Is Bitcoin like gold?

[tecate]

A store of value doesn't equal a risk off asset,

I'm here to learn and I want to better understand this. So just so that I have this straight - you are saying that bitcoin is not a currency and you believe it to be a very bad store of value? Is that your thinking?

I don't know why you needed to deflect instead of just answering the question.

Now now! It's been pointed out to you that personal commentary is not appreciated. This afterall is a discussion - not of me or you - but of the subject.

I'm honestly trying to learn how you view and value it given our differing opinions.

That honesty is shining through - I commend your thirst for learning. It's truly a sight to behold.

At the end of the day all of this 'give it time' rhetoric is just opinion and can't be proven.

Uff! so close. You had me at 'honestly' ...and yet despite my yearning to agree with you, I'm very much struggling here. So we daren't observe how things develop? Oh dear. I mean if you're holding a gun to my head, I guess I better offer an opinion? But it appears my opinions are rhetoric. Riddle me this:

- Are your opinions rhetoric?
- Are @Brendan Burgess , @Duke of Marmalade 's opinions 'rhetoric' when they say that bitcoin is going to zero come what may and that there isn't even a zero % chance of there being any other outcome? I'm honestly trying to learn how you view and value that - given our long standing differing opinions. Perhaps they form opinions that 'can' be proven in this instance? Is that your understanding?
By contrast little old me offering to see how it turns out has been found guilty of presenting with an incredibly indecisive opinion that apparently...can't be proven!? Well I never! I'm learning so much already.

Just on a related point, in the past I've been guilty of suggesting we should park certain aspects of the subject up or 'wait and see'. Some folks don't get the social cues but it's a polite way of saying we've expressed our opinions and so we don't need to restate them and leave it there. I mention that as it seems to have upset you in the past.

And just for the record vis-a-vis my overall opinion...as I've stated many times at this point, I'm quite happy to accept that bitcoin could crash and burn and never be heard of again. Whilst that's not my current thinking in terms of a likely outcome, I consider it prudent to acknowledge unlikely outcomes. I also believe it useful to continually review and reserve the right to change my opinion as and when the facts change.

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.

Oy veh! The volatility - right, got it! So the $100 worth of btc of yours? Will you be divesting that toot suite what with bitcoin being a lousy currency and lousy store of value?

As goods are still purchased in fiat, bitcoin also is impacted by inflation.

It's uncanny you should bring this up. I was only saying to Ana Mercedes at lunch that I could have sworn the pupusas were 36,000 satoshis each on Thursday and there she was charging me 38,250 satoshis. That pesky inflation!

 

[Duke of Marmalade]

@tecate
Another interesting link from you, this time Bloomberg.
I am a tad shocked that Bloomberg seem here to be openly promoting bitcoin.
Yep I note the point about volatility down from 8x Nasdaq to 3x but we should note that Nasdaq vol is a large multiple of that between leading fiats.
I note that there are now 17,000 crypto assets, doubled in a year. I recall you hauling me over the coals for saying there were 7,000, perhaps I was ahead of the time.
But I was really stumped by this Bito fella and that annoyed me, as at this stage I felt I was on top of the subject. Can you help me understand what the 10% cost of carry on Bito means?

 

[tecate]

Yep I note the point about volatility down from 8x Nasdaq to 3x but we should note that Nasdaq vol is a large multiple of that between leading fiats.

At the end of the day, it evidences a trend towards reduced volatility - even if you challenge the degree of that reduction.

I note that there are now 17,000 crypto assets, doubled in a year. I recall you hauling me over the coals for saying there were 7,000, perhaps I was ahead of the time.

I do find myself in the dock a lot lately although on this occasion, I'd like to register a guilty plea. I'm angling for a suspended sentence though Duke as at the time, the suggestion seemed to be that these were challengers to bitcoin. Only a handful of projects are aimed at the same use case as bitcoin. To my knowledge, they existed already back in 2017 and although they've lingered they're floundering.
Since back then, we've seen an exponential increase in projects related to DeFi, NFTs, Metaverse, Gaming, etc.

But I was really stumped by this Bito fella and that annoyed me, as at this stage I felt I was on top of the subject. Can you help me understand what the 10% cash and carry on Bito means?

I've mentioned before that I have little knowledge when it comes to derivative products so apologies in advance - I can only impart the limited understanding of this that I have.

BITO is the Bitcoin exchange traded futures product that was approved some months back. For an age, the sector has been crying out for the SEC to approve an ETF - as it enables market access to a whole host of investors who are not comfortable in dealing with bitcoin directly either due to concerns re. bitcoin storage or regulatory/compliance concerns. What had been asked for was a spot based product. What Goldman Gary at the SEC approved was a futures product.

