• Baden
    11.3k


    Great minds. :cool: I jumped in in July. I don't know if I'd want to write 15 minutes worth of spiel about Bitcoin, but there's a couple of important things about it. First of all, it's based on an important technology that has a multitude of use cases, i.e. the blockchain. Secondly, it's a currency that can be transmitted securely, quickly, cheaply, and globally. Thirdly, it's a store of value, a digital gold, and a great potential hedge against inflation. Fourthly, it's the granddaddy of a whole tribe of so-called altcoins, including a world computer called Ethereum on which the nascent field of decentralized finance is largely based through the use of smart (i.e. self-executing) contracts built on its protocol that remove the need for financial middlemen, such as banks. This in itself is huge. Loads more to say, but for now...

    (BTW if you want some resources or advice, PM me as I'm a little ahead of you and have been diving right in.)
  • Baden
    11.3k
    Free course in Bitcoin and Crypto from Princeton if anyone's interested.
  • csalisbury
    2.7k
    In in July, good lord. A hearty -and envy-tinged - congratulations.

    Agree very much with all of what you've said (& am going to take you up on that PM offer shortly, I need some help with wallets)

    I do think this is one of the rare cases where philosophy dovetails quite nicely with worldly concerns & wanted to put out there some of the things I've been scribbling on notepads during my downtime. I think you're wise not to spiel, but I can't help myself:

    Alongside the technical bitcoin stuff, I want to understand what money is and why it has value. I feel like the core thing is:

    I Money has value because people will accept it as payment
    &
    II People will accept it as payment, because they know other people will accept it as payment in turn.

    Which leads to: why would people think other people would accept it?

    I feel like the answer to that is

    I It's scarce
    &
    II (building of off I) it's hard to simulate (fake)

    So: metal is a prime early candidate. It's rare. It's near-impossible to fake. & those conditions hold wherever you go. (Plus, to dust off the musty marxist terminology, rare metals had little use-value compared to other bearers of value) Of course, if you go ahead and colonize argentina & pump metal into the market, that can throw a wrench in things.

    The obvious problem is how cumbersome it is. Plus, how easily you can be dispossesed if you're tromping around a world as violent as the metal-currency world was.

    Enter Banknotes, redeemable for a certain portion of gold (from what I understand they used to be redeemable only if you were the original depositor, only later became redeemable to whoever holds the notes). The circulation of gold ('s value), without actually circulating gold, allows for dramatic changes in how credit works & we're off to the races.

    With the introduction of redeemable notes, you're also introducing trust in institutions. Accepting a banknote means you have faith that there is a stable institution that you can go to that will give you gold for your paper.. You're implicitly showing faith that there are certain institutions that will remain stable within the flux of history.

    Trust in institutional stability gets its foot-in-the-door there. As it establishes itself, it becomes central in the shift to fiat. The value of fiat currency is entirely tied to faith in the state & because of that is totally linked to how that state fares on the world-stage. Which is ok early on in the life-cycle of a reserve currency; less palatable when interest rates drop to zero and there is no way to pump up the economy besides redistribution (which won't happen without bloodshed) or mass-printing of paper money. In the broad scope of things, holding fiat feels kind of like betting on a state-combatant in a historical struggle. That's fine when your lifespan is snuggly nestled in an era where your chosen combatant is at his prime; less so when he's wheezing and rambling about the good old days and trying to sell you DVDs of his best fights.

    Ok, that's my scribbles for 'Context for Bitcoin's Significance'. To anyone who's read this far: thank you & I'm sorry.
  • BitconnectCarlos
    952


    Hey, congrats on your gains. Sentiment has been very bullish lately, so hopefully you got in at a good time. Personally, I've been "in" since late 2016 and I can assure you that the volatility can be absolutely face-ripping. In March we saw roughly a 50% drop in a day. If you hold onto your investment for over a year there's tax advantages to that, i.e. you'll get to keep more of your profit.

