BTC in the PP

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Jack Jones
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Re: BTC in the PP

Post by Jack Jones » Tue Aug 10, 2021 1:08 pm

D1984 wrote:
Tue Aug 10, 2021 11:38 am
First of all, why is she--or anyone--entitled to a positive real rate of interest on their savings?
I'm saying that the money should just work. You get paid, you put it in the bank, you're good. If you want to take additional risk, you can invest it.

Instead we have made it a policy to erode the perspective through which we all value the world. Every year our vision gets worse, but we're wearing the same pair of glasses.
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Re: BTC in the PP

Post by I Shrugged » Tue Aug 10, 2021 7:26 pm

Don't believe your lying eyes. Listen to the economists.
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Re: BTC in the PP

Post by Kbg » Wed Aug 11, 2021 10:42 am

Jack Jones wrote:
Tue Aug 10, 2021 1:08 pm
D1984 wrote:
Tue Aug 10, 2021 11:38 am
First of all, why is she--or anyone--entitled to a positive real rate of interest on their savings?
I'm saying that the money should just work. You get paid, you put it in the bank, you're good. If you want to take additional risk, you can invest it.

Instead we have made it a policy to erode the perspective through which we all value the world. Every year our vision gets worse, but we're wearing the same pair of glasses.
No disrespect or slam intended, but really, you've got some rose colored glasses on that are showing you a world that has never existed. Your expectations of some fixed never changing entity that magically adjusts itself to never having inflation and is simultaneously available to all who need it has just never existed. For emphasis, ever. As mentioned, earlier, there are tradeoffs. That's it full stop.

But let's use your "put it in the bank and you're good" as an example. In the world you are advocating, do not be the least bit surprised if you show up at that bank and they won't give you your money because it has been lent out and they can't get it back. The business owner who has a loan out can't pay it back even if he wanted to because his customers don't have money to buy anything in his store...because completely rational people are hording it and there is none to be found. That's the reality of it in your world. Now extend your mind, if this is wide spread what is happening everywhere...businesses are going bust left and right, people are getting tossed from their jobs and you are in a downward induced spiral that is self-feeding. Sound familiar? It should. This would be known as the 1930s most recently...and again, is why no one does a fixed currency anymore. It's stupid and is analogous to shooting yourself in the foot and then continuously reloading for more shots.

I've found it is very difficult for most people to get their heads around the simple fact that the way money works at a macro level is not the same as how money works at the micro level for people day to day. You may not like this, but it is what it is. I recommend educating yourself on the topic, though most of the stuff is boring as all get out and excellent for putting you to sleep after crawling into bed for the evening.
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Re: BTC in the PP

Post by Kbg » Wed Aug 11, 2021 2:51 pm

vincent_c wrote:
Wed Aug 11, 2021 11:26 am
As a creditor of the bank, you should only expect whatever contractual rights you are entitled to and you should understand the risks. Governments are there to facilitate commerce by subsidizing banks so that regular people don't have to think about these risks. In the end it's about financial education and I think a lot of the problems we have can be solved if everyone can take responsibility for their risk taking.
Are you saying FDIC is good or shouldn't be a thing?
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Re: BTC in the PP

Post by Kbg » Wed Aug 11, 2021 10:44 pm

vincent_c wrote:
Wed Aug 11, 2021 3:15 pm
It's a necessary evil because most people are not financially educated. I don't even want to guess how many to the degree we have in this forum.
Think 2007-2008, even professional financial people didn't understand what was going on in most cases. Mom and Pop, not at all. So I think the FDIC is a net plus.

In today's world I honestly don't understand why not just restore most if not all of the depositors' funds if a bank goes under and then actually wipe out all the equity and debt of the owners. I'm pretty sure that would lead to much more responsible banks.
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Re: BTC in the PP

Post by glennds » Thu Aug 12, 2021 12:11 am

Kbg wrote:
Wed Aug 11, 2021 10:44 pm
vincent_c wrote:
Wed Aug 11, 2021 3:15 pm
It's a necessary evil because most people are not financially educated. I don't even want to guess how many to the degree we have in this forum.
Think 2007-2008, even professional financial people didn't understand what was going on in most cases. Mom and Pop, not at all. So I think the FDIC is a net plus.
I get a visual in my mind of a line of scrimmage. The banking corporation on one side, and the customer on the other. If there were no FDIC or regulatory body involved, the customer would be toast. No matter how financially educated, the customer does not have access to the financial data to assess the stability of the bank and make an educated judgment call about depositing their funds there.

