# Lifestyles & Discussion > Bitcoin / Cryptocurrencies >  Why is Crypto so . . . Cryptic?

## Anti Federalist

*Why is Crypto so . . . Cryptic?*

https://www.ericpetersautos.com/2022...to-so-cryptic/

By eric - March 21, 2022

Theres one simple  inarguable  fact about Bitcoin and crypto in general that ought to give everyone a moments pause. It is that no one can explain it intelligibly in less than 10 minutes  if at all. 

Anything opaque that ought to be readily understandable is inherently suspect. Not necessarily bad  but suspect. Cryptic contracts filled with legalese which even intelligent people who can read and understand Shakespeare cannot understand, for instance. Time-share spiels. There are many such examples. 

Money ought not to be among them.

Everyone understands that money is a medium of exchange because everyone understands that you can exchange money for something that isnt money. That money has value precisely because other people are willing to accept it  whatever its form  in exchange for that which is not money. 

In this sense, Bitcoin and crypto generally qualify as money since people are willing to accept them in exchange for things  goods and services  that are not money. 

So far, so good. 

People also accept Federal Reserve Notes in exchange for goods and services. They do so because they believe they are receiving money  which has value to them because they, in turn, can exchange it for goods and services as well.

Neither of these forms of money has any intrinsic value, however. Absent the willingness of people to accept Federal Reserve Notes in exchange for goods and services, all youve got are pieces of paper that have next to no value at all, in and of themselves.

With crypto, you havent even got that.  

The problem  the danger  with both of these forms of money, then, seems to be that they only have value to the extent people are  willing to accept them in exchange for things that do have intrinsic value; i.e., goods and services or any other tangible thing (such as land).

Both crypto and Federal Reserve Notes have another  dangerous  commonality that relates to their having no intrinsic value, as such. Both being created things of no intrinsic value of which a potentially limitless amount can be easily created  presto!  by those in a position to create them.

The Federal Reserve has a legal monopoly on the creation of Federal Reserve Notes  those pieces of paper that have no intrinsic value in and of themselves. And it has the ability to create as many as it likes.

The more of these notes the Fed creates  issues is the term the Fed prefers to use, to imply there is a fixed amount and that the notes are merely being  . . . issued  the less the value of the notes already in circulation, since more of them are chasing fewer goods and services that do have intrinsic value, both because they are intrinsically valuable for whatever they are and because it is not possible to simply print more goods and services. The limited supply of goods and services imposes a kind of floor on the devaluation of these things whereas notes can be devalued to worthlessness via the simple act of making more of them, presto-style.

There is no legal monopoly on the issuance of crypto  but it does seem to be under the control of cryptic entities; enter the difficulty explaining where crypto comes from and who controls it.

*Then there is this business of mining it  which is as understandable as quantum mechanics. How does one mine something that has no physicality? Who, exactly, is mining it  and how do we know that whatever-it-is thats allegedly being mined actually is  or even exists, at all?*

We go on say-so. So long as people say they are willing to accept crypto as money, then it functions as money.

But it is not at all clear how crypto is a sounder form of money than Federal Reserve Notes because it appears to be just as subject to devaluation by dint of printing (or mining) more of it.  Some proponents say there is a set limit to the quantity of crypto that can be issued that correlates to the mining of it. But if you understand  or can explain  this, you are a smarter man than I am.

Perhaps the most worrisome thing about crypto, though, is precisely related to the thing which has made it so attractive to so many.

It is  so it is said  decentralized (i.e., not under the control of some centralized government-corporate nexus, such as the Fed) and thus represents a return of control to the average person over his financial affairs  as well as anonymity. Again, so it is said.

But it is, it actually?

Crypto is issued by  . . . whom, exactly? Due diligence prompts the wanting of  the needing of  an understandable answer to this simple question. And anonymity?

Really?

Cash  even if fiat  is inherently anonymous because of its physicality. A dollar bill is one of trillions  literally  and not tied to any specific individual. So long as the individual can exchange a dollar bill for goods and services without having to also produce identification and have the exchange recorded, the exchange is completely anonymous. No one else knows you fed a dollar bill into a soda machine in exchange for a can of Coke.

And if you receive dollars in exchange for your goods and services  or as compensation for work  no one else knows the exchange has been transacted, absent any requirement that it be recorded and the parties to it identified.

Cash also has the intrinsic value of being the support of a black market in goods and services as well as the exchange of labor, etc. Put another way, physical cash is an effective way to keep the government out of your financial business  and the push to eliminate it in favor of some form of digital money speaks volumes about the governments motives in that respect. If money becomes digital, it is no longer physical and so no longer anonymous. The Internet will know you bought a can of Coke  the moment you bought it. It will know everything about every exchange you and everyone else makes.

How, then, will the government not also know of it?

Which circles us back to crypto, which is necessarily digital. Which ought to give everyone a moments pause. Are we quite sure we want to trust in the assurance that it is decentralized and anonymous. That we want to buy into a medium of exchange that is inherently suited to eliminate anonymity?

Perhaps not. Blockchains and wallets and such. But I wish someone could explain how, exactly, this works  and in a way that anyone of average intelligence could easily understand.

Until then, I remain on guard  and prefer money I can hold in my hand and (ideally) which has intrinsic value, such as that based on (or which actually is) silver and gold, actually mined  and which cannot be mined in unlimited quantities by cryptic centralized issuers thereof.

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## TheTexan

> There’s one simple – inarguable – fact about Bitcoin and crypto in general that ought to give everyone a moment’s pause. It is that no one can explain it intelligibly in less than 10 minutes – if at all.


Shrug.  It's really not that complicated.

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## TheTexan

> Then there is this business of “mining” it – which is as understandable as quantum mechanics. How does one “mine” something that has no physicality? Who, exactly, is “mining” it – and how do we know that whatever-it-is that’s allegedly being “mined” actually is – or even exists, at all?


Mining uses a function:

f(x) = y

given "f" and "x" it is very quick and easy to find "y".

it is however basically impossible to find "x" if you are only given "f" and "y".

"mining" is the activity of searching random values of "x" to find specific values of "y".

it takes a great deal of computing power & electricity to find specific values of "y", which happens in Bitcoin approximately every 10 minutes.

every time someone finds the specified "y", they take the list of pending transactions, and add it to the end of the ledger.

this is called a "confirmation"

every confirmation is proof that energy was expended ("proof of work")

the more "confirmations" a ledger has, the more trust is placed in it that the transactions within that confirmation, will not be overturned.

after 2-3 confirmations, it's reasonably assured that the transaction is secure, because at that point, a great deal of proven energy was expended to confirm the prior transactions.

as a reward for expending that energy, the miner is rewarded with some amount of bitcoin.  but the purpose of mining is to confirm transactions, and provide trust in the ledger by adding to the amount of energy that has been expended into securing it.

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## CaptUSA

> Shrug.  It's really not that complicated.





> Mining uses a function:
> 
> f(x) = y
> 
> given "f" and "x" it is very quick and easy to find "y".
> 
> it is however basically impossible to find "x" if you are only given "f" and "y".
> 
> "mining" is the activity of searching random values of "x" to find specific values of "y".
> ...


Uh 

Thanks for _simplifying_ that??

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## TheTexan

> Uh 
> 
> Thanks for _simplifying_ that??


Happy to help

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## CaptUSA

Here are my major concerns with crypto...

It's confusingIt seems to track with tech stocks and not a converse relationship to the dollarWhere does the value go if I lose my wallet?Who controls my wallet?What happens to that wealth in a SHTF scenario?It's confusing

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## TheTexan

For the mathematically challenged:

bitcoin mining is like making chicken nuggets.  its very easy to turn a chicken into chicken nuggies.  but very hard to turn nuggies back into chicken.

"mining" is basically the mass slaughter of trillions of chickens, to get the perfect chicken nugget.

the bitcoin "ledger" is a growing list of perfect chicken nuggies.  a chicken nuggie "hall of fame" if you will.  and this chicken nuggie hall of fame also keeps track of all chicken nuggies that have been bought or traded.

you trust this chicken nuggie hall of fame because it has so many perfect chicken nuggies.

you would not trust a chicken nuggie hall of fame that only has a few perfect chicken nuggies.  not very impressive hall of fame.

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## TheTexan

> [*]Where does the value go if I lose my wallet?


Poof




> Who controls my wallet?


You




> What happens to that wealth in a SHTF scenario?


Depends if internet is still a thing or not.




> It's confusing


So is the Fed, people don't seem to care about its intricate details.

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## CaptUSA

> For the mathematically challenged:
> 
> bitcoin mining is like making chicken nuggets.  its very easy to turn a chicken into chicken nuggies.  but very hard to turn nuggies back into chicken.
> 
> "mining" is basically the mass slaughter of trillions of chickens, to get the perfect chicken nugget.
> 
> the bitcoin "ledger" is a growing list of perfect chicken nuggies.  a chicken nuggie "hall of fame" if you will.  and this chicken nuggie hall of fame also keeps track of all chicken nuggies that have been bought or traded.
> 
> you trust this chicken nuggie hall of fame because it has so many perfect chicken nuggies.
> ...


Ok - now, not only do I not want crypto, I'm getting nauseated thinking of chicken nuggets.

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## CaptUSA

> So is the Fed, people don't seem to care about its intricate details.


I keep converting my FRN's into real assets.  I've been stacking PM's, ammo, hardware (nails, screws, bolts, etc.), tools and land in case I need to liquidate.  Other than that, I try to put as much as I can towards improving the value of my properties.

It may not make me a millionaire, but feels like the best way to store the value I've created with the lowest risk.  Maybe I'm just old school.

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## TheTexan

> I keep converting my FRN's into real assets.  I've been stacking PM's, ammo, hardware (nails, screws, bolts, etc.), tools and land in case I need to liquidate.  Other than that, I try to put as much as I can towards improving the value of my properties.
> 
> It may not make me a millionaire, but feels like the best way to store the value I've created with the lowest risk.  Maybe I'm just old school.


I'm not a fan of crypto in its current state either.

It has the promise of being anonymous and easy to use, but neither of those things are true currently.

From a pure technology perspective, it has the capability of destroying government's control of money.

It could even destroy the concept of the state.

It is however obviously very far from achieving that goal currently.

But it has within its capacity, the power to do so, once the technology has matured, and a proper ecosystem has been built around it.

Crypto in its current state however, is basically garbage.  I wouldn't encourage anyone to invest in it outside of pure speculation purposes.

It may be worthwhile however to have a very small portion of your wealth in crypto, as it can be accessed from anywhere, regardless of what "domestic terrorist" status you may or may not have at the time.

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## ClaytonB

> Here are my major concerns with crypto...
> 
> It's confusing


It is a new tool. When the PC was first introduced, it was a mystery to most users. It was mainly only a few nerds -- armed with the user manual and pocket-protectors, typing cryptic strings of letters into a blank screen with golden glowing letters -- who could figure the damn things out. And when they did figure it out, they could do truly amazing stuff, like desktop printing. Does anyone even go to the printer anymore, nowadays??




> It seems to track with tech stocks and not a converse relationship to the dollar


Most cryptos are sh!tcoins. So, it's no surprise they track with the tech sh!t-stocks.




> Where does the value go if I lose my wallet?
> Who controls my wallet?


If you truly lose your wallet, it's gone, just like cash. That is a feature, not a bug. The funds are _absolutely unrecoverable_, by design. This feature is what is driving so much interest in crypto.

You should control your own wallet. It's slightly oversimplified, but your wallet is basically the password itself. If you can memorize a (long) password, then you can store your wallet in your brain and only type it into a computer if you ever needed to access it. THis is called a brain-wallet. There are also cold-wallets, hardware wallets and software wallets (and wallet apps should be mentioned separately, as well).




> What happens to that wealth in a SHTF scenario?


It depends on how SHTF. If it's an apocalyptic CME that wipes out 90% of earth's electronics, then yes, crypto will probably become useless/worthless. But aside from a scenario that extreme, crypto will probably work just fine during SHTF.




> It's confusing


It can be made a lot more confusing than it actually is.

The long-and-short of it is that _Bitcoin permits you to become your own bank_. That's kind of cool if you stop stressing over the implementation details for a minute, and really think about it. If it Bitcoin really was such a broken and flawed system, wouldn't somebody have pointed it out already? I understand Bitcoin. Your concerns seem reasonable but you will find, upon further investigation, that they are not well-founded. Bitcoin really works.

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## CaptUSA

> If you truly lose your wallet, it's gone, just like cash. That is a feature, not a bug. The funds are absolutely unrecoverable, by design. This feature is what is driving so much interest in crypto.


