The article makes it sound like one needs an esoteric narrative to explain the premium to NAV that MSTR is currently trading at.
That is not the case. MSTR has a simple business: "Give us money, we invest it into Bitcoin for you and shield you from the downside. In return, we get some of the upside."
As long as the Bitcoin price goes up, that is a viable business. How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential.
Their deal is basically "After a set period, you receive your initial investment back. If Bitcoin's price has increased during this period, you can also chose to get shares in our company instead. That way you might get back more than you invested.".
Since they had a sizeable amount of Bitcoin before they started this approach, in theory they might be able to repay all the lenders in full even if the Bitcoin price only declines from now on. Depending on the details of their behavior and the price movement. If Bitcoin's price declines rapidly and they fail to sell quickly enough, then they would go broke.
What are you talking about? The stock can go down so that isn’t guaranteed. The bonds can also go down if bitcoin goes down enough. The convertible bonds can go down for the same reasons.
I used my 401k to invest in MSTR. In fact, when I figured out what Saylor was doing, I put all of it in MSTR, in 2021. I'm up 700-800% right now.
It wasn't an easy ride, but long term it was the right choice for me. It isn't that much much money because I stopped contributing to it about 15 years ago (instead opting to do what you said, buy BTC directly), but my 401k has never seen that sort of growth.
With the fairly recent split, I can now sell covered call options. I generally sell OTM and then use the proceed from that to buy more MSTR. My goal is to compound the stock, not dollars. It will split again, enabling me to compound again.
Once you spend the time understanding what he is doing, you will understand the value in investing in both. It definitely takes an acceptance that Bitcoin won't go to zero, but if you can get past that, as he has done, then the risk profile changes dramatically.
I am also waiting for someone to explain it coherently.
It essentially allows you to buy bitcoin at 3x the market price. (mstr market cap is about 3x the bitcoin it holds)
People seem to equate that as meaning that the future stock price will grow at a faster rate than the price of bitcoin, but that would require the premium to grow to an even larger factor than the current 3x. It also ignores the reality that a falling bitcoin price should completely wipe out the premium of stock price over net asset value (if we are to apply any common sense).
Of course I might be missing some great insight that makes it something other than a really stupid gamble.
I would invest in micro strategy if I cared about Bitcoin because I don't want to mess with wallets or pay someone to manage my wallet.
Banks can do fractional reserve banking to 'pay' for the expense of storing our money. Can crypto wallets do such a thing? Or would they have to borrow money?
Some exhanges like coinbase are basically banks at this point.
You open an acccount, you do a kyc, you declare it to the state, and they are submitted to regulations in your country.
Coinbase is an expensive one, but way cheaper than micro strategy, and is from y combinator s12 so you know what to expect.
Deal with an exhange directly, it's cheaper, and more flexible. No wallet to manage, and you can handle a few millions before even having to talk to a human.
Of course you lose a lot of advantages of crypto, but you were going to with micro strategy anyway.
Or buy an etf if you really like your bank.
Although I would argue now is the worse time to buy. You had to buy last year, or wait until 2 years, assuming the halving cycle is still relevant, which I believe it is.
It is expected from most crypto holders that we are not that far from the top and the usual crash back is near.
Some my friends are still in, but have placed their exit orders already. I'm already out with a 500% profit and play it safe.
You may be able to get some more, but it's getting riskier by the day.
And maybe the cycle will break, but it's really not what I would bet on.
Because you said it is? Come on, let's have some more informed dialog than that.
> As long as the Bitcoin price goes up, that is a viable business.
He's been doing this for 4 years. The price has had some wild swings in that timeframe. He's sold one time (for tax loss harvesting) and bought right back in. Everything is tracked in public, because it is a public security. https://saylortracker.com/
He's never sold because he had to. In that timeframe, bitcoin has also always gone up. It is higher than it was 4 years ago. He has stated in public that he won't ever sell, nor will he have to.
> As long as the Bitcoin price goes up, that is a viable business.
Okay, let's assume Bitcoin's price is going up forever, Laura. Right now, 16 years after Bitcoin was invented, that's a completely reasonable assumption.
> How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential.
Hold it! You're saying that the premium is saying that rational buyers are calculating that there'll be more customers for $MSTR or Microstrategy's convertible bonds in the future? So it's a ponzi? But is it a good ponzi or a bad ponzi?
That is: where is value being created to be returned to investors who are ultimately left holding the bag?
> I feel like that’s just what the market has been like since 2020
The S&P 500 peaked at 5400 in December 2021 and dropped to 3800 in September 2022, and went mostly sideways to 4300 until October 2023, after which is has mostly gone up:
Obviously, it went up in value and down in value and it doesn’t make much sense over the long term. Currently, governments are tolerating the loophole of it being used to launder money, purchase illicit goods and evade financial border controls.
As long as that is tolerated, it will be successful and when governments start to crack down it won’t be successful, because it sucks as a currency but seems to make a pretty good tulip bulb.
Probably an unpopular opinion, but as someone who’s purchased a few things with bitcoin, it has insane transaction fees, is not easy to use and is not a stable store of value, so why people would flock to it as money other than the above reasons is beyond me.
The new US government has crypto-bros at its core and there will be use of the US Treasury to set up a "Bitcoin Strategic Reserve" that will be a way for the crypto-bros to milk the US economy to bail themselves out of the market before it dies.
Bitcoins are the most useless "asset" that there has ever been. At least beanie babies had some entertainment value and tulips look pretty.
