I think it’s time to move into crypto

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Re: I think it’s time to move into crypto

Post by dualstow » Wed Mar 03, 2021 3:15 pm

Today is a good day for showing the non-correlation of bitcoin, zagging while the nasdaq zigs.
traveling...
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Wed Mar 03, 2021 3:21 pm

dualstow wrote:
Wed Mar 03, 2021 3:15 pm
Today is a good day for showing the non-correlation of bitcoin, zagging while the nasdaq zigs.
Maybe. But perhaps it just dumps in the afterhours.
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Re: I think it’s time to move into crypto

Post by dualstow » Wed Mar 03, 2021 3:31 pm

Yup, it's always ready to dump. O0
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Re: I think it’s time to move into crypto

Post by vincent_c » Wed Mar 03, 2021 3:35 pm

@bitcoininthevp

Would love to hear more of your thoughts on ETH.

I guess a question I have for you is whether you hold any USD cash and why if it is only the 'token' of the US economy.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Wed Mar 03, 2021 7:14 pm

vincent_c wrote:
Wed Mar 03, 2021 3:35 pm
@bitcoininthevp

Would love to hear more of your thoughts on ETH.

I guess a question I have for you is whether you hold any USD cash and why if it is only the 'token' of the US economy.
I dont hold much USD. That which I do is for nearer term transactions and the rest basically emergency fund type funds.

I dont hold any ETH. I think BTC is better money so I hold that. ETH doesn’t even have a supply cap and its monetary policy is constantly shifting.

And I dont have any use for the games that I need ETH tokens to pay for. If any of the games on ETH became useful to me, like defi, likely there is a cheaper chain to play such games on. And a better money for use in such defi games (like BTC in multisig or "wrapped" form) instead of ETH.
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Re: I think it’s time to move into crypto

Post by vincent_c » Wed Mar 03, 2021 7:45 pm

bitcoininthevp wrote:
Wed Mar 03, 2021 7:14 pm
I dont hold much USD.
So what do you use in instead of the cash portion in your PP?
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Wed Mar 03, 2021 8:04 pm

vincent_c wrote:
Wed Mar 03, 2021 7:45 pm
bitcoininthevp wrote:
Wed Mar 03, 2021 7:14 pm
I dont hold much USD.
So what do you use in instead of the cash portion in your PP?
I dont have a PP at the moment as I own no stocks or treasuries. I have gold and cash positions and a bitcoin position.
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Re: I think it’s time to move into crypto

Post by vincent_c » Wed Mar 03, 2021 10:40 pm

So there is likely an ETH drag to my crypto PP just like there is cash drag on any USD based portfolio. That is to say that maybe investing in a basket of DEFI alone or BTC alone would produce more ETH than holding an allocation of ETH for rebalancing purposes.

The fun part for me is to think in ETH terms so the whole purpose of the crypto PP is to reduce volatility in ETH and at the same time producing positive returns in ETH rather than just holding ETH alone.

It’s possible that although ETH is potentially inflationary, it is less inflationary than fiat so that having exposure to ETH also produces positive returns in USD.

There is an argument to be made about just holding BTC over ETH or my crypto PP. It’s likely the case that it is better to just hold BTC if its liquidity potential is orders of magnitude above that of ETH. Certainly from a risk perspective in USD returns, BTC is a much safer bet as a reliable store of value long term.

It’s also possible that ETH has diversifying effects during a bull market by being slightly less correlated to BTC. During a crypto crash it’s likely that those correlations go to 1.

I guess although fun, I’d love to be shown something I’m missing so that I can maybe end my experiment while I’m ahead.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Mar 04, 2021 9:51 am

Like all markets, human psychology is a huge factor in pricing. I would not be surprised if ETH outperforms in the next day, week, year. For example:

- ETH is down against BTC 27% in the last month
- ETH is up against BTC 27% in the last 3 months
- ETH is down against BTC 5% in the last 6 months
- ETH is up against BTC 25% in the last 1 year
- ETH is down against BTC 9% in the last 2 years

But I just dont see the value in ETH so I have not invested:

