Crypto vs. Fiat

I own more than few and less that a lot of both BTC and ETH. My thought process was its a hedge. Hedge against what is the question? certainly not against inflation and especally not againt the dollar. My thought was at the time that the amount was not a significant percentage of our total portfolio, with potential upside that maybe exponential. I guess I wanted to hedge against my own lack of iminagatiom of its perceived future value and practicality.
Depends on what you invest in. Different cryptos have different applications. Bitcoin being 100% finite does make it a viable and proven hedge. Through all the recent economic turmoil bestowed on us recently I find it a good case that crypto has and will prevail for at least our lifetime.
 
You make the major point. No one should assume I have never, would never, or don't currently own crypto. I just hate a bad argument. It isn't an inflation hedge and it isn't protection from government control and it certainly isn't going to change the world. It's a SPECULATIVE asset that you buy thinking or hoping the value (in US $, of course) will go up. That's it.
I disagree with your assesment as the government has been trying to get their hands on crypto and for the most part has failed miserably doing it so far other than buying crypto on exchanges there is no way of them knowing what you've done with it once it's off the exchange. But everything is speculative. Everyday analysts speculate what the future will hold in almost every facet of our society. Admittedly most are about as accurate as a weatherman on a bad day. However, if you don't speculate then you cannot be prepared for what is yet to happen. There are real world uses for many cryptos. Many cryptos run off their own version of internet/network known as web3. Investing in these assets is a lot like being able to invest into the internet we know today back in the 1990's.
The speculative part is which one will win the race to mass adoption. Some 3rd gen cryptos are indeed superior to ethereum however they lack in mass adoption since ethereum gained such a grip hold on utility.
I just find an option that limits government control and gives the power to the people as a whole to be a much more sound decision than allowing the clowns run our national currency into the ground.

If you have a more solid argument than my post, I'm more than happy to read it.
 
gettyimages-1451506211-53db0d0ea8f77db81c0e469aa6f6fc593e143b64-s1100-c50.jpg


FTX founder Sam Bankman-Fried leaves Manhattan Federal Court after his first court appearance in New York. Federal prosecutors have charged him with criminal fraud.
Michael M. Santiago/Getty Images
There's an expression crypto enthusiasts use, with fingers crossed, in the hopes a particular digital currency's value will blast off: "To the moon!"

Much of crypto did graze the stratosphere at the start of 2022, when enthusiasm was astronomically high, but a few months later it all came crashing back down to Earth.

Bitcoin's value is roughly a fourth of what it was a year ago, and the industry is just starting to grapple with the fallout from the catastrophic implosion of the cryptocurrency exchange FTX.

In the future, 2022 may be regarded as a turning point for the world of virtual currencies, when they lost their luster and were cast out as a fringe product most people approach with skepticism and caution. Or it may simply be remembered as a stretch of excruciating growing pains for an industry still in its infancy.
This is what I mean by the wild west of crypto. I never said it's immune to fraud or manipulation especially in it's infancy. These are growing pains that crypto will get through and there's always going to be someone doing bad things just like the countless stock market mogols that have been indicted over the decades. What I look at is 15 years into crypto and the market has had over a trillion dollar valuation. That's insane adoption in such a short time. It's only going to get bigger as time goes on. It's not unfathomable to think in another 20-40 years it could become 10 trillion or even upwards of 80 trillion dollar market valuation. Several billion is pennies in the bucket. What should be taken from this is that this guy actually got caught and held accountable, which is a win for crypto.
 
No idea where 1964 comes in. The US official left the gold standard in 1971, but one could argue the revaluing of gold/$ exchange price in 1934 was the first major step with Bretton Woods agreement post WWII the second major step.

A currency is just a medium of exchange. If there is no exchange, it isn't a currency, just fairy dust. That fairy dust has value as long as people believe it has value (see gold as example). If you get broad adoption in the use of Bitcoin to actually transact, it has a fighting chance, but the whole inflation argument has proven itself as pure horseshit. Crypto prices benefits from expanding money supply like everything else. If the "Big Brother is Controlling your money" argument doesn't work on BHR, then you have a lot of work to do. He is our litmus test for all conspiracy theories.
1964 is the last year precious metals were used in us coins. Bitcoin is terribly expensive and slow for transactions you should be using a different crypto. You are correct that value is only there if people value it. But I challenge your argument about this pixie dust because in reality that pixie dust is one in the same with the internet you used to make your post. Crypto is intangible, but it's no less real than the internet or even sound for that matter, these examples certainly are real and all are intangible. Crypto doesn't need fiat to be successful. Everyday hundreds of millions of transactions or maybe even more are done across all crypto to purchase goods and services privately. The only reason people buy it with fiat is because they are not paid in crypto at their jobs.
Yes people could use seashells as currency if it gained adoption, however the use and storage of such currency is limited.
We live in a digitized world, heck an overwhelming majority of U.S. money is digitalized just like that pixie dust your mention.
Lose your wallet? Tough luck. Loose your crypto wallet, no problem, enter the seed phrase on a new wallet and bam there's your money.
 
1964 is the last year precious metals were used in us coins. Bitcoin is terribly expensive and slow for transactions you should be using a different crypto. You are correct that value is only there if people value it. But I challenge your argument about this pixie dust because in reality that pixie dust is one in the same with the internet you used to make your post. Crypto is intangible, but it's no less real than the internet or even sound for that matter, these examples certainly are real and all are intangible. Crypto doesn't need fiat to be successful. Everyday hundreds of millions of transactions or maybe even more are done across all crypto to purchase goods and services privately. The only reason people buy it with fiat is because they are not paid in crypto at their jobs.
Yes people could use seashells as currency if it gained adoption, however the use and storage of such currency is limited.
We live in a digitized world, heck an overwhelming majority of U.S. money is digitalized just like that pixie dust your mention.
Lose your wallet? Tough luck. Loose your crypto wallet, no problem, enter the seed phrase on a new wallet and bam there's your money.
Best of luck to you, and good hunting.
 