Bitcoins and all the other nonsense contribute nothing to the world's real economy, it's entirely a mechanism for washing or moving fiat currency from one place to another.
It is used extensively in Asia entirely for that purpose, paying for drugs and gambling transfers.
For the actual economy it is useless and the entire "market" is just barely regulated gambling and entertainment.
It's hard to take seriously an argument that recycles the tired trifecta of tropes "tulips, beanie babies and drug dealers".
I don't know if bitcoin will eventually become a low level store of value, or if the red hats now running US government will use it to reduce the nation's indebtedness, or if it will gradually fade away as people lose interest, or if it will crash and burn over a weekend.
But I am quite certain that the current system of government currencies, sanctions, repression and surveillance is unsustainable in the long run. One look at the stupendously large debt that can never be repaid should make it obvious that the current state cannot continue forever.
Nobody knows how long the long run is, but the fiat system has been flashing signals of stress and potential fracture for at least twenty years. Maybe governments and central banks can keep papering over its fault lines for another decade. But when a thing cannot continue forever, at some point it will stop.
Is bitcoin the replacement for the base layer? Or is it at least a way to preserve some wealth, outside the increasingly rickety nation-state-fiat system? Some mainstream finance leaders who manage trillions and are far smarter and better connected that I am, seem to think so.
I don't know, and you don't know, but there's more than enough evidence that there's something real here. It can't be easily dismissed as just beanie babies, tulips and drug dealers.
States are getting more sophisticated at tracing crypto coins.
And getting anything useful from them does depend on states not regulating them into obsolescence or black markets, with all the baggage those markets entail.
As for pettiness, I'm not the one promoting dubious benefits, nor am I invested in any coins or their downfall. Just concerned the whole thing is making the world worse: more gambling, more corruption, more scams, more wasted energy, more pollution, etc.
> Bitcoins are the most useless "asset" that there has ever been. At least beanie babies had some entertainment value and tulips look pretty.
Hilariously, some people won't realize that your comment is almost entirely copy-pasta from a decade ago when Bitcoin cost less than $500. Thanks for the laughs though. Good memories.
Oh gosh. You're actually one of those people. Well, it's a pleasure to meet you!
And since you feel Bitcoin is useless (I'm leaving the door wide open for a retort filled with cognitive dissonance), please send me 21BTC for which I'll pay you $1000 immediately? My address is:
To clarify: I wasn't saying the bull run is over, I'm saying it'll likely end some time in 2025, likely late in 2025, if history rhymes. That's what I meant about plenty of water to yet pass under the bridge. Like you said Bitcoin could still double from here.
MicroStrategy seems heavily leveraged, which creates extra risk on the downside.
If the underlying asset doubles, MicroStrategy roughly doubles. But if the underlying asset goes down by 50%, MicroStrategy is stuck paying interest on loans it took to buy an asset that’s now heavily underwater. It can suffer much worse than 50% in that scenario.
MicroStrategy’s stock price seems to roughly parallel the price of Bitcoin during this bull market. They are not a simple leveraged Bitcoin fund, but something more complicated where the founder’s personality plays a big role. So I guess the market doesn’t quite know how to value this admittedly unique approach, and it defaults to just following Bitcoin on the upside. Who knows what happens if there’s a crash.
> something more complicated where the founder's personality plays a big role
Not to pretend that other leveraged funds founder's are equally known as saylor, but how do all other funds differentiate themselves? Is it the same to through money at one vs another?
MicroStrategy is publicly listed, which is kind of special. I don’t think there’s a lot of celebrity investor hedge funds that are public.
Bill Ackman’s Pershing Square is listed in London and trades at a substantial discount to net asset value (something like 30%). Maybe that’s an indication that markets find it hard to value these vehicles.
Yes, there are lots of degenerate gamblers, grifters, and scammers in the crypto scene, but any new platform that's in any way related to finance will attract that scum.
If you spend a little while attempting to understand Bitcoin's reason for existence, it may start to make some sense.
You don't have to buy in, but you will be able to provide a more educated contribution to the discussion.
The reality is the microstrategy is to allow investor which cannot directly own bitcoin, or bitcoin etfs, to own bitcoin. There is a premium associated with this (which am suspending analysis on), microstrategy's overshot price.
Any other description is an act of mental gymnastics.
> People are leaving failing paper curencies which are being print nonstop all over the world. Go bitcoin.
What "failing paper currencies" are you referring to? USD? EUR? GBP? JPY? AUD? CAD? CNY? MXN? Other?
Also, 'printing money' is a feature, not a bug: it allows for currency needs to be met so that economic activity/growth can occur. Otherwise you get into troubling situations:
> Also, 'printing money' is a feature, not a bug: it allows for currency needs to be met so that economic activity/growth can occur.
We all know the Central Bank hymn book by now.
That said, printing money doesn't create economic activity nor economic growth nor wealth. I know central bankers and their inflationist acolytes want you to believe this and they have dazzling models to show this, and convincing buttoned-up tales to prove this, and I'm not trying to re-litigate an argument as old as Vienna.
Hopefully some subset of humans will remember how wealth is created. And incidentally, if you look in your library, you can find very different interpretations of the various booms and economic depressions of history.
Yes, but some folks don't seem to accept the evidence and the historical record of what didn't work, and why we moved towards the current system. Some folks still think that FDR (and Keynes) got things wrong.
> That said, printing money doesn't create economic activity nor economic growth nor wealth.
