They would be able to whipsaw the market better than anyone.
Don’t want to hand it over? Here is your jail cell. How will they know about it? Simple, they threaten/incentivize anyone you can transact with (just like they did via FATCA).
They don’t have to stamp it out completely. They just need to make the risk/reward high enough to keep volume and demand low enough not to matter.
What is the difference between bitcoin and gold? For bitcoin, allegedly less than 1,000 people own over 40%. For gold, almost EVERYONE owns some and attributes value to it in the form of jewelry (which 99.9% of the population transfers without ever paying capital gains taxes on). Even a 4 year old attributes value to it because leprechauns and pirates want it so bad.
More importantly, China and Russia are stockpiling it hand over fist while the western world already has it scheduled to be a 100% collateral tier-1 asset in finance next year.
The idea that Bitcoin is threatening gold is pretty much laughable. People like to site bitcoin market volume, but their has been plenty if research that the vast majority of the volume in crypto has been spoofed.
Sorry to burst anyone’s bubble, but bitcoin is the textbook definition of a high-risk speculative bet.
If you are going to do it, do it in your VP to at least keep your psychology from confusing it with something that it isn’t.
I hear ya. "What ifs" are hard to quantify.buddtholomew wrote: ↑Sat Mar 20, 2021 11:01 am Thank you for your perspective.
I keep asking myself “what if”?
What if Bitcoin is legitimate even with all the challenges outlined to owning and transacting.
What if...
I have .60% of investable assets in Bitcoin to answer all the what ifs...
ahhrunforthehills wrote: ↑Sat Mar 20, 2021 10:26 am
If you are going to do it, do it in your VP to at least keep your psychology from confusing it with something that it isn’t.
Very interesting perspective. So I am an complete amateur here (cryptonewbie!). But what do you thing about Ethereum and it’s variants? From my understanding the class of underlying product is the virtual machines. Basically decentralized compute that creates smart contracts.ahhrunforthehills wrote: ↑Sat Mar 20, 2021 11:46 amPeople seem to think that somehow bitcoin can operate the same way as internet piracy. But internet piracy has only a few entities that want it stopped (not like the masses that benefit from wealth redistribution). Internet piracy provides the END PRODUCT in an anonymous form (the movie, software, etc.). Bitcoin does not. The END PRODUCT for bitcoin needs to be fiat/products/services... none of those are anonymous. A black-market that will take 20% of your money to buy some anonymous starbucks and best buy gift cards will not be enough to support bitcoin's value.buddtholomew wrote: ↑Sat Mar 20, 2021 11:01 am Thank you for your perspective.
I keep asking myself “what if”?
What if Bitcoin is legitimate even with all the challenges outlined to owning and transacting.
What if...
I have .60% of investable assets in Bitcoin to answer all the what ifs...
The question will always come back to "why are you using it"? Is the purpose to make the transaction better (i.e. does it help businesses increase sales?) or is it to avoid government centralized fiat and meddling.ppnewbie wrote: ↑Sat Mar 20, 2021 12:47 pmVery interesting perspective. So I am an complete amateur here (cryptonewbie!). But what do you thing about Ethereum and it’s variants? From my understanding the class of underlying product is the virtual machines. Basically decentralized compute that creates smart contracts.ahhrunforthehills wrote: ↑Sat Mar 20, 2021 11:46 amPeople seem to think that somehow bitcoin can operate the same way as internet piracy. But internet piracy has only a few entities that want it stopped (not like the masses that benefit from wealth redistribution). Internet piracy provides the END PRODUCT in an anonymous form (the movie, software, etc.). Bitcoin does not. The END PRODUCT for bitcoin needs to be fiat/products/services... none of those are anonymous. A black-market that will take 20% of your money to buy some anonymous starbucks and best buy gift cards will not be enough to support bitcoin's value.buddtholomew wrote: ↑Sat Mar 20, 2021 11:01 am Thank you for your perspective.
I keep asking myself “what if”?
What if Bitcoin is legitimate even with all the challenges outlined to owning and transacting.
What if...
I have .60% of investable assets in Bitcoin to answer all the what ifs...
Anyway would love to hear people’s thoughts especially bitcoininthevp’s.
ahhrunforthehills wrote: ↑Sat Mar 20, 2021 3:24 pm ...
I am not seeing anything "revolutionary" with no drawbacks there. Even PayPal offers consumers protections outside of government oversight.
Obviously, if I was a Angel Investor for Visa or PayPal, it would have been AMAZING! But again, this is akin to venture capitalism. Extremely high risk and high reward. For every Visa or PayPal, there are a thousand companies that failed. What makes Etherium so special?
Well, if we want to review it as a venture capital investment, we will want to know what its distinct competitive advantage is. One of the most important questions a venture capitalist will ask is "Can the technology easily be replicated by a competitor?"
...
If I was 3 feet taller I would have Lebron’s house.whatchamacallit wrote: ↑Sat Mar 20, 2021 7:10 pm
If I would have put in $1000 when I knew about it at $100 per bitcoin or whatever it was at the time.
Think about what you will lose if you put 1% of your investable assets into Bitcoin and it goes to 0 versus what you may gain if it just keeps doubling.
I wouldn’t worry about it.My biggest fear of Bitcoin at this point since I bought a small sliver is that it will become less volatile. I think we may actually be seeing this right now as it has become more adopted.