He put about €20k into it and it's not worth €5k now.
Liquidity in bitcoin itself has reached a significant level over the course of the past 24 months - akin to daily trading levels of German bonds. It can be easily disposed of in a 24/7 'always-on' market.A significant responsibility of a treasury function is to ensure liquidity of the company.
What is of concern is it's buying power. These companies are utilising bitcoin as a hedge against potential inflation at this time.However the volatility of USD is not of much concern because it is cash and the world reserve currency so the volatility of the USD against other currencies has little impact for a company that's liabilities are in USD.
Will $100 today buy you the same goods/services in 6 months time?Put it this way if I owe you $100 in 6 months, whats riskier putting $100 cash in a bank account, or buying $100 in Bitcoin?
Have a look at from August. Saylor is clearly saying that its capital allocation strategy is mindful of Bitcoin's dependability as a store of value and as a legitimate and attractive investment asset. You could say that those charged with administrating treasury reserves have a responsibility to take steps to protect against the erosion of those funds and Ray Dalio's notion that 'cash is trash'.I am highly dubious they really are holding it as a primary treasury reserve and is rather an actual trade / bet on Bitcoin and they have had to structure it this way due to the trading mandate they have signed with clients.
Liquidity in bitcoin itself has reached a significant level over the course of the past 24 months - akin to daily trading levels of German bonds. It can be easily disposed of in a 24/7 'always-on' market.
What is of concern is it's buying power. These companies are utilising bitcoin as a hedge against potential inflation at this time.
Will $100 today buy you the same goods/services in 6 months time?
Have a look at from August. Saylor is clearly saying that its capital allocation strategy is mindful of Bitcoin's dependability as a store of value and as a legitimate and attractive investment asset. You could say that those charged with administrating treasury reserves have a responsibility to take steps to protect against the erosion of those funds and Ray Dalio's notion that 'cash is trash'.
Will $100 today buy you the same goods/services in 6 months time?
Given that none of these public companies have placed ALL reserves in bitcoin, then you're not talking about liquidity at all then - you're talking about the volatility of an asset...as EmmDee clarifies ->Tecate you are missing the point, I am not talking about the liquidity of Bitcoin, I am talking about the liquidity of the business. A treasury function helps maintain Liquidity and thus should be investing in assets with low volatility.
EmmDee said:The liquidity comment is, I think, one of volatility of the asset price rather than liquidity of the asset.
Not havin' that. I have cited/acknowledged a whole host of shortcomings of bitcoin over the course of discussions here - over the course of a couple of years. What makes no sense is that you're referring to volatility and I acknowledged the volatility of bitcoin. You suggested that there was an investment aspect to these decisions to hold bitcoin reserves and I agreed with you. I'm not sure what more you want.The fact you didn't answer the straightforward question of the risk associated with $100, shows you are not willing to do anything other than back Bitcoin in every single situation.
I posed that question to you! You accuse me of backing bitcoin blindly yet it's you I'm trying to encourage to also identify the current risk with the USD (whereas you are just considering bitcoin volatility risk exclusively).I suggest if you can't answer this question, you don't understand financial markets.
Ok, then. Where have I stated that bitcoin is 'the saviour of every financial situation'?It is no different to if I start promoting Tesla stock as the saviour of every financial situation.
And it's on this basis that those that view the digital asset positively can see themselves beyond the volatility issue - by taking a low time preference.DublinBay the time horizon on this is way longer than 6 months, he's seeing this as staying in bitcoin indefinitely. 500m is a huge warchest for this company and they don't expect to need the 425m that is in bitcoin anytime soon barring exceptional circumstances. He also says he accepts that it may fall 50% because it may rise 1000%.
And it's on this basis that those that view the digital asset positively can see themselves beyond the volatility issue - by taking a low time preference.
Why respond to a question with a question? Go back and answer the question that was posed to you and thereafter, I can respond (although I would contend it's ground I've covered already).@tecate if I owe you $100 in 6 months, what's riskier putting $100 cash in a bank account, or buying $100 in Bitcoin?
Give yerself a pat on the back. Precisely as I told you, over the course of three years of discussion on here, I have cited/acknowledged many facets of bitcoin in its current state which are problematic. You didn't dispute this - because the posts are there. Everyone carries an inherent bias - but if you're telling me that I'm not being objective, you'll have to prove it. Your recent posts do no such thing.I am a proponent of Bitcoin, but I am able to step back and critique it, much to often technological developments are seen as the be-all and end-all. I feel through your discussions on this thread you try to defend Bitcoin against every critique.
