Duke of Marmalade
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You think that is a useful contribution to the debate? Maybe Vijay when he revises his graphic will include Covid resistant.
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You think that is a useful contribution to the debate? Maybe Vijay when he revises his graphic will include Covid resistant.It's covid infested cotton.
That digital assets (to include bitcoin) are a new asset class? Damn, first challenge I've ever heard to the notion.I believe you have made this point more than once.
11 actually.Bitcoin is on the go for about 9-10 years.
Indeed it did Firefly -although it existed before that 'widespread coverage' and after that widespread coverage. What of it?It received widespread coverage 18 months ago in relation to its value.
And as much as I have (and will continue to...) refer to it as a new asset class, you've presented before with the notion that a technology and its supporting eco-system - just unpacks itself out of a box - all complete and ready to go. Write it off today. Ignore that a volume of work is being done in the space - I don't care! Here's the timeline for the development of the internet. Had you even known what it was in the mid 70s it seems you would have thrown up your hands and told everyone to pack up their stuff and go work on something else. You may not even have gotten to the stage of Dukey's friend, fax machine guy. That takes some beating!Would you mind telling us when you think it will no longer be "new"? An approximate year would suffice.
I think you're getting a tad confused. What you reference relates to Fungibility - not Censorship Resistance. Fungibility implicates anonymity and traceparency. However, as I mentioned, for those savvy with the technology, those issues can be overcome. For everyone else there are software updates waiting in the wings. They won't be applied any day soon but they will be applied in time.In the picture above Bitcoin scores an A for "Censorship Resistant". Doesn't seem right to me given what you are saying below..
I'm sure its with greater difficulty. I have not checked it out more recently but my understanding is that interest (and use) amongst Chinese is still decent. That article I linked to on stablecoin use is indicative of that. But we're talking about use to move bigger amounts around. It was a couple of years back that the Chinese really clamped down on ALL means of citizens in getting money out of the country. Crypto got caught up in that. But my point is that the starting point was with that type of money movement. Not the purchase of goods and services.With difficulty where bans are in place I'd imagine. I still don't see much evidence of any broad adoption for buying goods or services. With the lack of real options there, the lack of guarantees about being able to retrieve money from cryptos will put a lot of people off.
Like you say, VPN can get round that. It's also possible to transact bitcoin without internet - via the infrastructure blockstream have put in place via satellite. In the near future, there will also be mesh networking. In Venezuela, its also possible to transact bitcoin via text message (not something that would be useful in the Chinese context but an interesting alternate approach).Pretty much every developed nation restrict access to certain portions of the internet, totalitarian regimes take that a lot further. China tolerate a certain amount of VPN usage that bypasses the great firewall, but they can and do occasionally restrict that access.
Well, lets wait and see what they come out with. There's no doubt it will have totalitarian hands all over it. But it doesn't necessarily mean that they can snuff it out. Like I mentioned before, I'd sooner hope that there are folks working on the user experience - that's far more important. Bitcoin has already achieved a level of success and can continue to do so in the digital gold/uncorrelated asset use case. However, for further down the road and mass use as a transactional means of exchange, intuitive UI is key.I haven't seen full specs of the Chinese offering, I doubt the full details will ever be made public. But they could very easily restrict or block use of their centralised currency based on the user's Social Credit Score as the already do with interest rates on credit for example (j-walk, your loan rate goes up!)
Absolutely. I've heard commentors speak to that. It makes sense. They've locked horns with the yanks and they want to get out from under the US dollar as the world reserve currency. They're going to pimp this digital renminbi and force trading partners to use it as per their rules (with all the nasty elements of that - that you were referring to above).Very true, perhaps China might leverage it's position over developing nations to force them on-board. I wouldn't be jumping on board with those, but people will always take risks where they believe there might be money to be made.
That cash is riddled with Covid? Yes, I do. Less cash is being used in recent months and the whole covid saga is going to speed up the digitisation process for sure.Duke of Marmalade said:You think that is a useful contribution to the debate?
His 'store of value' graphic isn't in need of editing due to any discussion which has taken place here.Duke of Marmalade said:Maybe Vijay when he revises his graphic will include Covid resistant.
