https://podcasts.apple.com/us/podca...coin-podcast/id928933489?i=1000517048777Greg Foss comes from the bond market angle.
https://rockstarinnercircle.com/fossgregfoss/"Greg Foss has a 30-year history in banks, bonds and the credit markets as a whole. His insights around Bitcoin and the state of the banking industry and the global economy are amazing. "
I listened on my phone while working. Probably have to listen again. I'm not pumping bitcoin, just trying to get educated on the subject. If anyone has a chance to listen, I'd like to hear your thoughts.
I'll try to give it a listen tomorrow. Not that I need any more convincing..
I've been trying to read the institutional investment angle.
Pretty interesting interview. Preston Pysh is the real deal.
https://www.forbes.com/sites/prestonpysh/?sh=15eb3b5770a4"I provide independent research of the stock market and central banking policy. I am currently the host of the #1 ranked investing podcast on iTunes, We Study Billionaires. I’ve written numerous books on investing and leadership and have been ranked as a top 35 business author on Amazon. As the Founder and President of the Pylon Holding Company, I specialize in the acquisition of private and public companies by assessing the durable competitive advantage and capacity for growth. I have a B.S. in Aerospace Engineering from West Point and have been awarded the bronze star in combat while commanding an attack helicopter company with the 101st Airborne Division. I am a Postgraduate Candidate at the Johns Hopkins Carey Business School in Baltimore, Maryland. "
I'll have to give it a listen when I have a chance.
I continue to believe that it is rare to find a traditional finance person who can wrap their brain around crypto and why people find it valuable. Most of it that I have seen from those people is barely a step up from the garbage tier take you can read from the boomers here. Most don't have the first clue about the technical merits and they can't make the mental connection needed to understand the market.
Making up value from thin air should be old hat to these people but when it comes to digital assets they choke.
Bitcoin and other crypto currencies are not currencies in the normal sense. They are not money because they are not legal tender backed by a government nor are they backed by a riskless asset. They are speculative assets like the Dutch tulip fad or like wildcat bank paper money in the 1830's-1860's. Yes, you can make money investing in them but there will be an inevitable run on their value. Only a matter of time unless legal activities somehow maintain their exchange value. They are indicative though of the movement of finance to shadow banks and unregulated markets because of the high regulatory cost burden we have placed on National and State chartered banks.
Bitcoin and other crypto currencies are not currencies in the normal sense. They are not money because they are not legal tender backed by a government nor are they backed by a riskless asset. They are speculative assets like the Dutch tulip fad or like wildcat bank paper money in the 1830's-1860's. Yes, you can make money investing in them but there will be an inevitable run on their value. Only a matter of time unless legal activities somehow maintain their exchange value. They are indicative though of the movement of finance to shadow banks and unregulated markets because of the high regulatory cost burden we have placed on National and State chartered banks.
Bitcoin has ATMs scattered around the country where cash can be withdrawn.
Some car dealerships are accepting Bitcoin as payment.
The bigger banks have special departments dealing in crypto currency.
There are existing ETFs for it with others awaiting approval.
From the above it’s hard to envision Bitcoin as a ponzi type scheme.
Erikj,
Many thanks, Pard. I look forward to listening and reading these having read some of Foss’ works before.
Much appreciate this.
Toot, yes, no question, you are correct. It is being used as a medium of exchange. But history is replete with examples of assets that have temporarily been used as a medium of exchange. It cannot last though because it is not legal tender and because it is fundamentally a valueless asset. It has been valuable though in drawing attention to new technologies like blockchain which the Chinese are now using for better or worse) in their new digital currency.
Toot, yes, no question, you are correct. It is being used as a medium of exchange. But history is replete with examples of assets that have temporarily been used as a medium of exchange. It cannot last though because it is not legal tender and because it is fundamentally a valueless asset.
I see what you’re saying but would ask that if it can be exchanged “directly” for US$ bills, legal tender backed by the full credit and faith of the US Government, how then would it be different from, say, silver or gold or platinum, etc.?
Precious metals don’t have dedicated ATMs that I’m aware of.
