Cryptocurrencies

[clutch]

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.

 

Blockchain Revolution is a horrible book. No depth at all and just a bunch of shallow stories and what if. More of a marketing tool for the authors.

[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.

 

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.

 

It seems you can't grasp that there can be two countervailing forces where one is stronger than the other. Taxation supports the dollar. Creating new dollars weakens the dollar.

 

Weimar Germany was creating far more $$$ than they were taxing.

 

I think it's insane to think the dollar would have the same strength if there was no taxation.

[SharperDingaan]

Like it or not, crypto is an asset class.

There are only two investable assets in that class, BTC and ETH, and it is because they both have a reliable, and robust derivative market (CME futures/option). A 0.5% asset allocation to crypto, within the total global investment portfolio, and significant price increases are inevitable. What one thinks of a BTH or ETH, is largely irrelevant. 

 

BTC/ETH are just apps, using the underlying Bitcoin and Etherium Protocols (the 'blockchain'). Blockchain is replacing legacy systems the world over, but in the short/near term it raises costs, as both systems must run in parallel. Prove the blockchain replacement works, and that it is robust - then you can drop the legacy systems. Short/medium term BTC/ETH outperforms, longer term it underperforms.

 

Allocating to BTC, then into 'other' is just being smart. Gain on the increasing acceptance, protect yourself against potential currency devaluation, and sell high/buy low in the 'other' of choice. Every time there is more QE, BTC benefits even further. Can you value this? No. Is it the obvious direction of choice? Yes. Hence - the markets inability to adequately deal with it.

 

You can be roadkill, or you can go with the flow.

But your flexibility is key.

 

SD

 

[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.

 

It seems you can't grasp that there can be two countervailing forces where one is stronger than the other. Taxation supports the dollar. Creating new dollars weakens the dollar.

 

Weimar Germany was creating far more $$$ than they were taxing.

 

I think it's insane to think the dollar would have the same strength if there was no taxation.

 

Literally nobody on has made the argument that it would have the same strength without taxation.

 

Does demand for dollars provide some support for the dollar? Yes. But your initial statement was that it "backs" the dollar i.e. there is fundamental support for the valuation of the dollar due to demand from taxes.

 

All I've done is provided examples of countries who also had the same tax related demand whose currencies collapsed to zero because that "backing" is a very shallow fork of value and support.

 

Stop coming after people because you made a terrible argument.

[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.

 

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.

 

It seems you can't grasp that there can be two countervailing forces where one is stronger than the other. Taxation supports the dollar. Creating new dollars weakens the dollar.

 

Weimar Germany was creating far more $$$ than they were taxing.

 

I think it's insane to think the dollar would have the same strength if there was no taxation.

 

Literally nobody on this thread has made that argument. Me buying a candy bar supports the dollar, but you don't see me waiving a candy bar and saying "see! Dollar supported! It's backed by tangible value of this candy bar!"

 

Do tdemand for dollars provide some support for the dollar? Yes. But your initial statement was that it "backs" the dollar i.e. there is fundamental support for the valuation of the dollar due to demand from taxes.

 

All I've done is provided examples of countries who also had the same demand whose currencies collapsed to zero because that "backing" is a very shallow fork of value and support.

 

Stop coming after people because you made a terrible argument.

 

There is fundamental support for the valuation of the dollar due to demand from taxes. If this demand didn't exist the dollar would trade much lower.

 

Your brain worms are preventing you from understanding the first principles of sovereign currencies and fiscal and monetary policy.

[SharperDingaan]

The value of a currency is the result of supply/demand for it. Sure, tax creates demand - but it's just one component of many.

Raise your tax too high, and the value of your currency falls - as your country is not competitive; I either sell down my local assets and take the money out, or borrow against them in local currency to pay local taxes as they come due.

 

There is nothing wrong with the understandings.

 

SD

 

 

 

[TwoCitiesCapital]

 

Your brain worms are preventing you from understanding the first principles of sovereign currencies and fiscal and monetary policy.

