This is a VERY detailed and informative post that has me thinking about cryptocurrencies from angles I had never considered before. Because it isn't 'real' as in the sense of paper money, I could never get my head around it. I know that I get paid 'digitally' these days -numbers transfered from one bank to another - but I can go to a cash machine or a bank and withdraw it as real money... I've never believed that I could do that with crypto and so I just don't see it as anything real. This idea that it is safer is kinda lost on me. If any government really wanted to destroy crypto, they could simply turn off the power supply and block online servers. I'm not saying they will, but the whole concept just doesn't compute in my head. I think I am thinking in a similar way to Warren Buffett... I just don't understand it. Still, as a vehicle to make money, it may be worth dipping my toe and putting in a few hundred or thousand dollars to see if it generates a return over the years that I can 'cash out' later.
As a pure "investment" I think it's worth allocating a small % of your NW to purely just to see what happens, as you said. It's a pure speculation IMO, rather than one that's based off fundamentals.
To invest past speculation you've then gotta ask what the intrinsic value is - Bitcoin (or any other crypto) doesn't really produce or do anything past maybe being useful in super fringe cases. It's been around long enough to have dispelled all the "it's just like the internet!" people and other hype (the blockchain isn't new tech, it's old) and the market mostly runs off hype and FOMO (which is why it's worth being exposed - it's fun!). There's a bunch of issues with the concept of decentralisation itself (many of those who have commit access to Bitcoin Core code are affiliated with Blockstream, who profit from Lightning) and... that's all my brain is bringing me now since I am reaching back to my deep research over 2020 haha!
It's hard to comment on this topic because I'm no expert in cryptocurrencies. Perhaps more focus on institutional investors? You did mention what Larry Fink thinks but I believe that overall, giving attention to the most important market participant group could be a positive. You made a very nice overview of the topic, Ryan! It's just a suggestion, not criticism.
> giving attention to the most important market participant group
It's funny that the technology itself will ultimately lead to more freedom and benefit people everywhere who don't want to be subject to the whims of the huge institutions but in the meantime the huge institutions' opinions are the ones that will create the momentum.
Or at least help it achieve mass adoption *sooner*.
This is a VERY detailed and informative post that has me thinking about cryptocurrencies from angles I had never considered before. Because it isn't 'real' as in the sense of paper money, I could never get my head around it. I know that I get paid 'digitally' these days -numbers transfered from one bank to another - but I can go to a cash machine or a bank and withdraw it as real money... I've never believed that I could do that with crypto and so I just don't see it as anything real. This idea that it is safer is kinda lost on me. If any government really wanted to destroy crypto, they could simply turn off the power supply and block online servers. I'm not saying they will, but the whole concept just doesn't compute in my head. I think I am thinking in a similar way to Warren Buffett... I just don't understand it. Still, as a vehicle to make money, it may be worth dipping my toe and putting in a few hundred or thousand dollars to see if it generates a return over the years that I can 'cash out' later.
Thanks for reading!
Re: “I can go to a cash machine or a bank and withdraw it [GBP, USD, etc] as real money”
What makes it real?
Arguably nothing anymore, now that currencies aren't backed by anything physical that has value.
I thought this was an interesting post about how not just central banks but also many small private banks used to print paper currency.
https://pomp.substack.com/p/fake-currencies-meme-coins-and-history
But of course that didn't work, because nobody could tell "what is real".
Maybe the same thing is happening with central banks.
Do these currencies have real value?
Only to the extent that anyone else believes that they do.
And since the central banks keep printing more and more of them (paper or digitally), people's belief in them evaporates.
As a pure "investment" I think it's worth allocating a small % of your NW to purely just to see what happens, as you said. It's a pure speculation IMO, rather than one that's based off fundamentals.
To invest past speculation you've then gotta ask what the intrinsic value is - Bitcoin (or any other crypto) doesn't really produce or do anything past maybe being useful in super fringe cases. It's been around long enough to have dispelled all the "it's just like the internet!" people and other hype (the blockchain isn't new tech, it's old) and the market mostly runs off hype and FOMO (which is why it's worth being exposed - it's fun!). There's a bunch of issues with the concept of decentralisation itself (many of those who have commit access to Bitcoin Core code are affiliated with Blockstream, who profit from Lightning) and... that's all my brain is bringing me now since I am reaching back to my deep research over 2020 haha!
Interesting. I found https://en.wikipedia.org/wiki/Blockstream#Industry_partnerships and had never heard of Blockstream before.
If you ever have more to share about Bitcoin (e.g. the issues with decentralization, etc), I'm definitely all ears.
It sounds like you know a bunch about this topic.
I do think Bitcoin will keep growing. Perhaps I should finally overcome my little existential crisis of ignoring BTC in 2013 and finally buy some.
I know you think about investments all the time.
What pros and cons or adjustments would you add to what I've written? Thanks.
It's hard to comment on this topic because I'm no expert in cryptocurrencies. Perhaps more focus on institutional investors? You did mention what Larry Fink thinks but I believe that overall, giving attention to the most important market participant group could be a positive. You made a very nice overview of the topic, Ryan! It's just a suggestion, not criticism.
What a great point!
> giving attention to the most important market participant group
It's funny that the technology itself will ultimately lead to more freedom and benefit people everywhere who don't want to be subject to the whims of the huge institutions but in the meantime the huge institutions' opinions are the ones that will create the momentum.
Or at least help it achieve mass adoption *sooner*.
Whoa, Tim Draper wondering whether the USD will rapidly become worthless, maybe just 7 years from now.
I haven't heard anyone else with such a drastic view.
https://youtu.be/2MLQJfGZo-U?si=jgsFKXcClGGsLDB-&t=598
“If you look at a chart on who's optimistic about Bitcoin, it's:
Nigeria
India
Indonesia
Vietnam...
The youngest countries in the world.
And who's pessimistic on bitcoin? It's:
France
Japan
Germany
the oldest countries in the world.
Right?
So focus on where the youth is.
They're touching the chain more directly.
And don't get too caught up in what's going on in US politics.
It's probably going to change anyway.”
— Matthew Sigel, Head of Digital Assets Research, VanEck
https://youtu.be/eqaUbig9YDU?si=mLeHAQCY10gILyDk&t=1931
Whoa, I hadn't heard that point before.
Very interesting that big firms like VanEck are now promoting Bitcoin.