While liquidity is not (necessarily) sufficient for economic activity it is necessary, and a lack of liquidity certainly hinders it. This is evidenced not least from the Great Depression and that once a country abandoned the gold standard they started to recover:
Fixed supply monetary systems (like the gold standard) are a hindrance, and it's not like they do anything useful like create a stable monetary base either:
The problem is Bitcoin is being treated as a commodity and not a currency. Its value is measured using paper currency, that stuff you'll actually trade for product and services.
It's difficult to use Bitcoin as currency because its value keeps rising. And when there are no more coins to be mined, when the value stops increasing: do you think everyone will suddenly agree to begin using it as currency?
Or do you think everyone will try and sell Bitcoin to cash out for real currency? What happens to Bitcoin value at that point?
> The problem is Bitcoin is being treated as a commodity and not a currency.
That's because that is what it is. Just like gold. (Which, besides mostly jewelry, has few other 'practical' application—modest use in industry and medicine.)
> It's difficult to use Bitcoin as currency because its value keeps rising.
And this is the problem with deflationary currencies, and was predicted a decade ago:
> And when there are no more coins to be mined, when the value stops increasing: do you think everyone will suddenly agree to begin using it as currency?
When there are no more coins to be mined (even if you want to get into slicing BTCs into satoshis) the value will increase: even more: if the demand for it goes up by (e.g.) 2% every year but your supply goes up 0%, what does Econ 101 tell us will happen? Even now folks are mostly hoarding:
Something is worth whatever someone else is willing to pay.
If everyone thought of Bitcoin the way I do: its price would plummet.
Fiat currency works because it's linked to a county's GDP, its credit (in the eyes of other nations). With such a system, you can put a price on commodity, like gold or Bitcoin.
World trade is mostly done with the US dollar. Others are willing to trade the dollar because of belief in its issuing country's GDP and future economy. I understand that lack of faith in the US dollar and its 'money printer' are part of Bitcoin's rise... But that's a different topic in my opinion.
Anyhow, gold is created in the heart of exploding stars, it looks good (we all love pretty, shiny things), it's rare. It's used in most advanced electronics (it's critical for sure, not sure about practical). Gold has always existed, and there's no doubt it will exist in the future.
Bitcoin is math and ordered electrical charges. It's not being used the way it was intended. Its future is uncertain (quantum computing), and seems to be a big ponzi scheme. How are we expecting the value to keep increasing?
While depletion of mining rewards is very far into the future, it will very soon be virtually nothing, the only reward will be trading fees, and I'm not bullish on that.
Satoshi should have just made a linear minting algo. All early reward was a mistake. We'll see why inflation is necessary. In 80 years will the youngins want a coin that they have no way of minting except begging their grampas for it?
It's a tired trope, but time is money. Fiat currency works because of this idea.
Fiat currency fails when a nation defaults on its loans because people lose faith in the currency.
The money printing scares everyone because of the US's rising debt. If it cannot be balanced at some point, people will think inflation is permanent.
It's difficult to cut costs because the US economy must pay to maintain its status. The only way to reduce our debt is to increase our GDP: aka, sell more shit and do more with less.
That is a property of society, not of the currency itself. Taxes pay for those things, and the US taxes economic activity in all currencies including bitcoin.
I get the argument that taxes might not be a property of the coin (its is, you don't pay taxes in btc, you pay them in usd)
But the ability of the government to print usd to pay for social benefits is 100% a property of the coin.
The argument is simple, Bitcoin has a limited supply and usd has constant minting, therefore btc gives more power to old farts, and usd gives power to everyone (citizens of the us)
1) Bitcoin is more convenient to store and transfer: it's digital. You can literally use your brain as a Bitcoin wallet.
2) The supply of gold is less predictable. For instance, just last month, China announced the discovery of the world's largest known gold deposit, estimated to be worth over $80 billion.
> 1) Bitcoin is more convenient to […] transfer: […].
As some phishing victims have learned to their peril. Of course BTC transfers are non-reversible / non-refundable, with no means of redress (unlike a bank transfer).
I was referring to the fact that you can memorize your seed phrase. If the seed is not recorded anywhere, the Bitcoins can be thought of as being held only in the mind of the owner.
To be clear, $80 billion is not earth-shattering in the gold market. Lots of gold exists in the world but is too expensive to mine. I don't remember how expensive but I think it is at least half of the current price. The supply of gold grows at a very slow rate of at most 2% per year. It is getting harder to mine all the time. Demand and futures market manipulation matter far more to gold than its small supply. All the world's gold that was ever mined could fit in roughly two Olympic size swimming pools.
The supply of discovered gold and the supply of gold extracted from mines (and recovered from other sources) aren’t the same, and one is more predictable. Which one has a greater impact on the price….
> Gold is 'first place' and has been a symbol of value for most of our recorded history.
Actually it has not. Not in Mesoamerican civilizations (Aztec, Mayans). Also not for the Chinese, who used silver for currency (and gold for ceremonial purposes). Around the Mediterranean, gold became a currency 'only' around 500BC with the Lydians—which is a very long time after the first economic records we have, which take back to Ur III, the Babylonians (Hammurabi), Ancient Egypt.
And when it was used, there were periods of economic stagnation due to its fixed supply:
It also cannot be hacked or tracked like Bitcoin. It works offline and can even survive longer than whole countries. The biggest problems are risk of theft and high taxation.
