The Bitcoin (BTC) thread

Arado

Pelican
Gold Member
Interesting tweet



(not sure why it's not pasting but Jack Dorsey tweeted that BTC will replace the USD)

Thoughts on poor price action:

-Fear of Fed tightening, they are cutting QE so less liquidity is sloshing around markets

-So many people expecting the four year cycle and stock to flow to play out that it somewhat became invalidated

-Fractional ownership of paper bitcoin exceeding the actual bitcoin available, a lot of people think they own it but won't be able to redeem when they want.



-Selling pressure from Asia

 

cosine

Woodpecker
A year ago, I moved a former 401k into a self-directed IRA. I did well with GBTC and ETHE, but recently moved it all into itrust capital which allows purchase of actual cryptocurrencies inside of an IRA account.

It was a bit of a pain, but I also inadvertently sold the GBTC when BTC was at $65k and then repurchased it at $46k.

To me, retirement accounts ironically seem like the best place to invest in volatile assets like crypto. If they go up a ton, I'm set, and if they tank, well, at least I won't personally need that money anytime soon.
 

chance vought

Woodpecker
Protestant
Any idea if Chinese miners are still forced into dumping during their move out? Supposedly many are moving to Russia.

I wonder the same thing though. I constantly meet and hear of people who own BTC. Some own $5k worth, some own 3-10 btc. "Institutional adoption is coming" is either simply taking quite a while and we need to be patient, or I am missing something.
It seems more people I work with own it than I thought, and one has ~10 BTC. I think 2020 woke a lot of normies up, including me.
At the very end of “The Fiat Standard”, Ammous writes that one scenario could be a gradual unwind of the current debt slave system, rather than a sudden collapse, with BTC adoption staying at a steady pace, and holders paying off their debts and not taking on new ones, and less USD being created because fewer people are taking on debt.

My thoughts are that this would lead to a lower inflation rate in USD, which would slow BTC adoption…it would just gradually take over, so there is never a complete financial collapse and the war or suffering that would accompany that. The best way to deal with debt is to pay it off, which with a gradual transition, instead of default, could be accomplished over the next few hundred years.
 
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cosine

Woodpecker
with BTC adoption staying at a steady pace, and holders paying off their debts and not taking on new ones, and less USD being created because fewer people are taking on debt.
I sold a $1M house to a guy with a high level position at Google. He took out a regular mortgage for 75% of the price, and just borrowed $250k against his Google stock to make the down payment. Got the loan at 1.875% too.

Why would bitcoiners not do the same? Michael Saylor preaches exactly the same thing; don't sell and pick up capital gains, borrow against it in fiat instead.

Debt will just follow into the crypto space; institutions like BlockFi already give out loans.
 

Talus

Robin
Other Christian
If your collateral depreciates, and you can't refinance, you default. At least with BlockFi. Sounds like a bad game to play when you are holding a volatile asset class in uncertain times. Also, with BlockFi, your collateral is held 3rd party, so you can also lose your money by not having access to it (not your keys, not your coins), ie, mismanagement/backdoor scam/hacker. The whole point of Bitcoin is financial sovereignty, not wealth accumulation. The latter is just a by-product of investing your time and labor into a hard money asset.
 

chance vought

Woodpecker
Protestant
If your collateral depreciates, and you can't refinance, you default. At least with BlockFi. Sounds like a bad game to play when you are holding a volatile asset class in uncertain times. Also, with BlockFi, your collateral is held 3rd party, so you can also lose your money by not having access to it (not your keys, not your coins), ie, mismanagement/backdoor scam/hacker. The whole point of Bitcoin is financial sovereignty, not wealth accumulation. The latter is just a by-product of investing your time and labor into a hard money asset.
Solution: overcollateralize the loan with BTC…20% or 10% LTV.
Unchained Capital, for loans, you hold the keys together in a multisig …
Saylor took it a step further, where he is executing a speculative attack on fiat…borrowing at artificially low interest rates to buy BTC. This has been done fiat/fiat, where you borrow the weaker currency to buy the stronger one. If the weaker country has insufficient reserves, it will have to devalue its currency, while the stronger currency gets stronger because it is being bought. If larger corporatiions did this as well, they could borrow trillions.
If this became a strategy I would expect finance regulations that prohibited BTC holders from getting loans. This only works if interest rates are kept artificially low, which is the only way fiat money can function anyway.
 