Besides, in 2007-2008 what (almost) took the major banks down was mostly reckless risk taking and losses on the investment banking side of their massive organizations, not the traditional commercial banking side. Thanks entirely to the repeal of the Glass-Steagall Act in 1999, the separation of commercial banking and investment banking ceased. This allowed for the huge consolidation in banking and also exposed depositors to the risks of investment banking which is what Glass-Steagall was intended to prevent.
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Re: BTC in the PP

Post by vnatale » Thu Aug 12, 2021 11:21 am

Would this be a consideration for anyone making an investment in Bitcoin or any other crypto currency?

Vinny

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Re: BTC in the PP

Post by gaddyslapper007 » Thu Aug 12, 2021 3:36 pm

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Re: BTC in the PP

Post by gaddyslapper007 » Thu Aug 12, 2021 3:41 pm

"The world produces 160,000 TWh every year. 50,000 TWh is wasted.....Bitcoin uses 120 TWh."

https://twitter.com/BTC_Archive/status/ ... 4950752260
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Re: BTC in the PP

Post by gaddyslapper007 » Fri Aug 13, 2021 1:55 pm

vincent_c wrote:
Fri Aug 13, 2021 12:28 am
1:09 is where they specifically deal with the energy question.

It’s an interesting talk but I’m not sure I agree with a lot of the points on economics.
In regards to economics.....In a way we are so used to the Fiat world its hard to really think outside of it ( a fiat mindset)...as it is all we know. But one example i like to contemplate is what the modern US homes and infrastructure would look like if it were built with wealth instead of debt. If our architectural construction / infrastructure were built for aesthetics, longevity and efficiency vs. built with debt / as cheap as possible to get the job done and flip to someone else. I do not doubt our fiat based / lend money into existence economy helped fuel "prosperity" and innovation leaps that otherwise would have taken longer organically.....but in the grand scheme of things i think a slower expanding economy and technology advances would not have been such a bad thing either. Did the fiat economy (hustle and bustle / flipping the hot potato) speed up life to a point where everyone is unhappy, rushed etc...??...dunno
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Re: BTC in the PP

Post by gaddyslapper007 » Fri Aug 13, 2021 6:33 pm

“...There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.”

-Greenspan (1966)


This is what Bitcoin aims to do. Store energy / labor spent in the form of money through time. Time value of money is a fiat concept. It does not exist as a law of nature….only in a fiat economy.

In all honesty I’m not against the fiat economy….to me, hold debt in fiat and wealth in BTC. It’s the perfect recipe!
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Re: BTC in the PP

Post by gaddyslapper007 » Sun Aug 15, 2021 11:09 am

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Re: BTC in the PP

Post by Matthew19 » Fri Aug 20, 2021 1:52 pm

gaddyslapper007 wrote:
Fri Aug 13, 2021 6:33 pm

Time value of money is a fiat concept. It does not exist as a law of nature….only in a fiat economy.

In all honesty I’m not against the fiat economy….to me, hold debt in fiat and wealth in BTC. It’s the perfect recipe!
Time value of money is a human fact and has nothing to do with fiat, its directly tied to time preference. The discount of time value due to inflation is due to fiat inflation, among other things, but money now is worth more than money later because you have to deduct opportunity costs & potential interest earnings.
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Re: BTC in the PP

Post by Matthew19 » Fri Aug 20, 2021 2:00 pm

As for BTC in the PP, I think it could be seen as part of a VP in the same way that Tyler views the golden butterfly as a PP with a small cap value VP added to it.

