Cryptocurrency, DAOs and NFTs

[carlsonjok]

Originally Posted by skelly423

The con comes with the infrastructure surrounding cryptocurrencies. Artists have their work stolen.

The major downfall I see of cryptocurrencies is that they present themselves as a modern alternative to national fiat currencies without solving the presumed problems of such currencies. The US dollar is a fiat currency so, to a certain extent, its value as a medium of exchange is derived from the fact that it is backed by the full faith and credit of the US government *and* the markets opinion of same. Cryptos are fiat currencies backed by the nothing other than the hopes and prayers of it's holders.

Here is the one year chart of Bitcoin:

crypto.JPG

Maybe my view is colored by the fact that I intend to retire in the next 10 years, but that isn't anything I would consider as a store of value. A speculative investment? Absolutely, but there are plenty of speculative investments that are backed by tangible assets and cash flows like REITs and any number of publicly traded company stocks.

[BobC]

Originally Posted by carlsonjok

The major downfall I see of cryptocurrencies is that they present themselves as a modern alternative to national fiat currencies without solving the presumed problems of such currencies. The US dollar is a fiat currency so, to a certain extent, its value as a medium of exchange is derived from the fact that it is backed by the full faith and credit of the US government *and* the markets opinion of same. Cryptos are fiat currencies backed by the nothing other than the hopes and prayers of it's holders.

Here is the one year chart of Bitcoin:

Attachment 495497

Maybe my view is colored by the fact that I intend to retire in the next 10 years, but that isn't anything I would consider as a store of value. A speculative investment? Absolutely, but there are plenty of speculative investments that are backed by tangible assets and cash flows like REITs and any number of publicly traded company stocks.

Jeff,

I think you beat me to it. Didn't see your last post before putting up mine. I'm of a similar position that crypto-currencies may be undermining regular, national currencies in countries around the world. And that actions towards them, as already put in place by China, may become the norm for the rest of the world at some point. We shall see.

[carlsonjok]

Originally Posted by BobC

Jeff,

I think you beat me to it. Didn't see your last post before putting up mine. I'm of a similar position that crypto-currencies may be undermining regular, national currencies in countries around the world. And that actions towards them, as already put in place by China, may become the norm for the rest of the world at some point. We shall see.

Bob, I think we differ on whether cryptos represent a threat to national currencies. I don't see that at all. Certainly, both the US Dollar and the various cryptos are both fiat money. But, money takes on two roles: a store of value and a vehicle for speculative investments. The dollar can do both, but I don't see cryptocurrencies ever taking on the first role. The dollar has been and currently remains the world's reserve currency. If it gets supplanted, I would see the renminbi taking on the role, not Bitcoin or any of its imitators.

It was my understanding that the regulations related to crytpos were more related to the ease at which they can be used for money laundering and tax avoidance. However, you are the tax expert so I would defer to your opinion on that matter.

[swarmee]

There are some cryptos that are stores of value, if that's what you want. Look into USDC - the US Dollar Coin. It tracks the value of the US dollar, so that you don't have to be invested in a volatile coin if you choose. It's like when I move my investments in my retirement savings account into a cash or bond fund if I expect market turmoil.

[Peter_Spaeth]

Originally Posted by swarmee

There are some cryptos that are stores of value, if that's what you want. Look into USDC - the US Dollar Coin. It tracks the value of the US dollar, so that you don't have to be invested in a volatile coin if you choose. It's like when I move my investments in my retirement savings account into a cash or bond fund if I expect market turmoil.

https://www.chicagobooth.edu/review/...he-nobel-prize

Fama's basic thesis is don't try to time the market, because you won't win. Not you personally. Just look at all the people who panicked when the pandemic drove down the market in early 2020 and got out, and then didn't get back in as the market soared back up.

[swarmee]

Originally Posted by Peter_Spaeth

Fama's basic thesis is don't try to time the market, because you won't win. Not you personally. Just look at all the people who panicked when the pandemic drove down the market in early 2020 and got out, and then didn't get back in as the market soared back up.

Yep, I'm aware. I'd rather lose the small IMO upside risk during some times than suffer the downside.

[Peter_Spaeth]

Originally Posted by swarmee

Yep, I'm aware. I'd rather lose the small IMO upside risk during some times than suffer the downside.

But the research shows you can't really predict what is going to happen when, so assuming you believe in the market over the long term (and if you don't of course you shouldn't be in it period), you're better off just deciding in light of your goals and timeframe what your allocation is between equities, debt (and cash), and more or less riding it out. The guy who founded Vanguard wrote a short but very IMO informative book along these lines, and there's another very similar one written by a very successful guy who became fatally ill and decided to put all his wisdom into a short book. As for being able to predict trends be they down or up, or where the market is heading at any given moment, consider the famous quote by Paul Samuelson: economists have successfully predicted 6 out of the last 4 recessions.

[carlsonjok]

Originally Posted by swarmee

There are some cryptos that are stores of value, if that's what you want. Look into USDC - the US Dollar Coin. It tracks the value of the US dollar,

So does the Jordanian dinar and the Panamanian balbao.

[Peter_Spaeth]

By the way, Fama is still active. His advice from a couple of months ago:

Hold a diversified portfolio and forget about it.

[BobC]

Originally Posted by carlsonjok

Bob, I think we differ on whether cryptos represent a threat to national currencies. I don't see that at all. Certainly, both the US Dollar and the various cryptos are both fiat money. But, money takes on two roles: a store of value and a vehicle for speculative investments. The dollar can do both, but I don't see cryptocurrencies ever taking on the first role. The dollar has been and currently remains the world's reserve currency. If it gets supplanted, I would see the renminbi taking on the role, not Bitcoin or any of its imitators.

It was my understanding that the regulations related to crytpos were more related to the ease at which they can be used for money laundering and tax avoidance. However, you are the tax expert so I would defer to your opinion on that matter.

Jeff, Wasn't speaking like crypto would totally replace currencies like the dollar. Just thinking if they get into too much daily mundane life, like everyday people even get paid in crypto instead of dollars, and then there is a negative crypto event, it would damage the overall economy and erode people's faith and trust in the government to protect us from such economic disasters. That would carryover to the currency as well since it is an integral part of the overall economy, I would imagine.