patrick.net

Crypto has no intrinsic value. It is backed by nothing real. It has very limited use in commerce if your not an international terrorist or narco kingpin. Most people that hold it plan on one day selling it to someone that will pay more for it than they did (including transaction fees). It has artificial scarcity and takes an incredible amount of electricity just to keep the network going.

Bitcoin sounds more like a liability than an asset.

G36 says

(he asks for intrinsic value, you send him the link, he ignores it and just asks again)

You sent me a link to a book. I asked you to summarize. Do you have a simple answer to the question of "what is the intrinsic value of bitcoin?"

I found this smug prick to be pretty compelling. His buy in was 500 million bucks!
www.youtube.com/embed/WrR95PFYDFQ&feature=emb_logo
Another factor is if entities like this one are successful attracting institutional investors:
https://getpocket.com/explore/item/the-wealthy-are-hoarding-10-billion-of-bitcoin-in-bunkers?utm_source=pocket-newtab
BTC gives me the creeps, which might be a contrary indicator.

Hey what about silver... we be like


This is week we dancing for sure ;))) Nice gains

Any other PM gold bugs?

Onvacation says

Crypto has no intrinsic value. It is backed by nothing real. It has very limited use in commerce if your not an international terrorist or narco kingpin. Most people that hold it plan on one day selling it to someone that will pay more for it than they did (including transaction fees). It has artificial scarcity and takes an incredible amount of electricity just to keep the network going.

Bitcoin sounds more like a liability than an asset.

G36 says

(he asks for intrinsic value, you send him the link, he ignores it and just asks again)

You sent me a link to a book. I asked you to summarize. Do you have a simple answer to the question of "what is the intrinsic value of bitcoin?"

No, I dont think I have a simple answer for you. If there were a simple answer you probably would already have heard it. Take other forms of money like the US dollar. Whats the intrinsic value of a 100 dollar bill? a few cents production cost?
No, the value is 100 dollars for this piece of paper because its backed by the US government and the world believes in it. You may re-produce the same type of paper and it will look very authentic but nobody would accept it because its not backed by the US Government.

Why do some people buy AMZN stock at 3.2K? You may argue the intrinsic value of one Amazon stock is much less. I bought Tesla and other tech stocks and I dont care if someone tells me, but wait, you overpaid, I calculated the intrinsic value to be only X. I had people tell me that TSLA might not even make it due to their financial situation and wishful estimations. Fast forward and the stock went nuts. It was speculation on my part, probably luck and my disregard for people who argued its not worth that much.
My point is, we most likely dont arrive on the same page here. Which is totally fine. This discussion probably doesnt get us anywhere. I dont "invest"/speculate in Bitcoin because of its intrinsic value. I invest in it because I believe its price has a lot of upside. For me its a store of value and I can see there is adoption by well known entities/Nasdaq listed companies. I also like the traits of Bitcoin in comparison to other similar forms of money. If I am only concerned about intrinsic value I might as well just invest in food and entertainment, but that wont increase my wealth over time.

G36 says

I invest in it because I believe its price has a lot of upside.

If you call investing depending on the greater fool to pay more for your "coin", go for it.

I don't buy into pyramid schemes but I hear SOME people make a lot of money from them.

G36 says

I also like the traits of Bitcoin in comparison to other similar forms of money.

Yeah. It's probably better than my https://patrick.net/post/1314087/2018-02-28-getrichquickcoins

G36 says

You sent me a link to a book. I asked you to summarize. Do you have a simple answer to the question of "what is the intrinsic value of bitcoin?"

No, I dont think I have a simple answer for you.

I'll help.

Bitcoin has no intrinsic value. It only has value if someone else is willing to pay you for it.

Onvacation says

G36 says

You sent me a link to a book. I asked you to summarize. Do you have a simple answer to the question of "what is the intrinsic value of bitcoin?"

No, I dont think I have a simple answer for you.

I'll help.

It only has value if someone else is willing to pay you for it.

Yes, of course. I dont buy Bitcoin at the current price (value) because I hope it will stay at that price (value). I put money in Bitcoin because I believe someone (the market) will pay more in the future for it. Same with tech stocks BTW. The number of Bitcoin addresses is growing and the number of Nasdaq listed companies that either invest in Bitcoin or build infrastructure to transact Bitcoin is also growing (Paypal, Microstrategies, Square). I absolutely think that the market ("someone willing to pay for it") will grow.