I do agree that it is a medium of exchange and that is apparently happening as we speak.
Edited to add:
China is now in on the crypto market offering their RMB out on the world market.
Excellent point. All I am saying is because its value is based on speculation (and perhaps its use in criminal activities) its exchange value with the dollar will inevitably fluctuate (and eventually plummet) which means it is not money. It is like any other asset. You can exchange stocks for cash as well, Or even guns. That does not make them currency. Other than the technology aspects it is just like tulips in Holland in the 1600s or like Planters Bank of Tennessee notes in he 1850s.
Excellent point. All I am saying is because its value is based on speculation (and perhaps its use in criminal activities) its exchange value with the dollar will inevitably fluctuate (and eventually plummet) which means it is not money. It is like any other asset. You can exchange stocks for cash as well, Or even guns. That does not make them currency. Other than the technology aspects it is just like tulips in Holland in the 1600s or like Planters Bank of Tennessee notes in he 1850s.
I see what you mean and appreciate your thoughts on it.
I don’t own any yet but I am entertaining some ETF purchases in the near future.
Stickfight and xxclaro have provided some in-depth explanations here at The Campfire in the recent past. It’s good reading.
Actually I do own some. I view it though like gambling or buying any stock. I think in the short run it might be a good gamble, I am not sure about the long run. Like all other speculative assets, timing will be everything. My view is make some money on it (hopefully) and get out. Bulls and Bears make money, pigs get slaughtered is an old investment cliche. Stay too long to try to get rich and it probably will not end up well.
The problem with crypto is it competes with government currencies, at some point they will decide they don't like the competition.
Yes, we all go to government sponsored crypto currencies at some point in the near future. They make a lot of sense as a safe asset for people to hold and might even make monetary policy easier with less distributional impacts than say current open market operations that work through interest channels and basically reward that segment of the population that holds interest sensitive assets. .
Well ETH and DOGE have done well for me. I am in the game now with "their money" so we'll see what it does.
Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
Yes bitcoin has a limited number. Some others do not.
Actually I do own some. I view it though like gambling or buying any stock. I think in the short run it might be a good gamble, I am not sure about the long run. Like all other speculative assets, timing will be everything. My view is make some money on it (hopefully) and get out. Bulls and Bears make money, pigs get slaughtered is an old investment cliche. Stay too long to try to get rich and it probably will not end up well.
I expect we will see a significant correction in the somewhat near future, I wish I knew when. There are so many different projects currently, running on different blockchains, and money is just flying around. Something has gotta give at some point. I think the big players and those solving real problems will survive, and rise from the ashes to new heights like they did in the previous crash. Like you said, best to take your profits early and reduce exposure well before it crashes, rather than trying to guess the peak.
It is a gamble, but at least its an educated gamble. Frankly, the potential is unmatched anywhere else that I know of. Making 100% gains in a couple months is considered not doing very well...
[quote=Hastings]Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
I think perhaps in part that was the case. Not the case for the wildcat bank notes though. One problem with bitcoin is its fictionalized creation. This is just a "thing" crated by solving computer puzzles. What is that "thing". It is definitely a fad and people are trading it and that creates value. But what is the intrinsic value? I could be wrong but I do not see how some fictional asset with no intrinsic value can possibly be worth anything in the long run unless it is backed by a government as legal tender. The mob might like it but once they realize it is really worthless they will use some other less traceable asset. Kind of like the dotcom stocks of the late 1990s that traded at high prices and then disappeared.
[quote=Hastings]Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
I think perhaps in part that was the case. Not the case for the wildcat bank notes though. One problem with bitcoin is its fictionalized creation. This is just a "thing" crated by solving computer puzzles. What is that "thing". It is definitely a fad and people are trading it and that creates value. But what is the intrinsic value? I could be wrong but I do not see how some fictional asset with no intrinsic value can possibly be worth anything in the long run unless it is backed by a government as legal tender. The mob might like it but once they realize it is really worthless they will use some other less traceable asset. Kind of like the dotcom stocks of the late 1990s that traded at high prices and then disappeared.