I'm not sure what you were expecting yesterday Brendan - fireworks?So nothing much happened last night?
You can see its performance over the past month/quarter/year to date in the graphic below. It's the best performing *asset of 2020 (thus far), 2019 and the last decade.It fell about 10% in the immediate run-up to the halving but it had risen by more than that in the previous few weeks. Just its normal volatility.
The halving did as it said on the tin - and cut the supply of newly minted coins in half. If you're thinking in terms of price action, then we only have two other halvings to compare it to. In those cases, price increased 12-18 months after the halving. That may or may not be the case in this instance - perhaps it's priced in already. That said, we had 7 consecutive weeks of an increasing bitcoin price leading up to the halving.'The Halvening' did not turn out to be a Hollywood blockbuster....not yet anyway.
I'm not sure what 'performance' you were expecting from it. However, its market cap is around $160 billion - vs. gold which has a market cap of $7 trillion. Therefore, yes - this is at a nascent stage.In my opinion, the performance of Bitcoin YTD vs the rest of the market shows it has some way to go before it and other cryptocurrencies have real relevance in economy / financial markets.
Both bitcoin and gold sold off initially too following the March 12 crash but as per the graphic above, they both recovered later on.We are experiencing a global pandemic / idiosyncratic event and financial markets have sold off across the board (Equities, Rates, Credit Spread, Oil) with the exception of Gold.
I think it's fair to say that we have not had broad participation of institutions in bitcoin/digital assets yet. However, we have had two recent examples of interest from that world with Chris Wood - the global head of equity strategy at Jefferies (Worlds 9th largest investment bank) advising clients to hold some bitcoin. Then we had Paul Tudor Jones of Tudor BVI Global saying he's keeping 2% of his portfolio in bitcoin with his fund having taken steps towards buying bitcoin futures.It will be easy to say "Hedge fund Manager is now looking at Bitcoin as a hedge", but that is forward-looking and maybe Bitcoin will accidentally thanks to its performance during pandemic become a hedge play.
I'm very much onboard with the notion of further innovation - and that's actively happening in the space (there are other subsets of conventional finance which will be disrupted). However, for that store of value use case, I'm not seeing anything that fits the bill comparatively but lets see how things unfold. In the case of CBDCs and Facebook's Libra, I agree with Tudor Jones when he says that "they will make the understanding, utility, and ease of ownership of Bitcoin a much more commonplace option than it is today".I love the anti-authoritarian Orwell esque rhetoric that comes with Bitcoin, but I can't see it being around forever and I don't see that as bad thing. The first car that rolled off the Ford production line was a great invention, but thanks to innovation we don't need to.
Then we had Paul Tudor Jones of Tudor BVI Global saying he's keeping 2% of his portfolio in bitcoin with his fund having taken steps towards buying bitcoin futures.
I'm very much onboard with the notion of further innovation - and that's actively happening in the space (there are other subsets of conventional finance which will be disrupted). However, for that store of value use case, I'm not seeing anything that fits the bill comparatively but lets see how things unfold. In the case of CBDCs and Facebook's Libra, I agree with Tudor Jones when he says that "they will make the understanding, utility, and ease of ownership of Bitcoin a much more commonplace option than it is today".
I agree with all of the above. There are some physically settled bitcoin futures options - so depends on what service provider he utilises.Bitcoin Futures are cash settled? So Paul Tudor is taking exposure to Bitcoin without physically purchasing Bitcoin, so it has little impact on the Bitcoin Network. It does have an impact on legitimizing Bitcoin in Financial Markets, but not sure hedge fund owners really help legitimize it. It is more interesting that custodial services are being set up by Financial Institutions.
Agreed. It probably will take quite some time until that gets to retail level but above that, we will see CBDCs for sure. China's digital Yuan (DCEP) is the favourite to be first out of the blocks.The involvement of facebook and Central governments will legitimize the technology, and I really believe that in the next 5 years we will see some form of a CBDC, in essence money is already digital.
