Gold outflows, bitcoin inflows

Discussion of the Gold portion of the Permanent Portfolio

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Re: Gold outflows, bitcoin inflows

Post by vnatale » Mon Oct 25, 2021 8:00 pm

BITCOIN COULD BECOME WORLD RESERVE CURRENCY, SAYS SENATOR RAND PAUL


https://bitcoinmagazine.com/markets/bit ... -rand-paul
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Re: Gold outflows, bitcoin inflows

Post by Kbg » Tue Oct 26, 2021 2:06 pm

I thought this article very good. A good synopsis of a lot of different takes on BTC.

https://dualmomentum.net/2021/06/23/bit ... -approach/

A couple of interesting excerpts...

There will never be more than 21 million bitcoin, of which 89% has already been mined. That leaves a circulating supply of 18.5 million bitcoin. About 3 million has been lost. Much of the rest is illiquid and held by HODLers. Glassnode estimates that 78% of the circulating bitcoin last December was illiquid. Only 4.2 million bitcoin were available for buying and selling. Liquidity goes up when the price of bitcoin goes down, but there is still less tradeable supply than many realize

There is also high volatility due to bitcoin’s concentration. According to the analytics firm Flipside Crypto, 2% of bitcoin addresses control 95% of bitcoin. Large holders can dramatically move bitcoin prices. They also raise concerns with the SEC about market manipulation. There is statistical evidence here of past manipulation.

Be nimble, be fast.
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Re: Gold outflows, bitcoin inflows

Post by Cortopassi » Tue Oct 26, 2021 2:37 pm

vnatale wrote:
Mon Oct 25, 2021 8:00 pm
BITCOIN COULD BECOME WORLD RESERVE CURRENCY, SAYS SENATOR RAND PAUL


https://bitcoinmagazine.com/markets/bit ... -rand-paul
Hah Hah!

"The government currencies are so unreliable — they're also fiat currencies. They're not backed by anything," Sen. Paul said."

And Bitcoin is backed by....????
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Re: Gold outflows, bitcoin inflows

Post by Xan » Tue Oct 26, 2021 5:04 pm

Cortopassi wrote:
Tue Oct 26, 2021 2:37 pm
vnatale wrote:
Mon Oct 25, 2021 8:00 pm
BITCOIN COULD BECOME WORLD RESERVE CURRENCY, SAYS SENATOR RAND PAUL


https://bitcoinmagazine.com/markets/bit ... -rand-paul
Hah Hah!

"The government currencies are so unreliable — they're also fiat currencies. They're not backed by anything," Sen. Paul said."

And Bitcoin is backed by....????
Without the full context, it could be that he's saying that neither the USD nor Bitcoin are backed by anything, and so the dollar (in some ways) isn't any more "real" than Bitcoin.
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Re: Gold outflows, bitcoin inflows

Post by I Shrugged » Tue Oct 26, 2021 6:32 pm

I read that 0.1% of Bitcoin miners control half of all mining capacity. This gives rise to the 51% problem. Meaning the network could be abused by a small cohort of miners. I’m not claiming knowledge of how. But you can search 51% Attack and read up.
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Re: Gold outflows, bitcoin inflows

Post by vnatale » Tue Oct 26, 2021 8:23 pm

Kbg wrote:
Tue Oct 26, 2021 2:06 pm

I thought this article very good. A good synopsis of a lot of different takes on BTC.

https://dualmomentum.net/2021/06/23/bit ... -approach/

A couple of interesting excerpts...

There will never be more than 21 million bitcoin, of which 89% has already been mined. That leaves a circulating supply of 18.5 million bitcoin. About 3 million has been lost. Much of the rest is illiquid and held by HODLers. Glassnode estimates that 78% of the circulating bitcoin last December was illiquid. Only 4.2 million bitcoin were available for buying and selling. Liquidity goes up when the price of bitcoin goes down, but there is still less tradeable supply than many realize

There is also high volatility due to bitcoin’s concentration. According to the analytics firm Flipside Crypto, 2% of bitcoin addresses control 95% of bitcoin. Large holders can dramatically move bitcoin prices. They also raise concerns with the SEC about market manipulation. There is statistical evidence here of past manipulation.