If I dont believe that someone else will pay more for my tech stock, Bitcoin or my fixer upper in the future compared to what I pay today, why would I want to invest in it? Thats what almost any market is. You invest/speculate with something because you believe the future price is higher as long it still meets your risk profile.

Your risk profile lets you only invest in food/entertainment. That's fine. My risk profile allows me to invest in something thats highly volatile without losing sleep. Someone else might speculates with leveraged trading vehicles and may lose or win big. And someone else might like to go to Vegas and put it all on red. I dont call any of these people names because its their choice and its legal.

OnVacation, After reading your comments I think you really don't invest in much other than food/entertainment as you said. First, your story didn't make much sense to me, you are just on vacation (indefinitely, but you still work) and because of being onvacation you invest only in food/entertainment. Yet you take all this time to call people greater fools and idiots that invest in Bitcoin.
After reading your comments about pyramid schemes etc. I think you might have gotten burnt by investing in something in the past and therefore you wont put money into something that is speculative/risky or has no simple answer of intrinsic value. I think that is totally fine. What I didn't think is a bit too much is calling Bitcoin speculators/investors greater fools or calling it a pyramid scheme. Pyramid schemes are illegal. Its meant to ruin people and only benefit a few on the top. That shows me you have a strong hostility against people that like to invest in Bitcoin. You don't say these things about people investing in tech stocks, even though we could argue that the value of a certain tech stock is way above its intrinsic value, or do you?

G36 says

I dont buy Bitcoin at the current price (value) because I hope it will stay at that price (value). I put money in Bitcoin because I believe someone (the market) will pay more in the future for it. Same with tech stocks BTW.

Nice it's all the same as you say, regardless any active professional trader or investor will tell you all markets are a "looking forward" game not so much a look in the review mirror situation for the absolutely most part. BTW I never got around to setting my SL which in this case a SL wouldn't of been set to save me from ruin just a shot at discount pricing lol
Price is again above 15250 and Sunday morning US can often turn into a sweet spot for price movement the same when the Asian markets opens this evening. I have other crypto which depending when BTC "HITS" 16800 I may sell due to how hot it should be when it lands there. Good investing.

G36 BTW, BTC also became a high probability "BUY" 4hr as soon as it breached up above 15100

G36 BTW, BTC also became a high probability "BUY" 4hr as soon as it breached up above 15100

G36 says

My risk profile allows me to invest in something thats highly volatile without losing sleep.

So buying a bitcoin is like buying a lotto ticket.

Onvacation says

G36 says

My risk profile allows me to invest in something thats highly volatile without losing sleep.

So buying a bitcoin is like buying a lotto ticket.

Onvacation, Maybe for you. Because your risk profile lets you only invest in food/entertainment. For me, no. Not at all. I dont buy lotto tickets, thats gambling to me with very bad odds. I like to speculate in Bitcoin/tech stocks etc. Other Nasdaq listed companies invest in it too. Square/Paypal dont buy lotto tickets. But they put a significant amount of money in Bitcoin.

I am starting to think you just like to provoke instead of having a real/meaningful discussion. Which is why you dont answer questions.

Cash,
in which other Cryptos do you invest and why? I agree the backtest to lower levels is very bullish. I am thinking of either buying more Bitcoin or other cryptos.

G36 says

I dont call any of these people names because its their choice and its legal.

I'm not calling you a fool directly, but indirectly I am because I think it is foolish to invest in bitcoin. The fact that it currently uses as much electricity as the country of Chile just to maintain it should convince any but the most feeble minded that it is not sustainable.

Now you are not a fool if you win and somehow someone someday wants to buy your accumulated store of coins for some fantastic amount and you agree to sell.

People who speculate in bitcoin should admit that they are dependent on the next greatest fool to buy their worthless wallet full of coins. The last greatest fool will have nothing but a flash drive full of bits.

At least tulips were pretty.

G36 says

That shows me you have a strong hostility against people that like to invest in Bitcoin. You don't say these things about people investing in tech stocks, even though we could argue that the value of a certain tech stock is way above its intrinsic value, or do you?

It's not you I have disdain for it's crypto as a currency. It's not.