There's been a lot of criticism of that decision. The remit of the SEC is (allegedly) to protect the little guy. So in this instance, the little guy is being disadvantaged at a cost of 10% and upwards. If contracts have to be 'rolled over' i.e. someone buys a futures contract - its duration is 1 month - they want to continue to maintain a position - so they have to keep buying new contracts. There's an expectation that more often than not, futures contracts will be in 'contango' i.e. that there will be a premium to be paid in moving from one contract to another with the later contract having a higher price.

I've no doubt that I'm not explaining that away clearly/correctly. But if you'd like to figure it out for yourself, you might find this further info useful ( / link2 / link3 ). Otherwise, if there's anyone here that has day to day experience with cash & carry trades relative to any futures product (bitcoin-related or otherwise), I'm sure they could shed more light on it.

 

[Duke of Marmalade]

At the end of the day, it evidences a trend towards reduced volatility - even if you challenge the degree of that reduction.


I do find myself in the dock a lot lately although on this occasion, I'd like to register a guilty plea. I'm angling for a suspended sentence though Duke as at the time, the suggestion seemed to be that these were challengers to bitcoin. Only a handful of projects are aimed at the same use case as bitcoin. To my knowledge, they existed already back in 2017 and although they've lingered they're floundering.
Since back then, we've seen an exponential increase in projects related to DeFi, NFTs, Metaverse, Gaming, etc.


I've mentioned before that I have little knowledge when it comes to derivative products so apologies in advance - I can only impart the limited understanding of this that I have.

BITO is the Bitcoin exchange traded futures product that was approved some months back. For an age, the sector has been crying out for the SEC to approve an ETF - as it enables market access to a whole host of investors who are not comfortable in dealing with bitcoin directly either due to concerns re. bitcoin storage or regulatory/compliance concerns. What had been asked for was a spot based product. What Goldman Gary at the SEC approved was a futures product.

There's been a lot of criticism of that decision. The remit of the SEC is (allegedly) to protect the little guy. So in this instance, the little guy is being disadvantaged at a cost of 10% and upwards. If contracts have to be 'rolled over' i.e. someone buys a futures contract - its duration is 1 month - they want to continue to maintain a position - so they have to keep buying new contracts. There's an expectation that more often than not, futures contracts will be in 'contango' i.e. that there will be a premium to be paid in moving from one contract to another with the later contract having a higher price.

I've no doubt that I'm not explaining that away clearly/correctly. But if you'd like to figure it out for yourself, you might find this further info useful ( / link2 / link3 ). Otherwise, if there's anyone here that has day to day experience with cash & carry trades relative to any futures product (bitcoin-related or otherwise), I'm sure they could shed more light on it.

Ok, I think I get it. Good links (esp. link2 who obviously is not a cultist).
Another idiot boy question for either you or others. Is BITO ETF price determined by supply and demand for it or is it calculated on a look through NAV basis?

 

[DublinHead54]

I'm here to learn and I want to better understand this. So just so that I have this straight - you are saying that bitcoin is not a currency and you believe it to be a very bad store of value? Is that your thinking?


Now now! It's been pointed out to you that personal commentary is not appreciated. This afterall is a discussion - not of me or you - but of the subject.


That honesty is shining through - I commend your thirst for learning. It's truly a sight to behold.


Uff! so close. You had me at 'honestly' ...and yet despite my yearning to agree with you, I'm very much struggling here. So we daren't observe how things develop? Oh dear. I mean if you're holding a gun to my head, I guess I better offer an opinion? But it appears my opinions are rhetoric. Riddle me this:

- Are your opinions rhetoric?
- Are @Brendan Burgess , @Duke of Marmalade 's opinions 'rhetoric' when they say that bitcoin is going to zero come what may and that there isn't even a zero % chance of there being any other outcome? I'm honestly trying to learn how you view and value that - given our long standing differing opinions. Perhaps they form opinions that 'can' be proven in this instance? Is that your understanding?
By contrast little old me offering to see how it turns out has been found guilty of presenting with an incredibly indecisive opinion that apparently...can't be proven!? Well I never! I'm learning so much already.

Just on a related point, in the past I've been guilty of suggesting we should park certain aspects of the subject up or 'wait and see'. Some folks don't get the social cues but it's a polite way of saying we've expressed our opinions and so we don't need to restate them and leave it there. I mention that as it seems to have upset you in the past.

And just for the record vis-a-vis my overall opinion...as I've stated many times at this point, I'm quite happy to accept that bitcoin could crash and burn and never be heard of again. Whilst that's not my current thinking in terms of a likely outcome, I consider it prudent to acknowledge unlikely outcomes. I also believe it useful to continually review and reserve the right to change my opinion as and when the facts change.


