Bitcoin

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AlbionAmerican said:
There is an excess of dollar demand due to the desire to trade in dollars around the world, it creates massive imbalances in FX markets and arbitrage between onshore and offshore dollar credit markets. Essentially there is a shortage of dollars because firms around the world borrow dollars locally and local banks supply those dollars,
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this is not true. when a south korean bank lends money to a thai exporter, no dollars change hands. this is true even if the loan is denominated in dollars. everything settles in local currency. even if dollars did change hands it would not affect the value of dollars because it is a wash. bank buys dollars to send to thai company which then sells dollars to get the baht needed to pay workers, suppliers and taxes. dollars purchased, dollars sold, no effect on the dollar's value.

this is an oft-repeated mistake by people in the crypto community. i am not going to argue about it because it is a fact. i will offer you a way to think about it, though. if your theory was true, then the price of bitcoin could be driven to infinity simply by crypto bros borrowing money denominated as btc. is that how you think the world works?

the rest of your theory falls when this errant assumption is removed.
 
Milk and Cookies said:
The tale of the Asian Financial Crisis is of moral hazard by those local governments and businesses. In the postmortems no one says the lesson learned is that we should never let the USD strengthen beyond some arbitrary value, which is what you're asserting. The blame is laid squarely on the monetary and fiscal policies of those countries.
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it is more complex than that, and there is more blame to go around. but you are right that the usd is not a player in that story.
 
AlbionAmerican said:
2. & 3. The end isn't near, but if you have even a minute understanding of counterparty risk, then you'll realize when crises hit, it affects not just that country or that company, but the entire world given the debt levels. You have to have your head so far in the sand to realize the potential for a global crisis has never been closer, it just depends on where it could play out (finance, geopolitics, war, food shortages, further energy shortages, etc.). I cant believe someone who claims to be informed on the world doesn't realize we're on the brink of something, it may not manifest itself as a crisis if policy leaders are smart about it, which WAS MY ENTIRE POINT REGARDING BITCOIN. Crisis can be prevented by letting something else absorb the volatility, whatever type of volatility (whether it be financial, government or real world volatility) its ALL linked and its ALL due to the world being too damn flooded with debt. There is ALWAYS a counter party to debt, and the world ALWAYS runs up against the limits to how much more debt can be created before it needs to be extinguished via some pressure valve, be it higher gold prices, commodity prices (oil going to $300/barrel), economic collapse, or global war. History of warfare is far more often a story of counterparty debt than what people understand it to be.
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we are always on the brink of something, by definition. for instance, i am on the brink of a satisfying bowel movement. if your theory is that we're on the brink of something, then it is not a theory at all. the last statement there is ridiculous, even by your standards lordquest, and you'd do well to retract it if you want any credibility.

your post is also self-contradictory. as you note, there is always a counterparty to debt. thus it is impossible for the world to be too damn flooded with debt. Net debt worldwide is by definition zero. also the idea that counterparty risk in debt is bad is mistaken. counterparty risk is the whole point of debt. it is why we have credit scores.

absorbing volatility is something that sounds cool but actually makes no sense.

it is impossible for the dollar to be become crisis-level overvalued in a tradeable currency market with no currency pegs. literally impossible. by the time the dollar got "too high" it would be immediately brought back down by supply and demand. a too high dollar would both hurt american exports and reduce investment demand for dollars, thus weakening it. currency markets are in equilibrium by nature, but you are assuming they are in disequilibrium. that's what "dollar can get too strong and trigger a crisis" means. that it hasn't happened ever for a major floating currency should tell you something.
 
AlbionAmerican said:
I never said it was good or bad, it merely presents problems that have to be dealt with on occasion. If you don’t know what the Asian Financial Crisis is then you’re misunderstanding my point. A dollar that is either too strong or too weak is a problem as long as the dollar remains the overwhelmingly dominant choice of trade settlement worldwide. Bitcoin helps address the problem when the USD gets too strong (as it has in recent years) and gold in a way does the same when the dollar gets very weak (as it did from 2001-2012), as you can see below.
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the gold standard is actually a terrible idea, and so are all these btc-themed variations on that theme. the gold standard transformed the bank panic of 1929 into a great depression. then the us recreated the gold standard at breton woods, except with the dollar as the new gold. it also failed for the same reasons, because fixed money is a terrible idea that nobody outside of crypto cranks and austrian "economists" takes seriously. i don't mean literally nobody, so my claim is not refuted by anecdotes, but overwhelmingly economists disagree with you.

also trade settlement isn't what you think it is.
 