- There is no supply cap
- There is not even consensus in the ETH community about what the current supply of ETH is currently
- Monetary policy changes often
- It is not immutable money (ETH "leaders" have rolled back the chain for transactions they didn’t "like")
- I dont find value in, or use, any of software on top of ETH
- ETH isnt even cheaper for basic transactions than BTC
- ETH trying to be a "world computer" vs just being money (BTC) causes huge scaling issues which affect decentralization (hint: crypto value proposition is entirely based on decentralization)
- Because ETH is competing on features in an open source software world, cheaper competitors can appear relatively easily, and have

If you want to have some crypto VP or playground, I think you should go for it as a consumption value and not as a production value.
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Re: I think it’s time to move into crypto

Post by vincent_c » Thu Mar 04, 2021 10:25 am

bitcoininthevp wrote:
Thu Mar 04, 2021 9:51 am
Like all markets, human psychology is a huge factor in pricing. I would not be surprised if ETH outperforms in the next day, week, year. For example:

- ETH is down against BTC 27% in the last month
- ETH is up against BTC 27% in the last 3 months
- ETH is down against BTC 5% in the last 6 months
- ETH is up against BTC 25% in the last 1 year
- ETH is down against BTC 9% in the last 2 years
No disagreement with me here.
bitcoininthevp wrote:
Thu Mar 04, 2021 9:51 am
But I just dont see the value in ETH so I have not invested:
This is key, investing in any economy using its token/currency to measure performance requires a belief in the long term for that economy. This is why at the same time I am hedging in DOT, ADA, ATOM, and other smart contract protocols.

What would you say if I suggested that having exposure to ETH provides you with a better risk adjusted way to invest in the Blockchain economy agnostic to whether you believe in ETH versus investing BTC alone.

If you believe in BTC, BTC's value is dependent on the blockchain economy as a whole and vice versa. Don't you agree?
bitcoininthevp wrote:
Thu Mar 04, 2021 9:51 am
If you want to have some crypto VP or playground, I think you should go for it as a consumption value and not as a production value.
I only use the term Crypto PP sparingly knowing it is not actually a PP and does not perform like one because it is missing a long duration component (there currently isn't any counter party that requires borrowing long term in ETH) there is no way to currently actually have an ETH PP.

I have heard that an entire ETH yield curve will take place within the year and I am hoping if products like insurance and annuities become available in ETH where you have long term obligations in smart contracts that there will also be long duration products available.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Mar 04, 2021 1:20 pm

vincent_c wrote:
Thu Mar 04, 2021 10:25 am
This is key, investing in any economy using its token/currency to measure performance requires a belief in the long term for that economy. This is why at the same time I am hedging in DOT, ADA, ATOM, and other smart contract protocols.
What smart contracts do you actively use on any of these platforms, other than securing your coins or buying other coins, say?
vincent_c wrote:
Thu Mar 04, 2021 10:25 am
What would you say if I suggested that having exposure to ETH provides you with a better risk adjusted way to invest in the Blockchain economy agnostic to whether you believe in ETH versus investing BTC alone.

If you believe in BTC, BTC's value is dependent on the blockchain economy as a whole and vice versa. Don't you agree?
This might be the crux of the disagreement. I dont believe in some "blockchain economy". I believe blockchain has one use case so far: money. And the best version of blockchain money that we have is Bitcoin.
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Re: I think it’s time to move into crypto

Post by vincent_c » Thu Mar 04, 2021 1:46 pm

bitcoininthevp wrote:
Thu Mar 04, 2021 1:20 pm
I believe blockchain has one use case so far: money. And the best version of blockchain money that we have is Bitcoin.
Although I agree that BTC will have some value on its own, I believe that its liquidity potential would be far reduced from where it will be given the existence of a blockchain economy.

It might also mean that it would take exponentially longer for it to have been a relevant asset and I believe if the blockchain economy fails, it would set back btc as well as a relevant asset perhaps taking it from relevant to irrelevant. So that's where my perspective of BTC is dependent on the blockchain technology comes from.

If BTC has no use as a collateral asset, then it's usefulness as a store of value is limited.

As far as smart contracts, I've used Nexus Mutual to insure against hacking. I've used Compound/AAVE to yield farm stablecoins. I've used uniswap to do exchanges...

I'm looking into NFTs.

