I disagree with your conclusion despite agreeing with the study. Trying to insinuate that if you aren’t a fraudster it’s not going to end well for people buying Bitcoin is a stretch to say the least. Your conclusion could easily be applied to literally investment as a reason not to invest.
“If you aren’t the US president, investing in global shares probably isn’t going to end well for you”
Evidence of manipulation or bubbles doesn’t mean that investing in something is instantly bad if you still warrant it worth investing in. Also, no idea what the graph at the bottom is supposed to show? Its literally just a price graph of 4 cryptocurrencies.
So you make sweeping statements in this point which i don’t agree with.
“Its not an investment”
You can invest in virtually anything. Depending on the definition you want to apply. Whether or not that is a good investment is a different question. A medium of exchange is an investment, you invest your time for currency, then sell that currency for another item you want. You can invest your time for Crypto, then sell that at a later date. Its an investment.
Then you insinuate as if it’s fact that Bitcoin is purely speculative. Once again, not actually factual is it.
While I agree with you that almost anything can be an investment if you define an 'investment' as an effort to make money by buying something, the more traditional definition of 'investment' is an asset that is a store of value and provides a series of cash flows in the future. In that sense, neither cryptocurrencies nor collectibles like art or commodities like gold are an investment.
I think the disagreement comes from these differences in definition and reasonable people can disagree.
Also, my post is deliberately provocative to start a discussion. In my view, fraud is much more rampant in crypto market than in regulated security markets and this is what I wanted to emphasise in the post. In my view, crypto markets should be regulated in exactly the same way that stock and bond markets are regulated so that people who engage in rug pulls can be prosecuted for market manipulation, as they should.
But where I disagree with you is in your last statement that Bitcoin (and by extension other cryptocurrencies, I assume) aare not just pure speculation.
Are you trying to say that Bitcoin has a fundamental value that is ascertainable in any other way than just by looking at what people are willing to pay for it? If so, please tell me what that fundamental value is because I have never seen anyone who can do that.
Are you trying to say that Bitcoin has a use case? I have not come across a single use case for Bitcoin or any other cryptocurrency except to launder money and enable illegal transaction undetected from authorities. Indeed, I have argued that there is no 'use case' for Bitcoin that cannot be performed better by simple cash: https://klementoninvesting.substack.com/p/cryptocurrencies-are-not-currencies
But happy to discuss why you think Bitcoin is not purely speculative.
Bitcoin does seem be like gold, art, antiques etc. in that they are assets not investments as there is no expected return from the efforts of other people/institutions. So no need to regulate, I mean your Nan's wedding ring and best china aren't regulated and shouldn't be either.
Stablecoins like Tether, USDC etc. do seem to be investments as the expected return is to keep par with $USD - and IMHO are also securites in the USA under the Securities Act of 1933. I'm baffled as to why this is not enfored on them.
To be honest, i think the definition of investment isn’t actually relevant here and was used as a way to discredit the point i was making.
The argument you make about a store of value is strange though because capital accumulation/ growth shares wouldn’t meet that criteria based on the lack of cashflow from them. I speak of investment as something that someone can possess, their property if you will. But as you say this disagreement isn’t really relevant.
I fully agree that the market should be regulated but insistence that this is a necessity so you aren’t “milked” is hilarious. And in my opinion is wrong albeit from your point of view, probably deliberately for engagement.
Well this is where the tyre meets the road on these types of conversations because everythings value is based on what people will pay for it. “Fundamental value” is itself a flawed concept. Its if people want it and theres not an abundance to meet everyone’s wants that something obtains value. That value can be expressed in anything but the best “things” i explain below.
The use case for all money is saleability across time and space. The ones that do this best win. Bitcoins usecase is that its good across space and holds value across time due to finite supply. Gold failed because its not good across space, glass failed because its not good across time or space.
Cash fails because its not digital and therefore isn’t as useful across space and isn’t actually yours because there numbers on the notes don’t control buying power.
Money has evolved slowly for 1000’s of years and the move into the digital realm outside of third party control is a natural continuation. For the record i don’t think its finished at Bitcoin either. I just use that because its the best/most well known example.
Thanks, Jake. I take your comments, though I disagree with them. In my view, growth stocks are not a store of value, but they are an investment because they have cash flows. These cash flows may be negative in the near future, but they eventually have to become positive, or otherwise, their net present value will be negative or, at best, zero. And even if an investor doesn’t get dividends at any point in the future, holding a stock is a part ownership and right to the assets and cash flows of the company. None of that exists in cryptocurrencies (it does exist in crypto exchanges, though, for example).
But again, I think we have a fundamental disagreement here. I am stuck in more restrictive concepts about investments or fundamental value than you are. This could be a mistake I make, or it could save me from making huge financial mistakes. But it is where I stand, and I get your point and where you stand.
I think this form of debate is wholesome. We both look at finance and money differently and because of that don’t agree on everything. I would assume we’re both a little bit right and wrong on certain topics. Beauty of it is, we don’t need to agree 👍🏻
All very interesting, but in my opinion any holding that pays no reward is speculation. Even gold. You hold it in the hope of "finding another fool" who will pay you more than you did.
I was pleased to hear the discussions on these topics use gray area terms. Too often I read about absolutes that ignore the messy details of modern life.
I disagree with your conclusion despite agreeing with the study. Trying to insinuate that if you aren’t a fraudster it’s not going to end well for people buying Bitcoin is a stretch to say the least. Your conclusion could easily be applied to literally investment as a reason not to invest.
