The sad thing is, people (like yourself) who were critical of tether a few years ago have already been validated on multiple counts: the Bitfinex connection (which tether denied) was proven; the claim that it is 1:1 cash backed was walked back to “asset backed”.

So it isn’t a case of crying wolf, it’s more a case of pointing out a wolf and being dismissed as FUD.

That’s Cassandra syndrome: https://en.wikipedia.org/wiki/Cassandra_(metaphor)

Cassandra was gifted by Appollo to see the future, but then cursed to be not believed.

How can you be “long BTC” - it’s a currency not a stock. You might say “I’m long USD” but then you are really saying you believe the US economy will grow, and the value of its currency will strengthen.

Given Bitcoin isn’t attached to anything… what does long mean?

> How can you be “long BTC”

By owning BTC, or equivalent economic exposure to owning BTC, ie, you will profit if BTC becomes relatively more valuable, and lose if it becomes relatively less valuable.

> it’s a currency not a stock. You might say “I’m long USD”

People take long position in currencies all the time. That is just a perfectly normal thing that people do, all the time. I have no idea why you think a currency is somehow different than any other financial asset here; it is not (except, perhaps in some cases, taxes).

> but then you are really saying you believe the US economy will grow, and the value of its currency will strengthen.

No. That's not how exchange rates work. The US economy is growing all the time (...well, outside of recessions), but so is everyone's else. A thousand factors go into determining relative strength.

> Given Bitcoin isn’t attached to anything… what does long mean?

It means you have a positive exposure to an increase in it's price, probably by owning some, or something that closely approximates that. Same as being long anything else. Why would it be different? What did you think being long meant?

Exactly as I suggested in my examples. Being "Long" in the USD implies general stability of the currency (which as you say has a number of factors... all of which are non-existent in bitcoin). So my question still stands. What exactly are you thinking factors into the growth of the currency? Beyond say... hopes and dreams (aka gambling).

The fact that people go "long" in fiat currencies is not at all relevant, as there is a government and usually a central bank that controls production of that currency (responsibly or not).

100% exchange rates work based on the economy underlying them (and the governments control on it)... they are not just random numbers fluctuating randomly... There is almost no comparison to crypto here, is there a fiat currency that shows as much volatility for as long as bitcoin has?

> Being "Long" in the USD implies general stability of the currency

It does not. Many currencies aren't stable at all; people still take long and short positions on them, either as part of an explicit investment thesis, or just by, you know, having some paper currency in their wallet. People have been buying gold for centuries as a way of reducing their exposure to unstable currencies.

I would assume it doesn't need to be explicitly said, but just for safety's sake, let's be clear: A long (or short) position is a bet, and you can bet on unpredictable things. Nobody uses the terminology, but technically you're "long red" if you bet on red coming up next on a roulette wheel at Vegas.

Currently equity markets have been consumed with discussions of the "meme stocks". People have been going long on, eg, Gamestop, but the stock has been incredibly volatile, and there are no underlying economic factors that even begin to support the highs it's reached. Again, being long in a super volatile stock because it's funny, or because you're bored, or because you're trying to make a statement, or because you believe it is bouncing around randomly and you're trying to profit from this is still being long on the stock.

Being long is not a moral judgement, it just means you've got an exposure to the asset becoming more valuable. If you own a share in Gamestock, or a USD, or few satoshis, or a house, you're long those assets. It doesn't matter why you own them.

> which as you say has a number of factors... all of which are non-existent in bitcoin

That is also untrue; many factors have exact equivalents, such as evaluating competing currencies for differences in projected inflation or deflation, projected interest rates, projected uptake in usage in new markets, projected change in regulations. If you think DeFi will continue to grow, or that Ethereum's migration to Proof Of Stake will finally happen and be successful, that suggests a relative strengthening of of Ethereum versus Bitcoin. If you think that a pure Bitcoin ETF will be approved by the SEC and will be good for Bitcoin prices, that suggests a strengthening of Bitcoin versus other currencies. And of course, you can evaluate the so-called "shitcoins" to decide if you think they'll ever get a fraction of the adoption Bitcoin and Ethereum have, etc.

