A Tweet today on on the three most important uses of Bitcoin caught my eye. Let’s discuss the three uses.
Bitcoin as Collateral
“Bitcoin is the ultimate collateral because it is priced 24/7 and can be transferred 24/7. Something skeptics miss.”
A Word About Volatility
Using something volatile as collateral will eventually lead to margin calls and forced selling.
It’s a disaster waiting to happen, assuming Bitcoin really is used as collateral.
Bitcoin Accepted Here
As for transactions, nearly 100 percent of Bitcoin transactions are buying and selling Bitcoin, in other words, speculation.
Most of the rest of the Bitcoin transactions are really fiat-transactions in disguise.
Q: What does “Bitcoin Accepted Here” mean in practice?
A: In the vast majority of cases, the merchant who takes Bitcoin immediately converts it to dollars, euros, or the local currency.
Buying something with Bitcoin is thus a preference for dollars (good prices in dollars, euros, etc.) rather than Bitcoin. These transactions are net negative to the price of Bitcoin.
Ironically, it’s a good thing for the price of Bitcoin that people like to hold it for speculative appreciation.
What is HODLing?
HODLing is speculation that Bitcoin is the ultimate asset that will always rise over time in the long run despite record up-down volatility as an asset.
The near universal, ~100 percent use of Bitcoin is speculation. But volatility is a benefit for true believers who can gleefully buy the dip.
That volatility makes it a terrible for collateral use and very questionable for transaction use (other than cashing out after a big run, hoping for a decline).
I suspect many Bitcoin fans will accept most of what I just said if they are at all honest and understand what using Bitcoin to buy something really means.
My next sentence will be more controversial.
Halving Is Mostly Irrelevant
Halving does not reduce the supply of Bitcoin. That’s a cold hard fact that people struggle with.
The supply of Bitcoin is every Bitcoin ever mined minus lost keys. Halving changes the rate of increase of the supply of Bitcoin.
Similarly, the supply of gold is every ounce ever produced minus coins lost at sea, buried and forgotten, used in commercial applications or tooth fillings and now in landfills.
I would hesitate to guess whether there are more lost keys than lost gold in percentage terms.
Regardless, we are now at the point where the rate of increase in supply of Bitcoin is less than the rate of increase in supply of gold.
How Many Bitcoins in Circulation?
Assuming those numbers are reasonably accurate, ~94 percent of Bitcoins that ever will be mined have already been mined.
Further halvings will parse out the next 6 percent of supply over increasingly long periods of time.
For all practical purposes the current supply is the final supply. Thus, future halvings cannot realistically matter, mathematically speaking.
“Who else is waiting for 2028?”
How can it matter?
Oddly, one way that it can matter is if people believe it matters. The hype surrounding halvings is similar to hype about stock splits.
But that reaction only lasts for a short time. So now we have to look forward to hype that gets further and further into the future.
Perhaps the next hype being so far off is a net negative psychologically. I’ll buy in 2027 mentality.
Bitcoin Monetary Policy?!
Bitcoin has no monetary policy. It is not money and likely never will be for the simple fact that no major government will ever hand over monetary policy to an asset it does not control.
Governments can easily squash Bitcoin.
That’s another statement of fact Bitcoiners will reject. But if government banned the buying and selling of Bitcoin (or taxed the hell out of it), there would be no way to use that Bitcoin other than direct barter.
You can keep your Bitcoin, but it would be useless other than direct barter because no merchant would accept it. There would be no way to get fiat money into or out of Bitcoin. Period. If you disagree, please answer this question: How do you get money into Bitcoin if governments do not allow that or tax the hell out of it?
This is not realistically debatable. Nonetheless, I expect ridiculous attempts at rebuttal based on half-assed measures by China or whatever.
The real question is not whether governments could kill Bitcoin, but rather the likelihood of that.
I used to think this would happen. Now I don’t. But it all depends on whether Bitcoin ever gets high enough for governments to fear Bitcoin. The higher the price of Bitcoin, the more likely the government reaction.
The Transaction, Collateral, and HODL Triangle
For Bitcoin to gain widespread acceptance in transactions and as collateral, volatility and speculation are the enemy.
