Cryptocurrencies

[TwoCitiesCapital]

To get to the energy consumption questions, you cannot say BTC has huge energy consumption while ignoring the energy consumption of the modern financial industry.

 

Well, who is being disingenuous now? :D

The finance industry does a lot more than clear transactions.

 

I am curious on your thoughts on whether you think eventual concentration of crypto-mining resources is a potential risk.

 

So does crypto. I've got savings accruing interest denominated in ethereum based stable coins. I have loans outstanding collateralized by BTC. I have "staked" DeFi exchanges which is similar to making an equity investment in their operations.

 

Crypto as a whole replaces A LOT of what traditional banks do. It remains to be seen if they can scale it for primetime, but I'm optimistic. And while the REAL comparison would be electricity usage for ALL cryptos versus the financial industry, I still think you'd find that the global financial industry dwarfs crypto energy demands by many, many multiples.

 

[beerbaron]

Did you know that by the year 2020 Bitcoin will consume all of the worlds energy?

https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036

 

Quite a sensationalized title and only if you extrapolate November 2017's monthly 25% energy growth rate over 3 years (as that part of the article mentions).

 

The full analysis is found here:

https://digiconomist.net/bitcoin-energy-consumption

 

Which estimates that today, the bitcoin network uses about as much energy as Chile.

 

On a per-transaction basis, each bitcoin transaction uses 741 kWH of energy as of 2020, up from 686 kWH in 2019.

(https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)

 

By comparison, 741 kWH would power approximately 497,000 transactions on Visa's network.

 

This is why I don't think Bitcoin can work for high volume of transactions. How could as humanity justify building power plants to support something that can be done 1000000 cheaper in energy.

 

If you are a government that wants to nail Bitcoin for taking over your currency just control the supply of electricity.

 

Furthermore, wait till bad press related to CO2 emissions get there... Farms in China are not powered with solar.

 

Technology will not save Bitcoin, we are already at ASics. Only a major protocol change can do it. Will it happen?

 

Beerbaron

[TwoCitiesCapital]

Did you know that by the year 2020 Bitcoin will consume all of the worlds energy?

https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036

 

Quite a sensationalized title and only if you extrapolate November 2017's monthly 25% energy growth rate over 3 years (as that part of the article mentions).

 

The full analysis is found here:

https://digiconomist.net/bitcoin-energy-consumption

 

Which estimates that today, the bitcoin network uses about as much energy as Chile.

 

On a per-transaction basis, each bitcoin transaction uses 741 kWH of energy as of 2020, up from 686 kWH in 2019.

(https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)

 

By comparison, 741 kWH would power approximately 497,000 transactions on Visa's network.

 

 

1. I'm skeptical that 741 kwh is the actual power usage for a single BTC transaction seeing as the average electricity consumption for a household in a day is ~30 kwh. No way the transactions that requires 20x my daily household usage of electricity only costs ~2x as much. Maybe it's talking about a single BTC block? But then - each block contains dozens of transactions so also not quite a fair comparison then.

 

2. Average size of Visa transactions? ~$60. Average size of BTC transaction? $400,000 which makes up some ground on the per dollar efficiency as well.

 

Also, for smaller transactions of the likes that VISA tends to process, the solution would likely reside on a second layer solution or something like the Lightning Network which are massively less energy-intensive. 

 

Bitcoin uses ~78 terawatt hours of energy as its current run-rate.

JP Morgan used 2 terawatt hours of energy in 2019.

 

The argument wasn't that BTC used less than a single bank - but rather that it uses less than the banks it could replace. You're making a fine point by showing that JPM alone has 2.5% of the energy use of BTC. What about once we consider Citi, BofA, Deutsche, BNY, Santander, US Bank, State Street, Goldman, TD, HSBC, all local banks and credits unions, dozens upon dozens more international institutions etc. etc. etc.