As a software engineer I do understand the concept of blockchain and know that it is open source. I have seen a lot of change in technology over the years and some brilliant young geek is always coming up with a hack that makes the old way obsolete. Crypto currently takes incredible amounts of electricity. Like I have said, it's not sustainable.

Tech stocks have intrinsic value. Pets.com made some people a lot of money. So does Apple. Some stocks pay dividends. I don't mess with the stock market. I just dollar cost average chunks of mutual funds and let it ride, knowing full well it may or may not be there when I want it. I am diversified. I don't gamble, though when the lotto reaches a stupid prize amount I buy a ticket.

I don't spend a lot of time investing. I spend about half my time working, making the world a better place. the other half I spend playing. I particularly enjoy sailing in the bay and working on my little sloop. Sailing, windsurfing, motorcycling, traveling, staying fit, good food, the best investment is leading a good balanced life.

But if you want to, and have the coin, to spend $30k on a couple of Bitcoins in the hope that someday somewhere someone will pay you a lot more money for them, go for it, but it's a speculation (gamble) not an investment. That is if you believe that is is what it is.

Cash says

G36 BTW, BTC also became a high probability "BUY" 4hr as soon as it breached up above 15100

The lotto is $138.000,000.00 this week. Your chances of winning are about the same whether you play or not but you definitely will not win if you don't buy a ticket. If you and a bunch of your friends buy a bunch of tickets the prize will be even higher.

Don't miss out!

G36 says

I am starting to think you just like to provoke instead of having a real/meaningful discussion. Which is why you dont answer questions.

No. I just like to provoke cognitive dissonance.

G36 says

in which other Cryptos do you invest and why? I agree the backtest to lower levels is very bullish. I am thinking of either buying more Bitcoin or other cryptos.

There is also the super lotto.

Ok, now I am getting a bit annoying.

Thanks OnVacation, first off I appreciate that you are sharing some insight which sounds a lot more realistic now.

I agree with a lot of few things you are saying (Blockchain tech is fast changing/evolving, electricity of Bitcoin and most of all "Best investment is leading a good balanced life"). It also sounds like you are in a pretty good financial situation and don't really need to spend time on investing to make your lifestyle work. That's good for you!

The one thing I don't fully get is, you say if something has no intrinsic value than it has no value and investors are greater fools. I get that tech stocks have intrinsic value but how does your "greater-fool-theory" apply to the fact hat the market price is way above the intrinsic value for tech stocks?

For instance, AMZN, this website is calculating the intrinsic value of AMZN
https://www.gurufocus.com/term/iv_dcf_share/AMZN/Intrinsic-Value-Projected-FCF/Amazoncom#:~:text=As%20of%20today%20(2020%2D11,FCF%20of%20today%20is%206.6.

Since the price per stock is multiple times greater, do you see AMZN stock holders as part of the greater fool theory?

G36 says

I get that tech stocks have intrinsic value but how does your "greater-fool-theory" apply to the fact hat the market price is way above the intrinsic value for tech stocks?

The fiat money systems. It is some kind of law of nature that those that have get more and those that have not, lose that they even seem to have. When money from nothing gets created it has to go somewhere. Thus the stock market boom while many people are living paycheck to paycheck. The rich get richer.

The fiat money system has forced us all to be gamblers. Savings accounts pay less interest than inflation and that is before banks start charging us to hold our money. There is no way the current system can last more than a couple hundred more years. Your best investment is still in experience, good food, entertainment, and helping the less fortunate.

I did a lot of research on crypto a couple of years ago when it was reaching for $20k. Any of the fools that bought at that price have sold and moved on or are HODLing in the hopes of fortunes. My research revealed how well setup the scam was; "coins in your wallet", "digital gold", "the currency of the future", "an untraceable way to transfer money", "a permanent record of all transactions", "a financial system apart from the government", "they're not making any more, once the last bitcoin is mined, that's it" and my favorite, "buy now or be priced out forever". Hype.

Good luck with your speculation.

onvacation, I agree with a lot here. I used to not want a credit card. Why should I get in debt and risk spending more than I have and risk paying enormous interest on it?
I had to get several credit cards in order to built a great credit score. I know there are other ways but this is actually an easy way for some. Not for all. Most probably max out their cards and get screwed. People like me actually spend time on finding cards that offer sign up bonuses for spending a minimum amount within a few months. After a year I cancel the card or switch to a card that has no annual fee. A bit of work maintaining my spreadsheet but I play the game to get more points for travel and other stuff.
And that's my point, play the game.

