Bitcoin in a hyperbolic bubble

[Duke of Marmalade]

I was thinking of replacing my 8 year old car. I see it is about the same price as it was 8 years ago but probably better spec. But I do have sympathy with Saylor who probably does not have the same situation with his yacht.

 

[tecate]

The Fed target 2% inflation - this is the official CPI not the one that is preferred by some economists. The cult seems to get great buzz from a belief that the reason for these economists to take this position is part of a grand conspiracy to hood wink the ordinary punter who are not as enlightened as the cultists.

So tell me, which bs version are you suggesting your buddies are using now? Does this version include housing costs, health insurance and education costs? Are they using 'estimates' or real data? Isn't it interesting that Core CPI became popular in the 70s when inflation went through the roof?
The hood winking is out in the open these days, your Dukeness. The guy that coined the term 'quantitative easing' must have gotten himself a promotion as it avoided your CB buddies from calling it something that the masses would understand -> rampant money printing.

But I do have sympathy with Saylor who probably does not have the same situation with his yacht.

So you'll flip flop whichever way suits your narrative, Duke of Marmalade...err...I mean Comrade Marmalade!! I hadn't you down as a socialist but every day's a school day. I suppose there's no need to include housing costs then as you're living in a commune, right?

 

[Duke of Marmalade]

@tecate fair point on the ridiculous use of the term QE. But the cult isn‘t above using misleading terms. “Mining” indeed. “Digital Gold”.

 

[DublinHead54]

You know perfectly well that this sovereign money world is one we all inherited. Therefore, it's not realistic to have people switch to a 100% crypto payment scenario. That said, I'm aware of quite a few folk who do get paid in crypto. I've been paid myself in crypto on occasion. And in the meantime, the bridges between those two worlds continue to be built. Any crypto I possess today - I can spend in crypto or I can spend in fiat via a plethora of visa/mastercards. Yesterday, visa announced that they will accept crypto payment to settle payments on their network. Later today, Paypal will facilitate US account holders to spend crypto at millions of online merchants.

Did you mention before that you moved to a country that had favourable tax treatment of crypto so that you can spend it? The fact is and I believe you have made this comment before that the use case for BTC is as a store of value and not a currency in the current environment.

Wasn't it confirmed that Paypals implementation will convert the BTC to USD immediately thus it will become a taxable event for the customer? I can only see this being used by those who got BTC much earlier before the recent price rise and that it still is profitable to buy goods via paypal accounting for tax.

But for a person starting out today to go and get BTC and then pay for goods and pay additional tax vs using cash puts it at a disadvantage. It will be interesting to see how paypal BTC transactions grow in the coming months. There is already a small sample to look at with Overstock whose BTC sales accounted for a tiny % of its general sales.

 

[DublinHead54]

As Square CFO Amrita Ahuja put it yesterday, "there's absolutely a case for every balance sheet to have bitcoin on it". Regardless of this current bull run, we're still incredibly early in the adoption curve. Tesla taking no more than 1-3% of revenue in bitcoin provides an organic way for the company to build its holding organically with no effect on its day to day commitments.

1. Is there enough BTC for every Balance sheet to have bitcoin on it?
2. The companies holding BTC still value it in terms of Fiat, how do you transition away from the fiat valuation?

There are roughly 18.5m Bitcoins mined but according to this research there are only 4.2m in circulation, and the liquidity will further deteriorate as more corporations buy and hold on their balance sheet. The research points to companies like Microstrategy and FIs buying large quantities and hoarding. Given that the companies holding BTC are only a tiny fraction of public companies what will happen to the network as liquidity dries up? In this case, scarcity is an issue and is probably part of the reason why corporates don't hold Gold on their balance sheets (physical storage costs beng the other).

This is not an aspect that Satoshi had planned for, as the use case was a currency with constant circulation. The liquidity is one area I haven't looked into much, so keen to hear the thoughts of others on this forum.

 

[tecate]

@tecate fair point on the ridiculous use of the term QE. But the cult isn‘t above using misleading terms. “Mining” indeed. “Digital Gold”.

Use of the term 'Quantitative Easing' is a deliberate exercise in obfuscation. The other terms you mention - go the other way in trying to affix understandable terms to what can be a technical subject for many. That's the difference.
As regards 'cult' - those who were/are enthusiastic about the role of gold have been tarred and feathered as a cult also. However, have a look at this nonsense and you see where the real cult is.

 

[WolfeTone]

But the cult isn‘t above using misleading terms.

Surely you mean "the cults...."?

Surely we are beyond pretending that the Central Banks operate a sound monetary system?

 

[Duke of Marmalade]

This is how the cult depicts bitcoin.
1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2 is what it really looks like.

QE? Is there a better term? I suppose Monetary Easing or Monetary Accommodation would be better.
Mining? Performing zillions of trial and error puzzles would be better.

Surely we are beyond pretending that the Central Banks operate a sound monetary system?