Bitcoin was supposed to be private and secure, so it more or less failed its mission. It is only presently easier to trade because of various gimmicks to warm people up to the idea of accepting it. Gold on the other hand has a long history of being a currency. Everyone in the world knows it is valuable, even if they don't know how much. The fact Bitcoin wildly swings around in value and requires special computer access and sometimes hardware makes it harder to transact with. If you don't care about privacy and security, and want ease of use, you would be far better served by a credit card than a Bitcoin wallet. And if you do care about those three things, gold is better. The only thing I can say positive about Bitcoin is that it is easier to carry across borders than gold. That plus the modicum of privacy it offers might make it ok for some. As for me, I don't think I could privately accumulate enough Bitcoin for that to be a real benefit to me.
Edit: I hit the limit for now so here's a reply:
>Was it supposed to be [private]? A currency with a complete ledger of transactions available for view by anyone in the p2p network is hardly secure by design
It was intended to be secure and private. That is, people can't steal your Bitcoin (theoretically) and the public ledger gives you some potential strategy if you did want to establish a reputation while dealing with anonymous people. Someone could also deal with you without ever knowing your identity, which makes it private. It would be fairly hard to identify Bitcoin users if their wallets were never linked to their identities, e.g. through an exchange. I don't know how other cryptocurrencies do their ledgers but I assume you are limited to querying the network about specific transactions instead of having access to it all. It could be done by having public yet encrypted transaction records as well maybe. Idk, cryptocurrency never appealed to me. I remember thinking my classmates were insane for buying Bitcoin at $70. The price movement we've seen feels like some insiders using it to embezzle money from reputable institutions who have been sold on the hype. We're in real trouble if the government starts buying it. We will be robbed blind.
Was it supposed to be? A currency with a complete ledger of transactions available for view by anyone in the p2p network is hardly secure by design.
Edit: thanks for the reply. In that sense that you are able to be only identified by a wallet address, that makes sense. I guess I meant that, unlike privacy-focused coins like Monero, there is a way to see who sent what to who (even if who is just an address) and to develop surveillance based on this.
The article makes it sound like one needs an esoteric narrative to explain the premium to NAV that MSTR is currently trading at.
That is not the case. MSTR has a simple business: "Give us money, we invest it into Bitcoin for you and shield you from the downside. In return, we get some of the upside."
As long as the Bitcoin price goes up, that is a viable business. How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential.
> shield you from the downside
How does Microstrategy shield anyone from downside?
Their deal is basically "After a set period, you receive your initial investment back. If Bitcoin's price has increased during this period, you can also chose to get shares in our company instead. That way you might get back more than you invested.".
Since they had a sizeable amount of Bitcoin before they started this approach, in theory they might be able to repay all the lenders in full even if the Bitcoin price only declines from now on. Depending on the details of their behavior and the price movement. If Bitcoin's price declines rapidly and they fail to sell quickly enough, then they would go broke.
What are you talking about? The stock can go down so that isn’t guaranteed. The bonds can also go down if bitcoin goes down enough. The convertible bonds can go down for the same reasons.
Basically I can't dee how investing in micro strategy is better than buying btc directly
I used my 401k to invest in MSTR. In fact, when I figured out what Saylor was doing, I put all of it in MSTR, in 2021. I'm up 700-800% right now.
It wasn't an easy ride, but long term it was the right choice for me. It isn't that much much money because I stopped contributing to it about 15 years ago (instead opting to do what you said, buy BTC directly), but my 401k has never seen that sort of growth.
With the fairly recent split, I can now sell covered call options. I generally sell OTM and then use the proceed from that to buy more MSTR. My goal is to compound the stock, not dollars. It will split again, enabling me to compound again.
Once you spend the time understanding what he is doing, you will understand the value in investing in both. It definitely takes an acceptance that Bitcoin won't go to zero, but if you can get past that, as he has done, then the risk profile changes dramatically.
I am also waiting for someone to explain it coherently.
It essentially allows you to buy bitcoin at 3x the market price. (mstr market cap is about 3x the bitcoin it holds)
People seem to equate that as meaning that the future stock price will grow at a faster rate than the price of bitcoin, but that would require the premium to grow to an even larger factor than the current 3x. It also ignores the reality that a falling bitcoin price should completely wipe out the premium of stock price over net asset value (if we are to apply any common sense).
Of course I might be missing some great insight that makes it something other than a really stupid gamble.
So far all the explanations are yada yada yada magic.
Buy bitcoin. Buy a bitcoin etf. But don’t buy a wrapper on bitcoin at a premium to the underlying bitcoin. Eventually this collapses on itself.
I would invest in micro strategy if I cared about Bitcoin because I don't want to mess with wallets or pay someone to manage my wallet.
Banks can do fractional reserve banking to 'pay' for the expense of storing our money. Can crypto wallets do such a thing? Or would they have to borrow money?
Some exhanges like coinbase are basically banks at this point.
You open an acccount, you do a kyc, you declare it to the state, and they are submitted to regulations in your country.
Coinbase is an expensive one, but way cheaper than micro strategy, and is from y combinator s12 so you know what to expect.
Deal with an exhange directly, it's cheaper, and more flexible. No wallet to manage, and you can handle a few millions before even having to talk to a human.
Of course you lose a lot of advantages of crypto, but you were going to with micro strategy anyway.
Or buy an etf if you really like your bank.
Although I would argue now is the worse time to buy. You had to buy last year, or wait until 2 years, assuming the halving cycle is still relevant, which I believe it is.
It is expected from most crypto holders that we are not that far from the top and the usual crash back is near.
Some my friends are still in, but have placed their exit orders already. I'm already out with a 500% profit and play it safe.
You may be able to get some more, but it's getting riskier by the day.
And maybe the cycle will break, but it's really not what I would bet on.
Bitcoin exposure without the hassle of wallets can be solved with a bitcoin etf. No need to punt on some NAV premium infinite money ponzi.
