Cryptocurrencies

[Parsad]

Fed chair said today that they are looking very closely at issuing a digital dollar. If central banks issue digital currencies, does that upend BTC and everything esle? Or are people attracted to crypto because of its decentralized nature and supposed anonymity? I struggle to understand the bull case for crypto. The ledger technology seems to have real utility but I don't really grasp how these are solving a lot of problems unless one really fears inflation.

 

I work with a lot of retail investors. My totally subjective view is the fervor for crypto is similar to 2017, maybe slightly dampened because there have been other hot assets running up simultaneously. You know its crazy when construction workers start asking about it... LOL (and I've had several).

 

The ledger technology can be adapted for any digital currency, not only BTC or the existing batch of crypto.  So that technology is the backbone of crypto and what is important.  BTC itself has no value...similar to internet stocks 20 years ago with no supporting cash flow or earnings.  BTC is inflated by speculation and demand...nothing backing or supporting it...it will eventually turn into nothing!  Most of the money being "invested" in crypto will be lost by their owners.  Cheers!

[TwoCitiesCapital]

Fed chair said today that they are looking very closely at issuing a digital dollar. If central banks issue digital currencies, does that upend BTC and everything esle? Or are people attracted to crypto because of its decentralized nature and supposed anonymity? I struggle to understand the bull case for crypto. The ledger technology seems to have real utility but I don't really grasp how these are solving a lot of problems unless one really fears inflation.

 

I work with a lot of retail investors. My totally subjective view is the fervor for crypto is similar to 2017, maybe slightly dampened because there have been other hot assets running up simultaneously. You know its crazy when construction workers start asking about it... LOL (and I've had several).

 

I mean, as long as the Fed reserves the rights to issue unlimited digital dollars, it doesn't seem to erode the competitive advantage much.

 

Just means that the entire USD system is getting a digital upgrade for faster/cheaper transfer and settlements, but doesn't take away from the advantages of  BTC being global and scarce.

 

Quite honestly, this might INCREASE adoption as I envision a digital USD would increase on-ramps into DeFi. Right now, it's difficult to get dollars into DeFi. You have to deposit cash on an exchange, buy a digital asset, wait 4 days, transfer to a wallet, convert to the token you need, and then you can get involved. Multiple fees paid in expensive ether along the way.

 

A digital dollar might forego the need for first 3 steps and make it easier to get dollar liquidity into the system. It's more likely that the digital dollar negates the need for stable coins as opposed negating the need for BTC and would actually lower transaction costs as less gas would be wasted exchange between, and supporting, stablecoin transactions.

[rkbabang]

Fed chair said today that they are looking very closely at issuing a digital dollar. If central banks issue digital currencies, does that upend BTC and everything esle? Or are people attracted to crypto because of its decentralized nature and supposed anonymity? I struggle to understand the bull case for crypto. The ledger technology seems to have real utility but I don't really grasp how these are solving a lot of problems unless one really fears inflation.

 

I work with a lot of retail investors. My totally subjective view is the fervor for crypto is similar to 2017, maybe slightly dampened because there have been other hot assets running up simultaneously. You know its crazy when construction workers start asking about it... LOL (and I've had several).

 

I mean, as long as the Fed reserves the rights to issue unlimited digital dollars, it doesn't seem to erode the competitive advantage much.

 

Just means that the entire USD system is getting a digital upgrade for faster/cheaper transfer and settlements, but doesn't take away from the advantages of  BTC being global and scarce.

 

Quite honestly, this might INCREASE adoption as I envision a digital USD would increase on-ramps into DeFi. Right now, it's difficult to get dollars into DeFi. You have to deposit cash on an exchange, buy a digital asset, wait 4 days, transfer to a wallet, convert to the token you need, and then you can get involved. Multiple fees paid in expensive ether along the way.

 

A digital dollar might forego the need for first 3 steps and make it easier to get dollar liquidity into the system. It's more likely that the digital dollar negates the need for stable coins as opposed negating the need for BTC and would actually lower transaction costs as less gas would be wasted exchange between, and supporting, stablecoin transactions.

 

This would be great news because the stable coins are all pretty shady, it would make trading into and out of crypto much easier and safer.

 

 

[fareastwarriors]

Square buys $170 million worth of bitcoin

 

The company said it purchased approximately 3,318 bitcoins, expanding on its Oct. 2020 purchase of 4,709 bitcoins.