 

I guess. You keep your dollars. I'll keep my BTC. The winner will have the satisfaction of knowing they were right.

[DeepSouth]

 

Your brain worms are preventing you from understanding the first principles of sovereign currencies and fiscal and monetary policy.

 

I guess. You keep your dollars. I'll keep my BTC. The winner will have the satisfaction of knowing they were right.

 

BTC is my largest position. I guess there's more than one way to skin a cat/come up with a bullish thesis on BTC.

[TwoCitiesCapital]

 

Your brain worms are preventing you from understanding the first principles of sovereign currencies and fiscal and monetary policy.

 

I guess. You keep your dollars. I'll keep my BTC. The winner will have the satisfaction of knowing they were right.

 

BTC is my largest position. I guess there's more than one way to skin a cat/come up with a bullish thesis on BTC.

 

Then what is your point?!?!?!

 

Series of events:

 

1) SD said USD isn't backed by anything - just like crypto

2) You took offense to that and pointed out that it's "backed" by the economy and demand by tax payers

3) I pointed out that has been the case for EVERY currency that has ever collapsed and doesn't seem to provide much support

4) You started personal attacks and questioning people's intelligence for not "getting" your argument and then admitted you own crypto anyways

 

So what is your point? You haven't addressed any of the counterexamples other than to say "well they printed money" - we're doing that too BTW.

 

Seems to me you have no substance to your posts and must just enjoy being rude and a troll

 

Every individual source of demand "supports" the dollar. But there are also many countervailing forces that work against it. No one disagrees the USD would be worth less if it had no demand. I think we all understand it would be 0. So every use case supports the dollar value being somewhat above 0.

 

But the USD still rises and falls in values and on a long-term scale has been only falling despite us having many more taxpayers today than in prior decades. So no - tax payer demand didn't provide support to the USD as it still has dramatically depreciated in value over the past 4 decades despite having more tax payers. Would it be lower without taxpayers? Sure. But that's not what any here has debated - we're not debating the incremental impact to every source of demand just to point out there are source of demand. We're talking about the overall value of it and that the overall value hasn't been backed by anything physical or well supported in absolute value terms.

 

Now f*ck off.

[DeepSouth]

 

Your brain worms are preventing you from understanding the first principles of sovereign currencies and fiscal and monetary policy.

 

I guess. You keep your dollars. I'll keep my BTC. The winner will have the satisfaction of knowing they were right.

 

BTC is my largest position. I guess there's more than one way to skin a cat/come up with a bullish thesis on BTC.

 

Then what is your point?!?!?!

 

Series of events:

 

1) SD said USD isn't backed by anything - just like crypto

2) You took offense to that and pointed out that it's "backed" by the economy and demand by tax payers

3) I pointed out that has been the case for EVERY currency that has ever collapsed and doesn't seem to provide much support

4) You started personal attacks and questioning people's intelligence for not "getting" your argument and then admitted you own crypto anyways

 

So what is your point? You haven't addressed any of the counterexamples other than to say "well they printed money" - we're doing that too BTW.

 

And you're trying to get us all to believe that tax base supports/backs the value of USD, and making the same argument in numerous posts, while dismissing all the countries where it DIDN'T really support the valuation and currencies went to 0 and then still saying you own crypto anyways.

 

Seems to me you have no substance to your posts and must just enjoy being rude and a troll

 

My point is that USD isn't worthless, we aren't Weimar Germany, and BTC proponents saying USD isn't backed by anything can hurt BTC's adoption because that's wrong and institutional investors could lump in rational BTC proponents with zero hedge cranks.

 

My point is that taxation supports a currency's value by creating demand for USD to satisfy a tax liability and then removing USD from the economy. Bitcoin has no similar structure.

 

Bitcoin is far more like gold than USD. Its demand is driven by a mutual delusion driven by human desire for scarce assets that can signal social status and/or store value. Bitcoin had attractive characteristics for a scarce store of value since day 1, it's the mutual delusion that is snow balling in a positive feedback loop driving higher price vs gold.