That's true. In fact, I would go for one of the ETFs before investing with MicroStrategy.
Because MSTR has two legs to the trade: BTC returns + NAV premium/discount.
It is a better trade if the premium continues to rally. Otherwise it’s a worse trade.
So overpaying vs NAV because in hope the next greater fool with overpay NAV by even more. Nice.
I think some boomers would prefer to invest in a company which holds btc, or fund, and pay a premium not to touch it directly.
Premium goes to techies and lawyers and stuff.
There are numerous ETFs which hold BTC. This is not why money is flowing in to MSTR.
Overpaying because you expect less savvy people to overpay you more when you exit is not a sound investment thesis.
Not less savvy, more savvy.
Boomer does not know about bitcoin wallets.
Engineer at MicroStrategy does.
Last paragraph sounds like a ponzi scheme.
Because it is
Because you said it is? Come on, let's have some more informed dialog than that.
> As long as the Bitcoin price goes up, that is a viable business.
He's been doing this for 4 years. The price has had some wild swings in that timeframe. He's sold one time (for tax loss harvesting) and bought right back in. Everything is tracked in public, because it is a public security. https://saylortracker.com/
He's never sold because he had to. In that timeframe, bitcoin has also always gone up. It is higher than it was 4 years ago. He has stated in public that he won't ever sell, nor will he have to.
So, what part of this is a ponzi scheme?
The duration of a ponzi does not change its status as a ponzi.
What Saylor is doing does not fall within the definition of a ponzi. It is also happening in the most regulated public financial market out there.
Again, what makes this a ponzi?
> As long as the Bitcoin price goes up, that is a viable business.
Okay, let's assume Bitcoin's price is going up forever, Laura. Right now, 16 years after Bitcoin was invented, that's a completely reasonable assumption.
> How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential.
Hold it! You're saying that the premium is saying that rational buyers are calculating that there'll be more customers for $MSTR or Microstrategy's convertible bonds in the future? So it's a ponzi? But is it a good ponzi or a bad ponzi?
That is: where is value being created to be returned to investors who are ultimately left holding the bag?
The current bull run, as far as I can tell seems to have two legs.
One is retail YOLOing into it like a meme coin.
The other is professional investors who want bitcoin exposure but are bound by investment mandates to equities only.
Neither of these are particularly good reasons long term, nor will they endure a pullback in bitcoin price.
> The other is professional investors who want bitcoin exposure but are bound by investment mandates to equities only.
MSTR was recently added to QQQ. With the rebalance, they have no choice now.
> The current bull run, as far as I can tell seems to have two legs.
I feel like that’s just what the market has been like since 2020
> I feel like that’s just what the market has been like since 2020
The S&P 500 peaked at 5400 in December 2021 and dropped to 3800 in September 2022, and went mostly sideways to 4300 until October 2023, after which is has mostly gone up:
* https://en.wikipedia.org/wiki/2022_stock_market_decline
* https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
People seem to (a) forgotten that it happened:
* https://en.wikipedia.org/wiki/Recency_bias
and (b) forgotten that it was not a forgone conclusion that there'd be a recovery/growth:
* https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...
I remember the market stalled in price movements, but the attitude always seemed to be bullish beyond all reason.
Never noticed that attitude before 2020
There are dozens of bitcoin etfs now so the second leg is gone
Exactly
It’s bitcoin. What are you going to say?
Obviously, it went up in value and down in value and it doesn’t make much sense over the long term. Currently, governments are tolerating the loophole of it being used to launder money, purchase illicit goods and evade financial border controls.
As long as that is tolerated, it will be successful and when governments start to crack down it won’t be successful, because it sucks as a currency but seems to make a pretty good tulip bulb.
Probably an unpopular opinion, but as someone who’s purchased a few things with bitcoin, it has insane transaction fees, is not easy to use and is not a stable store of value, so why people would flock to it as money other than the above reasons is beyond me.
> why people would flock to it as money other than the above reasons is beyond me
Despite what the whitepaper laid out, it has morphed into something that isn't money. Use the analogy that Saylor lays out... https://x.com/saylor/status/1860399115449799119
Definitely interested to see how the MicroStrategy share price pans out as the 2025 bull run comes to a close.
Lots of water yet to go under the bridge though.
The new US government has crypto-bros at its core and there will be use of the US Treasury to set up a "Bitcoin Strategic Reserve" that will be a way for the crypto-bros to milk the US economy to bail themselves out of the market before it dies.
Bitcoins are the most useless "asset" that there has ever been. At least beanie babies had some entertainment value and tulips look pretty.
Bitcoins and all the other nonsense contribute nothing to the world's real economy, it's entirely a mechanism for washing or moving fiat currency from one place to another.
It is used extensively in Asia entirely for that purpose, paying for drugs and gambling transfers.
For the actual economy it is useless and the entire "market" is just barely regulated gambling and entertainment.
It's hard to take seriously an argument that recycles the tired trifecta of tropes "tulips, beanie babies and drug dealers".
I don't know if bitcoin will eventually become a low level store of value, or if the red hats now running US government will use it to reduce the nation's indebtedness, or if it will gradually fade away as people lose interest, or if it will crash and burn over a weekend.
But I am quite certain that the current system of government currencies, sanctions, repression and surveillance is unsustainable in the long run. One look at the stupendously large debt that can never be repaid should make it obvious that the current state cannot continue forever.