Ok, talk to me in terms I can understand...  where does that value go?  Does it sit in limbo forever?  How many cryptocoins are currently in this limbo state?  Is there ever a clearinghouse?  




> You should control your own wallet. It's slightly oversimplified, but your wallet is basically the password itself. If you can memorize a (long) password, then you can store your wallet in your brain and only type it into a computer if you ever needed to access it. THis is called a brain-wallet. There are also cold-wallets, hardware wallets and software wallets (and wallet apps should be mentioned separately, as well).


Obviously, I'm not using the right terminology.  I understand I have _access_ to the wallet via the password.  But can I give that password to my heirs?  And there seem to be crypto exchange platforms to put more FRN's into crypto or turn crypto into FRN's for use - and those platforms cost value and seem to be vulnerable to restrictions.




> That's kind of cool if you stop stressing over the implementation details for a minute, and really think about it. If it Bitcoin really was such a broken and flawed system, wouldn't somebody have pointed it out already? I understand Bitcoin. Your concerns seem reasonable but you will find, upon further investigation, that they are not well-founded. Bitcoin really works.


In theory, it's really cool.  But it doesn't really seem to operate like that.  It seems like a tech speculation mechanism.  And the fluctuations support that premise.  And one thing I know about speculation is that the bottom can fall out really fast if the climate of opinion changes.  I'll watch the video, but I've seen many of them and they never seem to address the concerns.  Just a bunch of tech-geek gobbledygook.

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## ClaytonB

> Ok, talk to me in terms I can understand...  where does that value go?  Does it sit in limbo forever?  How many cryptocoins are currently in this limbo state?  Is there ever a clearinghouse?


There are other cryptos that handle this differently. Some of them are sh!tcoins, others have valid reasons. But in Bitcoin, the point is to be the digital equivalent of cash/gold. If you drop your gold into a deep channel in the middle of the ocean, it's gone. That is the use-model which Bitcoin was designed to replicate. If you delete your wallet (that is, throw away the password without a backup), the funds are _completely and totally unrecoverable_ and there is no clearing-house or other recovery system. It is permanent, forever, gone.

The coins do sit in a "limbo" which is just their most-recent blockchain entry. It can never be moved or changed by anyone, because they do not have the cryptographic keys (and you threw them away by throwing out the password, aka "seed phrase"). There is no way to be certain how many coins are in limbo but I've read some articles on it in the past. In terms of the viability of Bitcoin itself, these lost coins are no obstacle. They account for some tiny percentage of the activity on the Blockchain. Every holder of Bitcoin is maximally motivated to make sure their coins do not end up in this state for obvious reasons, so it's a "self-solving problem" in that regard.




> Obviously, I'm not using the right terminology.  I understand I have _access_ to the wallet via the password.  But can I give that password to my heirs?


Yes. Think of it like a Swiss numbered bank account. When you give them the number (the "seed phrase"), they now own that account. There is no other KYC or anything else attached to it as long as you have followed good digital/crypto hygiene (a separate topic to itself).




> And there seem to be crypto exchange platforms to put more FRN's into crypto or turn crypto into FRN's for use - and those platforms cost value and seem to be vulnerable to restrictions.


If you think of Bitcoin as just a money-transmission/bank-wire service, then you're right, its value-proposition is arguable, and it doesn't help you escape any kind of KYC or other financial surveillance. However, if you think of Bitcoin as a money in its own right, then exchanges are just a bridge for leaving FRNs for good. Why would you ever want to put your money back into a devaluing currency?




> In theory, it's really cool.  But it doesn't really seem to operate like that.  It seems like a tech speculation mechanism.  And the fluctuations support that premise.


Bitcoin and other cryptos should be treated as completely separate entities. I haven't compared Bitcoin:Tech Stocks, so I'll do that if I get an opportunity. Last I checked (a couple years ago), Bitcoin was indeed fluctuating inversely with the dollar. Other cryptos will be different.




> And one thing I know about speculation is that the bottom can fall out really fast if the climate of opinion changes.  I'll watch the video, but I've seen many of them and they never seem to address the concerns.  Just a bunch of tech-geek gobbledygook.


You're right to be wary. Bitcoin has shot up in price in just the last few years, and I don't know if that's a true plateau, or if it could drop back down. It's not going back to zero, but $40,000 is an awful lot of dough for something that was worth $5,000 just two years ago. That's the hard part with any kind of disruptive technology, it's really difficult to price it at first. If you ever do decide to invest, just be careful, ease in, use dollar-cost averaging, and don't risk money you can't afford to lose.

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## dannno

> Ok, talk to me in terms I can understand...  where does that value go?  Does it sit in limbo forever?  How many cryptocoins are currently in this limbo state?  Is there ever a clearinghouse?


The value of crypto is the same as other money, it is based on supply and demand. If somebody loses access to their wallet, then the coins sit there indefinitely. That reduces the supply of bitcoin and increases the price. 




> Obviously, I'm not using the right terminology.  I understand I have _access_ to the wallet via the password.  But can I give that password to my heirs?  And there seem to be crypto exchange platforms to put more FRN's into crypto or turn crypto into FRN's for use - and those platforms cost value and seem to be vulnerable to restrictions.


You can write down the whole password, or write down just a portion of it that you don't want to memorize, and put it in a safe. It is usually a 24 word randomly generated passphrase. You could put it in a safety deposit box. Or you can chisel it into a metal plate and bury it in your yard. You can get as creative as you want. You can gift it to your heirs, or anybody else. 





> In theory, it's really cool.  But it doesn't really seem to operate like that.  It seems like a tech speculation mechanism.  And the fluctuations support that premise.  And one thing I know about speculation is that the bottom can fall out really fast if the climate of opinion changes.  I'll watch the video, but I've seen many of them and they never seem to address the concerns.  Just a bunch of tech-geek gobbledygook.


The speculation is that fiat money has a lot of flaws and having something solid in place to take over for that system when people do not trust it anymore will lead to eventual adoption. Having something solid in place to take over fiat will incentivize more people to ditch the current system sooner than they might otherwise.

Gold and silver are great, except that you need to physically guard it and it takes time and is difficult to transport with large security risks. 

Bitcoin can be transported from anywhere in the world to anywhere else in the world instantaneously, with the best digital security that exists. If it wasn't the best security, it would have been broken a long time ago. 

That is what gives bitcoin "value". It does something that no other type of money, fiat or otherwise, can do. It can be transferred anywhere  instantly, without permission from governments or banking institutions and government and banking institutions cannot print their own and devalue yours. 

That said, don't put your life savings in it any one thing, no matter what it is.. You could stockpile ammo and next thing you know everybody is shooting cheap laser guns. Or you could be trading single bullets for 5 pounds of meat, who knows. Diversifying your investments intelligently is always a good thing. But it is a good hedge along with whatever else you have invested in.

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## ClaytonB

> Gold and silver are great, except that you need to physically guard it and it takes time and is difficult to transport with large security risks.


All great points -- I want to add in respect to gold/silver that Bitcoin could lead to an explosion in the use of gold and silver in the event of a Fed/IMF/WB collapse. How? Because the way that you get around the problem of transport costs/risks when you have electronic systems, is you just transmit account transfers in a gold/silver vault. Bitcoin could be used as a secure digital backbone for such a system. 

Suppose I live on the other side of the US and I am sending you 100 silver coins. In your town there is Silver Transmitters, Inc. Instead of physically transporting you 100 silver coins, I transmit 1/10th of a Bitcoin to Silver Transmitters, Inc. and they segregate 100 silver coins to an account in your name. Now, you can go to your local Silver Transmitters branch at your convenience and withdraw your 100 coins. In fact, as long as you trust STI to be reliable, you don't even need to rush down to take physical delivery, you just need to see the transaction confirmation on the blockchain, and it's done.

Right now, the main obstacle to this kind of business is all of the "money-transmitter"/"bank-wire"/KYC/AML laws which are really in place to protect the Fed-backed banking monopoly. We're just one collapse away from all of that crumbling into a heap of ash. It could all change overnight, and Bitcoin could play a pivotal role not only in bringing about that collapse, but in super-charging a post-collapse gold-and-silver-coin economy.

Whether you "believe in Bitcoin" or not, Bitcoin is not the enemy of Liberty...

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## Occam's Banana

I don't have anything to say about cryptocurrency here - just a strenuous quibble.

Eric repeatedly invokes and greatly relies upon the notion of "intrinsic value".

This makes me twitch because "intrinsic value" is an oxymoron.

Value is always subjective and never "intrinsic" (or "objective").

Nothing ever has any value intrinsically. Not paper FRNs, not silver or gold, not land. Nothing.

A thing has value only insofar as someone values it. Indeed, one may regard a thing as having value, not because one subjectively values it oneself, but only because others do. (For example, a Honus Wagner baseball card in excellent condition could be regarded as extremely valuable even to those who otherwise have no interest at all in baseball or baseball cards, merely because others subjectively regard it as highly valuable.)




> Neither of these forms of money has any intrinsic value [...]
> 
> [...] they only have value to the extent people are willing to accept them in exchange for things that do have intrinsic value; i.e., goods and services or any other tangible thing (such as land).
> 
> [...]
> 
> The more [FRNs] the Fed creates [...] the less the value of the “notes” already in circulation, since more of them are chasing fewer goods and services that do have intrinsic value, both because they are intrinsically valuable for whatever they are and because it is not possible to simply “print” more goods and services. [...]
> 
> [...]
> ...


None of the things Eric references (goods, services, tangibles such as land, etc.) have any intrinsic value. They are valuable only because Eric subjectively values them, and/or because he recognizes that other people subjectively value them (and would accept a trade for those things in exchange for something else that Eric does subjectively value). The fact that some of those things (such as gold or land) are subjectively regarded as being valuable by a great number of people does not in any way make their value "intrinsic" (or "objective"). It only means that a lot of people subjectively regard those things as being valuable.

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## TheTexan

> I don't have anything to say about cryptocurrency here - just a strenuous quibble.
> 
> Eric repeatedly invokes and greatly relies upon the notion of "intrinsic value".
> 
> This makes me twitch because "intrinsic value" is an oxymoron.
> 
> Value is always subjective and never "intrinsic" (or "objective").
> 
> Nothing ever has any value intrinsically. Not paper FRNs, not silver or gold, not land. Nothing.
> ...


Gold has some intrinsic value.  It's used in electronics.  Land also has intrinsic value for growing food and such.

Paper FRNs are useful to some extent for wiping your ass.

This is what intrinsic value is meant.  It's how much value it has _absent_ of "other people".  If other people did not exist and you alone existed on this earth, you would still value gold, land, and FRN's, for the intrinsic value that they offer above.

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## acptulsa

> This makes me twitch because "intrinsic value" is an oxymoron.


Well, you're right, of course.  That said, a gold eagle has intrinsic because there is something there, inside, which is valued.  Whereas a ten dollar bill is a cross between a rag and a paper towel, and you wouldn't pay ten bucks for a whole roll of the stuff if it weren't currency.

So, yes.  But, you know, if there is stuff inside, and people do value that stuff, what the hell _should_ we call that?  "The prize in the Cracker Jack box" is kinda wordy.

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## TheTexan

FRN's are also really good for starting fires.

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## ClaytonB

> This makes me twitch because "intrinsic value" is an oxymoron.


Correct.

You already dispelled the fallacy of "intrinsic value" because value does not inhere in goods (or services), rather, value is _attributed_ to them by "valuers", that is, acting humans. Baseball cards are a great example. I know nothing about baseball cards but if I found a vintage-looking baseball card in a sealed flip just laying somewhere, abandoned, I'd probably snag it and check its value on the interwebz. Personally, I have no value/use for it, but I know that others do, or might. This is the essence of what the value of _anything_ actually is.

As for what people are trying to say by "gold/silver/whatever" have "inherent value", what they are usually talking about are _alternative uses_. A good that has many alternative uses is usually more marketable than a good with only a few uses. Fuel-grade Uranium is extremely expensive, but it is not very marketable, that is, it is not very liquid. Despite its extremely high value-density, it is not the slightest market threat to gold, as a money, even if it could retain all of its valuable applications without its harmful health effects. Why? Because it is highly regulated (since it can, in principle, be made into a weapon) and so it is extremely illiquid. The time-horizon on which a seller must hold a given weight of Uranium in hopes of finding a buyer who is paying a reasonably good price (relative to market prices) may be very long. I'm not familiar with the details of the market but I suppose it could take months or years, depending on how much red-tape is involved. So, "I own $1B of Uranium" is not nearly as impressive as "I own $1B of gold." In the former case, you hold $1B of something that could, over a potentially very long span of time, be turned into $1B worth of other goods and services. In the latter case, you hold $1B of something that can, more or less overnight, be turned into $1B worth of other goods and services.