> What exactly are you thinking factors into the growth of the currency? Beyond say... hopes and dreams (aka gambling).

As above. Although let's be clear: All currency speculation is gambling. Exchange rates are volatile, unpredictable, and for major pairs, impossible to manipulate. You can (and so very, very many people have) come up with some thesis about why the USD/EUR rate is going to move in a specific direction, go long (and/or short) in the appropriate currency, and get run over, because the market doesn't care about your thesis. Even if you're right about the thesis! :)

> as there is a government and usually a central bank that controls production of that currency

And...?

> they are not just random numbers fluctuating randomly...

They might as well be. Given the closing price of the USD/EUR pair today, there's no amount of information I can give you about relative economic performance of the US versus the EU that will let you predict the closing price of the USD/EUR pair tomorrow. Or next week. Or next year.

> is there a fiat currency that shows as much volatility for as long as bitcoin has?

There are - and have been - some very volatile currencies. Certainly bitcoin is at the far end of the volatility distribution. What of it? Again, you seem to have the model that you can only bet on sure things, and the more random something is, the less you can truly "gamble" on it. That is, if anything, the opposite of how it works.

My model is: Bitcoin investing is gambling. There are no underlying factors that could rationalise a “long” position.

You used euro/usd comparison… why not Argentina peso to usd… is there a chance it could close higher than the usd tomorrow? - no. Because the underlying economies do effect currencies and they are not random despite the three paragraphs of prose you wrote.

My question, perhaps poorly put, is why would you (rationally) go long on Bitcoin? It looks like pure gambling/speculation. I’m 100% wanting to know the value judgement being made. I’m quite okay if that answer is: gambling.

The US dollar isn't really tied to the strength of the economy either, it's about the supply and demand for dollars on the international market. Generally, dollars are in high demand as a result of their status as a worldwide reserve currency, but otherwise the strength of the dollar should be tied to the trade deficit. Having a trade deficit, all else the same, exhibits downward pressure on the dollar because people buying foreign things in dollars give their money to people that need to then trade those dollars back to someone for their own currency.

This is REALLY common finance terminology and it is being used properly here.

You are long a thing if you hold a position which benefits from its price going up. You are short a thing by holding a position which benefits if the price goes down.

So not only could I be short gold by not holding it (because I now have more equivalent gold quantity if gold price goes down) I could also be short the market by being long puts on SPY

Sorry my question wasn't about the term... but the meaning behind the term. In finance land, this terminology usually implies you believe it will go up based on ... factors.

I don't see any attached factors to bitcoin, i.e. it's purely speculative. So my question was more "Why are you long on bitcoin?" As - it seems quite random.

Apologises for not being clearer... The old "I knew what I meant" problem :\

It absolutely does not need to imply anything about the psychology behind the position. If I'm long BTC (or whatever) it simply means I'm holding a position that benefits from a positive price movement in that asset.

The more pop culture meaning of 'long' meaning "i support" is post facto the other pre existing meaning. And it's not unreasonable to correlate them. If your money is where your mouth is, they are the same thing.

It's totally possible though to be "long BTC" via a position while thinking bitcoin is a total scam, if let's say you believe you can exploit some short term irrationality.

Thank you for articulating an answer that makes sense to me. I see how my initial assertion was incorrect.

You rock!

When people say they are “long something” they mean they are invested in the price growth.

People can be “long USD” because they expect the price to increase. That's not expressing any belief beyond that. People are long on something for many reasons.

> it’s a currency not a stock.

It's a digital asset that you buy with dollars (or equivalent). If your position benefits from the price in dollars increasing, then you're long.

It just means that you think people are willing to buy it from you at a higher price later in time.

Not sure why you’re being downvoted. I think it’s a fair question. Being “long” in a zero-sum game seems a bit odd to me, as well.