Nobody knows how long the long run is, but the fiat system has been flashing signals of stress and potential fracture for at least twenty years. Maybe governments and central banks can keep papering over its fault lines for another decade. But when a thing cannot continue forever, at some point it will stop.
Is bitcoin the replacement for the base layer? Or is it at least a way to preserve some wealth, outside the increasingly rickety nation-state-fiat system? Some mainstream finance leaders who manage trillions and are far smarter and better connected that I am, seem to think so.
I don't know, and you don't know, but there's more than enough evidence that there's something real here. It can't be easily dismissed as just beanie babies, tulips and drug dealers.
When states fail crypto isn't much of a safe harbor. It's just a fiat with crazy interchange fees, except one with a public ledger.
Also mining will come to an end soon as it becomes impossible to meet the energy demand.
One of the points is that it is resilient across a 'state failure' because it's not associated with a state.
That's precisely one of it's key differentiators from fiat.
If you're meaning "when all states fail", well, everything falls off the table, and "told you so"-ing about Bitcoin might be just a little bit petty.
States are getting more sophisticated at tracing crypto coins.
And getting anything useful from them does depend on states not regulating them into obsolescence or black markets, with all the baggage those markets entail.
As for pettiness, I'm not the one promoting dubious benefits, nor am I invested in any coins or their downfall. Just concerned the whole thing is making the world worse: more gambling, more corruption, more scams, more wasted energy, more pollution, etc.
> Bitcoins are the most useless "asset" that there has ever been. At least beanie babies had some entertainment value and tulips look pretty.
Hilariously, some people won't realize that your comment is almost entirely copy-pasta from a decade ago when Bitcoin cost less than $500. Thanks for the laughs though. Good memories.
Bitcoin is still useless except as a gambling ticket or illicit money transfer. And even those use cases are on shaky ground.
Reuters: "Russia is using bitcoin in foreign trade, finance minister says"
https://www.reuters.com/markets/currencies/russia-is-using-b...
Your definition of "useless" must be different from mine.
> Bitcoin is still useless
Oh gosh. You're actually one of those people. Well, it's a pleasure to meet you!
And since you feel Bitcoin is useless (I'm leaving the door wide open for a retort filled with cognitive dissonance), please send me 21BTC for which I'll pay you $1000 immediately? My address is:
What would you do with it if not exchange it for fiat, gamble, or purchase illegal goods or services?
The bull run is over? What if it doubles in 2025?
To clarify: I wasn't saying the bull run is over, I'm saying it'll likely end some time in 2025, likely late in 2025, if history rhymes. That's what I meant about plenty of water to yet pass under the bridge. Like you said Bitcoin could still double from here.
MicroStrategy seems heavily leveraged, which creates extra risk on the downside.
If the underlying asset doubles, MicroStrategy roughly doubles. But if the underlying asset goes down by 50%, MicroStrategy is stuck paying interest on loans it took to buy an asset that’s now heavily underwater. It can suffer much worse than 50% in that scenario.
> MicroStrategy seems heavily leveraged
"seems"!
https://www.youtube.com/watch?v=R87vco0jHvo
What kind of leverage creates risk on the downside without benefit on the upside?
MicroStrategy’s stock price seems to roughly parallel the price of Bitcoin during this bull market. They are not a simple leveraged Bitcoin fund, but something more complicated where the founder’s personality plays a big role. So I guess the market doesn’t quite know how to value this admittedly unique approach, and it defaults to just following Bitcoin on the upside. Who knows what happens if there’s a crash.
> something more complicated where the founder's personality plays a big role
Not to pretend that other leveraged funds founder's are equally known as saylor, but how do all other funds differentiate themselves? Is it the same to through money at one vs another?
MicroStrategy is publicly listed, which is kind of special. I don’t think there’s a lot of celebrity investor hedge funds that are public.
Bill Ackman’s Pershing Square is listed in London and trades at a substantial discount to net asset value (something like 30%). Maybe that’s an indication that markets find it hard to value these vehicles.
The loans are 0% interest.
Smart money wins both ways. Saylor will get zeroed eventually, but when that happens is anyone’s guess.
"what if it does next year" is a near-complete summary of the thought process of crypto buyers
Please do some research.
Yes, there are lots of degenerate gamblers, grifters, and scammers in the crypto scene, but any new platform that's in any way related to finance will attract that scum.
If you spend a little while attempting to understand Bitcoin's reason for existence, it may start to make some sense.
You don't have to buy in, but you will be able to provide a more educated contribution to the discussion.
For anyone curious about what Saylor is actually thinking, it is good to spend some time listening to this recent interview.
https://www.youtube.com/watch?v=R87vco0jHvo
Ugh this is so bullish
The reality is the microstrategy is to allow investor which cannot directly own bitcoin, or bitcoin etfs, to own bitcoin. There is a premium associated with this (which am suspending analysis on), microstrategy's overshot price.
Any other description is an act of mental gymnastics.
People are leaving failing paper curencies which are being print nonstop all over the world. Go bitcoin.
> People are leaving failing paper curencies which are being print nonstop all over the world. Go bitcoin.
What "failing paper currencies" are you referring to? USD? EUR? GBP? JPY? AUD? CAD? CNY? MXN? Other?
Also, 'printing money' is a feature, not a bug: it allows for currency needs to be met so that economic activity/growth can occur. Otherwise you get into troubling situations:
* https://en.wikipedia.org/wiki/Long_Depression
* https://en.wikipedia.org/wiki/Great_Bullion_Famine
* https://www.nber.org/books-and-chapters/financial-markets-an...
> Also, 'printing money' is a feature, not a bug: it allows for currency needs to be met so that economic activity/growth can occur.