Be nimble, be fast.


Excellent article....the two preceding paragraphs to your last paragraph above...

Eugene Fama says bitcoin should not exist. He thinks its value will drop to zero since it doesn’t have enough stability to serve as a unit of account.

Many who buy bitcoin know little about it. (Click here to learn how the protocol works). Most buy it motivated by fear of missing out (FOMO) when they see the price going up. They sell when the price falls, motivated by fear, uncertainty, and doubt (FUD). This kind of uninformed trading exacerbates price volatility.
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Re: Gold outflows, bitcoin inflows

Post by Jack Jones » Wed Oct 27, 2021 8:32 am

Xan wrote:
Tue Oct 26, 2021 5:04 pm
Cortopassi wrote:
Tue Oct 26, 2021 2:37 pm
vnatale wrote:
Mon Oct 25, 2021 8:00 pm
BITCOIN COULD BECOME WORLD RESERVE CURRENCY, SAYS SENATOR RAND PAUL


https://bitcoinmagazine.com/markets/bit ... -rand-paul
Hah Hah!

"The government currencies are so unreliable — they're also fiat currencies. They're not backed by anything," Sen. Paul said."

And Bitcoin is backed by....????
Without the full context, it could be that he's saying that neither the USD nor Bitcoin are backed by anything, and so the dollar (in some ways) isn't any more "real" than Bitcoin.
It's real like gold is. If you want Bitcoin or gold, you, a sovereign individual, can invest capital in mining equipment and expend energy to mine it, or pay an enterprising individual who has. They are backed by the capital and work required to produce them.
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 9:34 am

Kbg wrote:
Tue Oct 26, 2021 2:06 pm
There is also high volatility due to bitcoin’s concentration. According to the analytics firm Flipside Crypto, 2% of bitcoin addresses control 95% of bitcoin. Large holders can dramatically move bitcoin prices. They also raise concerns with the SEC about market manipulation. There is statistical evidence here of past manipulation.
Here is the issue with this sort of analysis:

- The 2% of bitcoin addresses that hold 95% of bitcoin are exchanges and custodians
- Related to the point above, addresses dont equate to entities in any way. For example, I could have 1000 BTC spread across 10,000 bitcoin addresses. Or 1 exchange address could have 1000 BTC which represents BTC held by 100,000 of its customers
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 9:36 am

vnatale wrote:
Tue Oct 26, 2021 8:23 pm
Eugene Fama says bitcoin should not exist. He thinks its value will drop to zero since it doesn’t have enough stability to serve as a unit of account.


This is pretty hilarious given Fama is the efficient market hypothesis guy.

Sorry Eugene the market knows something you dont!
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 9:47 am

I Shrugged wrote:
Tue Oct 26, 2021 6:32 pm
I read that 0.1% of Bitcoin miners control half of all mining capacity. This gives rise to the 51% problem. Meaning the network could be abused by a small cohort of miners. I’m not claiming knowledge of how. But you can search 51% Attack and read up.
Id be curious as to the source on this, sounds wildly wrong.

Also there is some nuance here, a couple points:

There is no way to know for sure which miner is mining which blocks as mining in bitcoin is anonymous. Anonymous mining (transaction processing) is critical for the decentralization of the network.

Also, there is a difference between Bitcoin MINERS and Bitcoin MINING POOLS. Bitcoin miners join Bitcoin mining pools of other miners to smooth out their BTC mining rewards (otherwise small miners might get no revenue for a year+ and then find one block reward after 18 months of mining, for example). Here is a chart of mining pools: https://btc.com/stats/pool

Pools voluntarily choose to identify themselves when they mine a block as a way of advertising how big their network of miners is to other potential miners.

Miners can join and leave pools with ease, instantly. So if there is misbehaving pool, or if a pool gets too big, things rapidly resolve.

I suppose in theory a miner could own 99% of the hashrate and just join many different pools to "pretend" they are not the owner of 99% of the bitcoin hashrate. So it is possible, but there is no evidence of this.