In a zero-sum game like Bitcoin, there is necessarily a timing component at play. Being “long” seems at odds with that.

Long simply means taking a position that would benefit if the stock/currency/commodity/bond/etc goes up in value. Similarly, being short generally means the opposite (although in specific situations it can mean selling something you do not own, like a stock, with the intention of buying it back later for a lower price). The terminology isn't limited to stocks, investors talk about being long currencies all the time.

Hope this clears up some of the confusion.

You’ve used the term zero-sum incorrectly. Zero-sum games result in gains equal to losses.

Let’s say we all invested in Bitcoin today and only bought from people who had purchased at $10000. Then, in two years, if we sell our Bitcoin for $100000, we all make money. That’s not a zero-sum game because no one lost money.

Whoever gave you the $100000 lost that money unless they can sell it later for a higher price. Eventually someone will be left holding an empty bag.

You’re not describing a zero-sum game. Someone “holding the bag” means nothing—from your understanding, investing in the $SPY would be a zero-sum game as well.

Well, it’s not. Unless you think the entire value of our entire world economy will become zero. Merely predicting that the value of something will become zero doesn’t automatically make it zero-sum.

In order for a game to be zero-sum, that requirement must be built into the rules of the game. That isn’t true in either of these cases (Bitcoin nor $SPY).

From https://en.wikipedia.org/wiki/Zero-sum_game (emphasis added):

> Zero-sum games are a specific example of constant sum games where the sum of each outcome is always zero. Such games are distributive, not integrative; the pie cannot be enlarged by good negotiation.

Investing in the $SPY would not at all be a zero sum, because the value invested would be converted ultimately into something of real experiential value (in the form of the goods and services produced by the underlying companies), rather than Bitcoin which by definition is only ever an exchange of value.

It is precisely that difference which (I think) makes it zero-sum

> … Bitcoin which by definition is only ever an exchange of value.

Even if this was true (it is not) this still does not make an exchange of Bitcoin a zero-sum game.

I’ll prove it.

Let’s first denominate value in BTC to simplify this. I then mine one Bitcoin with less than 1 BTC-worth of energy (I wouldn’t mine it, otherwise). I now have 1 - (cost of energy) BTC,

I then give my BTC to someone else in exchange for a Widget. I now have a Widget, and they have a non-zero amount of BTC.

At no point are the sum of our two assets equal to zero, and they never could be. This could never be a zero-sum game, either by definition or in practice. There is always a non-zero net value after adding up all assets and debts between all of the players.

My background: I studied Applied Math in college, with a focus in finance, game theory, and computer science. I studied games and game theory extensively.

Just to be clear though, there is not a whole lot of places you can transact from Bitcoin to goods and services. Those that do accept it, pin it to the usd… so Bitcoin is only used as an exchange of value for USD. That is still zero sum. $1 in $1 out

You are correct mining is at least surface level not zero sum. If you apply the assumption that the energy, computing equipment and time were worth less than the resulting btc. But given the fact it has no intrinsic value… is only valuable in exchanging between fiats… I don’t think those assumptions hold.

Read about the credit creation process.

Money is created by loans by banks.

What you’re describing is precisely a Ponzi scheme. Run the game long enough, the net expected value is 0.

What you’re describing is a hand-wavy caricature of the actual definition of Ponzi scheme. Let’s be precise in our language here, please.

From Wikipedia [1]

> A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.[1] The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds

Do you see a distinction between this and the system theli0nheart described?

[1] https://en.wikipedia.org/wiki/Ponzi_scheme

> Let’s be precise in our language here, please.

It is pretty silly when people who are calling bitcoin a "currency" and autonomous blockchain agents "smart contracts" complain anytime the term "ponzi scheme" is used for a zero sum speculative asset that only pays out gains to existing holders by bringing in new "investors".

If you look at the classic definition of a ponzi scheme, bitcoin doesn't fit, though central bank fiat currencies do. See macro economist Lyn Alden's excellent article for the full explanation: https://www.lynalden.com/bitcoin-ponzi-scheme/