Speculative spikes can happen for a lot of reasons, but that Bitcoin would replace all currencies (as early advocates would have had you believe) was not one of those reasons.
Bitcoin was not bought because people believed it will replace all currencies. They bought bitcoin to get rich fast and cash out BEFORE the expected crash.
That excitement disappeared pretty quickly once I came to the (in hindsight, obvious) realization that its only valid use cases were illicit transactions and speculation. I donated whatever I had and moved well away from it (certainly a poor financial decision in retrospect, but I still believe it was the right choice personally).
The shine has been off BTC for a long time. Even though some (if not most) of the early adopters were as you describe, I suspect that almost all of the more recent comers have only joined the party for the get rich quick scheme.
Crytocurrencies have many valid use cases. For one, they are the only system that allows sending money truly anywhere in the world, to anyone, anytime, and near-instantly. No other system accomplishes this. My most poignant example was being able to send money to a then-homeless unbanked friend, on a sunday, and he even converted it to cash in hands within 1 hour as he was near a bitcoin ATM. In such an emergency, no other system would have worked. We briefly considered Western Union but he was banned from them due to previous financial issues. So the permissionless aspect of Bitcoin was another benefit.
It's a little puzzling that you were an early adopter, and yet did not appreciate the qualities. Perhaps you think crypto isn't useful to you personally, therefore it has no use cases for anyone else.
What makes this argument different than the "I don't have anything to hide" anti-privacy argument?
Crypto currency is a wasteful, destructive, expensive and innefficient technology that has few benefits except facilitating crimes like tax evasion, money laundering, financing terrorism and purchasing drugs.
What are the others, in the specific context of this conversation (which is privacy from the government, not from random other citizens)?
This is perhaps the primary reason that the right of privacy even exists.
Cryptocurrencies like Bitcoin directly mitigate (if not outright prevent) that risk.
For example, I expect Bitcoin to likely remain an alternative system, used only for a minority of transactions. And this view didn't conflict with my desire to buy in when I did.
These people were minning not buying bitcoin.
I guess they could have all been lying to puff up their investments, but then I guess I'm left with thinking those particular people were stupid and liars.
I often wonder if those same people moved into Bitcoin.
https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
Regardless of your opinion on this, you have to at least wait till the proposition plays out before passing judgement. You have to see if they can withstand the short term volatility and whether bitcoin succeeds or not.
Calling the experiment failure before the results is silly to say the least.
Salvadoran here.
It's hard to see the benefits if there is no transparency on the process.
If we could even have a dashboard and an official website were we could have access to audited reports about the results of this bet, and see how its value varies over time. Then I might agree.
Maybe just a graph like the one found Norway's Sovereign Fund website
In reality we just don't. Public information is limited or contradictory. The few public information available includes a tweet about the president buying bitcoin from his phone while not wearing clothes.
https://www.washingtonpost.com/world/2022/01/26/el-salvador-...
As far as I know, the trust that holds El Salvador bitcoin doesn't have a public website. And the state wallet's website doesn't publish an address or phone number.
The only time I've seen their address is a receipt from a veterinary hospital run by the same state company operating the wallet, in which every procedure costs only US $0.25 because they are subsidized by "bitcoin profits"
El Salvador is a strange country sometimes.
El Salvadors adoption could have definitely been handled in a more transparent and self sovereign manner. I really wasn't big fan of forcing companies to accept it..
But then again, you never get everything you want. I guess the best we could do is praise them for the good and provide feedback when they miss the mark..
See: Survivorship bias.
Now we have a game theoretic situation where the early adopters take the most risk but are going to reap the most benefits.
To call this a "base jump without parachute" is asinine and completely unwarranted. There is a clear bet going on with the smartest people in the world on both sides.
Some believe the “rulers” of the current system will never allow this to happen therefore we will get CBDC’s instead. Others believe, the collapse of the current debt passed system is inevitable therefore bitcoin is a lifeboat.
Either way, china isn’t using the same technology invented by satoshi (without the PoS & decentralisation) for no reason. The US isn’t thinking about thinking about creating a FedCoin for no reason. India isn’t building one for no reason.
The race is on. Its a bet. There is risks on both side but its definitely not a one sided thing to say the least.
There are those who envision a world full of privacy coins, CBDC's, bitcoin, company coins etc..
In this world, bitcoin will be the ruler of rulers. As in, Bitcoin will reward disciplined countries and punish undisciplined countries. Just like gold did in the past.
Its utility as a decentralised banking system for those who have no access to banking in poorer regions of the world is a clear benefit and has achieved what it wanted for the country.
A lot of the risk can be hedged by custodians, so I don't agree.
The reason it should fail for transactions is because Bitcoin sucks for transactions. Few people will prefer slow, irreversible and expensive transactions.
El Salvador primarily uses lightning network, same network Strike uses for instant cross border payments.
So, aside from irreversibility of transactions, what is preventing adoption?