Either way, you can't deny the existence of a rapidly growing blockchain industry/economy, can you?
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Mar 04, 2021 2:36 pm

vincent_c wrote:
Thu Mar 04, 2021 1:46 pm
If BTC has no use as a collateral asset, then it's usefulness as a store of value is limited.
There is no requirement that bitcoin can only be used on blockchains. Bitcoin is acting as collateral to get USD loans for example (Unchained Capital). It is also used as collateral for trading/exchanges.

Also, to be clear, there are smart contracting capabilities on Bitcoin. Multisignature and Lightning Network are smart contracts on Bitcoin, for example.
vincent_c wrote:
Thu Mar 04, 2021 1:46 pm
Either way, you can't deny the existence of a rapidly growing blockchain industry/economy, can you?
Of course other blockchains exist and "something" is happening on them. But I really just see people talking about valuing the required tokens to power the network instead of how much value they are deriving from the network and its capabilities. Because value IS the use case of Bitcoin (money), the same criticism doesn’t really apply to Bitcoin.

Look at coinmarketcap.com from 2013.
Image

Now look at it from 2017.
Image

I was around the space during these times. And there were promises of what those coins would do. There were people like you evangelizing. There were price bubbles in all sort of coins, etc. Now most of them are gone for all intents and purposes.

Now look at https://coinmarketcap.com/ today. A whole new class of maybes, promises, could-bes.

I dont want to state unequivocally that all altcoins will die and there is zero value ever for anyone. But I hope this opens your, and others, eyes to the altcoin world and lure.
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Re: I think it’s time to move into crypto

Post by vincent_c » Thu Mar 04, 2021 2:59 pm

bitcoininthevp wrote:
Thu Mar 04, 2021 2:36 pm
Of course other blockchains exist and "something" is happening on them.
Ok, I think it is becoming clearer where our differences lie.

What if instead of using controversial terms like "blockchain economy", I merely referred to blockchain technology.

This includes private blockchains and any other technology that can serve as a bridge between converting value held in BTC to the real world.

I don't think it is controversial to say that based on market cap, we can say that ETH has a certain weighting that the free market has given it to play in the blockchain ecosystem.

You see whether we talk about ecosystems, economy, what have you. My stance is that ETH is playing a role in that at the moment that it is perhaps logical from a risk management perspective to give it an allocation. I do think this position is debatable and that it is also reasonable to disregard everything other than BTC at the moment based on market cap.

But if we look at the total crypto market cap vs that of BTC alone, it would seem prudent also to proxy an exposure to the rest of that space.
bitcoininthevp wrote:
Thu Mar 04, 2021 2:36 pm
But I really just see people talking about valuing the required tokens to power the network instead of how much value they are deriving from the network and its capabilities.
Yes, it is important to understand the tokenomics of every coin, but there are certainly cases where the token functions very much like equity so likewise I wouldn't be so quick to dismiss it. I do see a lot of excuses from investors who don't want to carry out the due diligence for all the projects out there so it feels better to either buy a basket of all of them or ignore the space completely.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Mar 04, 2021 3:16 pm

It doesn’t seem that you are really listening to my points, tbh.

I've illustrated how in the past there have been coins and evangelists of those coins. And then those coins disappear/go to zero.

You respond by ignoring that and continue evangelizing.

It seems your point comes to liking the idea of some version of a market cap weighted crypto index fund.

You should see how such an investment worked out historically. I believe https://www.shrimpy.io/backtest had something like this, but not anymore. Maybe some other service does.
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Re: I think it’s time to move into crypto

Post by vincent_c » Thu Mar 04, 2021 3:46 pm

bitcoininthevp wrote:
Thu Mar 04, 2021 3:16 pm
It doesn’t seem that you are really listening to my points, tbh.
I hear what you're saying but perhaps we're not listening to each other.

I think what you're saying is basically, even if there are coins where the tokenomics reward token holders like equity holders, the entire sector is in a bubble right now so their current price (regardless of indexed or not) is no where near what their fair value should be.

I actually agree with this, which is why I also think btc is currently in a bubble as well so there is a chance that the next bottom of the bear market is actually below today's price. If one considers an investment in the space purely on this then yes right now would not be a good time to dip your toes in.