That's a good point. It depends on how it pans out. It may be that bitcoin - as the main net - in a network with multiple sidechains - will be utilised for substantial money movements. As an example, lightning network is being developed as a layer 2 solution ( a network that runs on top of the bitcoin network ) for micro payments. Increased transaction cost on main-net may be feasible in such an instance. And of course it depends on the level of network activity also. In a worst case scenario, bitcoin could fork to a different mining algorithm. This is much further down the road so we will have to see how it pans out.The biggest problem with Bitcoin is the design never fully considered the costs associated with operating the network. The Miners are operating a business and when it becomes unprofitable they will stop, or increase transaction fees to the point the network has no benefit vs traditional payment systems.
PTJs letter can be found.I have lost the link to Paul Tudor Jones letter but the following is written from my recollection.
I don't think anyone has said that there are known outcomes here. There's potential for inflation in the wake of the current money printing on steroids. Equally CBs may not win the battle with deflation either. As regards Zimbabwe, CBs & governments can mismanage FIAT money to varying degrees. It doesn't have to be as bad as what's going on in Lebanon right now to qualify as mismanagement. Once programmed appropriately from the outset, that's not the case with decentralised digital currency.He argues quite persuasively that there is a danger of a Great Monetary Inflation arising from these unprecedented monetary initiatives. He by no means argues that a GMI is certain but that it is possible that Central Banks' capability to put on the brakes and wind back the QE might not work. I agree there is that danger. (This is not Zimbabwe where the car was raced to 200 kph in the knowledge that there were no brakes).
Well done you on finally recognising that FIAT money is a bad store of value. Little Jimmy would be proud of you.He then runs a horse race to see which is best placed to meet that challenge, Financial Assets, Gold, Fiat Cash and Bitcoin. They are judged by some focus panels or such on the criteria of Purchasing Power, Trustworthiness, Portability and Liquidity.
For a start the stewards should not have allowed Fiat Cash to enter. As the judges observed, since the CBs have a stated aim to devalue FC by 2% per annum this poor beast was carrying a hopeless top weight.
I don't think there's any surprise here given that it is very much the relative newcomer with an 11 year vintage as opposed to the other contenders that are established. However, he also believes it to be mispriced in this context:Bitcoin did well on Portability and Liquidity but got trounced on Trustworthiness. Exactly how I would have rated it except for me no amount of doing well under the other headings (where at best it is only equal to Monetary Assets) could make up for my zero trust in its long term future
Duke of Marmalade falters at Becher's Brook. That's incorrect.He doesn't even attempt to consider its fundamentals, which in most economists' eyes condemn it.
He does no such thing. We've discussed fundamentals of bitcoin as a store of value. PTJ identifies bitcoin's qualities as a store of value. Tulips don't have any of the good characteristics of bitcoin as a store of value. The analogy mismatch is very much tongue in cheek and inappropriate.PTJ more or less admits that he would have found a rôle for tulips in his portfolio.
To hedge is to speculate. He is speculating on the realisation of 'the great inflation'. With that, he's speculating on the use of a digital asset (bitcoin) as a hedge against that possibility.As he says himself Bitcoin is a pure speculation.
Ah, so are you going to call it then? Are you confirming that bitcoin dies if there is no significant inflation within 36 months of this currently limitless money printing?I understand that the Great Halvening block contains some media references to the unprecedented monetary interventions, echoing similar references in the Genesis block. In fact, in terms of the rationale for bitcoin current conditions could hardly be more auspicious. The threat of a GMI will underpin the bitcoin price for a while yet. If the GMI fear dissipates in a year or two then the rug will have been pulled form under that rationale.
For sure. Euro/USD/GBP, etc have not been weaned off the first wave of QE - and going into this crisis, there was little leeway in terms of reducing interest rates. I understand that they have no other option but to print money right now - but that doesn't mean to say that anyone knows if there's a way out of all that afterwards - as we have not been here before (not at these numbers).The interference of Central Banks in the economy via monetary policies such as QE reminds me of a Father Ted episode. The one where Ted tries to tap a small dent in a car out with a hammer and results in him destroying the car. The Central Banks had no choice but to interfere because we can't be trusted to behave by ourselves, but once the interference starts it is hard to stop, and those actions are having less and less of an impact.