Marketability is the key to understanding how money came to be in the first place. One definition that can be given for money is that _the monetary good is whatever is the most marketable good._ The essential feature of money is that it has maximum liquidity. There is nothing you can get rid of faster -- at fair market value -- than money. You can probably sell your car for $10 in an hour or less. Even then, money still has your car beat... not only will you get a full $10 worth of goods and services in exchange for $10, you can do so virtually instantly.

By "inherent value", people really mean that a good has (a) _lots of alternative uses_ and (b) _high liquidity_. While paper cash, gold and silver are the very most liquid goods, there is a second-tier class of goods that are damn close, and those are the kinds of goods you will tend to find in pawn shops. Ironically, if the government went full-retard and "banned cash", what would really happen is that people would just start using pawn-shop goods as street cash. So, watches, jewelry, iPhones, phone cards, and so on and so forth, would become street-money. Because they already nearly are. This shows that goods -- _even monetary goods_ -- exist in a hierarchy of "real marketability". When the government bans physical gold in order to establish a paper-money banking monopoly, gold itself doesn't disappear or even stop being money, it just "slides down the scale" of marketability and other goods take its place. People start using silver bars, commodity metals, jewels, and so on, as monies in place of the superior money which the government has gone to war against.

If you really want to understand why Bitcoin can be money, then watch the following highly excellent lecture by Bob Murphy:

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## TheTexan

> Correct.
> 
> You already dispelled the fallacy of "intrinsic value" because value does not inhere in goods (or services), rather, value is _attributed_ to them by "valuers", that is, acting humans. Baseball cards are a great example. I know nothing about baseball cards but if I found a vintage-looking baseball card in a sealed flip just laying somewhere, abandoned, I'd probably snag it and check its value on the interwebz. Personally, I have no value/use for it, but I know that others do, or might. This is the essence of what the value of _anything_ actually is.
> 
> As for what people are trying to say by "gold/silver/whatever" have "inherent value", what they are usually talking about are _alternative uses_. A good that has many alternative uses is usually more marketable than a good with only a few uses. Fuel-grade Uranium is extremely expensive, but it is not very marketable, that is, it is not very liquid. Despite its extremely high value-density, it is not the slightest market threat to gold, as a money, even if it could retain all of its valuable applications without its harmful health effects. Why? Because it is highly regulated (since it can, in principle, be made into a weapon) and so it is extremely illiquid. The time-horizon on which a seller must hold a given weight of Uranium in hopes of finding a buyer who is paying a reasonably good price (relative to market prices) may be very long. I'm not familiar with the details of the market but I suppose it could take months or years, depending on how much red-tape is involved. So, "I own $1B of Uranium" is not nearly as impressive as "I own $1B of gold." In the former case, you hold $1B of something that could, over a potentially very long span of time, be turned into $1B worth of other goods and services. In the latter case, you hold $1B of something that can, more or less overnight, be turned into $1B worth of other goods and services.
> 
> Marketability is the key to understanding how money came to be in the first place. One definition that can be given for money is that _the monetary good is whatever is the most marketable good._ The essential feature of money is that it has maximum liquidity. There is nothing you can get rid of faster -- at fair market value -- than money. You can probably sell your car for $10 in an hour or less. Even then, money still has your car beat... not only will you get a full $10 worth of goods and services in exchange for $10, you can do so virtually instantly.
> 
> By "inherent value", people really mean that a good has (a) _lots of alternative uses_ and (b) _high liquidity_. While paper cash, gold and silver are the very most liquid goods, there is a second-tier class of goods that are damn close, and those are the kinds of goods you will tend to find in pawn shops. Ironically, if the government went full-retard and "banned cash", what would really happen is that people would just start using pawn-shop goods as street cash. So, watches, jewelry, iPhones, phone cards, and so on and so forth, would become street-money. Because they already nearly are. This shows that goods -- _even monetary goods_ -- exist in a hierarchy of "real marketability". When the government bans physical gold in order to establish a paper-money banking monopoly, gold itself doesn't disappear or even stop being money, it just "slides down the scale" of marketability and other goods take its place. People start using silver bars, commodity metals, jewels, and so on, as monies in place of the superior money which the government has gone to war against.
> ...


So, my life has value, only to the extent others exist to "value" me?

Rude.

----------


## ClaytonB

> So, my life has value, only to the extent others exist to "value" me?
> 
> Rude.




Well, hopefully we have enough spiritual awareness to distinguish between the immortal soul -- which, coming from God, is of inestimable value -- and our earthly lives which do have some finite value. Some people assert that human life has infinite value but this is a more dangerous line of thinking than it seems, on the surface, and quickly descends into a broad array of absurdities like those you see in wokism. I mean, if one life is of _infinite_ value, then the Fauci-ites are right, we should turn all of society and the entire community upside-down in the mad pursuit of stopping anyone from getting the common cold.... "even if one life is saved." So this line of thinking is actually quite dangerous. No life insurance company will give you an infinite-payout, no matter what premium you pay them. So, as grim a thought as it is, your actuarial value is not infinite...

----------


## Anti Federalist

> Mining uses a function:
> 
> f(x) = y
> 
> given "f" and "x" it is very quick and easy to find "y".
> 
> it is however basically impossible to find "x" if you are only given "f" and "y".
> 
> "mining" is the activity of searching random values of "x" to find specific values of "y".
> ...

----------


## Anti Federalist

> Nothing ever has any value intrinsically. Not paper FRNs, not silver or gold, not land. Nothing.
> 
> A thing has value only insofar as someone values it. Indeed, one may regard a thing as having value, not because one subjectively values it oneself, but only because others do. (For example, a Honus Wagner baseball card in excellent condition could be regarded as extremely valuable even to those who otherwise have no interest at all in baseball or baseball cards, merely because others subjectively regard it as highly valuable.)


Food, clothing, shelter.

Those have"intrinsic" worth.

Without them, you die.

That which can be exchanged for those things, due to the fact that food spoils, clothing is different for each person and location, and shelter has limited liquidity or transportability, have "intrinsic worth".

At least, that's how I see it...

----------


## CaptUSA

> 


Ok, I watched this video.  Once again, it didn't answer any questions.  This is a good explanation of the _theory_ of bitcoin.  I understand how it proposes to operate in theory.  But in practice, I'm not seeing it.  

Are you really seeing large quantities of people using bitcoin as _money_??  Or is it an investment - a place to store your money in the hopes that it will gain in value, or at least not lose value?  

This guy talks about the money-side of the concept, but isn't talking about the speculative side.  If it were truly "money", it would have a converse relationship to the dollar.  Because crypto wouldn't gain or lose _value_ - it would just be a permanent measurement of value.  In terms of dollars, it would look like it's gaining, but only because the dollar is losing value.  In theory, one bitcoin would buy the same amount of goods in 2050 as it did in 2018.  But that theory doesn't seem to be supported by the data.  From what I can tell, it looks like a speculative increase similar to other tech stocks.

So explain the volatility to me.  Why does the value of crypto constantly change?  And who wants "money" that constantly changes in value?  That's the biggest concern with the FRN.  And what percentage of people who use crypto use it for money versus the percentage that use it as a hedge?

----------


## TheTexan

> Ok, I watched this video.  Once again, it didn't answer any questions.  This is a good explanation of the _theory_ of bitcoin.  I understand how it proposes to operate in theory.  But in practice, I'm not seeing it.  
> 
> Are you really seeing large quantities of people using bitcoin as _money_??  Or is it an investment - a place to store your money in the hopes that it will gain in value, or at least not lose value?  
> 
> This guy talks about the money-side of the concept, but isn't talking about the speculative side.  If it were truly "money", it would have a converse relationship to the dollar.  Because crypto wouldn't gain or lose _value_ - it would just be a permanent measurement of value.  In terms of dollars, it would look like it's gaining, but only because the dollar is losing value.  In theory, one bitcoin would buy the same amount of goods in 2050 as it did in 2018.  But that theory doesn't seem to be supported by the data.  From what I can tell, it looks like a speculative increase similar to other tech stocks.
> 
> So explain the volatility to me.  Why does the value of crypto constantly change?  And who wants "money" that constantly changes in value?  That's the biggest concern with the FRN.  And what percentage of people who use crypto use it for money versus the percentage that use it as a hedge?


Very few people are using it as money currently as its just not very useful as money in its current form.  It's almost entirely purely speculative at this point.

One valid use case that has been seen so far is Argentina, when their currency was collapsing, crypto offered a way to get their money out of pesos bypassing government restrictions.

As for the volatility, there are many reasons for it.  In 10 years the price will have likely settled down.  In the meantime, there are digital coins like USDC and "stablecoins" that provide a relative stable way to store your money in crypto.

----------


## TheTexan

One reason the dollar has/had value, is that you could loan it out and earn interest based on the productive use of that dollar.

There really is no way to do that in a meaningful way with crypto currently.  Though there are certainly efforts in that direction.

----------


## ClaytonB

> Food, clothing, shelter.
> 
> Those have"intrinsic" worth.
> 
> Without them, you die.
> 
> That which can be exchanged for those things, due to the fact that food spoils, clothing is different for each person and location, and shelter has limited liquidity or transportability, have "intrinsic worth".
> 
> At least, that's how I see it...


Many people think about it that way and, as long as you stay non-technical about it, it's serviceable. The problem is when you start trying to analyze human choice in exchange (economic theory), it starts to break down. Why is the intrinsic value of water very low, even though we cannot live without water, and the intrinsic value of diamonds is very high? "Diamonds are rare, water is abundant" doesn't work because dirt is also abundant, and some species of beetle are extremely rare, but these do not have the same value differential, despite the fact you don't need dirt to live, and beetles that are more rare than diamonds won't fetch millions on auction. The root of the problem is that value is not something that is inherent to any material object, it is something that is attributed or imputed to it.

It's a little bit like answering the question "who is the king?" Sure, you can say, "Whoever is wearing the crown" but, not only is that a circular answer, it cannot cope with the problem of any random guy putting on a crown. Rather, the king is the man who is _attributed to be_ the king, generally. It is not his crown that makes him king but, rather, the other way around. Neither he nor his crown have any inherent "kingness"... it is attributed or imputed to him by people, generally.

----------


## ClaytonB

> Very few people are using it as money currently as its just not very useful as money in its current form.  It's almost entirely purely speculative at this point.
> 
> One valid use case that has been seen so far is Argentina, when their currency was collapsing, crypto offered a way to get their money out of pesos bypassing government restrictions.
> 
> As for the volatility, there are many reasons for it.  In 10 years the price will have likely settled down.  In the meantime, there are digital coins like USDC and "stablecoins" that provide a relative stable way to store your money in crypto.


We're probably being lied to / censored in respect to the popularity of Bitcoin. If they (the Clown-"elites") _weren't_ censoring this, that would be the shock of all time. Try searching japan bitcoin economy and you get hardly any results, despite the fact that, until recently, you could find articles discussing the thriving Bitcoin sub-economy in Japan. Prior to El Salvador, Japan was the country with the highest and fastest uptake of Bitcoin in hand-to-hand use, see this 2017 article which hasn't been memory-holed yet for evidence along that line.

----------


## ClaytonB

> One reason the dollar has/had value, is that you could loan it out and earn interest based on the productive use of that dollar.
> 
> There really is no way to do that in a meaningful way with crypto currently.  Though there are certainly efforts in that direction.


This is simply not true.

----------


## TheTexan

> This is simply not true.


Which part.

----------


## ClaytonB

> Are you really seeing large quantities of people using bitcoin as _money_??


In parts of the world outside the US, and even in some local US communities, yes. As I note in a post above, this information _is being censored from Internet serach_. I used to have no problem pulling up heaps of articles about this, but now the searches are getting memory-holed. This is not a joke, they are not playing around, the war against Bitcoin is a Manhattan-project-scale war because Bitcoin can kill the Fed. And the Fed is _the_ crown-jewel of the Marxist/globalist octopus.




> Or is it an investment - a place to store your money in the hopes that it will gain in value, or at least not lose value?


That's up to you. Bitcoin can be used, today, as money. If you are willing to trade in Bitcoin denomination with others who are willing to do so, that's it, you are a Bitcoin economy. Nobody can stop you from doing that and, contrary to the latest disinfo that "Bitcoin isn't anonymous!!!", the Feds (or whoever) have no way to "hunt you down" for transacting in Bitcoin. There's literally no way to reconstruct that a transaction even took place. This is why they hate Bitcoin.

