Is Bitcoin a bubble or not - my motto was always “who cares when you are you are invested from the in the early stages”. But still the thought didn’t let me go, then I stumbled over that X video. At the end, as Arthur C. Clark said - Predictions are difficult, especially about the future.
Your view on that?
Is not this forum thread all about this question?
Bitcoin is a bet that the central banks will continue printing more money. It is a vessel that enables you to save for the future without having to invest in anything (as it produces no yield). It’s like gold but is superior to gold in its transport cost, verification cost, divisibility.
Could be. Bitcoin will, with the rise of its value, inevitably be held in custody by institutions, like banks, as the transaction costs will make it unattractive for a private person to directly transact on chain. I have lived through self-custody on a ledger nano and I didn’t like it. You just need to eff up once to lose your money. One of the original functions of banks was to keep your possessions safe, so I think people will need to trust banks to keep custody of their BTC. The difference to gold will be that the ledger is public and you can verify if the bank really controls as many BTC as it claims.
Very likely. I think as well that 90% of the users will use it that way. Less because of costs, but conveniece. Today you can pay with Lightning with very cheap transaction cost. But dealing with the mainnet and L2s are too complex for the avarage Joe. I suppose banks (or whatever institustional custodians may arise) will hide all the technical stuff and give you a debit card or so.
Some ammunition against inflation and Keynes by Saifedean Ammous.
The reasoning as presented seems limited to me:
Emphasis mine. The argument is that savings are the foundation of investment, which is true. However, if what you want is to funnel investments, you want for there to be savings and for them to be used as investments. Savings alone are not enough and that point isn’t addressed in the post on X.
Inflation disincentivizes savings kept as savings (as they loose value over time) but incentivizes the use of savings as investments (as those may beat inflation). Bitcoin incentivizes savings, as it gains value over time, but does not incentivize investments, as there is no need for the further step of investing.
If the debate is on the incentives for investing being there, then inflation, depending on the person:
→ incentivises investing as stated above (person with an entrepreuneurial mindset who sees opportunities).
OR
→ incentivises consumption (as savings not invested loose value over time - for people without the ability/drive to see investing opportunities). More consumption means more money available to be caught and gathered by the people with an entrepreuneurship mindset → people who wouldn’t invest anyway still provide their resources to the people who would actually invest. Investing is incentivized. Saving is incentivized only as a required step toward investing.
There again, Ammous fails to distinguish between people without entrepreuneurial mindset, whose consumption fuels the ventures of others, and the people with entrepreuneurial mindset who simply face drag in their returns. Many creative minds work better under constrains and inflation gives that.
I don’t understand this one. If people value stability and peace of mind more than the goods and services they buy with their money, then they would buy stability and peace of mind with their money instead of the goods and services they do. The problem here is with people alegedly not pursuing what they care most for but going for the low hanging fruit instead. Inflation has nothing to do with that.
No disagreement there. It’s mainly about creating a framework nurturing creativity for driven individuals. Good and bad things will happen.
YES! I would argue that is the biggest benefit of inflation → legacy wealth alone can’t be used to sit on, not do a thing and still enjoy a very good life, ruling parts of society (because money buys influence). Rich heirs have to actually have skills to maintain their wealth and driven, poorer people can prey on those who don’t, getting that wealth into their own hands. Inflation doesn’t do all but it helps skilled individuals to get rewarded for their skills and actually accrue wealth out of it.
No disagreement here.
In my layman view, it is Ammous who fails to properly understand the relationships between saving, consumption and investment when dealing with human nature.
I think the whole point is about “meaningful” investments. Inflation enforces investment even it’s stupid or socially or environmentally undesirable outcome. It’s like we did in the military in WK: “If you don’t spend the ammo now, next year you’ll get less budget for ammo.” And so it’s in many companies.
Same with war machinery. It’s only possible by inflation and endless printing of money. So less meaningful. When a king spent all his gold on war, the war ended… not today.
There are better examples in his book (The Bitcoin Standard). Again “meaningful” is definitely not VC spending billions on AI companies just to be invested in because it’s a hype. One or two of the companies will prevail, but most will be history. It’s just pumping into 90% stupid, just because they have to invest… or on a personal level, if I cannot save I’m forced to invest and take risk, where maybe I wouldn’t.
I disagree, because the redistribution we have now is from poor to rich and not the other way around.
I doubt that, as the Austrian school is a lot about social behavior and human nature.
Inflation almost forces investment even if you don’t want to. Anything with a positive nominal return is better than holding cash. But even with positive return you may still not beat inflation, which means your investment is malinvestment, it’s destroying value.
Keeping zombie companies alive is not good for economic growth.
Investment means putting capital to work. I’m not sure if bitcoin stands in the way of investment. A bitcoin holder is not competing for real resources. E.g. he’s not buying a house/land that will just sit there to “gain in value”. Any real asset turned into savings will be hoarded and made expensive beyond reason.
Wealth can be used to sit on, it’s cash that can’t be sit on. It’s goods and services that are made more expensive by government competing for them with newly made money. Everyday between doing the work and spending the IOU, govt steals a portion of that IOU. That forces people to invest in things they don’t know about or to consume things they don’t really need (eg my parents bought a merc because omg inflation).
I think inflation mostly hits lower & middle class, but it also disrupts the prices, which leads to misallocation of resources, which destroys value.