Clear as mud?
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Re: Gold outflows, bitcoin inflows

Post by Cortopassi » Thu Oct 28, 2021 11:20 am

Jack Jones wrote:
Wed Oct 27, 2021 8:32 am

It's real like gold is. If you want Bitcoin or gold, you, a sovereign individual, can invest capital in mining equipment and expend energy to mine it, or pay an enterprising individual who has. They are backed by the capital and work required to produce them.
I understand there are clear similarities between gold and bitcoin, on the energy needed to gain either.

However, I never really understood the pooh poohing by so many of "fiat" government money, especially the US, making it sound like the money is worth nothing. The US has gold, property, buildings, infrastructure, land, armies, etc. There's absolutely value that could be sold off to prop up the price of the dollar if needed.

Gold, on the other hand, if an alchemist figures out how to transmute sand into gold, its value goes to zero nearly instantly.

Bitcoin, I don't know. When quantum computing becomes more mainstream and it possibly becomes easier to hack into wallets and such, I could see value dropping like a rock.

Just some thoughts.
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Re: Gold outflows, bitcoin inflows

Post by pugchief » Thu Oct 28, 2021 11:24 am

bitcoininthevp wrote:
Thu Oct 28, 2021 9:36 am
vnatale wrote:
Tue Oct 26, 2021 8:23 pm
Eugene Fama says bitcoin should not exist. He thinks its value will drop to zero since it doesn’t have enough stability to serve as a unit of account.
This is pretty hilarious given Fama is the efficient market hypothesis guy.

Sorry Eugene the market knows something you dont!
If BTC is so market efficient, can one of you proponents ELI5 why the cost of buying, selling and holding BTC is so high compared to stocks?
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 11:32 am

pugchief wrote:
Thu Oct 28, 2021 11:24 am
If BTC is so market efficient, can one of you proponents ELI5 why the cost of buying, selling and holding BTC is so high compared to stocks?
Which exchange are you referencing?
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Re: Gold outflows, bitcoin inflows

Post by pugchief » Thu Oct 28, 2021 11:35 am

bitcoininthevp wrote:
Thu Oct 28, 2021 11:32 am
pugchief wrote:
Thu Oct 28, 2021 11:24 am
If BTC is so market efficient, can one of you proponents ELI5 why the cost of buying, selling and holding BTC is so high compared to stocks?
Which exchange are you referencing?
If I want to buy stocks, I open a brokerage at any of a dozen+ firms. Buying is free, holding is free, selling is free. All I need is a username and password.

Can any of that be said of BTC?
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 11:35 am

Cortopassi wrote:
Thu Oct 28, 2021 11:20 am
However, I never really understood the pooh poohing by so many of "fiat" government money, especially the US, making it sound like the money is worth nothing. The US has gold, property, buildings, infrastructure, land, armies, etc. There's absolutely value that could be sold off to prop up the price of the dollar if needed.
Dollars have value because people believe they do. Just like anything else. If people start valuing dollars less (right or wrong I suppose), what would the mechanism be for the US to increase the value of the USD? Would the USG sell some BLM land to a private entity, and the act of taking those dollars off of the market would push up the dollar ever so slightly. Curious more than criticizing here.
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 11:40 am

pugchief wrote:
Thu Oct 28, 2021 11:35 am
If I want to buy stocks, I open a brokerage at any of a dozen+ firms. Buying is free, holding is free, selling is free. All I need is a username and password.

Can any of that be said of BTC?
Im unclear, there are no line item transaction fees so its free? They make no money (on spread?, on selling your orders or whatnot)?

Fees are coming down in crypto with more competition in the space. But, I dont really have a horse in this race, and Im not sure how fees even came up actually. EMH isnt about fees or maybe Im missing something.
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Re: Gold outflows, bitcoin inflows

Post by bitcoininthevp » Thu Oct 28, 2021 11:43 am

bitcoininthevp wrote:
Thu Oct 28, 2021 11:40 am
pugchief wrote:
Thu Oct 28, 2021 11:35 am
If I want to buy stocks, I open a brokerage at any of a dozen+ firms. Buying is free, holding is free, selling is free. All I need is a username and password.

Can any of that be said of BTC?
Im unclear, there are no line item transaction fees so its free? They make no money (on spread?, on selling your orders or whatnot)?