The world and history have seen many "currencies" come and go! All are doomed to fail. Outside of straight up trade, currencies all have weaknesses. You seem like a sharp guy, please tell us you don't really have the faith in our currency as you are leading us to believe.
Not sure that was addressed to me but if it was I agree with you. I do not have much faith in the dollar especially given our huge national debt burden. Its value has eroded significantly for years against goods and services but not so much, historically speaking, against other currencies.
[quote=Hastings]Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
I do not see how some fictional asset with no intrinsic value can possibly be worth anything in the long run unless it is backed by a government as legal tender.
This seems to me that you imply faith because it is backed buy Government, Financial Institutions, and Intrinsic Value!
Not attacking you, just saying what you see as faults in Crypto is the same faults in basically every other currency.
Well gentlemen, I am very late to this cryptocurrency thing. But, for a retired mill worker, I am going to put some real money into it. I think it will allow me to fund lots of charities.
Well gentlemen, I am very late to this cryptocurrency thing. But, for a retired mill worker, I am going to put some real money into it. I think it will allow me to fund lots of charities.
Start small, make your initial investment back and let ride. Somethings you really need to CYA on, this to me is one of them. I hate to see anyone lose.
[quote=Hastings]Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
I do not see how some fictional asset with no intrinsic value can possibly be worth anything in the long run unless it is backed by a government as legal tender.
This seems to me that you imply faith because it is backed buy Government, Financial Institutions, and Intrinsic Value!
Not attacking you, just saying what you see as faults in Crypto is the same faults in basically every other currency.
Yes, you are certainly correct to a point. The big difference is that anyone can create a crypto currency. What will the value be when there are 500 different ones running around? There can only be one legal tender (for the most part) and that gives it a value (dependent on its creation and the soundness of the government to be sure as you suggest) but a basic value non the less. And please understand I am not telling anyone not to invest in crypto currencies. I have done so myself. I am just trying to say they are a speculative asset and that is ALL they are and when their use in exchange is questioned that value will certainly be 0.
[quote=Hastings]Weren't tulips, ostriches, and other big bubbles destined to fail because of the unlimited potential supply? Is there a finite supply of bitcoin? I am curious because I don't understand it. I bought RIOT Blockchain at somewhere between $2 and $3 last year and it went almost to $80 and today closed at $48. Wish I had bought 20,000 shares instead of 200.
I do not see how some fictional asset with no intrinsic value can possibly be worth anything in the long run unless it is backed by a government as legal tender.
This seems to me that you imply faith because it is backed buy Government, Financial Institutions, and Intrinsic Value!
Not attacking you, just saying what you see as faults in Crypto is the same faults in basically every other currency.
Yes, you are certainly correct to a point. The big difference is that anyone can create a crypto currency. What will the value be when there are 500 different ones running around? There can only be one legal tender (for the most part) and that gives it a value (dependent on its creation and the soundness of the government to be sure as you suggest) but a basic value non the less. And please understand I am not telling anyone not to invest in crypto currencies. I have done so myself. I am just trying to say they are a speculative asset and that is ALL they are and when their use in exchange is questioned that value will certainly be 0.
What investment outside of TIME is not speculative?
I hear what you are saying and agree for the most part with you.
Yes, you are right, none are sure things. Maybe if someone came up with the cure for cancer (or the one gun or caliber we could all agree is the greatest gun/caliber of all) that would not be speculative but in the end even investments in the best companies end up being worthless. As you point out it is all a matter of timing. I was just trying to clarify what people are actually buying when they buy bitcoin. No question the bitcoin craze has driven up its value. Many people have made a lot and many more might make money on it going forward. It is all a matter of risk preference. People who are highly risk averse will not invest in crypto currencies. People with a little more risk tolerance will.
I think perhaps in part that was the case. Not the case for the wildcat bank notes though. One problem with bitcoin is its fictionalized creation. This is just a "thing" crated by solving computer puzzles. What is that "thing". It is definitely a fad and people are trading it and that creates value. But what is the intrinsic value? I could be wrong but I do not see how some fictional asset with no intrinsic value can possibly be worth anything in the long run unless it is backed by a government as legal tender. The mob might like it but once they realize it is really worthless they will use some other less traceable asset. Kind of like the dotcom stocks of the late 1990s that traded at high prices and then disappeared.