The reason is to capture those fleeing dollars for safety from inflation. You can’t argue that BTC doesn’t siphon off that inflation hedge money from gold to some degree. A PP with a 10% BTC VP seems wise at this point.
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Re: BTC in the PP

Post by bitcoininthevp » Fri Aug 20, 2021 2:00 pm

vincent_c wrote:
Thu Aug 05, 2021 11:20 am
glennds wrote:
Thu Aug 05, 2021 11:11 am
I just don't think BTC out-gold's gold any more than an apple out-oranges an orange even though they're both fruit. But if an investor decides for their own reasons to shift from apples to oranges staying within the fruit family, it's not for me to say they're wrong.
You mentioned overlap right?

So let's say out of 10 trillion dollars there is 5 trillion of overlap, and out of that overlap BTC will trend toward taking away 50% of that value. BTC will also gain market share from other assets that we will ignore for now.

Something like this still leaves BTC with 2.5 trillion market cap eventually. I think the problem people have is that while BTC may only be worth 100 billion right now they are assigning it a value of 500 billion to 1 trillion and it's just speculative in that sense. Does it make any sense to assign a multiple to BTC? Multiple of what if not earnings, perhaps future gain in market share?
One consideration here is that "savings" today means putting your money in stocks, bonds, etc. (hence the PP!). But before the government took over the money and devalued it (making it not a good way to "save"), money (mostly gold) was actually a way of saving wealth.

If bitcoin becomes money, it could eat away at other current savings mechanisms like stocks/bonds that we are all forced to speculate in because the money is broken.

So perhaps the addressable market for bitcoin is much larger than just gold.
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Re: BTC in the PP

Post by gaddyslapper007 » Fri Aug 20, 2021 2:43 pm

Matthew19 wrote:
Fri Aug 20, 2021 1:52 pm
gaddyslapper007 wrote:
Fri Aug 13, 2021 6:33 pm

Time value of money is a fiat concept. It does not exist as a law of nature….only in a fiat economy.

In all honesty I’m not against the fiat economy….to me, hold debt in fiat and wealth in BTC. It’s the perfect recipe!
Time value of money is a human fact and has nothing to do with fiat, its directly tied to time preference. The discount of time value due to inflation is due to fiat inflation, among other things, but money now is worth more than money later because you have to deduct opportunity costs & potential interest earnings.


thinking this through…..help me. If given the choice of a loan denominated in $50,000usd amortized 30yrs…..or 1BTC (~$50k) same amortization….and by your definition opportunity cost lies within time frame preferences (not inherently to fiat)……(time / opportunity cost is equal here no?). why would you EVER take a loan denominated and accrued in BTC knowing it will be harder and harder over time to accumulate and repay? Since humans assign value collectively….I believe time value of money is inherent to the form of money. (It obviously makes a difference when time / opportunity costs are Equal)
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Re: BTC in the PP

Post by Matthew19 » Fri Aug 20, 2021 3:27 pm

I agree that BTC will inflate less than USD. But time value is based on preferences, and that would depend on the interest rate and expectations of the price vs other currencies or investment options. There are plenty of people who would like to be short BTC right now because they think it’s overvalued. Thats no different the borrowing BTC.

The point about the time value works both ways, why would anyone loan out BTC and NOT charge interest for it when they can forego the risk altogether or spend the BTC on something right now.

In the past I didn’t understand why someone would loan to the U.S. at 0% interest short term, but HB made me realize its to mitigate the counter party risk of the banks.
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Re: BTC in the PP

Post by gaddyslapper007 » Fri Aug 20, 2021 3:58 pm

Maybe I was vague originally…..yes “time value of money” is a human preference weighted in time / opportunity cost. What I should have stated is that the “rule” of a dollar today is worth more than a dollar tomorrow is a symptom of a fiat economy. (Not a law of nature / applicable to all forms of money). That logic does not hold true if denominated in deflationary currency obviously. (Which btc aims to do over the long term)