_All the usual suspects hate Bitcoin_, so doesn't that make you think twice before jumping on the Bitcoin-is-an-evil-pyramid-scheme bandwagon?? Check it out: Interview of Bill Gates, Warren Buffett and Charlie Munger: Bitcoin Is Worthless Artificial Gold | CNBC




> This guy talks about the money-side of the concept, but isn't talking about the speculative side.  If it were truly "money", it would have a converse relationship to the dollar.


Not necessarily. Scale matters and the dollar is the largest monetary asset in the world, by far. Bitcoin's market cap is around a trillion dollars. That's a drop in the USD ocean.




> Because crypto wouldn't gain or lose _value_ - it would just be a permanent measurement of value.  In terms of dollars, it would look like it's gaining, but only because the dollar is losing value.  In theory, one bitcoin would buy the same amount of goods in 2050 as it did in 2018.  But that theory doesn't seem to be supported by the data.  From what I can tell, it looks like a speculative increase similar to other tech stocks.


Hmm, I don't think you're analyzing it correctly. Think of each world money as a kind of "pool". In addition to fiat monies, let's track gold, silver and Bitcoin as well. Now, if you remove $1000 of value from USD and put it in Bitcoin, what has really happened? It's analogous to taking a bucket of water out of the USD pool and dumping it into the Bitcoin pool. If lots of people start doing that, the USD pool could drain extremely rapidly, and the Bitcoin pool could fill extremely rapidly. The volatility in Bitcoin is the result of two factors: the enormous scale-differential between USD and Bitcoin, and the politicization of Bitcoin (and the ongoing attempt by the Swamp to stamp it out).

The USD is useful in the US as a money because it can be exchanged for pretty much anything else and is accepted anywhere. That's very straightforward. Bitcoin does not have the liquidity of USD because it is still not as widely accepted as USD. So, that's pretty much the whole "bet" of Bitcoin speculation ... do you believe there is a future in which Bitcoin becomes widely used in hand-to-hand transactions? You can still buy and use Bitcoin even if you believe it will only ever be a niche money. But the investment/speculation question is really a socio-political one. Can they keep the lid on Bitcoin indefinitely? If so, then maybe it's not such a great speculative move. Only time can answer that question with certainty.




> So explain the volatility to me.  Why does the value of crypto constantly change?  And who wants "money" that constantly changes in value?  That's the biggest concern with the FRN.  And what percentage of people who use crypto use it for money versus the percentage that use it as a hedge?


Come on, don't confuse the market fluctuations in the _relative_ value of Bitcoin:USD with the constant dilution of USDs by the printing-press. Unlike USDs, Bitcoin can't be inflated. The usability of Bitcoin is not just a technical question, it is also a political one. The Clown Swamp has gone to war with Bitcoin... and you're shocked that its widespread adoption is being delayed? In a world where the US government can mandate any business to impose any insane measure it wants, on pain of immediate closure and shutdown, you're shocked that businesses are not taking up a technology that the Fed and its banking system have gone to war against? Let's not be naive...

----------


## ClaytonB

> Which part.


The whole thing. There is nothing stopping me from loaning you Bitcoin. The law recognizes Bitcoin like any other asset. I can loan you a commodity such as iron, for example, and the terms of the loan can be that you pay me back the the same amount of iron, plus whatever for interest. So, there is no obstacle to a Bitcoin loans market.

----------


## TheTexan

> The whole thing. There is nothing stopping me from loaning you Bitcoin. The law recognizes Bitcoin like any other asset. I can loan you a commodity such as iron, for example, and the terms of the loan can be that you pay me back the the same amount of iron, plus whatever for interest. So, there is no obstacle to a Bitcoin loans market.


I specified in a "meaningful" way.  yes, you can do it.  no, the ecosystem is not currently well developed enough for it to be an efficient investment option

----------


## ClaytonB

> I specified in a "meaningful" way.  yes, you can do it.  no, the ecosystem is not currently well developed enough for it to be an efficient investment option




This is like saying the kid that's never picked for the soccer-team doesn't have any trophies. While true, it's also meaningless and indicates nothing about his actual potential.

Or are we to believe that Bitcoin is magically apolitical, and the Fed/US government has no political orientation towards Bitcoin at all, whether favorable or hostile?

----------


## TheTexan

> This is like saying the kid that's never picked for the soccer-team doesn't have any trophies. While true, it's also meaningless and indicates nothing about his actual potential.
> 
> Or are we to believe that Bitcoin is magically apolitical, and the Fed/US government has no political orientation towards Bitcoin at all, whether favorable or hostile?


I'm just pointing out the current status of the ecosystem.  Your kid analogy is apt because crypto is a child currently.  It's chubby useless and whines a lot.

But it has potential.

----------


## Anti Federalist

> Many people think about it that way and, as long as you stay non-technical about it, it's serviceable. The problem is when you start trying to analyze human choice in exchange (economic theory), it starts to break down. 
> 
> *Why is the intrinsic value of water very low, even though we cannot live without water, and the intrinsic value of diamonds is very high?* 
> 
> "Diamonds are rare, water is abundant" doesn't work because dirt is also abundant, and some species of beetle are extremely rare, but these do not have the same value differential, despite the fact you don't need dirt to live, and beetles that are more rare than diamonds won't fetch millions on auction. The root of the problem is that value is not something that is inherent to any material object, it is something that is attributed or imputed to it.
> 
> It's a little bit like answering the question "who is the king?" Sure, you can say, "Whoever is wearing the crown" but, not only is that a circular answer, it cannot cope with the problem of any random guy putting on a crown. Rather, the king is the man who is _attributed to be_ the king, generally. It is not his crown that makes him king but, rather, the other way around. Neither he nor his crown have any inherent "kingness"... it is attributed or imputed to him by people, generally.


There has not been an adjustment yet to technological advances that made clean fresh water available to most of the planet's population.

Up until about 50 years that was not the case, and for thousands of years prior to that, clean, fresh water was a very valuable commodity.

So was salt, for instance.

----------


## ClaytonB

> There has not been an adjustment yet to technological advances that made clean fresh water available to most of the planet's population.
> 
> Up until about 50 years that was not the case, and for thousands of years prior to that, clean, fresh water was a very valuable commodity.
> 
> So was salt, for instance.


Still no comparison to diamonds. If I remember correctly, the diamond-water paradox was first formulated in the 18th century when clean, fresh water was far from widely available, as it is in the modern world.

In order to resolve this and other economic paradoxes economists, such as Carl Menger, formulated the marginal theory of value (aka subjective theory of value):

----------


## Occam's Banana

> Gold has some intrinsic value.  It's used in electronics.  Land also has intrinsic value for growing food and such.
> 
> Paper FRNs are useful to some extent for wiping your ass.
> 
> This is what intrinsic value is meant.  It's how much value it has _absent_ of "other people".  If other people did not exist and you alone existed on this earth, you would still value gold, land, and FRN's, for the intrinsic value that they offer above.





> Food, clothing, shelter.
> 
> Those have"intrinsic" worth.
> 
> Without them, you die.
> 
> That which can be exchanged for those things, due to the fact that food spoils, clothing is different for each person and location, and shelter has limited liquidity or transportability, have "intrinsic worth".
> 
> At least, that's how I see it...


But none of these considerations have anything  to with what "intrinsic" means. Just the opposite, in fact - they explicitly undermine and directly contradict the notion that value is intrinsic.

An intrinsic quality is a quality that is essential to or inherent in a thing in, of, and by itself, without relation to anything else, and that is not contingent upon any external factor or circumstance. Hence, saying, for example, that "gold has some intrinsic value" because "it's used in electronics" is a contradiction. Such a statement conveys the _exact, diametric opposite_ of what "intrinsic" means. If gold is said to have value because it is used in electronics (or for any other purposes or reasons external to the gold itself), then its value is explicitly being identified and accounted for as _extrinsic_ to the gold, _not_ intrinsic to it. (The same goes for food, shelter, FRNs, etc.)

Value does not inhere "in" things. Value denotes a relationship _between_ things - specifically, it denotes the relation between an object (the thing that is valued) and a subject (who values the object for whatever purposes or reasons). Thus, value is _always_ subjective and is _never_ intrinsic (or "objective"). The concept of value makes no sense without _both_ subject and object. This is why the notion of "intrinsic value" is an oxymoron. It is a contradiction in terms (somewhat like speaking of a "married bachelor").

All the suggestions being given for why the value of the referenced objects (gold, food, etc.) is supposedly "intrinsic" are actually just (some of) the reasons subjects (such as you or me) value those objects. There is really no good reason at all to insert the entirely superfluous (not to mention contradictory) concept of "intrinsic[ness]". Any statement one can meaningfully make about the (supposed) "intrinsic value" of a thing can be made just as well about the "value" of that thing, without introducing "intrinsic[ness]" into the matter at all.




> Well, you're right, of course. That said, a gold eagle has intrinsic because there is something there, inside, which is valued. Whereas a ten dollar bill is a cross between a rag and a paper towel, and you wouldn't pay ten bucks for a whole roll of the stuff if it weren't currency.


Being the "stuff" of which a gold eagle must necessarily be made, gold is, of course, intrinsic to a gold eagle.

But the _value_ of the gold in a gold eagle is _not_ intrinsic to the gold.

A subject is required as well as an object.




> So, yes. But, you know, if there is stuff inside, and people do value that stuff, what the hell _should_ we call that? "The prize in the Cracker Jack box" is kinda wordy.


We already have a perfectly good thing to call that - and that thing is the word "value". There is no need to tack on "intrinsic" as an adjective. It serves no purpose, it adds no meaning, it clarifies nothing, and in fact, it actually contradicts the very concept of "value" (see my remarks earlier in this post), which leads to confusion and the potential for equivocation. For anything of which one can say "this has value", there is nothing to be gained (and only clarity and consistency to be lost) by saying "this has intrinsic value".

As far as I have ever been able to tell, (mis)applying the concept of "intrinsic[ness]" to that of "value" seems to be meant as a way of vaguely suggesting that a purportedly "intrinsically valuable" thing is somehow more valuable than a thing that is merely "valuable" (but not "intrinsically" so), or that the value of the former is in some vague, ineffable way superior to or distinctively different from the latter. (In one of his earlier posts, ClaytonB made some excellent suggestions for why this might be.)

----------


## TheTexan

> But none of these considerations have anything  to with what "intrinsic" means. Just the opposite, in fact - they explicitly undermine and directly contradict the notion that value is intrinsic.
> 
> An intrinsic quality is a quality that is essential to or inherent in a thing in, of, and by itself, without relation to anything else, and that is not contingent upon any external factor or circumstance. Hence, saying, for example, that "gold has some intrinsic value" because "it's used in electronics" is a contradiction. Such a statement conveys the _exact, diametric opposite_ of what "intrinsic" means. If gold is said to have value because it is used in electronics (or for any other purposes or reasons external to the gold itself), then its value is explicitly being identified and accounted for as _extrinsic_ to the gold, _not_ intrinsic to it. (The same goes for food, shelter, FRNs, etc.)
> 
> Value does not inhere "in" things. Value denotes a relationship _between_ things - specifically, it denotes the relation between an object (the thing that is valued) and a subject (who values the object for whatever purposes or reasons). Thus, value is _always_ subjective and is _never_ intrinsic (or "objective"). The concept of value makes no sense without _both_ subject and object. This is why the notion of "intrinsic value" is an oxymoron. It is a contradiction in terms (somewhat like speaking of a "married bachelor").
> 
> All the suggestions being given for why the value of the referenced objects (gold, food, etc.) is supposedly "intrinsic" are actually just (some of) the reasons subjects (such as you or me) value those objects. There is really no good reason at all to insert the entirely superfluous (not to mention contradictory) concept of "intrinsic[ness]". Any statement one can meaningfully make about the (supposed) "intrinsic value" of a thing can be made just as well about the "value" of that thing, without introducing "intrinsic[ness]" into the matter at all.
> 
> 
> ...


You're being some combination of pedantic, OCD, and autistic however.  Take your words to the conclusion and there is no such thing as intrinsic properties whatsoever.  Everything is just some quantum set of possibilities and any "property" that is observed is subjective.

Gold is useful in electronics because it conducts electricity.  It conducted electricity long before humans existed and it will conduct electricity long after humans die.  It is an intrinsic property.  It is a useful property because humans exist.  It is thus intrinsically useful.

Words will necessarily carry with it some assumptions.  If you  throw out the assumptions in some autistic effort to "correct" the "wrong" definition of accepted phrases in use ("intrinsic value") you may as well just burn the entire dictionary, because there will never be a set of words that is fully consistent with the quantum reality we live in.  Mathematics aims to achieve that precision but even that may never do so.