Fees are coming down in crypto with more competition in the space. But, I dont really have a horse in this race, and Im not sure how fees even came up actually. EMH isnt about fees or maybe Im missing something.
I suppose I can go nuclear in this "argument" and just say, I can buy BTC from a guy in an alley and pay $0.00 fees. I can also store BTC for $0.00 indefinitely. And likewise sell in an alley for $0.00. But yeah, not sure where we are going with this.
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Re: Gold outflows, bitcoin inflows

Post by Cortopassi » Thu Oct 28, 2021 1:23 pm

bitcoininthevp wrote:
Thu Oct 28, 2021 11:35 am
Cortopassi wrote:
Thu Oct 28, 2021 11:20 am
However, I never really understood the pooh poohing by so many of "fiat" government money, especially the US, making it sound like the money is worth nothing. The US has gold, property, buildings, infrastructure, land, armies, etc. There's absolutely value that could be sold off to prop up the price of the dollar if needed.
Dollars have value because people believe they do. Just like anything else. If people start valuing dollars less (right or wrong I suppose), what would the mechanism be for the US to increase the value of the USD? Would the USG sell some BLM land to a private entity, and the act of taking those dollars off of the market would push up the dollar ever so slightly. Curious more than criticizing here.
I'm not saying the value of the dollar can't go down or up, it obviously has gone down because of inflation since the start.

I'm just kind of going down the line that drastic value changes in either direction are way more unlikely with the dollar (which is the main reason I don't have anything in Bitcoin). The US could certainly sell things off as crazy as that may be. Didn't we get land that way from France and such? :D

On the other hand, if, say, somebody really had a hard on against Bitcoin, it cold easily likely be declared illegal to own and/or mine. Didn't that happen recently in China in some fashion?
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Re: Gold outflows, bitcoin inflows

Post by vincent_c » Thu Oct 28, 2021 2:47 pm

bitcoininthevp wrote:
Thu Oct 28, 2021 11:43 am
I suppose I can go nuclear in this "argument" and just say, I can buy BTC from a guy in an alley and pay $0.00 fees. I can also store BTC for $0.00 indefinitely. And likewise sell in an alley for $0.00. But yeah, not sure where we are going with this.
When you say stuff like this, they will just shake their head and disagree.

What they don't know is that there are safe P2P ways to buy bitcoin without fees.
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Re: Gold outflows, bitcoin inflows

Post by vincent_c » Thu Oct 28, 2021 2:50 pm

Cortopassi wrote:
Thu Oct 28, 2021 1:23 pm
On the other hand, if, say, somebody really had a hard on against Bitcoin, it cold easily likely be declared illegal to own and/or mine. Didn't that happen recently in China in some fashion?
I think it was critical that the West has won the bitcoin war.

Do you think it is a coincidence that China finally banned bitcoin, then the hash rate left China and now the US is developing the semiconductor production facilities that will secure bitcoin mining in the future and the hash rate has gone to the US. Then the SEC allows a Bitcoin futures ETF so that financial advisors can allocate BTC for the mass market. FDIC is saying Banks would like to add BTC to their balance sheets.

If after all of this, the US declares bitcoin illegal, does this make sense to you? Not only that, but the crypto industry is probably the fastest growing sector and lots of young kids are developing the skills to work in that industry. I don't see how it can be made illegal, can you?
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Re: Gold outflows, bitcoin inflows

Post by Cortopassi » Thu Oct 28, 2021 3:34 pm

vincent_c wrote:
Thu Oct 28, 2021 2:50 pm
Cortopassi wrote:
Thu Oct 28, 2021 1:23 pm
On the other hand, if, say, somebody really had a hard on against Bitcoin, it cold easily likely be declared illegal to own and/or mine. Didn't that happen recently in China in some fashion?
I think it was critical that the West has won the bitcoin war.

Do you think it is a coincidence that China finally banned bitcoin, then the hash rate left China and now the US is developing the semiconductor production facilities that will secure bitcoin mining in the future and the hash rate has gone to the US. Then the SEC allows a Bitcoin futures ETF so that financial advisors can allocate BTC for the mass market. FDIC is saying Banks would like to add BTC to their balance sheets.