 

Just as federal taxation (and tight monetary policy) supports currency value, federal spending and loose monetary policy weakens a currency's value. Weimar Germany government materially outspent their fiscal capacity in order to pay FX denominated liabilities to WWI victors. It's unusual enough in developed countries that people use the same 100 year old example over and over.

 

I expect the US federal government and central bank to continue deficit spending and for central bank to keep rates low to drive aggregate demand higher to drive higher employment -> wage gains -> inflation -> investment -> productivity growth. If productivity growth can't keep up with nominal spending, uncomfortably high inflation could rear its head, which could lead government/central bank to raise taxes and rates to reduce aggregate spend, driving the USD higher.

 

The USD and BTC can exist peacefully together, one as a sovereign currency that underpins the economy (as government spend and taxation is done with USD), and one as a non-productive store of value.

[TwoCitiesCapital]

A practical application of Deep South's arguments:

 

1988 - Loaf of bread - $2 ZBD. Deep South says taxpayer demand support the value of the currency

1994 - Loaf of bread - $20 ZBD. Deep South says taxpayer demand support the value of the currency

2000 - Loaf of Bread - $2000 ZBD. Deep South says taxpayer demand support the value of the currency

2008 - Loaf of Bread - $2,000,000,000,000 ZBD. Deep South says taxpayer demand support the value of the currency

 

*ZBD is a fictional characterization of the Zimbabwean dollar

 

While the argument is "technically" true that the ZBD would have been worth less at any given time without the demand of taxpayers, it's matters naught because it was still worthless at the end.

 

When someone points this out - Deep South's response was "I was right and you have worms in your brain for not understanding that taxpayers support the value of a currency"

 

 

[TwoCitiesCapital]

Ultimately the argument boils down to "the USD is supported by its use cases". That's exactly the same as crypto - it's supported by demand for its use cases.

 

Neither have fundamental tangible backing. Neither have a floor to their value. They both are only as valuable as the confidence in them and the demand for them.

[DeepSouth]

 

Your brain worms are preventing you from understanding the first principles of sovereign currencies and fiscal and monetary policy.

 

I guess. You keep your dollars. I'll keep my BTC. The winner will have the satisfaction of knowing they were right.

 

BTC is my largest position. I guess there's more than one way to skin a cat/come up with a bullish thesis on BTC.

 

Then what is your point?!?!?!

 

Series of events:

 

1) SD said USD isn't backed by anything - just like crypto

2) You took offense to that and pointed out that it's "backed" by the economy and demand by tax payers

3) I pointed out that has been the case for EVERY currency that has ever collapsed and doesn't seem to provide much support

4) You started personal attacks and questioning people's intelligence for not "getting" your argument and then admitted you own crypto anyways

 

So what is your point? You haven't addressed any of the counterexamples other than to say "well they printed money" - we're doing that too BTW.

 

Seems to me you have no substance to your posts and must just enjoy being rude and a troll

 

Every individual source of demand "supports" the dollar. But there are also many countervailing forces that work against it. No one disagrees the USD would be worth less if it had no demand. I think we all understand it would be 0. So every use case supports the dollar value being somewhat above 0.

 

But the USD still rises and falls in values and on a long-term scale has been only falling despite us having many more taxpayers today than in prior decades. So no - tax payer demand didn't provide support to the USD as it still has dramatically depreciated in value over the past 4 decades despite having more tax payers. Would it be lower without taxpayers? Sure. But that's not what any here has debated - we're not debating the incremental impact to every source of demand just to point out there are source of demand. We're talking about the overall value of it and that the overall value hasn't been backed by anything physical or well supported in absolute value terms.

 

Now f*ck off.

 

My original post: "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."

 

I've been saying that the USD has a support mechanism that BTC doesn't have. USD has a tax liability driven source of demand that BTC doesn't have. You have turned that simple and objectively true idea into a reason to screech about German fiscal policy from 100 years ago. I never said that USD has appreciated over time. You are fighting against the brain worms and voices in your head.