 

What about all of the support functions like payment processing from the Fed or Visa/MasterCard/Amex? What about the required 3rd party intermediaries that audit balances and books? What about insurance co's that support the custody of the assets or the FDIC? What about all of the electricity/carbon used by their employees to get to and from work OR to remote in using video conferencing and telephones?

 

I think it's laughable to think the global financial system could operate with fewer than 40 companies with JPM's energy consumption which is what it would take for them to "underspend" BTC on energy consumptions. And again, a large and growing portion of BTC's consumption is renewables so it matters less what the actual consumption is because it's not a finite resource any longer.

 

[TwoCitiesCapital]

Did you know that by the year 2020 Bitcoin will consume all of the worlds energy?

https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036

 

Quite a sensationalized title and only if you extrapolate November 2017's monthly 25% energy growth rate over 3 years (as that part of the article mentions).

 

The full analysis is found here:

https://digiconomist.net/bitcoin-energy-consumption

 

Which estimates that today, the bitcoin network uses about as much energy as Chile.

 

On a per-transaction basis, each bitcoin transaction uses 741 kWH of energy as of 2020, up from 686 kWH in 2019.

(https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)

 

By comparison, 741 kWH would power approximately 497,000 transactions on Visa's network.

 

This is why I don't think Bitcoin can work for high volume of transactions. How could as humanity justify building power plants to support something that can be done 1000000 cheaper in energy.

 

If you are a government that wants to nail Bitcoin for taking over your currency just control the supply of electricity.

 

Furthermore, wait till bad press related to CO2 emissions get there... Farms in China are not powered with solar.

 

Technology will not save Bitcoin, we are already at ASics. Only a major protocol change can do it. Will it happen?

 

Beerbaron

 

It's only "cheaper" when you're only considering energy as a cost input and not wages/time/buildings/marketing/etc. all required for the current financial system

 

On an all-in basis, BTC is cheaper and faster and is getting even cheaper and faster with the advent of new technologies to exist on top of the blockchain so not every individual transaction has to be run through the blockchain.

 

You used to transact in gold/silver. Then we found out its cheaper and easier to transact on the second layer which was paper representing that gold and silver. Then we went even further and found it's cheaper to transact with eltronic blips that represent the paper money that used to represent gold and silver. BTC is likely to be the foundational layer for payments (gold and silver) and there will be improvements and developments on top of it that make it even easier/cheaper to transact in going forward - we're already seeing this.

[beerbaron]

Did you know that by the year 2020 Bitcoin will consume all of the worlds energy?

https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036

 

Quite a sensationalized title and only if you extrapolate November 2017's monthly 25% energy growth rate over 3 years (as that part of the article mentions).

 

The full analysis is found here:

https://digiconomist.net/bitcoin-energy-consumption

 

Which estimates that today, the bitcoin network uses about as much energy as Chile.

 

On a per-transaction basis, each bitcoin transaction uses 741 kWH of energy as of 2020, up from 686 kWH in 2019.

(https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)

 

By comparison, 741 kWH would power approximately 497,000 transactions on Visa's network.

 

This is why I don't think Bitcoin can work for high volume of transactions. How could as humanity justify building power plants to support something that can be done 1000000 cheaper in energy.

 

If you are a government that wants to nail Bitcoin for taking over your currency just control the supply of electricity.

 

Furthermore, wait till bad press related to CO2 emissions get there... Farms in China are not powered with solar.

 

Technology will not save Bitcoin, we are already at ASics. Only a major protocol change can do it. Will it happen?

 

Beerbaron

 

It's only "cheaper" when you're only considering energy as a cost input and not wages/time/buildings/marketing/etc. all required for the current financial system

 

On an all-in basis, BTC is cheaper and faster and is getting even cheaper and faster with the advent of new technologies to exist on top of the blockchain so not every individual transaction has to be run through the blockchain.