For speculation purposes and buy the dip HODLing, volatility is an asset not a detriment.
Meanwhile, it is increasingly obvious that Bitcoin is among the most, if not the most, speculative thing invented.
Don’t forget:
You can sell your tulip bulb anytime, day or night, weekends too!
All you need is a buyer that offers an acceptable price.
Q: What does “Bitcoin Accepted Here” mean in practice?
A: In the vast majority of cases, the merchant who takes Bitcoin immediately converts it to dollars, euros, or the local currency.
It’s actually far worse than that. A: What it means in practice is “Bitcoin Not actually accepted here, we just say that because wr think its cool”
Watch George Gammon describe his attempt to travel in S. America using only bitcoin, not one single restaurant, hotel, market, or gas station that said it accepted bitcoin actually did. It’s a non-starter for a transactions.
The supply of Bitcoin is fixed. It’s impossible to expand it, ever. Not so with any and every other form of “money”.
USD is fiat. If it never goes to zero, it will be the only one ever.
Bitcoin is volatile only if measured in USD.
USD if the Ponzi scheme, not Bitcoin.
When there are no more dollars, how will BTC. be valued?
Currency or money has value because people wanting to buy or sell goods or services are willing to accept it in exchange. Note that how or whether it’s backed is only relevant in reassuring people it won’t be lost due to theft or systemic failure.
Finally, a question: When the international central banking cartel decides to just implement CBDCs, and our every thought , word and deed is being centrally monitored, and we are being forced to be continually at their beck and call, Will any of you guys wish you had something like Bitcoin to do some secret transactions?
All that you describe makes BTC useless as money. In order to support economic activity money supply needs to grow and contract. How are businesses going to get capital to finance growth and expansion? Are they going to be able to borrow BTC to fund expansion? The only way that can be done is via a fully reserved system since you can’t fractionally reserve BTC to provide temporary funding (i.e. loans) to support commerce. For every BTC borrowed by Company A, there will be one less available for Company B. The competition for capital will result in astronomical interest rates on BTC loans. We will have capital starvation instead of capital formation and economies will grind to a halt.
Maybe you know more about this than I do, but does money supply grow and contract as a result of a fully reserved system? Or as a result of central bank operations to buy and sell treasuries, and issuing new dollars (from thin air) to lend to the system? And why wouldn’t businesses be able to borrow bitcoin? Since the FED is a centrally controlled central bank, why would a distributed central bank be impossible?
The reason I want Bitcoin to not die, is that it can become a store of long-term value, which USD is not. Not even gold can make that claim, because as it becomes more valuable, more of it is mined, driving the value down. That will never happen with Bitcoin. No other form of money or currency even creates that expectation.
My central premise is that governments are hopelessly corrupt, and that any and every idea we the people can come up with to take some of their power from them can extend the time we have left on Earth. All other currency alternatives will continue to depreciate in value at exponentially accelerating rates until hyperinflation, at which point chaos erupts.
Bitcoin is simply the best idea for facilitating commerce that anyone has ever conceived. If we all could stop being little ‘useful idiots’ and supporting every lie they tell us, we might actually make some progress in retaining our freedoms. Which by the way, are evaporating faster than the value of the Dollar.
“The supply of Bitcoin is fixed. It’s impossible to expand it, ever.” Which is one of the reasons it will never be money.
“Bitcoin is volatile only if measured in USD.” Lol, okay.
“When there are no more dollars, how will BTC. be valued?” In gold.
“When the international central banking cartel decides to just implement CBDCs, and our every thought , word and deed is being centrally monitored, and we are being forced to be continually at their beck and call, Will any of you guys wish you had something like Bitcoin to do some secret transactions?” No, because just like CBDCs have failed in Nigeria, they will fail everywhere else. Some US states are already banning CBDCs. Elites are the last people that want all their transactions monitored.
Never be money? Please explain.
If bitcoin were to be valued in gold, both would become less volatile.
Elites won’t care that their transactions are monitored. They control who sees them, and they certainly won’t have their activities controlled, because they decide who gets controlled. I certainly hope CBDCs never get a foothold here or anywhere, but I’m not sure they can be stopped.