This is the problem I have understanding it (or maybe I do understand it after all....). It is nothing. Numbers on a computer screen. Created by someone (who?) out of thin air. Yes, I know that a Federal Reserve note is no different, especially since most "money" is probably not even physical, but numbers on a screen, created from nothing by each bank that loans out a buck. Bitcoin doesn't really exist. And as has been stated, it competes with governments who want you to use their currency, not anyone else's. Frankly, I'm kind of shocked it has been allowed to continue for as long as it has.
Doesn't really matter to me, personally, just curiosity. I'm too poor to do much "investing" in anything.
Can't really stop it. It is not counterfeit money it is just an alternative asset people use to barter for goods.
One thing for sure is that anyone who equates BTC and the Dutch tulip bubble is an imbecile who knows almost nothing about BTC or the Dutch tulip bubble.
One thing for sure is that anyone who equates BTC and the Dutch tulip bubble is an imbecile who knows almost nothing about BTC or the Dutch tulip bubble.
Please explain. Apparently many of us need to be enlightened. "Bank of America analysts warned on Friday that the world’s popular cryptocurrency “blows the doors off prior bubbles”, such as the dotcom boom and gold in the 1970s Others are pointing further back, to the Dutch tulip mania in the 17th century that ended in tears. "
" JP Morgan boss Jamie Dimon, the longest-serving chief executive on Wall Street, may have toned down his views of bitcoin since he declared in 2017 that it was a “fraud” and that he would fire any of his employees caught trading the digital currency."
Yes there are technological trading differences and some differences in how bitcoin is harvested, but beyond that what is there?
Apparently many of us need to be enlightened.
You nailed that one.
If only the many were smart enough to ask questions rather than try to answer them.
Bitcoin is simple. It can't go down unless some fool decides to take a profit.
...or flee to an alternative speculative asset. I am sort of amazed that so many think bitcoin is this miracle investment. It is a highly risky asset that has to offer high returns as a risk premium. Only two things are keeping it afloat. Unbridled speculation in this asset and the fact certain parties use it as a medium of exchange. I think it is more the former than the latter.
...or flee to an alternative speculative asset. I am sort of amazed that so many think bitcoin is this miracle investment. It is a highly risky asset that has to offer high returns as a risk premium. Only two things are keeping it afloat. Unbridled speculation in this asset and the fact certain parties use it as a medium of exchange. I think it is more the former than the latter.
Try listening to the Greg Foss interview above, and start at about 47 min mark.
Not sure what point you are making. Might bitcoin be part of a portfolio? Yes, as should all non-redundant speculative assets belong in a market portfolio.
Not sure what point you are making. Might bitcoin be part of a portfolio? Yes, as should all non-redundant speculative assets belong in a market portfolio.
I was attempting to discuss Greg's conclusions.
It seems to me that folks who buy Bitcoin are looking at fiat currency and their faith in those who manage it and saying to themselves that globally, they have more faith in the management of bitcoin than the money printing and foolish spending of the greatest sovereigns, let alone the banana republic that we don't tend to think about day to day. That it is a global phenomenon will tend to buoy it up over time, IMO.
That it is limited in supply seems to virtually guarantee the confidence of its purchasers.
It seems the major threat to Bitcoin would be vastly improved government monetary policy. Which does not seem likely in the near future.
It seems to me that folks who buy Bitcoin are looking at fiat currency and their faith in those who manage it and saying to themselves that globally, they have more faith in the management of bitcoin than the money printing and foolish spending of the greatest sovereigns, let alone the banana republic that we don't tend to think about day to day. That it is a global phenomenon will tend to buoy it up over time, IMO.
That it is limited in supply seems to virtually guarantee the confidence of its purchasers.
It seems the major threat to Bitcoin would be vastly improved government monetary policy. Which does not seem likely in the near future.