Oy veh! The volatility - right, got it! So the $100 worth of btc of yours? Will you be divesting that toot suite what with bitcoin being a lousy currency and lousy store of value?


It's uncanny you should bring this up. I was only saying to Ana Mercedes at lunch that I could have sworn the pupusas were 36,000 satoshis each on Thursday and there she was charging me 38,250 satoshis. That pesky inflation!

Tecate,

Can't you just answer the questions? Or at least say you're not going to answer the question?

You've just spent two posts trying to change the subject.

 

[Duke of Marmalade]

Ok, I think I get it. Good links (esp. link2 who obviously is not a cultist).
Another idiot boy question for either you or others. Is BITO ETF price determined by supply and demand for it or is it calculated on a look through NAV basis?

I looked up the prospectus. It is market priced though it publishes a NAV and the market price seems to very closely match the NAV. There is also a remarkably low bid offer spread of 0.04%. Incidentally down 40% since launch 3 months ago.
A very clear prospectus which would make you run a mile from it. It mentions the possibility of going to zero at least 3 times. And then there is this new on on me, the possibility of an “air drop” of bitcoin; I thought the supply was limited. But what particularly caught my eye was the following:

A significant portion of bitcoin is held by a small number of holders sometimes referred to as “whales”. These holders have the ability to manipulate the price of bitcoin. Unlike the exchanges for more tradi- tional assets, such as equity securities and futures con- tracts, bitcoin and bitcoin trading venues are largely unregulated. As a result of the lack of regulation, individu- als or groups may engage in fraud or market manipulation (including using social media to promote bitcoin in a way that artificially increases the price of bitcoin).

So Professor Roubini does a line in writing prospecti.

 

[tecate]

It mentions the possibility of going to zero at least 3 times.

Drama queen much, Duke? Check the literature that comes with medical devices and drugs in the US (and likely elsewhere) - warning of the risk of death...and yet we're talking about medicines taken by millions of people....go figure.

And then there is this new on on me, the possibility of an “air drop” of bitcoin

See above.

So Professor Roubini does a line in writing prospecti.

meaning?

 

[Duke of Marmalade]

Drama queen much, Duke? Check the literature that comes with medical devices and drugs in the US (and likely elsewhere) - warning of the risk of death...and yet we're talking about medicines taken by millions of people....go figure.

I have never seen in any investment prospectus the risk of going to zero.

meaning?

The bit that I quoted from the prospectus was pure Roubini (whales etc.) and I thought he was exaggerating a bit.

 

[tecate]

And yet you're not disputing that FDA regulated medicines consumed by millions oftentimes contain warnings of a risk of death from taking them. Who are you trying to convince with this stuff Duke?

 

[Duke of Marmalade]

And yet you're not disputing that FDA regulated medicines consumed by millions oftentimes contain warnings of a risk of death from taking them. Who are you trying to convince with this stuff Duke?

Pull in your horns my dear @tecate
I am learning.
Positive for the cult was that I am really surprised that Bloomberg seem to be endorsing bitcoin. Also the SEC even countenancing an ETF based on bitcoin albeit on its futures is equally surprising.
So there, I acknowledge that things have moved on for the cult since 2018.
But can you acknowledge that the warnings, presumably required by the SEC, of going to zero and of whales manipulating the price and using social media to pump and dump is also strong support for the Nobel/Roubini school of thought?

 

[tecate]

But can you acknowledge that the warnings, presumably required by the SEC, of going to zero and of whales manipulating the price and using social media to pump and dump is also strong support for the Nobel/Roubini school of thought?

I can acknowledge that this stuff originates from the country that brought us 'caution: coffee may be hot' warnings.
Taking them one by one...
Clearly neither SEC or Proshares believe that bitcoin is going to zero. There isn't any way they would approve that ETF if they thought otherwise and Proshares - and the other couple of entities that launched bitcoin-based futures products similarly wouldn't bring the product to market if they thought bitcoin going to zero was a likely outcome.

Market manipulation: Is considerably less of an issue than it was in the past. If you have a tiny nascent market that can be moved by a whale, its obvious someone will try to manipulate it. But try to manipulate a $ trillion dollar market.
Re. pump and dump claims - see above.
Meanwhile, there are a whole heap of examples of wrongdoing in these categories in conventional markets.


I had the nutty professor on my twitter feed for quite some time but when it became obvious that he would latch on to anything (and I mean anything) negative re. bitcoin - regardless of the source or any basis to the claim - I took him off about a year ago. There's a world of difference between the nutty professor's claim (bitcoin is definitely going to zero) and the 'coffee may be hot' level legal mumbo jumbo.

