BTC in the PP

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glennds
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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 11:05 am

vincent_c wrote:
Mon Aug 23, 2021 10:44 am
glennds wrote:
Mon Aug 23, 2021 10:38 am
Over a 5 year period Bitcoin has been phenomenal. Over a two month period starting in May 2021, not so much.
I would add that over the next 10 years (could be much shorter) gold is likely to not be such a good store of value relative to bitcoin and then sometime after both gold and bitcoin will stabilize and both will be good long term stores of value again.
That's a reasonable prognosis. However that case you make rests upon the premise that there is a material overlap in the respective markets for the two assets. And a secondary premise that we are in a period of movement from gold and into Bitcoin. This may be the case, but I have found it very difficult, maybe impossible to ascertain.

In my quest for the answer I have found a lot of opinion, but no real empirical data.
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Re: BTC in the PP

Post by vincent_c » Mon Aug 23, 2021 12:32 pm

How about the price trend for gold since 2020 when BTC started its current bull run?

Plot the trends on a graph and see if you can spot the 4-5% annual decline in the largest structures.
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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 12:51 pm

vincent_c wrote:
Mon Aug 23, 2021 12:32 pm
How about the price trend for gold since 2020 when BTC started its current bull run?

Plot the trends on a graph and see if you can spot the 4-5% annual decline in the largest structures.
I can see the correlation but is there a way to prove causation?
How do we know the gold price decline is because gold investors are switching to Bitcoin?
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Re: BTC in the PP

Post by vincent_c » Mon Aug 23, 2021 12:55 pm

They don't have to, but investors who would have stored value into gold historically may be moving those funds into bitcoin.

The concept behind the PP is a theoretical one, the concept of a store of value is also theoretical, so you just have to go with theory. In 10 years you can backtest and "prove" whether this was correct or not.
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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 1:12 pm

vincent_c wrote:
Mon Aug 23, 2021 12:55 pm
They don't have to, but investors who would have stored value into gold historically may be moving those funds into bitcoin.

The concept behind the PP is a theoretical one, the concept of a store of value is also theoretical, so you just have to go with theory. In 10 years you can backtest and "prove" whether this was correct or not.
I'm not questioning the PP theory or the store of value concept. I'm a Bitcoin believer.

What is unclear to me is the relationship between Bitcoin and gold, specifically the assumption that one is eroding the other. As you say, an investor "may" move funds from gold to bitcoin as a store of value play, but it is just not possible to say the degree to which that is happening. Because the universe of bitcoin investors is not limited to gold investors. So to forecast bitcoin's growth in market cap as a transfer of gold's market cap may not be sound. To use your term, the correlation is theoretical at this point and can only be proven through backtest some time in the future.

Personally, I think there is probably some competition between gold and bitcoin going on, but I also believe the majority of bitcoin investment is completely independent of the gold market despite the natural tendency to compare the two assets as non-fiat stores of value and inflation hedges.
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Re: BTC in the PP

Post by vincent_c » Mon Aug 23, 2021 1:22 pm

You have to make your own decision at the end of the day.

For me, the reason I know it will be that way is because I believe that the total value stored in these stores of value is distributed between all property that can act as a store of value. If one rises then it must erode from the others what would have otherwise flowed to them. Throughout history it was only gold that was the best proxy for this long term store of value and since you do not disagree that bitcoin is a store of value then they must share the same pie.
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Re: BTC in the PP

Post by glennds » Mon Aug 23, 2021 1:59 pm

vincent_c wrote:
Mon Aug 23, 2021 1:22 pm
You have to make your own decision at the end of the day.

For me, the reason I know it will be that way is because I believe that the total value stored in these stores of value is distributed between all property that can act as a store of value. If one rises then it must erode from the others what would have otherwise flowed to them. Throughout history it was only gold that was the best proxy for this long term store of value and since you do not disagree that bitcoin is a store of value then they must share the same pie.
Not necessarily. What if a material % of Bitcoin investors are not there for store of value rather pure speculation? They are investing in Bitcoin in lieu of equities or any other asset class simply because they are betting Bitcoin will go up more. So in this way, the rise of Bitcoin may not involve an equivalent erosion of gold.
I know one guy who sold some residential land recently because it has run up in the hot RE market, and he threw the money into Bitcoin on the belief that it has more upside potential. This guy never would have considered gold. What about the techie base of Bitcoin aficionados? They're attracted to the technology, definitely would not otherwise put money into something as antiquated as gold.