However, since I was invested in the space prior to bubble territory, I am merely trying to debate the merits of this approach when valuations are more reasonable. Now I can go back and have a think about whether it is worth keeping this experiment going when I think everything is in bubble territory. I think I will sell down to just hedging against it never coming back down to current prices during the next bear. Haven't decided how much to sell although the more I think about it the more it seems close to or pretty much near 100% since I'm pretty convinced at least the alts are in massive bubble territory.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Thu Mar 04, 2021 6:48 pm

vincent_c wrote:
Thu Mar 04, 2021 3:46 pm
bitcoininthevp wrote:
Thu Mar 04, 2021 3:16 pm
It doesn’t seem that you are really listening to my points, tbh.
I hear what you're saying but perhaps we're not listening to each other.

I think what you're saying is basically, even if there are coins where the tokenomics reward token holders like equity holders, the entire sector is in a bubble right now so their current price (regardless of indexed or not) is no where near what their fair value should be.
I didn’t say tokenomics, relate it to equity holders, say anything about a sector or a bubble, didn’t state anything about fair value.
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Re: I think it’s time to move into crypto

Post by vincent_c » Thu Mar 04, 2021 7:55 pm

You do reference the 'An (Institutional) Investor’s Take on Cryptoassets'? article and you use many points from that article. In that article the author does acknowledge that there is some value to ETH but it is nowhere near what the current market value is. So that implies the view that ETH is in a bubble.

I was the one who mentioned tokenomics and used equity as an analogy to some tokens to try to understand what you're trying to say. I don't believe I've ignored any of your points and I have tried my best to respond to each one. Instead of trying to guess what you're trying to say then, I'll just quote you.
bitcoininthevp wrote:
Thu Mar 04, 2021 1:20 pm
I believe blockchain has one use case so far: money. And the best version of blockchain money that we have is Bitcoin.
I think this is factually wrong. How can you say that blockchain only has one use case? You're either misinformed or you haven't fully researched the space if you really believe this.

I've been trying to find some common ground to build up my arguments, but when someone cannot agree on trivial matters it's usually a sign they are not interested in a good faith discussion.
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Re: I think it’s time to move into crypto

Post by Arthur Boe Nansa » Fri Mar 05, 2021 6:22 am

I've been following this site passively with no intention of contributing, but the recent discussions of Bitcoin have given me a particular itch that I couldn't help but scratch. Bitcoininthevp has been a great resource, but there are some things that I feel need to be addressed, so I will do that.

A disclaimer now and one i will add again at the end, to cover all bases: I am not a fan of what BTC has turned into. I will explain what that means briefly in the post, but it shouldn't matter much because this post is about looking at the crypto landscape from a macro perspective. Any project I mention is more to highlight the pros/cons of different use-cases rather than an endorsement or set in stone financial advice. And one more thing- Bitcoininthevp, if you feel anything i've said is unfair, feel free to call me out on it. ;)

Let's dive in:
I've illustrated how in the past there have been coins and evangelists of those coins. And then those coins disappear/go to zero.

This is a great way to keep expectations in check, but a terrible way to assess the merits of a financial asset/use case. When light-bulbs were first being created some overheated, gave little light, weren't reliable etc. Would you say: "Many early revisions weren't good enough, stick to the "original" Electric Arc Lamp"?

Bitcoin (BTC) was and is revolutionary. It will always be considered the first mover and the start of a new technology, but to hold it as the only viable option is short sighted and frankly, just wrong.

For technical reasons way beyond the scope of this post, I do not believe Bitcoin (BTC) is a long term solution. "Digital gold" and "new monetary network" are buzzwords that sound great, but aren't realistic. B-vp is right that most projects are either scams or will die a slow death, but that doesn't make the claim "so just buy Bitcoin (BTC)" any more sound.
Because value IS the use case of Bitcoin (money), the same criticism doesn’t really apply to Bitcoin.
What does this mean? You've assigned it value, but not given it value. The difference between the two cannot be overstated. Bitcoin (BTC) ISN'T money, not even a monetary network. No matter how many times people try to claim it is. Why? Because people don't use it. They speculate with it. And no serious metric or technological advance has given any reassurance that this will change in the near future. The best example of this is the flexible narrative of Bitcoin (BTC).