Yes i think you are correct. Global monetary policy is reckless
It seems to me that folks who buy Bitcoin are looking at fiat currency and their faith in those who manage it and saying to themselves that globally, they have more faith in the management of bitcoin than the money printing and foolish spending of the greatest sovereigns, let alone the banana republic that we don't tend to think about day to day. That it is a global phenomenon will tend to buoy it up over time, IMO.
That it is limited in supply seems to virtually guarantee the confidence of its purchasers.
It seems the major threat to Bitcoin would be vastly improved government monetary policy. Which does not seem likely in the near future.
Good observation. The decentralized nature is a large part of the appeal.
Bitcoin and other crypto currencies are not currencies in the normal sense. They are not money because they are not legal tender backed by a government nor are they backed by a riskless asset. They are speculative assets like the Dutch tulip fad or like wildcat bank paper money in the 1830's-1860's. Yes, you can make money investing in them but there will be an inevitable run on their value. Only a matter of time unless legal activities somehow maintain their exchange value. They are indicative though of the movement of finance to shadow banks and unregulated markets because of the high regulatory cost burden we have placed on National and State chartered banks.
Bitcoin has ATMs scattered around the country where cash can be withdrawn.
Well that the 1st time I ever got an answer as to how you sell a bitcoin for an actual dollar currency.
And without asking!
Bitcoin and other crypto currencies are not currencies in the normal sense. They are not money because they are not legal tender backed by a government nor are they backed by a riskless asset. They are speculative assets like the Dutch tulip fad or like wildcat bank paper money in the 1830's-1860's. Yes, you can make money investing in them but there will be an inevitable run on their value. Only a matter of time unless legal activities somehow maintain their exchange value. They are indicative though of the movement of finance to shadow banks and unregulated markets because of the high regulatory cost burden we have placed on National and State chartered banks.
Bitcoin has ATMs scattered around the country where cash can be withdrawn.
Well that the 1st time I ever got an answer as to how you sell a bitcoin for an actual dollar currency.
And without asking!
I believe that the amounts per withdrawal are set at 25K$.
Stickfight posted some very good info concerning the ins and outs of how to purchase and sell bitcoin.
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Atm's are kind of dated. Check this out.
https://beta.strike.meI'm not that advanced personally.
What I found interesting from Greg's interview was his price valuation and the situation bond traders are in.
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
I'll have to give it a listen when I have a chance.
I continue to believe that it is rare to find a traditional finance person who can wrap their brain around crypto and why people find it valuable. Most of it that I have seen from those people is barely a step up from the garbage tier take you can read from the boomers here. Most don't have the first clue about the technical merits and they can't make the mental connection needed to understand the market.
Making up value from thin air should be old hat to these people but when it comes to digital assets they choke.
I think their take depends on whether they think the deep state NWO Bolshevik cabal is going to win and push in the chinese yuan flavor of crypto on us as they make our petro dollars turn into toilet paper in their planned takeover of the world OR if the Patriot/Trump plan of a new currency like bitcoin and backed by gold and silver wins and the globalists efforts to keep the prices of metals depressed forever succeeds.
If the latter is the case, as time goes on the currency would gain in value as the population increased and the supply stayed relatively stable vs what the dollar does.
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
I am not sure how they could stop it. All governments are suspect and acceptance is everything. If countries start insisting on crypto payments, then they are in. And, the less fiat currencies are trusted the more likely that seems. It seems to me that world reserve currency favors one nation and it all has to do with confidence. All the other nations have a default reason to favor a neutral, non sovereign cryptocurrency reserve.
[quote=Milwroad]
Edited to add:
China is now in on the crypto market offering their RMB out on the world market.
That is a big factor. China has their crypto first to the market for trading and transactions. They are leading. This could bring bitcoin down in a crash.
Patriot/Trump plan of a new currency...
You really are the grand Poobah of Qanon.
[quote=Milwroad]
Edited to add:
China is now in on the crypto market offering their RMB out on the world market.
That is a big factor. China has their crypto first to the market for trading and transactions. They are leading. This could bring bitcoin down in a crash.