I have a foot in each camp, I'm probably 75% long under store of value theory, and 25% trading the volatility as a shameless speculator.

Not trying to be argumentative, I'm enjoying the discussion, and you've already made me look at a few things differently. Thx
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Re: BTC in the PP

Post by vincent_c » Mon Aug 23, 2021 3:48 pm

Any speculation just goes into volatility across varying time horizons and individual investor behavior gets averaged out when you look at things in the macro sense.
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Re: BTC in the PP

Post by bitcoininthevp » Tue Aug 24, 2021 1:41 pm

seajay wrote:
Sat Aug 21, 2021 2:55 pm
bitcoininthevp wrote:
Sat Aug 21, 2021 10:40 am
I think gold and bitcoin are stores of value.
Gold, paintings by a favored dead artist, etc. are finite/scarce and as such tend to store value. When one is selling to raise cash/money another with surplus capital looks to buy. Bit coin scarcity is virtual/manufactured, could vanish overnight. Bit coin is more a Ponzi, greater fool, its price reflects only speculation on its future value.
You cant really just wave hands and say Bitcoin's scarcity is fake and can vanish overnight. There are very specific things keeping the 21 million bitcoin cap in place. At least attack one of those!

Bitcoin holds almost none of the characteristics of a ponzi scheme.

The more towards the monetary asset side that an asset is the more purely "greater fool" it is. The only reason gold isnt pure great fool is that it has non-monetary uses. Which, as Ive pointed out is a bad thing. Its the same reason the by gold is better money than silver, it has a higher monetary premium. Harry talks about this topic.
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Re: BTC in the PP

Post by bitcoininthevp » Tue Aug 24, 2021 1:45 pm

vincent_c wrote:
Sat Aug 21, 2021 2:56 pm
bitcoininthevp wrote:
Sat Aug 21, 2021 10:40 am
Does "monetary-like assets" put a better label on it? Or you basically only going to accept government issued currencies, a unit of account focus, as "money" (the 3 year olds understanding of money)?
I think it’s actually very helpful to start referring to them as monetary assets. This differentiates bitcoin and gold from property that are obviously not monetary or even valuable assets.

Because “true” money is inherently valuable, when someone states something is money then I think they are trying to say the same about that thing. Whereas if someone were to simply say that gold or bitcoin are monetary assets, I think they are only saying they have properties that can be used as money (potential money). That doesn’t make those things necessarily money or inherently valuable and shouldn’t be controversial because they are facts given agreement on what a monetary asset is.
"Because “true” money is inherently valuable" - not sure what true or inherently is here. All value is subjective remember.

"I think they are only saying they have properties that can be used as money (potential money)" - agreed here. And there are a series of properties that humans value in their money (not necessarily "currency").
bitcoininthevp wrote:
Fri Jul 03, 2020 2:05 pm
"It performs none of the functions expected of gold."
I assume you mean gold's functions as money. Here are some valuable characteristics of money:

Durability: bitcoin and gold both strong here.
Portability: bitcoin is digital thus much more portable than gold.
Divisibility: A single bitcoin can be subdivided into 100,000 sub units. Gold much hard to pay with shavings.
Uniformity/Fungibility: gold strong here (verifiability of such uniformity later). I think bitcoin is a bit weaker currently due to transactions being public. Improvements hopefully to come there.
Limited supply: bitcoin has a mathematic max of 21m coins. Gold is scarce as well but more susceptible to increases in supply with price rises (stock to flow). I think the mining asteroids argument is far off.
Acceptability: bitcoin is bad here. Gold has history and global awareness. This will be the last domino to fall on bitcoin's monetization.
Censorship Resistance: gold pretty good. Bitcoin better due to digital nature.
Security: Much easier to store bitcoin (paper, brain) than bulky gold.
Verifiability: bitcoin can be verified with free software. Gold you need contraptions for coins which are cheap. But hard for bars (see recent scandals on fake gold)
Seizure resistance: bitcoin wins as there isnt anything in the physical world that you really need to own it. Plausible deniability. Gold can be searched and found
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Re: BTC in the PP

Post by bitcoininthevp » Tue Aug 24, 2021 1:50 pm

glennds wrote:
Mon Aug 23, 2021 1:59 pm
I have a foot in each camp, I'm probably 75% long under store of value theory, and 25% trading the volatility as a shameless speculator.
People are speculating on Bitcoin's store of value (and resulting monetization).
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Re: BTC in the PP

Post by gaddyslapper007 » Tue Aug 24, 2021 3:43 pm

life hack: Bitcoin is the ultimate PP. (replace gold, replace fiat, replace stonks, replace government debt, no rebalance needed!).