BURNΞR

Ostrich
Agnostic
I sold a $1M house to a guy with a high level position at Google. He took out a regular mortgage for 75% of the price, and just borrowed $250k against his Google stock to make the down payment. Got the loan at 1.875% too.

Why would bitcoiners not do the same? Michael Saylor preaches exactly the same thing; don't sell and pick up capital gains, borrow against it in fiat instead.

Debt will just follow into the crypto space; institutions like BlockFi already give out loans.

Fact check me if I'm wrong but interest rates borrowing against crypto is pretty high. Blockfi charges 10% to non-US people and if you are a US-person you get something like 5% which is high when you remember that people are using a line of credit against conventional assets like their house for much lower interest. Saylor is getting loans against his company, not his BTC. It's not really a fantastic deal to borrow against crypto right now, this is why Saylor encourages people to borrow at low interest rates against their property/conventional bank approved assets. You can make the argument that 5-10% interest rate is very good considering the way crypto can moon but this is only a good deal if you are in a bull market or have stable job or income and have the stomach to pay off interest in 4-5 year horizons. I'm not saying it can't work. I borrowed against crypto earlier in 2020 and it worked out well for me despite the high interest rate, ideally I want 3% or lower interest rate.
 

kurtybro

Woodpecker
I sold a $1M house to a guy with a high level position at Google. He took out a regular mortgage for 75% of the price, and just borrowed $250k against his Google stock to make the down payment. Got the loan at 1.875% too.

Why would bitcoiners not do the same? Michael Saylor preaches exactly the same thing; don't sell and pick up capital gains, borrow against it in fiat instead.

Debt will just follow into the crypto space; institutions like BlockFi already give out loans.

Well first of all the volatility can wreck if you don't go in at a very conservative LTV.

Another thing is that AFAIK these lenders (all relatively new) require full custody of the crypto; seems like huge counterparty risk. Especially if your LTV is low, you risk losing alot of collateral, relatively speaking.

- You're being loaned less than 50% of your BTC value in fiat, a depreciating currency...WITH excessive interest.
- You're accepting all of the volatility risk in exchange for dirty fiat.
- You can get liquidated without getting the chance to put up more collateral under certain circumstances.
- They win either way; they seize your bitcoin upon momentary volatility, or they make a risk free return on the fiat.

So you end up taking all of the risk, and can get screwed on a quickly-reversed plummet.

What about this multi-sig thing? Well how are they able to do this :
Finally, in the most extreme bitcoin price drops, Unchained Capital must immediately liquidate loans at 110% CTP. This is the worst case scenario, but we must follow this rule without exception to ensure that Unchained can continue to lend to clients in the future.
They say they use a trusted "third-party key agent (Citadel SPV)"...... What about the hacking risk then? Is there any insurance?


What if bitcoin moons and you want to withdraw some collateral?

If the Bitcoin price increases so that the CTP ratio exceeds 300%, the borrower can withdraw collateral until the CTP ratio is back to the original 250%. Collateral refunds are supported once per month, although it is a good practice to keep extra collateral in the event that the price of bitcoin drops.


You seem to be taking all of the risk. What risk are they taking?

All in all, the value prop doesn't seem to be there, from my perspective.
 
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bucky

Hummingbird
Other Christian
It seems more people I work with own it than I thought, and one has ~10 BTC. I think 2020 woke a lot of normies up, including me.
At the very end of “The Fiat Standard”, Ammous writes that one scenario could be a gradual unwind of the current debt slave system, rather than a sudden collapse, with BTC adoption staying at a steady pace, and holders paying off their debts and not taking on new ones, and less USD being created because fewer people are taking on debt.

My thoughts are that this would lead to a lower inflation rate in USD, which would slow BTC adoption…it would just gradually take over, so there is never a complete financial collapse and the war or suffering that would accompany that. The best way to deal with debt is to pay it off, which with a gradual transition, instead of default, could be accomplished over the next few hundred years.
This is all interesting, but maybe most interesting to me is that your coworker told you he holds about a half million USD worth of BTC. I once had a coworker brag to me that he and his wife had saved up a million USD over the years by contracting in Afghanistan and Iraq, which also stunned me. Not the money, but the fact that he told me, someone he barely knew, about it.

