Future of Bitcoin

Investing / Cryptocurrencies
687

The trust some of you put in the government to handle YOUR money is astonishing … But that’s another discussion…

Would you prefer bitcoin:

  • 21 million supply
  • hard capped
  • infinite number of node that anyone can run
  • clear monetary policy that you cannot change without consensus of all owners + miners
  • fair distribution, everyone in the globe can participate equally

Or this scam:

  • 27 trillion in circulation
  • unlimited supply cap
  • only 1 node
  • 25% of supply minted in last 6 months
  • 1% of holders own 30%

(:point_up:that’s the US dollar)

Two additional remarks:

  • 51% attacks are very real, check BCH for instance. But for btc, it is virtually impossible and you would see the activity on chain way before it happens (hash rate changing). China banned bitcoin yet again this year, and no one care. They would have 51% attack it if it was possible.
  • yesterday was a big first, a pension fund in the US purchased $25m worth of Bitcoin. Is it for a get rich quick scheme? Or is it to protect the fund against inflation?
1 Like
688

How about neither? I get paid in fiat, then I buy something with it (goods, stocks, real estate). I only hold currency for liquidity, not as a store of value.

So as a means of exchange, it’s doesn’t matter if you use fiat or crypto (assuming that crypto can at all handle this use case).

As a means of storing value, I believe it’s better to store it in productive assets, but ok, if gold and art isn’t enough for you, you can add this digital collectible to your collection and rebalance your portfolio with it.

My big source of anxiety with crypto comes from the fact that I need make sure I don’t lose my passwords, then when I do cash out, that the process will work and I can access my wallet and that the exchange won’t screw it up. If I fck it up, there will be no support. So the more I have, the more concerned I am, and tempted to cash out. I think if I invested today, I would probably use some established financial entity and not play around with physical wallets and seed words.

9 Likes
689

I understand. It’s the Wild West right now, and the user experience is still choppy - it’s the other side of having assets that appreciate by 300-500% in less than a year.

There are several options for storage, from using something like the Vault on Coinbase (they put it in cold storage for you), or multi-signature concierge solutions like Unchained Capital or Casa, or earn interest on something like Celsius (risky but great rewards) or even banks a bit down the line, they will all be offering custody service for your Bitcoin.

But I totally see your point and lots of people share your concerns.

1 Like
690

I share these concerns exactly - and the ECB and the SNB are printing pretty paper at almost exactly the same rate as the Fed. I am hardly concerned for my family (our income is not increasing at the same rate as inflation but we hold little cash, virtually everything is in stocks and crypto), but VERY concerned for my parents who hold cash in the bank and have good pensions. At this rate, their purchasing power will be in the toilet in 10 years. At least they own their house outright, phew…!

1 Like
691

I do not fully trust the government either, but turning the question around, would you take out a mortgage debt denominated in BTC?

I have a net short position in fiat currencies as I have loans. I can predict what my debts will be worth in the future with reasonable accuracy. If they were denominated in BTC I could not

For day to day expenses chf (or credit cards denominated in chf) also wins

3 Likes
692

None of those options. I prefer the people setting the value of my currency to be reachable by torch and pitchfork. That’s what local democracy offers and why I have a lot of trust in the swiss authorities: we know where they live (and yet, they still manage to have a life, because they’re doing a mostly good job, for what I am thankful to them).

Edit and then edited out: digression about taxation not worth relaunching in yet another thread. @Bojack, thanks for your remark.

1 Like
693

I don’t follow your digression. But better to leave it for another thread…

694

Hi, I think it would make sense for you to have a look at the fundamentals. Bitcoin has never, ever been hacked to date. When you buy Bitcoin, you never give money to people the way you say in the first paragraph. Your transaction is entered and validated into the ledger by multiple nodes, each and every node can see it. Your Bitcoin remains on the blockchain forever (you only hold the keys), unless you sell it to someone else, in which case that transaction must be multilaterally validated. This “trustless” element is not a scar/problem/issue: it is actually what makes Bitcoin so great. And banks have defrauded money, cheated and broken the law countless times and continue to do so, see all the lawsuits they settle for millions out of court (Panama papers, Libor manipulation, manipulation of precious metals, horrible investments that lose the banks millions…). Who do you think pays for these costs, if not we as clients of the bank?

I will 100% agree that phishing and cybercrime are serious issues, and there are steps to be taken if you become serious about crypto ownership. Later, I am 100% certain the banks will offer crypto custody services (for a fee, of course - whereas if you have it on Celsius, you earn 6.2% on your Bitcoin, paid in Bitcoin, which is conservatively expected to go up at at least 30% per year for the next 5-10 years. This year it’s up about 400%, this will def. decrease over time).

Yes, there is no 100% guarantee. Anything could happen, if there is a huge market crash Bitcoin will crash also, even gold will (which is actually absurd, see March 2020). But it is an incredible asymmetric bet.

We are basically FIRE (work very little), so have spent hundreds of hours educating ourselves before allocating money to what we previously thought was “digital money, probably worthless or very risky”. If you have time on your hands, read the books I suggested, follow Saylor and InvestAnswers on YouTube. M. Saylor is a Bitcoin maximalist, InvestAnswers is not. But both have spent thousands of hours researching the subject, look at the fundamental videos and not just the ones with just news.

