OT: Bitcoin Surge -- New Investment Safe Haven?

cough $3600 cough

cough $3700 cough

I sold my bitcoin off the first time it hit $4,000

My feeling is that it could have a dramatic impact, or nations could come to see that if they don't pre-empt it they are going to have some problems due to it. Which means the smart ones will adopt it themselves to slow down the rise of currencies not under their control. Even if that happens though it's still a question if they can just slow the rise or head it off altogether.

I do agree that rise in BTC is due to hot money leaving other markets. Whether it is poised to become a "safe haven" or not, I think it's too early say, but good chance of it.

In my experience, people who lean toward Austrian economics (e.g. Peter Schiff) tend to dismiss Bitcoin because, in their minds, Bitcoin has no inherent value. At first, it certainly does seem like Bitcoin has no inherent value (at least, not in the same way that gold does), but one cannot deny the fact that it (cryptocurrency) is quite a unique idea.

I wonder if the true inherent value of Bitcoin lies in its ability to create a communally permanent digital foundation. I might be wrong on this, but when I consider all other modes of digital storage, and digital ownership, it seems they all fall short of the Blockchain technology. Is there a mode of digital storage which is more permanent than that provided by Bitcoin's blockchain?

Perhaps Bitcoin's value is simply this: stability in an unstable, albeit ubiquitous, medium.

And it seems appropriate that its use as money, or as a store of value, would be its first application. After all, who doesn't want their wealth to be protected by a stable medium?

I'm not sure about that. I think it's split among the Austrians. Some like Bitcoin and gold, some only gold.

What someone should do is write down a list of desirable properties of money and see how many Bitcoin fulfills versus gold versus paper money.

In any case, I got sold in late May. Even thinking of going to work on one of the crypto currencies myself. (Please don't tell my current employer though, in case I change my mind.)

Another interesting thing I discovered recently is that blockchain not only solves the digital cash problem, but also the internet voting problem (although that gets little mention). So I think it's also the ticket to the Athenian democracy I've always dreamed of.

Don Tapscott is a tech guru and futurist I respect. At a TED talk, he outlined many future applications of blockchain, including voting integrity. See YouTube video below.

youtu.be

One of the keys to the increasing value of Bitcoin is the restriction on Bitcoin "supply". Supposedly the increase in supply is controlled by some automated formula. Understanding that is key to projecting how the cryptocurrency may increase in value. The big gating factor, as Dougster mentioned, is what governments will do to maintain control of currencies and money supply.

cough $3900 cough

Also @Dougster, here is that comparison you wanted: coinatmradar.com

Great chart Futuretrackstar!

Pretty good chart, but it is missing anonymous. Also, although Bitcoin has a limited supply, it's very easy to invent new coins, so I would actually put gold well above Bitcoin in terms of scarcity.

For the record, I did not make this chart. I found it on google. Took about 10 seconds.

cough $4300 cough. I gotta get some lozenges.

LOL!

Another company to watch is Coinbase, focused on providing a digital currency exchange and enabling software for users. "Coinbase, with its attention to digital currencies as an enabling technology and not just a tradeable asset, will likely have a bigger overall impact on the mainstream adoption of cryptocurrencies."

How Coinbase Can Be a Real Unicorn - FORTUNE apple.news

Here's what fueling the recent rise in Bitcoin:

"The largest digital tender jumped to a peak of $4,187 Monday, a gain of nearly 17 percent since Friday, after a plan to quicken trade execution by moving some data off the main network was activated last week. The solution -- termed SegWit2x -- had been so contentious that a new version of the asset called Bitcoin Cash was spun off earlier this month in opposition."

fortune.com

Real problem with bitcoin is the small capitalization of the crypto currencies allowing a heavy hitter to actually manipulate the market, there are a few I can think of with the means and know how, ability, to run a game and who's going to stop them. There is no regulator in this market you guys think you are sharks but compared to a real shark you're just a bunch of guppies.

My biggest concern is where is the political backing behind bitcoin?

The dollar is backed by US government, and the entire network behind the use of that currency which is why it is the biggest safe haven, behind gold.

Bitcoin? Does it have anything more than a few millionaires as its political power? It seems to carry a lot of political risk, which to me doesn't sound much of a safe haven in turmoil involving politics.

Lol!

Some sour grapes by those who missed the current rally?

Don't worry folks, still early in the crypto-currency game: plenty money still to be going forward.

I agree with Giraffe, BTC rallied big because Segwit2 really closed the gap on its performance issues.

Also contributing to the rally, IMO, is the fact the mainstream financial institutions are drooling like hound dogs to get in. So people buying now basically to front run that.

@Dougster no sour grapes I just don't have time to recover like you younger guys I wish you all well but I am in good shape I'll not be looking any more for the next big thing , at this stage of my life I am more into steady growth and capital preservation.

Dougster, the OP inquire in the title about bitcoin being a safe haven. Not sure how anyone can justify that reasoning.

Sure it is known profits can be made, but back to the topic at hand(safe haven), anyone care to elaborate?

It's important to keep in mind the difference between the tangible and intangible. Gold is obviously a good store of value because it is a tangible object with utility value, aesthetic value, etc etc. nobody argues that gold is an adequate safe haven / store of value; the price of most commodities and goods, when prices in milligrams or grams of gold, generally go down with time.