----------


## TheTexan

The more I understand your post, the less I think you understand what intrinsic value is even intended to mean.

To help clarify, the price of gold currently is 1950 dollars.

I will make a ballpark estimate that the intrinsic value of gold is 10-20 dollars. This is how much I expect gold would sell for, if it was valued purely for its use in electronics and not for its extrinsic worth as a currency or store of value.

Similarly, if gold did not have intrinsic value as being useful in electronics, I would expect the price of gold today to not be 1950, but perhaps 10-20 dollars lower.

----------


## ClaytonB

> You're being some combination of pedantic, OCD, and autistic however.  Take your words to the conclusion and there is no such thing as intrinsic properties whatsoever.  Everything is just some quantum set of possibilities and any "property" that is observed is subjective.


No, he's spot on, and this is standard textbook economics, basically everywhere (except in Woke Marxist Upside-Down Academic Rainbow-World).

An objective property is one that we can all agree inheres in an object _irrespective_ of what anyone thinks about it. That's a definition, not a proposed concept. A property is objective if it is like this. Color, for example, is objective. Beauty, is not. Value, in the economic sense, is like beauty, not color. The reason it can be mistaken to be something like color is because of the tendency of market prices to quickly converge (through arbitrage) to what we call "the" market price.

Note that "the" market price itself is an illusion, something you can prove to yourself by watching a real-time Ask-Bid chart on any given stock or other exchange. At any given "price", the stock or other asset will have many outstanding Asks and Bids that are just above and just below (respectively) the current "price". The price itself is just a convenient summary of where the outstanding Bids and Asks have resolved. A stock is the closest thing to something with "inherent" value (the real asset value of the business, divided X ways), as far as market prices are concerned, and yet we see that basically no two people can agree on its "inherent price" -- that's because it doesn't have any.




> Gold is useful in electronics because it conducts electricity.  It conducted electricity long before humans existed and it will conduct electricity long after humans die.  It is an intrinsic property.  It is a useful property because humans exist.  It is thus intrinsically useful.


Its physical properties are, indeed, intrinsic, and its intrinsic properties are why we value it differently from other physical materials. But as pointed out in the (short) videos I linked above, the problem with the objective theory of value is that it reverses cause and effect. We value the _uses_ of gold first (to make jewelry, as a conductor, as a coinage, etc.), and this is why we are willing to pay people a lot of money to scratch around in the dirt looking for it. The objective or "inherent" theory of value would lead to a universal valuation of gold by all humans... everyone would know and agree that one ounce of gold is absolutely equivalent to, say, 5 goats, or whatever. By contrast, if I cut a 1-ounce gold coin exactly in half, everyone will know and agree that those two halves, taken together, are exactly equal to one, uncut 1-ounce gold coin. That's because physical mass is an intrinsic property, and equal masses of a fungible material are equally valuable. Beyond that, however, there is no "inherent" value of gold. The value of gold is _attributed_ to it by our subjective valuation (demand) for the uses for which gold is suitable.

----------


## TheTexan

> No, he's spot on, and this is standard textbook economics, basically everywhere (except in Woke Marxist Upside-Down Academic Rainbow-World).


I would ask you for a source but it would be too much to expect for either of us to still have any economic textbooks.




> An objective property is one that we can all agree inheres in an object _irrespective_ of what anyone thinks about it. That's a definition, not a proposed concept. A property is objective if it is like this. Color, for example, is objective. Beauty, is not. Value, in the economic sense, is like beauty, not color. The reason it can be mistaken to be something like color is because of the tendency of market prices to quickly converge (through arbitrage) to what we call "the" market price.


Both you and OB are drastically overthinking this with an OCD/autism brain.

The word "intrinsic" will always be relative to a frame of reference.  As will *any* word used for communication.

In the context of stock options, "intrinsic value" has a well defined meaning which refers to the value inherent in the contract (which is objectively defined), and "extrinsic value" refers to the value that is placed on the option, which is defined by how much value others place on that contract (subjective).

In the context of currency, "intrinsic value" has a well defined meaning which refers to its usefulness as an object itself.  "extrinsic value" is the value placed upon it by others.

OB is trying to make the argument that "intrinsic value" should just be referred to as "value".  But he has not proposed a useful alternative.  The "intrinsic" and "extrinsic" adjectives are used because they efficiently convey (to everyone except you and OB apparently) an intended meaning, that "value" by itself cannot.

There is absolutely nothing wrong with using "intrinsic value".  To say otherwise is just 100% autistic.

----------


## TheTexan

Reminds me of the "lawn chairs is wealth" train wreck argument.

Honestly, you guys' autism puts my own to shame.

----------


## ClaytonB

> I would ask you for a source but it would be too much to expect for either of us to still have any economic textbooks.


Wikipedia: Theory of Value (economics):

2.1 Intrinsic theory of value *<-- You are here*
2.2 Labor theory of value
2.3 Exchange theory of value
2.4 Monetary theory of value
2.5 Power theory of value
2.6 Subjective theory of value and marginalism *<-- This is where you need to be*




> Both you and OB are drastically overthinking this with an OCD/autism brain.


Probably but that doesn't mean we're wrong! 




> The word "intrinsic" will always be relative to a frame of reference.  As will *any* word used for communication.
> 
> In the context of stock options, "intrinsic value" has a well defined meaning which refers to the value inherent in the contract (which is objectively defined), and "extrinsic value" refers to the value that is placed on the option, which is defined by how much value others place on that contract (subjective).
> 
> In the context of currency, "intrinsic value" has a well defined meaning which refers to its usefulness as an object itself.  "extrinsic value" is the value placed upon it by others.
> 
> OB is trying to make the argument that "intrinsic value" should just be referred to as "value".  But he has not proposed a useful alternative.  The "intrinsic" and "extrinsic" adjectives are used because they efficiently convey (to everyone except you and OB apparently) an intended meaning, that "value" by itself cannot.
> 
> There is absolutely nothing wrong with using "intrinsic value".  To say otherwise is just 100% autistic.


You will notice in my first post on this topic in this thread, I pointed out that it is common to refer to "inherent value" where people are referring to what economists would call _alternative uses_. The vernacular is never wrong, it's just how people talk. But the Marxists are a tad more clever than I think you give them credit for... they have seized every opportunity to corrupt and confuse the way that _ordinary_ people think and talk about economic subjects in order to attack sound reasoning about economic subjects. It's nearly the biggest conspiracy in the world, Ludwig von Mises himself even wrote a section in _Human Action_ about it, called The revolt against reason, which is well worth anyone's time to read (this section is brief).

Back to the topic at hand, the problem that I was trying to address and which OB is commenting on, is that "intrinsic value" is a _common economic fallacy_ that is used by the Marxists to confuse people. If there was only one bottle of water left in the world, how many diamonds would you be willing to give for it? Obviously, you would be willing to give all the diamonds. This is Menger's solution to the diamond-water paradox... when you consider the fact that the first bottle of water you purchase is more valuable to you than the second, third, fourth and so on, then you realize that value does not inhere equally in every bottle of water, despite the fact that _every bottle of water is roughly the same as every other_. This is marginalism. If you already have 100 bottles of water, what is one more? This is why you cease buying food despite the fact you will need more food in the future. You do not buy all the food you will ever need in your lifetime because you have other uses for that money that are more pressing _right now_ than what you will eat for dinner 10 years from now is. The Marxists hijack the common vernacular use of "intrinsic value" (by which people mean "many alternative uses, highly liquid" in economic jargon) and turn it into something else (labor theory of value).

Sometimes, the solution to autists like the Marxists is even worse autists... like us...

----------


## ClaytonB

> The more I understand your post, the less I think you understand what intrinsic value is even intended to mean.
> 
> To help clarify, the price of gold currently is 1950 dollars.
> 
> I will make a ballpark estimate that the intrinsic value of gold is 10-20 dollars. This is how much I expect gold would sell for, if it was valued purely for its use in electronics and not for its extrinsic worth as a currency or store of value.
> 
> Similarly, if gold did not have intrinsic value as being useful in electronics, I would expect the price of gold today to not be 1950, but perhaps 10-20 dollars lower.


The jargon term in economics would be "the non-monetary commodity value of gold". It's purely hypothetical, like how many angels can dance on the head of a pin. The fact is that gold is a monetary commodity, and so is silver. Other commodities have and could in the future play a role as a monetary commodity. In any case, being a monetary commodity is not completely black-and-white, there is a bit of a sliding-scale. However, it is is a "winner-takes-all" type of thing... the more a good is used as money, the more valuable it becomes for its monetary use, and a spiral-of-increasing-value is created until the monetary value of that commodity nearly swamps out its non-monetary uses.

See Mises's Regression Theorem.

See also:




I recommend the whole playlist.

----------


## TheTexan

> is that "intrinsic value" is a _common economic fallacy_ that is used by the Marxists to confuse people.


LOL.

It's not used by Marxists to confuse people, and it's not an "economic fallacy".

"intrinsic value" has a well defined meaning and it is in common usage, and the phrase is used to convey a legitimate concept.

Again, see below:




> OB is trying to make the argument that "intrinsic value" should just be referred to as "value". But he has not proposed a useful alternative. The "intrinsic" and "extrinsic" adjectives are used because they efficiently convey (to everyone except you and OB apparently) an intended meaning, that "value" by itself cannot.


If you don't like the word "intrinsic value"... then what is your alternative, to convey the same meaning?

----------


## CaptUSA

> Back to the topic at hand...


The topic was "Why is Crypto so Cryptic".  But you all did a great job at proving the point in the OP.

----------


## TheTexan

https://en.wikipedia.org/wiki/Intrinsic_value_(finance)




> In finance, the intrinsic value of an asset usually refers to a value calculated on simplified assumptions. For example, the intrinsic value of an option is based on the current market value of the underlying instrument, but ignores the possibility of future fluctuations and the time value of money.


This is not some economic fallacy lol.

It's just a regular $#@!ing word used in every day language, that only a professional autist would find linguistic or theoretical issue with.

----------


## TheTexan

> The topic was "Why is Crypto so Cryptic".  But you all did a great job at proving the point in the OP.


My take-away from this thread is that crypto is so cryptic because you have to have some amount of autism to understand it.

----------


## ClaytonB

> LOL.
> 
> It's not used by Marxists to confuse people, and it's not an "economic fallacy".


You yourself just noted that OB and me are both autists on this subject. If you don't want to chase sources then just trust me, it's used by Marxists to confuse people.

As for the economic fallacy underlying the labor theory and objective theory of value, it traces at least back to Thomas Aquinas and the theological teachings of the church on just price. The only people in the world who are worse at economics than government officials, are clerics. Keep in mind that clergymen, by virtue of their job, believe in invisible sky-beings with magical powers. To be clear, I do too, but I also believe that God is a God of cause-and-effect (covenant). If you have crappy theology about God's covenantal nature, you're going to have really crappy economic beliefs made _even worse_ by your belief in the supernatural. So, the clergy are the worst offenders when it comes to economics, many of them outdo Marx himself (eg Liberation Theology).

In case it's not obvious to lurkers why just price theory is false, consider the following illustration. Suppose that Alice sells Bob a bottle of water for $1M. They are lost in an expansive desert and Alice has two bottles and Bob has none. But he does happen to have a briefcase with $1M in it. After handing her the cash, Alice gives him the water bottle. Just price theory says that Alice has sinned because she has taken advantage of Bob's bad fortune in order to exploit him. However, consider the other alternatives. Alice was under no obligation to give Bob either of the water bottles and, if she simply chose not to offer him one of the bottles at any price, she would have been charging an infinite price. Do the extenuating circumstances somehow magically convert Alice's water bottles into "common property"? If so, then why only her water bottles and not her body. Bob could live for quite some time from draining her bodily fluids and eating her flesh. Or, since he's presumably stronger than Alice, does their desert predicament empower him to simply seize one of the bottles by force? No matter which way you analyze the problem, you end up having to deny one or more clear teachings of Scripture and conscience in order to uphold the "just price" theory. Aquinas and his predecessors were simply out to lunch on the just price teaching.

People denigrate the "opportunists" who flood into a disaster zone with relief supplies at high prices as "vultures", "scalpers", and so on. But suppose they do not drive into the disaster zone at all... what price are they effectively charging for those goods? In that case, they are really charging an infinite price, because they are simply _not selling at any price_. Thus, those who sit on their couch and condemn "price-gougers" are actually condemning themselves because they are the ones charging the higher price. The "price-gouger" has actually lowered the price by making the trip into the disaster zone and making the relief goods available at _some finite price_.

