Is Bitcoin like gold?
- Thread starter Sunny
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Absolutely not. Your suggestion infers that correlation with the markets is permanent and not just a part of bitcoin's development. @Brendan Burgess believed that he had 'settled' this argument in March 2020 - via this thread. Whilst bitcoin is at times correlated with the markets, what followed didn't settle matters as beyond the initial panic, btc bounced.
We know that there is continually a lot of leverage being used in this market - so that exaggerates swings. Algorithmic traders are following past patterns and treating it as a risk on asset. Fundamental investors believe it to be a risk off asset. In 2020, bitcoin eventually bounced - and whilst it remains to be seen if the immediate panic is over or not right now, its also starting to bounce right now also.
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DazedInPontoon
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Did I miss something, or are we still over-reacting to short term (hourly in this case) volatility and ignoring the long term trend?
Eh?? It has nothing to do with just today but today is another sign that bitcoin is perceived as nothing like gold. It is proving highly correlated to other risk assets in periods of rising inflation and geo political turmoil. Exactly when we were told bitcoin would come into its own.
All we have seen is that bitcoin is nothing but a speculative asset with high volatility that will attract all sorts of people to try and make money in the short term. It is not a hedge instrument. It is not an defensive play for people concerned about inflation. It does not offer shelter in times of geo-political crisis. The idea that bitcoin is more than completely speculative is not holding up....
DazedInPontoon
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I disagree with most of that.
Paul O Mahoney
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"Truth is like poetry , very few like each of them. "
It would be useful to explain your disagreements , just for balance ....
DublinHead54
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I would be interested to understand what metrics fundamental investors and yourself use to arrive at a conclusion that Bitcoin is a risk off asset?
Typically in my experience in a risk-off environment investors are seeking low risk investments and hence a flight to quality (treasuries, cash, to a lesser extent gold etc) and investments that yield less. Bitcoin over its history thus far has proven to be volatile, and not exhibited itself as a risk-off asset in my opinion.
Are there any metrics on bitcoin flows from exchange wallets to cold wallets over the last few days? That is probably a more telling metric than the actual price i.e. if people are moving more funds onto exchange wallets ready to buy etc.
In my opinion Bitcoin isn't fully in sync with the market, so at this point any movements with outside events doesn't really prove anything. Pretty sure though the correlation with markets has been used as a pro Bitcoin argument here before, so interesting to see correlation discounted now.
Ah but this is all part of Bitcoin's development, where swings in price are expected until the price settles down. Afterall, Bitcoin is only knocking around for 13 years or so. Have some patience sir
You've referred to bitcoin being a store of value previously. What makes it a good store of value? Is it being used as a store of value by all its users? The point is that bitcoin may have all of the fundamental characteristics of what makes for a store of value and a risk-off asset. That doesn't mean to say that all user groups are treating it in that way at this time.
Yes, of course Firefly- it's an old default position of yours. When the first 2 fax machines existed, would you have written off the innovation on the basis of not being able to fax anything to anyone? Would you have written off the internet in 1992? It appears that you would.Ah but this is all part of Bitcoin's development, where swings in price are expected until the price settles down. Afterall, Bitcoin is only knocking around for 13 years or so. Have some patience sir
Are you claiming that over the course of the past five years, there has been no development in bitcoin and its ecosystem? Bitcoin started off the back of a message board on some hard to find crevice of the internet back in 2009. Have a look at your posts here from 2018. Either the complaints you've presented with no longer apply or they're significantly weaker than they were - due to bitcoin's ongoing development. With the above, you're directly calling out bitcoin's volatility...yet over the course of the past 5 years, bitcoin's volatility has reduced considerably. That's not hearsay - that's verifiable.
Similarly, the OP claimed a long time back that bitcoin would be usurped by another cryptocurrency on the basis of 4 shortcomings. To my point - in the meantime - bitcoin and its extended eco-system has resolved 3 of those shortcomings ( and the fourth is going to be viewed completely differently soon enough).