 

In fact one of my earlier posts: "And I never said that USD has maintained its full value for 50 years. I said that taxation is a source of support."

 

"So no - tax payer demand didn't provide support to the USD as it still has dramatically depreciated in value over the past 4 decades despite having more tax payers. Would it be lower without taxpayers? Sure."

 

You contradict yourself at every turn. If the value would be lower without taxpayer, then taxpayers did provide support to the USD.

[TwoCitiesCapital]

 

In fact one of my earlier posts: "And I never said that USD has maintained its full value for 50 years. I said that taxation is a source of support." [/Quote]

 

You and I must have very different definitions of support. Under your definition, the ZBD was "supported" all the way down to oblivion.

 

Under my definition, it going to oblivion is evidence that it didn't have meaningful support - just like the USD isn't supported at it's current value by any single use case but rather the sum of them all and the net of their bullish/bearish effects.

 

"So no - tax payer demand didn't provide support to the USD as it still has dramatically depreciated in value over the past 4 decades despite having more tax payers. Would it be lower without taxpayers? Sure."

 

You contradict yourself at every turn. If the value would be lower without taxpayer, then taxpayers did provide support to the USD.

 

It's not a contradiction. The USD is dramatically lower than it was 50 years ago despite a dramatically higher tax base and nominal tax demand. Thus it's clear the tax base provides little meaningful support to the value of the USD at any time or over any period of time.

 

Tax demand is one input, out of thousands, and what matters is the net effect of all those thousands of inputs. An effect that you ignore by simply parroting the same line over and over and over and then criticizing people when they call you on your BS.

 

It's like arguing with a child....

 

 

 

You have turned that simple and objectively true idea into a reason to screech about German fiscal policy from 100 years ago. I never said that USD has appreciated over time. You are fighting against the brain worms and voices in your head.

 

Nobody is screeching about anything. I used real world examples where tax payer demand didn't support the currency and it still went to oblivion.

 

Nobody in this recent conversation said buy Bitcoin because the US is Weimar. I simply pointed out that Weimar's currency wasn't supported in any meaningful way by taxpayers. The USD is no different. The "support" is there, until it isn't, and that's not support at all - as we've witnessed over the decades.

 

You're whole argument is the USD is "supported" by this 1 item that gives it an advantage - but that one item is 1 of thousands and in the scheme of things any one of those items is irrelevant.  All that matters is the net effect - it won't matter that it's "supported" by the taxpayers if we lose reserve status, or the reliance on the dollar in global trade.

 

If BTC becomes the new global trade currency or the new reserve, the dollar tanks. I'm not saying that it will happen, just pointing out the USD tanks despite "tax payer support" in that scenario and all that matters is that the USD tanked and BTC sky rocketed and nobody gives a f*ck that the USD was "supported by tax payers "

 

 

 

[rkbabang]

TwoCitiesCapital,  I think there are some people who just can't imagine change.  It's like telling someone in the 1840's that slavery would someday be illegal in the US.  The dollar has value now and it is unimaginable that it won't always have value.  Yes, you are correct every currency that has ever collapsed had the same government requirement that it be used for tax payments, therefore that will do zero to protect the dollar if and when it collapses, but you are going to bang your head against a wall convincing someone of this if they can't wrap their heads around it.  Nothing backs Bitcoin, nothing backs the dollar, and nothing really backs gold.  All value is subjective, so another way to look at it is the same thing backs all 3: demand.

 

 

[TwoCitiesCapital]

TwoCitiesCapital,  I think there are some people who just can't imagine change.  It's like telling someone in the 1840's that slavery would someday be illegal in the US.  The dollar has value now and it is unimaginable that it won't always have value.  Yes, you are correct every currency that has ever collapsed had the same government requirement that it be used for tax payments, therefore that will do zero to protect the dollar if and when it collapses, but you are going to bang your head against a wall convincing someone of this if they can't wrap their heads around it.  Nothing backs Bitcoin, nothing backs the dollar, and nothing really backs gold.  All value is subjective, so another way to look at it is the same thing backs all 3: demand.