Some talking points and their rebuttals:
"It's digital gold!" --- "This hasn't been proven yet. But even if we were to believe it, why wouldn't you hold both? Surely if you're so infatuated with a digital version of something, you'd also hold the physical, time tested thing in (nearly) the same regard?" Some Bitcoin (BTC) holders do hold gold as well, but the vast majority hold next to none of it, or have never even been interested in gold to begin with. That's strange for a group so obsessed with a slightly more fungible, digital version of the same "asset type."

"It's a monetary network!" --- "Monetary how? Who is pricing anything in BTC? How often do you "exchange" it rather than only "accumulate" it? Isn't the point of money to...transact?

"BTC is a hedge!" --- "This is a way to sound smart without actually saying anything. It's an attempt to wrap up the first two points in some grand theory without any evidence or sound explanation."

"Lightening Network will solve high fee issues." --- "It hasn't and it won't. Structurally, the technology has its weak points. It's also pretty cumbersome to use. And other projects can incorporate the same technology more effectively on their own chains, so what stops people from using those other projects?"

"Use other solutions" --- "Ah yes, custodial solutions. Which are what Bitcoin was supposed to give an alternative to."

"Well if you want 'money', use paypal. It's cheaper and easier. If you don't get what Bitcoin (BTC) is, I don't have time to explain it to you. Have Fun Staying Poor!" --- "Wasn't Bitcoin supposed to be a "peer-to-peer electronic cash system"?

"What altcoin are you trying to promote?! You're just a scammer." --- "Maybe i'm looking for something that...has utility?"

The list goes on...
As you can see, the "point" of Bitcoin (BTC) is pretty confusing. It's meant to only be held and accumulated. But it's a monetary network. But it has high fees (which some ludicrously claim is a feature and not a bug). But it has scaling solutions. But even if those scaling solutions aren't very good and aren't being used it doesn't matter because it's only meant to be held and accumulated, so use paypal/something else...

The reason why BTC has managed to remain so strong is because of it's ossification. To remain competitive but keep its stability in the free-market crypto environment, it changed narrative rather than capability. It has just enough talking points backed by first-mover network effect to remain the standard. But it won't stay that way unless there are some serious developments to scale its use case. Until that happens, people are assigning it value, not giving it value.

You may be asking yourself at this point: "Okay, so maybe Bitcoin (BTC) isn't the best option. What's the best crypto project? Also, why do you keep calling it "(BTC)" and not just Bitcoin?

Great questions, i'll start with the second one.
Because some believe that Bitcoin needs to scale appropriately to have real value. In 2017, Bitcoin Cash (BCH) "forked" from the original Bitcoin (BTC) to increase the blocksize and remain a potential candidate for peer-to-peer electronic cash. It can still technically be considered Bitcoin because its blockchain originates from the same genesis block of Satoshi Nakamoto. There are other forked projects (some of them have been mentioned in this thread), but I don't think they have the same value proposition as BCH, all things considered.

"Great, so you're saying I should go with Bitcoin Cash (BCH)?"

NO. I am saying you should try and understand the pros and cons of different projects and their ability to provide value to you and society. Truth be told, between BTC and BCH, I think BCH can do it better. Does that mean it will? No. Does that mean it will be the most financially prosperous crypto or be the definitive monetary network? Double-no.

The point is to understand what you're trying to "get out" of a project by assessing how serious it is (track record - past), how in demand it is (use-case - present) and how relevant it will be (value - future).

Back to the first question; what's the best crypto project?
Answer: No one knows. If you want a PP inspired style portfolio, try and find 4-6 projects that are large (preferably time tested, though even 10 years is chips in a technological revolution like crypto), and offer different use cases to balance "risk". I'll try and outline different "spheres of progress":

1. "Sound money" - BTC/BCH/Dash/ZCash/Monero
2. Financial/contract-based "base layer" - Ethereum/Cosmos/Cardano/Polkadot
3. Interoperability/"Global coverage" - Avalanche, dfinity, Fantom, Solana

This is a very rough way of segmenting them so don't take this strictly, it's just an off hand way to provide a bit of clarity to different use-cases as a way of (trying) to diversify risk. I'm not endorsing any and there are also many other worthwhile projects, this is just to give the general idea.
Finally, you can tweak based on your comfort.

