The Bitcoin / Crypto Currency Thread

Finance
667

Because there’s nothing special about Bitcoin – it’s a cryptocurrency like any other. It’s just as stupid as Etherium and Doge and a thousand others that have been and will continue to be created out of thin air (ether?) every day. The whole idea of cryptocurrency is horrendously stupid, not only because it’s entirely unnecessary, but also because of how much electricity it is wasting. It’s the Dutch tulip of the 21st century. It’s a black hole without the Hawking radiation. The only thing Bitcoin has going for it is that it was the original implementation – created the market – and it managed to stay the most popular (by market cap). But being the most popular amongst fools and charlatans is nothing to be proud of.

Even Ethereum is technologically better. Bitcoin should have gone the way of the Dodo. And for anyone who forgets, Doge (and over 100 others) was created as a joke, a parody of cryptocurrency, and yet people keep falling for it.

Except in this case they’re trading something that has no underlying or future value.

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668

Calling something “stupid” is just name-calling instead of making an argument.

What is the underlying value of gold? Or the option to buy 100 shares of TSLA at $300 before April 1, 2024?

Most financial products do not have intrinsic value. Even shares of common stock, which supposedly give you some right to name the management of the company, do not always.

Most publicly traded stocks have only one class of common stock, but there are plenty of examples other than Alphabet of companies with multiple share classes. There are several reasons why a company might prefer multiple share classes, but the most common reason has to do with founders and company insiders maintaining control over the company.

669

I explained my reasoning. It is literally stupid, because there’s no limit on how many cryptocurrencies can exist. Anyone can create a new one at any time with a few bits of effort.

Huh? What are you talking about?

Gold has practical applications – industrial, jewelry, healthcare, electronics, etc. It can be used as a pretty paperweight. Some forms of gold are legal tender.

Stock options and shares have value because of book value and current and future profits. The case of GOOG vs GOOGL is again, even though one class doesn’t give you voting rights, it still entitles you to book value and current and future profits.

There’s no current or future profit in Bitcoin or any other cryptocurrency. The only reason to buy it now is the hope that a greater fool will buy it in the future at a higher price. It’s the definition of a pyramid scheme.

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670

I must be an idiot - don’t answer that one, I already know. But these bitcoin ETFs have me really puzzled. Why pay 0.25-1.5% expense ratio and possibly trading fees to hold bitcoins in ETFs instead of buying them and holding in my digital wallet directly? Except ETF is likely even less liquid than holding BTC in wallet. It sounds like buying an ETF to hold one specific equity. Pay fees and trade less quickly for holding the same thing? I could see it if it were a basket of cryptocurrencies. But just for holding bitcoins, what’s the point?

P.S.: Not even going into how sound BTC is as investment.

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671

Behind A pay wall, but the first few lines tell the story

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672

Makes sense that bogleheads doesn’t want it either.

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673

The other part of the story about the “monster start” implies that many people are interested in it. Other reputable companies like Fidelity are coming out with products. To ban all discussion is paternalistic nonsense.

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674

I just ran across this description of FBTC on the Fidelity website. I have not studied it yet, but it seems like a good resource to answer questions about the new products. There are probably discussions of other ETFS at their issuing companies’ websites.

https://www.fidelity.com/etfs/fbtc

Introducing the Fidelity®Wise Origin® Bitcoin Fund (FBTC)

Get easier exposure to the price of bitcoin—without buying bitcoin directly—in brokerage, trust, and tax-advantaged accounts.

Get started

This product is for investors with a high risk tolerance. It invests in a single asset, bitcoin, which is highly volatile and can become illiquid at any time. View prospectus

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675

Plenty of fools around!

Fidelity is a private company owned by the CEO and former employees. Vanguard is customer-owned and has prior history of ethics-driven decisions. Bogleheads is a privately owned and volunteer-run website. And all of them are free to do as they wish. You are free to start your own forum and discuss whatever you want. IMO the discussion of these ETFs is no different than discussion of Bitcoin itself, and the internet is full of such discussions.

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676

Let me introduce you to the small cap sector. There are so so many stocks where book value is worthless (goodwill or intangibles) or negative, and also unprofitable. AMC has -$2B in shareholders equity and lost money steadily until just now for Q3. Sure there’s a chance but there’s a chance Bitcoin gets used for currency somehow too if you’re willing to entertain unlikely future scenarios.