Note: this post submitted 8-10 years in the future…..where it’s glaringly obvious.
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Re: BTC in the PP

Post by vincent_c » Tue Aug 24, 2021 4:36 pm

bitcoininthevp wrote:
Tue Aug 24, 2021 1:45 pm

"Because “true” money is inherently valuable" - not sure what true or inherently is here. All value is subjective remember.
We can define true money theoretically but because money has conflicting objectives then the objectively true money is a concept that maybe no one yet knows what it might be yet. But I just mean that whatever money is at a point in time, that money is inherently valuable by definition because it is used to store value.

I disagree that value is subjective. Something could be valuable to you but to no one else and it just means there is no liquidity and no real value.
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Re: BTC in the PP

Post by seajay » Tue Aug 24, 2021 8:40 pm

Durability: Gold - millennia, bitcoin just a decade and that could be replaced at any time.

Portability: Don't transport gold across borders, liquidate it, electronic transfer the capital, repurchase at the target destination.

Divisibility: Again gold can be liquidated and sub-divided

Uniformity/Fungibility: gold strong here.

Limited supply: bitcoin has a conceptual mathematic max of 21m coins - but that could be extended or replaced. It's not a physical limit but a virtual/synthetic limit.

Acceptability: Gold has history and great breadth/depth here. Try bribing your way into a airport as a new regime takes control and guards are more inclined to accept a bag of gold coins than they are bit coins.

Censorship Resistance: gold excellent. Can literally be buried away or moved. Digital is difficult to avoid censorship as such tracking is mandated in being potentially illicit activity. US banned investment gold trading from the 1930's up the the mid 1970's. Other countries gold trading continued. Gold as a PM can be swapped out for perhaps silver to equal value/effect. Swapping bitcoins from one to another is more inclined to see distinctly different characteristics.

Security: Bitcoin involves counter-parties whereas gold does not.

Verifiability: Good dealers are competent at verification of gold

Seizure resistance: Recent theft by hackers of millions of bitcoin $$$ value. Gold stored in trusted regions can have Plausible Deniability/paper trails established relatively easily.

Fundamentally bit coin is a pretend scarcity, no different to clackers, only remain scarce until circumstances direct towards expansion of numbers. With a physical finite scarce object/item there are physical limits on expansion.

Stablility: In being unregulated, the likes of Elon Musk can ramp and plunge the price ahead of their intended trades. For bit coin to become stable it will endure regulation/controls. Existing versions will be replaced at a unknown exchange rate, possibly $0. Yes there is a great push for recognition and acceptance, which involves regulatory compliance. Once established its more inclined to be pegged to the US$ rather than moving counter direction to the US$. Its diversification benefits will be lost, become comparable to cash.
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Re: BTC in the PP

Post by vincent_c » Tue Aug 24, 2021 10:34 pm

So I think if you demonstrate that you have done good research on the subject and also approach the subject with skepticism with the aim of learning about it, then perhaps people would spend the time and energy to explain where you have misunderstood things. Otherwise, your approach of forming such strong opinions when it is clearly poorly researched is more likely to make others just give up on you and let you just keep on thinking you are right.
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Re: BTC in the PP

Post by bitcoininthevp » Wed Aug 25, 2021 7:56 am

vincent_c wrote:
Tue Aug 24, 2021 4:36 pm
I disagree that value is subjective.
vincent_c wrote:
Tue Aug 24, 2021 4:36 pm
Something could be valuable to you but to no one else
;D
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Re: BTC in the PP

Post by bitcoininthevp » Wed Aug 25, 2021 8:02 am

seajay wrote:
Tue Aug 24, 2021 8:40 pm
Security: Bitcoin involves counter-parties whereas gold does not.
No.
seajay wrote:
Tue Aug 24, 2021 8:40 pm
Seizure resistance: Recent theft by hackers of millions of bitcoin $$$ value. Gold stored in trusted regions can have Plausible Deniability/paper trails established relatively easily.
This is like saying gold isnt seizure resistant because someone broke into your safe.
seajay wrote:
Tue Aug 24, 2021 8:40 pm
Fundamentally bit coin is a pretend scarcity, no different to clackers, only remain scarce until circumstances direct towards expansion of numbers. With a physical finite scarce object/item there are physical limits on expansion.
This is "pretend scarcity" hand waving again. Please make a specific argument against the scarcity at least.

