Bitcoin is the promised reserve asset? - September 2020

"Bitcoin's value largely come from a widespread assumption that certain promises will be kept forever. One of those promises is the block reward. If that is ever changed - no matter how slightly - then Bitcoin has a NPV of zero."

submitted by mkgll to btc [link] [comments]

Joe Weisenthal (Bloomberg): Until true anonymity (or near anonymity) is developed into Bitcoin, it's still incomplete, and not delivering on its promise. Without anonymity, there's no censorship resistance, and no store of value.

Joe Weisenthal (Bloomberg): Until true anonymity (or near anonymity) is developed into Bitcoin, it's still incomplete, and not delivering on its promise. Without anonymity, there's no censorship resistance, and no store of value. submitted by geonic_ to Monero [link] [comments]

03-30 06:43 - 'If there is value in utility, ETH and XTZ are useful in ways BTC is not. ETH is so well established that 2.0 looks too promising to fail and XTZ is already doing really well in tokenizing assets.' by /u/jefe_el removed from /r/Bitcoin within 49-59min

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If there is value in utility, ETH and XTZ are useful in ways BTC is not. ETH is so well established that 2.0 looks too promising to fail and XTZ is already doing really well in tokenizing assets.
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08-19 17:46 - 'Simplest I can explain is this. Things must either have an Intrinsic value (direct enjoyability) or a redemption value (someone promised you something else, if you present the coupon). / In absence of these two, the thing is wo...' by /u/stopiyt removed from /r/Bitcoin within 81-91min

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Simplest I can explain is this. Things must either have an Intrinsic value (direct enjoyability) or a redemption value (someone promised you something else, if you present the coupon).
In absence of these two, the thing is worthless. And bitcoin has neither.
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Bitcoin could become a promising solution for Venezuela's hyperinflation because the “government can’t control its value". Any Bitcoin mines are now an underground operation as the government tries to maintain financial control by outlawing the activity. What an age we live in.

Bitcoin could become a promising solution for Venezuela's hyperinflation because the “government can’t control its value submitted by dantesshoes to Bitcoin [link] [comments]

#crypto #cryptonews #bitcoin #Lightning Network total value locked continues to plummet as BTC investors leave for better alternatives after years and years of broken promises

#crypto #cryptonews #bitcoin #Lightning Network total value locked continues to plummet as BTC investors leave for better alternatives after years and years of broken promises submitted by vegasbooty to Cryptoandme [link] [comments]

I've thinking about this crypto community and how it's stifled itself as being the promise of a store of value, when it could be so much more. /r/Bitcoin

I've thinking about this crypto community and how it's stifled itself as being the promise of a store of value, when it could be so much more. /Bitcoin submitted by ABitcoinAllBot to BitcoinAll [link] [comments]

Bitcoin Agreement Promises To Break Impasse, Leads To Jump In Value

Bitcoin Agreement Promises To Break Impasse, Leads To Jump In Value submitted by Chakra_Scientist to Bitcoin [link] [comments]

Wormhole promises to propel the Bitcoin BCH network forward, but in reality, its another attempt to deviate from the primary purpose of Bitcoin BCH ( peer-to-peer electronic cash system), and on further inspection, it will destroy the value of the network. We dont need Wormhole WHC! /r/btc

Wormhole promises to propel the Bitcoin BCH network forward, but in reality, its another attempt to deviate from the primary purpose of Bitcoin BCH ( peer-to-peer electronic cash system), and on further inspection, it will destroy the value of the network. We dont need Wormhole WHC! /btc submitted by ABitcoinAllBot to BitcoinAll [link] [comments]

Wormhole promises to propel the Bitcoin BCH network forward, but in reality, its another attempt to deviate from the primary purpose of Bitcoin BCH ( peer-to-peer electronic cash system), and on further inspection, it will destroy the value of the network. We dont need Wormhole WHC! /r/btc

Wormhole promises to propel the Bitcoin BCH network forward, but in reality, its another attempt to deviate from the primary purpose of Bitcoin BCH ( peer-to-peer electronic cash system), and on further inspection, it will destroy the value of the network. We dont need Wormhole WHC! /btc submitted by cryptoallbot to cryptoall [link] [comments]

Redditor promised to "eat a hat" if bitcoin's value decreased by 2014. Bitcoin crashed, he kept his promise.