Then again, a whole lot of speculative stocks are greater fool situations

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677

Yeah, a meme stock for a company that should have ceased to exist if it wasn’t for probably the same fools that also like Bitcoin. HODL is the underlying motto. Get in before everyone else, pump it up, then dump it before everyone else also dumps it.

I think that’s not just unlikely, it’s impossible, because it’s both impractical and unnecessary. Other cryptocurrencies are more suitable than Bitcoin to be used for currency. Even more suitable are CBDCs that don’t even use a ledger, which would makes them not cryptocurrencies, just digital records no better than what everyone is using already. The whole thing is a solution in search of a problem, and the problem doesn’t exist.

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678

Fiat currency dilution / inflation is a real problem. Enforced scarcity is valuable, which is what BTC provides, just like that’s what the secret service tries to provide by cracking down on US$ counterfeiters.

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679

Reading the FBTC prospectus.

Here’s their opening statement

Fidelity Wise Origin Bitcoin Fund (the “Trust”) is an exchange-traded product that issues shares of beneficial interest (the “Shares”) that trade on the Cboe BZX Exchange, Inc. (the “Exchange”). The Trust’s investment objective is to seek to track the performance of bitcoin, as measured by the performance of the Fidelity Bitcoin Reference Rate (the “Index”), adjusted for the Trust’s expenses and other liabilities.

Here is their marketing statement, not from the prospectus, but from

Potential pros of spot bitcoin ETPs

May make crypto more accessible to the public

Those new to crypto can find it hard to understand the details behind buying bitcoin and other cryptocurrencies. Which platform should I use to buy crypto? Was my purchase recorded on the blockchain? Where are the coins I just bought stored? These questions can be daunting for first-timers.

Then, once you’ve made your purchase, there are financial planning considerations that differ from those of traditional assets. For example, when it comes to reporting taxes for traditional assets, your gains and losses can often be synced to tax preparation software with a single click through your brokerage platform. Reporting crypto taxes, however, may require uploading documents to your tax preparation software, as the ability to sync seamlessly with platforms offering crypto may not yet exist. Apart from taxes, there are also unique steps necessary for fitting crypto into your estate plan.

These factors may make those who are unfamiliar with crypto’s nuances hesitant to invest. They can also make it harder for financial advisors to incorporate crypto into an investment plan for clients.

Buying spot bitcoin ETPs, however, operates much like buying an index fund or sector ETF. Investors can complete everything through more traditional routes, including brokerage accounts, IRAs, and trusts, which simplifies many of the questions above. Tax and estate planning considerations may also be simpler to manage through this route.

Note: Despite the potential advantages, remember that spot bitcoin ETPs hold bitcoin as their underlying asset. Bitcoin and other cryptocurrencies are highly volatile and may be more susceptible to market manipulation than other securities.

Nevertheless, in general, the ETPs remove significant hurdles for investors who want exposure to bitcoin.

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680

KEY TAKEAWAYS

  • Bitcoin has value because it can function as a store of value and a unit of exchange. It also demonstrates six key attributes that enable its use in an economy.
  • The definition of value in a currency has changed over centuries from physical attributes to the velocity of its use in an economy.
  • Bitcoin demonstrates some attributes for a currency, but its primary source of value lies in its restricted supply and increasing demand.
681

It’s a problem for people on fixed income that isn’t inflation-adjusted. For everyone else it’s only a problem if they don’t understand the purpose of inflation, which is to prevent something even worse – stagnation and deflation.

It provides scarcity in exchange for wild fluctuations in value. That’s hardly a solution.

It also has a limit on how much of it can exist, and transaction fees which make it useless for small transactions, both of which prevent it from being useful as a currency.

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682

That right there is admission that it’s a pyramid scheme. Once everyone knows that “value” comes from increasing demand, or simply once that demand is satisfied, the ball should drop. This is why the future value of Bitcoin is zero.

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683

When appropriately viewed from the perspective of the One True Store of Value, the BTC price in dollars represents the exchange rate between these currencies. The wild fluctuations are surely the fault of the uncertainty around the wars and economic troubles of our fiat system, not anything to do with speculators in the Bitcoin market :wink:

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684

:smiley: :laughing: :rofl:

685

Isn’t that a good thing normally, you know to prevent people from investing in things they know nothing about?

Still, it’s true that it could make including bitcoin into an investment plan and tax compliance easier. To each their own. Everybody should be free to choose how they’ll blow up as long as I won’t need to bail them out later.

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686

That statement is very re-assuring LOL but at least investors should not complain about any outcome after that.

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