In this sense, you can decide to hold:
20% BTC
20% BCH
20% ETH
20% Cosmos (ATOM)
20% Avalanche (AVAX)

Or overweight BTC and ETH, etc.

Always remember that it's still the very early stages. Technologies can change, developments can change, teams can change, etc.
Marketing (both good and bad) is still more of an influence in crypto today than people are willing to admit.
Don't fall for hype, narratives, promotions, or pipe dreams.
Assume your holding will go to zero.

Stay unemotional, but be excited of what's in store for the future. Good luck to all!

A disclaimer now and one i will add again at the end, to cover all bases: I am not a fan of what BTC has turned into. I will explain what that means briefly in the post, but it shouldn't matter much because this post is about looking at the crypto landscape from a macro perspective. Any project I mention is more to highlight the pros/cons of different use-cases rather than an endorsement or set in stone financial advice. And one more thing- Bitcoininthevp, if you feel anything i've said is unfair, feel free to call me out on it. ;)
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Fri Mar 05, 2021 11:32 am

Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
I've been following this site passively with no intention of contributing, but the recent discussions of Bitcoin have given me a particular itch that I couldn't help but scratch. Bitcoininthevp has been a great resource, but there are some things that I feel need to be addressed, so I will do that.

A disclaimer now and one i will add again at the end, to cover all bases: I am not a fan of what BTC has turned into. I will explain what that means briefly in the post, but it shouldn't matter much because this post is about looking at the crypto landscape from a macro perspective. Any project I mention is more to highlight the pros/cons of different use-cases rather than an endorsement or set in stone financial advice. And one more thing- Bitcoininthevp, if you feel anything i've said is unfair, feel free to call me out on it. ;)
Glad I could... provoke you to join us :)
Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
I've illustrated how in the past there have been coins and evangelists of those coins. And then those coins disappear/go to zero.

This is a great way to keep expectations in check, but a terrible way to assess the merits of a financial asset/use case. When light-bulbs were first being created some overheated, gave little light, weren't reliable etc. Would you say: "Many early revisions weren't good enough, stick to the "original" Electric Arc Lamp"?


I see vincent_c as somewhat new to the space and, yes, my intent was to shed my historical experiences light on his outlook.
Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
Bitcoin (BTC) was and is revolutionary. It will always be considered the first mover and the start of a new technology, but to hold it as the only viable option is short sighted and frankly, just wrong.

For technical reasons way beyond the scope of this post, I do not believe Bitcoin (BTC) is a long term solution. "Digital gold" and "new monetary network" are buzzwords that sound great, but aren't realistic. B-vp is right that most projects are either scams or will die a slow death, but that doesn't make the claim "so just buy Bitcoin (BTC)" any more sound.
Ill reiterate, my opinion is there isnt a use case other than money that is proven to me as a good long term investment.

Im also (barely) open to the idea that a new crypto could come along and be a better money than BTC. As Harry said in one of his speeches, ~"and if one does come along, I guarantee ILL be in line before YOU will!".
Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
Because value IS the use case of Bitcoin (money), the same criticism doesn’t really apply to Bitcoin.
What does this mean? You've assigned it value, but not given it value. The difference between the two cannot be overstated.
All value is subjective as individuals. Bitcoin is trying to be money, so its perceived money-like properties give it monetary value for those looking for such value. Essentially, high price is the point of bitcoin as its trying to become money and the monetizing process is measured in $.
Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
Bitcoin (BTC) ISN'T money, not even a monetary network. No matter how many times people try to claim it is. Why? Because people don't use it. They speculate with it. And no serious metric or technological advance has given any reassurance that this will change in the near future. The best example of this is the flexible narrative of Bitcoin (BTC).

Some talking points and their rebuttals:
"It's digital gold!" --- "This hasn't been proven yet. But even if we were to believe it, why wouldn't you hold both? Surely if you're so infatuated with a digital version of something, you'd also hold the physical, time tested thing in (nearly) the same regard?" Some Bitcoin (BTC) holders do hold gold as well, but the vast majority hold next to none of it, or have never even been interested in gold to begin with. That's strange for a group so obsessed with a slightly more fungible, digital version of the same "asset type."