There is no intrinsic value. There is no "just price". No one is obligated to sell something that is their own property at _any_ price, if they choose not to, and if they choose to offer it for sale, they are free (in the sight of God) to put any price they like on it, no matter how absurd. I have a water bottle sitting right here on my desk for sale for $1M to anyone willing to pay it!




> "intrinsic value" has a well defined meaning and it is in common usage, and the phrase is used to convey a legitimate concept. ... If you don't like the word "intrinsic value"... then what is your alternative, to convey the same meaning?


I don't have a problem with the vernacular use. And yes, most people hold a large array of economic fallacies because many of the basic principles of economics are contrary to intuition. Our brains are wired for "the game theory of negotiation" which is almost diametrically opposite of the emergent properties of large numbers of exchanges within a large population. That is, your brain is wired to "get the best price"... but your brain does not comprehend the outcome of billions of people spread over the globe all bargaining for the best price. This is why people are naturally very bad at economics. It took humanity from the invention of writing in Sumeria until the late 1800's -- a span of more than 5,000 years -- to figure out what makes some things more valuable than other things in society. For your own individual self, it's obvious why one thing is more valuable than another. But how does a market of goods emerge, with some things you find utterly useless (such as NFTs) held to be extremely valuable, while other things you find very valuable (maybe your oddball toy collection from some obscure defunct toy brand) are neglected by society as worthless. Despite thousands of years of commerce, trade, writing, philosophy, theology, and so on, _humans had no good explanation for this simple fact until the late 1800's_. It's not obvious!

----------


## ClaytonB

> The topic was "Why is Crypto so Cryptic".  But you all did a great job at proving the point in the OP.


Look, I've never been a Bitcoin pusher. If you don't understand Bitcoin, you shouldn't buy it. The only point I would like liberty-lovers to understand is this: _Bitcoin is not your enemy_ and it might just turn out one day to be your friend. If you make stickers for a living, I would recommend you to go ahead and print up some of those Bitcoin stickers and sell them, even if you've never owned and never will own a "hardware wallet" or check how many "blockchain confirmations" your last transaction has. They say that the people who got richest off the California gold rush were the mining supply shops selling picks and shovels. Even if you don't "get" Bitcoin, Bitcoin isn't going to hurt you (unlike the Fed, which is hurting your wallet this very moment if you have even one USD to your name.)

Bitcoin is not the enemy!

----------


## TheTexan

> I don't have a problem with the vernacular use.


That's pretty much my point though... is that the phrase "intrinsic value" is not tied to any specific economic theory, it is an absolutely neutral phrase, with no inherent assumptions about the meanings of either word.

You and OB have chosen to bind certain meanings to the words in this phrase, because I can only assume you have some sexual fetish with the word "value" (as I do, with the word "separation"), but there is no inherent controversy to be had with the phrase itself...

----------


## ClaytonB

> ... I can only assume you have some sexual fetish with the word "value" (as I do, with the word "separation")...


TMI!!

----------


## 106459

> There’s one simple – inarguable – fact about Bitcoin and crypto in general that ought to give everyone a moment’s pause. It is that no one can explain it intelligibly in less than 10 minutes – if at all.


	- No, I can definitely explain in less than 10.
-Can we explain our current monetary system in less than 10…? Fractional reserve? Debt to GDP? Fed fund rate? M2 money supply?




> Then there is this business of “mining” it – which is as understandable as quantum mechanics. How does one “mine” something that has no physicality? Who, exactly, is “mining” it – and how do we know that whatever-it-is that’s allegedly being “mined” actually is – or even exists, at all?


	- Huh? Bitcoin is infinitely more transparent than our current system in my mind.

Technology has always tried to tie digital->physical concepts. (Firewall?? Viruses?) Much like it takes 'work' to mine gold from the Earth:
	- It takes 'work' to 'mine' bitcoin.
	- Work (computations) are performed to validate the integrity of the system. Rewards are minted to the validators, which is the mining.
		○ Anyone in the "Programming/Blockchain" business can certainly prove there's nothing 'alleged' about "alleged mining" on networks
			§ Also…How much effort is exhausted to maintain our current monetary system? Banks, armored trucks, vaults, auditors, admins, etc?

There are certainly privacy coins, mixers, etc that could be utilized to achieve privacy in crypto. But yes, it is an elusive concept because -- crypto isn't really used to buy groceries. In the current state: crypto flows back to a centralized exchange, which withdraws to a bank account … which … is KYC'd.

In any case: I know AF has posted many times about not understanding crypto haha. I've recently participated in the altcoin market & it's interesting how coincidental the timing of this video is:
youtube.com/watch?v=95lSNn0Er_Q

So: when you watch this video: it's like 1 screen, 2 movies. Take note of every "over the top cynical" comment made: and realize it's more like 100% accurate.

Altcoins: it's correct there is no 'current' market for these.
-There is no revenue.
-Pump & dump is a given.
-It is about narrative. Tell a story that people will put money into.
--If a project delivers on its goal: "it has reached the end-game." The money was in the dream; not the reality.

That said: no, there's still a lot of legitimate aspects of crypto.

As it was noted: "goldminers didn't get rich in the gold rush .. People selling the shovels did"
	- You can certainly safely provide 'liquidity' on 'fully collateralized USD assets' to the goldminers. At ~5-20% interest.
		○ Congrats: you're now the bank you've always complained about never being able to be. Or: have really started to bite & scratch at bank cartel monopolies
		○ Even better: it is able to provide real alternatives. More research needed on my part … but, think the US Dollar is a bankrupt $#@!coin? Stop holding it then. Why not use a real currency, like the "Swiss Franc"? jCHF. A couple clicks away. Don't like that? jGBP. Pick any one you want.

Crypto is one of the instruments available. People keep talking about how great gold is (and I do like it: a lot) -- but, how in the world can you guarantee you'll be able to move 1 million in gold across a border? In a high tech dictatorship?
	- You can't do anything with more than $10k in cash anymore.
	- Good luck trying to get through an airport.
	- I guess: "I'll just go rogue over open border" - as if that seems like a safe option. From where to where? With what guarantees of safety? Against how many modern obstacles? How is that much different from relying on crypto?

In crypto: You could store a 15 word seed-phrase (your keys) any number of ways. Or even memorize them … if it came down to a million bucks. And you don't have to do anything. Just "take a vacation"; leave. don't come back.
	- Buy a ledger hardware wallet in a new country where it's safe.
	- Use your key & instant fund access. Done.

Given the failures of central bank currencies, and: bitcoin's scale: I'd say it does have rather good odds of becoming a decentralized reserve currency. (Ultimately: trashcoins will need to pair against something for liquidity/trading, and eventually: the market will stop accepting garbage.)
	- Seems very similar to gold, to me. …Why in the world is gold chosen as a store of value? Why does that make any sense? …Because it's pretty rare; difficult to mine; and people "value" it. Sounds similar to bitcoin to me: (shrug).

Crypto's a crazy world. Can't understand it at all until you've made money. Lost money. Made money. Tried to keep it.

And before it gets shrugged off, reminds me of another sentiment I heard. About a developer & the upcoming of mobile apps back in the 2000s or whatever. And: "That's retarded." - "Mobile apps? You think that's a business model? That's worth dev time??" … Lol. Yeah: I would say so; in retrospect.
	- "There's nothing to love or hate. There just is."

Meh. I think everyone has seen screenshots of the 'lucky' guys who made 7 figures in crypto. So many opportunities to get into bitcoin, even at 4k. Looking back on the crypto market: it really should not be that hard. Use it as a % of your portfolio, don't drink kool-aid, take what the market gives you. Particularly: remove your initial investment along the way; don't be the guy to lose the whole bag. Equally important: take profit the way up. There is no timing the top, IMO.

Anyways - hope you can appreciate the post AF! I click in (rarely) time to time .
-(Minimal refinement to post done, hopefully it's of substance haha).
edit: @Anti-Federalist: i forget how good notifications are haha

----------


## 106459

Oh, I figure I should provide at least 1 citation -- bitcoin, weekly candles. "Heiken Ashi average" - (good for trends, so they say).

(edit: uhh, image upload not working? IMGBB link)
https://ibb.co/Y80316H

Anyone notice the lots of greens & lots of reds?
-Don't get wrecked jumping in before a confirmed bull trend (above a bull market band, with confirmed holding a bottom as support & going up). -- Do we really need to risk a 90% flash crash just to secure "a 2x headstart"? Probably not.
-Don't "swing trade"/"take" your entire bag. Why not have your initial capital secure & see where it goes? Ok: you might turn 2k profit into $200 profit. You might turn it into 20k profit. Which has value to you?

But, yeah. Just dropping it here.

edit: 1 more citation: what i'd consider a "safe of the safe" options.
--USDC/USDC.e liquidity providing (for people who want to bring USDC from ETH network, to AVAX network):

I could do a bunch more writing...but...shrug
app.beefy.com/#/avax/vault/joe-usdc.e-usdc

----------


## ClaytonB

> - No, I can definitely explain in less than 10.
> -Can we explain our current monetary system in less than 10…? Fractional reserve? Debt to GDP? Fed fund rate? M2 money supply?


Excellent points.

I'll offer my opinion here for anyone who is interested in getting started in crypto. If you want to start using crypto, first set aside a small amount of "learner's cash" that you could light on fire and it would be fine, say, $200. This money is not an "investment", it's your training-wheels bicycle. Create an account on a reputable exchange (do your research first; if nothing else, use Coinbase) and purchase $200 of whatever (I recommend Bitcoin, because it is "best by test".) At that point, the money will be in a custodial wallet, meaning, the exchange is holding your coins for you. Now, you need to create your own wallet. You can use a mobile wallet or learn how to use a desktop wallet (such as Electrum), or even a hardware wallet (e.g. Ledger, Trezor, etc.) Once you have created your own wallet which you control, you can now transfer some of the money from the exchange to the wallet that you fully control. The funds are no longer custodial, they are 100% under you control. Lose the wallet or forget your password, and the funds are gone forever. Plan on spending 1-3 months figuring out all the little quirks of crypto usage. You've gone from Crawl to Walk, but you still have a ways to go to get to Run. But once you are confident with the mechanics of moving crypto around and the basics of digital hygiene and how to take responsibility for your own wallets, you are ready to start regular dollar-cost-average investing. Bitcoin is volatile but, short of a globale CME event, Bitcoin isn't going to zero. Just set aside a certain amount of cash each month, say $50, and buy a little Bitcoin and put it in your self-administered wallet. That's it, you are now a "crypto investor". If you don't want to run with the herd, that's fine, pick another crypto and follow the same steps here.

Be safe out there!

----------


## 106459

> ^^


Yep! So much of an essay, that could be written, lol.
--Bitcoin certainly isn't a bad choice. "I thought I was smarter  than the everyday Joe" - got lucky, on an altcoin pick.
Proceeded to think I was smart: likely lost more than I otherwise would have, if I had a more measured approach to it all

----------


## 106459

> One reason the dollar has/had value, is that you could loan it out and earn interest based on the productive use of that dollar.
> 
> There really is no way to do that in a meaningful way with crypto currently.  Though there are certainly efforts in that direction.


Can that be asserted as correct? There are stablecoins backed by 'big-boys' (USDC/BUSD) that claim 1:1 collateralization to dollars (available for withdraw) & that it's audited.

There are massive 'decentralized exchanges (DEXes)' that have managed to not have hundreds of millions (billions) stolen.
-You can have your tokens & put them into a 'liquidity pool' where you don't have to worry about any 'lending mumbo-jumbo'.

(You own tokens. effectively in crypto: users have to route through them, and: the pool earns 0.2% swap fees, which is kept in the pool/gained by the pool owners)
-Nothing is ever risk free, but, the odds of a modern huge-name exchange, with a huge liquidity pool, getting exploited & losing hundreds of millions of dollars, is becoming more slim.

You could browse the beefy finance site for 'all the stablecoin farms' & there are a ton of them (various networks, various dexes, varied trading APR vs dex-incentive (vault) APR).
-I'd certainly recommend against USDT since it isn't 1:1 collateral...it's as much a ponzi as fiat. The rates of return reflect that (shrug).

Anyways - just wanted to toss this info in the thread -- those pools have been around some time, and certainly have been making people money thus far

----------


## 106459

> I keep converting my FRN's into real assets.  I've been stacking PM's, ammo, hardware (nails, screws, bolts, etc.), tools and land in case I need to liquidate.  Other than that, I try to put as much as I can towards improving the value of my properties.
> 
> It may not make me a millionaire, but feels like the best way to store the value I've created with the lowest risk.  Maybe I'm just old school.


