BTC in the PP

[bitcoininthevp]

- Lightning Network is a custodial solution - not crypto currency

This is not true. You can use lightning in a custodial or non-custodial manner.

But even the global digital store of value case has been kneecapped by the block size limit. As more people try to use the blockchain as a store of value, fees will rise, pricing out potential new users of the store of value.

There is lightning as a scaling (and fee) solution among a dozen other protocols that are more in the R&D stages.

Why should it go up?

If people value Bitcoin's properties, it will go up in value. It's properties being inflation resistance, censorship resistance, seizure resistant, programmable digital bearer asset.

However, what if something more clever than bitcoin is created? There are other systems, like ethereum, but what if something comes along that has mass appeal for whatever reason, and the governments and citizens of the world readily adopt it, leaving bitcoin behind. Maybe they resent bitcoin and its MIT-graduate early adopters/hoarders, and this new system presents a level playing ground. What happens to bitcoin then? Just something to think about.

There have been 10,000 or probably more competing cryptocurrencies, many of which have tried to compete with Bitcoin with no success.

If there is some "better" technology that isnt incorporated in to Bitcoin, the best route to adoption for such a "NewCoin" would probably be forking Bitcoin's UTXO set so that all current Bitcoin users instantly become NewCoin users.

[bitcoininthevp]

I’m familiar with this argument, but find it far fetched. The institutions in question benefit from the fact that they control the base layer. They went through great lengths to own the base layer and will not easily give it up. In fact, I believe Bitcoin has already been neutered by these parties.

What evidence do you have that the Bitcoin software or protocol has been neutered by banks or governments or the like?

[boglerdude]

They havent been, but non-nerds do not operate outside the matrix. The bitcoin ETFs make that worse, paradoxically. As has been the case for years the only person I know IRL who needs bitcoin uses it for drugs. When my plumber offers a bitcoin option that'll be a shift. If they pull another pandemic and FL+TX break off from the banking system you might want bitcoin to move around the former country. Or you might want metals.

[Smith1776]

Even if Bitcoin is never adopted as an explicit part of our monetary system (in the sense of being the settlement layer), I still think it will have a powerful place in our economy. More specifically, I think it finds its place as the form of pure digital capital and store of value. People will hold Bitcoin on their balance sheets, both corporate and personal, as savings, and simply convert as necessary for spending.

[yankees60]

Even if Bitcoin is never adopted as an explicit part of our monetary system (in the sense of being the settlement layer), I still think it will have a powerful place in our economy. More specifically, I think it finds its place as the form of pure digital capital and store of value. People will hold Bitcoin on their balance sheets, both corporate and personal, as savings, and simply convert as necessary for spending.

What will be the accounting rules for valuing them on the balance sheets? Will it be mark-to-market? Are there any authoritative sources for what they are worth on a given date?

[Jack Jones]

- Lightning Network is a custodial solution - not crypto currency

This is not true. You can use lightning in a custodial or non-custodial manner.

Are you referring to running your own Lightning node?

As fees to send a transaction became untenable for commerce, and the developers in control of the project refused to increase the blocksize, Lightning was proposed as a solution so that the dream of peer-to-peer digital cash was not lost. However, Lightning as proposed as a solution for regular people, is not peer-to-peer, it is custodial in practice. With a regular on-chain Bitcoin wallet, Grandma could easily send, receive, and hold Bitcoin w/out an intermediary. This isn't the case w/ Lightning, is it? The experience has been degraded to something that is more palatable to the powers that be: transactions are intermediated via a custodian.

But even the global digital store of value case has been kneecapped by the block size limit. As more people try to use the blockchain as a store of value, fees will rise, pricing out potential new users of the store of value.

There is lightning as a scaling (and fee) solution among a dozen other protocols that are more in the R&D stages.

As I indicated above, Lightning is a degradation of service. It's not a proper solution. The solution, in my opinion as a software engineer, is to dynamically scale the blocksize w/out human intervention. This keeps fees low and grows the capacity of the network as it becomes more heavily used.

Why should it go up?