 

You used to transact in gold/silver. Then we found out its cheaper and easier to transact on the second layer which was paper representing that gold and silver. Then we went even further and found it's cheaper to transact with eltronic blips that represent the paper money that used to represent gold and silver. BTC is likely to be the foundational layer for payments (gold and silver) and there will be improvements and developments on top of it that make it even easier/cheaper to transact in going forward - we're already seeing this.

 

Visa and all their employees do not consume the energy of Chile.

 

Beerbaron

 

[Xaston]

How long before a floor punk is worth more than a Bitcoin?

 

World's best NBA bettor just bid 2.1 million for an alien punk and the bid was not accepted.

[TwoCitiesCapital]

Did you know that by the year 2020 Bitcoin will consume all of the worlds energy?

https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036

 

Quite a sensationalized title and only if you extrapolate November 2017's monthly 25% energy growth rate over 3 years (as that part of the article mentions).

 

The full analysis is found here:

https://digiconomist.net/bitcoin-energy-consumption

 

Which estimates that today, the bitcoin network uses about as much energy as Chile.

 

On a per-transaction basis, each bitcoin transaction uses 741 kWH of energy as of 2020, up from 686 kWH in 2019.

(https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/)

 

By comparison, 741 kWH would power approximately 497,000 transactions on Visa's network.

 

This is why I don't think Bitcoin can work for high volume of transactions. How could as humanity justify building power plants to support something that can be done 1000000 cheaper in energy.

 

If you are a government that wants to nail Bitcoin for taking over your currency just control the supply of electricity.

 

Furthermore, wait till bad press related to CO2 emissions get there... Farms in China are not powered with solar.

 

Technology will not save Bitcoin, we are already at ASics. Only a major protocol change can do it. Will it happen?

 

Beerbaron

 

It's only "cheaper" when you're only considering energy as a cost input and not wages/time/buildings/marketing/etc. all required for the current financial system

 

On an all-in basis, BTC is cheaper and faster and is getting even cheaper and faster with the advent of new technologies to exist on top of the blockchain so not every individual transaction has to be run through the blockchain.

 

You used to transact in gold/silver. Then we found out its cheaper and easier to transact on the second layer which was paper representing that gold and silver. Then we went even further and found it's cheaper to transact with eltronic blips that represent the paper money that used to represent gold and silver. BTC is likely to be the foundational layer for payments (gold and silver) and there will be improvements and developments on top of it that make it even easier/cheaper to transact in going forward - we're already seeing this.

 

Visa and all their employees do not consume the energy of Chile.

 

Beerbaron

 

Once again, Visa is just one company in a network of companies required for Visa to work. Visa doesn't custody assets - just process payments. So you also need to consider the electric use if the custodian bank who is sending and receiving cash on behalf of Visa processing.

 

And Visa doesn't just work with one bank - it's entire value is premise hinges on "it's everywhere you want to be" because it works with the bulk of banks globally. So to consider the energy consumption of Visa to deliver on its value proposition, you have to consider the energy consumption of all of its network banks as well. And many of those banks are insured by private, or by public, interests. You have to consider the energy consumption of those insurance companies/govt agencies because otherwise they wouldn't have the scale of operations they do.

 

And now you're approaching something that's comparable to BTC - and something that consumes vastly more energy.

 

I just don't understand why people compared BTC to each single company. It's not here to be another competitor. It's aiming to be THE option in an entirely new paradigm and value chain based on blockchain. Bitcoin and a handful of other smart-contract based tokens have the ability to replace the entire global infrastructure for finance if they can figure out how to get it to scale at reasonable cost.

 

If you adopt crypto and DeFi, you don't need traditional banks. You don't need custodial banks. You don't need insurance companies. You don't need Fed payment network to settle transactions and move cash. You probably wouldn't need a brokerage account and a separate custodian and SIPc insurance for that.  All that is replaced by a single blockchain which is more energy intensive than any single part, but less than the collective whole.

 

And once again, as a broken record, I'll point out that it's energy consumption in aggregate becomes less important as renewable resources take up a larger and larger part of the processing power. Renewables aren't a scarce resource - crypto supports the addition of capacity and what's that capacity is issued it's basically there for very very minimal incremental cost for energy production.