Yes, there is no reason to lend (take risk) if you aren’t rewarded. (Whatever the interest rate works out to be). Lending at 0% or negative rates might actual be profitable in a deflationary based economy. But as an investor….there is no profitable / logical reason to lend at 0% or negative rates in an inflationary based currency / economy. ( from a government standpoint it works to artificially boost velocity of money knowing more is coming from the printing press)
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Re: BTC in the PP

Post by bitcoininthevp » Fri Aug 20, 2021 6:48 pm

gaddyslapper007 wrote:
Fri Aug 20, 2021 2:43 pm
Matthew19 wrote:
Fri Aug 20, 2021 1:52 pm
gaddyslapper007 wrote:
Fri Aug 13, 2021 6:33 pm

Time value of money is a fiat concept. It does not exist as a law of nature….only in a fiat economy.

In all honesty I’m not against the fiat economy….to me, hold debt in fiat and wealth in BTC. It’s the perfect recipe!
Time value of money is a human fact and has nothing to do with fiat, its directly tied to time preference. The discount of time value due to inflation is due to fiat inflation, among other things, but money now is worth more than money later because you have to deduct opportunity costs & potential interest earnings.


thinking this through…..help me. If given the choice of a loan denominated in $50,000usd amortized 30yrs…..or 1BTC (~$50k) same amortization….and by your definition opportunity cost lies within time frame preferences (not inherently to fiat)……(time / opportunity cost is equal here no?). why would you EVER take a loan denominated and accrued in BTC knowing it will be harder and harder over time to accumulate and repay? Since humans assign value collectively….I believe time value of money is inherent to the form of money. (It obviously makes a difference when time / opportunity costs are Equal)
Check out this article "Speculative Attack"
https://nakamotoinstitute.org/mempool/s ... ve-attack/
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Re: BTC in the PP

Post by bitcoininthevp » Sat Aug 21, 2021 10:40 am

vincent_c wrote:
Fri Aug 20, 2021 8:12 pm
I’m tired of people saying gold or bitcoin is money. What is the point of using the term money anyway given that everything we use is just a proxy for a theoretical concept.
Words are hard sometimes but they are all we got. What would you like to call things like gold and bitcoin? Just assets? Its fine but Im not sure it helps with any of the discussion.
vincent_c wrote:
Fri Aug 20, 2021 8:12 pm
Like mentioned many times before, hard money is not money and the world has been there and done that and it doesn’t work.
Just because you declare it on the forum a few times means that its true?

Gold is hard money and served as the worlds money for 1000s of years. It was also money during the most recent prosperous modern period (even when it backed paper "money"). Its only in the last 100 years or so that freely floating fiat currencies been the dominant "money" (if you could even call fiat currencies money?). And its actually been quite terrible in many regards. https://wtfhappenedin1971.com/ has some thoughts on that, especially regarding the 1971 breaking of USD to gold.

"world has been there and done that and it doesn’t work" its worked really well actually. Golds biggest flaw is that its physical and thus easier for governments to seize/control/etc.

But its weakness there was its physical-ness. Not its hard-ness.
vincent_c wrote:
Fri Aug 20, 2021 8:12 pm
What is wrong with bitcoin and gold simply being stores of value? I can ask my 3 year old what money is and she’ll be able to tell you and it’s definitely not gold or bitcoin.
I think gold and bitcoin are stores of value. I dont think anyone really uses them for unit of account currently. But clearly there is something more money-like about gold and bitcoin vs other stores of values like real estate or whatever. Does "monetary-like assets" put a better label on it? Or you basically only going to accept government issued currencies, a unit of account focus, as "money" (the 3 year olds understanding of money)?
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Re: BTC in the PP

Post by seajay » Sat Aug 21, 2021 2:55 pm

bitcoininthevp wrote:
Sat Aug 21, 2021 10:40 am
I think gold and bitcoin are stores of value.
Gold, paintings by a favored dead artist, etc. are finite/scarce and as such tend to store value. When one is selling to raise cash/money another with surplus capital looks to buy. Bit coin scarcity is virtual/manufactured, could vanish overnight. Bit coin is more a Ponzi, greater fool, its price reflects only speculation on its future value.
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Re: BTC in the PP