But I do know people over estimate what can be accomplished in a year and underestimate what can be accomplished in 10.
> Investments are sound based on probability and risk beforehand.
Investing in bitcoin had a limited downside (lose 100%), but a very high upside (reaches it's initial goals). For me, the potential gains outweighed the low probability.
I consider myself very lucky that I made some money (wasn't crazy to put all my money in there). But for me, when it would have gone to 0, I still feel it was worth the risk.
But of course, with such a high risk high reward investment, only invest a small % of your total money.
Assume you invest 1% of your portfolio in Bitcoin. What is your downside? 1%. Not that high, is it?
What is your upside? Maybe x100, so double your entire portfolio.
Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk. And it didn't even live up to its original intent. Imagine the price if it did!
There are probably better places to put your 1% on. ;-)
I totally agree, but the argument being made is that "the potential upsides outweigh the low probability". That's not investing, that's gambling.
Let's say we play a game where you throw a coin 3 times in the air. If it's not 3 times head, I'll pay you $1. If it's 3 times head, you pay me $10.
Your chance of winning is pretty high, while my chance is low. Yet, I would love to play this game.
No, my argument is that once it's a matter of "you could lose everything or make it big!" is gambling.
> It's a ratio.
With totally unknown values.
> Yet, I would love to play this game.
This is exactly what the people who currently hold bitcoin are suggesting to those who don't.
I never suggested this, as you could see a few replies up:
> Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk.
Nevermind, this conversation is clearly going nowhere.
Things like startups for example also have a very high risk rate, but also potential high payouts. There it actually makes sense since the ratio is way better.
Yeah, but that payout ratio - millions to one! Bitcoin will never pay out at that level - I don't know if it ever did.
I find it interesting you're arguing that an unknown ratio is preferable to a known one. Bitcoin has a known current cost, but entirely unknown chances and payouts over an unknown duration. There's little reason to assume that Bitcoin will make another massive jump other than optimism that there will be a new wave of true believer bag holders. I know the lottery is going to be drawn each week and I know the cost and the odds, as well as the minimum payout, and the current payout is updated as we get closer to the drawing.
Or I guess you could buy lottery tickets. Probably a slightly less insane way to "invest" your money.
Have a nice day.
I went from living very comfortably to living paycheck-to-paycheck in about 6 months. Holding my value in USD has become a significant risk.
Yeah, its up like 100% over Bitcoin and like +30% over Euro, Yen, and GBP? In fact, holding Cash/USD has been basically one of the best performing things in my entire portfolio this year (after oil/energy)
Have _you_ seen BTC's buying power recently?
USD is also up vs Bitcoin.
EDIT: Feel free to look at gold, silver, and other 'inflation hedges' while you're at it. The main thing going up is commodities (oil and food), which is certainly important. But there's more to the world than those two things.
Unless you are arguing we currently don't have any inflation, which would be a tough sell :)
Also this last CPI report oil & gas pulled inflation down whereas just about everything else pulled it up. Food is hot, but a lot of other things are as well including non-commodity service based industries.
This is what I'm arguing. Do you deny it?
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In a bear market, you don't have to outrun the bear to get ahead. You only have to outrun your friends.
A year or two from now Bitcoin very well might be back above it’s all time high.
Its ironically, also when BTC really began to collapse from its $60,000 high. So it really demonstrates how much the BTC was benefiting from low-interest rate / inflationary policies.
It's almost like it's not a hedge at all and just another part of the exact same game as the rest of the market.
CPI was nasty for most of June 2020 to June 2021. It's just that fewer publications were picking up the story yet.
Edit: some examples https://www.ers.usda.gov/data-products/food-price-outlook/su... Retail egg prices went up 38% from July 2021 to July 2022.
Hell, I got 3.5 pounds of steak tips for $20 about a month ago.
My food costs have absolutely gone up, but it's MUCH closer to the "10 percent" figures quoted as inflation than anything close to what you have said. Where do you live and shop?
A lot of cattle was recently liquidated (made into meat products, this year) as grazing fields have been drying up and, due to climate change, meat pipelines have had to start making MAJOR changes.
https://fred.stlouisfed.org/series/APU0000FS1101
So of the two items you cherry-picked to support an assertion that groceries have more than doubled, one is up...around 30-35%. In fact, there doesn't appear to be a single food item in this list that has doubled in the past year. Eggs are the closest.
https://www.bls.gov/regions/mid-atlantic/data/averageretailf...
https://www.ams.usda.gov/mnreports/dywabutter_cme.pdf
https://www.globaldairytrade.info/en/product-results/butter/
But that's not the whole story. Prices are not primarily set by wholesale costs for many goods.
I think cereal has only gone up 30%, although there have been other events that influenced Kellogs pricing (notice how the Poptarts boxes have changed slightly) and then there has been the opportunity to steal away some extra profit - https://www.wxyz.com/news/now-cereal-prices-are-on-the-rise-... (search for "Mills").
https://www.mercatus.org/publications/inflation/inflation-la...