I was going to address this quoting official statistics. But what's the point? The cult rejects all official statistics as a grand conspiracy where they don't support the narrative.

 

[tecate]

This is how the cult depicts bitcoin.

Yeah, that makes a lot of sense your dukeness! So Satoshi used a '₿' symbol to represent bitcoin? Big deal - and false equivalence. There's no religious/masonic/cult connotations as in the case of the USD.

1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2 is what it really looks like.

That's incorrect. That's a bitcoin wallet address. Be reasonable.

QE? Is there a better term? I suppose Monetary Easing or Monetary Accommodation would be better.

Again, be reasonable! It's unrestricted money printing/ issuance.

Mining? Performing zillions of trial and error puzzles would be better.

Use of the term mining doesn't deliberately lead people astray. Use of the term Quantitative Easing does.

 

[WolfeTone]

QE? Is there a better term? I suppose Monetary Easing or Monetary Accommodation would be better.

Magic money tree printing.

The cult rejects all official statistics as a grand conspiracy where they don't support the narrative.

I accept all the official statistics, I don't accept that they are sourced from a sound monetary system.
Who does anymore?

 

[DublinHead54]

1. Is there enough BTC for every Balance sheet to have bitcoin on it?
2. The companies holding BTC still value it in terms of Fiat, how do you transition away from the fiat valuation?

There are roughly 18.5m Bitcoins mined but according to this research there are only 4.2m in circulation, and the liquidity will further deteriorate as more corporations buy and hold on their balance sheet. The research points to companies like Microstrategy and FIs buying large quantities and hoarding. Given that the companies holding BTC are only a tiny fraction of public companies what will happen to the network as liquidity dries up? In this case, scarcity is an issue and is probably part of the reason why corporates don't hold Gold on their balance sheets (physical storage costs beng the other).

This is not an aspect that Satoshi had planned for, as the use case was a currency with constant circulation. The liquidity is one area I haven't looked into much, so keen to hear the thoughts of others on this forum.

Does anybody want to opine on this? I was hoping for some positive discussion on the back of this topic.

 

[DazedInPontoon]

1. Is there enough BTC for every Balance sheet to have bitcoin on it?

yes. There is not enough BTC for every balance sheet to have the number of bitcoins that firms like MicroStrategy and Tesla have accumulated, but there is enough BTC for every balance sheet to have as much as they need in terms of fiat value. The price per BTC in fiat rises as required.

1. The companies holding BTC still value it in terms of Fiat, how do you transition away from the fiat valuation?

It might happen, it might not. There is no necessity for it to happen, and it seems unlikely unless BTC is much more stable.

There are roughly 18.5m Bitcoins mined but according to this research there are only 4.2m in circulation, and the liquidity will further deteriorate as more corporations buy and hold on their balance sheet.

The liquidity in terms of bitcoin or in terms of dollar value of liquid bitcoin? I think everyone considers bitcoin, as a whole, more liquid today with 4.2m in ciculation that it might have been years ago with 8m in circulation but with each one only worth $50.

The research points to companies like Microstrategy and FIs buying large quantities and hoarding. Given that the companies holding BTC are only a tiny fraction of public companies what will happen to the network as liquidity dries up?

The price per BTC in fiat rises as required.

In this case, scarcity is an issue and is probably part of the reason why corporates don't hold Gold on their balance sheets (physical storage costs beng the other).

I disagree. In fact I think it is *more* in your interest to accumulate a treasury asset if the action of doing so will raise the value of the asset, as happened with MicroStrategy buying bitcoin. The scarcer something is the more of such an effect you'll see. The price per BTC in fiat rises as required.

This is not an aspect that Satoshi had planned for, as the use case was a currency with constant circulation. The liquidity is one area I haven't looked into much, so keen to hear the thoughts of others on this forum.

Satoshi explicitly likened btc to gold in his communications, and it played a part in how bitcoin was modeled. He knew the consequences of an ultimately fixed eventual supply.

 

[DazedInPontoon]

Also back in October you said

I am not really sure what this does for price stability, if most of the BTCs in the world are held in wallets and not circulating.

and I replied:

Personally I think it will be absolutely terrible for stability, as bitcoin is propelled to the moon with this as the catalyst in the next year or so.

and here we are.

(source https://www.askaboutmoney.com/threa...l-gold-crashing-right-now.216478/post-1687726)

 

[DublinHead54]

The liquidity in terms of bitcoin or in terms of dollar value of liquid bitcoin? I think everyone considers bitcoin, as a whole, more liquid today with 4.2m in ciculation that it might have been years ago with 8m in circulation but with each one only worth $50.

Can you explain what you mean here? A bitcoin is a bitcoin, the equivalent dollar value doesn't impact the liquidity of the asset. If there were 8m Bitcoin in circulation vs 4 million then by a matter of fact the 8m had more liquidity.

Also back in October you said

and I replied:

and here we are.