    I actually didn't buy my first bitcoin with the intention of holding onto it or treating it as an investment. Bitcoin was simply the best way to move money around the poker sites given all the onerous bank restrictions on sending money to them. It's definitely the favored currency on those sites as well now: Censorship-resistant, decentralized, borderless. When you hold your own bitcoin in your own wallet that bitcoin is truly yours - it's not being held onto by a bank or a company that gives you an IOU. It's yours and no one else can access it, not even governments. What else falls into that category? You can send it anywhere you want at any time you want and no one can censor or reverse it. It's truly unique.
  • bongo fury
    859
    converted a sizable percentage of my modest savings to bitcoin at the end of last month. Crypto's notoriously volatile and I know not to make too much of a sharp valuation-shift in a short time-window but the rapid appreciation of the investment was still dizzying enough for someone who has never made money on anything to lead me, effervescent, to try to talk some old friends into getting some.https://en.wikipedia.org/wiki/Economic_bubble
  • ssu
    3.8k
    OK,

    This thread is back! Again people who basically are into Philosophy have become interested in talking about Bitcoin/Cryptocurrencies. Last discussions were 2-3 years ago. Interesting actually, that this is the only investment that has been talked about here.

    This thread is the perfect "canary in the coal mine" indicator: Just look at when people have written on this thread and what where the bitcoin price has been then.

    (bit old graph, now I guess over 17 000 USD so back again where it was years ago..when this thread was active)

    screenshot-1.png

    Hence best time to buy bitcoin when at least for a year nobody has written on this thread. :razz:
  • Baden
    11.3k


    Fixed it for ya.

    0mt8gkm2d4y0iy91.png
  • ssu
    3.8k
    Ah, Nice! Thanks Baden.

    Tell you, this thread is an indicator! Notice that the 2019 upturn didn't yet get people to write on this thread. But now..

    i1082-6742-30-4-386-f01.jpg
  • Baden
    11.3k
    I have reviewed this craze, declare it a fad, and await its demise. Carry on.Hanover

    :lol:
  • Baden
    11.3k


    :100: and expect fireworks before the end of the year if BTC breaks its all-time high. It will be all over the news and a new round of retail mania will ensue. It's already available to buy on PayPal in the US along with a few other cryptos and a quarter of a billion worth has been snatched up within weeks.

    https://cryptobriefing.com/paypal-reaches-85-binance-us-volume-first-month/
  • csalisbury
    2.7k
    OK,

    This thread is back! Again people who basically are into Philosophy have become interested in talking about Bitcoin/Cryptocurrencies. Last discussions were 2-3 years ago. Interesting actually, that this is the only investment that has been talked about here.

    This thread is the perfect "canary in the coal mine" indicator: Just look at when people have written on this thread and what where the bitcoin price has been then.

    (bit old graph, now I guess over 17 000 USD so back again where it was years ago..when this thread was active)
    ssu

    I suppose there's two ways to look at that graph. One is a (fair) assessment ala: 'here we go again.' The other is that if you were a long term holder pre 2017 and held on, then the brutal crash following the bubble, in the long run, didn't sink your investment. You seem likely to end up ahead despite the 2018 (and covid-2020) crash.

    I agree entirely that the best time to invest in bitcoin is when it isn't being talked about. I didn't invest anticipating a bull run like this, and its a happy accident my investment coincided with this sort of rapid appreciation. I wish I had come to the decision to invest earlier on, because my rationale didn't involve thinking it would spike again like this. I anticipate this to go up up up, generate interest (media coverage etc), attract a lot of FOMO investors looking to get-rich-quick, and then crash again - BUT peak at a higher point, then crash to a level higher than what it leveled out at last time.