Why would anyone want to spend Bitcoin if they think it will be worth twice as much in a month? A good currency fluctuates the amount in circulation based on demand, which is exactly what the US dollar does. The US dollar mainly increases in supply only when there is more lending. There is usually more lending when the economy is growing. It shrinks when there is less lending, which is usually because the economy is shrinking. As such, it’s supply relative to demand is pretty constant. High inflation means no one wants to accept it. High deflation is just as bad as high inflation, for a currency. High deflation means no one wants to spend it. Nothing is higher deflation than not only no new coins, but a decreasing amount of coins as they are lost. The deflation for Bitcoin is astronomical.
Only idiots think it is relevant that the US dollar has lost 96% of its value in the last 100 years. NO ONE holds US dollars for a hundred years. They hold assets. Dollars are simply a utility for exchange.
So you’re arguing for a token that fluctuates in value and depreciates wildly over time. That vs. one that is designed to be stable over time. Could that have anything to do with the budget disaster that’s looming? https://www.zerohedge.com/news/2024-07-01/coming-us-budget-disaster-will-impoverish-americans
Not at all. I’m stating that people want a currency that DOESN’T fluctuate in value much. 2%-4% yearly fluctuations aren’t that much. What is the fluctuation in value for Bitcoin over the 15 years it’s been around again? You’re the one claiming people want a currency with high fluctuations, not me. From Nov ’21 Bitcoin dropped 75% to Nov ’22. From Nov ’22 it went up 285% to today. Look at the USD and tell me the difference.
I really hate it when I need some local currency for living and I have to sell some of my Bitcoin for less than I paid for it. Plus the transaction costs losses. But hey, it’s only not money.
Two things haven’t been discussed so far so I’ll throw them out there before anyone else does.
1/ Have fun staying poor.
2/ Everyone buys bitcoin at the price they deserve.
Let me know how things go when Bitcoin keeps dropping.
Great points Mike. I was a big Bitcoin fan when it first came out. But once I realized that the only real way to “use” it was to exchange it for fiat on exchanges, I stopped being a fan. Governments love it. They can see what everyone is doing on them and so you pretty much lose all privacy when you use an exchange. And privacy is supposed to be one of the main benefits of using Bitcoin.
A big issue with Bitcoin as well is its technical nature. Most people have no idea how it works, as such they have no trust in it or desire to figure out how to even use it.
Bitcoiners have been saying for years that once an ETF is approved in the US the floodgates will be opened! Well, it was finally approved and the best it could do was get a few thousand dollars above its ATH? Can it get much more laughable than that? What we saw, ~$72k, will be the highest it every goes.
Bitcoin and all crypto assets will be going to zero in the current bear market that has begun. Bitcoin, for the most part, is completely useless. Sure you can take billions of dollars worth of Bitcoin across borders, but then what? Good luck exchanging it for billions of dollars worth of local currencies or assets.
It will never function as a currency, because it is way too volatile. It will never function as a currency because it is way too slow. It will never function as a currency because to ensure a transaction occurs quicker, you have to pay a fee. The lightning network is a joke. It just adds complexity on top of the already complex Bitcoin network that most people have no desire to figure out.
It doesn’t act as an asset because it has no real world use, unlike gold. Gold can be used to make jewelry and for industrial applications, even it if isn’t used as money. Bitcoin? Nope, nothing. It’s just a number on a ledger. That’s it.
The problem I have with crypto-currencies is that the supply is unlimited. When Bitcoin has maxed out, anyone can introduce Bitcoin II.
Right on!
Gold is one of 92 natural occurring elements. Each element is priced daily.
The ability to do secret crtypo-transactions is valuable … BTC is one of many methods but KYC in the US makes secrecy difficult (need to go to El Salvador for cash-BTC conversion).
I see the same mentally of GME for BTC….to the moon!
BTW, I only eat natural food; that is, food with atoms of atomic number no greater than 92.
Um, that’s a hard no. One of the features that makes the Bitcoin network the best is it has almost all of the hash power. Anyone can make “Bitcoin II”. But it will have almost no one mining it so it won’t be resilient. You can only have “infinite” Bitcoin if you have infinite hash power, which means infinite energy.