Post by glennds » Sat Aug 21, 2021 4:21 pm

bitcoininthevp wrote:
Sat Aug 21, 2021 10:40 am

I think gold and bitcoin are stores of value.
A few random thoughts -
I agree, they are both stores of value, but there are big differences. A store of value is only a store of value to the degree that there is a ready buyer or market of buyers willing to recognize the value i.e. pay for it i.e. allow you to realize the value when you want.
Gold has proven its market for millenia and as such its value is relatively stable. Gold is too mature to be subject to big swings in value over short periods of time, and as such it is not an attractive target for speculation. Gold cannot be accused of having any new fad value.

Bitcoin definitely looks to be a store of value, but the issue is clouded by the novelty, and the big swings in value of short periods is a magnet for speculation. So I might postulate that Bitcoin is both a store of value AND a vehicle for speculation and it is difficult to tell how much of each feature is built into its pricing. Just the fact that Bitcoin saw a 50% drop in value over a short period this year speaks to it's speculative element.
A stable store of value moves mostly sideways or up in modest, methodical movement. If it ever moves down, it is very limited movement but over a long time span, the chart is low incline upward.
Once Bitcoin reaches maturity, presumably the volatility will level and the speculation value will also level. At that point it will be a much clearer store of value. There are other issues too, such as sensitivity to regulation or even threatened regulation.

A feature of both gold and Bitcoin is fungibility. Elsewhere in this thread people have mentioned art and real estate, both of which are physical assets that store value, but neither are very liquid or fungible.

Of course for practical purposes both of these assets are denominated in US dollars, and it is important to think about whether change in Bitcoin or Gold value is more rooted in change in US dollar value than change in either of the two assets. Right now this is something to consider given the loose monetary policy in response to the pandemic.

Personally I'm a fan of both, but I try to stay cognizant of the differences in their features. So I haven't been willing to leave one in favor of the other, rather I maintain exposure to both.


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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 10:38 am

vincent_c wrote:
Mon Aug 23, 2021 9:55 am


Does a store of value have to be stable in the short term?
Initially I might have answered with a resounding yes. But upon reflection, maybe the answer is a personal to the individual investor depending upon their circumstances. By that I mean if a store of value is volatile in the short term, and a given investor needed to access his/her capital when it was down materially, then it wasn't a very good store of value for that person.

Based on this discussion, I am mentally distinguishing between high beta and low beta stores of value. An argument could be made about one being "better" than another, but an argument could also be made that "better" is in part a function of the investor's time horizon, as we would do when constructing a traditional portfolio. Over a 5 year period Bitcoin has been phenomenal. Over a two month period starting in May 2021, not so much.

So take a PP, where we should be rebalancing under defined conditions. If our store of value component is diversified between gold and Bitcoin, and if timing is not optimal for selling the Bitcoin due to it's own unique volatility, then sell the gold.
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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 11:05 am

vincent_c wrote:
Mon Aug 23, 2021 10:44 am
glennds wrote:
Mon Aug 23, 2021 10:38 am
Over a 5 year period Bitcoin has been phenomenal. Over a two month period starting in May 2021, not so much.
I would add that over the next 10 years (could be much shorter) gold is likely to not be such a good store of value relative to bitcoin and then sometime after both gold and bitcoin will stabilize and both will be good long term stores of value again.
That's a reasonable prognosis. However that case you make rests upon the premise that there is a material overlap in the respective markets for the two assets. And a secondary premise that we are in a period of movement from gold and into Bitcoin. This may be the case, but I have found it very difficult, maybe impossible to ascertain.

In my quest for the answer I have found a lot of opinion, but no real empirical data.
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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 12:51 pm

vincent_c wrote:
Mon Aug 23, 2021 12:32 pm
How about the price trend for gold since 2020 when BTC started its current bull run?

Plot the trends on a graph and see if you can spot the 4-5% annual decline in the largest structures.
I can see the correlation but is there a way to prove causation?
How do we know the gold price decline is because gold investors are switching to Bitcoin?
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