The discussion has very much gotten entrenched. In my view that's largely due to the ridicule that was on display ref. bitcoin. However, whilst it has a long way to go, bitcoin/crypto has only gotten stronger since then.This often leads to cherry picked examples on both your side and from contributors against.
Acknowledged that it's just a drop in the ocean. If the inference is that I've suggested otherwise, then prove it. That said, if you think it's not worthy of consideration, I disagree. These are the first public companies to take this approach - and so, it covers new ground. Will others follow them? Maybe they will or maybe they won't. However, they're more likely to spend a bit more time considering it - seeing as others have been bold enough to go that direction.Two firms making investments is a drop in the ocean,
As I alluded to in my last post, you seem to be looking for an argument or a reason to disagree when there is none. Firstly, there's no connection between these examples and your overstock example. The latter has to do with a day to day transactional use case. Over the course of my time here, I've consistently agreed that bitcoin is hamstrung in that regard (at least until layer 2 solutions are developed further and gather more momentum). In which case, what's the argument about? You seem to be trying to contrive one.I could easily say Bitcoin is not going to be widely adopted citing the example of Overstock that allow (not sure if they still do) users to buy in bitcoin, but only a tiny % of revenues are actually from Bitcoin. Or I could argue
Territory I've gotten to long before you. I'm on record with examples that feed into those very aspects - and how they could hold back the further development of bitcoin. Yet you say I'm the one that's not objective.Whilst Bitcoin has benefits and is an interesting development, there are social, political, cultural and economic aspects that impact the success of it.
Over a couple of posts already, I agreed that there was an investment aspect to these decisions - but you seem to be hell bent on finding a point of disagreement.Choosing a long term view on Bitcoin, is an investment decision,
Again, I've never disputed the inherent volatility of bitcoin (save to remind people that it will dissipate over the longer term and there's already evidence of that). As regards your opinion here - it's exactly that. I invited you over a couple of posts to listen to Saylor and the rationale he presents on that. Another poster did so also. It seems that you haven't. Could it be that it's you that's guilty of what you accuse me of - and you're not 'stepping back' far enough?I would not purchase Bitcoin to manage my liquidity or liabilities over the short term. Why? Because it is a fact that it is a volatile asset, so I can be less certain on the future price vs I can on the dollar or for example Oil, a very large market that trades on futures.
Saylor talks about precisely this - and if you genuinely have an interest, then go and listen to him and critique him on that basis. He doesn't arrive at the same conclusion as you do in terms of avoiding usd risk.The volatility you refer to in terms of the USD is against other currencies if I hold USD and my liabilities are in USD then the volatility is irrelevant. If I hold USD and my liabilities are in EUR, I can hedge that via the very large liquid market. The hedging market in Bitcoin is not huge and I have observed large bid/offer spreads, I don't have exact figures but it is fair to assume the FX derivative market of hedging BTC against fair currencies is tiny compared to that of G7 currencies.
Once again, listen to Saylor's rationale. It's not as simple as you present it.In this case, specifically, I was responding to your article you posted most recently on the premise of BTC being used as a treasury asset, My opinion is a firm buying BTC is making a trade with a long term view and not using it as a short term, which EmmDee clarified this firm is doing. This to me is no different than the same firm saying they are going to invest 250m in Tesla Stock.
This in the same breath as you go on about cherry picking? This is the title of MicroStrategy's press release ->To add, my interpretation was you were suggesting Bitcoin be used as a treasury asset, whereas the press release clarifies it is an investment. My argument is that BTC is not a short term investment, I don't have any argument against Investment managers trying to find some yield and investing in BTC as part of their strategy.
We were not and we are not discussing the adoption of bitcoin as a currency over the course of this entire thread - let alone since discussion of MicroStrategy/Square/Stone Ridge's use of bitcoin in some way as a treasury reserve asset. Why would you bring it up in this context?I don't think this goes anyway to help adoption of BTC as a currency, but does help legitimize it as an investment.
Why respond to a question with a question? Go back and answer the question that was posed to you and thereafter, I can respond (although I would contend it's ground I've covered already).
Well, volatility continues to decrease year on year (admittedly a multi year process still). The argument could be made that in 2020, there's a much greater likelihood of major usd volatility than previously. There's also greater upside potential with bitcoin (asymmetric risk). Click on the podcast link in post #467 above to hear Michael Saylor's (MicroStrategy) rationale for buying into bitcoin.