If people value Bitcoin's properties, it will go up in value. It's properties being inflation resistance, censorship resistance, seizure resistant, programmable digital bearer asset.

However, as it goes up in value and popularity, so will fees. These fees will price the marginal user out of being able to take advantage of these properties. This is what I mean by knee-capping itself. In practice, these properties are slipping away:

• Inflation Resistance: As more Bitcoin becomes controlled by custodians, you don't think there will be fractional reserves? See FTX
• censorship resistance: Good luck sending your IBIT shares to political dissidents
• seizure resistant: obviously, anything held by a custodian isn't resistant to seizure

However, what if something more clever than bitcoin is created? There are other systems, like ethereum, but what if something comes along that has mass appeal for whatever reason, and the governments and citizens of the world readily adopt it, leaving bitcoin behind. Maybe they resent bitcoin and its MIT-graduate early adopters/hoarders, and this new system presents a level playing ground. What happens to bitcoin then? Just something to think about.

There have been 10,000 or probably more competing cryptocurrencies, many of which have tried to compete with Bitcoin with no success.

If there is some "better" technology that isnt incorporated in to Bitcoin, the best route to adoption for such a "NewCoin" would probably be forking Bitcoin's UTXO set so that all current Bitcoin users instantly become NewCoin users.

Indeed. On August 1, 2017 some of us decided that Bitcoin could be a store of value AND peer-to-peer digital cash. This seems like a stronger proposition than just a store of value; it was the original proposition that so many people got on board with. Unfortunately, the knee-capped version of Bitcoin retained the name and network effect; however, Bitcoin Cash is Bitcoin in the same way that Protestantism and Catholicism are both forms of Christianity.

[Jack Jones]

I’m familiar with this argument, but find it far fetched. The institutions in question benefit from the fact that they control the base layer. They went through great lengths to own the base layer and will not easily give it up. In fact, I believe Bitcoin has already been neutered by these parties.

What evidence do you have that the Bitcoin software or protocol has been neutered by banks or governments or the like?

It's based on my professional opinion of the technical choices made by the Bitcoin development team, my lived experience of the psyop that took place during the blocksize wars, and my reading of the history of central banking in the U.S.

[bitcoininthevp]

Are you referring to running your own Lightning node?

Sure, but you dont need to run your own lightning node in order to use lightning in a non-custodial manner.

As fees to send a transaction became untenable for commerce, and the developers in control of the project refused to increase the blocksize,

AKA: As pressure built for Bitcoin developers to take the "easy" route and increase the blocksize, the developers refused to hard fork Bitcoin's protocol and compromise some of Bitcoin's decentralization properties and make block size a political football in the protocol discussions.

There is lightning as a scaling (and fee) solution among a dozen other protocols that are more in the R&D stages.

As I indicated above, Lightning is a degradation of service. It's not a proper solution.

You've stated Lightning is custodial, which is incorrect, as Ive indicated above.
You say fees are such a big concern of yours, but somehow lightning, with its orders of magnitude cheaper fees, is a degradation of service.
You didnt address the other layer 2 scaling protocols that are in the works.

The solution, in my opinion as a software engineer, is to dynamically scale the blocksize w/out human intervention. This keeps fees low and grows the capacity of the network as it becomes more heavily used.

That sort of approach is easily game-able by participants creating many superfluous transactions to affect the block size.

And even if it were not easily manipulated and block size perfectly matched the demand for the world's commerce on it, the block size would then grow to huge sizes to accommodate all the world's transactions, increasing the resource requirements to run a node to the point where all but a few entities would be running nodes on the network.

• Inflation Resistance: As more Bitcoin becomes controlled by custodians, you don't think there will be fractional reserves? See FTX
• censorship resistance: Good luck sending your IBIT shares to political dissidents
• seizure resistant: obviously, anything held by a custodian isn't resistant to seizure

People should always demand real, self custodied Bitcoin wherever possible. Otherwise they run the risk of owning paper Bitcoin and having their coins seized or censored.

