Evidence that crypto – the name’s most apt because its workings and those working it are hidden from view – is fine for gamblers but not much good as a store of value can be seen by checking the worth of what are styled one’s “assets” (assuming one has them) today vs. say a week or so ago.
My Bitcoin assets have lost about 20 percent of their value during that time – making a Federal Reserve Note seem almost as sound as the pound was in comparison. When the pound was tied to gold, that is.
What is crypto tied to? It value appears to be tied to the vagaries of speculation – and that is largely driven by what are styled “whales,” i.e., the huge speculators whose speculations cause the value to go up – or down – carrying the little fish along for the ride. It seems to operate much like a stock rather than money, in other words. But without the value – at least in theory – of a company (and customers) behind it. People who buy Tesla stock, for instance, do so because they believe that Tesla will sell EVs – which they believe Tesla will do because the government has put its greasy thumb on the scales to assure there is a “market” for EVs.
But what is the market for crypto? Why does crypto have any value at all? There is nothing backing crypto. Not even the – try not to laugh – “full faith and credit” of the United States, which at least promises that the notes issued by the privately owned banking cartel styled the Federal Reserve will be honored. All there is is the willingness of people to agree that crypto has value, which isn’t much different when you stop to think about it than people agreeing that “masks work.” It does not mean they do. It does not mean there is any value as such.
How could there be when there is literally nothing there? At least with Federal Reserve Notes you have a piece of paper with the promise of the federal government written on the piece of paper.
Of course, it is true that Federal Reserve Notes are also backed chiefly by the willingness of people to believe they are worth more than the paper they’re made of. But there are some meaningful differences. The chief one being that Federal Reserve Notes can be used to gamble but – unlike crypto – are not themselves essentially the gamble. Put another way, most people use their Federal Reserve Notes – i.e., their money – to buy other things. Not to buy (and sell) more Federal Reserve Notes. They are, in other words, primarily a medium of exchange rather than primarily speculative instruments.
Evidence in support of this assertion? How about the difficulty using crypto buy anything – except more crypto? As far as I have been able to determine, there are only a small handful of retailers who will exchange hard goods for crypto (one of them is the online retailer Overstock). It is possible to jump through some hoops and get a debit card that can be used to buy hard goods but there are only a couple of issuers as far as I have been able to determine and they require creepy facial/biometric recognition as part of the application process.
Regardless, the erratically (and rapidly) shifting value of the “coin” you have in your debit account – or your app – is such that you’ll want to spend what you soon may no longer have as quickly as possible.
That’s not worth much as money.
I probably ought to cash out what’s left of muh Bitcoin over at Overstock today – because what I’ve got left might not be worth a set of bath towels and bedsheets tomorrow. It conjures a feeling of sympathy solidarity with the poor schmucks in 1920s Weimar Germany who were under great pressure to spend their money as soon as they got it – so as to not be left with nothing to spend the next day.
Or that evening.
And a Weimar dollar – styled Papiermark – was at least a piece of paper.
What’s a piece of crypto, again?
. . .
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Peter Schiff explains Bitcoin using Sesame Street.
https://www.youtube.com/watch?v=KBNI5xrTXK0
Your comment cracked me up & made me click it, Landru.
Haven’t seen those two guys in forty years or so.
That was excellent.
“I told ya, I’m Not sellin’ the bottle!”
‘Bitcoin was aggressively bid today, back above $83,000 from yesterday’s lows around $76,000…’ — ZeroHedge closing market report, March 11
Eric’s article accurately bottom-ticked the selloff … a dubious achievement that I’ve claimed on a number of occasions too. 🙁
Thoughts from an aging software engineer:
Bitcoin/crypto requires two things for its trade utility:
• electricity;
• electronic communications.
I suppose this could work “most of the time” … but 6-sigma reliability?
Nope, and especially not when you need it most: e.g. war, natural disasters, etc.
Also, long-term, once some future computing capability cracks its encryption scheme, it’ll be worthless.
Cash (based on government fiat) works … until it doesn’t (e.g. Weimar Germany).
Real money (based on precious metals) still seems to be the best bet, long term.
Zero counterparty risk.
Its tied to putting a fn AI noose around collective humanitys neck.
You do know this right?
Every time this subject comes up I’m astounded by the number of responses that are absolutely absurd demonstrating they know nothing.
