cryptocurrencies
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Seattle
Valued Senior Member
There's no special reason that the Earth won't end tomorrow. It's possible.
It isn't just like a lot of cryptocurrencies. It's decentralized and its numbers are limited. It's been around for 10 years and its market cap is large compared to the rest but of course, anything could happen.
The environment knock isn't a fact either. It's a fair argument but it isn't a fact. It's pushed into service a lot of green energy and it's also an off-peak period user to say nothing of the fact that energy usage being an effective use of energy depends on the magnitude of what that energy is being used for.
Airline travel is incredibly bad for the environment. You could argue that a debt based economy is bad for the environment.
Bitcoin is thought to consume 707 kwH per transaction. In addition, the computers consume additional energy because they generate heat and need to be kept cool. And while it’s impossible to know exactly how much electricity Bitcoin uses because different computers and cooling systems have varying levels of energy efficiency, a University of Cambridge analysis estimated that bitcoin mining consumes 121.36 terawatt hours a year. This is more than all of Argentina consumes, or more than the consumption of Google, Apple, Facebook and Microsoft combined.
According to Cambridge University, only 39 percent of this energy comes from renewable sources, and that is mostly from hydropower, which can have harmful impacts on ecosystems and biodiversity.
In 2020, China controlled over 65 percent of the global processing power that runs the Bitcoin network; miners took advantage of its cheap electricity from hydropower and dirty coal power plants. Recently, however, China cracked down on mining out of concerns about cryptocurrency’s financial risks and enormous energy consumption that works against China’s goal to be carbon neutral by 2060. As a result, many Chinese bitcoin miners are trying to move operations to other countries, like Kazakhstan, which relies mainly on fossil fuels for electricity, and the U.S. A number of U.S. states are eager to attract Chinese miners to boost their own economies. If the miners are unable to move, however, they are selling their equipment to other miners across the globe. U.S. miners themselves are raising hundreds of millions of dollars to invest in bitcoin mining and converting abandoned factories and power plants into large bitcoin mining facilities.
.... Earth Justice and the Sierra Club sent a letter to the NYS Department of Environmental Conservation urging it to reject the renewal of Greenidge’s permit that would allow it to increase its greenhouse gas emissions. They also warned that there are almost 30 power plants in upstate New York that could potentially be converted to bitcoin mining operations; if this occurred, it could foil New York State’s efforts to eliminate virtually all greenhouse gas emissions by 2050.
Globally, Bitcoin’s power consumption has dire implications for climate change and achieving the goals of the Paris Accord because it translates into an estimated 22 to 22.9 million metric tons of CO2 emissions each year—equivalent to the CO2 emissions from the energy use of 2.6 to 2.7 billion homes for one year. One study warned that Bitcoin could push global warming beyond 2°C. Another estimated that bitcoin mining in China alone could generate 130 million metric tons of CO2 by 2024. With more mining moving to the U.S. and other countries, however, this amount could grow even larger unless more renewable energy is used.
Water issues and e-waste
Power plants such as Greenidge also consume large amounts of water. Greenidge draws up to 139 million gallons of fresh water out of Seneca Lake each day to cool the plant and discharges it some 30 to 50° F hotter than the lake’s average temperature, endangering the lake’s wildlife and ecology. Its large intake pipes also suck in and kill larvae, fish and other wildlife.
And even if it one day becomes possible to run all bitcoin mining on renewable energy, its e-waste problem remains. To be competitive, miners want the most efficient hardware, capable of processing the most computations per unit of energy. This specialized hardware becomes obsolete every 1.5 years and can’t be reprogrammed to do anything else. It’s estimated that the Bitcoin network generates 11.5 kilotons of e-waste each year, adding to our already huge e-waste problem.
Source: Bitcoin’s Impacts on Climate and the Environment - Climate Week NYC (columbia.edu)According to Cambridge University, only 39 percent of this energy comes from renewable sources, and that is mostly from hydropower, which can have harmful impacts on ecosystems and biodiversity.
In 2020, China controlled over 65 percent of the global processing power that runs the Bitcoin network; miners took advantage of its cheap electricity from hydropower and dirty coal power plants. Recently, however, China cracked down on mining out of concerns about cryptocurrency’s financial risks and enormous energy consumption that works against China’s goal to be carbon neutral by 2060. As a result, many Chinese bitcoin miners are trying to move operations to other countries, like Kazakhstan, which relies mainly on fossil fuels for electricity, and the U.S. A number of U.S. states are eager to attract Chinese miners to boost their own economies. If the miners are unable to move, however, they are selling their equipment to other miners across the globe. U.S. miners themselves are raising hundreds of millions of dollars to invest in bitcoin mining and converting abandoned factories and power plants into large bitcoin mining facilities.