51% attacks are not an issue for Bitcoin. Quantum computing (expected around 2027-28) is a true threat, and until then the network must be quantum-proof or people will pull out their capital, including us of course.

And btw, all central banks absolutely will be issuing their own cryptocurrency (CBDC’s), China being closest to launching - this will be a true 1984 scenario where the state will be able to totally control and monitor all that you do with the CBDC, which is exactly why you essentially need an independent monetary system if you do not want that to happen to you.

All the best!

4 Likes
695

So is it your argument that BTC will have value once states issue their CBDC because of demand from people hiding stuff from governments - tax evaders and the like (?)

697

It’s been discussed before, I think people with expansionist cryptocurrency views don’t believe that monetary policy is useful/desirable, and would be fine having frequent economic crisis when the economy needs adjustments as a tradeoff.

Personally that’s my main reason for being against their adoption, rather than just neutral. For stable countries, it’s like getting rid of one of the most useful modern tool. (I’m fairly sure that the counterfactual of not doing any monetary policy in the past 70y is much worse averall).

1 Like
698

One reason I can think of would be you don’t need to bother about the security aspect of your cryptocurrency (you loose the key and/or the device, crypto exchange where you store your crypto being hacked, etc). But this added security or outsourcing of security would cost you an extra 0.95%…

1 Like
699

That would be completely stup*d. Unless we live under a bitcoin standard and everything is denominated in BTC.

You want to keep the appreciating asset and use the fiat that are inflating over time. With 5%+ inflation rate and +200% yoy return on your btc, times work on your favor, the mortgage only gets cheaper.

Few years down the line, borrow fiat against your btc in collateral to refinance your mortgage. Repeat. The longer you save in btc, the cheaper life gets.

That’s the issue bitcoin solves :wink: bitcoin is a truly free an open market governed by mathematics and not by rulers. If you like democracy, you should love it.

Yes, if you put blinkers on, and don’t care about the impact of fiat currencies and IMF policies on the rest of the world or on poor people, it is probably fine.

700

Is it truly better wrt monetary policy, not every country is experiencing hyper inflation (and even then, using a cryptocurrency is not that different to enforcing parity with a stable currency, and has the same disadvantages, if your commercial balance is off, you’re screwed anyway).

1 Like
701

I agree, but then you have your answer why BTC won’t become used as a currency in a mainstream way in Switzerland and why I still have CHF, it is not because I blindly trust the government

For people in developed countries BTC seems to me to be a solution to a problem that doesn’t exist. People like getting pay rises due to inflation and that their house prices go up and mortgage debt depreciates.

1 Like
702

Actually, I do think Oliv is perfectly right here and their thinking financially sound.

If he/she can take out a mortgage denominated in a debasing currency at a fixed rate, that means she can continue paying back in a currency that is losing value. BTC has increased at 200+% per year, even if it continues increasing at just 20% per year that would make her mortgage more and more expensive if she took it out in BTC.

703

I agree too, my point is that BTC is less useful than what we already have (CHF) because it can’t be used as a medium for borrowing and lending. Therefore people won’t switch to use it as a currency.

The use case I understood so far is in countries without stable currencies and having controls on USD eg Nigeria. However I am not sure BTC has a sustainable advantage here or if this is a temporary phenomenon

704

Glad to read someone make a reference to Saylor. He is so articulated and versed in engineering principles that his arguments are compelling.
Personal opinions: Quantum computing is just FUD. The day that threat become perceptible, the protocol can be made quantum-resistant. Even a successful 51% attack is not economically viable, because the cost to sustain the attack outweighs the economical gain as it increases with each additional tainted block.
Regarding volatility: LOL, I’ll take it any day in exchange of an average 200% annual gain. We are talking about your savings pot, not the fiat pot you keep to spend on necessities. Fiat may be more stable but on a stable downward trend :slight_smile:

2 Likes
705

Does everyone here think that the future growth is going to be like it was in the past (or bigger)? :grin:

2 Likes
706

Nope. It might keep growing like in the past, sure, but it might not just as well.

There’s room for a lot more adoption, sure, so there’s room for growth, but an average of 200% annual gains isn’t sustainable on the long run. The current growth comes from wider adoption, it can break tomorrow, the day after, in 1 year, 5 years or 10 years, but taking it for granted is jumping the shark and then some in my opinion.

Bitcoin may get left aside for other cryptocurrency/es, or cryptocurrencies may get out of fashion altogether. It may go down and never recover, tomorrow. Just like stocks, except if stocks become real cheap, that would mean buying businesses is becoming real cheap, which would have some sort of counter effect on the falling prices.

In short, there’s real risk and the potential for real rewards. Only those who take the risks will be able to reap the rewards (if there’s any) but thinking the reward is for granted and ignoring the risk is walking on a narrow path bordered by cliffs, blindfolded. The chance to fall off the path to our (financial) doom is very, very real.

7 Likes
707

Of course, why shouldn’t it? :laughing:

I remember when I wrote my Maturaarbeit about the financial crisis in 2008, where everyone said “house prices can only go up”…