BTC in the PP

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Arthur Boe Nansa
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Re: BTC in the PP

Post by Arthur Boe Nansa » Wed Sep 01, 2021 6:37 am

vincent_c wrote:
Tue Aug 31, 2021 9:41 pm
To make things simple, people should know that the type of blockchain bitcoin is is considered more secure than most of the newer blockchains that are mostly some version of proof of stake. At the end of the day, encryption is probabilistic and it is secure enough for most people, I think that is a fair statement.

If you are concerned about bitcoin’s security then the conversation is over.
It's kind of hard to say "considered more secure" as a blanket statement. There are definitely important trade-offs though and anyone who wants to see crypto as more than a novelty (store of value, medium of exchange, etc.) Should understand the fundamental consensus mechanism of the project they're interested in.
If you are concerned about hardfork, I’ll say this isn’t 2017 and I’m very sorry for you if you supported BCH all this time. The thing is, people should understand the one key thing about forks which is that when a blockchain forks the token holders get both coins in the fork and you don’t lose anything. The market will sort out which is the blockchain that retains the most value and it doesn’t affect you at all.
You may find the article I linked to about hard and soft forks in my above post compelling. Thank you for being sorry for me, we're sorry for ourselves (and everyone else) as well haha. But it's okay, we have our heads up and I understand crypto is an experimental industry that will continue to have many changes. I support quite a few other projects, though you should know that BCH is far from "dead", but i'll leave it at that. The point is optionality in technology and while we'd all like to see the dollar value of our coins rise exponentially i'm also very excited about the possibilities that are being offered in the industry.
Why does BTC have value? It’s because everyone knows BTC and trust is difficult to accquire. Not a lot of people even know ethereum and if someone can name a project that is looking to be a store of value blockchain then let’s hear it because if I can’t think of one and I’m in the space both as an investor and in business then how well known can it be?
Why does Tesla have value? Is it because they're selling more cars than Ford or Toyota? Because they've rolled out a million robotaxis?
You could say it's because everyone knows Tesla and trust is a difficult thing to acquire...but people said the same of Theranos and WeWork. The passage of time does funny things to our memory.

I'll offer you an alternative perspective- what if a blockchain isn't looking to be a store of value, but naturally becomes one by way of its utility being too attractive to ignore and permeating everyday life? That is what Ethereum proponents imagine is going to happen. Whether it does I don't know, but that seems like a smarter strategy then "accept BTC as a store of value because everyone covets it (why they covet it, no one really knows).

Image
The blockchain industry needs capital in order for blockchain projects to be funded. That capital has to get into the crypto industry somehow and whether you like it or not, the tool that is being used is the BTC blockchain. Is that even controversial?
No that's what Tether and stablecoins do, but that's a completely different can of worms.
That BTC is objectively the "gold standard" (pun unintended, but now intended) of crypto projects right now is not controversial. Even people who don't like it will admit that, but that's because the space is FAR from mature. I do not expect it to last, but that's what makes a market.
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Re: BTC in the PP

Post by vincent_c » Wed Sep 01, 2021 8:21 am

Everyone following this thread should watch this https://youtu.be/QBjzEya1WRc, and then I think that it might be a good idea to focus on the reasons why BTC should be part of the PP or not because that is what this thread is about but also I think in the context of this forum it doesn’t make sense to discuss opinions like whether BTC or stablecoins are used to move money into the blockchain industry (which both could be).

I certainly don’t want to get into why Tesla has value or discuss anything that makes anything subjectively valuable. On the other hand I was challenged before on statements like money is inherently valuable. I think that if you don’t understand why then these are things that need to be discussed because I think there is an objective answer to it.

I think there’s got to be a way for us to identify a risk, for example that bitcoin is not 100% secure, but to agree that it is secure enough as a system that it is ready to be used in the PP.

If you guys are only interested in blockchain technology and not how it ties into how PP investors should act based on the state of that technology and adoption then I don’t think that discussion belongs in this thread.
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Re: BTC in the PP

Post by bitcoininthevp » Wed Sep 01, 2021 10:31 am

We seem to agree or at least agree to disagree on many of the points so keeping only a couple for discussion.
Arthur Boe Nansa wrote:
Wed Sep 01, 2021 6:00 am
Yes and no. You've again dipped into this idea of "credible monetary policy", but you keep blurring the lines between code and "efficient market participation that seems so obvious and that everyone would follow it."
Im not trying to blur any lines, but there is some relation there. The code that people run is directly tied to market participation, especially regarding fork-ish stuff.