Very good/informative piece. Last estimates I saw claimed about 30 percent of the mined bitcoin supply already got lost.
What I think is that Bitcoin is a closed game and if you aren’t in the inner circle, you won’t know the rules. I avoid it for that reason.
Most people who buy physical gold or gold coins are paying retail prices. Sellers
are paying 15%/40% below wholesale, at best. Gold scrap in Jewelry stores can be 60% 80% below London fix. Silver is worse.
Scraps are accumulated, before shipping to a smelters. Smelting in high temp by technician, in a secured places with guards and testing purity cost money. The karat content is always discounted. Add 3%/4% for losses. Buy in 2001 sell today skew up results.
The most important uses of Bitcoin are black market transactions and money laundering.for scammers,terrorists, etc.
IOW: Canary-in-the-coalmine uses, for the users most immediately impacted by the slide from freedom to unrestrained totalitarianism.
You can’t bitcoin monetary policy but you might be able to FEDcoin it one day. What’s the difference?
Bitcoin is also dependent on electricity. If the power grid goes down, your bitcoin is inaccessible. Same goes for the money system because 95% of dollars exist only in bank computers (Proofs at: bank LIES dot ORG).
REALLY GREAT LINK. Thanks!
“If the power grid goes down”
There’s not one, non-redundant worldwide “THE Powergrid.” There are plenty of redundancies keeping mostly Bitcoin accessible, even if someone should bomb a power plant in Gaza or Ukranine.
Correction, the halving has already taken place, 450 bitcoins mined a day. Moving to 225 bitcoins in 2028.
What percentage a year is the US dollar debasing? Which assets would you like to hold in order to compensate for that?
No one holds a currency. People hold assets. I could care less if my dollars debase by 2%-4% a year. I spend them much faster than that.
It’s also vulnerable in grid or network down situations.
The most likely reason governments have not yet cracked down on cryptocurrency is because they are using it for various reasons themselves. Possibly for things that are questionable from a legal view. The FTX thing was a hint of what’s going on behind the scenes.
It is JUST as probable that the US GOVERNMENT MADE UP CRYPTO/BITCOIN and then created a MYTHICAL PILE OF BULLSHIT LIES, inferring that it is illegal (at first) and then TAXED and WHAT IS NEXT?
OUTRIGHT CONVERSION TO THE CBDC. It just adds up in my mind. WE KNOW that everything that the Government tells us are LIES.
I find it interesting that Bitcoin and Beanie Babies both start with the letter B. So does the word “bullsh*t.”
Coincidence? I think not.
After WWII the dollar ruled. When ARAMCO was confiscated by the Saudis the dollar plunged. It cont to decay for 15 more years during the oil glut. It lasted until the mid 1990’s. Paul Volcker and his 22% FFER spike didn’t alone beat inflation. The glut did. Speculators around the world bought dollars during the dotcom until its collapse Then the Euro was born. DXY hit nadir in 2008. In 2009 when commodities were dumped in margin calls and the dollar was down ==> China gambled and moved in. “Barter”, trading real goods between nation, including transfer of knowledge, compete with dollar, Euro, Bitcoin and gold. In the next margin call Bitcoin will be first to go.
Bitcoin is around the same price it was back in March 2021.
Accounting for ~20% inflation from March 2021 to present day, its not holding much value.
A lot of Wall Street pundits have recommended hedging and holding 1% to 4% of your total assets in Bitcoin.
I would say hold 3% in Bitcoin, 9% in gold and silver, and 8% in energy ETFs or stocks if you want a hedge against inflation.
And Binnacle predicts Bitcoin value as follows
Year Price
2025 $ 63,919.96
2026 $ 67,115.96
2027 $ 70,471.76
2030 $ 81,579.87
if you examine Bitcoin, it pops and then for the next 4 years it drops and then moves sideways , as the current price is nearly the same price back in early 2021
I’d also count on it having a good sized dip or two between now and then.
Just like gold?
It will never get to $81k.
I would have been happy to sell a load of it at $65,000 a pop, and bought 99.99% gold bullion instead.