    The only good rationale for investing in bitcoin is learning and appreciating the value of the technology - trying to buy on the dips and sell on the peaks to get-rich-overnight might work occasionally, but is more likely to fuck you up.
  • The Opposite
    789
    Is it wrong that I want this whole thing to die on it's arse because I've been/I'm too lazy to get involved?
  • csalisbury
    2.7k
    Hey, congrats on your gains. Sentiment has been very bullish lately, so hopefully you got in at a good time. Personally, I've been "in" since late 2016 and I can assure you that the volatility can be absolutely face-ripping. In March we saw roughly a 50% drop in a day. If you hold onto your investment for over a year there's tax advantages to that, i.e. you'll get to keep more of your profit.

    I actually didn't buy my first bitcoin with the intention of holding onto it or treating it as an investment. Bitcoin was simply the best way to move money around the poker sites given all the onerous bank restrictions on sending money to them. It's definitely the favored currency on those sites as well now: Censorship-resistant, decentralized, borderless. When you hold your own bitcoin in your own wallet that bitcoin is truly yours - it's not being held onto by a bank or a company that gives you an IOU. It's yours and no one else can access it, not even governments. What else falls into that category? You can send it anywhere you want at any time you want and no one can censor or reverse it. It's truly unique.
    BitconnectCarlos
    Thanks! I'm excited for the gains but trying my best not to too closely follow the change in valuation (reasoning that if I get too excited about the rise, I'll get too worried about the drop, trying to keep even keel.). I really like your story because you don't hear enough from those who adopted bitcoin because it's useful - because it works.
  • BitconnectCarlos
    952


    Yeah, people who get into it for the money are the first ones to leave on the dip. In my experience they buy high and sell low. I remember in March when things were looking terrible with COVID and BTC had dropped 50% in a day looking at the price and telling myself that I was 100% ready to go down with the ship on this one.

    I think in order to be a good, patient investor you need something beyond the monetary reward. Bitcoin is a vision. I think the greatest thinker in this space is a guy named Andreas Antonopolous - check him out on youtube he's got a bunch of introductory material on bitcoin and ethereum. Personally I've done pretty poorly with altcoins because I'm mostly just in it for the gains and when things go too far south I'm out.

    As for wallets if you're serious then check out a hardware wallet like the Nano Ledger X (I have the Nano Ledger S which is the earlier model). These store your funds offline and you're not trusting someone else to keep them safe. Not your keys, not your coins.
  • ssu
    3.8k
    The other is that if you were a long term holder pre 2017 and held on, then the brutal crash following the bubble, in the long run, didn't sink your investment.csalisbury
    Do note the lower part of the graph showing the volume of trades. Now the transactions are over the 30bn range, however before 2018 the transactions don't even show in the graph. This tells it was then peanuts compared to now and then simply a small group people used / saved bitcoins.

    The only good rationale for investing in bitcoin is learning and appreciating the value of the technology - trying to buy on the dips and sell on the peaks to get-rich-overnight might work occasionally, but is more likely to fuck you up.csalisbury
    And hasn't the internet and tech stocks also been profitable? Yes and no. Yes if you have picked the few winners, yet many mutual funds investing in tech stocks got a real beating first at the turn of the Milennium and then during the financial crisis. Knowing to pick netflix and not pets.com is trickier than it looks at hindsight.

    Anyway, this is a very treacherous time to invest in general. An investment advisor said to me that he wouldn't be surprised if he would see a 50% drop in the stock market. We have the lowest interest rates ever in recorded history, central banks printing money in the trillions and stock market that is basically in the same level as pre-corona times acting as nothing has happened.

    And then you have gold very high also. Which isn't actually good sign for the economy.

    gold_10_year_o_usd_x.png
    file-20200520-152288-1gqjhhj.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip
  • Baden
    11.3k
    And then you have gold very high also. Which isn't actually good sign for the economy.ssu

    Gold is generally positively correlated with Bitcoin. It's similarly seen as a hedge against inflation. A massive economic crash would hurt everything of course but the Fed has signaled it will keep printing money to prop up Wall St. and Biden is likely to push congress for more stimulus. So, the monetary and fiscal direction in the US, in particular, currently favors this form of investment.
  • Benkei
    4.1k
    Yeah, until it doesn't. Problem that ssu is pointing at is you can't time the market or know who the winners are going to be.
  • Baden
    11.3k