Im also not trying to be prescriptive here but descriptive. There are properties that it seems humans value/prefer in "money". The closer Bitcoin's properties (or other cryptos or even non-cryptos) seem to align with these preferences the higher price those monetary-type assets seem to have. These properties include the usual divisibility, fungibility, durability, verifiability, scarcity, etc. But for something digital, there seems to be another property: credibility. And that means the "faith" that people have that those other properties will not change in a way that would decrease those properties.

This unique property, credibility, of digital money-type assets can be increased by things like:
  • Supply limit (scarcity) is not changed
  • Decentralization is preserved or enhanced so that Bitcoin can better resist attacks on its money-ness
  • Lindy effect - "hey this things been around a while, I have more faith in it"
  • Lack of changes - "those Bitcoin dudes fought for 3 years just about a small increase to the block size?, woah, they probably arent going to change <other Bitcoin money-ness properties> easily
  • PoW mining doesn’t change
The common theme here is that (faith in->credibility) not changing properties is prioritized in Bitcoin.
Arthur Boe Nansa wrote:
Wed Sep 01, 2021 6:00 am
Is segwit a credible monetary policy?
It doesn’t seem to negatively affect any of Bitcoin's money properties above, so I think its ok. It also adds to transaction capacity which is good for Bitcoin's money properties. It adds "features" to Bitcoin which I think are net positive. Biggest downside might be it shows that Bitcoin does change "some" which might give people who want nothing to change about Bitcoin a negative feeling.
Arthur Boe Nansa wrote:
Wed Sep 01, 2021 6:00 am
And I'm glad we agree scarcity isn't really a fundamental of Bitcoin, rather credible monetary policy (which i've briefly expressed my doubts about above and below)
I think scarcity (limited supply) is important in a money-type asset. And I believe in general other humans do. But scarcity without credibility-of-said-scarcity means the scarcity is untrustworthy and thus might as well not exist.
Arthur Boe Nansa wrote:
Wed Sep 01, 2021 6:00 am
They do seem to prefer that, but I think its more of a play to the narrative than an actually rational position. I feel comfortable making this claim as it simply reflects user behavior: most people keep their coins on custodial exchanges, from a code perspective UASF doesn't make much sense, and the fact that the Whitepaper was literally titled "Bitcoin: A Peer-to-Peer Electronic Cash System" and that fairly fundamental aspect of the network has gone by the wayside for some kind of SoV. The shift in narrative feels less like a calculated decision and more like an inevitable conclusion to a system that has trouble innovating. If you have an oven (=Bitcoin) that's supposed to be multipurpose for lots of different dishes (=handle many transactions, at scale, for a low fee with adequate decentralization and permissionlessness), but the oven doesn't rise to a high enough temperature (=scaling issues), sunk cost fallacy makes the idea of relabeling the use case of the oven (=narrative shift) much more attractive than deeming it a bad oven (=admitting its failure) or spending the time, energy, effort, and money to make big changes to it that can also make certain people upset (=finding "compromises" that "change" parameters of the code).
Im a bit more sympathetic to this narrative change than most Bitcoin maximalists. I think narratives (the way humans think or talk about Bitcoin) have changed over time. But I see it less of some sort of conspiracy and more of an evolution of our understanding of Bitcoin.
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Re: BTC in the PP

Post by Arthur Boe Nansa » Wed Sep 01, 2021 11:37 am

Regarding limited supply as money, KBG has provided relevant insights before, but fair points BintheVP. We disagree on a few things, but I think we presented our cases openly and amicably. Hopefully it'll be good food for thought for others.
I'll wait until the next route of discussion to chime in. ;)
vincent_c wrote:
Wed Sep 01, 2021 8:21 am
Everyone following this thread should watch this https://youtu.be/QBjzEya1WRc, and then I think that it might be a good idea to focus on the reasons why BTC should be part of the PP or not because that is what this thread is about but also I think in the context of this forum it doesn’t make sense to discuss opinions like whether BTC or stablecoins are used to move money into the blockchain industry (which both could be).
Breedlove is smart and articulates himself well, but he's not always right.
I only brought up stablecoins because you said "That capital has to get into the crypto industry somehow and whether you like it or not, the tool that is being used is the BTC blockchain. Is that even controversial?"
It was a direct response to something you said and I didn't mean to start a whole other discussion about it.
vincent_c wrote:
Wed Sep 01, 2021 8:21 am
If you guys are only interested in blockchain technology and not how it ties into how PP investors should act based on the state of that technology and adoption then I don’t think that discussion belongs in this thread.
I think clarifying the aspects of blockchain technology is a prerequisite to the discussion of considering crypto as any part of a financial portfolio, especially if before considering it as part of the PP.
That being said, we're in the Variable Portfolio section, defined as "A place to talk about speculative investing ideas for the optional Variable Portfolio". Yes the topic is "BTC in the PP", but I don't think we've really deviated much from the point of this section of the forum. If people don't find the technical discussion interesting or relevant, that's fine as we were wrapping up.
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Re: BTC in the PP