Dare I say this is a very measured approach . Yes, I'd be extremely skeptical of anyone who tried to say: 'crypto is the one solution'. In a SHTF situation: "Real wealth = Real things". Apparently, in a modern & abundant world: "Wealth = assets": whatever that means (and, it can mean quite literally anything).

Pretty sure all Texan's replies were accurate. "What happens in SHTF?" - "Depends on if internet is a thing" : yep, lol.

Maybe I should ponder on it more. Is it possible we could ever fully lose the internet? ...How much of this stuff is even hard-documented anymore, anyways? (Or: how feasible is it, to even delete all digital info...probably not).

Hard to see the internet not coming back. Same concept as gold in SHTF, no one cares about shiny jewelry material in the midst of starving. Only after.

----------


## TheTexan

> Anyways - just wanted to toss this info in the thread -- those pools have been around some time, and certainly have been making people money thus far


Any money that has been "made" in crypto has largely been at others' expense.  This is necessarily true of any asset that is valued based on pure speculation.

My point with what I said, is that 99.99999% of the valuation in crypto is exactly that - speculation.  As there is virtually 0 productive use of crypto currently. (without going through the dollar)

Even the pools where you ostensibly earn interest by loaning crypto money, I would argue as not being worthwhile (relative to non-speculation based risk/return options available in non-crypto) at best, or simply a ponzi scheme at worst.

Crypto is certainly a viable instrument for making gains via speculation.  It's also viable to a limited extent to storing and accessing money out of government control.

But any "productive" use in crypto, as you yourself have pointed out, is still tied to the dollar.

Crypto will not achieve it's full potential, until the ecosystem around crypto fully develops, and is no longer reliant on the dollar to be used productively and pragmatically.  Crypto is still VERY far from that.

I do hope it gets there.

----------


## 106459

> ^^


Reminding myself of Eric Cartman at the university: " I ain't arguin' " - lol.

I've seen enough that makes me sick. And in terms of speculation: what isn't speculation anymore? What about these stock market pump & dumps that I've come to believe is just crypto: on a more sophisticated level?

The dollar is speculation. Stocks are speculation. Crypto is speculation. At (arguably): various degrees.
( video on stocks: youtube.com/watch?v=uadi0JgpO7k )

In the speculative realm of crypto, the speculation has a use-case:
-Build decentralized finance. Central banks are a nightmare.
-As a result: I imagine things will start to look a lot different if the current monetary system is no longer feasible.

So: can a price be put on toppling the central banks? Trying?
-And what do rewards look like, for that? Vs trying to pick stocks that can also go down 70% & up 10x?

It is awful that people are blindly losing money. But on that thread:
-Who's pumping tens of thousands into something?
--What are they thinking??
-How do we ever expect to protect them to keep their money?

That's not intended to say it's acceptable. Just a part of my current "it is what it is" mentality. Crypto is a *very* real opportunity for *me* to make life changing money. And it won't go towards lambos. I want out of these $#@!ty cities, and $#@!ty suburbs. What if I had enough money to do what *I* wanted to do? Could afford to take up a real trade, learn real skills, teach other people? Give them independence?

Maybe I'm still an $#@!. Maybe my to-be-determined results will reflect that. Maybe it is what it is.
-And: it is. Regardless of the outcome: "I don't need $#@!." Maybe it's not to be. I'll have to pick myself up and do it another way.

On that note: where are these other non-crypto returns?
Currently (and I definitely have to fully research): Jarvis Network. Collateralized currencies.
-Remove an entire 50% exposure to USD by holding jCHF (swiss franc). Pair it in liquidity pool (LP) with USD. Make 10% a year. For holding money. 50% of which: Better money.

Also - I don't think it is, but none of this is at all meant to be combative. TX - you do great work on RPF lol

----------


## ClaytonB

> Any money that has been "made" in crypto has largely been at others' expense.  This is necessarily true of any asset that is valued based on pure speculation.
> 
> My point with what I said, is that 99.99999% of the valuation in crypto is exactly that - speculation.  As there is virtually 0 productive use of crypto currently. (without going through the dollar)
> 
> Even the pools where you ostensibly earn interest by loaning crypto money, I would argue as not being worthwhile (relative to non-speculation based risk/return options available in non-crypto) at best, or simply a ponzi scheme at worst.
> 
> Crypto is certainly a viable instrument for making gains via speculation.  It's also viable to a limited extent to storing and accessing money out of government control.
> 
> But any "productive" use in crypto, as you yourself have pointed out, is still tied to the dollar.
> ...


Speculators will buy/sell crypto for speculative purposes but just because there are crypto speculators doesn't mean that is the only way to make money in crypto. The idea is to simply replace fiat currencies outright by simply being better than them. A money is good or bad based on how widely accepted it is, and the stakes are pretty much all-or-nothing. Bitcoin is already widely used in Japan, El Salvador and many EU countries for hand-to-hand business. The fiat banking system has been cut out of the equation 100%. There is no way for a government to force people to convert their transactions into a fiat money as an intermediate step. I can just send you Bitcoin directly and nobody can stop that from happening. So, the Bitcoin economy is an emerging, global sub-economy that spans all borders and is based on people directly transacting, hand-to-hand, in Bitcoins. If I order a 3D printer with Bitcoins, buy the filament with Bitcoins, and sell my final product for Bitcoins and make a profit, I am earning money in crypto that has absolutely nothing to do with speculation. And yes, there are people out there doing exactly this.

----------


## TheTexan

> If I order a 3D printer with Bitcoins, buy the filament with Bitcoins, and sell my final product for Bitcoins and make a profit, I am earning money in crypto that has absolutely nothing to do with speculation. And yes, there are people out there doing exactly this.


Is it done out of pragmatism or activism however.  I doubt it's pragmatic.  But I get your point.

----------


## georgiaboy

> - So, the Bitcoin economy is an emerging, global sub-economy that spans all borders and is based on people directly transacting, hand-to-hand, in Bitcoins.
> 
> - If I order a 3D printer with Bitcoins, 
> - buy the filament with Bitcoins, and 
> - sell my final product for Bitcoins and make a profit, 
> - I am earning money in crypto that has absolutely nothing to do with speculation. And yes, there are people out there doing exactly this.


I expect this may have already been covered in detail - looking for a short answer if possible.

In a fully crypto new world order, how would taxation work - consumption, income, property, or otherwise?  Does it become literally unenforceable/untraceable?  Or do the exchanges and wallets just become the new banks & trackers for .gov?

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## TheTexan

> I expect this may have already been covered in detail - looking for a short answer if possible.
> 
> In a fully crypto new world order, how would taxation work - consumption, income, property, or otherwise?  Does it become literally unenforceable/untraceable?  Or do the exchanges and wallets just become the new banks & trackers for .gov?


This is the ultimate crypto question.  I hope it goes to the former.  It seems to be going the way of the latter.

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## ClaytonB

> In a fully crypto new world order,


Well, my hope is that Bitcoin will play some role in breaking us _out_ of the Antichrist "new" world order. Maybe my optimism will be disappointed (nothing new), but that's my hope.




> how would taxation work - consumption, income, property, or otherwise?


When used properly, Bitcoin is more or less like cash. So, how did taxation work in a cash economy? The government will always be able to tax things that can't move (real estate) and can't hide (commerce, shipping, etc.) But it's pretty easy to hide cash, so that makes it difficult for the government to tax. Which is why they hate cash, because cash creates a space for a thriving under-the-table economy. As we are learning in our hyper-technologized society, that under-the-table economy was the fuel of civilization. As we are eliminating it, we are simultaneously descending into a beastly condition in terms of human relations.




> Does it become literally unenforceable/untraceable?  Or do the exchanges and wallets just become the new banks & trackers for .gov?


"Literally unenforceable" is a very big word and I think that the more aggressive cyberpunk visions will never come about, and probably a good thing too. Open seas piracy really is horrific and nobody should desire to see an entire world comprised of that kind of activity.

I look at it in terms of cost/benefit analysis. The IRS has admitted that it just costs too much to audit rich people, so it doesn't bother, and it just targets middle-class people it can afford to audit. They can spend $3k-$5k turning a middle-class citizen upside down and shaking him to see what comes out of his pockets and probably pick up a nice $10k-$50k in spare change. So it's a net win for the agency. But spending $30k-$50k on legal action just to shake out the same $10k-$50k from a wealthy person is a net loss, or breakeven at best.

If you use Bitcoin to commit crimes that would get the attention of nation-state actors, I would just assume that they will be able to get you. Real-world hacking is 90% non-technical, and only 10% technical, meaning, most of the attack has to do with getting you to do something stupid, and only one piece or component of the attack requires any kind of technological wizardry. When they arrested Ulbricht, the FBI needed to catch him with his laptop open and Bitcoin wallets unlocked. He frequented public libraries and cafes while transacting to blend in with the crowd. So they had an agent online interacting with him to receive a payment (thus causing him to log in to the Silk Road website and unlock his Bitcoin wallet), and they deployed a team of FBI agents pretending to be patrons of the library around him. As soon as everything was unlocked and he was logged in to his website, they created a diversion causing him to turn his head, and the agent across the table then lightly slid the laptop from under his fingers quickly so he would not be able to slam the laptop shut and then he was tackled by the remaining agents, all in one motion. So when people say "Bitcoin is secure", they're not talking about this kind of thing -- nothing can protect you if you make yourself a big enough pain in the ass.

From Wiki:




> To prevent Ulbricht from encrypting or deleting files on the laptop he was using to run the site as he was arrested, two agents pretended to be quarreling lovers. When they had sufficiently distracted him, according to Joshuah Bearman of Wired, the two agents then quickly moved in to arrest him while a third agent grabbed the laptop and handed it to agent Thomas Kiernan. Kiernan then inserted a flash drive in one of the laptop's USB ports, with software that copied key files.


The exchanges are control points where the government will doubtless try to prevent people from off-ramping from Funny Reserve Notes to Bitcoin. But they can't stop people from off-ramping in other ways, such as physical cash, PMs, or other assets directly exchanged hand-to-hand for crypto. A wallet can't really be "tracked" as long as you take appropriate precautions in creating it. The addresses associated with the wallet can be monitored but there's no way to "locate" anyone who interacts with that address because the Bitcoin network is spread all over the world. You could hop on a flight to Iceland, log in at a cafe, perform a transaction, and go back home, and there is simply no way for the US authorities to connect you to that transaction, unless they are actively surveilling you with agents. With some restrictions, the same is true of a VPN -- VPN over to Iceland, perform your Bitcoin transaction and then close the VPN. If your ISP is being monitored, there is some chance the activity could be "correlated" but it's not enough to prove legally. All in all, if you're doing something that is getting that much attention from the Feds, then you probably are doing something you shouldn't be doing. Trying to wriggle out of a few grand in taxes isn't going to bring that kind of heat down on you.

The danger of Bitcoin to the Establishment goes back to the cost-benefit equation... it breaks the cost-benefit of the Feds constantly targeting the middle class for no other reason than that they're easy prey.

Summary: Bitcoin creates some new ways that the Feds will be able to track people's transactions, but it creates many more ways for the ordinary person to keep their private financial activities private. This empowers the individual, especially the middle-class individual who may have some assets that he would like to keep private (and has every right to keep private). So Bitcoin is a massive win for ordinary people and this crap about how "the Blockchain is a public ledger and the Feds will use it to track every transaction!" is a bunch of disinformation and FUD.

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## georgiaboy

> .


Sorry if Im being dense.  So if crypto is just like cash, in my world of corporate tax allowances and witholding on income, how will a company pay me and fellow employees in crypto?  How will taxes be withheld?  Will they link my employee data with my public key?  Same for my Amazon account?  Will public key just replace my credit card number and bank account ach info for purchases?

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## ClaytonB

> Sorry if I’m being dense.  So if crypto is just like cash, in my world of corporate tax allowances and witholding on income, how will a company pay me and fellow employees in crypto?  How will taxes be withheld?  Will they link my employee data with my public key?  Same for my Amazon account?  Will public key just replace my credit card number and bank account ach info for purchases?


Not being dense, but you are confusing separate concerns.

The primary attraction of Bitcoin is that it is _sound_, meaning, you can't just print up more Bitcoin. Even the government cannot print up more Bitcoin.

In addition, Bitcoin is pseudonymous or what I like to call "anonymity compatible". It's not anonymous out-of-the-box, but if you take some precautions, you can ensure a reasonable level of anonymity (thus, privacy.)

Bitcoin is also permissionless, meaning, there is no "gateway" through which transactions are authorized. For this reason, nobody can determine what transactions will or will not be processed by the network. The Bitcoin network will process any and all transactions which have an adequate fee attached.