 

More succinctly put than anything I posted. Thank you!

 

I feel like I'm going crazy here so maybe I should just take a break and move on.

[DeepSouth]

TwoCitiesCapital,  I think there are some people who just can't imagine change.  It's like telling someone in the 1840's that slavery would someday be illegal in the US.  The dollar has value now and it is unimaginable that it won't always have value.  Yes, you are correct every currency that has ever collapsed had the same government requirement that it be used for tax payments, therefore that will do zero to protect the dollar if and when it collapses, but you are going to bang your head against a wall convincing someone of this if they can't wrap their heads around it.  Nothing backs Bitcoin, nothing backs the dollar, and nothing really backs gold.  All value is subjective, so another way to look at it is the same thing backs all 3: demand.

 

Abolishing slavery was discussed during the formation of the United States and was abolished in the UK in 1803. Half the country had already abolished it. I think someone in the US in 1840 who couldn't imagine slavery being abolished would simply be blind to the facts on the ground.

 

I can imagine massive change. I can imagine 10 year old bitcoin surpassing 5,000 year old gold as a store of value. I can imagine life extension technology changing our view of mortality and humanity.

 

And sure, I can imagine some revolution/depression in the US that destroys the country, the economy, and the USD, but that doesn't mean I think it's likely. And by looking at Japan's strong living standards despite very loose monetary policy for decades, I think it's clear that if anything takes down the US it won't likely be loose monetary policy.

 

I'd argue it's the anarchists, austrians, and zero hedgers that are stuck to their priors/dreams of collapse. They've been saying that the US would collapse any day now since ~2007 and have been wrong despite crazy events like the GFC and a global pandemic. I view them like the doomsday cultists who claim the world will end on 1/1/2019, then simply change the date to 1/1/2022 instead of admitting they're wrong.

 

I think the doomsday talk hurts incremental bitcoin adoption at this point.

 

I'm not likely to see eye to eye with anarchists, so I'll leave it there. Apologies for getting frustrated.

[JRM]

Doomsday is not a good outcome for Bitcoin because who is going to run the power plants and the interwebs?

[rkbabang]

I think someone in the US in 1840 who couldn't imagine slavery being abolished would simply be blind to the facts on the ground.

 

I can imagine massive change. I can imagine 10 year old bitcoin surpassing 5,000 year old gold as a store of value. I can imagine life extension technology changing our view of mortality and humanity.

 

And sure, I can imagine some revolution/depression in the US that destroys the country, the economy, and the USD, but that doesn't mean I think it's likely. And by looking at Japan's strong living standards despite very loose monetary policy for decades, I think it's clear that if anything takes down the US it won't likely be loose monetary policy.

 

I'd argue it's the anarchists, austrians, and zero hedgers that are stuck to their priors/dreams of collapse. They've been saying that the US would collapse any day now since ~2007 and have been wrong despite crazy events like the GFC and a global pandemic. I view them like the doomsday cultists who claim the world will end on 1/1/2019, then simply change the date to 1/1/2022 instead of admitting they're wrong.

 

I think the doomsday talk hurts incremental bitcoin adoption at this point.

 

I'm not likely to see eye to eye with anarchists, so I'll leave it there. Apologies for getting frustrated.

 

"Blind to the facts on the ground" is a very good way to describe it.  You are talking about a government which reigns over and taxes a multi-trillion dollar economy with the most powerful military empire the world has ever seen.  Anyone who thinks that is going down in a year or even in a decade is crazy, but anyone who thinks the empire it is immortal is equally crazy.  It will take some time, but the Federal Government of the United States will not last forever. And the United States Dollar will not last forever.  Loose monetary policy does have the power to eventually take the dollar down, it won't be overnight.  Just because it hasn't happened yet, isn't evidence that it isn't happening.  The dollar has lost over 85% of its value since Nixon untied it from gold, this current round of printing will send it even lower.  In the next 50 years it will go down from here even more than 85%.  The dollar is doomed eventually, the only question is when?