 

https://www.cnbc.com/2021/02/23/square-buys-170-million-worth-of-bitcoin.html

[Fly]

Fed chair said today that they are looking very closely at issuing a digital dollar. If central banks issue digital currencies, does that upend BTC and everything esle? Or are people attracted to crypto because of its decentralized nature and supposed anonymity? I struggle to understand the bull case for crypto. The ledger technology seems to have real utility but I don't really grasp how these are solving a lot of problems unless one really fears inflation.

 

I work with a lot of retail investors. My totally subjective view is the fervor for crypto is similar to 2017, maybe slightly dampened because there have been other hot assets running up simultaneously. You know its crazy when construction workers start asking about it... LOL (and I've had several).

 

I mean, as long as the Fed reserves the rights to issue unlimited digital dollars, it doesn't seem to erode the competitive advantage much.

 

Just means that the entire USD system is getting a digital upgrade for faster/cheaper transfer and settlements, but doesn't take away from the advantages of  BTC being global and scarce.

 

Quite honestly, this might INCREASE adoption as I envision a digital USD would increase on-ramps into DeFi. Right now, it's difficult to get dollars into DeFi. You have to deposit cash on an exchange, buy a digital asset, wait 4 days, transfer to a wallet, convert to the token you need, and then you can get involved. Multiple fees paid in expensive ether along the way.

 

A digital dollar might forego the need for first 3 steps and make it easier to get dollar liquidity into the system. It's more likely that the digital dollar negates the need for stable coins as opposed negating the need for BTC and would actually lower transaction costs as less gas would be wasted exchange between, and supporting, stablecoin transactions.

 

This would be great news because the stable coins are all pretty shady, it would make trading into and out of crypto much easier and safer.

 

At least the NYAG and Tether settled their case:

https://www.coindesk.com/ny-ags-850m-probe-of-bitfinex-tether-ends-in-an-18-5m-settlement

[SharperDingaan]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

 

 

 

 

[DeepSouth]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

If you are a US citizen or resident and don't pay your federal taxes in USD you go to prison. If you don't understand that this creates an attractive demand characteristic I don't know what to tell you.

[TwoCitiesCapital]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

If you are a US citizen or resident and don't pay your federal taxes in USD you go to prison. If you don't understand that this creates an attractive demand characteristic I don't know what to tell you.

 

As a tax-paying BTC holder and DeFi investor, I'm not quite sure what it is you're implying here?

 

Everyone who talks about this being used for criminal activity or avoiding taxes seems to ignore that having a public ledger of every transaction you ever made is fairly ill-suited for that sort of thing.

 

All they have to do is identify the owner of the wallet. Given a public history of every transaction that wallet has ever made opens up numerous possibilities that there will be a weak link in that chain willing to identify who you are to avoid trouble with the authorities...

[SharperDingaan]

To pay your taxes, simply sell some of your BTC for whichever fiat you need - at the time that you need it. The rest of the time, you just keep your wealth in some other currency .. another fiat (Euro, GBP, etc), or a crypto (BTC, ETH, etc.). Business as usual.

 

Sure you can identify the wallet holder, even seize it; but you CANNOT transfer the value of the BTC without the private key. And if that BTC had already been pledged as collateral for a loan or stable-coin, obtaining the private key still will not help you. No different to what already occurs today in many money laundering transactions.

 

Rare paintings are routinely stolen, and held as collateral against an eventual capture. I pay 1M to have the Rembrandt stolen, you give me 5-10 years off my sentence if I give it back - more years off, the more famous the painting is. BTC is just more efficient, and leaves the Rembrandts in the galleries - where everyone can now see them.

 

It's essentially architectural disruption - the product (criminal usage) hasn't changed, just the plumbing.

To contain it, CB's have to collectively put up a better alternative. Not a bad thing.

 

SD

 

 

 

 

[tede02]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

I appreciate this perspective, particularly around negative yields in Europe which we've never had to deal with in the US. Maybe I would think about alternative currencies differently if I had to face negative yields.

 

I'm currently reading a biography on JP Morgan. There's a lot of interesting history that seems relevant to the current crypto debate. There was no central bank in the US until the year of his death. So I'm learning a lot about the challenges of maintaining a currency, capital flight and the inherent tension between parties that want a strong currency vs. those who want easy money. It certainly isn't cut and dry.