.... Earth Justice and the Sierra Club sent a letter to the NYS Department of Environmental Conservation urging it to reject the renewal of Greenidge’s permit that would allow it to increase its greenhouse gas emissions. They also warned that there are almost 30 power plants in upstate New York that could potentially be converted to bitcoin mining operations; if this occurred, it could foil New York State’s efforts to eliminate virtually all greenhouse gas emissions by 2050.
Globally, Bitcoin’s power consumption has dire implications for climate change and achieving the goals of the Paris Accord because it translates into an estimated 22 to 22.9 million metric tons of CO2 emissions each year—equivalent to the CO2 emissions from the energy use of 2.6 to 2.7 billion homes for one year. One study warned that Bitcoin could push global warming beyond 2°C. Another estimated that bitcoin mining in China alone could generate 130 million metric tons of CO2 by 2024. With more mining moving to the U.S. and other countries, however, this amount could grow even larger unless more renewable energy is used.
Water issues and e-waste
Power plants such as Greenidge also consume large amounts of water. Greenidge draws up to 139 million gallons of fresh water out of Seneca Lake each day to cool the plant and discharges it some 30 to 50° F hotter than the lake’s average temperature, endangering the lake’s wildlife and ecology. Its large intake pipes also suck in and kill larvae, fish and other wildlife.
And even if it one day becomes possible to run all bitcoin mining on renewable energy, its e-waste problem remains. To be competitive, miners want the most efficient hardware, capable of processing the most computations per unit of energy. This specialized hardware becomes obsolete every 1.5 years and can’t be reprogrammed to do anything else. It’s estimated that the Bitcoin network generates 11.5 kilotons of e-waste each year, adding to our already huge e-waste problem.
Seattle
Valued Senior Member
Excerpt, full report here:https://www.lynalden.com/bitcoin-energy
"And it’s easier to sensationalize things for pageviews or political gain. For example, it’s commonly said that the Bitcoin network uses more energy than some countries. That’s true, but then so does Google, Youtube, Netflix, Facebook, Amazon, the cruise industry, Christmas lights, household drying machines, private jets, the zinc industry, and basically any other sizable platform or industry. From that list, Bitcoin’s energy usage is the closest to that of the cruise industry’s energy usage, but bitcoins are used by more people, and the network scales far better.
It’s important to understand whether or not Bitcoin is an environmental problem and whether or not it is energy efficient, because these obviously affect its probability of being a good investment and a good payment network.
If Bitcoin did indeed have serious energy scaling problems, it would eventually fail against competitors in the private marketplace by not offering enough utility for its energy consumption.
From an engineering perspective, Bitcoin’s energy usage isn’t a problem when you actually run the numbers, but it takes an understanding of how it works to calculate it properly, and what the trade-offs are if you use a different approach than what bitcoin uses.
Let’s take a look at how that works. You can start from the beginning or jump to the chapters of interest to you."
"And it’s easier to sensationalize things for pageviews or political gain. For example, it’s commonly said that the Bitcoin network uses more energy than some countries. That’s true, but then so does Google, Youtube, Netflix, Facebook, Amazon, the cruise industry, Christmas lights, household drying machines, private jets, the zinc industry, and basically any other sizable platform or industry. From that list, Bitcoin’s energy usage is the closest to that of the cruise industry’s energy usage, but bitcoins are used by more people, and the network scales far better.
It’s important to understand whether or not Bitcoin is an environmental problem and whether or not it is energy efficient, because these obviously affect its probability of being a good investment and a good payment network.
If Bitcoin did indeed have serious energy scaling problems, it would eventually fail against competitors in the private marketplace by not offering enough utility for its energy consumption.
From an engineering perspective, Bitcoin’s energy usage isn’t a problem when you actually run the numbers, but it takes an understanding of how it works to calculate it properly, and what the trade-offs are if you use a different approach than what bitcoin uses.