“If you aren’t the US president, investing in global shares probably isn’t going to end well for you”
Evidence of manipulation or bubbles doesn’t mean that investing in something is instantly bad if you still warrant it worth investing in. Also, no idea what the graph at the bottom is supposed to show? Its literally just a price graph of 4 cryptocurrencies.
Cryptocurrency is not an investment. There is no underlying asset. It is, at best, an intermediate of exchange, and it's not even good for that.
In a purely speculative instrument, if someone is gaming it and you are not, you are going to be flayed.
So you make sweeping statements in this point which i don’t agree with.
“Its not an investment”
You can invest in virtually anything. Depending on the definition you want to apply. Whether or not that is a good investment is a different question. A medium of exchange is an investment, you invest your time for currency, then sell that currency for another item you want. You can invest your time for Crypto, then sell that at a later date. Its an investment.
Then you insinuate as if it’s fact that Bitcoin is purely speculative. Once again, not actually factual is it.
While I agree with you that almost anything can be an investment if you define an 'investment' as an effort to make money by buying something, the more traditional definition of 'investment' is an asset that is a store of value and provides a series of cash flows in the future. In that sense, neither cryptocurrencies nor collectibles like art or commodities like gold are an investment.
I think the disagreement comes from these differences in definition and reasonable people can disagree.
Also, my post is deliberately provocative to start a discussion. In my view, fraud is much more rampant in crypto market than in regulated security markets and this is what I wanted to emphasise in the post. In my view, crypto markets should be regulated in exactly the same way that stock and bond markets are regulated so that people who engage in rug pulls can be prosecuted for market manipulation, as they should.
But where I disagree with you is in your last statement that Bitcoin (and by extension other cryptocurrencies, I assume) aare not just pure speculation.
Are you trying to say that Bitcoin has a fundamental value that is ascertainable in any other way than just by looking at what people are willing to pay for it? If so, please tell me what that fundamental value is because I have never seen anyone who can do that.
Are you trying to say that Bitcoin has a use case? I have not come across a single use case for Bitcoin or any other cryptocurrency except to launder money and enable illegal transaction undetected from authorities. Indeed, I have argued that there is no 'use case' for Bitcoin that cannot be performed better by simple cash: https://klementoninvesting.substack.com/p/cryptocurrencies-are-not-currencies
But happy to discuss why you think Bitcoin is not purely speculative.
Not all crypto is created equal.
Bitcoin does seem be like gold, art, antiques etc. in that they are assets not investments as there is no expected return from the efforts of other people/institutions. So no need to regulate, I mean your Nan's wedding ring and best china aren't regulated and shouldn't be either.
Stablecoins like Tether, USDC etc. do seem to be investments as the expected return is to keep par with $USD - and IMHO are also securites in the USA under the Securities Act of 1933. I'm baffled as to why this is not enfored on them.
To be honest, i think the definition of investment isn’t actually relevant here and was used as a way to discredit the point i was making.
The argument you make about a store of value is strange though because capital accumulation/ growth shares wouldn’t meet that criteria based on the lack of cashflow from them. I speak of investment as something that someone can possess, their property if you will. But as you say this disagreement isn’t really relevant.
I fully agree that the market should be regulated but insistence that this is a necessity so you aren’t “milked” is hilarious. And in my opinion is wrong albeit from your point of view, probably deliberately for engagement.
Well this is where the tyre meets the road on these types of conversations because everythings value is based on what people will pay for it. “Fundamental value” is itself a flawed concept. Its if people want it and theres not an abundance to meet everyone’s wants that something obtains value. That value can be expressed in anything but the best “things” i explain below.
The use case for all money is saleability across time and space. The ones that do this best win. Bitcoins usecase is that its good across space and holds value across time due to finite supply. Gold failed because its not good across space, glass failed because its not good across time or space.
Cash fails because its not digital and therefore isn’t as useful across space and isn’t actually yours because there numbers on the notes don’t control buying power.
Money has evolved slowly for 1000’s of years and the move into the digital realm outside of third party control is a natural continuation. For the record i don’t think its finished at Bitcoin either. I just use that because its the best/most well known example.
Thanks, Jake. I take your comments, though I disagree with them. In my view, growth stocks are not a store of value, but they are an investment because they have cash flows. These cash flows may be negative in the near future, but they eventually have to become positive, or otherwise, their net present value will be negative or, at best, zero. And even if an investor doesn’t get dividends at any point in the future, holding a stock is a part ownership and right to the assets and cash flows of the company. None of that exists in cryptocurrencies (it does exist in crypto exchanges, though, for example).
But again, I think we have a fundamental disagreement here. I am stuck in more restrictive concepts about investments or fundamental value than you are. This could be a mistake I make, or it could save me from making huge financial mistakes. But it is where I stand, and I get your point and where you stand.
Cheers, and thanks for the thoughtful comments 😀🙏
I think this form of debate is wholesome. We both look at finance and money differently and because of that don’t agree on everything. I would assume we’re both a little bit right and wrong on certain topics. Beauty of it is, we don’t need to agree 👍🏻
All very interesting, but in my opinion any holding that pays no reward is speculation. Even gold. You hold it in the hope of "finding another fool" who will pay you more than you did.
I was pleased to hear the discussions on these topics use gray area terms. Too often I read about absolutes that ignore the messy details of modern life.