There is a lot of talk of gold in space.

Im not anti gold. To be clear, Im contrasting gold and bitcoin and think bitcoin "wins" in many regards. Gold also wins in some aspects. Im willing to admit this. Are you?
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Re: BTC in the PP

Post by gaddyslapper007 » Wed Aug 25, 2021 8:38 am

“you get Bitcoin at the price you deserve”. …meaning: you will be punished monetarily if you fall for high intellect catch phrases and ideals ……

Cure: drop everything you “know” and follow the fabric of instinctual knowledge. (Ignore galaxy brain high IQ intelligence….it’s a scam!)
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Re: BTC in the PP

Post by vincent_c » Wed Aug 25, 2021 9:49 am

gaddyslapper007 wrote:
Wed Aug 25, 2021 8:38 am
“you get Bitcoin at the price you deserve”. …meaning: you will be punished monetarily if you fall for high intellect catch phrases and ideals ……

Cure: drop everything you “know” and follow the fabric of instinctual knowledge. (Ignore galaxy brain high IQ intelligence….it’s a scam!)
I think bitcoininthevp makes a great point that all stores of value are actually greater fool assets. All stores of value can be overvalued at a given point in time only knowable in hindsight so I think it goes back to time preference. Paying 30% more for gold 100 years ago doesn't seem like such a big deal if you held onto all of it today. The trick is to ignore volatility and hold greater fool assets long enough that their cost is now below its true value and then from that point on they can expect it to act as a long term store of value.
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Re: BTC in the PP

Post by bitcoininthevp » Wed Aug 25, 2021 10:11 am

vincent_c wrote:
Wed Aug 25, 2021 9:49 am
I think bitcoininthevp makes a great point that all stores of value are actually greater fool assets. All stores of value can be overvalued at a given point in time only knowable in hindsight so I think it goes back to time preference. Paying 30% more for gold 100 years ago doesn't seem like such a big deal if you held onto all of it today. The trick is to ignore volatility and hold greater fool assets long enough that their cost is now below its true value and then from that point on they can expect it to act as a long term store of value.
To put a finer point on it, and brainstorming here: All else equal, the less uses that a monetary-like asset has, thus more monetary premium, the more the greater fool theory seems to apply to it. And this may in fact be a good determining factor of the best money (NOT currency).
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Re: BTC in the PP

Post by seajay » Thu Aug 26, 2021 4:42 pm

bitcoininthevp wrote:
Wed Aug 25, 2021 8:02 am
There is a lot of talk of gold in space.
When investment gold trading was outlawed in the US between the 1930's and 1970's investors could have held silver to similar/equal effect. If a solid gold asteroid was mined the gold price would plummet and other rarer metals would become more preferred as stores of value. Paintings by favoured dead artists cannot have more created and as such are valued by those with surplus capital, in the hope/expectation that if/when they need to liquidate others with surplus capital would look to buy. Generally that rule of thumb has sustained across many generations. Indeed the expansion of numbers with surplus capital has seen prices generally rise ahead of inflation (increased demand). Gold fits into that category, a computer algorithm (bit coin) does not.
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Re: BTC in the PP

Post by bitcoininthevp » Fri Aug 27, 2021 9:44 am

seajay wrote:
Thu Aug 26, 2021 4:42 pm
Gold fits into that category, a computer algorithm (bit coin) does not.
Can you explain why not?

Also, when gold price goes up, MORE gold is produced. When bitcoins price goes up, no more can be produced.
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Re: BTC in the PP

Post by Jack Jones » 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.
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Re: BTC in the PP

Post by seajay » Fri Aug 27, 2021 2:39 pm

bitcoininthevp wrote:
Fri Aug 27, 2021 9:44 am
seajay wrote:
Thu Aug 26, 2021 4:42 pm
Gold fits into that category, a computer algorithm (bit coin) does not.
Can you explain why not?

Also, when gold price goes up, MORE gold is produced. When bitcoins price goes up, no more can be produced.
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Re: BTC in the PP

Post by gaddyslapper007 » Sat Aug 28, 2021 2:31 pm

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