[DeepSouth]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

If you are a US citizen or resident and don't pay your federal taxes in USD you go to prison. If you don't understand that this creates an attractive demand characteristic I don't know what to tell you.

 

As a tax-paying BTC holder and DeFi investor, I'm not quite sure what it is you're implying here?

 

Everyone who talks about this being used for criminal activity or avoiding taxes seems to ignore that having a public ledger of every transaction you ever made is fairly ill-suited for that sort of thing.

 

All they have to do is identify the owner of the wallet. Given a public history of every transaction that wallet has ever made opens up numerous possibilities that there will be a weak link in that chain willing to identify who you are to avoid trouble with the authorities...

 

I'm implying that the idea that the USD is backed by nothing but the central bank is insane. It is backed by the US economy as US residents and citizens must use it or face prison time.

[TwoCitiesCapital]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

If you are a US citizen or resident and don't pay your federal taxes in USD you go to prison. If you don't understand that this creates an attractive demand characteristic I don't know what to tell you.

 

As a tax-paying BTC holder and DeFi investor, I'm not quite sure what it is you're implying here?

 

Everyone who talks about this being used for criminal activity or avoiding taxes seems to ignore that having a public ledger of every transaction you ever made is fairly ill-suited for that sort of thing.

 

All they have to do is identify the owner of the wallet. Given a public history of every transaction that wallet has ever made opens up numerous possibilities that there will be a weak link in that chain willing to identify who you are to avoid trouble with the authorities...

 

I'm implying that the idea that the USD is backed by nothing but the central bank is insane. It is backed by the US economy as US residents and citizens must use it or face prison time.

 

That doesn't support it's value IMO. The only time a year I need USD to pay taxes, or face prison as you put it, would be in March/April.

 

The rest of the year, I could get by with BTC at any merchant that accepts Square payments following recent developments.

 

That doesn't really sound like much of a "support" to me. Particularly if the globe is also weening themselves off the petro-dollar a la Russia and China.

 

I'm not banking on a dollar collapse, but I certainly don't think that just because the US govt used it for taxes means it sustains value in any way shape or form. If that's the case, why the massive devaluation against real assets over the last 50 years? Are we a less taxed, less productive, smaller economy? Or is it that there are trillions more outstanding of it than there used to be?

[DeepSouth]

Demographics matter a great deal here.

 

The older generations see BTC as a means of paying for things; BTC has zero value, because there is nothing backing it. The younger generations just recognize that US Dollars (CB fiat) are no different; "In God We Trust" is a scam. The actual backing of a fiat currency, is nothing more than the CB on the levers of both monetary and fiscal policy. We can't repossess a sovereigns assets or receipts, 'In God We Trust', means that we trust the CB not to f*** it up!

 

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing. Paying 75bp to hedge my BTC, or paying 75bp to a swiss bank to keep my money, has the same outcome; but if I hold BTC - I make a MTM gain if there is a sudden devaluation. Treasurers aren't stupid either.

 

BTC is becoming mainstream for a reason, and it is because of declining trust in the ability of CB's. CB's either get their collective act together, and offer a viable alternative, or people do it themselves (crypto currencies). Highly unnerving for CB's, 'cause to question 'God's' ability, is to threaten fiat currency itself.

 

There is a reason why the 'Hamilton vs Satoshi' rapper skit, had such 'high level' audience participants.

We think CB's will ultimately prevail, but they will have to be forced, and they will need a material cultural turnover within their ranks.

All good!

 

SD

 

If you are a US citizen or resident and don't pay your federal taxes in USD you go to prison. If you don't understand that this creates an attractive demand characteristic I don't know what to tell you.

 

As a tax-paying BTC holder and DeFi investor, I'm not quite sure what it is you're implying here?

 

Everyone who talks about this being used for criminal activity or avoiding taxes seems to ignore that having a public ledger of every transaction you ever made is fairly ill-suited for that sort of thing.

 

All they have to do is identify the owner of the wallet. Given a public history of every transaction that wallet has ever made opens up numerous possibilities that there will be a weak link in that chain willing to identify who you are to avoid trouble with the authorities...

 

I'm implying that the idea that the USD is backed by nothing but the central bank is insane. It is backed by the US economy as US residents and citizens must use it or face prison time.