Indeed. On August 1, 2017 some of us decided that Bitcoin could be a store of value AND peer-to-peer digital cash. This seems like a stronger proposition than just a store of value; it was the original proposition that so many people got on board with. Unfortunately, the knee-capped version of Bitcoin retained the name and network effect; however, Bitcoin Cash is Bitcoin in the same way that Protestantism and Catholicism are both forms of Christianity.

Thats right, this discussion is just a rehash of the block size wars arguments.

It would be interesting to setup an experiment where we had a larger block size copy of Bitcoin with the bigger block size and also a small block "kneecapped" Bitcoin at the exact same time. Existing Bitcoin users would get coins on both chains and could freely choose the large block or small block chain. Users could freely buy or sell coins on either chain. We could run the experiment for 6 years and see if the large or small block side "won".

Oh wait, that is exactly what happened. The experiment resulted in BTC (small block chain) accruing 200x more value on its chain compared to BCH (large block chain). So from a store of value perspective BTC and small blocks (and unchanged protocol) clearly won.

It does not appear the large block, low fee, easy to transact side of the fork, BCH, even won from the p2p digital cash perspective, the goal it optimized for. But regardless, you, and anyone else is still free to use BCH as either a store of value or transactional layer ("L2" for Bitcoin) so I guess we can all be happy?

[dualstow]

Even if Bitcoin is never adopted as an explicit part of our monetary system (in the sense of being the settlement layer), I still think it will have a powerful place in our economy. More specifically, I think it finds its place as the form of pure digital capital and store of value. People will hold Bitcoin on their balance sheets, both corporate and personal, as savings, and simply convert as necessary for spending.

I would love to do that if the fees were lower.

And, putting aside the rapid price rise, it would be interesting to see if bitcoin maintains popularity, and it has a few things going for it.

Earlier, I mentioned that Bitcoin-friendly Trump only has 4 years, and that the next administration might not be so friendly. Still, a lot can happen in four years, and maybe an anti-bitcoin candidate would be deeply unpopular in 2028. They may have to hide their intentions.

The idea of the world or much of the world returning to a standard sounds attractive. Maybe that’s just a romantic notion, as there are reasons why currency could not remain linked to gold and shouldn’t return to it.

Perhaps it’s just a matter of time before a country pegs its currency to the bitcoin instead of the dollar — or has some small nation already done so? Kind of the converse of stablecoin.

[dualstow]

P.S. See Seajay’s post
viewtopic.php?p=255223#p255223

Thought/heard somewhere that they already did own thousands of bitcoins ??

EDIT ... the duck shouted out https://www.forbes.com/sites/digital-as ... -bitcoins/
…

Thank you for that, Seajay!

Sen Lummis introduced to the 118th Congress the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024”, or BITCOIN Act. The bill mandates that all bitcoin held by any Federal agency be transferred to the Treasury to be held in a strategic bitcoin reserve. In addition, it mandates that the Secretary of the Treasury purchase “not more than 200,000 Bitcoins per year over a 5-year period, for a total acquisition of 1,000,000 Bitcoins.” That 1,000,000 Bitcoins is then to be held by the Treasury for at least 20 years before they can consider selling it, and places a number of restrictions on potential future sales.

[bitcoininthevp]

More specifically, I think it finds its place as the form of pure digital capital and store of value. People will hold Bitcoin on their balance sheets, both corporate and personal, as savings, and simply convert as necessary for spending.

I would love to do that if the fees were lower.

Arguably the fact that you cant spend bitcoins at most of peoples day-to-day places is a bigger hurdle than the fees atm.

"simply convert as necessary for spending" will likely mean taking some of your long-term cold-storage coins and putting them in lightning (where fees are super low for spending) or some other layer 2 similar to lightning w/ similar or even lower fees.

[bitcoininthevp]

Perhaps it’s just a matter of time before a country pegs its currency to the bitcoin instead of the dollar — or has some small nation already done so? Kind of the converse of stablecoin.

Seems like a bad idea to do this, at least in the next 10 years. Many crises already around countries pegging to the dollar and getting wrecked when there is a strong dollar. While Bitcoin is still monetizing, and thus increasing in value, it would wreck even more.

Recognizing Bitcoin as a legal form of payment, as El Salvador has, doesnt come with those same risks.