 

What global financial institution can say half of their global energy consumption is from renewables? Crypto is doing far more for renewable investment and adoption than traditional finance is doing whole consuming less total energy.

[TwoCitiesCapital]

I'm just going to say, I haven't been a crypto head forever. I have watched it since 2012 and felt satisfaction every time it busted because "I told you it was a bubble." This includes the recent bust in 2017.

 

It wasn't until late 2018 that I realized I WAS WRONG. Despite being "right" everytime it was a bubble, I missed the opportunity of buying an asset that went from $100 to $3000 (at the bottom of the 2018 bust) over the same time I was telling everyone "see...I was right. It WAS a bubble."

 

When focused less on the investment merits and more on the technological merits, my mind was changed and I realized that it had the potential to eat the entire payment/processing/settlement industry at the very least.

 

Once accepting there was a valuable use case, you can then begin defining that use case and begin putting a value on it. I decided back when it as ~$8k/coin that it was worth ~50-60k/coin minimum if it met my base case scenario and replaced a large portion of Visa/MasterCard/AmEx/Square/PayPal etc and began accumulating.

 

Is it overvalued now? Probably since it hasn't actually replaced them yet - but it also has a history of trading at extreme overvaluation relative to it's current potential and growing into that. And I have a habit of underestimating its potential. So am willing to give it a little room to run and imagine that in 5-years it won't matter that it was "overvalued" today - just like it didn't matter it was "overvalued" in 2017 and 2013.

[SharperDingaan]

The valid energy comparison is ALL energy use by ALL FI's/custodians/payment rails in the globe versus the energy use of ALL crypto x the proportion used by De-Fi. Crypto uses a lot less total energy, but it's not the folklore - so we don't want to hear it.

 

It is well known that investment/finance people are utterly useless at tech valuation. There is no value until the tech is generating a probable future cashflow that can be discounted, a multiple applied to it, and the result divided by the share count. And there is no value unless the tech produces new mouse-traps. Therefore nobody invested in the first Apples, Chip Makers, Velcro producers when they were concept proven start-ups. Mind, and process gaps, that exist to be exploited.

 

Blockchain is architectural disruption; the same mouse-traps delivered differently, at much lower cost.

To the consumer it's the same mouse-trap, BUT A DIFFERENT PRODUCT - because it's a different user experience, and a different 'story'. To the blockchain using business - it is fresher product, cost effective per person customization, material cost savings, and material improvements in both agility and productivity.

 

Of course the results will not show up on the bottom lines for quite some time, well beyond the <18 month horizon of most investors.

Hence to most investors, this is utter sh1te! Whereas to operators it's golden - the opportunity to BOTH fundamentally and materially improve cost structures, AND 'go private' at depressed valuations relative to future prospects. Greater profitability, easier to run, and no more whining shareholders and their associated costs!

 

Not what investors want to hear.

 

SD

 

 

 

 

 

 

 

[tooskinneejs]

Interwoven in these posts about energy use are suggestions that the real value is the system that bitcoin is creating:

 

"Bitcoin and a handful of other smart-contract based tokens have the ability to replace the entire global infrastructure for finance"

 

"it had the potential to eat the entire payment/processing/settlement industry at the very least."

 

The only problem with this is that buying bitcoin doesn't give you ownership of the system where the real value purportedly is.

[TwoCitiesCapital]

Interwoven in these posts about energy use are suggestions that the real value is the system that bitcoin is creating:

 

"Bitcoin and a handful of other smart-contract based tokens have the ability to replace the entire global infrastructure for finance"

 

"it had the potential to eat the entire payment/processing/settlement industry at the very least."

 

The only problem with this is that buying bitcoin doesn't give you ownership of the system where the real value purportedly is.

 

Bitcoin IS the network for transfers and payments. The token is how you access and use the network AND what is sent through it. Basically it is simultaneously the oil and the pipeline at the same time. 