I would add one thing to your sentence:
"Your best investment is still in experience, good food, entertainment, and helping the less fortunate" + building passive income.

You still haven't really answered the question if tech stocks investors are also greater fools since the intrinsic value of the stock is 5-6 times lower than the market price.

Regarding "fools" buying at an all time high in the last Bitcoin bull cycle.....What do you say about people who bought in the previous bull cycle at an all time high of 1k and held until now?

I struggle with saying you are a greater fool now for buying but later when you sell at a higher price you are all of the sudden not a greater fool anymore.

Also, the buy now or be priced out forever phrase came from the 2005/2006 housing bubble....That phrase will be repeating by some people during any bubble.

G36 says

I struggle with saying you are a greater fool now for buying but later when you sell at a higher price you are all of the sudden not a greater fool anymore.

Bitcoin profits are dependent on someone paying more than you did for the coin. The same could be said about a gold coin, but at least with the gold coin you have a shiny piece of metal that can be used to make things. With real estate you have a place you can live. With stocks, for good or bad, you own a piece of a business's profits and losses. With Crypto you own... what?

My biggest problem with Bitcoin and other such devices is that it depends on fools to make money. When you pass your bitcoin ownership on to the bigger or smaller fool (dependent on your profits or losses) you also pass on the fool moniker.

I don't have a problem with people making fools of themselves. I do have a problem with fools trying to make fools of others even unconsciously. And I think I have made it clear why I think bitcoin is a foolish speculation requiring ever greater fools to profit, and not an investment.

G36 says

Also, the buy now or be priced out forever phrase came from the 2005/2006 housing bubble....That phrase will be repeating by some people during any bubble.

I'd call it more of a mania like tulips or beanie babies rather than a bubble like we had with the real estate bubble.

"With Crypto you own... what?"

A lot of traits actually. Not shininess though.

Gold has been a currency since time immemorial backed by GOLD!. The fiat dollar has been a currency since 1973 when it was no longer backed by gold. Bitcoin is a pseudo-currency backed by nothing and valued in fiat currency.

If you offered me equal values of all three I would definitely take the cash. I'd go on a nice trip with my wife and eat some good food.

We were thinking of a road trip to San Diego for X-mas because it's not real convenient to fly to New England this year.

personal

Onvacation says

We were thinking of a road trip to San Diego for X-mas because it's not real convenient to fly to New England this year.

Gonna miss Maine lobster rolls this year. But San Diego has fish tacos and sailboat rentals!

Smart Money and Governments and Secret Organizations hate the Dollar so much, that when bonds are issued by the Treasury at bupkiss interest, or they have an opportunity to snatch up suitcases full of cash, everybody runs to snatch it up. Some people like to have a little gold as a hedge against uncertainty.

Meanwhile, as soon as most people hear Buttcoin, they're like "Here comes a scam"

onvacation, i enjoy the debate too, but it would be helpful if you could clarify a few things and answer the questions.

For instance,
Since the price per tech stock is multiple times greater than its intrinsic value, do you see AMZN stock holders as part of the greater fool theory?

And, you said if someone sells Bitcoin at a higher price he/she is no longer a fool. You also said, people who bought the last all time high (at 20k) are fools. What about the people that bought the all time high at 1k in the previous bull run and are still holding? Are they also fools?

I wouldn't describe it as FOMO (me putting money in Bitcoin). I think "No" about the breastfeeding question. But I don't really remember. Since you asked, did your mom stop too soon?

NoCoupForYou says

Smart Money and Governments and Secret Organizations hate the Dollar so much, that when bonds are issued by the Treasury at bupkiss interest, or they have an opportunity to snatch up suitcases full of cash, everybody runs to snatch it up. Some people like to have a little gold as a hedge against uncertainty.

Meanwhile, as soon as most people hear Buttcoin, they're like "Here comes a scam"

It used to be like this (that most people who hear Bitcoin thought it was short lived and a scam). I think that is changing though. You see Bitcoin being discussed in the media and very few call it a scam anymore. You also have reputable trading websites offer to transact crypto (Robinhood) and reputable companies invest in it one way or the other (Square/Paypal).