In this thread, we're told that bitcoin doesn't have any other use case aside from speculation. Yet, I just paid for breakfast using bitcoin. The other day, it emerged that El Salvador has secured commitments that account for half of its $1 billion dollar bitcoin-based bond - which will launch next month. That's an entirely new use case that has never been discussed here.
On Tuesday, the leading decentralised USD stablecoin project placed $1 billion of bitcoin in its reserve - underscoring bitcoin's ability to act as a reserve asset within the entire asset class.
I've always referred to bitcoin's digital gold role as developmental. I believe that it has made a good start on that and that it will continue to transition into that role ( because it has the fundamental characteristics of what makes for a decent store of value to underpin it ).
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Why did you not just use cash or your debit card?
Because I have availability to BTC at all times - why shouldn't I use it if its convenient to do so? Furthermore, you may not experience this in Ireland but in Latin America, oftentimes you try to pay with card and you'll be presented with that option so long as you're prepared to pay 4-5% additional. So let me turn this around. In those circumstances would you pay the 4-5% additional or would you pay with bitcoin if you happened to have it available to you via a wallet on your phone?
Bear in mind that once again, I'm not suggesting that bitcoin is going to cannibalise day to day payments at the expense of fiat. I'm claiming that it should be an option in the same way as you decide to pay via cash/card. There has also been a chicken and egg scenario re. its use for this purpose. When there were two fax machines or two networked computers, fax and internet weren't a whole lot of good. If we get to a point where everyone has a digital wallet, then paying via bitcoin becomes a more realistic option. Whether you prefer to use it above other means at that point will be situational/specific to the users circumstances.
This is also another example where I'm calling BS on @Firefly 's summary dismissal of bitcoin's ongoing development. The ability to spend bitcoin on a day to day basis may still be limited but it's further on than it was when he first stated that it couldn't be used to buy anything back in 2018 ...and back then ( just as he is right now) he was also suggesting that it was unreasonable to consider that this might develop further (which it has in the interim through the fruition of Lightning Network ).
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By all accounts the first commercialized version of the modern fax machine was invented by Xerox in 1964. I think they were "big" in the early 80s (16-18 years later?) .. I was too young then, so I'll take your word for it. Bitcon is on the go 13 years now, but dismal uptake for all the hype. Are you expecting it to be "big" in the next 4-5 years? And by "big" I mean, you know, that many people all over the world will actually buy stuff with it? If not, when will it be "big"? The closest decade will suffice.
Au contraire! Due to the rise of internet usage and IT more generally, I pursued IT (over finance) at 3rd level and have been working with ones & zeros since. In fact, the rise of the internet gave way to cloud services which is a nice little earner
Given, that you like to remind everyone that Bitcoin has appreciated 214% pa over the course of 13 years, I take it you think we're now at the top, otherwise that could turn out be a very expensive breakfast
Ok, so you see my point? Why not be open to the fact that this can develop further rather than ridicule the notion? The examples are there already. That development is there where BTC is concerned also over the course of the past 5 years.
The very same point. Why the deadline? How long has AI been knocking about? You remember going back a couple of decades we were told that we'd have a crisis soon enough as there would be no work for us (due to automation)? That's still in play but it didn't happen back then.
Other than that, you say its not in use when I've given you examples of day to day use. As you've always done, you're also dismissing any and all other use cases beyond 'paying for stuff'. You can box yourself in by defining success/failure of bitcoin on that one metric - but don't expect others to do so.
On the one hand, delighted to hear that - but it makes it all the more baffling to try to understand your inability to appreciate that things can take time to unfold. If you work in that sector, then you'll already be aware of the history and it goes back forever and a day. You're talking about the nearest decade - how many decades did it take for the internet and associated technologies to develop? The other irony is that crypto, blockchain etc. is very closely related to that - it's an extension of it.
How long has EV tech been on the go?
The fact that you bemoan a perceived lack of progress adds more weight to Amara's Law:
"We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run"
And yet by a whole host of metrics, bitcoins developmental progress has been validated.