Which is mostly driven by putting trillions of dollars into the economy. The Fed had 1 trillion on it's books during the 07 recession. It has 8 trillion on it's books now. That's a major problem.
Yeah, it's been going up relative to almost all other currencies and especially BTC.
If Bitcoin's momentum hadn't been dissolved, it wouldn't require people to be forced by State to accept it.
[1] https://bitinfocharts.com/comparison/size-btc-ema14.html#all...
Being able to send and receive from anyone is growth, lightning isn't on the bitcoin chain until it gets synchronized.
If I give you a bitcoin address, you can't send anything to me with the lightning network.
It's unnecessary nonsense because bitcoin is pointlessly crippled. Every other cryptocurrency has plenty of throughput and can be used decentralized.
That is literally the purpose of building second layers. We don't need to keep on-chain records of every microtransaction and coffee purchase in an immutable, ever-growing blockchain synchronized across thousands of nodes across the globe.
> If I give you a bitcoin address, you can't send anything to me with the lightning network.
Sure I can. It is called a submarine swap.
You can call it whatever you want, someone still has to sync with the main chain, where all the utility is. You can get together with your friend and give each other IOUs all day every day, it doesn't somehow change the fact that bitcoin's throughput is severely crippled to be the speed of a dialup modem.
Have you ever stopped to think that other cryptocurrencies don't have second layers because people don't want them and their chains don't need them? Why go through all this when there is no reason to have a crippled chain in the first place?
Using regular cryptocurrencies is incredibly simple and elegant. It's only when people started to believe propaganda about disk space and cpu time (that never made sense with the most basic examination) that somehow something that worked amazingly well is now a complete mess.
Bitcoin SV did not care about these things and is dead because of it. Its blocks are ~200MB spammed with mostly non-payment related data. Its blockchain has grown to over 6 TB, the global number of nodes verifying the chain is down to 20 and it has been delisted by many exchanges and block explorers.
Bitcoin and Lightning in comparison have ~25,000 nodes.
Your example is bizarre since it is a nonsense fork made by a scammer. Even so it does actually work and keeps running even though all the people that sold you a second layer said throughput above a 56k modem was impossible. The spam could easily be prevented by a minimum fee. Even $0.10 per transaction would be $120,000 an hour paid by spammer and going to miners.
After people realised that this is a crap idea, they have reinvented banks, who take people's BTC and give them IOUs instead. Then only banks have to deal with the "channels" and "locked" tokens in a centralised way, lessening the overall complexity.
Few understand :)
The general story is that not all transactions are equal. A payment from your cousin for a poker debt doesn't need the fury of a million computers protecting it. Similarly if you have an ongoing relationship with a vendor, and many other examples. In real-life there are vastly differing trust-profiles between transactions. It's ok to trade some security for some efficiency sometimes. It doesn't make sense to treat them all the same.
[1] https://www.cardrates.com/advice/number-of-credit-card-trans...
This is why I can’t get Bitcoiners - their assumptions are always over the top “we will take 100% of gold’s value” “nations will dissolve because of Bitcoin” or something of that order.
Compare that to ETH - people will build decentralised applications and ETH will be the currency in those applications. Stakers get a fee.
Simple.
Bitcoin Cash (the og big block chain) is alive and kicking, and getting stable updates (both features and performance), and also has optional (affordable) coin shuffle). Lightning Network is a security and usability nightmare, and its total liquidity is in the low thousands of BTC (lol).
In comparison, BCH has lost 80% of its transaction volume in the last year alone. Its blocksize is now 100KB on average and it now processes fewer transactions than LN. It also regularly hard-forks, either because of leadership cults (Ver, Wright, Sechet, ...) or because of scheduled hard-forks every 6 months which kick off all users who haven't updated. It's the opposite of stable and the market apparently does not share its determination in sacrificing decentralization for adoption.
You're the opposite of lucky.
I bought in 2015 when Bitcoin was about $250, so still looking good on a 10 year timescale.
Or am I missing something?
Moreover, the entire philosophy of holding BTC as some store of value destroys the notion of BTC as a viable currency.
If someone's looking to sell high, what's to stop them from selling at $20k, which was an all time high in December 2020? Why not wait for $80k instead of selling at $60k?
It's easy to see these opportunities in hindsight, but you can never be sure where the peak is.
money has a time-value, the opportunity loss of investing it in other instruments. The longer you wait for a peak, the more that peak has to be for it to be worth it. When the value you would have had you invested elsewhere reaches your expected peak, you can officially say your strategy failed.
Many people have conviction in their belief in God. That doesn't make the existence of God any more sound.
Until then, I will let institutions take the risk and I will stick with my index fund.
El Salvador gambled which is stupid. Whether they won or lost at the lottery is inconsequential to its stupidity.