Post by vincent_c » Wed Sep 01, 2021 12:10 pm

Arthur Boe Nansa wrote:
Wed Sep 01, 2021 11:37 am

I only brought up stablecoins because you said "That capital has to get into the crypto industry somehow and whether you like it or not, the tool that is being used is the BTC blockchain. Is that even controversial?"
It was a direct response to something you said and I didn't mean to start a whole other discussion about it.
I suppose I should say that it is the main way capital is flowing into the blockchain industry. It could very well be that people are increasingly using stablecoins to move capital. I'm not sure about that but let's just leave it at that. What I see is that BTC's market cap is 40% of all cryptocurrencies.
Arthur Boe Nansa wrote:
Wed Sep 01, 2021 11:37 am
I think clarifying the aspects of blockchain technology is a prerequisite to the discussion of considering crypto as any part of a financial portfolio, especially if before considering it as part of the PP.
That being said, we're in the Variable Portfolio section, defined as "A place to talk about speculative investing ideas for the optional Variable Portfolio". Yes the topic is "BTC in the PP", but I don't think we've really deviated much from the point of this section of the forum. If people don't find the technical discussion interesting or relevant, that's fine as we were wrapping up.
I mean, if you think that understanding blockchain technology is a prerequisite then I would only agree to the extent that each person needs to be reassured that BTC has the properties of money that make it relevant to this topic. Discussion regarding security only makes sense if there are fundamental flaws that will ultimately mean something has to replace bitcoin (ie. if quantum computers can break the encryption in less than 10 minutes). Or if you think that a new technology with better security ought to be the digital store of value but I don't think anyone is arguing that.

I know neither you nor bitcoininthevp are interested in convincing others, but then what is the point? Any bitcoin investor ought to be interested in persuading others to join the network because that is how you make sure the network remains valuable. I think it's more like this is the forum where we should be able to decide as a community what is the proper way to allocate to the PP. In particular to those who have considered diversifying their gold with BTC but have come to the conclusion that it is either not the right time or it is not necessary I would like to hear those points of view and the reasons behind it, but so far the people who haven't taken action seem to either be ignorant or to not have a good understanding of how bitcoin functions as a monetary-like property.

My interest in this is that I have taken action myself and I would like to constantly test whether that was the correct thing to do or perhaps I overlooked some critical thing and my hope is that I can rely on the members of this forum and leverage our collective intelligence to figure it out. I worry that if the prerequisite bar is set too high then most people here will not even be able to get started. We should be able to agree on simple things like BTC is secure enough.
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Re: BTC in the PP

Post by bitcoininthevp » Wed Sep 01, 2021 12:38 pm

vincent_c wrote:
Wed Sep 01, 2021 12:10 pm
I know neither you nor bitcoininthevp are interested in convincing others, but then what is the point? Any bitcoin investor ought to be interested in persuading others to join the network because that is how you make sure the network remains valuable. I think it's more like this is the forum where we should be able to decide as a community what is the proper way to allocate to the PP. In particular to those who have considered diversifying their gold with BTC but have come to the conclusion that it is either not the right time or it is not necessary I would like to hear those points of view and the reasons behind it, but so far the people who haven't taken action seem to either be ignorant or to not have a good understanding of how bitcoin functions as a monetary-like property.
Im not here for production value, like getting PPers to buy BTC. Likely we as a small forum cant move BTC price (speak for yourself bitcoininthevp!). Plus pumping my bags feels... wrong.

