Bitcoin as a complement or alternative to gold in the PP

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gaddyslapper007
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by gaddyslapper007 » 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!
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by doodle » Sun Mar 14, 2021 12:42 pm

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!
Why are you so certain bitcoin will be the crypto to end up on top?

As I continue to dig into crypto at this point I tend to agree with this individual that eventually bitcoin disappears from the stage..his argument at the very least would make me hesitant to put anything near 30% of assets into it at this point.


https://youtu.be/2B09yRbMxcw
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by whatchamacallit » Sun Mar 14, 2021 1:49 pm

I have been one of the biggest Bitcoin haters since I found out about it.

This thread is probably what finally tipped me over to participate and I still don't hold it directly because I don't trust myself with it yet.

I don't see anything beating bitcoin yet for pure price growth just because it was the first

Two possibilities I could think of though.

1. A devastating flaw is found in Bitcoin that is only able to be fixed by a new coin.

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.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by vincent_c » Sun Mar 14, 2021 2:14 pm

It bugs me when people consider bitcoin as a new asset class.

If it had the liquidity and market depth of gold it would trade like gold. The non-correlations is only because it is more speculative than gold and it's discovering its true liquidity base.

It's just another potential form of money.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by doodle » Sun Mar 14, 2021 2:32 pm

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.
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.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by vincent_c » Sun Mar 14, 2021 2:43 pm

doodle wrote:
Sun Mar 14, 2021 12:42 pm
As I continue to dig into crypto at this point I tend to agree with this individual that eventually bitcoin disappears from the stage..his argument at the very least would make me hesitant to put anything near 30% of assets into it at this point.


https://youtu.be/2B09yRbMxcw
His argument that gold will always have value is flawed.

Why would it matter materially if a form of money went to zero vs dropping to its industrial value if the financial value is much higher than its industrial value?

He mentions ethereum which has more uses than bitcoin, but this just adds a layer of risk premium on ethereum like silver has on gold.

He makes an assumption that a single blockchain will dominate the network of smart contracts in the future and doesn't consider that interoperability might be an option where there is an internet of blockchains that might not be a platform rather just a public protocol. Without a dominant smart contract platform native token taking over, bitcoin is still hard to displace as a store of value in the crypto space.

He mentions Non-Interactive Proofs of Proof-of-Work (NIPoPoW) as native to Cardano but he doesn't mention that right now you can move value from BTC to ETH using wrapped coins. You can even do this with decentralized custodians like renBTC and not just centralized custodians like the more popular WBTC. But the point is, moving value across blockchains doesn't take away from BTC being the store of value.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by whatchamacallit » Sun Mar 14, 2021 2:56 pm

@doodle

I wasn't able to watch the whole video but skimmed it and didn't hear him mention what I mean.

What I mean by higher purpose is
Something like curing cancer. Kind of like a coin that gives power to
https://foldingathome.org/


I can't think of how it could be created right now without chance of the processing being used for ill will though.

I think it is already proven that it doesn't matter that new coins are improved.

It took me a long time to come around but btc was the first so it will continue to be bought for speculation until a devastating flaw takes it down.

If it halved tomorrow, then there would be plenty of buyers to just keep it going.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by whatchamacallit » Sun Mar 14, 2021 9:30 pm

How Much Bitcoin Should I Own? A Mathematical Answer

https://www.kiplinger.com/investing/602 ... answer?amp


Their conclusion is .5% based on market capitalizations if you wanted to be completely balanced.

Having 1% seems quite reasonable then to have tilt toward further growth but still realizing it can go to 0.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by gaddyslapper007 » Mon Mar 15, 2021 2:29 pm

I was wrong.....~60,000 people polled:

Investors reallocating capital into BTC instead of “X”
Stocks 49%
Bonds 10%
Gold 22%
Property 19%

Here's how big these buckets are:
Stocks $80T
Bonds $100T
Gold $10T
Real Estate $200T+




Source:

https://twitter.com/michael_saylor/stat ... 53671?s=21
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by Don » Thu Mar 18, 2021 11:22 am

I just purchased a fairly sizable amount of GBTC to supplement my gold holding. It's sure looking like bitcoin is replacing gold as an inflation hedge.

Note: This will probably be the absolute top of bitcoin's rise. Lol.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by buddtholomew » Thu Mar 18, 2021 3:33 pm

Don wrote:
Thu Mar 18, 2021 11:22 am
I just purchased a fairly sizable amount of GBTC to supplement my gold holding. It's sure looking like bitcoin is replacing gold as an inflation hedge.

Note: This will probably be the absolute top of bitcoin's rise. Lol.
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...
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by whatchamacallit » 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.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ahhrunforthehills » Sat Mar 20, 2021 10:26 am

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.
Sorry everyone, but this is probably going to sound pretty harsh...

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 in 2023 under Basel III.

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.
Last edited by ahhrunforthehills on Sat Mar 20, 2021 10:31 am, edited 1 time in total.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by buddtholomew » Sat Mar 20, 2021 10:31 am

ahhrunforthehills wrote:
Sat Mar 20, 2021 10:26 am
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.
Sorry everyone, but this is probably going to sound pretty harsh...