I don't think people are going to be very trusting of a centralized cryptocurrency controlled by a communist government.
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
I am not sure how they could stop it. All governments are suspect and acceptance is everything. If countries start insisting on crypto payments, then they are in. And, the less fiat currencies are trusted the more likely that seems. It seems to me that world reserve currency favors one nation and it all has to do with confidence. All the other nations have a default reason to favor a neutral, non sovereign cryptocurrency reserve.
This is where the tulip bubble theory starts to run into problems.
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
I am not sure how they could stop it. All governments are suspect and acceptance is everything. If countries start insisting on crypto payments, then they are in. And, the less fiat currencies are trusted the more likely that seems. It seems to me that world reserve currency favors one nation and it all has to do with confidence. All the other nations have a default reason to favor a neutral, non sovereign cryptocurrency reserve.
Maybe we are talking about different things (if so I apologize) but I do not think any government would want a currency outside of their control. It would make monetary policy impossible. Much like a gold standard. That said there are certainly issues with fiat currencies.In a sense bitcoin is the ultimate fiat currency. Backed by nothing at all.
.
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
I am not sure how they could stop it. All governments are suspect and acceptance is everything. If countries start insisting on crypto payments, then they are in. And, the less fiat currencies are trusted the more likely that seems. It seems to me that world reserve currency favors one nation and it all has to do with confidence. All the other nations have a default reason to favor a neutral, non sovereign cryptocurrency reserve.
This is where the tulip bubble theory starts to run into problems.
Sorry, but you will need to flesh out your reply for me to understand it. ;-{>8
Are you referring to my reply or erikj?
If Bitcoin becomes the world reserve currency, won't it become a self fulfilling phenomenon? That action would devalue all other fiat currencies, thus stabilizing Bitcoin and assuring its future use and value. What might major global sovereigns do to prevent that? What could they do?
It's hard for me to imagine any sovereign, especially China, being trusted to hold a world reserve crypto currency denominated in their fiat monetary units.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
I am not sure how they could stop it. All governments are suspect and acceptance is everything. If countries start insisting on crypto payments, then they are in. And, the less fiat currencies are trusted the more likely that seems. It seems to me that world reserve currency favors one nation and it all has to do with confidence. All the other nations have a default reason to favor a neutral, non sovereign cryptocurrency reserve.
Maybe we are talking about different things (if so I apologize) but I do not think any government would want a currency outside of their control. It would make monetary policy impossible. Much like a gold standard. That said there are certainly issues with fiat currencies.In a sense bitcoin is the ultimate fiat currency. Backed by nothing at all.
.
I am quite certain governments want control of their currencies, but one gets to be the reserve currency and that gives them a very real advantage. It seems to me all other governments would prefer Bitcoin over a currency that the reserve currency printers can manipulate. If other countries want to be paid in Bitcoin, how does anyone stop it? The gold standard no longer applies, so it seems a very real possibility that Bitcoin could become the international currency of choice.
Are you referring to my reply or erikj?
Sorry, erikj. Got confused, senior moment. ;-{>8
If you mean this let me explain what I was saying.
Bitcoin will not become the world's reserve currency. No government would allow a private citizen to create a reserve currency anymore than they would go back to a gold standard (as much as some want that). The Fed and other central banks are working on their own digital currency. I think we will have one in the next 10-20 years or so.
A reserve currency has to be something all central banks accept for clearing transactions. It also has to be something a responsible (big assumption) government manages to preserve its value. Bitcoin cannot be that because it can be controlled by Mr. Nakamura or whoever is setting up the bitcoin mining algorithms. In addition who knows how many other bitcoin like assets will be created. This can cause the value of any one of these to fluctuate wildly. In other words, bitcoin cannot be controlled. It is the opposite reason why gold cannot be a reserve "currency". It is in fixed supply and not under the control of a government. A fixed supply "currency" has some good characteristics (like keeping a government from over-creating money) but also has severe downsides. It creates beggar-thy-neighbor business cycles, severe liquidity crises like the Panic of 1907 and even deflations like in the 1890s that drove farmers to their knees.