Crypto is a medium of exchanged backed by massive amounts of electricity.

If power is cut off, it no longer exists.
You don't think your local credit union has the balance of your savings account sitting in cash in a bag with your name on it, do you?

Your crypto exists the same way your savings account exists... in digital record. The difference is that the blockchain is a safer way to keep that record than relying on Wells Fargo, Chase, or a local credit union to know how much money you're supposed to have. Whether you like crypto or not, blockchain is a good technological advancement invented to prevent the power going out in one place from erasing the record somewhere else.

What happened with FTX is people didn't follow the most basic rule of crypto and had their money stored on exchanges. Crypto 101 says to store your crypto in a hard wallet (account you control), whereas, in an exchange, the exchange has access to your funds. That's what those depositors had done, and they got burned.

What happened there is not dissimilar to what nearly happened with SVB. The people that had their millions of dollars in SVB thought their money was safe, but really it depended on somebody else being a safe steward of it. SVB required a government bailout to save the depositors... that didn't exist for people that stored their crypto in FTX and it cost them.

Lesson learned and now people know better than to store their crypto on exchanges, and the various reputable exchanges have open-sourced their financials so the public can audit to ensure they're not robbing Peter to pay Paul.

I don't own Bitcoin, but I do see the value of Ethereum and web3.
 
Reserve currencies have averaged like 94-5 years historically and the USD is 99 years old so it wouldn't shock me if it gets overtaken

Portugal 1450-1530
Spain 1530-1640
Netherlands 1640-1720
France 1720-1815
UK 1815-1920
US 1921- Present

What takes over as the reserve currency? It won’t be crypto. China yuan isn’t to par. Russia ruble won’t happen.

Euro? Pound? There’s talk of creating another Euro type currency in S America but it won’t have the strength either.

I don’t currently see a currency with the backing the dollar has in the world. Countries can complain but greenbacks are still taken everywhere.
 
You don't think your local credit union has the balance of your savings account sitting in cash in a bag with your name on it, do you?

Your crypto exists the same way your savings account exists... in digital record. The difference is that the blockchain is a safer way to keep that record than relying on Wells Fargo, Chase, or a local credit union to know how much money you're supposed to have.
👇

What happened there is not dissimilar to what nearly happened with SVB. The people that had their millions of dollars in SVB thought their money was safe, but really it depended on somebody else being a safe steward of it. SVB required a government bailout to save the depositors... that didn't exist for people that stored their crypto in FTX and it cost them.


Crypto is highly speculative, like a high risk stock. Savings accounts at Wells Fargo are insured by FDIC. You're conflating two incredibly different products.

Investing in Crypto = Investing in Tesla

Investing in crypto <> Savings account

The FTX issue is a lack of asset diversification + risk profiles.

You want a balanced portfolio, equities, bonds, real estate like your house, some FDIC insured accounts, etc... and sure some exposure to crypto isn't a bad idea.

The elephant in the room is that it requires an incredible amount of energy to keep the crypto system going.
 
Last edited by a moderator:
What takes over as the reserve currency? It won’t be crypto. China yuan isn’t to par. Russia ruble won’t happen.

Euro? Pound? There’s talk of creating another Euro type currency in S America but it won’t have the strength either.

I don’t currently see a currency with the backing the dollar has in the world. Countries can complain but greenbacks are still taken everywhere.
Yuan, Euro, SDR... 🤷‍♂️
 
Crypto is highly speculative, like a high risk stock. Savings accounts at Wells Fargo are insured by FDIC. You're conflating two incredibly different products.
No doubt crypto is speculative. Many of them are similar to fine art in that they have no use other than the idea that somebody will buy them for more in the future.

FDIC only insures up to $250k, a family member of mine had over $10MM in SVB the day it collapsed. Guess how much that FDIC insurance helped him. He was reliant on somebody else to protect his money, and then ended up reliant on the government to save him. Many people don't like that idea.
Investing in Crypto = Investing in Tesla

Investing in crypto <> Savings account

The FTX issue is a lack of asset diversification + risk profiles.

You want a balanced portfolio, equities, bonds, real estate like your house, some FDIC insured accounts, etc... and sure some exposure to crypto isn't a bad idea.

The elephant in the room is that it requires an incredible amount of energy to keep the crypto system doing.
I agree with much of this, however I'd point out that Bitcoin is energy intensive, that's not accurate for many of the other crypto groups... such as Ethereum, for example.

PS. Most of the coins are just ponzi scheme-esque frauds with no value. But not all of them.
 
I don’t agree with the logic that investing in crypto is a better safe haven for your dollars than the FDIC insured US Banking system.

There may be hiccups in the banking system but it remains strong. None of the depositors with SVB lost money. If you’re above $250k, and the majority of people aren’t, you better review the financials of your bank. Keeping funds in a weak bank is trouble. However, it does appear that the FDIC will protect depositors. There is no similar protection for crypto.

A hundred years from now the US Banking system will still exist. Who knows about crypto and that investment.
 
I agree with much of this, however I'd point out that Bitcoin is energy intensive, that's not accurate for many of the other crypto groups... such as Ethereum, for example.
That’s interesting I wasn’t aware of the difference.
 

Forum statistics

Threads
111,398
Messages
1,957,429
Members
35,158
Latest member
MJS4KIDS
Back
Top