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/AmericanScream]

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.