If after all of this, the US declares bitcoin illegal, does this make sense to you? Not only that, but the crypto industry is probably the fastest growing sector and lots of young kids are developing the skills to work in that industry. I don't see how it can be made illegal, can you?
I am talking out of my ass here, not knowing enough. What are the chances, like wifi encryption, and lots and lots of other historical precedents of unbreakable security being broken, that someone or something or some group in the near future can hack or break or otherwise get into the system and cause widespread problems?

Is it not possible? If yes, then what?

What bugs me most, and I know you can say the same thing about gold or diamonds, etc, is the energy consumption (and the resulting perpetual shortage of good graphics cards!)

https://digiconomist.net/bitcoin-energy-consumption/

Interesting:

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Re: Gold outflows, bitcoin inflows

Post by I Shrugged » Thu Oct 28, 2021 6:58 pm

bitcoininthevp wrote:
Thu Oct 28, 2021 9:47 am
I Shrugged wrote:
Tue Oct 26, 2021 6:32 pm
I read that 0.1% of Bitcoin miners control half of all mining capacity. This gives rise to the 51% problem. Meaning the network could be abused by a small cohort of miners. I’m not claiming knowledge of how. But you can search 51% Attack and read up.
Id be curious as to the source on this, sounds wildly wrong.

Also there is some nuance here, a couple points:

There is no way to know for sure which miner is mining which blocks as mining in bitcoin is anonymous. Anonymous mining (transaction processing) is critical for the decentralization of the network.

Also, there is a difference between Bitcoin MINERS and Bitcoin MINING POOLS. Bitcoin miners join Bitcoin mining pools of other miners to smooth out their BTC mining rewards (otherwise small miners might get no revenue for a year+ and then find one block reward after 18 months of mining, for example). Here is a chart of mining pools: https://btc.com/stats/pool

Pools voluntarily choose to identify themselves when they mine a block as a way of advertising how big their network of miners is to other potential miners.

Miners can join and leave pools with ease, instantly. So if there is misbehaving pool, or if a pool gets too big, things rapidly resolve.

I suppose in theory a miner could own 99% of the hashrate and just join many different pools to "pretend" they are not the owner of 99% of the bitcoin hashrate. So it is possible, but there is no evidence of this.

Clear as mud?

https://fortune.com/2021/10/26/bitcoin- ... ber-study/
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Re: Gold outflows, bitcoin inflows

Post by I Shrugged » Thu Oct 28, 2021 7:02 pm

Today I read that the simplest purchase of something with Bitcoin generates the consumption of $100 in electricity, assuming low rates being used by most miners. It is 1173 kWH.

https://fortune.com/2021/10/26/bitcoin- ... -footprin/
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Re: Gold outflows, bitcoin inflows

Post by vincent_c » Thu Oct 28, 2021 7:50 pm

These sources are probably trying to confuse you guys with misleading information.

The main chain's purpose is to secure transactions that the free market determines is worth securing. I can't imagine that any miner would operate at a loss for long so generally the fees for such transactions should cover the cost of electricity. The vast majority of transactions should be able to be transacted on layer 2s which have essentially free transactions that also don't require much energy per transaction.

So although I can imagine that the current energy use per transaction on the entire bitcoin network could be high, the scalability of the network is such now that you can theoretically have a very large number of transactions without increasing the costs of running the network significantly.
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Re: Gold outflows, bitcoin inflows

Post by vnatale » Thu Oct 28, 2021 9:12 pm

bitcoininthevp wrote:
Thu Oct 28, 2021 9:36 am

vnatale wrote:
Tue Oct 26, 2021 8:23 pm

Eugene Fama says bitcoin should not exist. He thinks its value will drop to zero since it doesn’t have enough stability to serve as a unit of account.


This is pretty hilarious given Fama is the efficient market hypothesis guy.

Sorry Eugene the market knows something you dont!



My first reaction was...you are correct!

However, when it comes to securities....there can be some form of efficient market since so much is known about the securities by so many people.

But when it comes to bitcoin is it not certain that nowhere as much is known about it and then only by a relatively small handful of people?
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