 

That doesn't support it's value IMO. The only time a year I need USD to pay taxes, or face prison as you put it, would be in March/April.

 

The rest of the year, I could get by with BTC at any merchant that accepts Square payments following recent developments.

 

That doesn't really sound like much of a "support" to me. Particularly if the globe is also weening themselves off the petro-dollar a la Russia and China.

 

I'm not banking on a dollar collapse, but I certainly don't think that just because the US govt used it for taxes means it sustains value in any way shape or form. If that's the case, why the massive devaluation against real assets over the last 50 years? Are we a less taxed, less productive, smaller economy? Or is it that there are trillions more outstanding of it than there used to be?

 

Taxes in the US are a large % of GDP (though lower than other OECD countries). People and corporations pay large amount of taxes in many ways throughout the year. The merchants you are talking about pay taxes in USD and their employees and suppliers need to pay taxes in USD. It's an incredible source of demand for USD. If taxes went away, demand for the dollar would plummet.

 

One reason scarce real assets go up in price is because of higher productivity and wealth creation. If they start giving away Rembrandt's, that's a bad sign for the economy, not a good sign.

 

As to middle class living standards, median real wages have gone up materially over the past 40 years, so modest inflation hasn't prevented increased living standards.

https://fred.stlouisfed.org/series/LES1252881600Q

 

And I never said that USD has maintained its full value for 50 years. I said that taxation is a source of support.

 

If you want massive deflation so we can have 30% unemployment and you can buy assets from people who are desperate/starving it's unlikely to happen.

 

I'm very long BTC so I guess the hatred of USD from anarchists/zero hedge people is somewhat good for me, but I don't think anarchism is going to appeal to the institutional adopters who are needed to really drive the price higher/

[DeepSouth]

To pay your taxes, simply sell some of your BTC for whichever fiat you need - at the time that you need it. The rest of the time, you just keep your wealth in some other currency .. another fiat (Euro, GBP, etc), or a crypto (BTC, ETH, etc.). Business as usual.

 

Sure you can identify the wallet holder, even seize it; but you CANNOT transfer the value of the BTC without the private key. And if that BTC had already been pledged as collateral for a loan or stable-coin, obtaining the private key still will not help you. No different to what already occurs today in many money laundering transactions.

 

Rare paintings are routinely stolen, and held as collateral against an eventual capture. I pay 1M to have the Rembrandt stolen, you give me 5-10 years off my sentence if I give it back - more years off, the more famous the painting is. BTC is just more efficient, and leaves the Rembrandts in the galleries - where everyone can now see them.

 

It's essentially architectural disruption - the product (criminal usage) hasn't changed, just the plumbing.

To contain it, CB's have to collectively put up a better alternative. Not a bad thing.

 

SD

 

So to pay taxes, dump BTC and buy USD. That sounds like a source of USD demand/support to me.

[SharperDingaan]

"So to pay taxes, dump BTC and buy USD. That sounds like a source of USD demand/support to me."

 

Nah. I just took this years incremental US10M increase in wealth out, and bought back US100K to pay my taxes. Net drain of USD9.9M.

But ... if I'm doing this every year, mostly parking the money in BTC, and the USD steadily devalues (re: too much QE) over the interim - when I eventually convert the BTC back into USD - the USD FX gain may well exceed the total USD tax paid over the interim.

 

SD

 

[Xaston]

I don't think any of the stocks I own are gonna outperform CryptoPunks over the next decade

[rkbabang]

I don't think any of the stocks I own are gonna outperform CryptoPunks over the next decade

 

I've owned crypto since 2014 and none of my stocks have outperformed them over the last 6-7 years and I don't think any stocks I own will outperform them in the next 6-7 years either, same probably goes for the 6-7 years after that as well.

[ValueArb]

I think the odds of crypto beating stocks over the next 5-10 years are close to nil.

 

But of course I expect a 80%+ pullback in crypto when stimulus gamble-gamble money is gone.

[rkbabang]

I think the odds of crypto beating stocks over the next 5-10 years are close to nil.

 

But of course I expect a 80%+ pullback in crypto when stimulus gamble-gamble money is gone.

 

A lot of crypto is crap of course (as is many stocks), but BTC and ETH will both beat the SP500 by a wide margin over the next 10 years.