I am here for consumption value. I enjoy the perspectives and debate. Writing down thoughts forces an organization in the mind that is helpful. I personally enjoy trying to communicate knowledge I think I have to others so they can at least not-buy Bitcoin for the right reasons. I like to think my posts help people understand the space better, and if they buy some BTC, that’s cool too.
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Re: BTC in the PP

Post by vincent_c » Wed Sep 01, 2021 1:54 pm

I'll play devil's advocate if you're willing to debate.

One of the things that I read recently was about the tokenization of NFTs themselves. So for example if we have a bunch of NFTs that people have used as a store of value (like meme NFTs, cypherpunks, veefriends, etc) then if you were able to buy a fraction of that store of value as your store of value driving up the price of a cypherpunk to a billion dollars then could something like that be a threat to bitcoin?
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Re: BTC in the PP

Post by bitcoininthevp » Wed Sep 01, 2021 3:15 pm

vincent_c wrote:
Wed Sep 01, 2021 1:54 pm
I'll play devil's advocate if you're willing to debate.

One of the things that I read recently was about the tokenization of NFTs themselves. So for example if we have a bunch of NFTs that people have used as a store of value (like meme NFTs, cypherpunks, veefriends, etc) then if you were able to buy a fraction of that store of value as your store of value driving up the price of a cypherpunk to a billion dollars then could something like that be a threat to bitcoin?
Id refer you to my recent posts in this thread for how Id think about that. Does a particular punk have monetary qualities? Does it have a credible monetary policy?

If so, Id like to store some value in punks. But I dont think, from what Ive seen, they are better money than bitcoins.

I dont think they are valueless, I just think it’s the latest fad.

That said, they could all good 10000x in value still for all I know.
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Re: BTC in the PP

Post by vincent_c » Thu Sep 02, 2021 9:41 am

bitcoininthevp wrote:
Wed Sep 01, 2021 3:15 pm
vincent_c wrote:
Wed Sep 01, 2021 1:54 pm
I'll play devil's advocate if you're willing to debate.

One of the things that I read recently was about the tokenization of NFTs themselves. So for example if we have a bunch of NFTs that people have used as a store of value (like meme NFTs, cypherpunks, veefriends, etc) then if you were able to buy a fraction of that store of value as your store of value driving up the price of a cypherpunk to a billion dollars then could something like that be a threat to bitcoin?
Id refer you to my recent posts in this thread for how Id think about that. Does a particular punk have monetary qualities? Does it have a credible monetary policy?

If so, Id like to store some value in punks. But I dont think, from what Ive seen, they are better money than bitcoins.

I dont think they are valueless, I just think it’s the latest fad.

That said, they could all good 10000x in value still for all I know.
So let's explore this a little bit. An NFT is a unique piece of digital property and we both agree it has value and so it acts as a store of value we're just trying to assess how good it is. The monetary qualities I think are there in that they are monetary-like assets once they are tokenized (divisible, fungible, portable, scarce, means of exchange, etc).

In terms of monetary policy, it can't inflate or deflate, I'm still not sure I understand what makes a monetary policy credible or not credible.

What makes BTC different from $DOG? I genuinely believe it is down to liquidity which is the result of all the adoption, infrastructure, branding, etc that makes something a fad or not. Really whether something is a fad can only be evaluated in hindsight and is only because some of these things like adoption started to fall or branding failures or infrastructure that didn't develop or deprecated.
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Re: BTC in the PP

Post by Jack Jones » Thu Sep 02, 2021 12:41 pm

bitcoininthevp wrote:
Wed Sep 01, 2021 10:31 am
Arthur Boe Nansa wrote:
Wed Sep 01, 2021 6:00 am
They do seem to prefer that, but I think its more of a play to the narrative than an actually rational position. I feel comfortable making this claim as it simply reflects user behavior: most people keep their coins on custodial exchanges, from a code perspective UASF doesn't make much sense, and the fact that the Whitepaper was literally titled "Bitcoin: A Peer-to-Peer Electronic Cash System" and that fairly fundamental aspect of the network has gone by the wayside for some kind of SoV. The shift in narrative feels less like a calculated decision and more like an inevitable conclusion to a system that has trouble innovating. If you have an oven (=Bitcoin) that's supposed to be multipurpose for lots of different dishes (=handle many transactions, at scale, for a low fee with adequate decentralization and permissionlessness), but the oven doesn't rise to a high enough temperature (=scaling issues), sunk cost fallacy makes the idea of relabeling the use case of the oven (=narrative shift) much more attractive than deeming it a bad oven (=admitting its failure) or spending the time, energy, effort, and money to make big changes to it that can also make certain people upset (=finding "compromises" that "change" parameters of the code).
Im a bit more sympathetic to this narrative change than most Bitcoin maximalists. I think narratives (the way humans think or talk about Bitcoin) have changed over time. But I see it less of some sort of conspiracy and more of an evolution of our understanding of Bitcoin.
Yes. Bitcoin is a phenomenon at this point. It's a fire that started in Satoshi's lab, but now it's out of control. The whitepaper was Satoshi's description of the phenomenon at that point in time. We should not anthropomorphize a phenomenon and expect it to behave consistently or feel betrayed when it doesn't live up to our expectations. Like with fire, what matters is how we can use the phenomenon to our advantage.