AlbionAmerican said:
Another poster who pretends to understand Bitcoin but clearly does not. If you dont know what the halving cycle is and how it contributes to why the price rises every 4-5 years then you have no clue. Every 4 years the mining reward halves, and every cycle there is usually a price spike around 8-14 months post-halving, just look at the chart for yourself. It literally makes no difference who would have won the presidential election, Bitcoin is indifferent to MAGA, indifferent to politics, all of it. Its a monetary system governed by math not by people. Its designed to be deflationary, and moves opposite to the inflationary design of modern central banking practices.
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you cannot learn anything about bitcoin or any other form of purported asset by looking at a chart. in fact, that's integral to the whole problem: people thinking that you can learn finance from looking at trading charts.

the halving cycle has no impact whatsoever on the actual value of bitcoin. it might have a short term impact on the price but it doesn't change the nature of the asset. when you say that the halving cycle is integral to understanding bitcoin, you are broadcasting that you do not understand bitcoin or any other type of finance.

another basic fundamental problem with "crypto economics" is the idea that scarcity creates value. it does not. message board posts from albionamerican are scarce. nobody will pay a single cent for them. that remains true even if you reduce their supply by half. btw, if people would pay money for super message board posts, i would be monetizing them already. it's called substack. and also i have recently decreased the supply of my message board posts and it has made me no richer. just so you know that i am not insulting you by saying that your posts have no value.
 

A Looming Threat to Bitcoin: The Risk of a Quantum Hack​

Researchers warn a quantum-computing attack on cryptocurrency would cause trillions in losses​


“…
Researchers say a quantum device powerful enough to crack bitcoin is likely a decade or more away. Still, advances in the technology pose a long-term risk, unless bitcoin’s fractious community of developers beef up its technology in a time-consuming upgrade.

A quantum-powered attack on bitcoin could have harmful spillover effects on traditional financial markets, analysts warn.

“What you’ve got here is a time bomb waiting to explode, if and when someone gets that ability to develop quantum-computer hacking and decides to use that to target cryptocurrencies,” said Arthur Herman, senior fellow at the Hudson Institute, a think tank based in Washington, D.C.

A 2022 Hudson Institute study estimated that a quantum hack of bitcoin would cause more than $3 trillion in losses across crypto and other markets and trigger a deep recession. Herman said the likely costs of a quantum hack have swelled since the study came out, as bitcoin has climbed to near $100,000 and grown into an increasingly mainstream investment asset. …”
 


This was a pretty good listen. I like derek Thompson a lot and think he is one of the better podcast journalists out there (lives in Chapel Hill now too). He often does a good job of getting people with differing viewpoints from him on his podcast and just listens and asks good questions (as journalists should). This episode was a good example as Derek is more of a crypto skeptic. It makes a good case for the use of stable coins Not for replacing the dollar but making money transfer much easier.
 
There's still plenty of time to get in crypto assets. I've been in a few years, dollar averaging here and there in modest restaurant spending amounts and only have profit modest profit to show across the board. I'd wait, though, for a sizable dip in prices that's bound to come.
 
CeruleanBlueHeel said:
There's still plenty of time to get in crypto assets. I've been in a few years, dollar averaging here and there in modest restaurant spending amounts and only have profit modest profit to show across the board. I'd wait, though, for a sizable dip in prices that's bound to come.
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Did you invest in the more established currencies only or did you ever invest in some of the newer ones? Did you ever get caught up in any sort of rug pull or different scam?

I would never invest in an asset like this until I really understood the use case but I am fascinated by it because it's so new. Obviously it made a lot of people extremely wealthy and yet the regulation isn't there and the repeatability of all the scams seem enormous. Just reading news headlines, it seems like almost all the newer coins are scams although I'm sure that's not true.
 
gtyellowjacket said:
Did you invest in the more established currencies only or did you ever invest in some of the newer ones? Did you ever get caught up in any sort of rug pull or different scam?

I would never invest in an asset like this until I really understood the use case but I am fascinated by it because it's so new. Obviously it made a lot of people extremely wealthy and yet the regulation isn't there and the repeatability of all the scams seem enormous. Just reading news headlines, it seems like almost all the newer coins are scams although I'm sure that's not true.
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I did about 32/32/36 (Bitcoin, Ethereum, other layer 2 alt coins), all buy and hold. The bitcoin portion has doubled in value. The others are only slightly profitable since I started. Just treat it as what it is, in essence, a storage of value that's portable. And I don't have a cold offline wallet yet. Meme coins are buy and trade only.
 
CeruleanBlueHeel said:
Just treat it as what it is, in essence, a storage of value that's portable.
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bitcoin stores value perhaps worse than anything else considered an asset. the risks you run with bitcoin include having your money stolen with no recourse and experiencing wild swings in price. it is extremely volatile. it has no government-backed deposit insurance or anything else. there are no bank regulators to prevent frauds or ensure adequate capitalization of market actors. it has no fundamental value, so if you can't sell it, it's worth zero (unlike bonds, which pay interest and then repay principal).

so if you treat it as it is, then you should sell it all and put your money in something that has value to retain.
 
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