---

Taxation is not an inherently financial thing. If you purchase a rural piece of property, sooner or later, the county tax assessor will swing by and he's going to "assess" your property. This "assessment" is just an imaginary number that he thinks up and slaps onto your property based on the idea that "if" you were to sell it now, then "this price" is what it would fetch in the market. And now you're liable to pay property tax at some percentage rate on that assessment. There's no way to get out of it -- you can't hide your property from the assessor, it's right there on the map. You can't move it, either, because it's _terra_. So, the act of purchasing the land is, _ipso facto_, an acquiescence to the reality that you are going to pay taxes on that property.

In the era of modern book-keeping, it became possible for the State to track and tax commercial transactions at an ever-increasingly fine-grained resolution. In previous eras, the State had to choose external "correlates" of wealth and income and tax those. In Paris, for example, houses were taxed based on the number and dimensions of windows, on the presumption that very wealthy estates would have lots of large windows, whereas the poor would tend to have windowless hovels or maybe have one window to the street. In response, builders began designing and erecting large houses with fewer and smaller windows. So this is the cat-and-mouse game that has always defined taxation.

So, when it comes to corporate employment, you will always be taxed because the State is the creator of all corporate entities, so it can order them to comply with its regulations and they will obey. Your employer is going to report your income to the State regardless of whether it is paid in USD, Bitcoin or cowrie shells. If you're paid in Bitcoin, you can sweep the Bitcoin out of the address your employer paid it to some other address which the State cannot prove you own. In other words, you can "spend" all your income and have "nothing remaining" so the State cannot come back later and double-dip in the form of wealth taxation, as they are wont to do. But the amount you are paid and the address it was paid to is absolutely reportable information and so I would just assume it will come under the same regulatory framework as USD payments.

As for spending, you can easily separate your spending wallets from your savings wallet(s) so that there is no way for the State to "backtrace" and find out your assets in the blockchain. If you have a $1M Bitcoin account and spend directly from that to Amazon, yes, you are putting that money at risk of being traced back to your IRL identity. So, you will need to split off a smaller amount into a dedicated spending wallet, and spend from that smaller wallet instead. Yes, you can _legally and effectively_ separate them in such a way that there is no way to trace the funds back to their origin. And it's only common-sense to do so, especially in our modern world of Russian hackers, "civil asset forfeiture", power-mad bureaucrats and government agencies imbued with unlimited NatSec/anti-terror powers to seize anything and everything they can get their fingers on under the flimsiest of pretexts.

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## CaptUSA

Ok, Bitcoin was down over 8% yesterday.

This is what I've been saying.  Bitcoin tracks with tech stocks.  It doesn't track with a currency hedge.  It gains value with tech speculation and loses value with speculative tech losses.

So, from what I can tell, it's being promised as an alternative currency, but in reality, it's a speculative tech tool.  That's a problem.

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## ClaytonB

> Ok, Bitcoin was down over 8% yesterday.
> 
> This is what I've been saying.  Bitcoin tracks with tech stocks.  It doesn't track with a currency hedge.  It gains value with tech speculation and loses value with speculative tech losses.
> 
> So, from what I can tell, it's being promised as an alternative currency, but in reality, it's a speculative tech tool.  That's a problem.


The problem with this analysis is that it's just "charting". Correlation is not causation.

There is a lot of institutional money that is using Bitcoin as yet another "growth/speculation" index. The amount of money in hedge funds dwarfs the total market-cap of Bitcoin, so yes, they have a disproportionate amount of influence over the fiat price of Bitcoin. The two factors that will stabilize the price of Bitcoin are _scale_ (market-cap) and _exchangeability_ (how many different kinds of things are priced in Bitcoin, and how widespread merchant acceptance is.) Basically, you're saying that Jesse Owens will never win the Olympics because he's 12 and he can't run as fast as a grown adult. Give it a little time to grow.

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## CaptUSA

> The problem with this analysis is that it's just "charting". Correlation is not causation.
> 
> There is a lot of institutional money that is using Bitcoin as yet another "growth/speculation" index. The amount of money in hedge funds dwarfs the total market-cap of Bitcoin, so yes, they have a disproportionate amount of influence over the fiat price of Bitcoin. The two factors that will stabilize the price of Bitcoin are _scale_ (market-cap) and _exchangeability_ (how many different kinds of things are priced in Bitcoin, and how widespread merchant acceptance is.) Basically, you're saying that Jesse Owens will never win the Olympics because he's 12 and he can't run as fast as a grown adult. Give it a little time to grow.


Lol - the problem with this analysis is that it's just a rationalization for what you want to believe.  In fact, you could use that same rationalization for just about anything.

Correlation is not causation - correct.  But if Bitcoin is what you want it to be, the correlation would be that when prices go up, so does the value of Bitcoin.

I wish it existed that way, but it just doesn't.  The correlation is with tech stocks.  I mean, that's fine as an investment tool, but it's not an inflation hedge.  And yeah, some people may use it as currency (just like some people may use milk as currency), but that doesn't appear to be its primary purpose.

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## ClaytonB

> Lol - the problem with this analysis is that it's just a rationalization for what you want to believe.


I have a trivial position in Bitcoin, so no, this is not about what I "want to believe". I moved past that stage of immaturity a couple decades ago. If you have a better idea as to how the fiat money system is going to be stopped, please speak up. "Gold and silver" may one day play a role but if it was such an easy fix, gold and silver would have destroyed the central banking system eons ago. Instead, what has really happened is that the central bankers have engineered a price-control system for gold and silver and _this system has proven to be completely effective_. Please chart a convincing route out of the current predicament by trading gold and silver coins hand-to-hand. I own more PM than I do Bitcoin, so this isn't me throwing shade on PMs.... I'm not talking about markets, I'm talking about law and politics, because that is the real obstacle. The markets will do whatever they are permitted to do.




> Correlation is not causation - correct.  But if Bitcoin is what you want it to be, the correlation would be that when prices go up, so does the value of Bitcoin.
> 
> I wish it existed that way, but it just doesn't.  The correlation is with tech stocks.  I mean, that's fine as an investment tool, but it's not an inflation hedge.  And yeah, some people may use it as currency (just like some people may use milk as currency), *but that doesn't appear to be its primary purpose*.


Well, that is its _intended_ purpose, but it hasn't reached a sufficient scale to achieve that purpose in the way you are demanding -- that its purchasing power be free of external market influences. Even in the Forex, any national currency of a smaller nation will be susceptible to market influences and so you can find correlations between Forex charts and other markets. Bitcoin does not have a market-cap on par with any first-world nation's currency (~$688B atm), and so its price is much more susceptible to external influences. The reason that Bitcoin's price is moving with tech-stocks -- for now -- is that that is how the big institutional investors are treating it, and their combined market-cap is in the dozens of trillions, which swamps the market-cap of Bitcoin.

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## CaptUSA

> ...





> Bitcoin is off nearly 55% from its November peak, and 40% of holders are now underwater on their investments, according to new data from Glassnode.
> 
> That percentage is even higher when you isolate for the short-term holders who got skin in the game in the last six months when the price of bitcoin peaked at around $69,000.
> 
> In the last month alone, 15.5% of all bitcoin wallets fell into an unrealized loss, as the world’s most popular cryptocurrency plunged to the $31,000 level, tracking tech stocks lower.* Bitcoin’s close correlation to the Nasdaq challenges the argument that the cryptocurrency functions as an inflation hedge.*
> 
> Analysts from Glassnode also noted an influx of “urgent transactions” amid this latest sell-off, in which investors paid higher fees, indicating they were willing to pay a premium in order to expedite transaction times. The total value of all on-chain transaction fees paid reached 3.07 bitcoin over the last week — the largest yet recorded in its dataset.
> 
> “The dominance of on-chain transaction fees associated with exchange deposits also signaled urgency,” continued the report, further supporting the case that bitcoin investors were seeking to de-risk, sell, or add collateral to their margin positions in response to recent market volatility.
> ...


https://www.cnbc.com/2022/05/09/40pe...node-data.html

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## ClaytonB

> https://www.cnbc.com/2022/05/09/40pe...node-data.html


Gold-holders have spent a lot of time "underwater" according to these same idiotic Funny Reserve Note "analysts". If you think the dollar is a stable measure of anything, there's nothing I can do to help you...

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## CaptUSA

> Gold-holders have spent a lot of time "underwater" according to these same idiotic Funny Reserve Note "analysts". If you think the dollar is a stable measure of anything, there's nothing I can do to help you...


Lol - nice non sequitur, but no one is saying that.

What I _am_ saying is that crypto is not behaving as advertised.  It's an investment tool, which is fine.  But let's drop the pretense that its primary function is an alternative currency.

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## ClaytonB

> Lol - nice non sequitur, but no one is saying that.
> 
> What I _am_ saying is that crypto is not behaving as advertised.


No, you're repeating Fed/central-banker talking-points that I have been watching them lay the groundwork for, since at least 2017. So, your 'piercing insight' into the 'reality' of Bitcoin is being spoon-fed to you by the financial MSMBS and you are lapping it up without skepticism. Think about where you are getting your information from. Do you trust these people to tell the truth about politics? So why in the world do you trust them to tell you the truth about Bitcoin??

#1 Fed/central-banking propaganda talking-point about Bitcoin: "It's just a crypto"

No, Bitcoin is not "a" crypto, it is _the_ crypto. You can argue that Ethereum and Litecoin are independent cryptos, but essentially all other crypto out there is just a derivative sitting on top of Bitcoin. They don't want to even mention its _name_ which is how you know they truly hate it. Everything they hate is literally unmentionable. So it's "crypto", not Bitcoin, per them.

In a rare moment of candor, three of the biggest Deep State Establishment billionaires -- Bill Gates, Warren Buffet, Charlie Munger -- tell the truth about their view of Bitcoin:




Oh boy, these guys sure are known for telling the truth about the world!! 




> It's an investment tool, which is fine.  But let's drop the pretense that its primary function is an alternative currency.


I posted this in the other thread. If you are truly the MSMBS skeptic you claim to be, then you would benefit from watching it:

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## dannno

> Lol - nice non sequitur, but no one is saying that.
> 
> What I _am_ saying is that crypto is not behaving as advertised.  It's an investment tool, which is fine.  But let's drop the pretense that its primary function is an alternative currency.


Bitcoin became a tech investment, but it's primary function is as an inflationary hedge. It is both of those things. Sort of like how gold is an inflationary hedge, but it's also used in technology. The price of gold can go up or down based on production needs for technology, it can also go up or down based on inflation.

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## ClaytonB

> Bitcoin became a tech investment, but it's primary function is as an inflationary hedge. It is both of those things. Sort of like how gold is an inflationary hedge, but it's also used in technology. The price of gold can go up or down based on production needs for technology, it can also go up or down based on inflation.


Technically, its primary function is _neither_ to be an investment, nor an inflation hedge, but simply to be _hand-to-hand money_. Can anyone guarantee that Bitcoin will actually achieve its stated goal? Of course not. So, early-adoption is an inherently speculative activity. Why you choose to be an early-adopter (or not) is up to you. Some are trying to use it for as many living expenses as possible, getting paid for work in Bitcoin, etc. in order to truly early-adopt. Some are trying to use it as an inflation hedge. Some are treating it as a speculative stock traded in "crypto-space" instead of fiat money. No one is right or wrong in how they approach it. But Bitcoin will only _not_ be a failure if it is eventually _widely adopted for direct, hand-to-hand payment for all kinds of goods and services_.

The creators, devs, miners, promoters, etc. who can all loosely be referred to as "the Bitcoin community" have been virtually unanimous on this point. Bitcoin-as-Ponzi-scheme is a cheap and easy smear, but what sort of Ponzi scheme involuntarily tapers itself over time? In the first few years of Bitcoin, yes, it was hard to tell it apart from a Ponzi scheme. But the difference is long since obvious. So, all of this FUD-mud being flung around by the Fed/central-bankers and their mouthpieces in the "financial news" industry is like one of those giant poop-flinging machines used to fertilize grass fields with cow manure. It's just a bunch of bullsh!t. Watching even an hour or two of some good introductory videos on what Bitcoin is and how it works will suffice to put any misconceptions about it to rest.

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## ClaytonB

I don't share Luke Smith's view that Monero is "Bitcoin done right"... Bitcoin is Bitcoin done right... but it does seem that Monero has a valid place in the ecosystem. Anyway, most of the talk is about the general political situation and I highly recommend...

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## ClaytonB

Crypto is not hard to understand...

https://twitter.com/RunwithBitcoin/s...17286877167616

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