 

[rkbabang]

BTC now has a market cap over $1T

 

At $53, isn't the BTC market cap around $700B as I seem to remember that accounting for lost and unmined total count was closer to 14M?

 

Or is that way off?

 

No one knows for sure how many coins are lost (including millions of bitcoins presumably owned by Satoshi Nakamoto), so the market cap is calculated based on the only number which is known for sure: the number of mined bitcoins.  So yes the real market cap is somewhat less, but no one knows how much less.  I know there have been people who have looked at the number of coins which has not moved in X numbers of years, but that doesn't mean anything as a lot of people are holding.  Most of my coins haven't been moved since 2014, but they are not lost.  There is really no way to ever know for sure which coins are lost and which are being intentionally held.

 

 

100 BTC which haven't moved since 2010 were recently moved, further illustrating the point that no one knows which coins are owned and which are lost.

 

https://cointelegraph.com/news/bitcoin-whale-from-2010-moves-100-btc-for-first-time-in-11-years

[Parsad]

TwoCitiesCapital,  I think there are some people who just can't imagine change.  It's like telling someone in the 1840's that slavery would someday be illegal in the US.  The dollar has value now and it is unimaginable that it won't always have value.  Yes, you are correct every currency that has ever collapsed had the same government requirement that it be used for tax payments, therefore that will do zero to protect the dollar if and when it collapses, but you are going to bang your head against a wall convincing someone of this if they can't wrap their heads around it.  Nothing backs Bitcoin, nothing backs the dollar, and nothing really backs gold.  All value is subjective, so another way to look at it is the same thing backs all 3: demand.

 

I think this is completely incorrect.  Most currencies are backed by tax revenues and the country's assets.  Gold has a utilitarian purpose, as does silver and virtually all other precious metals and commodities.  Bitcoin has nothing at all supporting it other than demand as you say...as did tulips.  I would dare say that tulips at least served some purpose in gardens.  Bitcoin as it presently stands has no value whatsoever!

 

Will crypto replace cash...almost certainly over time.  But it will be supported by something...most likely large recurring cash flows from multi-national companies that are the size of small nations or digital currency issued by nations.  Bitcoin isn't that digital currency...not now anyways...and alot of speculators will lose alot of money!  Cheers!

[LC]

Outside of the blockchain transaction technology, how is cryptocurrency different from something like gold? Why not just remove the t+2 settlement timing and trade fractional positions in GLD futures?

[TwoCitiesCapital]

It's weird we'll pretend USD is supported by tax payers when that isn't supported by history, while also pretending BTC isn't supported by it's superiority for large payment processing and potentially as a store of value.

 

Could a tulip pay my bathroom contractor 20k in less than 10 minutes in a secure manner? No. It couldn't. And neither can the USD - even with large fees paid for the expedited request.

[JRM]

Outside of the blockchain transaction technology, how is cryptocurrency different from something like gold? Why not just remove the t+2 settlement timing and trade fractional positions in GLD futures?

 

Gold is anonymous, whereas Bitcoin no longer is.  When you transact in gold the transaction is over, with Bitcoin there must be a network maintained in order to maintain the function.  Bitcoin is useful for very large transactions or transactions across borders. 

 

I see Bitcoin as an entirely separate asset class.  It is not money, it is closer to art or collectibles than it is to gold.

[SharperDingaan]

To the anarchists central banks are criminals, on par with the obvious buyers of BTC. The anarchists just recognize that when two scorpions are confined within a small bottle (Yin/Yang), everyone is safer. Mutually Assured Destruction, is a well-proven nuclear arms deterrent. 

 

This thread demonstrates the Yin/Yang of crypto.

There is no convincing either side; and as the wheel turns, the influence of the dominant currency will wax/wane. However, the two extremes co-exist, they each need each other, and the intense competition ensures that they each perform at their best. As users of the currencies, we're all better off.

 

SD