Cryptocurrency

[RevolverRob]

Of all the issues with Bitcoin, this isn't one. Each bitcoin is divisible into 100 million satoshis.

But isn't Bitcoin deflationary not inflationary?

If you divide each coin by up to 100,000,000 times - you're increasing the number of general units in circulation. Seems like...inflation to me.

[MickAK]

But isn't Bitcoin deflationary not inflationary?

If you divide each coin by up to 100,000,000 times - you're increasing the number of general units in circulation. Seems like...inflation to me.

No. If a dollar could buy you a car so you started paying the plumber in pennies it's not inflation. I can't tell if you're joking.

[GJM]

Buffet's take:

https://www.cnbc.com/2022/04/30/warr...n-bitcoin.html

[GJM]

Here is a question, and I have no idea of the answer. If, since inception, you tally up all the money invested in crypto, all the outflows, and the real value of current crypto holdings, is crypto collectively in the red or black?

[0ddl0t]

If you included energy expended "mining" bitcoin I'd be pretty confident it is in the red

[Nephrology]

Reeks of massive bubble behavior. Anticipate lots of pain and lost savings to tulip mania 2021.

Fundamentally zero value as actual currency, 100% value in speculative buying/selling. It's all fun and games til the music stops. If you think you can time the market, have at it. Recognize it is gambling and spend accordingly.

This proved prescient

[Borderland]

Buffet's take:

https://www.cnbc.com/2022/04/30/warr...n-bitcoin.html

probably rat poison squared

.

[TheRoland]

I think your number one rule is great. I wouldn't encourage someone to invest in Bitcoin until they understood it. I think the book I listed is a good starting point and if someone told me they wanted to invest in Bitcoin I would encourage them to read that book and study and research it for a dozen hours before investing anything serious into it. Even advocates for it must admit that there is volatility to it and to be in it for the long term you have to believe in the theory behind it.

I skimmed this book years ago and do not recommend. This book has some serious limitations in that it sees Bitcoin as some outcome of historical economics rather than a software product. Pushing a maybe-not-totally-historical narrative of what money is instead of explaining what the blockchain is and how it works and what we've learned about using it so far. It was written in 2018 and we've come a long way in discovering Bitcoin's technical problems since then. We've had hard forks, tried to deal with block size issues unsuccessfully, had runaway gas fees, largely fallen out of love with proof-of-work...

Crypto is a software product and when I see economics-theory based books or worse, history books recommended about it, I really get concerned. I would recommend wikipedia over this.

I do not remember quite enough to summarize the book's thesis fairly but we've learned a lot (of technical, software stuff!) in 4 years that will likely prevent bitcoin from being used as a general currency, which I think was fairly integral to what this book wanted.

[Borderland]

Some comparisons to the S&P 500.

KEY FINDINGS:

$1,000 invested in cryptocurrency grew to $27,000 over five years. From 2016 to 2021, that's a compound annual growth rate of 94%.

The S&P 500 outperformed the cryptocurrency index in 2021. From 2013 to 2022, cryptocurrency was four times more volatile than the S&P 500 over the same period and 26 times more volatile than bonds.

After an initial period of lower correlation between assets, cryptocurrency and stocks have become more correlated through 2021 into the start of 2022, suggesting that cryptocurrencies may not be viable as a store of value.

Incorporating cryptocurrency as a small percentage (3%) into a moderately aggressive long-term portfolio of 70/30 stocks/bonds from 2017 to 2021 would have led to 42% higher investment returns. This comes at the price of 18% higher portfolio volatility.

In other words, extremely volatile.

[willie]

[QUOTE=RevolverRob;1418583]But isn't Bitcoin deflationary not inflationary?

If you divide each coin by up to 100,000,000 times - you're increasing the number of general units in circulation. Seems like...inflation to me. [/QUOTE

At the jail, a male guard told another male guard that he would blow a dude for $1000,000. The trusty, charged with forgery, asked the speaker if he would take a check. Crypto money reminds me of this.