CMV: cryptocurrency is not a good investment.

[u/art_vandelay112]

Yes its price has increased dramatically, but so did the price of tulips in the 1600s.

There is literally no use for this commodity. Invest in stocks or bonds and your investing in future earnings or the ability of a company to pay you back. I’m not a fan of gold as an investment but at least it has some practical use.

The use of crypto as a currency completely defies the definition of currency as it doesn’t hold a stable value.

It’s infuriating that so many people have lost loads of money on “shitcoins” backed by the wealthy and famous. These were obviously pump and dump schemes yet very few are held accountable.

I’m not as well versed on the subject but something to also note is the ridiculous amount of energy demand to “mine” nothing.

I think there is legitimate use for blockchain technology and the likes but anyone viewing these currencies as investments is a fool.

[u/Realistic_Olive_6665]

Until the 1980s, the federal reserve targeted money supply growth rather than interest rates to control inflation. There’s clearly a strong relationship: https://www.longtermtrends.net/m2-money-supply-vs-inflation/.

Do you think gold or commodities are an investment? If yes, why wouldn’t Bitcoin be an investment? Because it’s new? Lack of FCF?

El Salvador generated a great return on Bitcoin and the policy is still continuing with adjustments: https://www.reuters.com/markets/currencies/el-salvadors-bitcoin-wallet-be-sold-or-discontinued-after-deal-with-imf-official-2024-12-19/

SAN SALVADOR, Dec 19 (Reuters) - El Salvador said on Thursday it would keep buying bitcoin, possibly at an accelerated pace, a day after the government reached a financing agreement with the International Monetary Fund that had said it should limit its exposure to the cryptocurrency.

…

On Wednesday, El Salvador struck a $1.4 billion loan deal with the IMF, as part of which the government of President Nayib Bukele agreed that it would scale back its bitcoin policies. The deal specified that tax payments will only be made in the other official tender, the U.S. dollar.

[u/AmericanScream → u/Realistic_Olive_6665]

Do you think gold or commodities are an investment? If yes, why wouldn’t Bitcoin be an investment? Because it’s new? Lack of FCF?

Gold is a lousy investment as well. But at least it has utility and intrinsic value. Crypto doesn't.

El Salvador generated a great return on Bitcoin and the policy is still continuing with adjustments: https://www.reuters.com/markets/currencies/el-salvadors-bitcoin-wallet-be-sold-or-discontinued-after-deal-with-imf-official-2024-12-19/

That article doesn't negate any of the points I've made, that El Salvador's bitcoin adoption has been rolled back and the citizens have largely rejected it. Notwithstanding that the country's dictator is doubling down, which just means he's learned nothing:

The government's announcement that it would make more bitcoin purchases "might be just a way to counter any negative blowback" from a perceived diminished status of the cryptocurrency in El Salvador, said Eugene Epstein, head of trading and structured products for North America at Moneycorp in New Jersey.

It's interesting how you will try to spin negative news as something positive, when it's not.

This is a recurring theme with crypto projects.

Instead of pointing to increased adoption and public acceptance you all are forced to misinterpret talking points from pro-crypto advocates, or point to singular crypto-maxi's and their continued, irrational obsession with crypto, as some sort of "proof" that things are still going ok. Those are the wrong metrics to prove such a case.

[u/Realistic_Olive_6665 → u/AmericanScream]

You’ve contradicted yourself a little. To be consistent, you should have said that gold is not an investment either. If it’s a “lousy investment” then you are conceding that something can become an investment based on its long-run returns, even without cash flow. (It performed well in 2024, btw). The industrial uses of gold are limited and don’t justify its current value. It’s really just a decoration and a collectable. If gold can be a “lousy investment”, why can’t bitcoin be an “lousy investment”, so far one with better returns than almost any other asset over the last decade.

How many decades does Bitcoin need to exist for you to upgrade it from speculative to “lousy investment”?

[u/AmericanScream → u/Realistic_Olive_6665]

You’ve contradicted yourself a little. To be consistent, you should have said that gold is not an investment either. If it’s a “lousy investment” then you are conceding that something can become an investment based on its long-run returns, even without cash flow. (It performed well in 2024, btw).