Redditor promised to submitted by ClassyRedneck to InternetLegends [link] [comments]

Bitcoin could become a promising solution for Venezuela's hyperinflation because the government cant control its value". Any Bitcoin mines are now an underground operation as the government tries to maintain financial control by outlawing the activity. What an age we live in.

Bitcoin could become a promising solution for Venezuela's hyperinflation because the government cant control its value submitted by HiIAMCaptainObvious to BitcoinAll [link] [comments]

"The only value of bitcoin is what the other guy'll pay for it." - Jamie Dimon. You hit the nail on the head there Jamie. This is consensus driven money not government backed (inflationary) promises. /r/Bitcoin

submitted by BitcoinAllBot to BitcoinAll [link] [comments]

Putting $400M of Bitcoin on your company balance sheet

Also posted on my blog as usual. Read it there if you can, there are footnotes and inlined plots.
A couple of months ago, MicroStrategy (MSTR) had a spare $400M of cash which it decided to shift to Bitcoin (BTC).
Today we'll discuss in excrutiating detail why this is not a good idea.
When a company has a pile of spare money it doesn't know what to do with, it'll normally do buybacks or start paying dividends. That gives the money back to the shareholders, and from an economic perspective the money can get better invested in other more promising companies. If you have a huge pile of of cash, you probably should be doing other things than leave it in a bank account to gather dust.
However, this statement from MicroStrategy CEO Michael Saylor exists to make it clear he's buying into BTC for all the wrong reasons:
“This is not a speculation, nor is it a hedge. This was a deliberate corporate strategy to adopt a bitcoin standard.”
Let's unpack it and jump into the economics Bitcoin:

Is Bitcoin money?

No.
Or rather BTC doesn't act as money and there's no serious future path for BTC to become a form of money. Let's go back to basics. There are 3 main economic problems money solves:
1. Medium of Exchange. Before money we had to barter, which led to the double coincidence of wants problem. When everyone accepts the same money you can buy something from someone even if they don't like the stuff you own.
As a medium of exchange, BTC is not good. There are significant transaction fees and transaction waiting times built-in to BTC and these worsen the more popular BTC get.
You can test BTC's usefulness as a medium of exchange for yourself right now: try to order a pizza or to buy a random item with BTC. How many additional hurdles do you have to go through? How many fewer options do you have than if you used a regular currency? How much overhead (time, fees) is there?
2. Unit of Account. A unit of account is what you compare the value of objects against. We denominate BTC in terms of how many USD they're worth, so BTC is a unit of account presently. We can say it's because of lack of adoption, but really it's also because the market value of BTC is so volatile.
If I buy a $1000 table today or in 2017, it's roughly a $1000 table. We can't say that a 0.4BTC table was a 0.4BTC table in 2017. We'll expand on this in the next point:
3. Store of Value. When you create economic value, you don't want to be forced to use up the value you created right away.
For instance, if I fix your washing machine and you pay me in avocados, I'd be annoyed. I'd have to consume my payment before it becomes brown, squishy and disgusting. Avocado fruit is not good money because avocadoes loses value very fast.
On the other hand, well-run currencies like the USD, GBP, CAD, EUR, etc. all lose their value at a low and most importantly fairly predictible rate. Let's look at the chart of the USD against BTC
While the dollar loses value at a predictible rate, BTC is all over the place, which is bad.
One important use money is to write loan contracts. Loans are great. They let people spend now against their future potential earnings, so they can buy houses or start businesses without first saving up for a decade. Loans are good for the economy.
If you want to sign something that says "I owe you this much for that much time" then you need to be able to roughly predict the value of the debt in at the point in time where it's due.
Otherwise you'll have a hard time pricing the risk of the loan effectively. This means that you need to charge higher interests. The risk of making a loan in BTC needs to be priced into the interest of a BTC-denominated loan, which means much higher interest rates. High interests on loans are bad, because buying houses and starting businesses are good things.

