NWR Selling bitcoin

The energy thing is interesting, with the supposition that 'consuming' energy is automatically a bad thing. I know those that are using fossil fuels to power mining farms would be considered very bad, but those using gas burn off to power farms maybe not so much (potentially it's a solution to a problem). How about those using hydro? As with all these things it's not quite black and white it seems to me.

i'm not a bitcoin acolyte, as others have said, but it is an interesting area for so many reasons, not least due to the nature of discussing its value on a wine website. :)
 
Richard Zambuni said:
I wonder whether those who buy and hold Bitcoin are at all concerned about its hugely negative environmental footprint. The mining of Bitcoin consumes more power annually than the whole of Argentina. That alone would make it a non-starter for me.
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Presumably no more concerned than the millions of retail shareholders of the likes of BP, Exxon etc. But fair enough.

The move by other cryptocurrencies toward proof of stake as opposed to proof of work as a validation mechanism is much better with regards to energy consumption.
 
Simple question that bitcoin clearly fails to answer as an investment: How do you value it? Therefore, how do you decide whether it’s fairly priced vs a good time to sell or buy? If you can’t offer a rational answer to those questions then you shouldn’t be investing in it.

One can argue that it’s no different to buying any currency vs another eg should I buy USD now because I think GBP is overvalued? That’s why I don’t invest in currencies per se.
 
Dan Baillie said:
Simple question that bitcoin clearly fails to answer as an investment: How do you value it? Therefore, how do you decide whether it’s fairly priced vs a good time to sell or buy? If you can’t offer a rational answer to those questions then you shouldn’t be investing in it.

One can argue that it’s no different to buying any currency vs another eg should I buy USD now because I think GBP is overvalued? That’s why I don’t invest in currencies per se.
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That depends on what you mean by investing - it sounds as though this is devolving into a question of semantics. If you're talking long term, then I agree wholeheartedly. In the short-term, however, valuation is simple - it's worth what you can sell it for. So why not buy it when the price is historically low and sell it when it gets higher? As you say, it's the same as trading any other currency, except that it's more difficult to get a handle on how the market is going to move. In some ways, it's also a bit like investing in something like baseball cards - there's little in the way of inherent value in the commodity being traded and the value can potentially change quickly for no other reason than that a large enough group of people decides they want in or out.

As I mentioned in my first post, I started buying BTC for purely functional reasons. I'm sure I paid less than £50 for my first coin. At some point, however, I could see the value start to move up significantly. I gave myself a gentle kicking for not having bought more earlier on and saving them, and resolved not to have to kick myself again - which is when I bought a small amount as an "investment". I continued to dip into that investment for the functional reasons mentioned earlier - the higher value of the coins at the time meant that I was, in a way, cashing in my investment - and then, when the price hit current heights, which my gut tells me is unsustainably high, I cashed out most of the rest. End result, I made a few thousand quid for doing very little. Yes, it could all have gone horribly wrong, but my exposure was pretty minimal and as with investing in wine, if the price has crashed, I could still have got some "pleasure" out of the coins.

I'm definitely conflicted about the environmental footprint, just as I am about flying, but I do what I can to reduce my impact on the planet in other ways - and the way that modern life is set up these days, it's very difficult to not be doing damage of some sort. Being a wine drinker is hardly environmentally neutral.

Right, so that's my 2 BTC's worth.
 
Thom Blach said:
In a well regulated world such resource nihilism would surely be proscribed.
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Interesting thought...on the other hand, using the stuff already "mined" doesn't really have much effect on global energy consumption. I would compare it with the ivory trade - trading items already made with ivory (chess sets; pianos(?); etc etc..) should be allowed in my opinion but maybe future bitcoin miners ("poachers") could be penalised in some other way?

It's more likely to die a death anyway, at some point....there is an interest for speculators, but the thing about a good currency is that, while they do appreciate and depreciate they do so relatively gradually and they are freely transferable...otherwise you might as well be holding Zimbabwean dollars. Currencies are a medium for exchange, not an investment.
 
Johnny Richardson said:
trading items already made with ivory (chess sets; pianos(?); etc etc..) should be allowed in my opinion
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The infuriating thing with pianos is that there are millions in the world whose sole remaining effective part is their ivory keyboard, the recycling of which is not allowed. Modern substitutes do not have remotely the same quality.
 
Johnny Richardson said:
Interesting thought...on the other hand, using the stuff already "mined" doesn't really have much effect on global energy consumption. I would compare it with the ivory trade - trading items already made with ivory (chess sets; pianos(?); etc etc..) should be allowed in my opinion but maybe future bitcoin miners ("poachers") could be penalised in some other way?