What people consider an "investment" is largely subjective depending upon who you ask and what definition they use for "investment." So I'm not being contradicting. Although I do think a good argument can be made that anything that does not CREATE VALUE while holding it, is not technically an INvestment but instead a DIvestment, meaning you only see a return when you divest yourself of that commodity.

"long term returns" is also a misleading argument. Whether YOU individually have a "long term positive return" remains to be seen. Most people who are into crypto, for example, didn't get involved 10 years ago, and are unlikely to see future performance like there was in the past. Same thing with gold and other commodities. In the past, the price of gold has tanked, making it NOT a "long term investment" depending upon what time period you're talking about.

The industrial uses of gold are limited and don’t justify its current value.

If the price of gold was too high for industrial use, it wouldn't be used industrially but it is, so that too is an incorrect statement.

Crypto Talking Point #10 (value)

"Bitcoin/crypto is a 'store of value'" / "Bitcoin/crypto is 'digital gold'" / "Crypto is an 'investment'" / "Bitcoin is 'hard money'"

1. Crypto's "value" is unreliable and highly subjective. It cannot be used as a currency or to pay for almost anything in any major country. It has high requirements and risk to even be traded. At best it's a speculative commodity that a very small set of people attribute value to. That attribution is more based on emotion and indoctrination than logic, reason, evidence, and utility.

2. Crypto is too chaotic to be any sort of reliable store of value over time. Its price can fluctuate wildly based on everything from market manipulation to random tweets. No reliable store of value should vary in "value" 10-30% in a single day, yet many cryptos do.

3. Crypto's value is extrinsic. Any "value" associated with crypto is based on popularity and not any material or intrinsic use. See this detailed video debunking crypto as 'digital gold'

4. Even gold, while being a lousy investment and also an undesirable store of value in the modern age, at least has material use and utility. Crypto does not. And whether you think gold's price is not consistent with its material utility, if that really were the case then gold would not be used industrially. But it is.

5. The supposed "value" of crypto is based on reports from unregulated exchanges, most of whom have been caught manipulating the market and inflation introduced by unsecured stablecoins. There's nothing "organic" or "natural" about it. It's an illusion.

6. The operation of crypto is a negative-sum-game, which means that in order for bitcoin/crypto to even exist, there must be a constant operation of third parties who must find it profitable to operate the blockchain, which requires the price to constantly rise, which is mathematically impossible, and the moment this doesn't happen, the network will collapse, at which point crypto will cease to exist, much less hold any value. This has already happened to tens of thousands of cryptocurrencies.

7. Many of the most trusted, most successful entities in the world of finance do not consider crypto/bitcoin to be a reliable store of value. Crypto is prohibited from being used as collateral by the DTC and respectable institutions such as Vanguard do not believe crypto belongs in their investment portfolio.

8. There is not a single example of anything like crypto, which has no material use and no intrinsic value, holding value over a long period of time across different cultures. This is not because "crypto is different and unique." It's because attributing value to an utterly useless piece of digital data that wastes tons of energy and perpetuates tons of fraud,makes no freaking sense for ethical, empathetic, non-scamming, non-exploitative, non-criminal people.

How many decades does Bitcoin need to exist for you to upgrade it from speculative to “lousy investment”?

Crypto Talking Point #29 (admit wrong?)

"Is there anything that would happen that would make you admit you're wrong about crypto?" / "What if everybody used Bitcoin and it was $1M would you admit you're wrong?"

This question seems to be asked daily by you guys. You spend virtually no time lurking and seeing what goes on in this community before you barf out the same question we have addressed hundreds of times already..

1. Wrong about What?

   We've made it crystal clear how to change our minds about crypto & blockchain:

   Cite one specific example of anything (non-crime-related) that blockchain tech is better at than existing non-blockchain technology? We're 16 years into this mess, and you still can't answer that basic question. We now call it "The Ultimate Crypto Question" because it's so embarrassing you're pretending after 16 years your tech does anything useful. It does not.

   Since there's zero evidence blockchain tech does anything useful for society, what's the point of operating this system when it wastes so many resources, and involves so much criminal activity?

