Liberty

Your yearly reminder that the cold season is the perfect time to run distributed computing projects on your CPUs/GPUs/consoles. Extra heat produced just heats your house... My fave is Rosetta@home, a biomedical computational protein design project: https://boinc.bakerlab.org/ Feature piece about David Baker, the head of Baker lab where Rosetta@Home is based: http://discovermagazine.com/2018/nov/all-in-the-fold Another popular project in health research of Folding at Home. Because of what it does, it's particularly efficient to run on GPUs and consoles: https://foldingathome.org/start-folding/ (this one has a version that can run in-browser, so you don't even need to install the app to help: http://nacl.foldingathome.org/ ) But there are many projects, some in physics, math, cryptography, etc: https://en.wikipedia.org/wiki/List_of_distributed_computing_projects Einstein@home's a cool one that looks for gravity waves: https://en.wikipedia.org/wiki/Einstein@Home

https://www.cnbc.com/2018/11/21/hacker-lifts-1-million-in-cryptocurrency-using-mans-phone-number.html

The asset creates some form of value for its customer (ex. coke creates value for a person to enjoy a flavored drink over water, SAP allows a major organization the ability to monitor itself using SAP tools, etc.). If you believe that people will value these services long into the future, it does not matter what currency the company accepts. In this scenario you are not betting on what currency people will pay you in, simply that your company produces a value for its customers. +1. And the bull case for bitcoin is that people will choose it to store value. That thesis could be correct or not. Yes, and for the N'th time, that's totally speculative at this point. I'm not saying it can't happen, I'm saying you guys are gambling rather than having found known digital gold or having divined the IV of a bitcoin and buying it when it's undervalued. Why would someone pick something else rather than bitcoin? There can be lots of reasons. This is all digital, so if the goal is to send money, abstraction layers could be created that make it as easy to use any of the coins, and the one with the lowest fees/lowest latency/highest security/funkiest brand/etc can be used. If the goal is to store value, maybe other coins with characteristics that make them more stable or better can be picked, or excitment picks up for the brand new shiny thing taking lots of demand away from BTC, cratering the price, creating a self-reinforcing panic, reducing the network effect, etc. If somehow weaknesses are found in the crypto math, or sophisticated attackers succeed in putting very well obfuscated backdoors in the code, or if some black swan event scares away miners except for a large state-controlled presence that gets above 50%, etc. The idea isn't even that BTC doesn't stay the biggest one, just that it's not true that crypto supply is limited as long as there are a bunch of small challengers sucking up some of the demand that would otherwise go to BTC. Why do my dollars have value? Because I can spend them to buy the things I need or productive assets, because I got paid in them and pay my taxes in them, and because they aren't changing in value by 20% a day up and down so I can predict pretty well their purchasing power to be able to run my affairs. But I'm not storing value in dollars, I'm using them for transactions.

My post was about forks being dilutive (if they have value). No sure how any of that answers that. The rest is the usual story. I'm saying it's too early to tell if that'll work out that way. Some new fork or brand new coin could come out in 10 years that has characteristics so much more attractive than bitcoin that it could effectively compete away a lot of demand for bitcoin and make price drop, affecting the "store of value" part and the "supply is limited" part. Not really. Productive assets can return cashflow to shareholders via dividends, special dividends, or buybacks, or from an outright sale of the company for cash or some other stock, and if the company does well, those streams can increase over time. That's part of why someone else might want to buy it off you. Gold won't ever give you a cent, so it's all relying on someone else buying it.

Oh, I'm sorry, I didn't zoom out enough. Yeah, it's doing great. That little 80% drop is just normal volatility in this store of value. Valeant's stock is also doing fine. What's sad is that while there's a bunch of early adopters that made a bunch of money, the vast, vast majority of dollars that were put into this probably came during the peak of the mania from maybe 15k to 19k, many buying on credit and spending money they couldn't spare for that lottery ticket. Same story as hot mutual funds in the 1990s... They did really well for a decade, then 90% of their lifetime AUM piled on during the very last period right before they started doing really badly... Anyway, this *is* a value forum, which is why I point out that this is speculation. You can do it if you want, but don't pretend you're investing based on a rational estimate of IV. There's no value investing in gold or modern paintings either.