 

[DeepSouth]

"So to pay taxes, dump BTC and buy USD. That sounds like a source of USD demand/support to me."

 

Nah. I just took this years incremental US10M increase in wealth out, and bought back US100K to pay my taxes. Net drain of USD9.9M.

But ... if I'm doing this every year, mostly parking the money in BTC, and the USD steadily devalues (re: too much QE) over the interim - when I eventually convert the BTC back into USD - the USD FX gain may well exceed the total USD tax paid over the interim.

 

SD

 

 

So you bought $100K in USD to pay taxes. That is a source of demand for USD. You buying those USD supports the value of USD. If there were no taxes, you wouldn't have bought those dollars to pay those taxes. Therefore tax collection supports/backs USD.

 

It should be embarrassing not to grasp this.

[tooskinneejs]

Across the world, the last decade hasn't been good for CB's, and people aren't stupid. Negative borrowing rates, and paying your bank to hold your cash (Swiss), are hard evidence that CB's are failing.

 

Avoiding a slowly depreciating currency by buying something that has and could depreciate 50 percent overnight is a better option?

[TwoCitiesCapital]

"So to pay taxes, dump BTC and buy USD. That sounds like a source of USD demand/support to me."

 

Nah. I just took this years incremental US10M increase in wealth out, and bought back US100K to pay my taxes. Net drain of USD9.9M.

But ... if I'm doing this every year, mostly parking the money in BTC, and the USD steadily devalues (re: too much QE) over the interim - when I eventually convert the BTC back into USD - the USD FX gain may well exceed the total USD tax paid over the interim.

 

SD

 

 

So you bought $100K in USD to pay taxes. That is a source of demand for USD. You buying those USD supports the value of USD. If there were no taxes, you wouldn't have bought those dollars to pay those taxes. Therefore tax collection supports/backs USD.

 

It should be embarrassing not to grasp this.

 

It's not that we don't grasp it. It's that none of us believe it supports the value of a currency.

 

What do all of the countries who've had currencies collapsed have in common? They all collected taxes in those currencies. No one gave a shit that Zimbabweans or Germans paid taxes in their currencies - the currencies still went to 0.

 

And this isn't me being hyperbolic and predicting Weimar in the US. Just pointing out that this argument is crap.

[TwoCitiesCapital]

I think the odds of crypto beating stocks over the next 5-10 years are close to nil.

 

But of course I expect a 80%+ pullback in crypto when stimulus gamble-gamble money is gone.

 

A lot of crypto is crap of course (as is many stocks), but BTC and ETH will both beat the SP500 by a wide margin over the next 10 years.

 

Given that I can earn 8-12% per annum simply lending audited USD backed stablecoins on DeFi exchanges? Yea - I'm going to go with cyrpto outperforming stocks. Maybe not any just any altcoin but BTC or ETH or any stable coin lent for interest. The fact that people are willing to pay 8-12% for stablecoins on a consistent basis suggest there is a ROIC much higher than that in the altspace. Whiles some will fail - BTC and ETH basically support the entire alt space so I imagine they'll do alright through that.

[Xerxes]

A pack of cigarette could be a medium of exchange in a prison (i.e. currency), but it cannot be used to pay taxes.

Outside the prison, the pack of cigarette has competition and alternative in its role as a medium of exchange, so it looses its 'shine' and reverts to only being something to be consumed.

Fiat currency (be it digital or paper) is just the most convenient use case because everybody accepts it.

 

I see BTC as the digital commodity. I am in that camp as oppose to the currency camp.

 

Anybody has good suggestion on books on the topic, please let me know

I finished reading Digital Gold (came back in 2015 i think) and bought Blockchain Revolution.

[Xerxes]

A pack of cigarette could be a medium of exchange in a prison (i.e. currency), but it cannot be used to pay taxes.

Outside the prison, the pack of cigarette has competition and alternative in its role as a medium of exchange, so it looses its 'shine' and reverts to only being something to be consumed.

Fiat currency (be it digital or paper) is just the most convenient use case because everybody accepts it.

 

I see BTC as the digital commodity. I am in that camp as oppose to the currency camp, but might one day become a global currency for international trade, but never a local currency in a given nation.

 

Anybody has good suggestion on books on the topic, please let me know

I finished reading Digital Gold (came back in 2015 i think) and bought Blockchain Revolution.