Blessings of living in what is still a pretty safe and high trust country, I guess. I do not have anywhere near that kind of wealth in USD or crypto or anything else, but if I did no one but my wife and maybe my parents would know about it.
 

chance vought

Woodpecker
Protestant
This is all interesting, but maybe most interesting to me is that your coworker told you he holds about a half million USD worth of BTC. I once had a coworker brag to me that he and his wife had saved up a million USD over the years by contracting in Afghanistan and Iraq, which also stunned me. Not the money, but the fact that he told me, someone he barely knew, about it.

Blessings of living in what is still a pretty safe and high trust country, I guess. I do not have anywhere near that kind of wealth in USD or crypto or anything else, but if I did no one but my wife and maybe my parents would know about it.
My work requires a high level of trust, compared to most jobs, so some deep and personal stuff is sometimes discussed. But yeah, most of my own family doesn’t know what I have or even how to use Bitcoin, which I am trying to change, especially if something should happen to me, even my wife wouldn’t know how to spend a coin. No one wants to put in the time to learn why, which would give them the motivation to learn how.

It took me about a year of real study before I really got it. Even then I am always learning something, but the more I learn the more my conviction grows. Once that happened, my entire mindset changed about money.

I never had a savings account since 2004, because I knew I was losing money. Basically I invested everything except 1 months worth of expenses, because i couldn’t afford to lose 7% inflation tax on keeping an “emergency fund”. I couldn’t imagine having $20k or $50k in a bank account, losing 7% of its value per year. How stressful that was in hindsight. I had few liquid assets to survive with if I got sick or lost my job. All due to the inflation tax…which I thought was normal. Now I do have an emergency fund, in Bitcoin, that I could call on for a loan if I had to.

Thats The hurdle of Bitcoin, it is so unlike anything else, there is no shortcut to the learning process, because it has to change you. I was a slowly boiling frog in 2019, but then there was 2020, and I put in the time to learn.
 

Cynllo

Woodpecker
Other Christian
Blessings of living in what is still a pretty safe and high trust country, I guess. I do not have anywhere near that kind of wealth in USD or crypto or anything else, but if I did no one but my wife and maybe my parents would know about it.

I once told someone how much "money" I have. Most, norms especially, don't really know the definitions of wealth. It was obvious that that info spread like wildfire, which is not good, as I have paid exactly zero income tax in my life. And you guys probably won't believe this, but women started taking serious interest in me.

@chance vought - My situation has changed with my last will and testament. But I have a detailed will, which was held by a now deceased family member. This was encrypted on a USB. A friend also had the encrypted file.I just spent 2 days very clearly laying out the management of my levers. This gives peace of mind. A friend, who I guess had a 10 figure net worth in crypto has a different method. He just told me he has a password file somewhere on his computer.

In your situation, you could put your instructions in a high grade safe built into the floor. Even if your wife doesn't know how to get into it, it can be cracked in the event of your passing.
 

cosine

Woodpecker
I once told someone how much "money" I have. Most, norms especially, don't really know the definitions of wealth.
I'm curious how you would define those terms.

I have paid exactly zero income tax in my life.
I'd guess that you were born into a family with money(not an insult), so you didn't need jobs growing up, and were able to milk investments. But wouldn't you still have to pay income taxes on dividends, sale of assets, etc? Or were you(or someone) able to simply leverage enough against them that cash reserves were larger than any of your everyday needs?
 

cosine

Woodpecker
Well first of all the volatility can wreck if you don't go in at a very conservative LTV.
Agreed. Super risky.
- You're being loaned less than 50% of your BTC value in fiat, a depreciating currency...WITH excessive interest.
I'm guessing these rates will drop... if you have $100k of BTC, you'll pay a high rate. If you have $100M of BTC, I bet you'll pay a low rate.
What if bitcoin moons and you want to withdraw some collateral?
If it moons and you want to withdraw collateral, you can pay off debts with the sale, but still have more to invest elsewhere.
 

Cynllo

Woodpecker
Other Christian
I'm curious how you would define those terms.