(source https://www.askaboutmoney.com/threa...l-gold-crashing-right-now.216478/post-1687726)

Yes the drying up of liquidity / scarcity has been a factor in the large uptake.

yes. There is not enough BTC for every balance sheet to have the number of bitcoins that firms like MicroStrategy and Tesla have accumulated, but there is enough BTC for every balance sheet to have as much as they need in terms of fiat value. The price per BTC in fiat rises as required.

This doesn't make sense because in terms of USD value BTC is a volatile asset, so If want to hold BTC with a dollar equivalent of $1m on my balance sheet the position will need to be constantly adjusted as the BTC/USD exchange rate changes. However, the point is to move away from pricing BTC in Dollars and BTC be a standalone unit.

 

[DazedInPontoon]

However, the point is to move away from pricing BTC in Dollars and BTC be a standalone unit.

I expect your confusion is coming from this assumption. I don't think people are moving away from pricing BTC in dollars, and are therefore measuring the liquidity in terms of the total dollar value of liquid BTC.

 

[DublinHead54]

I expect your confusion is coming from this assumption. I don't think people are moving away from pricing BTC in dollars, and are therefore measuring the liquidity in terms of the total dollar value of liquid BTC.

@DazedInPontoon I am not confused, it appears that you have confused two separate topics in my response and misquoted. I am not sure how that happened given I responded individually to each of your comments, so it should be clear that the above quote was not in response to managing volatility on the balance sheet and not market liquidity. In comment number 494 I asked you to explain what you meant that bitcoin is more liquid now because the dollar value is higher.

I would appreciate if you could respond back to the questions (much like you did earlier) line by line? My understanding of how market liquidity works clearly is different to yours, so I'd like to understand how you arrived at those comments. My understanding in this context is the dollar value is just a reporting metric, the same way as there is a Euro equivalent. The $ value doesn't change the circulating supply of BTC at a given point. Can you explain what you meant by the dollar value of BTC impacts the liquidity?

I assume what you actually meant was there are more participants in the market now in part because of the price rise and that is impacting liquidity?

 

[galway_blow_in]

I was thinking of replacing my 8 year old car. I see it is about the same price as it was 8 years ago but probably better spec. But I do have sympathy with Saylor who probably does not have the same situation with his yacht.

you have an eight year old car which is worth the same today as it was eight years ago ?

is it an Aston Martin DB 9 ?

 

[Duke of Marmalade]

My understanding of liquidity is how much can you buy or sell of a quantity without your actual transaction materially moving the price.

I accept all the official statistics, I don't accept that they are sourced from a sound monetary system.
Who does anymore?

Wolfie I don't know where you live but are you seeing folk in your neighbourhood with wheelbarrows of € notes? Everything looks very normal in these parts. Shopkeepers are happy with the fiat and as far as I know most people are happy to work for fiat and will even let any surplus accumulate in their current accounts earning nothing. I am unaware of any folk demanding to be paid in btc. I admit the Irish Times now costs €2.30 when it used to cost €2.00. Admittedly I see folk wearing masks as they go shopping which I didn't see before but I don't think this is out of shame for cheating the shopkeeper with their dud fiat.
But of course if you enjoy wallowing in a belief that the whole caboodle is a sham and the end of our world is nigh, it would be unfair of me to try and persuade you from the comfort of your fantasy.

 

[Duke of Marmalade]

you have an eight year old car which is worth the same today as it was eight years ago ?

is it an Aston Martin DB 9 ?

The salesman left a lucky bitcoin in the glove compartment. I thought it was a trivial gesture at the time.

 

[tecate]

Wolfie I don't know where you live but are you seeing folk in your neighbourhood with wheelbarrows of € notes? Everything looks very normal in these parts. Shopkeepers are happy with the fiat and as far as I know most people are happy to work for fiat and will even let any surplus accumulate in their current accounts earning nothing. I am unaware of any folk demanding to be paid in btc. I admit the Irish Times now costs €2.30 when it used to cost €2.00. Admittedly I see folk wearing masks as they go shopping which I didn't see before but I don't think this is out of shame for cheating the shopkeeper with their dud fiat.
But of course if you enjoy wallowing in a belief that the whole caboodle is a sham and the end of our world is nigh, it would be unfair of me to try and persuade you from the comfort of your fantasy.

Wolifie, I don't know where you live but are you seeing folk in your neighbourhood epically dissatisfied with the horse and buggy? Everything looks very normal in these parts. Horse and buggy owners are happy with their horses and buggies and as far as I know most people are happy to travel wherever they want with their horse and buggy. I am unaware of anyone in my circle who's demanding change and looking to buy one of these new fangled motor cars. Admittedly, I see people wearing masks as they go round town what with all the horse dung but this creates much needed employment for the dung shovelers in the city.
But of course if you enjoy wallowing in a belief in this new fangled motor car idea and how it will change things, it would be unfair of me to try and persuade you from the comfort of your fantasy. However, I will say these contraptions of yours are frightening man and beast so I'm happy to see new regulation that requires you to have someone run in front of that hideous contraption of yours waving a red flag to warn the local townsfolk.