People tell me Amazon used to be a book store and back then most people had physical CD's or rented/bought VHS/CD movies. Books, CDs, movies, its all digital nowadays. Why shouldn't you be able to digitalize money or gold?
In case you like shiny things you can always buy physical gold in addition. Or you buy a nice shiny car.

G36 says

Since you asked, did your mom stop too soon?

Yeah. She said I was a biter.

Onvacation says

G36 says

Since you asked, did your mom stop too soon?

Yeah. She said I was a biter.

interesting story. Why not answer the other questions as well?

G36 says

And, you said if someone sells Bitcoin at a higher price he/she is no longer a fool. You also said, people who bought the last all time high (at 20k) are fools. What about the people that bought the all time high at 1k in the previous bull run and are still holding? Are they also fools?

Foolish to HODL, smart to get out.

It's a ponzi scheme. Some make a bunch of money most lose.

G36 says

interesting story. Why not answer the other questions as well?

Your turn, what is the intrinsic value of Bitcoin. I don't think anyone has summarized. Example:
Real estate is intrinsically valuable because you can do stuff on land.
Stocks are intrinsically valuable because you share ownership of a company.
Gold is intrinsically valuable because it is shiny and has many uses.
Bitcoin is intrinsically valuable because... Why?

I agree to disagree and i dont think you have much more to add than Bitcoin=ponzi=no intrinsic value.

I dont see how its foolish to buy the ATH and HODL Bitcoin. If you would have done this during the last bull run at a 1K ATH you would be sitting on a massive profit right now. I cant call these people fools. I wish I would have done that. Easy to say now of course.

A low or non existing Intrinsic value doesnt mean the price on an asset or a crypto currency cant or shouldnt go up over time.
That's why you dont answer the question about tech stocks and their intrinsic value.....Tech stocks trade multiple times over their intrinsic value and continue to go up (most likely).

Nobody says you should invest in anything here, but your reasons and labels dont apply in my mind. its all good though. No hard feelings, but I do think this isnt advancing the debate. We agree on a lot of topics things but not Bitcoin. Fine by me.

"Gold is intrinsically valuable because its shiny and has many uses." Great. I invested in gold before but it didnt do much. I didnt hold it physically and the shiny thing is not really important to me. The uses (traits) are definitely a good point.

G36 says

That's why you dont answer the question about tech stocks and their intrinsic value.....Tech stocks trade multiple times over their intrinsic value and continue to go up (most likely).

Can't you see the difference? Tech stocks, no matter how overvalued still have intrinsic value, until they don't.

Bitcoin has no intrinsic value and never will. It cost a lot of electricity just to maintain and will require more energy up to it's final mining phase projected in 2040. At that point, with all the bitcoins "mined" the "miners" will be working for transaction fees.

If all the coins are held by HODLers who's gonna do transactions? If nobody does transactions how is the blockchain going to be maintained? Or at the point when all of the coins are mined will the blockchain be static so we know (don't know) who all the HODLers are?

It's a scam.

G36 says

G36 says

Your tables contradict each other. Is bitcoin easier to counterfeit than gold and dollars or not?

Relax :) its all good.
we dont have to agree. Lets just leave it at that. You are not going to convince me because I disagree with a few of your points. And I dont intent to convince you on anything.

"Can't you see the difference? Tech stocks, no matter how overvalued still have intrinsic value, until they don't."

You say the tech stock is overvalued because its trading way above its intrinsic value. And I say, I dont agree with this. I agree however with what you said earlier, the current monetary system (low interest environment) encourages this. I dont have an issue with investing in something that has a low or non-existing intrinsic value.
I dont pay with my 100 dollar bill and tell people, hey, the intrinsic value of this piece of paper is only 14 cents!

I am fine with you calling us Bitcoin investors all kinds of things and calling the whole thing a scam, ponzi whatever. I just leave it as is.

Dollar has no "divisibility"? Seriously? Ever heard of cents? =)) And how the fuck cash dollars have no anonymity? Ever heard about kidnappers demanding ransom to be paid in small previosly circulated dollar bills? Ever wondered why?

That picture is a fucking joke.