If the government made Lima beans legal tender tomorrow; there would be comments defending Lima beans as sound money.
Exactly
I bought my house in 2011 at around the bottom of the market for an amount less than 3 times my annual salary and with a traditional 30 year mortgage with 20 percent down an interest rate of less than 4.5 percent.
There is absolutely no way I can do that again.
Indeed, Bryce –
My old house in Northern Va is now a $650k house. I bought it for $150k circa 1997. It was – and still is – a nothing special little house on a small lot in subdivision built for working and lower middle class people. Good luck buying a house like it today if you are workingor even upper middle class.
Once bitten twice shy indeed.
I laugh at this whole bitcoin thing. Its been good to me I bought some a long time ago to make a purchase on the dark web. The coins were I don’t recall exactly but around $1 each. The seller never responded so I got stuck with them and forgot about them because I had so little into them ~$50. I sold them last year and bought a new Porsche and some silver coins.
Its basically like hitting 3 cherries at the Wynn Casino.
But someone gave me a pile of money for what? Some random looking string of characters on a computer guaranteed to be unique.
The greater fool effect.
It looks like a massive scam. No one could ever say exactly what they are buying. The buy/sell/short folks will toss the price all over the place and make money on the spread, but in the end you still have nothing.
I have heard of people mortgaging their house to but bitcoin, but then I knew several who did the same to but S&P index funds (more air) in 2007.
Talk of a “strategic reserve” in bitcoin? Are you F***ing kidding me??!! Reserve of exactly what?
It makes tulip mania look positively rational.
That is great news, Alex! I am glad to hear your investment paid off. I hope you are enjoying the Porsche. 😁
Not going to say this story is a complete fabrication but:
50 Bitcoin @ $1 = $50 cost basis
Last year about this time Bitcoin was as $24k/coin
$24000 x 50 =$1,200,000.00
$1.2M buys more than a Porsche and a few silver counts. Even after you paid taxes on that? You do know that bitcoin isn’t anonymous and is traceable . . . Right?
And yet you’re not crying that had you waited until this year at $100k/coin, that 50 coins would be $5M?
And somehow you held those coins and didn’t sell at the $50 mark, the $1k mark, the $10k mark or even the $60k mark back in 2021?
Yeah, not buying that story.
Oops – Bitcoin was about $64k in March 2024 not $24k as it was in March 2023.
$64000×50=$3,200,000.00
Musta’ been a really nice Porsche and a lot of silver coins!
IRS paging Alex . . .
I live in Mykonos Greece right now. Mt passport is Danish. I paid enough in taxes to choke a horse.
That is pretty unfair, BID. Alex has posted here before, for many years if I recall. My guess is that he didn’t provide us a rundown of what he socked away or what he paid in taxes (nor should he). Anyone that is familiar that Palatka is farm country (and a huge power plant) means they probably live near by (Jacksonville/St. Augustine). There is some beautiful property there. I believe him. It isn’t a cheap place to live.
That’s a valid opinion
I’m just not buying a story of someone (possibly of means as you imply) shopping on the Dark Web with 50 bitcoin (approx) and accidentally making only enough money to buy a Porsche and some silver coins.
As you say Alex isn’t obligated to provide details just as I’m not obligated to believe the story.
Just pointing out the math doesn’t work as the story was implied.
Only a fool would post their entire financial history on an open forum. But the story is real and I never said I used all of it for my GTS. 😁😁
BTW it wasn’t my first sell. I smartly sold a few at $10k never imagining it would do what it did. Oh well, 2 cherries and a toilet brush. Too late to redo it now.
I still own 2 houses in that area but I live mainly in Greece. My family is still in that area.
Talked to a young person recently about their decision to “invest” in bitcoin. Granted, I don’t truly understand it. What I know is there’s nothing tangible to hold in your hand. He basically said I was like my depression era parents. Perhaps.
You depression era parents survived.
I told my son in law that if the S ever did HTF he can take his bitcoin and I can take my 1964 silver quarters and which one of us could buy a tray of eggs from one of the farmers in Palatka or Yulee.
So the Bitcoin supply is limited to 21 million coins.
And you now have a “whale of all whales”, such as the federal government of the USSA, who has access to infinite money printing.