Let’s take a look at how that works. You can start from the beginning or jump to the chapters of interest to you."
exchemist
Valued Senior Member
In practice I doubt that most vendors of everyday goods and services have any idea how to accept bitcoin. Nor do I see much prospect of them bothering to work out how to do it in the foreseeable future. Can you cite any examples of bitcoin being used like a national currency? Can you really buy a hot dog with it? Or pay your utility bill with it? Or buy airline tickets?
Regarding the enviromental issue, I guess we could just stop Netflix from operating? Although someone else would just fill that gap. So let's stop that from happening as well. That would save more energy, right?
Unfortunately with Bitcoin, and cryptos, they're the headline-grabbing fall-guy, because Joe Public doesn't really understand what it is, or the overall benefits to the economy it provides.
Yes, energy consumption is high. But that's not the issue with regard "harmful climate change". That issue lies with those that produce the energy, and wasteful use thereof. If you can produce a report that shows Bitcoin energy is wasteful, by all means put one forward. In many instances it is utilising energy that would otherwise be wasted (i.e. an unused fixed supply) - hence the cheapness of supply and hence where miners often flock to.
But otherwise it is an industry with value, like any other. Pointing a finger at it and saying "you're bad for the environment", at least without adequately robust analysis to support the assertion, is no better than pointing to capitalism and saying "you're bad for the environment!".
Crypto, as an industry, is also doing everything it can to reduce energy consumption. Miners make their money through efficiency, so it is in their best interest to do so, and they demand the most efficient chips, which helps drive a transferable R&D. Some cryptos are moving away from Proof of Work (what miners do) to Proof of Stake to help address this (among other things, although beyond the reduction in miners it's not straightforward whether it is actually any better). Plus S/W developments and higher-level tools to help reduce the mining workload etc.
But ultimately their impact on the climate is really all about the energy (and to a degree the e-waste etc), so it's about efficiency.
Unless you want to stop the entire crypto industry on the basis of using too much energy. Produce your analysis that says it's a waste of energy, a highly inefficient use, compared to other industries, then let's have that chat.
Unfortunately with Bitcoin, and cryptos, they're the headline-grabbing fall-guy, because Joe Public doesn't really understand what it is, or the overall benefits to the economy it provides.
Yes, energy consumption is high. But that's not the issue with regard "harmful climate change". That issue lies with those that produce the energy, and wasteful use thereof. If you can produce a report that shows Bitcoin energy is wasteful, by all means put one forward. In many instances it is utilising energy that would otherwise be wasted (i.e. an unused fixed supply) - hence the cheapness of supply and hence where miners often flock to.
But otherwise it is an industry with value, like any other. Pointing a finger at it and saying "you're bad for the environment", at least without adequately robust analysis to support the assertion, is no better than pointing to capitalism and saying "you're bad for the environment!".
Crypto, as an industry, is also doing everything it can to reduce energy consumption. Miners make their money through efficiency, so it is in their best interest to do so, and they demand the most efficient chips, which helps drive a transferable R&D. Some cryptos are moving away from Proof of Work (what miners do) to Proof of Stake to help address this (among other things, although beyond the reduction in miners it's not straightforward whether it is actually any better). Plus S/W developments and higher-level tools to help reduce the mining workload etc.
But ultimately their impact on the climate is really all about the energy (and to a degree the e-waste etc), so it's about efficiency.
Unless you want to stop the entire crypto industry on the basis of using too much energy. Produce your analysis that says it's a waste of energy, a highly inefficient use, compared to other industries, then let's have that chat.
Thus Spoke
Registered Senior Member
Okay, this is the part I don't get: What does Bitcoin do? Nothing. What is its value? Make-believe.
Try it this way: After 9/11, as the United States prepared for war in the Middle East, Americans started buying gas-guzzlers for whatever reason. A couple of the new vehicles introduced during that period were so big they didn't fit in parking garages. It was as if gasoline consumpion was some sort of patriotic demonstration.
Fast-forward maybe fifteen years: As the world struggles to disrupt climate change and seek renewable energy sources, capitalists invent a new way to waste electricity by pretending to transform it into money. The value of cryptocurrency is pretend: It's an industry with value? But what does it do? Nothing.
Cryptocurrency is alchemy, but with a twist: You don't actually have to produce gold; everyone just needs to pretend—Rumplestiltskin meets a Naked Emperor.
Remember, they call it "currency" in order to fool people. It's not stable currency. Indeed, I sometimes wonder if cryptocurrency is why a bunch of potsherd libertarians stopped using the word "fiat", or if it just died off with a generation, or maybe it was just a passing trend and they never understood themsleves any better than anyone else.
