Crypto

[prodigy]

I admitedly know very little about it. In recent years it feels like it's been accepted more but it also seems like lot of people refuse to acknowledge it and its still kind of underground in a way. I have heard arguments for and against it(environment impact seems to be a concern). Elon Musk has been pumping money into it and the price has skyrocketed. now he says you can buy a tesla with it. What are your guys thoughts on it?

 

[Ferguson_Mellochill]

The decentralized blockchain technology used by most crypto-currencies creates a completely peer-to-peer transaction system with no central authority. All transactions are recorded on a public ledger stored by multiple machines on the network. Traditional banks hate crypto because it disintermediates them (cuts them out of the loop).

The inspiration for creating a decentralized, peer-to-peer currency system is to remove the traditional banks that have shown themselves to be corrupt and reckless with people's money. At the same time, the U.S. dollar and other debt-based fiat currencies are designed to be inflated and thereby dilute people's buying power over time. Bitcoin operates with an ultimate fixed supply, so it can't be inflated the way modern fiat currencies are.

The value of Bitcoin is that it creates an alternative to the debt-based fiat currency system. I can put my money in a bank, or I can upload my money into a Napster-like peer-to-peer digital storage system. My money will be converted to the native currency called Bitcoin and stored in my digital wallet.

The problem with Bitcoin is that it's not backed by anything solid and real. A currency should really be backed by hard assets, or it readily creates a speculation bubble--meaning that people who get in early can make money from speculation, while people who get in too late will be left holding the bag (taking a loss). The market value of Bitcoin rises and falls as demand for it waxes and wanes vs. its fixed supply. As long as there is demand for it, Bitcoin will have value. If people abandon it, Bitcoin's value could drop precipitously, or even to zero.

People aren't really using Bitcoin as a medium of exchange or as a vehicle to preserve their wealth and buying power. They are treating it as a speculative asset to try to make profit. They know that the U.S. dollar and other fiat currencies are weak and getting weaker as the Fed continues to print vast amounts of dollars to create an artificial stimulus. When the value of 1 BTC = $50,000 USD, this is really an indictment of the value of the U.S. dollar and reflects its weakness.

The value of Bitcoin will continue to rise over time as people use it as a potential safe haven against a weak and volatile world economy. However, it too is highly volatile and can still be manipulated by really big players. I advised people to buy into BTC just over a year ago, when its market price was in the low $3k range. BTC had already established a price level at $15k that it was expected to return to. I don't know how I feel about BTC at its current price, though it should continue to appreciate and could readily pass $70k+ before the end of the year. The economic downturn caused by the pandemic, the Fed's addiction to money printing and increasing inflation will continue to create steady demand for BTC over the next year.

 

[AlaskanAssassin]

The decentralized blockchain technology used by most crypto-currencies creates a completely peer-to-peer transaction system with no central authority. All transactions are recorded on a public ledger stored by multiple machines on the network. Traditional banks hate crypto because it disintermediates them (cuts them out of the loop).

The inspiration for creating a decentralized, peer-to-peer currency system is to remove the traditional banks that have shown themselves to be corrupt and reckless with people's money. At the same time, the U.S. dollar and other debt-based fiat currencies are designed to be inflated and thereby dilute people's buying power over time. Bitcoin operates with an ultimate fixed supply, so it can't be inflated the way modern fiat currencies are.

The value of Bitcoin is that it creates an alternative to the debt-based fiat currency system. I can put my money in a bank, or I can upload my money into a Napster-like peer-to-peer digital storage system. My money will be converted to the native currency called Bitcoin and stored in my digital wallet.

The problem with Bitcoin is that it's not backed by anything solid and real. A currency should really be backed by hard assets, or it readily creates a speculation bubble--meaning that people who get in early can make money from speculation, while people who get in too late will be left holding the bag (taking a loss). The market value of Bitcoin rises and falls as demand for it waxes and wanes vs. its fixed supply. As long as there is demand for it, Bitcoin will have value. If people abandon it, Bitcoin's value could drop precipitously, or even to zero.

People aren't really using Bitcoin as a medium of exchange or as a vehicle to preserve their wealth and buying power. They are treating it as a speculative asset to try to make profit. They know that the U.S. dollar and other fiat currencies are weak and getting weaker as the Fed continues to print vast amounts of dollars to create an artificial stimulus. When the value of 1 BTC = $50,000 USD, this is really an indictment of the value of the U.S. dollar and reflects its weakness.

The value of Bitcoin will continue to rise over time as people use it as a potential safe haven against a weak and volatile world economy. However, it too is highly volatile and can still be manipulated by really big players. I advised people to buy into BTC just over a year ago, when its market price was in the low $3k range. BTC had already established a price level at $15k that it was expected to return to. I don't know how I feel about BTC at its current price, though it should continue to appreciate and could readily pass $70k+ before the end of the year. The economic downturn caused by the pandemic, the Fed's addiction to money printing and increasing inflation will continue to create steady demand for BTC over the next year.