We all know the Central Bank hymn book by now.
That said, printing money doesn't create economic activity nor economic growth nor wealth. I know central bankers and their inflationist acolytes want you to believe this and they have dazzling models to show this, and convincing buttoned-up tales to prove this, and I'm not trying to re-litigate an argument as old as Vienna.
Hopefully some subset of humans will remember how wealth is created. And incidentally, if you look in your library, you can find very different interpretations of the various booms and economic depressions of history.
> We all know the Central Bank hymn book by now.
Yes, but some folks don't seem to accept the evidence and the historical record of what didn't work, and why we moved towards the current system. Some folks still think that FDR (and Keynes) got things wrong.
> That said, printing money doesn't create economic activity nor economic growth nor wealth.
While liquidity is not (necessarily) sufficient for economic activity it is necessary, and a lack of liquidity certainly hinders it. This is evidenced not least from the Great Depression and that once a country abandoned the gold standard they started to recover:
* https://delong.typepad.com/delong_long_form/2013/10/the-grea...
Fixed supply monetary systems (like the gold standard) are a hindrance, and it's not like they do anything useful like create a stable monetary base either:
* https://archive.is/https://www.theatlantic.com/business/arch...
The problem is Bitcoin is being treated as a commodity and not a currency. Its value is measured using paper currency, that stuff you'll actually trade for product and services.
It's difficult to use Bitcoin as currency because its value keeps rising. And when there are no more coins to be mined, when the value stops increasing: do you think everyone will suddenly agree to begin using it as currency?
Or do you think everyone will try and sell Bitcoin to cash out for real currency? What happens to Bitcoin value at that point?
> The problem is Bitcoin is being treated as a commodity and not a currency.
That's because that is what it is. Just like gold. (Which, besides mostly jewelry, has few other 'practical' application—modest use in industry and medicine.)
> It's difficult to use Bitcoin as currency because its value keeps rising.
And this is the problem with deflationary currencies, and was predicted a decade ago:
* https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi...
* https://en.bitcoin.it/wiki/Deflationary_spiral
> And when there are no more coins to be mined, when the value stops increasing: do you think everyone will suddenly agree to begin using it as currency?
When there are no more coins to be mined (even if you want to get into slicing BTCs into satoshis) the value will increase: even more: if the demand for it goes up by (e.g.) 2% every year but your supply goes up 0%, what does Econ 101 tell us will happen? Even now folks are mostly hoarding:
* https://www.coindesk.com/markets/2023/11/23/bitcoin-supply-i...
Something is worth whatever someone else is willing to pay.
If everyone thought of Bitcoin the way I do: its price would plummet.
Fiat currency works because it's linked to a county's GDP, its credit (in the eyes of other nations). With such a system, you can put a price on commodity, like gold or Bitcoin.
World trade is mostly done with the US dollar. Others are willing to trade the dollar because of belief in its issuing country's GDP and future economy. I understand that lack of faith in the US dollar and its 'money printer' are part of Bitcoin's rise... But that's a different topic in my opinion.
Anyhow, gold is created in the heart of exploding stars, it looks good (we all love pretty, shiny things), it's rare. It's used in most advanced electronics (it's critical for sure, not sure about practical). Gold has always existed, and there's no doubt it will exist in the future.
Bitcoin is math and ordered electrical charges. It's not being used the way it was intended. Its future is uncertain (quantum computing), and seems to be a big ponzi scheme. How are we expecting the value to keep increasing?
Nobody knows.
While depletion of mining rewards is very far into the future, it will very soon be virtually nothing, the only reward will be trading fees, and I'm not bullish on that.
Satoshi should have just made a linear minting algo. All early reward was a mistake. We'll see why inflation is necessary. In 80 years will the youngins want a coin that they have no way of minting except begging their grampas for it?
That's not unique to bitcoin. We're all born into this world with no money.
When the youngins want money, they don't beg Jerome Powell to print them USD, or Satoshi to linearly mint them BTC--they get a job and work for it.
It's a tired trope, but time is money. Fiat currency works because of this idea.
Fiat currency fails when a nation defaults on its loans because people lose faith in the currency.
The money printing scares everyone because of the US's rising debt. If it cannot be balanced at some point, people will think inflation is permanent.
It's difficult to cut costs because the US economy must pay to maintain its status. The only way to reduce our debt is to increase our GDP: aka, sell more shit and do more with less.
Incorrect.
Taxes and printed money are used as a redistributive system.
Newborns enjoy unemployment benefits, basic health care, schooling etc...
Bitcoin does not have this property, it's basically its whole ethos.
That is a property of society, not of the currency itself. Taxes pay for those things, and the US taxes economic activity in all currencies including bitcoin.
I get the argument that taxes might not be a property of the coin (its is, you don't pay taxes in btc, you pay them in usd)
But the ability of the government to print usd to pay for social benefits is 100% a property of the coin.
The argument is simple, Bitcoin has a limited supply and usd has constant minting, therefore btc gives more power to old farts, and usd gives power to everyone (citizens of the us)
Don't overthink the simple.
You have a point about inflation. But in this matter, what's different about Bitcoin vs gold?
1) Bitcoin is more convenient to store and transfer: it's digital. You can literally use your brain as a Bitcoin wallet.
2) The supply of gold is less predictable. For instance, just last month, China announced the discovery of the world's largest known gold deposit, estimated to be worth over $80 billion.
> 1) Bitcoin is more convenient to […] transfer: […].