Here's the analysis: That much electricity to produce something that, having been produced, still doesn't actually exist. It's not just inefficient; it is a literal waste of energy.
I used to make a joke about the value of a dollar compared to bartering something like marijuana; the point was that the value of a dollar was complicated, and the only reason it cost four of them for a particular loaf of bread is because we were all wiling to play along. Cryptocurrency is, in its way, the same thing, and the convention will hold as long as it holds.
Bitcoin offers a store of value, underpinned by the sentiment and willing of those playing along. It does it via blockchain technology that has benefits for security, transparency, and traceability, across the network. At least it should do. Those contribute to the value people perceive in it.
As to whether it exists, it exists in the same way that computer games exist (c.75 billion kWh/yr): it offers value to people who are willing to pay for it. That it doesn't have a tangible existence is neither here nor there.
Does it use a lot of electricity? Yes. Undoubtedly. I read somewhere it was around c.0.55% of global electricity production. Would stopping it alter the trajectory of global warming? The effect would be lost in the roundings and noise.
If we roughly use a consistent amount of power per person per year across the globe (and that's a big IF, as I think power consumption has mostly been increasing per capita, but I may be wrong), then while the world has a c.1% growth rate, energy consumption will go up 1% a year. So if we stop Bitcoin/crypto, within 6 months we're back to where we were.
It's small fry, even if it is for nothing. What needs to change is the total infrastructure of generation, not just point at individual industries/sectors. Each can do their thing to minimise their own power consumption, but ultimately climate change rests on changing the production, and on tackling the big-ticket users. Home heating and air-conditioning, for example, accounts for c.50% of the total energy use globally. Not just electricity but total energy use (elec+gas etc). Even if it was all electricity, and crypto used 0.5% of it, improve the efficiency of both (heating and a/c) by just 1% and you've covered what crypto uses. (Note, that's not just domestic heating/air-con, but includes industry).
I'm not saying crypto should be ignored on this front, as yes, it does use a lot. But it needs to be taken in context, and that includes the context of value that those that use the system place in it.
As said previously, you need an analysis of consumption v. value to get a better picture. It may well stick out quite badly.
As to whether it exists, it exists in the same way that computer games exist (c.75 billion kWh/yr): it offers value to people who are willing to pay for it. That it doesn't have a tangible existence is neither here nor there.
Does it use a lot of electricity? Yes. Undoubtedly. I read somewhere it was around c.0.55% of global electricity production. Would stopping it alter the trajectory of global warming? The effect would be lost in the roundings and noise.
If we roughly use a consistent amount of power per person per year across the globe (and that's a big IF, as I think power consumption has mostly been increasing per capita, but I may be wrong), then while the world has a c.1% growth rate, energy consumption will go up 1% a year. So if we stop Bitcoin/crypto, within 6 months we're back to where we were.
It's small fry, even if it is for nothing. What needs to change is the total infrastructure of generation, not just point at individual industries/sectors. Each can do their thing to minimise their own power consumption, but ultimately climate change rests on changing the production, and on tackling the big-ticket users. Home heating and air-conditioning, for example, accounts for c.50% of the total energy use globally. Not just electricity but total energy use (elec+gas etc). Even if it was all electricity, and crypto used 0.5% of it, improve the efficiency of both (heating and a/c) by just 1% and you've covered what crypto uses. (Note, that's not just domestic heating/air-con, but includes industry).
I'm not saying crypto should be ignored on this front, as yes, it does use a lot. But it needs to be taken in context, and that includes the context of value that those that use the system place in it.
As said previously, you need an analysis of consumption v. value to get a better picture. It may well stick out quite badly.
RainbowSingularity
Valued Senior Member
bitcoin price is hovering around $27k currently
if one of the big hedge fund companys or some retirement fund decides to sell up it might start a downward move.
i imagine gold should be gradually gaining so maybe they will shift into gold.
if i had bitcoin i would be looking to sell it to invest in lithium mining somewhere
if one of the big hedge fund companys or some retirement fund decides to sell up it might start a downward move.
i imagine gold should be gradually gaining so maybe they will shift into gold.
if i had bitcoin i would be looking to sell it to invest in lithium mining somewhere
Seattle
Valued Senior Member
You can use PayPal to do that for anyone that accepts PayPal.