Bitcoin and government currencies that are not backed by gold (insofar as they are used as money) are intangible (ignoring, of course, the physical paper of the bills themselves). In the absence of modern computing technology, gold is the only safe haven in which to store ones wealth. But, of course, modern computing technology is not going away any time soon; it will only get faster, better.

Why is Bitcoin a superior safe haven to the US dollar? The answer, to me, is simple: US dollars can be devalued by increasing the money supply. After the Fed increases interest rates enough to cause a stock market crash, they will start QE 4 and pump trillions of new US dollars into the economy, effectively devaluing the labor required to earn your dollars. Nobody can do that to Bitcoin. If somebody attempts to change the code in order to change the limit of 21 million coins, then my understanding is that that will constitute a software hard fork, and the new coin will operate independently of Bitcoin.

Additionally, the security technology of Bitcoin is far superior to the technology employed by modern banks. I am quite sure that, e.g. in the interest of national security, a person's financial assets stored in a bank can be wiped clean. Set to zero. This kind of action is literally impossible with Bitcoin.

^^^I guess that's why Howard Johnson has 64 flavors.

I don't know if bombs were going off, I wouldn't want to flock my money over to crypto currency.

".. they will start QE 4 and pump trillions of new US dollars into the economy, effectively devaluing the labor required to earn your dollars."

My (admittedly) limited understanding of Bitcoin is that it's a sort of electronic gold standard. It should really appeal to the multitude of Randoids on TUSCL. We don't need no stinkin' Fed.

Actually I would argue against gold being a safe haven. It certainly has never behaved that way since I started following the markets around 2008.

@Dougster, that's because it peaked in '11! My comment is largely based on the reading I've done one a website called pricedingold.com. They have charts of all kinds of things priced in milligrams or grams of gold over the past hundred years or more. One of the most compelling charts I've seen in the Shiller home price index, priced in gold. Would you believe it if somebody told you the Shiller index hasn't really gone up at all over the past 120 years, when priced in gold? Take a look.

Real estate as an investment is nothing I really understood. I think it turns into a good investment for people b/c they need a place to live anyway, so it saves them rent money. Also mortgage payments tie up a good portion of their entire income, so it's kind of like forced savings that most of the population, apparently, doesn't have the discipline for. The other factors are the illiquidity forces them into buy and hold (which is occasionally violated when house flipping becomes a fad). Another factor is that you can get pretty good leverage. High than you can with stocks, in general (ignoring derivatives). So people are accidentally making a leveraged investment on something with positive return. Final three factors are the tax breaks for mortgage interest, fact that you don't owe capital gains on a primary residence, and apparently willingness of the government to do a collective bailout if the country gets it wrong. :-)

Generally, though, when you run those rent vs own calculators, it's much closer than most people think. But I think their big flaw is assuming people real will put their saving on a mortgage payment versus rent into the stock market, rather than just blow it on hookers and coke, or, whatever.

But in general, I'm not surprised real estate isn't much of an investment. After all what does it do? it's like gold that just sits around all day in a vault and collects dust.

trends.google.com

This is pretty cool. Google searches of gold and bitcoin have both spiked in the past few days relative to the past 3 months. Curious...

I won't be surprised if the events this weekend with those KKK idiots contributed.

@Dougster its not really the rent vs own, its more like you needed to spend the money anyway to have a place to live in or a place to operate your business, its never going to be cheaper than it is right now, so if you buy you lock in the cost of the rent no more annual increases, of course taxes and insurance do increase annually but those are controllable, insurance through market forces(shopping it annually) and taxes through smart management, plus when you no longer need the property it will add value to your business and bring at least as much as it cost as a ROI probably much more actually, and your home, bubble or not will eventually go higher than your cost, as long as it is well maintained.

Buying a home should t be used an an investment. It should be looked at a way to keep your housing costs from rising much due to inflation. Rents rise but your mortgage payments are steady. Figuring the average person gets tax breaks for owning a home to offset maintenance costs, then you have a hedge against inflation.

The people who purchase homes for investment only purposes are playing a high risk game that can backfire. One mishap can ruin you, and generally flipping real estate doesn't build much wealth unless you're willing to put in tremendous sweat equity. Equities and securities are easier to trade in the open markets. Housing requires a contract to buy and sell, and usually financing which detracts me from expanding my real property holdings. I'm good on all of my properties held for 15 years or more, but I have to maintain them.

The rent versus own calculators take everything into account and told me it was dead heat last fall. I somewhat reluctantly decide to go ahead and buy anyway. Right now I'm neither ecstatic nor disappointed with my decision. (I haven't, however, bothered to look at listing prices nearby.) Also some chance I'll be moving in the near future already if I decide to commit my life to block chain and Athenian democracy. :-)

Looks like Bitcoin is going to have some healthy competition., as cryptocurrency exchanges add Ethereum.

Bitcoin: Blockchain and Bitstamp Add Ethereum - FORTUNE apple.news

"The move signals a growing acceptance of Ethereum, created in 2014 by Vitalik Buterin, a Russia-born programmer who appears on this year’s Fortune 40 Under 40 list (you can read more about him here). Ethereum has been responsible for a massive explosion in enthusiasm for cryptocurrency and digital token assets this year."

Ethereum is a neat concept, but a massive security risk, IMO (and actually has a very bad track record). But I guess that hasn't stopped other technologies with the same problem. :-) I made a little money off UBIQ recently, which is a project to implement the stabilist parts of ETH. Still I don't think given the number of developers they have 2? 3? The market cap can be justified.