    You can't know anything for sure but you can use macro analysis to give yourself an advantage. It's just another way of saying the game is not one simply of luck (and I think ssu is acknowledging that anyway. I'm just adding a refinement to his take.)
  • Benkei
    4.1k
    Well, I'd still diversify.
  • Baden
    11.3k


    Generally good advice. You'd have to be more specific though. I reckon stocks are the weakest link here as per ssu's warning, so I'm staying clear. And gold is to me just a similar (but inferior) store of value to Bitcoin, so though I had some, I dumped it (and I'm glad I did as it dumped soon after that). I don't know shit about bonds and I have a share in some property and some cash. Does that work?
  • ssu
    3.8k
    I don't know shit about bonds and I have a share in some property and some cash. Does that work?Baden
    About bonds.

    Remember that we are at historically low interest rates meaning that there's in the longer term no other way than up. Interest rate cycle is historically very long. Last peak happened in the early 80's when there were inflation fears in the US and from there the rates have gone down up until now. Many have anticipated that a turnaround might happen. Basically your bonds give you the interest they promise (if you hold them until they mature), yet the selling price of the bond goes up if interest rates go down and down if interest rates go up.

    rates.gif.png

    Real estate is rather good, if you think people want to live there also twenty or thirty years from now. At least here in Finland an old apartment in the center of the Capital has risen far more than inflation for, oh, I guess at least 120 years (Helsinki city center hasn't become a slum). So it has been a "no-brainer". However if you have real estate in a dying urban area, you might lose your investment or take a heavy loss. And if you have good tenants, they will likely pay more in rent that with these interest rates you pay interest to the bank for a loan. Yet I think people tell far too many horror stories of tenants turning up to be drug addicts and tearing down your apartment.

    And it seems that if/when there is a real estate bubble that bursts, it's likely that the price level comes back at least in one decade (and of course, you still get the rent). Usually. Of course it can take longer, just like in Japan:

    wlnKaji--tmtF3F7dDp8b3bbLdIA6Jk32TAErNs5iB6EREJuqCdyB2xB-fN0RvDnCfJAFXlA1q4qQPpZjlgcKwfO8BQ-2ESMVAZ6pEeCnSghzCCuPRXugLKTOmXA6kFl_SCGc9heufT6babGVwARicHooEsFnvKoIAzrSvBSAA

    Well, I'd still diversify.Benkei

    That is a smart move. In fact, if you do even a small investment, that gives you incentive to follow what is happening in the markets.
  • Benkei
    4.1k
    I know everything about sovereign bonds. I issued them for 5 years at the Dutch State Treasury Agency. So fire away. There are still bonds out there that will perform even if interest rates start rising again and the market value will lower but there's Ukrainian collateralised bonds offering 6% or so, which given current interest rates is a good return and relatively safe.

    Another I've always found interesting but never tried is investing via crowd funding. There are platforms that allow you to evaluate the underlying business case and pick something you know something about so you can make a real assessment.
  • Baden
    11.3k
    Basically your bonds give you the interest they promise (if you hold them until they mature), yet the selling price of the bond goes up if interest rates go down and down if interest rates go up.ssu

    Oh, I didn't know that, but having looked into it, I get it now.



    Cheers. I might take you up on that at some point. I don't have much spare for investments right now, but delving into finance, I'm starting to realize how easy it is for people who do to suck all the money out of the system, especially in this kind of low-interest rate, weak fiat, environment.
  • ssu
    3.8k
    Oh, I didn't know that, but having looked into it, I get it now.Baden

    It's actually a reason why investing into bond funds might create large losses.

    I know everything about sovereign bonds. I issued them for 5 years at the Dutch State Treasury Agency. So fire away.Benkei
    Very interesting to know! It's actually a very interesting world for investing, and basically where a lot of the actual money lies around compared to the stock market. One medium-to-large size insurance company would influence the stock market if they would put all of their assets into the stock market.