"It's a monetary network!" --- "Monetary how? Who is pricing anything in BTC? How often do you "exchange" it rather than only "accumulate" it? Isn't the point of money to...transact?

"BTC is a hedge!" --- "This is a way to sound smart without actually saying anything. It's an attempt to wrap up the first two points in some grand theory without any evidence or sound explanation."

"Lightening Network will solve high fee issues." --- "It hasn't and it won't. Structurally, the technology has its weak points. It's also pretty cumbersome to use. And other projects can incorporate the same technology more effectively on their own chains, so what stops people from using those other projects?"

"Use other solutions" --- "Ah yes, custodial solutions. Which are what Bitcoin was supposed to give an alternative to."

"Well if you want 'money', use paypal. It's cheaper and easier. If you don't get what Bitcoin (BTC) is, I don't have time to explain it to you. Have Fun Staying Poor!" --- "Wasn't Bitcoin supposed to be a "peer-to-peer electronic cash system"?

"What altcoin are you trying to promote?! You're just a scammer." --- "Maybe i'm looking for something that...has utility?"

The list goes on...
As you can see, the "point" of Bitcoin (BTC) is pretty confusing. It's meant to only be held and accumulated. But it's a monetary network. But it has high fees (which some ludicrously claim is a feature and not a bug). But it has scaling solutions. But even if those scaling solutions aren't very good and aren't being used it doesn't matter because it's only meant to be held and accumulated, so use paypal/something else...
I think two perspectives can address these points:

1. Everything has tradeoffs and Bitcoin is no exception.

The Bitcoin community has prioritized hard money characteristics above all. That also means prioritizing decentralization. It means innovating slowly and changing very little. That means DE- prioritizing onchain payment capabilities (higher fees/lower capacity). It means you cant play tetris on it.

"it has high fees (which some ludicrously claim is a feature and not a bug)" If you believe decentralization is the whole point of crypto, then having ways of sustaining the security of the network isnt really that ludicrous. Since the miner block subsidy (release of new coins) fades away some day, transaction fees need to fill the gap to secure the network. Transaction fees are needed because a hard cap on coins was chosen. Maybe there is some innovative way to skirt this and there are lots of hypothetical discussions here, but I hope we dont get too lost in this as its really be done to death (in 2017 BCH fork).

Lightning and other payment layers on Bitcoin are all promising but need a lot of work.

Yet from my vantage point, Bitcoin is still best positioned to become money. Which leads to...

2. An investment in Bitcoin is largely a speculation on Bitcoin becoming money.

This doesn’t mean Bitcoin is the unit of account out of the gates. It means monetization of an asset takes time and is a gradient, not binary. Ill keep posting this chart as the type of mental model Im talking about:
viewtopic.php?f=1&t=11918&start=25#p223442
Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
The reason why BTC has managed to remain so strong is because of it's ossification. To remain competitive but keep its stability in the free-market crypto environment, it changed narrative rather than capability. It has just enough talking points backed by first-mover network effect to remain the standard. But it won't stay that way unless there are some serious developments to scale its use case. Until that happens, people are assigning it value, not giving it value.
I dont think personification of Bitcoin is a valuable way to position it. Some in the Bitcoin community are more hard money/conservative and some are more payments/innovative. The community split over this in 2017, so "Bitcoin" narrative sounds a bit different perhaps since the payments people left the community to a large degree.
Arthur Boe Nansa wrote:
Fri Mar 05, 2021 6:22 am
You may be asking yourself at this point: "Okay, so maybe Bitcoin (BTC) isn't the best option. What's the best crypto project? Also, why do you keep calling it "(BTC)" and not just Bitcoin?

Great questions, i'll start with the second one.
Because some believe that Bitcoin needs to scale appropriately to have real value. In 2017, Bitcoin Cash (BCH) "forked" from the original Bitcoin (BTC) to increase the blocksize and remain a potential candidate for peer-to-peer electronic cash. It can still technically be considered Bitcoin because its blockchain originates from the same genesis block of Satoshi Nakamoto. There are other forked projects (some of them have been mentioned in this thread), but I don't think they have the same value proposition as BCH, all things considered.

"Great, so you're saying I should go with Bitcoin Cash (BCH)?"