From what I have heard from norms, it seems most think that a millionaire is someone with more than $1,000,000 in the bank. They don't have too much concept that most of millionaires'/billionaires' wealth is held in assets, and it is generally unwise to hold more cash then you need for emergencies.

Net worth - the fiat value of your all your assets. I make a distinction between liquid and illiquid. Since the actual value of illiquid assets is harder to know and will have higher overheads and burden to sell. And if you have your own private business it is very hard to put a price on it.

Millionaire - someone with a net worth over $1M.

I'd guess that you were born into a family with money(not an insult), so you didn't need jobs growing up, and were able to milk investments. But wouldn't you still have to pay income taxes on dividends, sale of assets, etc? Or were you(or someone) able to simply leverage enough against them that cash reserves were larger than any of your everyday needs?

I'm not an American, so I don't have the burden of the long-arm of The IRS.

My parents had average to below average jobs, but my mother seems to have been quite a good financial manager, and I think she may have amassed about $200,000 in stocks, which is a lot for such people in my home country.

I didn't do much with normal investments as my mind was poisoned by Peter Schiff. But I never listened to the norms who spent a lot of their lives telling me what to do, that I am idiot and laughing at me. But much that is beyond salary is going to be something new. I chose not to tell these people about any of this. When I became liable to pay tax I left the country and now I live under The Shariah. The crypto scene is getting very hot under it. Looks like Binance could be moving to Dubai.

FHICC9VaMAUCG8J.jpg


My reception is the powers that be are pivoting to China and crypto in an attempt to get away from The World Bank, IMF, OECD, WEF. Crypto is of no threat to them as these countries have few taxes that not everyone pays. They don't care about regulation. People are still buying 7-figure apartments with a mix of fiat, gold, stocks, crypto, even though The OECD is telling them it has to stop. Regulation and stopping terrorists is just an excuse to control the flow of money. When was a terrorist ring ever taken down by money flows? In their model, their wealth is derived from not controlling the flow of money.

I would be very against raising children on trust funds etc. I know a couple of these types - not trust funds, but always had ample money available for whatever they need. One is like a cat that you have to feed. Children need to experience a good amount of hardship, boys at least.
 

cosine

Woodpecker
I didn't do much with normal investments as my mind was poisoned by Peter Schiff.
I've been there too. I was certain that in 2017-2018 we were on the brink of collapse. I owned some gold funds and etc, now I just see charts that are mostly sideways for decades. And remembered that Peter Schiff sells gold for a living. His income depends on him believing that it will go up.

I would be very against raising children on trust funds etc.
Couldn't agree more. Sons will lack independence, daughters will become high-maintenance drama queens.

Millionaire - someone with a net worth over $1M.
For what it's worth, in the US at least, we generally define millionaires as people having $1M outside of equity in their personal homes. A bit nitpicky of course.
 

BURNΞR

Ostrich
Agnostic
I too listened to Peter Schiff instead of Max Keiser so I never bothered looking into Bitcoin or crypto. When I heard ETH being mentioned at around $4 I was so uninformed I thought it was a stock. Schiff understands macro economics well but when it comes to crypto he has some serious blinders or just strong incentives to shill his gold selling business. I think it is clear that based on his own disclosed behavior he doesn't believe in gold. By his own admission he "doesn't own much gold, he owns gold mining stocks". According to him this is not hypocritical because the mining companies hold gold themselves, but upon closer examination the mining companies don't like to hold gold and sell it at a loss to get rid of it. Even the mining companies do not believe the price of gold will go up.

After over a decade of touting gold being the ultimate inflation hedge we all know now this thing has utterly failed and is the butt end of every joke. Everything you can conceive of has outshined gold as an inflation hedge. Cars, property, land, collectables, crypto/NFTs, businesses, GPUs, LEGOs (yes, the toy), food, gasoline, lumber, stocks, home appliances, clothes, hotels and flights. Gold is stuck around 1800 after 10 years.
 

Penitent

Woodpecker
Orthodox
You don't buy gold if you want to earn yield. One thing gold does well is hold it's value over time. An ounce of gold would buy you the same today as is would a hundred years ago or a thousand years ago. Doesn't appreciate much. It's like an anchor in your portfolio, which can be a good or bad thing depending on your investment strategy.
 
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