 

For DeFi and etc buying Ethereum is basically buying the fuel the entire network needs to run on. So not owning the network outright, but owning the required input for the network to operate and to provide value. It's like other energy commodities - you'd expect that demand growth over time would result in higher prices as this is a necessary input for that growth.

 

You can also stake tokens in DeFi platforms and collect a percentage of their profits (similar to taking a common equity position).

 

So no one OWNS the system like no one OWNS the internet. But you can have stakes in individual pieces of its success. Instead of owning owning Google, Amazon, Facebook, etc to take advantage of the growing trend of online internet adoption you can stake Synthetix, Aave, Uniswap, etc. Own a portion of the value these protocols create.

 

The primary difference is buying stock in Google means you're entrusting Google to manage that exposure on your behalf and hopefully capture the success of the internet. When staking exchanges, you get a say in the evolution/changes within the protocol yourself and are not entrusting a third party to act on your behalf.

[tooskinneejs]

If the point of cryptos is DeFi, do you really have DeFi if you use CeFi to add funds to your wallet and use CeFi to reconvert your crypto to cash to pay for things?  The dude in this video literally transfers funds from his bank account to his crypto wallet, then pays for things at a store by reconverting his crypto to cash on a debit card.

 

[TwoCitiesCapital]

If the point of cryptos is DeFi, do you really have DeFi if you use CeFi to add funds to your wallet and use CeFi to reconvert your crypto to cash to pay for things?  The dude in this video literally transfers funds from his bank account to his crypto wallet, then pays for things at a store by reconverting his crypto to cash on a debit card.

 

 

I'm sorry that the entire financial system doesn't get rebuilt overnight.

 

And yes - there a DeFi options, there are CeFi options, and there are hybrid companies that currently bridge the gap (crypto exchanges, BlockFi, etc).

 

If the US is serious about releasing a digital dollar, you likely won't need companies that straddle both as your on-ramp as the digital dollar will likely be immediately available as an on-ramp into DeFi without using one of these intermediaries

[rkbabang]

If the point of cryptos is DeFi, do you really have DeFi if you use CeFi to add funds to your wallet and use CeFi to reconvert your crypto to cash to pay for things?  The dude in this video literally transfers funds from his bank account to his crypto wallet, then pays for things at a store by reconverting his crypto to cash on a debit card.

 

 

I'm sorry that the entire financial system doesn't get rebuilt overnight.

 

And yes - there a DeFi options, there are CeFi options, and there are hybrid companies that currently bridge the gap (crypto exchanges, BlockFi, etc).

 

If the US is serious about releasing a digital dollar, you likely won't need companies that straddle both as your on-ramp as the digital dollar will likely be immediately available as an on-ramp into DeFi without using one of these intermediaries

 

If you are going to wait until you can spend crypto everywhere you shop the opportunity to get in early will be gone.  I'm old enough to remember when not every store you went into accepted credit cards and not everyone had them.  They did catch on though.

 

[tooskinneejs]

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

"If you are going to wait until you can spend crypto everywhere you shop the opportunity to get in early will be gone."

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

[TwoCitiesCapital]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

[widenthemoat]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

 

The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

[TwoCitiesCapital]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

 

The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

 

Nah dawg. Settlement delays in securities industry has nothing to do with trying to prevent criminal activity. As someone who used to process them, can guarantee that's not the cause and that's it's just a result of the plumbing and the systems in place.

 

Pretty certain its the same in banking and the regulatory involvement is primarily on the KYC side of the business and not throttling every single transaction to be reviewed.

[Fly]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

 

The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

 

They must have skipped the criminal activity part

 

https://perspectives.dtcc.com/articles/leading-the-industry-to-accelerated-settlement

 

Q: Why stop at T+1 or T+½? Why not go to real-time settlement?