    (even if the numbers are old, the ratio is shown well:)
    Global-Bond-Market-Size.png

    I have to then ask you this Benkei: Was one reason why some Euro zone countries could actually dig a hole for themselves was that prior to the first Greek crisis the markets assumed that there wasn't much risk in investing in Greek bonds than in German (or Dutch) ones when all were in the Euro-zone? And then "suddenly" the markets noticed that there's a big difference in buying Greek bonds compared to Dutch ones. Is my thinking correct?
  • Benkei
    4.1k
    The Greeks cooked the books, which was partly caused by bad accounting rules applying to off-market swaps but it was the Greek government (advised by Goldman Sachs) that chose to use that accounting "mistake". Basically, entering into an off-market swap, where your counterparty pays you an amount in return for a mark up on the variable or fixed leg of the swap compared to an at market swap, wasn't accounted as debt.
  • BitconnectCarlos
    952
    I know everything about sovereign bonds. I issued them for 5 years at the Dutch State Treasury Agency. So fire away. There are still bonds out there that will perform even if interest rates start rising again and the market value will lower but there's Ukrainian collateralised bonds offering 6% or so, which given current interest rates is a good return and relatively safe.

    Another I've always found interesting but never tried is investing via crowd funding. There are platforms that allow you to evaluate the underlying business case and pick something you know something about so you can make a real assessment.
    Benkei

    I'd be interested in learning more about government bonds. I don't own any. What's their importance for the macro picture? What should newer investors know about either buying them or the bond market in general?
  • Benkei
    4.1k
    What's their importance for the macro picture?BitconnectCarlos

    That's a bit vague. What sort of things are you wondering about?

    What should newer investors know about either buying them or the bond market in general?BitconnectCarlos

    It's important to know the difference between the coupon rate (the interest being paid) which is always at least 0%, and yield, which is your actual rate of return, which can be negative. Although I'm not sure about the US, in the EU it's nearly impossible for retail clients to buy bonds in the primary market, whereas it's quite common to buy shares with an initial public offering of a company. So the primary market is opaque and ruled by large institutional players, although I'm sure the banks that underwrite do plenty of riskless-principle trades with affluent retail clients.

    But the most interesting thing about bonds is that they can be collateralised, meaning some of the default risk can be recovered, improving the recovery rate and therefore potential losses. Especially poorer countries will offer collateral to get the coupon down and avoid paying too high interest. The interests are still decent usually and relatively safe when compared to corporates.

    Also, check your local tax rules. The coupon or buying at a discount may trigger capital gains tax.

    And in relation to that, you might consider a fixed income ETF instead which probably avoids the capital gains tax. But these are always actively managed, so relatively expensive when compared to other ETFs, because it needs to be rebalanced regularly when bonds mature.

    I'm probably forgetting a thousand things.
  • csalisbury
    2.7k
    And then you have gold very high also. Which isn't actually good sign for the economy.ssu


    Right.

    Bitcoin, functionally, is a gold-type asset. It seems, more and more, like prudent, cautious, institutional money agrees with you: the economy is in a dicey place. Bitcoin's gone up a good bit since this thread was last active, mostly because of institutional hoovering-up of what's available on exchanges. But on a macroscale that might be a bad sign.
  • irshad09
    1
    bitcoin is at an all-time high now this is not the right time to invest in bitcoin we can wait until the value goes down, we just need to be good at analyzing bitcoin we can Learn Bitcoin Online and other cryptos aswell
  • ssu
    3.8k
    Bitcoin's gone up a good bit since this thread was last active, mostly because of institutional hoovering-up of what's available on exchanges. But on a macroscale that might be a bad sign.csalisbury
    This might be so.

    In fact that stocks are going up, gold is going up, bitcoin is going up, all seem to be a sign of one thing:

    Asset price inflantion

    And that may be the result of the Zombification of the economy where huge quantities are put to support financial institutions, large corporations (air lines etc.) and now even consumers.

    Strange times indeed...
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