I would as soon as buy tulips…
There’s no limit to supply. Bitcoin governance group can increase it any time, and arguably they’ll have to in order to keep the network functioning effectively and affordably .
They will devalue it from beneath… First there were satoshis, then milli, micro, nano satoshis, but whose accepting them?
Rinky, George Gammon went to Argentina recently with his BITCOIN (on a USB) and he found a shop: “WE ACCEPT BITCOIN.”
The shop owner refused to help him. NO ONE allowed him to convert his Bitcoin to Argentine Peso’s. He was forced to use his Credit Cards and scramble to find Cash in some way. Argentina is a CASH only culture.
It is just another Ponzi scheme, like US TREASURIES.
“Bitcoin governance group can increase it any time,”
Only with 50+% buy-in from existing holders (Good luck with that….) Otherwise they’d have to fork, and blindly hope enough went with them to what will be; in effect; just the latest in a long line of alt-coins.
To keep things affordable, they’ll just have to divide each coin finer as prices rise. Which is a lot easier with a digital currency, than it is with physical metal.
Bitcoin is fundamentally a well designed currency. There are no trivially obvious “gotchas” in the form of “Those guys can do” or “Bill Gates can wank” silly conspiracies.
It unfortunately was not resistant to blockchain analysis wrt transaction anonymity. The proof-of-work function is too simplistic, hence amendable to custom hardware. And issuance was too front loaded. Which combine to make it less convenient, hence less attractive, as a currency.
The early issuance issue, as well as the proof-of-work issue; are likely unresolvable: Those who arbitrarily benefited are unlikely to hand over any coins; and the big miners won’t give up the edge their mining farms bring them vis-a-vis PC-miners. While at the same time, the other 99.99%, who are the ones who need to use it for regular stuff in order for it to start serving as a currency, are unlikely to do so when they know there’s multiple times the entire active “economy” extremely concentrated in a few hands ready to wreak havoc, and that a few concentrated miners wield an outsized influence over the future.
The protocol could conceivably be amended to include enforced mixing/anonymization. But without the concentration and pow issues resolved; I’m not sure if demand would be there even then, for use cases less corner-case’y than “criminal” ones.
A derivative which bakes mixing/pooling/anonymization in at the protocol level; which has a pow that greatly reduces the benefit from custom hardware and concentration in specific datacenter locations; and which is introduced slowly enough to limit early concentration issues; remains INSANELY tantalizing. And more so every day.
Today, so-called “national currencies” have all sunk so far, that they severely hamper both economic growth and resistance to outright theft and tyranny. Gold is a traditional hedge; but lots of people have limited access to safe storage. For all of them, a distributed, anonymous currency is a boon great enough to serve a straight up existential role. But that does require both true distribution AND guaranteed anonymity.
I doubt it. It would immediately destroy it.
Mish! Have you seen this? Carl ₿ MENGER ⚡️🇸🇻 on X: “U.S. banks unrealised losses have accumulated to $525 billion, almost 7 times bigger than during the GFC. https://t.co/NiyIEYMaHi” / X Is it real?
Unrealized losses on US treasuries don’t matter much and will revert to zero over time IF interest rates don’t rise much further.
It is the commercial real estate losses that will be impossible to hide if there are defaults
Won’t they just come up with another RE-JIGGERED ALPHABET SOUP BAIL OUT: BTFP-like?
James Lavish was just on the QTR podcast explaining this in simple terms.
I think, Mish, it is time for a ROLL-UP article about the FED PROGRAMS. I am CONVINCED that the REPO Sept 2019 problems were the reason “COVID” was concocted and they shut us all down only to begin MMT for the PLEBS.
Doubtful. Most of the Commercial Real Estate loans are not held by the banks. Rather they’ve been sold to investors and pension funds, bond funds etc. When was the last time the common guy got a bail out?
All the largest banks, investment companies have bought significan amounts and hold bitcoin
Proof?
Bitcoin puts me to sleep. Wake me up when Warren starts buying in.
Warren has criticized it many times.
No one has every accused Liz wareen of intelligence
I assumed jhrodd was referring to Warren Buffet not Pocahontas, but I could be wrong.