Great synopsis. My issue with cryptos is that they are still a fiat currency. The technology is cool, and it's great the spending power is decentralized, but I still worry that it's not backed by anything. If the government discovers that it can't address the deficit, and consumer prices truly start to rise, is it better to have invested in Crypto or in a commodity (Gold, Silver). I worry that if there is a significant recession/depression, many ordinary people will be trading in their crypto for cash (thus reducing demand and $ of crypto).

Another potential concern would be government intervention. We've already seen governments restricting or outlawing ownership or use of cryptocurrencies. Who is to say that the US government wouldn't do that sometime in the future. The US hasn't shown any interest in that yet, but if it truly stars becoming a medium of exchange, I guarantee you that there are a lot of politicians that would want to restrict that.

It's funny to me that Elon Musk is apparently buying Crypto, while at the same time basically trashing it on Twitter as only slightly better than government fiat at the same time.

 

[Eminence]

Currency should inflate as production increases imo, so that's kind of a negative imo that BTC can't inflate.

 

[Ferguson_Mellochill]

Great synopsis. My issue with cryptos is that they are still a fiat currency. The technology is cool, and it's great the spending power is decentralized, but I still worry that it's not backed by anything. If the government discovers that it can't address the deficit, and consumer prices truly start to rise, is it better to have invested in Crypto or in a commodity (Gold, Silver). I worry that if there is a significant recession/depression, many ordinary people will be trading in their crypto for cash (thus reducing demand and $ of crypto).

Another potential concern would be government intervention. We've already seen governments restricting or outlawing ownership or use of cryptocurrencies. Who is to say that the US government wouldn't do that sometime in the future. The US hasn't shown any interest in that yet, but if it truly stars becoming a medium of exchange, I guarantee you that there are a lot of politicians that would want to restrict that.

It's funny to me that Elon Musk is apparently buying Crypto, while at the same time basically trashing it on Twitter as only slightly better than government fiat at the same time.

Governments and central banks do like the idea of crypto-currency, but they are likely planning to introduce a centralized cryptocurrency that they control. Quite frankly, it can be used to eliminate cash and create a more centrally controlled system that monitors everyone's behavior. The Orweilian nightmare version of this would be a social credit system like the Chinese communist government uses that connects to the currency system and rewards or penalizes people for their behavior.

I don't think the U.S. will ban crypto-currency, but the SEC and the U.S. Treasury Dept. want oversight to regulate it as a security or commodity. A number of start-up ventures that issue digital currencies are being blocked by being accused of selling an "unregistered security." This is how the U.S. government tries to exercise control.

I've recently been advising a company that is Crypto 2.0 using a digital currency that's regulated as a security, backed by hard assets (incl. gold), and that works with existing payment systems.

Elon Musk is just speculating on Bitcoin for profit.

 

[idestroyedthetoilet]

The decentralized blockchain technology used by most crypto-currencies creates a completely peer-to-peer transaction system with no central authority. All transactions are recorded on a public ledger stored by multiple machines on the network. Traditional banks hate crypto because it disintermediates them (cuts them out of the loop).

The inspiration for creating a decentralized, peer-to-peer currency system is to remove the traditional banks that have shown themselves to be corrupt and reckless with people's money. At the same time, the U.S. dollar and other debt-based fiat currencies are designed to be inflated and thereby dilute people's buying power over time. Bitcoin operates with an ultimate fixed supply, so it can't be inflated the way modern fiat currencies are.

The value of Bitcoin is that it creates an alternative to the debt-based fiat currency system. I can put my money in a bank, or I can upload my money into a Napster-like peer-to-peer digital storage system. My money will be converted to the native currency called Bitcoin and stored in my digital wallet.

The problem with Bitcoin is that it's not backed by anything solid and real. A currency should really be backed by hard assets, or it readily creates a speculation bubble--meaning that people who get in early can make money from speculation, while people who get in too late will be left holding the bag (taking a loss). The market value of Bitcoin rises and falls as demand for it waxes and wanes vs. its fixed supply. As long as there is demand for it, Bitcoin will have value. If people abandon it, Bitcoin's value could drop precipitously, or even to zero.

People aren't really using Bitcoin as a medium of exchange or as a vehicle to preserve their wealth and buying power. They are treating it as a speculative asset to try to make profit. They know that the U.S. dollar and other fiat currencies are weak and getting weaker as the Fed continues to print vast amounts of dollars to create an artificial stimulus. When the value of 1 BTC = $50,000 USD, this is really an indictment of the value of the U.S. dollar and reflects its weakness.

The value of Bitcoin will continue to rise over time as people use it as a potential safe haven against a weak and volatile world economy. However, it too is highly volatile and can still be manipulated by really big players. I advised people to buy into BTC just over a year ago, when its market price was in the low $3k range. BTC had already established a price level at $15k that it was expected to return to. I don't know how I feel about BTC at its current price, though it should continue to appreciate and could readily pass $70k+ before the end of the year. The economic downturn caused by the pandemic, the Fed's addiction to money printing and increasing inflation will continue to create steady demand for BTC over the next year.

It's gold bug mentality at its finest, was from the start. Supercharged, on steroids and meth.

I'll never understand the gold bug obsession with finding a store of value, as opposed to investing in something productive that actually benefits society. Or the obsession with inflation which is necessary and healthy.