BTC has a fixed supply, so these problems are built in

Some people think that going back to a standard where our money was denominated by a stock of gold (the Gold Standard) would solve economic problems. This is nonsense.
Having control over supply of your currency is a good thing, as long as it's well run.
See here
Remember that what is desirable is low variance in the value, not the value itself. When there are wild fluctuations in value, it's hard for money to do its job well.
Since the 1970s, the USD has been a fiat money with no intrinsic value. This means we control the supply of money.
Let's look at a classic poorly drawn econ101 graph
The market price for USD is where supply meets demand. The problem with a currency based on an item whose supply is fixed is that the price will necessarily fluctuate in response to changes in demand.
Imagine, if you will, that a pandemic strikes and that the demand for currency takes a sharp drop. The US imports less, people don't buy anything anymore, etc. If you can't print money, you get deflation, which is worsens everything. On the other hand, if you can make the money printers go brrrr you can stabilize the price
Having your currency be based on a fixed supply isn't just bad because in/deflation is hard to control.
It's also a national security risk...
The story of the guy who crashed gold prices in North Africa
In the 1200s, Mansa Munsa, the emperor of the Mali, was rich and a devout Muslim and wanted everyone to know it. So he embarked on a pilgrimage to make it rain all the way to Mecca.
He in fact made it rain so hard he increased the overall supply of gold and unintentionally crashed gold prices in Cairo by 20%, wreaking an economic havoc in North Africa that lasted a decade.
This story is fun, the larger point that having your inflation be at the mercy of foreign nations is an undesirable attribute in any currency. The US likes to call some countries currency manipulators, but this problem would be serious under a gold standard.

Currencies are based on trust

Since the USD is based on nothing except the US government's word, how can we trust USD not to be mismanaged?
The answer is that you can probably trust the fed until political stooges get put in place. Currently, the US's central bank managing the USD, the Federal Reserve (the Fed for friends & family), has administrative authority. The fed can say "no" to dumb requests from the president.
People who have no idea what the fed does like to chant "audit the fed", but the fed is already one of the best audited US federal entities. The transcripts of all their meetings are out in the open. As is their balance sheet, what they plan to do and why. If the US should audit anything it's the Department of Defense which operates without any accounting at all.
It's easy to see when a central bank will go rogue: it's when political yes-men are elected to the board.
For example, before printing themselves into hyperinflation, the Venezuelan president appointed a sociologist who publicly stated “Inflation does not exist in real life” and instead is a made up capitalist lie. Note what happened mere months after his gaining control over the Venezuelan currency
This is a key policy. One paper I really like, Sargent (1984) "The end of 4 big inflations" states:
The essential measures that ended hyperinflation in each of Germany,Austria, Hungary, and Poland were, first, the creation of an independentcentral bank that was legally committed to refuse the government'sdemand or additional unsecured credit and, second, a simultaneousalteration in the fiscal policy regime.
In english: *hyperinflation stops when the central bank can say "no" to the government."
The US Fed, like other well good central banks, is run by a bunch of nerds. When it prints money, even as aggressively as it has it does so for good reasons. You can see why they started printing on March 15th as the COVID lockdowns started:
The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.
In english: We're going to keep printing and lowering rates until jobs are back and inflation is under control. If we print until the sun is blotted out, we'll print in the shade.

BTC is not gold

Gold is a good asset for doomsday-preppers. If society crashes, gold will still have value.
How do we know that?
Gold has held value throughout multiple historic catastrophes over thousands of years. It had value before and after the Bronze Age Collapse, the Fall of the Western Roman Empire and Gengis Khan being Gengis Khan.
Even if you erased humanity and started over, the new humans would still find gold to be economically valuable. When Europeans d̶i̶s̶c̶o̶v̶e̶r̶e̶d̶ c̶o̶n̶q̶u̶e̶r̶e̶d̶ g̶e̶n̶o̶c̶i̶d̶e̶d̶ went to America, they found gold to be an important item over there too. This is about equivalent to finding humans on Alpha-Centauri and learning that they think gold is a good store of value as well.
Some people are puzzled at this: we don't even use gold for much! But it has great properties:
First, gold is hard to fake and impossible to manufacture. This makes it good to ascertain payment.
Second, gold doesnt react to oxygen, so it doesn't rust or tarnish. So it keeps value over time unlike most other materials.
Last, gold is pretty. This might sound frivolous, and you may not like it, but jewelry has actual value to humans.
It's no coincidence if you look at a list of the wealthiest families, a large number of them trade in luxury goods.
To paraphrase Veblen humans have a profound desire to signal social status, for the same reason peacocks have unwieldy tails. Gold is a great way to achieve that.
On the other hand, BTC lacks all these attributes. Its value is largely based on common perception of value. There are a few fundamental drivers of demand:
Apart from these, it's hard to argue that BTC will retain value throughout some sort of economic catastrophe.

