Crypto - why do we need them?

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#1
The whole world has pumped more than 2 trillion into Crypto and I still cannot understand why. To me all these coins are baseless, created out of thin air and wasted unnecessary electricity. When the Bitcoin is first created, is it supposed to be replacement for fiat currency, but now we see the dramatic ups and downs in prices, who would still use Bitcoin as currency? 

Can somebody engage in friendly debates, to convince me that the crypto is not bull shits. 

Let's have a look of the crypto bug, the most famous Michael Saylor says: https://www.youtube.com/watch?v=coHC_9ApBdg
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#2
hi valuebuddies,

For a start, the entire crypto market is around 2 trillion, doesn't mean that 2 trillion of liquidity has flown into crypto. It just means that prices have been bid up to 2 trillion market capitalization.

Next, there is a very big difference between crypto (which is a subset of blockchain/distributed ledger technology) and crypto that is used as a speculative vehicle.

I suggest you to read 2 threads below and discover for yourself Smile

Crypto as blockchain: https://www.valuebuddies.com/thread-8510.html
Crypto as speculative vehicle: https://www.valuebuddies.com/thread-3136.html
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#3
Sorry for creating a new thread on this topic, but being a crypto bear, i find it purposeless to read a lenghty thread on things that i dont believe.

To me crypto is not blockchain, it doesn't mean that u own a pcs of blockchain technology if u have some crypto. And it also doesnt mean that all crypto owners know and understand how blockchain works. No one is able to monetize the benefits of blockchain from owning of crypto. Please correct me if I am wrong.

Its more of speculative instruments to me. I believe most people buy crypto is not an act of de-dollarization, its not because of the blockchain, its not because of anything fundamental. But instead, its the anticipation that the price would double in 6 months, 10 folds in 2 years.

Crypto is a perfect speculative instruments because there is no fundamental, no valuation, and no basis and no limit.

If you have a pcs of Bitcoin, am I right that u are expecting the Bitcoin to become 100k a coin in the next year or 2? If yes, then is this value investing?
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#4
Hi valuebuddies, there are many schools of thought.

1. The Bitcoin (or insert any other Crypto) Maximalist
Fiat is worthless as Fed and other central banks keep creating money out of nothing. Bitcoin is secured by Math, and is finite, it cannot be created by any single entity; hence, it's the only medium of exchange that is neutral and trustworthy. In the future, people will only believe in the value of Crypto and not any fiat. Future economy and technologies will be built on top of the Bitcoin economy; hence, in order to engage with that corner of the economy, the only choice is by owning Bitcoin. Bitcoin will be worth much more in the future, because it can be used to buy many valuable things, that could only be bought by bitcoin.

In fact, eventually Bitcoin will replace Fiat one day. Hence, Fiat is worthless. They only measure their own net worth, based on how many bitcoins they own.

2. The Libertarian
Similar to Maximalists, Libertarian believe that runaway inflation is coming by the Fed irresponsible money printing, and thus, needs to own asset that is not controlled by central banks, and can't be inflated. They used to be Gold Bugs, but since, gold has been underperforming as a hedge to money printing in recent years, Bitcoin is the best alternative.

3. Bitcoin/Ethereum/DeFi (or any other crypto) Technocrat
Yes in the future Bitcoin (or any other crypto) will be use as the backbone of many decentralized technologies (DApps, DAOs, smart contracts, NFTs, metaverses etc.); Bitcoin would be worth more in the future, due to it's many utility. But it will not replace fiat.

4. Investors
Don't know what the future holds, but since more and more smart people and institutions want to use Bitcoin as a medium of exchange, they are betting on it to increase in value as transaction volume and adoption increases. Volatility is high, hence expected returns too. It also might offer a non-correlated asset that might hedge inflation risk, volatility risk of their other investments.

Many are also mining cryptos and investing in businesses that makes an income on top of the existing crypto economy (e.g. Crypto exchanges like Binance and Coinbase, Crypto wallets, mining companies like Riot Blockchain, DeFi yield farming, Crypto consultancies, Crypto investment funds).

5. Speculators
They just want to sell the asset at a higher price.

Most are probably some combination of the above.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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#5
(25-06-2021, 07:58 PM)valuebuddies Wrote: Sorry for creating a new thread on this topic, but being a crypto bear, i find it purposeless to read a lenghty thread on things that i dont believe.

To me crypto is not blockchain, it doesn't mean that u own a pcs of blockchain technology if u have some crypto. And it also doesnt mean that all crypto owners know and understand how blockchain works. No one is able to monetize the benefits of blockchain from owning of crypto. Please correct me if I am wrong.

hi valuebuddies,
There is no issue with creating a new thread here.

When we don't believe in something, and then we don't read about it --> Isn't there a tinge of irony here? ie. if we don't bother to read about something, how can we be affirmatively sure of our belief of disbelief? Are we putting the cart in front of the horse, or the horse in front of the cart?

Education is changing an empty mind, to an open mind. And Charlie Munger has constantly reminded us to the effect that the best way to move forward, is to always try to knock down our prior beliefs or best ideas. This is very similar to the school of thought for the black swan analogy - the way to disapprove all swans are white, is to try looking for a black one.

Rather than asking for opinions, may be the better way is to read and synthesize the facts yourself to come up with your own? It is a good way to move forward to be independently minded in an interconnected world with so much noise and chatter.

To be honest, the questions you asked, are already easily answered if you had read through those threads.

I do not desire to feed you the fish, but hope to direct you to fish yourself. You will find the fishing skills you pick up, help you tremendously in your investing endeavors.
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#6
(25-06-2021, 07:08 PM)valuebuddies Wrote: The whole world has pumped more than 2 trillion into Crypto and I still cannot understand why. To me all these coins are baseless, created out of thin air and wasted unnecessary electricity. When the Bitcoin is first created, is it supposed to be replacement for fiat currency, but now we see the dramatic ups and downs in prices, who would still use Bitcoin as currency? 

Can somebody engage in friendly debates, to convince me that the crypto is not bull shits. 

Let's have a look of the crypto bug, the most famous Michael Saylor says: https://www.youtube.com/watch?v=coHC_9ApBdg

There is Crypto and there is Blockchain but what if they are almost the same?

I had been in the midst of dwelling into DeFi. The DeFi space is really interesting and chaotic but there is some very interesting concept bubbling up. 

Just published an article which I touched on a hybrid Crypto, Blockchain and Business? 

Maker - MKR. 

2021 Quicktake #2: Maker Dao - Weighted (weightedresearch.com)

MKR is really interesting to me as it is a decentralised autonomous organisation (DAO) which is really similar to a cooperative structure. It is still early days and it is getting really "messy" (check out the MKR forum), but it is an experiment which I am keen to find out if it will work. MKR is not the only one around operating this business model but I think they may be the only truly DAO.

Follow us @ www.weightedresearch.com
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