I wouldn't currently use Bitcoin to buy stuff anymore than I would use gold but you can do it. Bitcoin is best thought of as a store of value, a commodity, it's decentralized and limited. Other crypto is best thought of as securities, centralized and not limited.
Currently around USD 17k. It has taken a hammering this year, dropping c.75% from its peak last year.
RainbowSingularity
Valued Senior Member
$27,224.44 NZ$
$16,684.40 US$
during covid lock down lots of small investors bought up i think
& i wonder if speculators bought up big expecting it to finally make the front row of global currencys but it didnt
so there must have been some huge losses in who ever that was
i think its worth about 8k US$ per coin(half of its current value)
Seattle
Valued Senior Member
I think most people would be better off thinking of the "crypto" space not as a currency but rather as Bitcoin as decentralized store of value and Ethereum in terms of "smart contracts" and the rest as speculative securities just as we have in the stock market.
Or as some have put it, there's Bitcoin vs the rest of Crypto.
Or as some have put it, there's Bitcoin vs the rest of Crypto.
We were talking about Bitcoin. If you have some relevant information about Netflix, we can talk about that as well, I suppose.
The economy got on just fine without it until it was invented. What has changed since the invention of Bitcoin?
You have a very strange idea of how electricity production works. It isn't like electricity is stored in batteries, waiting to be used or wasted, for the most part. Instead, what happens is that electricity production is adjusted according to demand. If Bitcoin demands the energy supply equivalent to a medium sized nation, then the power stations to supply that energy will need to draw on whatever resources they use to generate electricity. As it happens, a lot of those resources are fossil fuels. Burning fossils fuels, as you may have heard, causes global heating. Global heating is bad for lots of reasons.
Helpfully, I pointed you towards exactly the sort of robust analysis you are looking for. Why don't you check it out?
Nonsense. Everything it can. Ha!
Are you in the crypto industry? Got any vested interests you'd like to declare?
Any improvement is better than nothing. That doesn't change the fact that crypto is currently bad for the climate. Maybe it will get better, but it has a long way to go.
You have yet to make any compelling argument as to why cryptocurrencies are necessary or desirable.
Ultimately, their impact on climate is really all about the innumerable harms that flow from global heating, especially above the 1.5-2 degree Celcius limits that scientists have determined are manageable.
Tell me why you value the entire crypto industry so much. Do you work in that industry? You seem very defensive.
I have made no argument about "wasted" energy, whatever that might mean.
I made an argument about harmful effects related to climate change. Follow the link I put in my post if you want more detailed analysis.
That's a stupid argument.Sarkus said:
It all adds up. Every 1% of energy produced by the burning of fossil fuels adds something to the total, and the total is what matters. 100 times 1% equals 100%.
Your argument, poor as it is, is essential that we should ignore any "small" contributors to fossil fuel burning, where you presumably define "small" to include 0.5% of global energy consumption.
You're arbitrarily carving up energy production, as if you can sequester away climate change by pretending that it only happens when the packets of consumption exceed a magical threshold. That's not how it works. Stop being so naive.
S&P Global↱ recently posted "A Deep Dive Into Crypto Valuation". Their selected highlights:
The point about Bitcoin is interesting; evolving ecosystem and future potential are what they are, but all the statement really tells us is that BTC "does not store value as gold does".
From the section comparing cryptocurrency and gold:
A comparison of stablecoins and fiat currency found, as we might expect, "higher volatility for stablecoins than for the fiat exchange rates".
That last sentence does a whole lot of work; more particularly, the load borne by the phrase, "others use crypto collateral and algorithms", is very nearly terrifying.
And the conclusion ought to be significant for being pabulum:
And that's the thing: People are going to invest in this stuff, full stop, so SPG needs something to tell their clients. Nothing about the analysis actually suggests confidence in cryptocurrency, and inasmuch as it radiates hazard, they can't come right out and say that, so the conclusion seems to run, approximately, 「Yeah, so, good luck with all that, and we'll let you know if we figure out anything useful.」
____________________
Notes:
Polizu, Cristina, et al. "A Deep Dive Into Crypto Valuation". S&P Global. 10 November 2022. SPGlobal.com. 17 November 2022. https://bit.ly/3OiVQRO
Cryptocurrencies (excluding selected stablecoins) exhibit high volatility relative to traditional financial assets (such as equities or bonds), with sharp drops in value but also high returns.