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.
Couldn’t resist...do you own any bitcoin?
I’ve traded in and out of GBTC but I hear you can receive a K-1 in an IRA with taxes due from that account for gains over $1K.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by whatchamacallit » Sat Mar 20, 2021 10:50 am

I am not familiar with k1s but quick Google seems to be that you don't need to do anything with it when in ira.


https://ttlc.intuit.com/community/retir ... /01/416901

To be clear.

I would agree that Bitcoin is very speculative. Something I am not willing to put more than 1% investable assets into.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ahhrunforthehills » Sat Mar 20, 2021 10:53 am

Hi Budd,

Anyways, no I don’t own any (but I have been researching it for years). I am not opposed to it anymore than I am other types of high-risk venture.

In fact, the ONLY reason i even commented was because this forum is really beginning to misclassify bitcoin in a crazy way.

Can bitcoin be the next Microsoft? Maybe. I concentrate on Risk vs Reward ratios. Venture capitalists bet that 1% of their bets will make up for 99% of their losing bets with profit to spare.

Ironically, now people in the forum are implying that you should have 1% bitcoin in their PP. I can’t tell if everyone is drunk or serious. It is clearly speculative betting at its finest.

Please note that I made a small correction since you responded. The Tier 1 is set for 2023, not next year.

I suspect the government likes people piling into Bitcoin.

It will be an easy trap for them to capture “unpatriotic tax evaders who don’t want to pay their fair share”. It will provide good political capital for politicians while simultaneously distracting the public from legitimate tax loopholes that the truly wealthy employ through their $1k/hour tax attorneys and Private Letter Rulings.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by buddtholomew » 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...
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ahhrunforthehills » Sat Mar 20, 2021 11:46 am

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...
I hear ya. "What ifs" are hard to quantify.

The biggest problem is that people have it in their mind that the world governments are like their ex-wife. That hiding the assets will be just so easy.

The government has influence on every single entity/individual you transact with. Period. From your internet provider to the entities that you will use to trade between crypto and fiat/goods/services. Even if you only trade in-person... some cops pretend to be hookers, why would this be different?

Furthermore, "the government" represents the masses desire to have a central authority that is able to allocate capital. This is necessary not only for wealth redistribution, but also for infrastructure and defense. The only countries that have weak taxation laws are those that have pretty horrible income disparity, infrastructure, and defense. These countries easily buckle under pressure from major countries... just look at Grand Cayman, Switzerland, etc.

People 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.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by vnatale » Sat Mar 20, 2021 12:01 pm

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.


ALL of what you wrote was absolutely SUPERB!

Many thanks!!!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ppnewbie » Sat Mar 20, 2021 12:47 pm

ahhrunforthehills wrote:
Sat Mar 20, 2021 11:46 am
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...
People 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.
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.

Anyway would love to hear people’s thoughts especially bitcoininthevp’s.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ahhrunforthehills » Sat Mar 20, 2021 3:24 pm

ppnewbie wrote:
Sat Mar 20, 2021 12:47 pm
ahhrunforthehills wrote:
Sat Mar 20, 2021 11:46 am
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...
People 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.
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.

Anyway would love to hear people’s thoughts especially bitcoininthevp’s.
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.

If it is the latter, you are screwed (for reasons I mentioned previously).

If it is the former... well, think of it like this...

MasterCard and Visa revolutionized how transactions occurred. The technology clearly was a step towards technological progress that helped both businesses and consumers. They are also linked to the contractual process between parties. Visa and MasterCard can step in and interfere with the payments associated between two contracting parties (i.e. a chargeback).

Now look under the hood further. If you have a foreign bank account and use a Visa or MasterCard that is linked to it, the government has essentially forced Visa and MasterCard to rat you out. Visa and MasterCard are also REQUIRED by law to offer certain consumer protections (i.e. you are not liable for the amounts if your credit card is stolen, etc.).

So here you have a technology that was great for "progress" in the financial transactions arena, but they are still very influenced by government.

Can Etherium help businesses? Well, with Etherium my business would not have to pay a 2% processing fee (that would normally go to Visa or Mastercard). That is a huge benefit to business. It will also help me get rid of those pesky chargebacks people file. On the other side of that coin, consumers will not feel as safe because they would have now lost their consumer protection in the form of a chargeback, lost card, etc.

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?"

This is where everything really turns into a dog turd. There will ALWAYS be a better technology that comes along and replaces your invention. In a pre-industrial revolution world, a watch took a lot of cheddar to have made. Things have clearly changed, but the transformation played out over centuries. In the world of crypto these changes happen over months, not centuries.

If I am looking for something that will "preserve wealth", the thing that is "preserving my wealth" would first either need a stable price (or at least stable in relation to inflation) or a stable correlation with another opposing asset to be a viable choice.

Etherium looks great. The problem is that there are 100 different drugs that look great for curing cancer too. You can also pick the number 4 on the roulette wheel to really goose your winnings. Where do you draw your line for what is just straight-up gambling? I saw a guy in NYC just sold a blockchain-based NFT sound recording of his fart for $85.