 

A: Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume. For example, on a typical trading day, NSCC processes an average of about $1.7 trillion in equities transactions. The multilateral netting process reduces that number by about 98%, and the total value settled is around $38 billion. Netting allows brokerages to transfer that $38 billion between parties only once at the end of the day. In a real-time settlement scenario, netting is not possible and trillions of dollars in cash and securities must move through the financial system on a continual basis throughout the trading day. This creates massive market and capital inefficiencies, increases credit and operational risks, and increases costs between trading parties, possibly undermining the stability of the markets.

 

Accelerating settlement requires careful consideration, industry coordination, and a balanced approach so settlement can be achieved as close to the trade as possible (for example, T+1 or T+½), without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting.

[ValueArb]

Any love for MARA?

 

They believe they will be one of, if not the largest BTC miner in the world by end of year when their 70,000 next generation Antminer S-19 ASIC Miners finish installation.

 

Plus $230M in BTC on balance sheet and another $200Mish in cash. BTC mining revenues hit $845,000 in Q3, 2020. All to support a $3B market cap.

 

And doing it all with 3 employees.

 

Disclosure: I own MARA....puts.

[SharperDingaan]

It is actually very straight forward to settle in live time. Securities as a debit/credit directly from/to the wallets. Each trade funds movement passed through the CB omnibus account. No issues with counterparty scares (contagion), as all funds movement is guaranteed by the CB; all netting internal within the CB, as frequently as the CB decides. CB charges each player a fee for the guarantee. Liquidity controlled at the player level by setting maximum netting shortfalls.

 

New tools, for a new era.

 

SD

 

 

[widenthemoat]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

 

The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

 

They must have skipped the criminal activity part

 

https://perspectives.dtcc.com/articles/leading-the-industry-to-accelerated-settlement

 

Q: Why stop at T+1 or T+½? Why not go to real-time settlement?

 

A: Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume. For example, on a typical trading day, NSCC processes an average of about $1.7 trillion in equities transactions. The multilateral netting process reduces that number by about 98%, and the total value settled is around $38 billion. Netting allows brokerages to transfer that $38 billion between parties only once at the end of the day. In a real-time settlement scenario, netting is not possible and trillions of dollars in cash and securities must move through the financial system on a continual basis throughout the trading day. This creates massive market and capital inefficiencies, increases credit and operational risks, and increases costs between trading parties, possibly undermining the stability of the markets.

 

Accelerating settlement requires careful consideration, industry coordination, and a balanced approach so settlement can be achieved as close to the trade as possible (for example, T+1 or T+½), without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting.

 

I'm very confused. Why are you guys referencing settlement times for equity securities? I can quite easily transfer small dollar amounts of my money to another individual today, instantly. Anything large has limitations and takes more time, due to regulations. What am I missing?

[TwoCitiesCapital]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

 

The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

 

They must have skipped the criminal activity part

 

https://perspectives.dtcc.com/articles/leading-the-industry-to-accelerated-settlement

 

Q: Why stop at T+1 or T+½? Why not go to real-time settlement?

 

A: Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume. For example, on a typical trading day, NSCC processes an average of about $1.7 trillion in equities transactions. The multilateral netting process reduces that number by about 98%, and the total value settled is around $38 billion. Netting allows brokerages to transfer that $38 billion between parties only once at the end of the day. In a real-time settlement scenario, netting is not possible and trillions of dollars in cash and securities must move through the financial system on a continual basis throughout the trading day. This creates massive market and capital inefficiencies, increases credit and operational risks, and increases costs between trading parties, possibly undermining the stability of the markets.

 

Accelerating settlement requires careful consideration, industry coordination, and a balanced approach so settlement can be achieved as close to the trade as possible (for example, T+1 or T+½), without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting.

 

I'm very confused. Why are you guys referencing settlement times for equity securities? I can quite easily transfer small dollar amounts of my money to another individual today, instantly. Anything large has limitations and takes more time, due to regulations. What am I missing?

 

You're missing that no settlement happens INSTANTLY in today's financial system. Not for securities. Not for cash.