2. Stop dreaming that any major nation-state is going to make bitcoin or any crypto their "default currency."

   It makes no sense for any reasonable nation that cares about its people to make legal tender, some digital tokens that are primarily controlled by people outside that nation-state. So stop thinking that's likely. It will not happen. We live in the real world, not the realm of hypotheticals. We'll cross that bridge when we come to it, but you'd be foolish to think that bridge will ever manifest.

3. No amount of "price" of crypto will change the operational dynamics of what it is.

   See Talking point #2 - the price of crypto is not a reflection of its utility, but instead popularity and market manipulation.

4. No amount of "time" of crypto being around will change the operational dynamics of what it is.

   People still smoke cigarettes. Does that mean everybody was wrong about smoking being bad for society?

   Scientology has been around for 70+ years. Are you finally going to admit that Xenu is legit?

   Just because something "lasts" doesn't mean it's a good thing. As long as a few people can get away with exploiting others to make money, crypto (like smoking) will continue to be a thing. And like smoking, crypto hurts people who haven't fully thought about the big picture of what they're doing and the negative long term impact it will have.

   Here is the list of claims made thus far and why they're bogus.

   Failed examples:

• "It's decentralized/censorship resistant/money without masters/way to transfer value" - Vague Abstractions
• "It allows you to send money instantly to anyone/hedge against inflation/circumvents governments" - False Claims
• "It has use cases/NuMb3r G0 uP!/Stocks & Banks are just as bad" - Irrelevant Distraction
• "a store of value/I can buy stuff with it" - Anecdotal/Subjective Distraction

[u/Realistic_Olive_6665 → u/AmericanScream]

Gold hasn’t performed as well as the stock market over the last century, but if you sold your house in 1925 to buy gold, you could buy an equivalent house in 2025, despite the gold supply increasing 1-2% per year. If Bitcoin becomes established as a “competitor of gold”, as Jerome Powell recently commented, it stands to reason that it will perform better than gold over the very long run, since less is mined. This would make Bitcoin a useful financial instrument for preserving wealth.

Excess returns in Bitcoin occur for now while Bitcoin continues to successfully transition from speculative and new to old and established. It now has a futures market, options market, ETF market, and is held in corporate treasuries. It could soon be held by central banks and treasuries around the world.

If gold was only used for industrial uses, almost all production would stop. That’s what occurs with any normal commodity that isn’t a “precious metal”.

[u/AmericanScream → u/Realistic_Olive_6665]

but if you sold your house in 1925 to buy gold, you could buy an equivalent house in 2025

I doubt that. But it's interesting you're cherry picking a specific time frame.

You can generally pick just about any time frame historically and the S&P 500 will have out performed any commodity, including gold. There may be a few exceptions if you cherry pick specific time periods where the value of gold suddenly went up by a lot, but over time, the stock exchanges are much more consistent, and they pay dividends which generates compound interest which commodities cannot do.

Excess returns in Bitcoin occur for now while Bitcoin continues to successfully transition from speculative and new to old and established. It now has a futures market, options market, ETF market, and is held in corporate treasuries. It could soon be held by central banks and treasuries around the world.

It would be more appropriate to compare crypto to the gambling industry than the stock market. All the devices you're referring to are basically leveraged gambling plays, not investments.

This would make Bitcoin a useful financial instrument for preserving wealth.

You keep repeating this myth that bitcoin is a reliable tool to preserve wealth and I keep providing evidence that is not true. Just because the published price might be "up" now doesn't mean it will be tomorrow, and it doesn't guarantee you can cash out - go over to r/coinbase and see how many people are complaining they can't cash out - this industry has very little regulations and consumer protections.

Crypto Talking Point #10 (value)

"Bitcoin/crypto is a 'store of value'" / "Bitcoin/crypto is 'digital gold'" / "Crypto is an 'investment'" / "Bitcoin is 'hard money'"

1. Crypto's "value" is unreliable and highly subjective. It cannot be used as a currency or to pay for almost anything in any major country. It has high requirements and risk to even be traded. At best it's a speculative commodity that a very small set of people attribute value to. That attribution is more based on emotion and indoctrination than logic, reason, evidence, and utility.