And when the same government begins to use their printing press to obtain Bitcoin, how does it not simply become US Dollar II or CBDC FedCoin at that point?
Wasn’t the (alleged) plot of Bitcoin to separate government from money?
“Wasn’t the (alleged) plot of Bitcoin to separate government from money?”
Indeed . . . Very concerning
And that it was originally hyped as anonymous but with Know Your Customer requirements imposed on the exchanges it’s anything but anonymous.
Bitcoin’s value is that of a hedge against government wasteful spending and inflation, people see that we are like Rome headed toward collapse so they are buying stocks and real estate, precious metals, art, classic cars and such because the currency, like in Rome, is going to shit. Bitcoin has gone up in waves while the value of the dollar declines – the two are inversely related. A nation that runs a trillion dollar deficit is a primer pump to make Bitcoin and all other inflation hedges go up. With BTC it is purely speculative – fortunes have been made by those who got in when BTC was less than a buck. So thousands of copycat cryptos followed – all trying to duplicate the instant path to riches.
If the United States was still on the gold standard I doubt if Bitcoin would even exist, except as an abstract mathematical idea of eggheads. But Bitcoin does exist BECAUSE WE ARE AN EMPIRE IN DECLINE. Hard money investor Doug Casey writes about the parallels of Rome and the USA:
https://internationalman.com/articles/decline-of-empire-parallels-between-the-us-and-rome-part-i/
A decade ago Alex Jones said Amerika had entered the empire phase of Caesars. Newsome burning California to the ground is described as Nero. Clinton and Biden as Caligula. Trump could be described as Vespasian, and I think if he does a good job we could see a Trump dynasty that lasts decades.
But Rome did not have the debt like we have today, nor did it have stock and real estate bubbles like we do now. Trump may have set off a tariff war, some are saying this is almost like they are intentionally crashing the world economy. Preacher Brandon Biggs predicted the bullet going by Trump’s ear, then said after Trump gets in the whole thing implodes into a bigger depression than 1929 – and the Smoot Hawley tariff act was to blame back then. So when you see big stock market down days you have to wonder if the preacher from Oklahoma tapped into our future.
Thus, if the implosion is coming, is it surprising the cryptos are being hammered? Cryptos have no intrinsic value, so a 20% drop ain’t diddly-shit, they could drop 100%. Does anyone really doubt that some day most cryptos will be worth zero? Most people don’t realize the extent of the bubble while they are in the bubble, then the bubble ends (like Tulip Mania, South Sea Bubble, 1929, Texas oil boom, etc) and boring reality re-asserts itself, and they say to themselves, oh god why didn’t I sell out at the top, why did I ride it all the way back to zero?
A duct-taped banana sells for $6.2 million at an art auction Nov 21, 2024
A piece of conceptual art consisting of a simple banana, duct-taped to a wall, sold for $6.2 million at an auction Wednesday, with the winning bid coming from a prominent cryptocurrency entrepreneur.
“Entrepreneur”. I always thought an entrepreneur went into business to create something of value from working capital. A cryptocurrency speculator is neither. Nor are real estate “entrepreneurs.” They are just trading land, and unless assisting in the building of a manufacturing plant, their role is limited and parasitic in nature. Away with them all.
The value of everything is subjective and set by supply and demand, the Austrian school of economics has taught us this.
Gold has no value if people are starving, for example.
So to answer your question, Bitcoin has value because people want it, and there isn’t enough to go around. It’s still held in very few hands and that causes very high volatility. The market decline in the last few days means the big investors are selling their “play money”, and speculative assets like Bitcoin are being sacrificed for what they consider real assets.
HODL, Eric, as long as you can. A single bitcoin might fund a retirement 10 years hence. Think of it in first principles. Does a magic form of gold, which can teleport from place to place instantly, and is very difficult to seize have any value? Yes, it’s really annoying to spend, and transaction fees are super high, but those other properties make it interesting to a lot of people.
Read this for the best description of why Bitcoin has value, from someone who is historically and economically literate: https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-part-1-of-4-94087a70d9e8
If you can’t touch it,,, you don’t own it.
My take…..
Bitcoin maintains a open ledger.
No power, no internet,,, no bitcoin.
Soon a Real ID will be required for Internet use. There goes anonymity.
Like a Ponzi scheme,,, requires constant new buyers to maintain ‘value’.