BTC is really risky

One last statement from Michael Saylor I take offense to is this:
“We feel pretty confident that Bitcoin is less risky than holding cash, less risky than holding gold,” MicroStrategy CEO said in an interview
"BTC is less risky than holding cash or gold long term" is nonsense. We saw before that BTC is more volatile on face value, and that as long as the Fed isn't run by spider monkeys stacked in a trench coat, the inflation is likely to be within reasonable bounds.
But on top of this, BTC has Abrupt downside risks that normal currencies don't. Let's imagine a few:

Blockchain solutions are fundamentally inefficient

Blockchain was a genius idea. I still marvel at the initial white paper which is a great mix of economics and computer science.
That said, blockchain solutions make large tradeoffs in design because they assume almost no trust between parties. This leads to intentionally wasteful designs on a massive scale.
The main problem is that all transactions have to be validated by expensive computational operations and double checked by multiple parties. This means waste:
Many design problems can be mitigated by various improvements over BTC, but it remains that a simple database always works better than a blockchain if you can trust the parties to the transaction.
submitted by VodkaHaze to badeconomics [link] [comments]

09-02 20:12 - 'but for it to continue...? / What about the fees and confirmation times? / It seems it's becoming more of an asset class investment for investors to park their value. / BCC seems to be promising the currency adopti...' by /u/GalacticFlotsam removed from /r/Bitcoin within 67-77min

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..., but for it to continue...?
What about the fees and confirmation times?
It seems it's becoming more of an asset class investment for investors to park their value.
BCC seems to be promising the currency adoption vision and carrying on the spirit of the Satoshi white paper.
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Bitcoin lover keeps promise to eat his hat if value falls below $1,000

Bitcoin lover keeps promise to eat his hat if value falls below $1,000 submitted by ijmolder93 to dogecoin [link] [comments]

Bitcoin Agreement Promises To Break Impasse; Currency Jumps In Value

Bitcoin Agreement Promises To Break Impasse; Currency Jumps In Value submitted by HiroJa to DogeNews [link] [comments]

FORBES: Bitcoin Agreement Promises To Break Impasse, Leads To Jump In Value

FORBES: Bitcoin Agreement Promises To Break Impasse, Leads To Jump In Value submitted by ether_11 to btc [link] [comments]

Bitcoin Agreement Promises To Break Impasse, Leads To Jump In Value

Bitcoin Agreement Promises To Break Impasse, Leads To Jump In Value submitted by BitcoinAllBot to BitcoinAll [link] [comments]

Bitcoin Agreement Promises To Break Impasse; Currency Jumps In Value

Bitcoin Agreement Promises To Break Impasse; Currency Jumps In Value submitted by JamieAlmeda to betbitcoins [link] [comments]

Bitcoin’s real value lies in the disruption it promises

Bitcoin’s real value lies in the disruption it promises submitted by cryptocurrencylive to CryptoCurrencyLive [link] [comments]