Given, that you like to remind everyone that Bitcoin has appreciated 214% pa over the course of 13 years, I take it you think we're now at the top, otherwise that could turn out be a very expensive breakfast
I don't give a fiddlers about that. It's something that is widely misunderstood. Unless I allocate all resources to bitcoin, then it doesn't make the slightest bit of difference whether I can buy a Ferrari with the equivalent 10 years from now. At the end of the day, I decide what level of exposure I have to bitcoin and digital assets - and I'm free to rebalance or adjust that as I go.
So that's not a head game for me. What would be a headgame for me is to be spoon fed all the merits and demerits and then to not be able to respond and update my thinking and position and at the very least avail of the smallest of positions in what is an asymmetric speculation on the maturity and success of bitcoin. That would haunt me until the end of days but then I'm in no way qualified what with the lack of an M.Sc. in Finance, being intellectually outflanked what with doing all my research whilst sitting on ceramic furnishings (allegedly).
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Duke of Marmalade
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There is a lot of talk of denying Russia access to the old world SWIFT money transmission system. That would be useless as Russia would simply use bitcoin. After all that was one of the main purposes of bitcoin, to be free of censorship/sanctions.
I certainly hope that they don't press the red button re. Russia/SWIFT. It's a high stakes game at that stage. It could lead to the yanks losing global reserve currency status and the influence that goes with that. It would also bring forward a major battle for bitcoin as it would make it the enemy and turn a largely positive outlook re. crypto/btc (with ongoing exceptions from time to time) in the US into the opposite. Aside from causing trouble, they'll probably cosy up with the Chinese and start using the Digital Yuan in any event. The Chinese are already capitalising on the situation - facilitating the purchase of Russian commodities through Yuan.
It's no coincidence that only last week, Russia recognised bitcoin as a currency (albeit with some draconian conditions attached ....of course! ...it's Russia after all). However, Putin certainly doesn't have altruistic views re. what bitcoin can do for the world - so I'd sooner see this saga pass off without this coming into play. Why ask for a harder route if an easier route ahead is possible.
Anyway, it looks like Europe can't do without Russian gas/oil so I don't think it will come to this.
As regards the use of sanctions, by and large the only ones that suffer with sanctions are ordinary people. Its easier to carry out and doesn't provide complete visibility re. the effects but the idea is to make people so desperate that they rise up. Most of the time, it doesn't work but causes misery all the same.
Maybe the Europeans should have used bitcoin a couple of years back when the US prevented them from choosing their own trading partners, Duke?
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I've fixed that for you.
'In God We Trust' money has the exclusive rights on hopium/faith/belief. There are plenty of shiny rocks that equally can be used to make ornate jewellery. It's golds store of value traits that give it its value.
Insofar as you'll end up buying bitcoin at the price you deserve? I guess you're right.
DublinHead54
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You didn't answer my question. A store of value doesn't equal a risk off asset, my statements previously were bitcoin is a risky investment asset. I don't know why you needed to deflect instead of just answering the question. I'm honestly trying to learn how you view and value it given our differing opinions.
DublinHead54
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At the end of the day all of this 'give it time' rhetoric is just opinion and can't be proven.
Bitcoin is not an effective currency today because of its volatility. A main trait of a currency is that it has a steady value. I know my $100 today will be worth $100 tomorrow and in these increments of time inflation isn't a factor. With Bitcoin I don't know what my $100 will be worth tomorrow.
As goods are still purchased in fiat, bitcoin also is impacted by inflation.
Logically why would anyone take that risk on their day to day purchases.
Bitcoin is not an effective currency today because of its volatility. A main trait of a currency is that it has a steady value. I know my $100 today will be worth $100 tomorrow and in these increments of time inflation isn't a factor. With Bitcoin I don't know what my $100 will be worth tomorrow.
As goods are still purchased in fiat, bitcoin also is impacted by inflation.
Logically why would anyone take that risk on their day to day purchases.
Brendan Burgess
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Folks - I don't really want to close this thread.
But please all read the Posting Guidelines again.
Even if you think that the other person is an idiot, don't call him one. Just respond to the post or ignore it.
Brendan
But please all read the Posting Guidelines again.
Even if you think that the other person is an idiot, don't call him one. Just respond to the post or ignore it.
Brendan