Humans don't like to concentrate on risk when they are in greedy-mode. There are no shortage of studies involving brainscans about this kind of thing. When you think about making money, your brain is flooded with so much dopamine that your frontal cortex basically checks out. What we think is logical thought about "investing" are just dopamine-induced drunkin' daydreams of grandeur.

My next sentence is going to sound condescending to some people here... but I am going to say it anyways because I think it might help some people here. For years I have been really perplexed by crypto (especially bitcoin). I heard so many crypto people say "they just don't get it". I have listened to countless podcasts, read articles, research, etc.

I kept saying to myself "what am I not getting about this", "am I being biased", "am I just acting like an old man afraid to embrace the future"? Sound familiar?

It finally hit me when I read that Peter Schiff's 17 year old went all in on bitcoin and said that his dad "just doesn't get it". This 17 year old lives in an Xbox world where you trade real money for virtual clothes for your avatar. His brain spent the majority of his developmental years in an environment created by Microsoft that has been designed to maximize his dopamine levels and to cause addiction to Microsoft's virtual purchases (i.e. to associate real-world value to virtual non-real-world goods). But you can't eat virtual groceries or stay warm in a virtual house. Crypo will basically be the same as fiat for any real world purchases.

I looked around at all the people I knew that were really cheerleadering crypto (excluding wall street propaganda). I realized that NONE of these people had even remotely the background or experience I had in taxation, investing, etc. They are like doomsday preppers who build their underground bunker but never even gave any thought about what they were going to do with all of their garbage (or a thousand other questions). Similarly, crypto people seem locked in their own little XBox world that doesn't factor in real world cause-and-effect. Nobody supporting Bitcoin ever walks through the entire process with how Bitcoin will play out in the REAL WORLD as a direct attack on world governments.

World governments are not some stupid schmucks sitting on a park bench. World governments are supported by THEIR PEOPLE and are provided infinite resources to exert the will of their people. Look at the app "Signal". Anonymous, right? Nope, NSA got in. Pedophiles looking at porn anonymously? The government can put a tracking cookie on your computer once you visit their site. At the end of the day, if you use technology... and if they want to target you bad enough, they can figure it out. They can get at your ISP, they can take control of your "safe" VPN, they can take control of your modem, your phone, your computer, etc. Go to a library? Even if a library still existed... they have cameras (and so do the neighboring buildings that recorded your license plate).

If the government doesn't care enough to pursue you over it, then it simply is not a threat to centralized government or fiat. If that is the case, what makes it so great outside of any other speculative bet like Tesla or #4 on the roulette wheel?

We already live in an electronic currency world. Very few people deal in cash. They are just 1's and 0's. Visa, MasterCard, PayPal, etc. all facilitate in the payment of contracts. Moving to another medium is not going to greatly benefit my business (or anybody else's business that I personally know). So why would my business even begin to focus on it? The moment it grows enough to matter (big "if"), the government will be all over it. The IRS will change its reporting requirements for my business to include [whatever flavor-of-the-month crypto]. If I do not comply, my completely innocent company will be breaking the law and will face penalties. Why would I not comply? It isn't like someone handing you CASH that can't be traced electronically as is accepted GLOBALLY. Once businesses are forced to report it, crypto will then be essentially pegged to fiat again.

Seems simple to me, but again, my brain wasn't created in an environment that conditioned me to inflate the value of non-tangible virtual goods/services. When I was a kid, you held those chucky-cheese tokens in your hand for to play the video game (aka non-tangible virtual service). When you were done, you felt ripped-off if you didn't receive some PHYSICAL TICKETS in return. You then took your PHYSICAL TICKETS to purchase PHYSICAL GOODS behind the stand.

Now before someone says, "aha, you see, you just aren't embracing the times old man. Paper is out, digital is in."...

I have actually made way more money than I will ever spend selling electronic non-tangible virtual services over my career. So, I definitely think I "get it". But I also think that I understand government even better.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ppnewbie » Sat Mar 20, 2021 4:16 pm

Ok so that is the speculative currency part. Very interesting thoughts. So much so that I am going to read it again! But what if I want to build a decentralized website or application that has no actual physical location. How do I get one? Where can it be installed? How do I pay for it? How do people pay me?

I am trying to see if there is a real value from that standpoint.
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by dualstow » Sat Mar 20, 2021 4:32 pm

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?"
...

What a fantastic post. I have nothing to add except thank you.
traveling...
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by ahhrunforthehills » Sat Mar 20, 2021 5:28 pm

Thanks for the feedback. It's nice to know that even if I am completely nuts in my ramblings... at least there are other people here that speak my same level of crazy :)
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Re: Bitcoin as a complement or alternative to gold in the PP

Post by whatchamacallit » Sat Mar 20, 2021 7:10 pm

I agree completely with ahhrunforthehills.

And I have been downright mad about the absurdity of Bitcoin because I missed out on such outlandish returns. 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 still think Bitcoin is just an apparently legal pyramid scheme. I remember before Bitcoin, the internet was full of the pyramid scheme websites that would eventually get shutdown as the authorities caught them. Bitcoin was just the first decentralized pyramid scheme that couldn't be shutdown so easy.

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.
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