[dualstow]

B, how do you think things are going to play out in the next few years?
Any general predictions?

[bitcoininthevp]

B, how do you think things are going to play out in the next few years?
Any general predictions?

Not sure if I am B, but Ill answer.

'It's tough to make predictions, especially about the future.' and they will make you look like a fool, which Im ok with for the fun of this forum.

Markets

I think we are in the bull phase of Bitcoin ~4 year cycle. I expect we have most of 2025 as a number-go-up. No idea on price top. Perhaps $200k.

I believe nation states will be adopting Bitcoin more and more. Perhaps a few more public announcements as well from larger nations than El Salvador and Bhutan. Probably middle east (UAE, Saudis). TBD on US proposed Strategic Bitcoin Reserve, these things always take longer than one thinks and as Harry says "Government doesnt work".

After the run up we probably have another blow off top with huge drawdown. This is what seems to happen to Bitcoin, so nothing crazy here. Maybe the drop is less % than previous blow offs due to ETF/institutional and government investment in BTC.

Politically, I believe the 2024 election showed that Bitcoiners (crypto industry) is important both financially and voter-wise. It will be deadly to oppose Bitcoin, with little upside to doing so. (note: this is somewhat surprising to me as my base case was always that Bitcoin is anti-central bank and the US has the largest central bank so they will be arch-enemies. Perhaps the US embrace of Bitcoin is temporary and a crisis will renew those tensions, but maybe not)

Technology

I suspect Bitcoin will have a soft fork protocol change that is widely accepted in the next few years. Probably an enhancement around Bitcoin's script capabilities that would enable "better" layer 2 functionality on top of Bitcoin. I think it could benefit the lightning network (2 parties self-custodially sharing bitcoins), but more likely would enable different types of layer 2s, specifically around coinpools (many parties, not just 2 parties, self-custorially sharing bitcoins). Once these are deployed, onchain fees would be lower, throughput and speed of transactions higher. Conversation probably swings from "fees too high" to "fees too low, how do we sustain mining!"

Potentially related to the above soft fork protocol change mentioned above, I think there will be trustless/trust-minimized bridges/sidechains that are launched. This enables bitcoins to be locked on the bitcoin chain and the equivalent amount of coins to be used on a different chain that has additional or different features. For example, I lock 1 bitcoin on the bitcoin chain and get 1 bitcoin-worth of tokens on an Ethereum-style chain where I can do Ethereum-y things but with Bitcoin as the token of the chain, not ETH. You can imagine many such "sidechains" launching.

As a result of these bridges/sidechains, a bunch of talent and VC money previously invested in altcoin ecosystems I think will trickle back in to the Bitcoin ecosystem. People will be building ON Bitcoin more and more, and building "a better Bitcoin" less and less. This probably results not just in more technical talent and VC money back in Bitcoin, but a relative drop in all altcoin token prices relative to Bitcoin.

[dualstow]

Yes, you are “B.”
Many thanks

[Smith1776]

...

Since the last time we interacted I actually ended up doing a 180 and becoming a BTC maxi.

I also hold lots of MicroStrategy stock. Any thoughts there?

[bitcoininthevp]

Wish I bought some seeing what it’s done. But never really looked into the details of the mechanisms.

Harry Browne said something about this idea that without a clear understanding of why something works, one may struggle to replicate or sustain that success in the future.

That’s probably where I’m at with it.

[Arthur Boe Nansa]

Politically, I believe the 2024 election showed that Bitcoiners (crypto industry) is important both financially and voter-wise. It will be deadly to oppose Bitcoin, with little upside to doing so. (note: this is somewhat surprising to me as my base case was always that Bitcoin is anti-central bank and the US has the largest central bank so they will be arch-enemies. Perhaps the US embrace of Bitcoin is temporary and a crisis will renew those tensions, but maybe not)

[...]