Firstly there's no tactical move not to address anything including your question so don't suggest that there is.Tecate, this is the question I asked in which you responded with a question......why do you refuse to answer it?
So that could be 2% or it could be something else. That's why these guys hedge.I'll answer yours, for simplicity I'll assume that I held the $100 in a 0% interest account, so the purchasing power of that $100 will have reduced by the inflation rate.
You're free to do whatever you like up until you accuse someone else of being disingenuous in their contributions to a thread you have not even read. As was pointed out to you, I've acknowledged a series of shortcomings related to bitcoin.Tecate, I have not read the full 25 pages of this thread in detail, as in my opinion there is little benefit to be gained, as I am fully versed in Blockchain (pros and cons), and for the most part I side with your optimism.
Are you in the mind reading business now? Prove it.However, what I infer is the updates posting is an almost 'I told you so' to those that critiqued Bitcoin on this forum.
Posting on mobile so its not convenient for me to check back but I don't think i made a whole lot of commentary when posting up info on moves by those three public companies recently.The comment above is one that I find a problem with, you are presenting a case of Bitcoin being less volatile than the USD (potentially). I just can't see objectively how you arrive at that and it is flawed on so many levels.
Because its completely out of context. This thread as a whole doesn't consider that use case.I also don't see why I can't reference BTC as a currency, because that is still the intended use, of which investments like this are having the opposite effect.
Firstly there's no tactical move not to address anything including your question so don't suggest that there is.
The answer is that the usd is an established sovereign currency whilst bitcoin continues to carve out its place in the world. Bitcoin remains the more volatile. Notwithstanding that, we're in exceptional times with a level of money printing never seen before. Now I know at this point you've listened to Saylor and you know what level of debasement he was talking in terms of, right??
On that volatility, time preference has been pointed out to you by me and another poster. Zoom out and you see that bitcoin has been the best performing asset of the past decade. As it goes through ita first crisis test, its the best performing asset of 2020 also.
Alongside the volatility that you're focusing on, these guys are calculating in the assemetry of that risk - you're not it seems.
That's your answer.
So that could be 2% or it could be something else. That's why these guys hedge.
but you didn't answer the question
That's my answer and my humble opinion. Perhaps you'd prefer to write the answer for me.I don't want to debate the point, but you didn't answer the question, it really should be a one-word answer (Cash or BTC).
When enforcing narrow parameters like that, sure. However, outside of those narrow parameters, it's beneficial to have an appreciation of time preference when considering the volatility of bitcoin.A debate on the time preference of BTC is irrelevant in the context of the question I asked, because I defined the time as 6 months.
Have any of these public companies moved to 100% btc reserves? Has anyone here suggested that they should?I asked this question because I was questioning the validity of BTC to manage cash / liquidity position in the firm,
See above, has anyone here suggested any such company should move to 100% btc reserves?it has been clarified that the firm is making a long term investment with excess reserve in BTC.
Rhetoric indeed.We aren't really in exceptional times, there is a tendency to believe that our present is changing at unprecedented times and we are facing all these new problems that never existed before. This rhetoric is often to use to support why we need technology and we must adopt all these new technologies. A quick scan of history will tell you otherwise.
Why participate then? Reading what you've just written is a waste of time. Your question was answered - you just don't like the answer.That is why this thread is pretty pointless, a simple question is not given a straight answer.
If you're attributing that to me, then mind-reading school didn't go so well for you. It does seem to assist your narrative though to try and claim that.The rhetoric is "Bitcoin is the future and if you don't believe in the technology you are a naysayer'.
I've freely cited such shortcomings long since. In that context there has been no change of views despite what you're trying to suggest.You have admitted there are flaws which is progress, but taking a step back
I wasn't and didn't make any specific reference to naysayers in recent postings about MicroStrategy, Square and Stone Ridge using btc as a reserve asset. Your wayward mind-reading isn't helpful here.I may have missed the point of why you posted the article a few days? I inferred it as you to show the naysayers that it is starting to be adopted in firms?
In the context of this particular use (major public companies using btc as a reserve asset), you give this thread far too much credit if that was your concern.I was simply trying to make sure people don't blindly adopt BTC,
Just in case you think that's a point you're arguing with me on, it's not.just because there is a technology solution it doesn't mean we need to change, we don't always need to be 'solutionizing' our perceived problems.
Another one that doesn't like the answers provided.I'm afraid you'll have to get used to that
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