As some phishing victims have learned to their peril. Of course BTC transfers are non-reversible / non-refundable, with no means of redress (unlike a bank transfer).
1) Bitcoin is more convenient to store and transfer: it's digital. You can literally use your brain as a Bitcoin wallet.
You can? I think it's too computationally expensive. We do less than 1 hash per day. And thats with paper as an aid
I was referring to the fact that you can memorize your seed phrase. If the seed is not recorded anywhere, the Bitcoins can be thought of as being held only in the mind of the owner.
https://en.bitcoin.it/wiki/Brainwallet
To be clear, $80 billion is not earth-shattering in the gold market. Lots of gold exists in the world but is too expensive to mine. I don't remember how expensive but I think it is at least half of the current price. The supply of gold grows at a very slow rate of at most 2% per year. It is getting harder to mine all the time. Demand and futures market manipulation matter far more to gold than its small supply. All the world's gold that was ever mined could fit in roughly two Olympic size swimming pools.
The supply of discovered gold and the supply of gold extracted from mines (and recovered from other sources) aren’t the same, and one is more predictable. Which one has a greater impact on the price….
Gold is physical, it can be made into jewelry due to its attractive luster. It has uses in electronics.
Gold is 'first place' and has been a symbol of value for most of our recorded history.
> Gold is 'first place' and has been a symbol of value for most of our recorded history.
Actually it has not. Not in Mesoamerican civilizations (Aztec, Mayans). Also not for the Chinese, who used silver for currency (and gold for ceremonial purposes). Around the Mediterranean, gold became a currency 'only' around 500BC with the Lydians—which is a very long time after the first economic records we have, which take back to Ur III, the Babylonians (Hammurabi), Ancient Egypt.
And when it was used, there were periods of economic stagnation due to its fixed supply:
* https://en.wikipedia.org/wiki/Great_Bullion_Famine
Letters of credit / bills of exchange were used in the Middle Ages. Most regular folks worked on credit for their day to day lives:
* https://en.wikipedia.org/wiki/Debt:_The_First_5,000_Years
The gold standard only appeared in the 1800s:
* https://www.goodreads.com/book/show/249245.The_Power_of_Gold
And it had all sorts of problems with it:
* https://en.wikipedia.org/wiki/Long_Depression
* https://archive.is/https://www.theatlantic.com/business/arch...
I did not say anything about gold being used as a currency, just that it has always been recognized as valuable, divine, even.
I think your references to China probably backs me up: it was used in ceremony for a reason.
Using gold as a currency has many problems: chief among them is scarcity as you mentioned.
Yet we want to pretend it will be different with Bitcoin?
> Yet we want to pretend it will be different with Bitcoin?
Bitcoin is scarce, gold is not. For example, El Salvador just found trillions worth.
It would take a majority of the miners to vote (by running a fork of the software) to increase supply, which goes against their own economics.
> Bitcoin is scarce […]
Which is a bug:
* https://en.bitcoin.it/wiki/Deflationary_spiral
* https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi...
How is it a bug?
“Bitcoin is not affected by this because it is fundamentally different from popular currency.”
The other arguments given are unproven and doubtful.
It also cannot be hacked or tracked like Bitcoin. It works offline and can even survive longer than whole countries. The biggest problems are risk of theft and high taxation.
Yes, I think the privacy and security of gold are superior. Bitcoin, by trading those, is easier to transact with.
Bitcoin was supposed to be private and secure, so it more or less failed its mission. It is only presently easier to trade because of various gimmicks to warm people up to the idea of accepting it. Gold on the other hand has a long history of being a currency. Everyone in the world knows it is valuable, even if they don't know how much. The fact Bitcoin wildly swings around in value and requires special computer access and sometimes hardware makes it harder to transact with. If you don't care about privacy and security, and want ease of use, you would be far better served by a credit card than a Bitcoin wallet. And if you do care about those three things, gold is better. The only thing I can say positive about Bitcoin is that it is easier to carry across borders than gold. That plus the modicum of privacy it offers might make it ok for some. As for me, I don't think I could privately accumulate enough Bitcoin for that to be a real benefit to me.
Edit: I hit the limit for now so here's a reply:
>Was it supposed to be [private]? A currency with a complete ledger of transactions available for view by anyone in the p2p network is hardly secure by design
It was intended to be secure and private. That is, people can't steal your Bitcoin (theoretically) and the public ledger gives you some potential strategy if you did want to establish a reputation while dealing with anonymous people. Someone could also deal with you without ever knowing your identity, which makes it private. It would be fairly hard to identify Bitcoin users if their wallets were never linked to their identities, e.g. through an exchange. I don't know how other cryptocurrencies do their ledgers but I assume you are limited to querying the network about specific transactions instead of having access to it all. It could be done by having public yet encrypted transaction records as well maybe. Idk, cryptocurrency never appealed to me. I remember thinking my classmates were insane for buying Bitcoin at $70. The price movement we've seen feels like some insiders using it to embezzle money from reputable institutions who have been sold on the hype. We're in real trouble if the government starts buying it. We will be robbed blind.
Was it supposed to be? A currency with a complete ledger of transactions available for view by anyone in the p2p network is hardly secure by design.
Edit: thanks for the reply. In that sense that you are able to be only identified by a wallet address, that makes sense. I guess I meant that, unlike privacy-focused coins like Monero, there is a way to see who sent what to who (even if who is just an address) and to develop surveillance based on this.
Yeah, the coperedictor.
The current financial system is straight up unusable. Cashing out on the future of money is cool.
I thought about cashing out, but cash out into what? Every form of currency has its own risk.
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