It's more likely to die a death anyway, at some point....there is an interest for speculators, but the thing about a good currency is that, while they do appreciate and depreciate they do so relatively gradually and they are freely transferable...otherwise you might as well be holding Zimbabwean dollars. Currencies are a medium for exchange, not an investment.
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The thing about Bitcoin is that not only does it cost an exponential amount of energy to mine for coins in the lottery, it also uses vast amounts of energy to conduct a transaction. Personally I think it's an immoral investment that can only make money out of the losers in the Ponzi scheme and serves no real purpose other than as a speculation instrument. There are all sorts of ways to make money. Bitcoin has been spectacularly successful for those fortunate ones who happened to get some right at the start but as an ongoing investment it's basically a game of financial chicken. Even if it didn't waste the same amount of energy as it takes to run The Netherlands, mainly in fossil fuels, it would still be a detrimental thing IMO.

www.bbc.com

How Bitcoin's vast energy use could burst its bubble

Could the cryptocurrency's huge electricity consumption also sink it?
www.bbc.com
 
At the risk of repeating myself - there is a purpose beyond speculation, and that purpose is precisely the reason why Bitcoin refuses to die. Transactions are entirely secure. It is therefore an incredibly effective way to transfer currency provided the two parties involved agree on the intrinsic value - that's up to them at the end of the day. Like most things in life, something is only worth what anyone would pay for it.

There is no lottery involved in Bitcoin. "Mining" is exactly the same thing as conducting transactions between on the blockchain. The reward is a grant of bitcoin. As time goes on and the total amount of bitcoin mined increases (towards a finite limit, hardcoded into the technology), as does "difficulty" - ergo you get less bitcoin rewarded for the same amount of calculation. If I remember correctly, the difficulty is somewhat logarithmic, so the final bitcoin will never be full mined.

More modern blockchains are transitioning away from this proof of work methodology to a proof of stake methodology, to address the energy consumption concerns. It therefore makes secure transactions a negligible cost, which was one of the ambitions of Bitcoin right at the beginning. I don't think the inventors ever thought it would reach this level of usage so the energy side of things are an unintended side effect of popularity. That doesn't make it any better but there was certainly good faith at the time of construction.

The way bitcoin works simply does not satisfy even just a few of the characteristics of a Ponzi scheme, let alone a majority. I get that it's a very speculative and volatile thing that has a great chance of screwing people over (and if I'm honest, it's probably people getting into Bitcoin for all the wrong reasons), but the very nature of it as a decentralised system is purposely built to position its function as something that genuinely could never align with such things.

If you read the original whitepaper written at the inception of Bitcoin, Jonathan, you'll see that no one involved in its creation ever perceived it as an investment vehicle. I don't know anyone with substantial knowledge on the topic who holds that opinion either. There will always be bad actors in life who manipulate objects and circumstances to benefit themselves, and I think really that's where the ire should be directed, rather than the tech itself.
 
I was just listening to Feynman saying that he failed to think about whether his initial justification for working on the atomic bomb still held now that the war was over. Maybe when a concept has simply become too destructive it is time to think again. I suppose one could answer that the war isn't over until we return to the gold standard. But I don't think fiat currency concerns are what motivate the Bitcoin market.
 
Julian Seers-Martin said:
At the risk of repeating myself - there is a purpose beyond speculation, and that purpose is precisely the reason why Bitcoin refuses to die. Transactions are entirely secure. It is therefore an incredibly effective way to transfer currency provided the two parties involved agree on the intrinsic value - that's up to them at the end of the day. Like most things in life, something is only worth what anyone would pay for it.

There is no lottery involved in Bitcoin. "Mining" is exactly the same thing as conducting transactions between on the blockchain. The reward is a grant of bitcoin. As time goes on and the total amount of bitcoin mined increases (towards a finite limit, hardcoded into the technology), as does "difficulty" - ergo you get less bitcoin rewarded for the same amount of calculation. If I remember correctly, the difficulty is somewhat logarithmic, so the final bitcoin will never be full mined.

More modern blockchains are transitioning away from this proof of work methodology to a proof of stake methodology, to address the energy consumption concerns. It therefore makes secure transactions a negligible cost, which was one of the ambitions of Bitcoin right at the beginning. I don't think the inventors ever thought it would reach this level of usage so the energy side of things are an unintended side effect of popularity. That doesn't make it any better but there was certainly good faith at the time of construction.

The way bitcoin works simply does not satisfy even just a few of the characteristics of a Ponzi scheme, let alone a majority. I get that it's a very speculative and volatile thing that has a great chance of screwing people over (and if I'm honest, it's probably people getting into Bitcoin for all the wrong reasons), but the very nature of it as a decentralised system is purposely built to position its function as something that genuinely could never align with such things.