Famously in fact.
Bitcoin exists because HODlers are delusional.
Most people I know who have bought BC – are in a cult… they actually believe it is going to 500k…
One of them was urging me to buy when it was approaching 70k…. (he’s an investment banker…)
Which leads me to believe he was not cashing out at the record high but more than likely he was dumping his bonus into more BC at the record high – cuz it’s going up 7x more soon…
Then he got smashed… but that did not make him question the cult… he no doubt scraped together whatever cash he could and bought more BC… and I am certain he has not cashed out and taken $$$ off the table… cuz 500k…
So the thing is … if you realize this is not a real asset but there is money to be made … buying low and dumping it on the idiots when they drive the price up … cuz 500k…
Rinse repeat… then congrats… but the Cult members will eventually get burned…
If people have trouble determining why Bitcoin’s price goes up, look at how Ponzi schemes work. The perceived value goes up because the phony value goes up.
It works until it stops working!
Nailed it!
But the person urging me to buy does not buy into this … he truly believes 500k is imminent … he’s buying more at the high and creating a self-fuelled ponzi hahahahaaha
I’ll be honest, I thought it was another Beanie Babies situation but it has some staying power. I still don’t understand it after watching and reading hours of material explaining it but to each their own. I will never put money into something I can’t understand. I want real assets. When someone cashes out their Bitcoin however and buys one of my real estate properties fine with me.
You’re not supposed to understand it, that’s why they are literally trying blind you with science and technobabble.
If anything, Mish’s article outlining how there is a limit to the number of total Bitcoins, would make me more interested in trying to trade Bitcoin than gold (I trade neither). The amount of gold will continue to grow as more is mined (perhaps ocean mining eventually).
If you are interested and don’t want to deal with keeping your private keys safe, jump in with a Bitcoin ETF.
Fidelity’s Wise Origin Bitcoin Fund (FBTC) and Blackrock’s IShares Bitcoin Trust (IBIT), just name a couple, are an easy way to get some exposure to Bitcoin. Blackrock’s Bitcoin ETF is the largest Bitcoin ETF at the moment, I believe.
I don’t mess around with Bitcoin. Way to volatile for me. To each thier own.
Thanks. Though I am still not interested. I prefer investments in companies with earnings and cash flow.
PAPA, if you believe the B.S. that public companies report to you, then I have some swamp land. I owned (MY SHARES) in a Pubic Company (my own high tech Co., cannot name it here)….but, I can safely say that the “ROAD SHOW” we did to go public was full of adventurous information…and lies by avoidance (not pointing out ANY Company flaws).
So, I fired our underwriter and insisted on being COMPLETELY honest with all of our forecasts, inventory numbers and so on. That cut our IPO PRICE by 75%. HONESTY DOES NOT PAY.
Then, you SHOULD go out and explore what GAAP and NON-GAAP accounting means and how you SHOULD learn how to find the REAL NUMBERS.
I only play futures (CRUDE OIL) and I use Options on the SPX (Weekly Strangles, using Tyler Jewel Rules — he is famous).
I ONLY RENT the market. And then put in my notice every week and start over again on Tuesdays.
Finally, I only use MEASURED MOVES to determine direction, buy/hold/sell points. I taught this to retired guys all over the world. THEN, I got SICKER THAN HELL and closed my room.
I have nothing to lose now. My time is short. BEWARE STOCK INFO, PAPA!
Thanks for that.
Not that much. Gold is pretty finite.
Numbers on a computer, not so much.
At today’s prices, there is roughly $12 trillion of gold that has already been mined. There is $771 trillion of gold in the oceans. At this point, most of that is unrecoverable. But the same thing was said about shale oil, prior to 1990.
The rate of increase in the supply of gold is ~2 to 3 percent
No commodities have a yield other than money (via interest rates).
Bitcoin has largely turned into a cult like religion in my opinion. If you happen upon a Bitcoiner and state anything even remotely critical of Bitcoin you’ll get an ear full of slogans like “you just don’t understand Bitcoin”, “Bitcoin solves this (your criticism)”, or, my personal favorite, “have fun staying poor”. Of course this doesn’t apply to all Bitcoiners, but I’ve found that honest Bitcoiners are few and far between. The lack of honesty amongst most Bitcoiners is a huge red flag against Bitcoin in my view.
