With the US Fed announces that they will not fight hard inflation but use 2% as an compass, we might go towards more inflation than before. With the bond market having around 20% negative yields, those investors or pension funds will look for potential alternatives during the next years. If only 1% goes into other assests like Gold and/or Bitcoin - those markets will go heavily up because of the crazy volumes in the bond markets.
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They will probably further increase their real estate exposure first. Can’t see institutionals investing in crypto.
It’s like gold. It doesn’t do anything, no value creation at all.
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Totally agree with your comment and counting that with time more people see that similar.
You can make the calculation yourself, what will happen with the BTC price when this goes that way.
Market Cap today: ca. $200 billion (Bitcoin) vs $12.7 trillion (Gold)
Except some cryptocurrencies do.
Depends what you consider “value creating” that is.
But fine if this discussion is solely on BTC.
The difference is: you can make countless assets like bitcoin, you cannot do the same for gold. Yes, the widespread acceptability of this bitcoin clone will be missing, but I think you can find a workaround also for that. the Ethereum network allows the creation of custom tokens (using the ERC-20 standard or others). So you can make your own new token and trade it over the existing network.
I guess one use case for the Ether currency is being means of payment for trading other custom tokens and smart contracts. You have tokenized real estate and it’s all in the blockchain? Great. But when you want to make changes to it, you need to pay a fee using Ether. Does this make Ether a productive asset? I don’t know, kind of?
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I’d argue that Ether is in fact a productive asset: When you do anything on the Ether chain, you always pay Ether for those computations. And if you use the chain to do something useful (I don’t consider creating cryptocurrency X productive), then Ether represents stored computation cycles. While one could argue that those cycles are highly inefficient (buying any computer to do the calculations for you comes cheaper), those computations can be trusted by outsiders. On most other forms of computation, other participants in your computation mostly have to rely on your word that you can’t fake anything.
AFAIK smart contracts are the easiest way to do such trusted computations. Any other such trusted computation requires deep cryptographic knowledge to set up [citation needed].
Just as an Example: Last semester I was in a group project and had to do something on the Etherium blockchain. I never worked on smart contracts before. It took me ~15hrs total to get a contract set up that offers three different types of auctions. And anyone else can (relatively) easily verify that there’s nothing fishy going on with that auction, so they don’t have to rely on my word that everything will be according to the expectations.
In short, I argue that Ether actually is/can be something more than just an unproductive number. It can be used for trusted computation between untrusting partners. I don’t know how much demand for such a thing there will be in the future, but I think it’s reasonable that ETH has at least some value.
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That’s interesting. The bank I work for would like to allow their clients to tokenize some assets and I would like to participate in that, but I miss some know-how on the blockchain part. I never created a real custom token or a smart contract. It’s nice to hear that it can be learned in reasonable timeframe.
It’s really easy to get started. On Linux, once I knew what I would need to start programming (Gnache + Remix), it took me 10 minutes to get set up.
The stuff that is really really hard for your bank’s application are probably:
- Updating a smart contract. See here and here how annoying it is to do right.
- Transactions are final. If you make a mistake, you made a mistake, and it will be there for all eternity. And customers will screw up at some point. If you allow the bank to intervene via some special function in the contract, you lose all benefits of using a smart contract in the first place.
- Regulations. I have no clue about how the current laws are around that.
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The bank will for sure not implement the whole tokenization and smart contract. They will use an existing solution and connect to it via interfaces and an API. I’m still not sure how would this work. Let’s say you own an oldtimer car or some other item worth millions, and you would like to offer partial ownership to collectors who cannot afford to buy the whole thing. But how would they trade these tokens? AFAIR, there is no exchange/broker/auction house for custom tokens.
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Very interesting conversation.
Initially I was ultra skeptical in terms of Bitcoin and never bought more than 500 bucks or so. In the meanwhile I am a bit more bullish and willing to spend 1-3 % of my NW. My logic is that it has proven in the meanwhile to that it is fairly unlikely to go away fully. That being said, it could easily drop 75% … but that wouldnt make me broke. For the bull case however, as this generation gets older and starts shifting a bit from gold/bonds/etc over to btc there is easily a potential for 10-100x returns. So risk-adjusted it feels like a reasonble gamble as part of much bigger well-diversified portfolio.
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Absolutelly and it will happen again. Happened several times that BTC lost 50% or more, then consolidated during a periode and had a 10-20x run. Just try not to watch in daily, forget it and look at it in 2025.
It sounds so crazy, but I agree, there is a high potential with many arguments already above mentioned.
- not that easy to buy Bitcoins
- very small % own BTC right now
- market cap is ridicoulus small compare to other asset classes
- we are still in the very beginning of digitalization, like the internet in the 2000
- potential inflation coming in FIAT
- negative yields in bonds (around 20% of bonds have already negative yields)
+1, got mine in 2014 and forgot about until 2017… 50$ to 1000$ is a good ROI.
Is this serious? Is the EU parlament really to forbit/restrict Cryptocurrencies? Anybody knows more about this. That would be similar like the gold prohibition in the 1930’s in Europe and USA - wow!
Probably reasons more to have any kind of Crypto in your ledger as a backup alternative.
There’s a question in the title, so per Betteridge law, the answer should be no.
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Anyone following the current price action of BTC ? We are back to 2018 levels.
https://www.cnbc.com/2020/11/05/bitcoin-price-hits-highest-level-since-january-2018.html
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Of course. Those who can’t accept it’s actually “a thing” will be the ones complaining the most, especially past $20k.
Paypal is now introducing support for Bitcoin, Square (SQ) has been doing it for over a year (and posted revenue growth of 400% yesterday). And no, I don’t think it will drop 75% from where it is currently.
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Adding on to the acceptance is also companies like Microstrategy adding BTC into their portfolio. I think it might be time to add a small portion of BTC as part planned monthly investments 
I actually bought some BTC and ETH for EUR 10’000 way back after the crash. It turned out, after that it crashed even more and my M2M performance was EUR -6’000. Now I’m at +1’000 
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Well you know what they say. HODL!
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