I am also sympathetic. I totally lost interest in the space from 2017-2021 because I felt the block size should have been increased. However, now that I'm back, it still feels like the wild west I remember it. The mempool is regularly clearing so fees aren't bad, and I think Bisq is the coolest thing since sliced bread.
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Re: BTC in the PP

Post by bitcoininthevp » Fri Sep 03, 2021 9:12 am

Jack Jones wrote:
Thu Sep 02, 2021 12:41 pm
I am also sympathetic. I totally lost interest in the space from 2017-2021 because I felt the block size should have been increased.
Without getting too technical here, there was an increase in the block size in 2017 / segwit. See the "size" column here for recent blocks:

https://mempool.space/blocks

It might not be an increase of what many wanted but there was an increase.
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Re: BTC in the PP

Post by bitcoininthevp » Fri Sep 03, 2021 9:19 am

vincent_c wrote:
Thu Sep 02, 2021 9:41 am
I'm still not sure I understand what makes a monetary policy credible or not credible.
See my other posts for credibility-building examples.

A rough response in this example:

- who "owns" or can affect the smart contract managing this NFT? (many people scam, even in groups)
- is the smart contract itself trustworthy? (many are hacked/bugs)
- what prevents changes to the smart contract? (people, the smart contract itself, etc)
- what chain is the smart contract on? (many chains have been attacked, reorg'd, hacked, or had a small group blacklist transactions they didn’t like)
- is the chain the smart contract is on resistant to the SEC or other organizations sending cease and desist letters?
- is the chain the contract is on becoming more or less decentralized over time?
- etc, etc
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Re: BTC in the PP

Post by vincent_c » Fri Sep 03, 2021 10:42 am

bitcoininthevp wrote:
Fri Sep 03, 2021 9:19 am
A rough response in this example:

- who "owns" or can affect the smart contract managing this NFT? (many people scam, even in groups)
- is the smart contract itself trustworthy? (many are hacked/bugs)
- what prevents changes to the smart contract? (people, the smart contract itself, etc)
- what chain is the smart contract on? (many chains have been attacked, reorg'd, hacked, or had a small group blacklist transactions they didn’t like)
- is the chain the smart contract is on resistant to the SEC or other organizations sending cease and desist letters?
- is the chain the contract is on becoming more or less decentralized over time?
- etc, etc
These are good points and why Ethereum dominates the NFT market.

I haven't looked too much into it but I can imagine it being similar in concept to how an L2 works so the security of the $DOG token is likely to be different to the underlying L1. I think you were probably referring to what blockchain the actual underlying NFT is on. I believe the doge meme NFT is a ERC-1155.

Despite all this, I don't see them as hurdles that cannot be overcome since it is possible that the difference in trust in Ethereum and Bitcoin become negligible.

What I see is that digital property opens up an infinite number of potential stores of value to a trustless way of transacting them. It would be like it was possible to have a rare art ETF, fractionalize the ownership, and then sell that to individual investors as a store of value.
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Re: BTC in the PP

Post by Jack Jones » Thu Sep 30, 2021 9:07 am

Jack Jones wrote:
Fri Aug 27, 2021 10:29 am
Jack Jones wrote:
Tue Jul 27, 2021 3:11 pm
Stocks: 25%
Bonds: 20%
Gold: 20%
Cash: 20%
Bitcoin: 15%
I created a portfolio on Yahoo Finance to track this. +4.17% since thread inception. BTC-USD has risen 22% since then.
-0.04% since inception. Bitcoin has been the only positive asset at +9%.
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