🔥Not your keys, not your coins : Why you should not use Paypal for Bitcoin

Today, PayPal announced that they will be launching a cryptocurrency digital wallet for buying, selling and storing Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
This confirms rumors which circulated earlier this year, and it is seen as a significant milestone by many in the community.
A milestone it may be, but it will impact millions of daily users who have, until now, never considered getting into cryptocurrency. For them, PayPal will be the leading authority in a space that it has long sought to discredit.
Over 221 Billion dollars were transacted in Q2 of 2020 using Paypal. That represents a rise of 10% in volume in just six months. PayPal is growing and dominating online payments as well as other services such as credit and insurance.
It has a long-established reputation of occasionally freezing user funds and censoring payments that conflict with its outlook but the payments giant continues to hold relevance where Bitcoin should have long overtaken it. Perhaps this news marks the beginning of a transition?
Is PayPal’s announcement good news for Bitcoin? Until very recently, PayPal was anti-crypto. Writing in 2018, ex-CEO Bill Harris called Bitcoin “the greatest scam ever”, so what’s changed?
This sudden turnaround is encouraging, especially as private companies like Microstrategy and Square make grandiose announcements about their own crypto diversification.
Should the community embrace them with open arms? After all, this is the start of mass adoption we’ve all been waiting for, right?
When a household brand like PayPal starts selling Bitcoin, it’s probably not because they want to spur healthy adoption. In the press release announcing their new cryptocurrency service, PayPal sends out mixed messages.
On one hand, the service will be entirely custodial, meaning users will not have the key to their own coins, while on the other they intend to “provide account holders with educational content to help them understand the cryptocurrency ecosystem”. The idea that anyone informed about bitcoin would agree to not holding their private keys might indicate that this educational content will overlook the fundamental rule of “Not your keys; not your coins”.
If millions of newcomers are onboarded to Bitcoin by PayPal, there could be a very serious information gap that jeopardizes their experience and undermines key principles of cryptocurrency.
This statement from their FAQ is, in practical terms, false: “You own the Cryptocurrency you buy on PayPal but will not be provided with a private key.” No-one should consider money held entirely by a third party as owned by them.
Time after time, exchanges have lost user funds, often leaving them with no recourse. A benefit for some will be a promise of greater regulation, where funds can be insured and new users may feel more comfortable than dealing with cryptocurrency exchanges directly, but they will be restricted from actually utilizing their coins. The only reasons to own Bitcoin which cannot be used, would be to invest for the long term, which is incredibly reckless to do when your funds are held by a third party, or speculate on its price, which again, would be introducing the masses to financial mechanisms they do not understand.
Is PayPal positioned to be a cryptocurrency leader? As it steps into the forefront, PayPal will be closely watched by companies, institutions, and consumers. While they can boast of “digital payments expertise”, they have historically taken an aggressive stance against users who bought cryptocurrency on exchanges, citing their acceptable use policy, forbidding transactions which “involve currency exchanges or check cashing businesses”.
The fact that this clause remains in their policy suggests that they intend to limit users to use only their platform for cryptocurrency, stifling competition and preventing users from ever withdrawing their cryptocurrency to the safety of a wallet they control the keys to. That said, there is something to be said for PayPal’s statement that they will “enable cryptocurrency as a funding source for digital commerce at its 26 million merchants”. Currently, the options for cryptocurrency funding are in their infancy, and Bitcoin loans could see future growth. There is only one thing about PayPal’s announcement that long-term hodlers will be celebrating today: the pump in price. Long-term, if PayPal proceeds without consulting the community and letting their users control their own keys, it offers no value to the space.
The greatest risk is that the clout they carry in traditional electronic payments will be interpreted as expertise in crypto. This would threaten the expert advice so carefully crafted by our community, which could be drowned out by the misinformed masses that PayPal brings to the space. For now, no-one can tell how it will turn out, but there are big concerns to address before informed users will turn to PayPal.
Welcome PayPal’s initiative with open arms, but by no means look to them for leadership. At best, this announcement indicates that they may fear sinking into irrelevance.
*Do not use PayPal for Bitcoin; there are many other places to buy crypto which will let you keep ownership of your coins. *
PayPal is conceding to Bitcoin, and the many other aspirational, educational projects within the community should be highlighted to prevent newcomers from falling into a trap of trusting one of Bitcoin’s greatest long-term adversaries.
Source : https://blog.trezor.io/why-you-should-not-use-paypal-for-bitcoin-f6e2d436ca96
submitted by mohiemen to CryptoCurrency [link] [comments]

Bitcoin Q&A: Trust, promise of value, and intrinsic utility The Promise of Bitcoin: Alternative Currencies and Anonymous Markets by Yaël Ossowski React CryptoCurrency Tutorial - Display Exchange Data with ... Bitcoin reversal Live Paycoin: The Scam that Was

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Bitcoin Q&A: Trust, promise of value, and intrinsic utility

Build a Beautiful CryptoCurrency App: https://goo.gl/cuH8sp Written tutorial: https://goo.gl/7tkmki https://coursetro.com for more awesome videos! Paycoin and PayBase promised price floors of $20 USD a coin, said business commitments of hundreds of businesses. Today on this special episode I look back into what was paycoin and how it was ... This video is unavailable. Watch Queue Queue A presentation on the prospects of Bitcoin and the peaceful nature of online anonymous markets by journalist and European Students For Liberty Program Manager Yaël Ossowski. Hosted in Vienna ... Wrapped Bitcoin (wBTC) is an Ethereum-based token that represents 1 Bitcoin. The price of 1 wBTC is pegged to the price of 1 BTC. If Bitcoin is trading for $9,200 - for example - then wBTC is also ...

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