Yeah, gold sucks too. All commodities are volatile and can be gripped be speculative bubbles and panics. I'm not making a case for gold. But at least it's been around for long enough to judge how it behaves over time and how it does in the face of inflation (which is to say, not as well as productive assets). Bitcoin might become a store of value. I'm saying it's too early to tell, and so far it's not behaving like one, it's behaving like beanie babies (last winter was truly a peak for the ages -- I logged on Twitch to watch a PUBG stream and the guy was chatting about Bitcoin with his chatroom). Denying that is denying the obvious.

That's just another way to say that the value of these is purely speculative and based on someone else being willing to buy it off you when you want to sell, not much on intrinsic value (since there's no cashflow and so far the utility case is a fairly minor part of the story and trading). If I fork it alone in my basement and nobody knows about it, I won't find sellers and won't be able to make a market. If a large group within a big coin community makes a fork, people will make a market and start buying and selling the thing giving it value. There's no intrinsic value, but the dollar amount that people are willing to put into a thing is limited, which is why I'm saying that these forks are dilutive (if they weren't, they'd be free money). So my basement fork that nobody knows about isn't really dilutive because nobody spends anything on it. But the bitcoin cash fork is dilutive because suddenly thousands of people might start speculating in it and use resources in it that they would otherwise have used on ethereum or bitcoin, leaving less resources to cash people out who are trying to sell their BTC or ETH, affecting the price of those. There's no such thing as a free lunch, as Heinlein would say.

I was saying that right now you can't know if it'll become a store of value someday. The characteristics of "store of value" (at least to me) imply reliability and stability and battle-tested robustness and such. Bitcoin isn't at the stage yet, and what we've seen so far is the opposite of that (volatility, uncertainty, hacks, short track record, everything rapidly changing, etc).

Bitcoin isn't exactly doing great right now either... For a while Litecoin, BCH, XRP and ETH and others were stars too, it's not like no other coin had success (even if temporary). When your "store of value" is down 80% in a year, after being up hundreds of percents before, maybe the value isn't being stored, but rather the tulip bulbs are being ferociously traded back and forth and speculated on because nobody can know what the thing is actually worth but everybody hopes that they can be on the "ground floor" of this new-age MLM. Even the utility of sending money anywhere around the world is pretty theoretical for most people at this point when you never know if your account will be worth 20% more or 20% less a week from now...

It's not dilutive, but it isn't necessarily additive either. You can go home tonight and write a script to fork bitcoin a billion times and you will have a billion worthless forks without effecting Bitcoin at all. I wasn't talking about a private fork, but the official forks like bitcoin cash that had wider support. People woke up and now had a new coin in their accounts, and its value wasn't zero. If it's not dilutive, then they should just keep doing those.

I bet gold (or any other "store of value" assets) had the same traits as BTC at their early stages of being adopted as a store of value. See my perspective on this matter: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/what-are-cryptocurrencies-(ontological-perspective)/msg320343/#msg320343 Of course, because BTC is at a very early stage, the possible range of outcomes is extremely wide, hence the risk / speculative nature of investing in BTC. It may not turn out to be a good store of value, but fundamentally speaking, I don't think you can claim that it CAN'T be a store of value. The thesis is that if it DOES, it will be worth as much as gold, if not more. We're agreeing. I't speculation at this point, not a store of value.

Oh, now we have Mr. Sarcasm here. That makes him sound superior. Great. If you buy something that doesn't produce any cashflow, you're just hoping to be able to sell it to someone else for a higher price later. That's speculation. You can do that if you want, some people are good at it, at riding momentum trends and predicting supply & demand... but don't pretend it's investing, and don't pretend that you know that something this volatile and new, in constant flux, is a "store of value". Yeah, but you don't know it's at 1% of the price of gold. You just made up that dividing the price of the market cap of one by the other was a way to value it, but nothing says there has to be a relationship between the two. That's like saying "people eat vegetables and they eat meat. Let's divide the market cap of meat by the market cap of vegetables to see which one is undervalued." It's not dilutive? So you get the fork for free! Great, let's fork it a thousand times and create all this value out of nowhere, you just found the new way to get rich with crypto!