I’ll admit that I wish that I had bought Bitcoin when it 1st hit the scene. It’s way to volatile now to screw around with. There’s plenty of cash to be made elsewhere without the huge volatility.
When they go into cult mode I tell them if BC has aspirations to replace the USD… then surely the Fed is the enemy of BC… and if the Fed decides to end BC … they could do it easily …
All they would have to do is declare it counterfeit illegal currency. HODlers then told that if they do not delete their HODlings they face 10 yr prison sentences. Then inform the banks that they are not allowed to facilitate the conversion of BC to fiat.
The cult members then tell me that the Fed does not know who owns BC… and I respond with — the NSA knows every key stroke you make on your computer… they know if you have traded BC… don’t fool yourself.
Recall the Silk Road website… a couple of the FBI agents who are involved in nailing the founder stole the BC accounts believing they could do so anonymously… seems they were not anonymous… and are serving prison sentences…
Most people who own BC are not criminals… but are they willing to risk that 10yr prison sentence???? Of course not — all the Fed would have to do is declare BC illegal and it goes to ZERO. In seconds…..
Which makes one wonder why the Fed does not do that…. they must have some reason to allow BC to exist…
My take is that is a ‘thinking man’s lottery’… It’s become much more difficult to go from rags to riches…. a society needs to believe that is possible … these self proclaimed geniuses who are in the BC cult actually believe they are entrepreneurs… that they can read the tea leaves on an investment that has ZERO fundamentals (it pretty much goes up based on PR bullshit that is believed by the cultists)….
But hey they that they have gone from rags to riches… because they are so smart…
And that sentiment is good because it defeats the despair that goes with believing there is no way out of the declining prosperity that is pervasive in previously prosperous populations
“Which makes one wonder why the Fed does not do that…. they must have some reason to allow BC to exist…”
Why should the fed care if it exists?
Bitcoin existing is not really any different than Beanie Babies existing in the late 90s and early 2000s. Did the Fed care about Beanie Babies? For that matter does the Fed even care about gold?
Bitcoin only matters if it becomes a threat as Mish has stated. At the moment it’s just a speculative asset like gold or stocks etc.
I suspect BC is a creation of the Fed and the Deep State.
Beanie Babies were not counterfeit currency nor did they owners of the company have aspirations to unseat the USD.
Lol! Cult alert!
Too late for the US federal government to declare Bitcoin as illegal since the major investment firms like Blackrock and Fidelity have created Bitcoin ETFs.
Also major hedge funds have been buying Bitcoin such as Millennium Management owns $2 billion of Bitcoin.
Bitcoin along with other major crypto is just another asset class complementing gold and silver ETFs.
Own both the precious metal ETFs along with precious metal (and oil/gas) ETFs as a way to hedge for inflation.
One reason the govt allows crypto or bit coin to exist:
At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?
I think there’s also the chance it could be declared illegal, or frozen, and I suspect the price is manipulated, so I don’t touch it.
I have a couple of mates with multiple flash villas that they rent in Bali… they have been trying to sell them however due to currency controls (you cannot easily get the cash out of the country)… they are struggling.
The reason Indonesia puts the brakes on taking money out is because they were burned by the ultra wealthy shifting their wealth to Singapore during the Asian Financial Crisis — as they abandoned the rupiah … that caused and already crashing currency to implode further.
Both of these guys have looked at trying to do a deal using BC… but the Indo govt has banned the use of crypto.
So there is proof that if they want to stop it … they can… easily
I agree with your assessment of many BC hodlers as “cult members” who like to think they know something that others don’t. That is true for many cult members. You see that in many of the folks who comment here. Once they go down that rabbit hole it’s hard to deprogram them as they will only pay attention to cult narratives that reinforce their ideology. They lose site of reality.
Dumb Money – the movie.
Watched Dumb Money last night about Roaring Kitty and GME. A run-up of GME stock a la greater-fool theory; along with hedge funds getting squeezed (who knew — more fools than expected given work-from-home and stimmy checks).