My thoughts exactly Ken,
In the long run bitcoin, ethereum, et al, are nothing more than vaporware.
“If you can’t touch it,,, you don’t own it.”
Just for clarity; are we in agreement you don’t own what ever you might have on deposit or in the checking account with your bank and/or other financial institutions?
“I probably ought to cash out what’s left of muh Bitcoin over at Overstock today – because what I’ve got left might not be worth a set of bath towels and bedsheets tomorrow.” -EP
Don’t sell low, Eric. Just chill. The price will recover sooner or later.
Are crypto prices volatile? Sure. But you can bet that the value of your dollars will steadily decrease, while crypto values will rise at times, sometimes meteorically.
I have oodles of bit coins, they’re called pennies.
I did donate at PayPal today, so you didn’t lose as much.
Finally figured out how.
‘As far as I have been able to determine, there are only a small handful of retailers who will exchange hard goods for crypto (one of them is the online retailer Overstock).’ — eric
Probably you haven’t shopped retailers on the dark web, who ONLY accept crypto for purchases such as ecstasy and entheogens (kindly share the blotter acid). This is one of its base-case uses: anonymity for buyer and seller.
The cavils raised against crypto in this essay apply to gold as well. When gold was legally defined as money, its value was fixed — at $20.67 an ounce from the late 1800s to 1933, and then at $35.00 an ounce after Frank Roosevelt’s devaluation was completed in 1934.
But when real money gets delinked from fiat currency, it becomes volatile in price, while fiat continues its slow-motion but steady collapse. Nevertheless, both gold and crypto will maintain their purchasing power over decades, while Federal Reserve Notes will lose about a third of their purchasing power every decade.
Crypto is correlated with the Nasdaq stock index, but more volatile. In the past few weeks, the Nasdaq has fallen about 10 percent, while crypto dropped about 20 percent: par for the course. As with stocks, cryptocurrency is best accumulated with steady monthly purchases to dollar cost average. Bitcoin bounces up just as violently as it slides down.
Here’s a shocker: house prices got chopped in half during 2006-2010. And it could happen again, starting right now. Many assets provide only an illusion of safety.
If house prices get chopped in half, will the cost of my weekly groceries also get cut in half? Hope so, being that one won’t happen independent of the other. We aren’t in a lending driven bubble like the mid-00s. More like housing continues to go “up” in devalued dollars due to the “tariffs”, wink, wink. So much winning! /s
Asset prices are a lot more volatile than consumer prices. The 12-month change in the Consumer Price Index went negative for a few months in mid-2009, reaching a maximum drop of minus 2 percent. That’s nothing compared to the 50 percent smash in stock prices and house prices in 2009.
But every drop in asset prices provokes a reaction from the currency counterfeiters. This chart shows that global M2 money supply (green line) leads Bitcoin’s price (blue line) by about 3 months:
https://ibb.co/WWRdfxwx
Printers with government badges are rising to the occasion. Thus, Bitcoin is likely to be higher in price by June than it is today. And indeed, the Fedsters are cutting back on quantitative tightening (shedding assets from their balance sheet). No fools, they see what’s coming, as Donnie Fubar shits the bed.
Are you talking about the Orange Man? He sickens me more and more every day.
I was lucky enough to have been using my brain at the time of the 2008-2010 real estate crash. I held off until prices dropped enough to make it sustainable. If you are “investing” in real estsate, check the house price compared to the Case Shiller index.
The problem today is that I don’t think real estate will necessarily crash. People can bleat on and on about honest money, the fed, etc, but few mention private equity as a reason that prices remain stubbornly high. Of course, private equity “wealth” like all other wealth indicies has been driven in a major way by the inflation of the money supply since the early 1980s. This bubble is so huge and that it will unlikely “burst” but will rather deflate slowly letting everyone drown in red ink.
Bottom line, the real estate market is no longer driven by consumers and borrowers. .
https://podcastaddict.com/the-pete-quinones-show/episode/191942982
Swamprat, you are absolutely correct regarding the big money driving home prices. Not only “US” funding, but American real estate is seen as a hedge for foreign investors looking to squirrel away funds so their local cleptocrats have a harder time seizing assets. The above link is worth a listen for a humorous conversationof this process. The end goal is to make a nation of renters.