Everyone realizes the inevitability of a conveniently created and transferable digital currency. It also might allow monetary policies that do not favor certain people. For example, when the Fed wants to create "money" it buys assets which typically lowers interest rates. This causes bond and stock prices to rise which creates wealth for people holding those assets but not for people who do not. This can make wealth inequality worse which is not what the Fed really wants. It could create a digital currency by simply adding money to everyone's account (assuming everyone has a digital currency account at the Fed). This might be a better way to conduct monetary policy because it reduces distributional consequences.
So in other words I do not see bitcoin becoming a reserve currency but I also see a digital currency on the horizon in the US. This leaves bitcoin and things like it basically a risky asset and not a currency even though some people will use it to transact, especially those who conduct illegal activities they do not want traced.
Sorry I missed you post. Please ignore my lengthy epistle on reserve currencies.
it can be controlled by Mr. Nakamura or whoever is setting up the bitcoin mining algorithms
Satoshi Nakamoto does not control Bitcoin nor do any individuals. The Bitcoin network is organized into nodes all of which are equal in terms of their ability to affect change in the way the network operates. If a majority of nodes choose to implement a change the change becomes standard and any node that declines either stops operating or forks out a new crypto.
Some people have speculated that one of the reasons China hosts so many nodes is that they are trying to build a majority so they can drive BTC in a direction that benefits China, one of which could be to give it a disadvantage against their nationally developed version.
"All" Nakamoto did was publish a paper describing Bitcoin and make its first implementation available to the public in 2009. He mined the first block, which contained some text referring to a bank bailout to suggest that was part of his motivation for creating it. The implementation solved a couple of major problems that were requirements for publicly traded decentralized digital assets to exist so it was pretty groundbreaking stuff.
Yes, all true. My point was just that this sort of asset is created by private parties. You did a nice job describing the mechanics. Nothing stopping others from creating similar "assets". which makes it unlikely it can become a reserve currency. But, stranger things have happened.
Are you referring to my reply or erikj?
Sorry, erikj. Got confused, senior moment. ;-{>8
Bitcoin was designed to compete with the central banking model.
Btc has weaknesses for sure, but the tulip growers didn't experience a four year halving cycle or a two week difficulty adjustment.
Yes, that is true about supply but to the extent that other crypto currencies can (and have) been created doesn't that make them sort of like tulips? You seem to know a lot about these, what happens after they create 21 million bitcoins or whatever the current limit is. Can those in the network all agree to create more? They are still like tulips in the sense that irrational exuberance can create an asset bubble. Many people are investing in bitcoins because they think they will make a fortune in a hurry. Some have. But that is the catalyst of asset bubbles.
Bitcoin gets most of the recognition, and perhaps rightly so. But, there are many other cryptocurrencies and blockchains out there doing things that Bitcoin can't really do very well, and I think much of what we will see in the future is going to be built on these.
Can you print a certificate of a bitcoin you own?
How are bitcoins mined as opposed to buying one?
Can you print a certificate of a bitcoin you own?
How are bitcoins mined as opposed to buying one?
When it comes to which cryptocurrency will be most trusted, it seems size (M) and longevity must give some preferential credibility. Before a currency reaches a threshold in total value, it can't be a real contender. While I am unfamiliar with other crypto currencies, it seems Bitcoin has to be the front runner, or does it have some discernable defects?
Can you print a certificate of a bitcoin you own?
No, but you can print the cryptographic keys associated with the address where that BTC is held and it could be used to transact.
There are no "certificates" for BTC nor is there any data resident on the personal computers of the owners that represent the BTC themselves. All there is is a blockchain copies of which exist on thousands of computers. That blockchain is the ledger for all BTC transactions that have ever happened and the only place they exist.
How are bitcoins mined as opposed to buying one?
Mining a BTC is a prerequisite for transacting with it. All BTC that exist were mined. A portion of those have subsequently been sold, then the buyer sold them again, etc etc. You can buy any amount of those BTC you want via an exchange, or by contacting its owner and negotiating a price. Show him the above print of your public key and he can send you some, which the blockchain will prove out and make record of.