 

ACH takes 3-5 business days. Stocks take 2 business days to settle. Wires can still take a few hours and cost $. Even solutions like Venmo that seem instantaneous take a few days for cash to reach your account.

 

The only solutions where cash moves "instantly" are solutions where a liquidity provider is giving you their cash while they wait for the cash you transferred to arrive (like trading Schwab allowing me to trade my cash deposit immediately or paying a fee to use an ATM).

 

Cash does NOT move instantly in today's system - this is a result of the plumbing and structure and not of government regulation.

[rkbabang]

 

Thanks for the responses.

 

"If the US is serious about releasing a digital dollar..."

 

Doesn't that already exist in substance?  I get paid electronically in US dollars.  I pay my bills electronically using US dollars.  I pay merchants the same way.  I'd guess that 99 percent of my inflows and outflows are electronic and in US dollars.  So why do I need a different electronic currency?

 

[/Quote]

 

Is it really though? Because for some reason it takes 3-5 business days for ACH transactions to go through, a month for credit card companies to deliver receivables to merchants, and 4-6 weeks for my bank to reliably schedule an auto-pay. Seems weird that these transactions would take days if they were truly electronic in nature and in plumbing. Shouldn't it be instantaneous?

 

And this isn't a hypothetical. The US is looking at a digital dollar just the China is rolling out a digital yuan. Seems like even the authorities disagree with you in terms of already having the benefits of digital currencies.

 

What opportunity?  Buying bitcoin doesn't give you partial ownership of the system any more than having US dollars in a bank gives you partial ownership of the bank or paying for things using a Visa gives you ownership of Visa.

 

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction.

 

We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions...

 

The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

 

They must have skipped the criminal activity part

 

https://perspectives.dtcc.com/articles/leading-the-industry-to-accelerated-settlement

 

Q: Why stop at T+1 or T+½? Why not go to real-time settlement?

 

A: Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume. For example, on a typical trading day, NSCC processes an average of about $1.7 trillion in equities transactions. The multilateral netting process reduces that number by about 98%, and the total value settled is around $38 billion. Netting allows brokerages to transfer that $38 billion between parties only once at the end of the day. In a real-time settlement scenario, netting is not possible and trillions of dollars in cash and securities must move through the financial system on a continual basis throughout the trading day. This creates massive market and capital inefficiencies, increases credit and operational risks, and increases costs between trading parties, possibly undermining the stability of the markets.

 

Accelerating settlement requires careful consideration, industry coordination, and a balanced approach so settlement can be achieved as close to the trade as possible (for example, T+1 or T+½), without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting.

 

I'm very confused. Why are you guys referencing settlement times for equity securities? I can quite easily transfer small dollar amounts of my money to another individual today, instantly. Anything large has limitations and takes more time, due to regulations. What am I missing?

 

You're missing that no settlement happens INSTANTLY in today's financial system. Not for securities. Not for cash.

 

ACH takes 3-5 business days. Stocks take 2 business days to settle. Wires can still take a few hours and cost $. Even solutions like Venmo that seem instantaneous take a few days for cash to reach your account.

 

The only solutions where cash moves "instantly" are solutions where a liquidity provider is giving you their cash while they wait for the cash you transferred to arrive (like trading Schwab allowing me to trade my cash deposit immediately or paying a fee to use an ATM).

 

Cash does NOT move instantly in today's system - this is a result of the plumbing and structure and not of government regulation.

 

 

Also, securities will exist as tokens and be traded on a blockchain in the future as well.  Maybe on a chain such as Ethereum.  Companies will issue shares directly to the blockchain and be able to buy-back and remove them.  You will be able to see in real time how many shares exist.  You will also be able to trade them almost instantly without 3rd party involvement.

 

[LC]

I find the transactional improvement argument a more attractive investment thesis compared to the "store of value" argument.

 

Question then is, what is the most direct investment vehicle to express that thesis? I would guess ethereum?