I cheapen the conversation? Dude, this asset is down 80%, was up hundreds of percents, was moving 20%+ a day every day last winter and everybody on every channel and every website was only talking about that. I'm not exactly the one who's bringing speculation into the conversation. Most of the activity around BTC was clearly speculation, and now that the price is down, we're seeing attention drain away from it just like it did from breanie babies. Functionality remains and it'll probably turn into something more useful over time, but the scarcity argument clearly was one used by speculators to explain why price HAD to keep rising. The scarcity doesn't help you much when it comes to just transferring money or other "utility" arguments for it. If you're looking for a store of value over long periods, then why would you look at BTC? It has no track record, has been wildly volatile and regulatory conditions are still fuzzy in many places and for many things. Productive assets have a track record of doing well over time in real terms, so they're a good way to store value against inflation, and even gold, while not productive, at least has a long track record of doing ok.

"If a Kremlin officer is allowed to run Interpol, it will have no credibility at all. Russia already abuses it to persecute political enemies. It's putting an arsonist in charge of the fire department." "It's a good example of the failure of engagement. Inviting dictatorships into free world institutions spreads their corruption, not liberalism or justice." "The Nazis took over Interpol in 1938 and it was run by SS generals. If its leadership is now handed over to a general from Putin's criminal dictatorship, civilized nations must again abandon it. Dark days."

I don't agree with your premise of painting rocks, so I disagree with the rest too. In the case of Bitcoin, the code is literally open source and can be (and has been) forked. You can get the same utility with these forks, or they could be made even better and drain supply away from the original at some point. Someone wanting to put their money in crypto has a growing target area to select from, while someone who wants gold doesn't (apart from mining inflation), so the scarcity argument doesn't play quite the same. The molecular makeup of gold gives it properties that painted rocks don't have, and someone can't just make something appears that looks, feels, behave, in exactly the same way as gold to the molecular level the way that software can be forked. Not that gold is that great to begin with, I prefer productive assets, but this is as far as comparing it to crypto.

One big difference that I see between cryptocurrencies and gold is that you can't make new versions of gold to increase the total supply of "gold-like" things, while you can always (and they do) create new cryptocyrrencies to increase the total supply of "bitcoin-like and ethereum-like" things in circulation even if the supply within once currency is limited. While you're generally correct about gold (there is incremental inflation mined each year and it can be faked), I couldn't disagree more with the notion that new crypto dilute bitcoin. You can argue that a new consensus mechanism may overtake proof of stake as the best for judgment resistance. But the notion that bitcoincash#3 dilutes bitcoin is a stretch argument. It dilutes it if you're trying to speculate in it and see price raise based on scarcity. Not if you just want the utility of sending money.

But why would it be?

One big difference that I see between cryptocurrencies and gold is that you can't make new versions of gold to increase the total supply of "gold-like" things, while you can always (and they do) create new cryptocyrrencies to increase the total supply of "bitcoin-like and ethereum-like" things in circulation even if the supply within once currency is limited.

:o But are you sure you're comparing an ounce of gold with an ounce of bitcoin?

Are the crypto bulls here still pounding the tables or did they change their minds?

What were interest rates when Buffett bought WaPo shares?

https://www.jonassoftware.com/About_Us/Latest_News/Jonas_Software_Announces_the_Acquisition_of_Leonar

??? Totally irrational way not only to think about "house money", but about investing in general, which is worse.

Come to the CSU AGM in Toronto next spring ;)

New post about a bunch of things: http://brooklyninvestor.blogspot.com/2018/11/brk-corporate-governance-msft-market.html