If you read the original whitepaper written at the inception of Bitcoin, Jonathan, you'll see that no one involved in its creation ever perceived it as an investment vehicle. I don't know anyone with substantial knowledge on the topic who holds that opinion either. There will always be bad actors in life who manipulate objects and circumstances to benefit themselves, and I think really that's where the ire should be directed, rather than the tech itself.
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I'm not criticising the creators of Bitcoin, although they should have been smart enough to work out the environmental impact of the ever-increasing energy demands of their novel virtual currency. Whether it is a Ponzi scheme or not depends on how it ends. If it continues to increase in value for ever, then it's not a Ponzi scheme, it is just a mathematically pure investment that rewards people less and less. If it one day becomes worthless because no new buyers can be found, it's a Ponzi scheme. Perhaps not designed as such but one created by speculators hoping that there are people willing to pay more than they did. That, as far as I can see, is the only reason for its increasing value.

I just hope that investment institutions don't start putting pension funds into it. If Elon Musk loses his stake I couldn't care less. If pension schemes goes bust, millions of people will be hurt and we'll all be in for another financial crisis.
 
Jonathan Hesford said:
I'm not criticising the creators of Bitcoin, although they should have been smart enough to work out the environmental impact of the ever-increasing energy demands of their novel virtual currency. Whether it is a Ponzi scheme or not depends on how it ends. If it continues to increase in value for ever, then it's not a Ponzi scheme, it is just a mathematically pure investment that rewards people less and less. If it one day becomes worthless because no new buyers can be found, it's a Ponzi scheme. Perhaps not designed as such but one created by speculators hoping that there are people willing to pay more than they did. That, as far as I can see, is the only reason for its increasing value.

I just hope that investment institutions don't start putting pension funds into it. If Elon Musk loses his stake I couldn't care less. If pension schemes goes bust, millions of people will be hurt and we'll all be in for another financial crisis.
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I can't get on board with criticising the creators of Blockchain technology for not being smart enough. That's a mind boggling statement to throw down. These individuals solved some extremely challenging computer science problems that had been recorded but unsolved for many years.

That's also not what a Ponzi scheme is. I think the critical thing I'm failing to communicate here is that because Bitcoin is decentralised, there isn't an authoratitive person or group of people who suggest X returns are possible over Y period of time. Ponzi schemes generally have this feature, and the profits given to customer 1 to fulfill the promise of X are taken from customer 2, customer 2 receives customer 3's money and so on. That act is coordinated by someone, and whilst that someone could exist, and using Bitcoin as the vehicle of value/execution of their plan, it's not Bitcoin itself that is inherently the scheme.

It's highly, highly improbable that there will be assignment of low risk investments into this type of cryptocurrency on an institutional level - it would be completely indefensible as the volatility involved is well documented. Nevertheless, institutional involvement in blockchain is rapidly increasing, and most big banks and asset managers have some resource dedicated to working with this market. It's an inescapable fact that blockchains will have a permanent impact on many types of recorded transactions, be it audit trails, tracking shipping containers, transferring currency (as Bitcoin set out to do) or any one of a whole host of innovative and value providing applications.
 
For the record, I own a total of 0.5 Ether - because I can't work out how to sell it as it's tied to my US mobile number that I no longer own. So in effect, I don't have any cryptocurrency at all. I may repurchase some Ether in time, and I'll stake it on the blockchain out of support for the tech; but again, I'm not an acolyte. I would encourage every single person interested in investing to consume the wealth of information out there on how blockchains work before doing so.
 
I'm with Julian I think people who refer to it as a ponzi scheme really don't either realise what it is or don't understand what a ponzi scheme is. As for the tech its pretty formidable and a very exciting development away from centralised state owned currencies that have been the only norm in the modern period. Just as states have become subject to large multinationals easily traversing state legal boundaries, particularly around taxation, I guess we're now seeing the expansion of that reality into other areas where the states influence is again weakened. In some ways this is an extension of the rejection and suspicion of institutions that began post WW2. Very interesting to follow.
 
Eric Burch said:
The 1960s, surely? I think of post-WW2 as a time of great faith in institutions, both because of how they'd coped with organising society during the war and also because of the role they took in deliberately rebuilding it afterwards.
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Am enjoying the impressionistic breadth of Adam Curtis's six documentaries on iplayer about the use of myths in politics and the decline of trust.
www.bbc.co.uk

Can't Get You Out Of My Head

Released 11 February 2021
www.bbc.co.uk
 
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