Bitcoin and Fear Discussion. Fact from Misinformation

[Eric Carr]

I don’t expect to change anyone’s mind about Crypto, specifically Bitcoin, nor do I expect this post to be popular or liked by 95% of BP users

I really like the money podcast and I’m listening back and am starting to see that @Mindy Jensen's hate for bitcoin comes from a total lack of understanding, which like in all things, leads to fear. To a lesser degree @Scott Trench as well but only because so far, he’s had less to say. But from what he’s said, doesn’t seem to understand it and doesn’t seem interested. Scott mentioned he thinks something else will come along – sounds logical, and I have friends who know little about BTC that have said the same thing. No one knows. But if you look at the fundamentals, growing support, dominance and market cap, and understand it, you end up with a better platform to base your decisions from. One example, a better Amazon hasn’t come around yet. A better internet either. There are thousands of crypto, which Mindy calls all of them Bitcoin, and at some point, I think we will see a lot of them disappear. Scott also says it has “no intrinsic value”, another phrase I see repeated often. I have friends who have said the same thing but can't define the word "intrinsic".  I’d like to ask Scott what the word intrinsic means to him, without looking it up! Because you could say the same about printed fiat currency. Money Show 86 with David Stein was telling. 

But don’t we think it’s important to understand what crypto is, what makes it useful, and the differences between all of the offerings? Just like any other asset class? They are not all the same.

David Steins advice that one should be able to explain something before investing is solid fundamental advice. On the other hand, wouldn’t everyone agree that one should be able to explain what something is before they hate and recommend against it? Not understanding and not investing is one thing, it’s a good reason not to invest in fact, but actively hating something that isn’t understood seems dangerous, especially when giving financial advice.

For instance, Mindy recalled something that might have happened in Greece that caused the price of BTC to sink to $6k – details are fuzzy, such as what exactly happened, when, what the price was before and after, and how it affected BTC

In this episode (86) there were a couple of points that had fuzzy or non-existent details and facts – don’t we think those are important when deciding for or against something?

Doesn’t it seem like giving financial advice out of fear, emotion, or/and lack of understanding, is dangerous?

One thing Mindy said did make sense, it is volatile. If the volatility is beyond your threshold, even when you believe in something, you might avoid it. But undersatand it first! 

When I started investing in BTC, it was early 2015 when it had fallen from previous highs of over $1,000. I bought at $246.

I held since and have seen gains in the 1000%. Not even my real estate purchased at the bottom of the last crash, has performed that well

Even given the volatility, since 2009, we've not seen anything perform like BTC. Look at Apple stock January 2015, which traded at around $110. It's at $227 today. Do the math from the same period against BTC. 

I invested no more than I could afford to part with, I understand it, I believe in it, adoption is growing, and I could write another two pages

I think if anyone has rational questions, not emotional hate, post up and we can discuss things. 

What's past is proglogue. People hated the automobile, MP3's, electric elevators, and were afraid of flight. Anything can happen, but if you're curious, I'm here to have a discussion 

[Jack Medford]

@Scott Trench Before getting into it I will mention that I've been a holder of various currencies since 2015, but do not consider myself an expert. I will do my best to explain as I see things, but welcome others with more knowledge to expand and/or point out inaccuracies. 

"Bitcoin is similar to hundreds of other cryptocurrencies. Each crypto has it's nuances, it's slight differences. But, at the end of the day, there seems to me to be no particular reason to me that Bitcoin will be the one universally adopted in the end. Perhaps it has odds over, say, KodakCoin. But, why Bitcoin vs. Litecoin? Vs. Ethereum? Vs. XRP"

I think this highlights why more research should be done before making strong opinions one way or the other. As you put it, Bitcoin's value is in its ability to replace other currencies (such as gold or fiat) as a store of value. With that being the case, why would people choose Bitcoin over the others? 

Gold is the best comparison, as BTC is often called digital gold. It may not be tangible in the sense that you can hold physical BTC, but the code that surround BTC is irrefutable. I think both of these currencies are complimentary. One is physical, the other digital. As long as you hold your private keys, you will always be in control of your BTC. Just like if you lock you gold in a safe, you will always be in control of your gold. Give it to a 3rd party to store, and that is where BTC and Gold both become vulnerable. 

Fiat government currency has shown that it is not a good store of value. The system is centralized to a max and is subject to inflation. BTC will never be inflated. It has a fixed supply that cannot be changed. Fiat currency is constantly being printed, causing it to lose value over time. 

Ethereum is a different concept from Bitcoin. The goal of Ether and the Ethereum blockchain isn't really to be a store of value. It is attempting to be a platform for development of Digital Autonomous Corporations (DAOs) as well as as Smart Contracts. This is a different use case entirely than Bitcoin, so I do not really see the two as competitors. 

Similarly, XRP was not created to be a store of value. It is currently being used by banks and financial institutions to help with cross border payments and to manage liquidity costs. If I remember correctly, the creators have mentioned that crypto investors should not be seculating with XRP, as the price of the token is intended to stay low. In addition, Ripple appears to fairly centralized compared to other cryptocurrencies. 

LTC on the other hand has a lot of similarities with BTC, making it the most obvious competitor. The main reason Charlie Lee created LTC was to improve the scalability of BTC. There are some differences, such as processing speed, but the functionality is largely the same. 

So why would someone choose BTC over LTC? 

There is an important point that many BTC maximalists will pount to. There is no creator/owner that can be easily pointed to. BTC is a protocal created by an anonymous entity and is now entirely run by the people who make up the ecosystem. LTC, and all other currencies, have a central founder. Even if the coins themselves are entirely decentralized, they still have founders/leaders who can heavily influence the community. 

I highly encourage you to listen to actual experts, as again, this explanation was just my best attempt. The two podcasts I'd recommend were done by The Investor's Podcast. This podcast is normally focused on stocks, but they did two back to back on Bitcoin. 

The two I recommend are #259 with Dr Saifedean Ammous and #260 with Plan B. The main takeaway I received by listening to these two episodes was the concept of stock to flow, and why this is important when deciding upon a store of value.