I suspect Bitcoin will have a soft fork protocol change that is widely accepted in the next few years. Probably an enhancement around Bitcoin's script capabilities that would enable "better" layer 2 functionality on top of Bitcoin. I think it could benefit the lightning network (2 parties self-custodially sharing bitcoins), but more likely would enable different types of layer 2s, specifically around coinpools (many parties, not just 2 parties, self-custorially sharing bitcoins). Once these are deployed, onchain fees would be lower, throughput and speed of transactions higher. Conversation probably swings from "fees too high" to "fees too low, how do we sustain mining!"

I think BitVP and I have hashed it out enough, but for the sake of general discussion and understanding i'll make a few points.

1. You (or anyone else) shouldn't be surprised because the base case of: "Bitcoin as anti-Central Bank and the US has the largest central bank so they will be arch-enemies" is pure fiction. Whether or not you have the humility to say it out loud, this is a tacit admission that "Bitcoin isn't doing the thing its supposed to." A potential Bitcoiner argument against a rational criticism such as this is "well that must be because Bitcoin is an even more amazing financial tool than I thought." It would be just another reframe among the many that have already been done.
The truth is BTC barely answers any of it's stated objectives (as outlined in the whitepaper). Instead, BTC has become an alternative asset class that is undergoing financialization. It is new and so (relatively) untainted, it is simple (enough) to acquire, and everyone has a (seemingly) fair opportunity to buy and hold it.

2. You keep saying soft fork as if that's a legitimate definition for something. It wasn't then, it isn't now and it won't be in the future. (I await the day BTC has a "hard fork" and the reframing begins anew)

3. The Lightning Network will never be a real solution for anything substantial.

4. To your point of the conversation swinging between fees being too high or too low and "how do we sustain mining?" , in either situation the answer is "it won't be sustained because usage doesn't justify costs." BTC will meet this fate regardless, it will just take a very long time...

To summarize, BTC isn't anything like what it pretends to be. It is a clunky, ineffective tool that doesn't have much of a purpose.
And yet, you would be foolish not to hold any.

Because Bitcoin has no real value, so long as it continues to capture mindshare it has no limit to its valuation. I have no doubt that Bitcoin as a network will fail, but Bitcoin as a financial asset can truly reach millions per coin.

The technology is not the differentiator, the expectation is the differentiator. To that end, holding BTC in a speculative portfolio is a good idea. Some of the other major coins may also prove valuable, but they have the added burden of actually needing to be useful for something.

In a chaotic world err on the side of safety, but leave room in your portfolio to be pleasantly surprised.

Good luck to all!

[Smith1776]

All I want is $100k per coin.

Omg hurry up lol.

[dualstow]

Smithers’ ‘All-Terrain Portfolio’, Second Edition





Eff it, just buy bitcoin

[Smith1776]

Smithers’ ‘All-Terrain Portfolio’, Second Edition
...

lmao. I was actually just thinking about it this morning and I think it would now be the following:

- 25% total global bond
- 25% total global stock
- 25% long/flat commodities
- 25% total crypto index

I know, I know, it keeps changing. I'm trying to nail it down.

[yankees60]

Smithers’ ‘All-Terrain Portfolio’, Second Edition





Eff it, just buy bitcoin

LOVE it!

[yankees60]

Smithers’ ‘All-Terrain Portfolio’, Second Edition
...

lmao. I was actually just thinking about it this morning and I think it would now be the following:

- 25% total global bond
- 25% total global stock
- 25% long/flat commodities
- 25% total crypto index

I know, I know, it keeps changing. I'm trying to nail it down.

Let us know when you finally do. You know that is a completely necessary step before you write your next book. One about All One Needs to Know about All Terrain Investing!

[Jack Jones]

Conversation probably swings from "fees too high" to "fees too low, how do we sustain mining!"

No. 99% of the time you ensure enough block space such that fees are extremely low. If someone wants to burn their precious satoshis to “spam” the network, they are welcome to. They only have so many. This is the 1% situation (spammer) where fees might rise above a trivial amount.

Mining should sustain itself by the network growing at the base layer. The more transactions, the more mining fees. Makes sense, right?

[frugal]

Hello

So what are the PP users and HB followers doing ?

Bitcoin on VP only ?

Or 5% on HBPP is correct ?

Kindest regards!