When it comes to digital currencies, in particular, a Central Bank Digital Currency, one of those most exciting parts is that it is programmable. Therefore it could become a new tool for monetary policy. For example, the US government sent out cheques for $1500 to everyone, but the government has no control over how it is spent. In the future, the government could send out 1500 Digital Dollar and program it to be only spent in certain shops or have it expire after a certain time.
Tech is neutral. However, it can be used for good or bad - and it's no different in this instance. I welcome the advent of CBDCs and Corporate money (Libra). They'll serve their purpose in getting people accustomed to digital money - the differences between them and the advantage that decentralised crypto offers in that context.Maybe Bitcoin has laid the groundwork for the government to have even more control over us!
Tech is neutral. However, it can be used for good or bad - and it's no different in this instance. I welcome the advent of CBDCs and Corporate money (Libra). They'll serve their purpose in getting people accustomed to digital money - the differences between them and the advantage that decentralised crypto offers in that context.
Thanks. I can now give a more detailed critique of the horse race. This took the form of polling a Research Group on how they would rank Gold, Fiat Cash, Financial Assets and Bitcoin on Purchasing Power, Trustworthiness, Portability and Liquidity. This was in the context of a well argued case for the potential for a Great Monetary Inflation resulting from the unprecedented monetary interventions.PTJs letter can be found.
Notwithstanding this endorsement Bitcoin came plumb last, even behind the hobbled Fiat Cash. PTJ's observation on this performance was as follows:Paul Tudor Jones said:I also made the case for owning Bitcoin, the quintessence of scarcity premium. It is literally the only large tradeable asset in the world that has a known fixed maximum supply. By its design, the total quantity of Bitcoins (including those not yet mined) cannot exceed 21 million. Approximately 18.5million Bitcoins have already been mined, leaving about 10% remaining. This brilliant feature of Bitcoin was designed by the anonymous creator of Bitcoin to protect its integrity by making it increasingly near and dear, a concept alien to the current thinking of central banks and governments.
So despite his enthusiastic promotion of the brilliance of bitcoin he still expected to to come in last. In the event it got a total thumbs down on Trustworthines which shows a considerable amount of ignorance on behalf of the Research Group - the White Paper makes a big play about how bitcoin avoids the need for trust in Central Banks.PTJ said:What was surprising to me was not that Bitcoin came in last, but that it scored as high as it did.
I don't think I have been to an ATM this year. I do carry notes as a sort of emergency or to drop something in an SVP box. I don't know about where PTJ hangs out but here in Ireland digitization of the currency is not coming - it has well and truly arrived.PTJ said:The most compelling argument for owning Bitcoin is the coming digitization of currency everywhere, accelerated by COVID-19.
The interference of Central Banks in the economy via monetary policies such as QE reminds me of a Father Ted episode. The one where Ted tries to tap a small dent in a car out with a hammer and results in him destroying the car. The Central Banks had no choice but to interfere because we can't be trusted to behave by ourselves, but once the interference starts it is hard to stop, and those actions are having less and less of an impact.
When it comes to digital currencies, in particular, a Central Bank Digital Currency, one of those most exciting parts is that it is programmable. Therefore it could become a new tool for monetary policy. For example, the US government sent out cheques for $1500 to everyone, but the government has no control over how it is spent. In the future, the government could send out 1500 Digital Dollar and program it to be only spent in certain shops or have it expire after a certain time.
Maybe Bitcoin has laid the groundwork for the government to have even more control over us!
He sums up the bullish case for bitcoin with the following:
I don't think I have been to an ATM this year. I do carry notes as a sort of emergency or to drop something in an SVP box. I don't know about where PTJ hangs out but here in Ireland digitization of the currency is not coming - it has well and truly arrived.
And I am not quibbling with the fact that there are only 117 other elements. This particular person (I leave others to decide my rationality status) has asked:PTJ said:Gold has survived the test of time although a rational person could ask
“Why gold over any of the other 118 elements?”
The Duke said:Why bitcoin over any of the 2,000 other crypto currencies?
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