NO. I am saying you should try and understand the pros and cons of different projects and their ability to provide value to you and society. Truth be told, between BTC and BCH, I think BCH can do it better. Does that mean it will? No. Does that mean it will be the most financially prosperous crypto or be the definitive monetary network? Double-no.

The point is to understand what you're trying to "get out" of a project by assessing how serious it is (track record - past), how in demand it is (use-case - present) and how relevant it will be (value - future).
This is fair.

I obviously dont agree that BCH is better and the market hasn’t agreed (yet?) either from a pricing perspective but I understand your stance here.
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Re: I think it’s time to move into crypto

Post by vincent_c » Fri Mar 05, 2021 11:43 am

bitcoininthevp wrote:
Fri Mar 05, 2021 11:32 am
I see vincent_c as somewhat new to the space and, yes, my intent was to shed my historical experiences light on his outlook.
This is not a fair statement for a couple reasons.

Regardless of how long someone has been in a space, can you focus on the arguments rather than anything personal?

Regarding my outlook, I'm trying to advocate a purely agnostic approach which is inline with PP principles.

Can we shift the discussion to identifying what is the best agnostic approach to having crypto exposure?
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Fri Mar 05, 2021 11:50 am

vincent_c wrote:
Fri Mar 05, 2021 11:43 am
bitcoininthevp wrote:
Fri Mar 05, 2021 11:32 am
I see vincent_c as somewhat new to the space and, yes, my intent was to shed my historical experiences light on his outlook.
This is not a fair statement for a couple reasons.

Regardless of how long someone has been in a space, can you focus on the arguments rather than anything personal?

Regarding my outlook, I'm trying to advocate a purely agnostic approach which is inline with PP principles.

Can we shift the discussion to identifying what is the best agnostic approach to having crypto exposure?
Sorry, no offense. We are all new at some point.

I believe an agnostic approach to crypto investing is traditional models of indexed investing. Market cap weighted index of the top 10 coins could be one?
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Re: I think it’s time to move into crypto

Post by vincent_c » Fri Mar 05, 2021 12:22 pm

Great, thank you.

I think that an agnostic approach should proxy the productivity of the entire blockchain space (I'm trying to find a term that we can agree on because there seemed to be an issue with referencing a blockchain economy).

So maybe we can actually figure this one out first, I'm willing to take a step back and re-evaluate what I think about this.

In my mind, a blockchain industry is equivalent to a blockchain economy.

The reason is because an economy is made up of:

1) Productive entities (so for example network fees are a source of productivity and anything in the space that generates more network fees contribute to that economy)

2) A store of value (acting as a unit of account).

3) Lenders

4) Borrowers


If we can just agree that there is a blockchain economy, I think I can take us to the next step.
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Re: I think it’s time to move into crypto

Post by bitcoininthevp » Sat Mar 06, 2021 6:50 am

Came across this. Not sure if it’s useful on your quest.

https://www.visionhill.com/indices
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Re: I think it’s time to move into crypto

Post by vincent_c » Sat Mar 06, 2021 4:02 pm

bitcoininthevp wrote:
Fri Mar 05, 2021 11:50 am
Market cap weighted index of the top 10 coins could be one?
I think that is also a valid approach and probably easier to accept than what I envision. A lot of the money flowing into the blockchain industry isn't represented in the market cap of cryptocurrencies though and BTC would be so overly dominant that it may not make much difference in total return compared to holding only BTC.

Holding BTC alone I would also expect to be a valid approach as a proxy for an agnostic approach until the market cap of any serious contender becomes relevant. That contender would have to be an obvious BTC replacement though and not a platform token.

I'm not against holding BTC alone, however you can say that my quest is to find an improvement on it.

It may be that the ETH PP is not suitable as a portfolio that is agnostic to the future because of the BTC benchmark. Just like how the PP needs to outperform gold in the long run as a benchmark.

If BTC alone ultimately outperforms an ETH PP then that would mark a failure of this approach. However, if instead of 100% BTC, we proxy the total crypto exposure by (90% BTC and 10% ETH) then it seems logical as a next step to replace the 10% ETH with the ETH PP.

So this leads me to suggest a 90% BTC/10% ETH PP.

I'm starting to see that we share more similarities than differences as I really don't think that 10% difference in allocation will ultimately make any significant difference.
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