Mediocre movie (even for a me, a MishTalk reader) but timeless story. Big Short 100x better.
Is BitCoin different than GME? I’ll admit, many more Roaring Kitties for Bitcoin and maybe the hedgies are afraid to short (I am). Maybe I go long a basket of 2nd tier crypto and short BTC…I dunno … that’s like long Intel/TSMC, short NVDA; risky….
Anyone else? Let’s start a movie thread?
Hedge funds in aggregate benefited massively due to GME run-up & shorting it, and are probably behind “Roaring Kitty”.
I’ll bet you only 2 people you’ve ever met realize that buying something with Bitcoin is simply buying dollars. And we saw that the last halving was much ado about nothing. Well-presented bear case Mish.
What business accepts bitcoin as payment, or as collateral? Given the volatility, it only make sense for money laundering. Losses of some magnitude are the norm in such business activity.
Try going to the bank and taking a substantial loan — and securing it with BC….
I’m think they will show you the door
I am not into Bitcoin, but read this article on Oil Price.Com today. Not sure if it’s pertinent.
“ The German government has recently transferred a substantial amount of Bitcoin to centralized exchanges, fueling market discussions and speculations. According to data from blockchain analytics firm Arkham, the German Federal Criminal Police Office (BKA) moved another 250 BTC to exchanges such as Kraken and Coinbase. This Bitcoin is worth about $15.4 million. A transfer that follows a series of similar moves last week. In total, around $150 million worth of Bitcoin has been sent to various exchange addresses.
The German authorities’ Bitcoin activities trace back to a massive seizure of nearly 50,000 BTC from the illegal film piracy site Movie2k in January. This seizure marked the largest in Germany’s history. Over the past week, the government has methodically sent significant portions of this stash to known exchanges. For instance, the government moved 400 BTC to Coinbase and Kraken. They also sent 500 BTC to an unidentified address labeled “139Po.” Additionally, the government received 310 BTC back from Kraken. They also got 90 BTC combined from wallets linked to Robinhood, Bitstamp, and Coinbase.
The rationale behind these transfers is not explicitly clear, but sending Bitcoin to exchanges typically suggests an intention to sell. While the exact motives remain speculative, such actions often signal the possibility of liquidating the assets for fiat currency or other tokens. Despite these moves representing only a fraction of daily Bitcoin trading volumes, the German government’s holdings, approximately 46,359 BTC worth around $2.8 billion, are significant. This makes Germany one of the largest nation-state holders of Bitcoin, following the United States, China, and the UK.
The broader market implications of these movements are noteworthy. Bitcoin’s price has seen downward pressure, partly due to these governmental transfers. On top of this, other factors are exacerbating the selling pressure. The upcoming Mt. Gox repayments, which will release around $9 billion worth of Bitcoin and Bitcoin Cash to creditors, and large outflows from Bitcoin spot ETFs are also contributing to market jitters. Furthermore, selling pressure from major Bitcoin holders, or “whales,” adds to the volatility.
While the exact reasons behind these moves remain speculative, their impact is tangible. As the market adjusts to this influx of supply, investors are keenly observing the developments, balancing between immediate selling pressures and continuous positive long-term market outlook.”
The current German government is not Germany’s finest hour… Green party and lignite/coal plants, for example.
“Auslander aus!”
Total “value” of bitcoin is around $1.2T right now. This is about half of the annual deficit for the U.S. Govt. It amounts to the value of a large company’s stock. Apple, Microsoft, Amazon, Nvidia – they all offer stuff or services, which are the basis for the value those stocks have. Gold coins can be held or put into your pocket. Even the U.S. govt offers some useful services.
Bitcoin only exists in electronic form. If it were so secure, why is there always some being stolen or ‘lost’ every year? There shouldn’t be.
Stocks at your brokerage also exist in electronic form.
But I see you point its a digital asset as far as the block chain.
One thing to examine is to compare the price of Bitcoin to the USA’s median priced home over the last 10 to 15 years.
How many Bitcoins could have bought a median priced home in 2010, 2015, 2020, and 2023 ?