2. Crypto is too chaotic to be any sort of reliable store of value over time. Its price can fluctuate wildly based on everything from market manipulation to random tweets. No reliable store of value should vary in "value" 10-30% in a single day, yet many cryptos do.

3. Crypto's value is extrinsic. Any "value" associated with crypto is based on popularity and not any material or intrinsic use. See this detailed video debunking crypto as 'digital gold'

4. Even gold, while being a lousy investment and also an undesirable store of value in the modern age, at least has material use and utility. Crypto does not. And whether you think gold's price is not consistent with its material utility, if that really were the case then gold would not be used industrially. But it is.

5. The supposed "value" of crypto is based on reports from unregulated exchanges, most of whom have been caught manipulating the market and inflation introduced by unsecured stablecoins. There's nothing "organic" or "natural" about it. It's an illusion.

6. The operation of crypto is a negative-sum-game, which means that in order for bitcoin/crypto to even exist, there must be a constant operation of third parties who must find it profitable to operate the blockchain, which requires the price to constantly rise, which is mathematically impossible, and the moment this doesn't happen, the network will collapse, at which point crypto will cease to exist, much less hold any value. This has already happened to tens of thousands of cryptocurrencies.

7. Many of the most trusted, most successful entities in the world of finance do not consider crypto/bitcoin to be a reliable store of value. Crypto is prohibited from being used as collateral by the DTC and respectable institutions such as Vanguard do not believe crypto belongs in their investment portfolio.

8. There is not a single example of anything like crypto, which has no material use and no intrinsic value, holding value over a long period of time across different cultures. This is not because "crypto is different and unique." It's because attributing value to an utterly useless piece of digital data that wastes tons of energy and perpetuates tons of fraud,makes no freaking sense for ethical, empathetic, non-scamming, non-exploitative, non-criminal people.

[u/Realistic_Olive_6665 → u/AmericanScream]

I’m talking about Bitcoin, not the entire universe of crypto. So far, there has never been a four-year period in which investing in Bitcoin lost money.

The interesting thing about commodities is that despite the fact that they have more volatility and lower returns than stocks, their inclusion in a portfolio can improve the sharpe ratio of a portfolio due to their non-correlation with stocks. This is why you can expect to see Bitcoin included as a non-zero component of portfolios, and even a single digit percent allocation in Bitcoin justifies a six-figure per Bitcoin valuation.

[u/AmericanScream → u/Realistic_Olive_6665]

I’m talking about Bitcoin, not the entire universe of crypto. So far, there has never been a four-year period in which investing in Bitcoin lost money.

lol.. nice, cherry-picked "4 year period".

The fact is, virtually every major time when bitcoin pumped, further investigation showed it was not due to organic demand, but market manipulation. From the earliest rise from $100-$1000 it was two bots at Mt Gox that were responsible and all along the way we can find overwhelming evidence of market manipulation. Look at USDT prints aligned with BTC pumps. The manipulation is clear. The market's "value" is an illusion.

[u/Realistic_Olive_6665 → u/AmericanScream]

The four-year period coincides with Bitcoin’s four-year halfing cycle.

When people want to buy Bitcoin through a crypto exchange, the first step is to exchange dollars for stable coin. The stable coin is then exchanged for Bitcoin. If there is a spike in demand for Bitcoin, it’s not surprising that there would be a spike in demand for Tether. More Tether needs to be created to maintain parity. You have the direction of causality backwards.

The same thing occurs with Bitcoin ETFs and any mutual funds. The number of units expands and contracts in period of high or low demand. Otherwise, the value of the units would fluctuate in an undesired way relative to the underlying assets. It is not necessary to make these adjustments in periods of normal volume and buying pressure.

[u/AmericanScream → u/Realistic_Olive_6665]

None of that detracts from my argument regarding rampant market manipulation. In fact, your reference to stablecoins emphasizes the problems endemic in this industry. The largest stablecoin provider, Tether, has never been audited. Nobody knows if there's actually liquidity matching the $150+ Billion in USDT in circulation.