 

[Duke of Marmalade]

Warnings about "unique" risk including the possibility of going to zero, beware of whales, social media being used to manipulate the price, fraud higher than usual, mostly traded on unregulated platforms etc. show that bitcoin is still far from being house trained but I agree that it is making its presence around the house felt.

 

[tecate]

It's a "coffee may be hot" level disclaimer, Duke. In any event, I think its a bit rich for you to try and make this molehill into a mountain when neither yourself nor @Brendan Burgess will acknowledge that there's a non-negligible possibility that bitcoin continues to progress from here.

 

[DazedInPontoon]

Warnings about "unique" risk including the possibility of going to zero, beware of whales, social media being used to manipulate the price, fraud higher than usual, mostly traded on unregulated platforms etc. show that bitcoin is still far from being house trained but I agree that it is making its presence around the house felt.

Those are the possibilities of a free market.

 

[Duke of Marmalade]

Those are the possibilities of a free market.

Well yes, even a government bond can go to zero. The point is that the SEC have required this possibility to be included in the Bito prospectus; I have not seen it any conventional prospectus.
@Brendan Burgess Boss the following bitcoin risk warning from the SEC should almost be a Key Post. Anyone promoting bitcoin should point out these risks.

Bitcoin Risk – Bitcoin is a relatively new innovation and the market for bitcoin is subject to rapid price swings, changes and uncertainty. The further development of the Bitcoin Network and the acceptance and use of bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Bitcoin Network or the acceptance of bitcoin may adversely affect the price of bitcoin. Bitcoin is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact bitcoin trading venues. Additionally, if one or a coordinated group of miners were to gain control of 51% of the Bitcoin Network, they would have the ability to manipulate transactions, halt payments and fraudulently obtain bitcoin. A significant portion of bitcoin is held by a small number of holders sometimes referred to as “whales”. These holders have the ability to manipulate the price of bitcoin. Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, bitcoin and bitcoin trading venues are largely unregulated. As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote bitcoin in a way that artificially increases the price of bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of bitcoin trading venues have been closed due to fraud, failure or security breaches. Investors in bitcoin may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. Legal or regulatory changes may negatively impact the operation of the Bitcoin Network or restrict the use of bitcoin. The realization of any of these risks could result in a decline in the acceptance of bitcoin and consequently a reduction in the value of bitcoin, bitcoin futures, and the Fund. Finally, the creation of a “fork” (as described above) or a substantial giveaway of bitcoin (sometimes referred to as an “air drop”) may result in significant and unexpected declines in the value of bitcoin, bitcoin futures, and the Fund

 

[tecate]

The point is that the SEC have required this possibility to be included in the Bito prospectus; I have not seen it in any conventional prospectus.

Right so. I'll just leave this here...

SEC.gov | SEC Charges Exchange-Traded Product and Its General Partner With Disclosure Failures

www.sec.gov

Looks like the promoters of conventional market products can't be trusted.

@Brendan Burgess Boss the following bitcoin risk warning from the SEC should almost be a Key Post. Anyone promoting bitcoin should point out these risks.

I think that would be entirely appropriate...so long as the post/thread is renamed 'Caution: Coffee is hot, these pílls may kill you and other similar musings'.

 

[DublinHead54]

Given there has been an argument put forward that Bitcoin is at the beginning of it's adoption curve and only a decade old. Then it shouldn't be hard to also accept that the market infrastructure is currently less secure/risky than traditional financial markets. Of course it's evolving but it's still a ways off and why regulation will be good for a efficient market.

The SEC is not discriminating against Bitcoin, they are reporting facts. they are doing what they always do....protect the consumer.

I'm pretty sure this isn't the first time the SEC has issued a risk warning!

 

[DazedInPontoon]

The TLDR is mostly just three points, which any of us here who have discussed bitcoin with people have probably already said ourselves many times:

1) Bitcoin is traded in a free market. The nanny state won't regulate it for you.
2) Not your keys not your coins.
3) Cryptocurrency is fairly new and experimental, there may be unknown unknowns.

 

[Duke of Marmalade]

I will concede one thing. The SEC are not making the BOHA argument. That's fair enough. They don't set values. They accept that the market does that. To say they have doubts about the market in bitcoin would be an understatement of monumental proportions.
I have always admitted my own humble capabilities in this regard though it seems to my nigh eve perspective to definitely be a BOHA. But I have relied on Nobels/Roubini/Buffet to guide me, just as I haven't a clue about vaccines but trust the experts. I will now regard Nobels/Roubini/Buffet/SEC as my guide. I must admit "air drop" was new to me, you live and learn.

@tecate Shoot the messenger is a sad reaction. I think @Dublinbay12 expected more.

 

[tecate]

@tecate Shoot the messenger is a sad reaction.

You've lost me Duke. What messenger have I 'shot'?