Cryptocurrencies (excluding selected stablecoins) show a notable historical return correlation among themselves, although they started at different times and independent of each other.
Cryptocurrencies have generally shown low return correlation with traditional financial assets.
Bitcoin does not store value as gold does, but this is an evolving ecosystem, and the future may prove differently.
Stablecoins are cryptocurrencies with a market value tied to an external indicator such as a fiat currency, but there are significant differences between their performance and design. Some may not live up to their promise (note the recent collapse of TerraUSD).
Cryptocurrencies (excluding selected stablecoins) show a notable historical return correlation among themselves, although they started at different times and independent of each other.
Cryptocurrencies have generally shown low return correlation with traditional financial assets.
Bitcoin does not store value as gold does, but this is an evolving ecosystem, and the future may prove differently.
Stablecoins are cryptocurrencies with a market value tied to an external indicator such as a fiat currency, but there are significant differences between their performance and design. Some may not live up to their promise (note the recent collapse of TerraUSD).
The point about Bitcoin is interesting; evolving ecosystem and future potential are what they are, but all the statement really tells us is that BTC "does not store value as gold does".
From the section comparing cryptocurrency and gold:
For thousands of years, gold has been and still is the oldest store of value and hedge against market downturns. Central banks use it as a reserve asset and as an inflation hedge. When Bitcoin was launched, it was often referred to as "digital gold." The market rallied expectations that Bitcoin may play a similar role as gold in a portfolio: store value and weather economic downturns. To live up to this promise, Bitcoin’s correlation with gold is expected to be significant especially if the market adopts Bitcoin as an investment asset during stress periods. Our study shows that this expectation has not been fulfilled so far. Starting with the volatility of gold in the 1970s, which was one of the periods of high volatility for gold, we see little resemblance with the initial period of volatility for Bitcoin ....
To date, gold exhibits low return correlation with the cryptomarket, but this may change in the future if markets will adopt crypto assets as a store of value; although, to date, there are no significant signals to point in that direction.
A deeper dive into the return correlation over 100-day windows shows generally low levels of correlation between gold and Bitcoin, with a modest spike in the pandemic's first months. The same low correlation levels hold for gold and USDC. In the first quarter of 2022, when the market has been dominated by fears of inflation and war uncertainty in Europe, we did not see increased trends in correlation for gold and the crypto assets. Going into the third quarter we see though a positive slope in rolling correlation.
‡
To date, gold exhibits low return correlation with the cryptomarket, but this may change in the future if markets will adopt crypto assets as a store of value; although, to date, there are no significant signals to point in that direction.
A deeper dive into the return correlation over 100-day windows shows generally low levels of correlation between gold and Bitcoin, with a modest spike in the pandemic's first months. The same low correlation levels hold for gold and USDC. In the first quarter of 2022, when the market has been dominated by fears of inflation and war uncertainty in Europe, we did not see increased trends in correlation for gold and the crypto assets. Going into the third quarter we see though a positive slope in rolling correlation.
A comparison of stablecoins and fiat currency found, as we might expect, "higher volatility for stablecoins than for the fiat exchange rates".
Pegged fiat currencies are a legal tender whose value is backed by governments and precede the recent expansion of stablecoins. A natural question to ask is whether stablecoins and traditional fiat pegged currencies exhibit similarities in terms of volatility .... Pegged fiat currencies typically require large amounts of capital reserves and rely on government and central bank support for maintaining the peg. This process is quite different for the stablecoins ecosystem, where some coins rely on cash and traditional assets as collateral and others use crypto collateral and algorithms.
That last sentence does a whole lot of work; more particularly, the load borne by the phrase, "others use crypto collateral and algorithms", is very nearly terrifying.
And the conclusion ought to be significant for being pabulum:
We find that key to understanding cryptocurrencies is the comprehension of the fundamental principles of blockchain and decentralized finance, as well as the performance drivers of this new asset class. Our study of the volatility of cryptocurrencies and their correlation to traditional financial assets provides more insight into this new ecosystem, as it enters its second decade. As more data become available and regulatory frameworks continue to develop, we believe that questions about future patterns in cryptomarkets will be at the center of many research studies.
And that's the thing: People are going to invest in this stuff, full stop, so SPG needs something to tell their clients. Nothing about the analysis actually suggests confidence in cryptocurrency, and inasmuch as it radiates hazard, they can't come right out and say that, so the conclusion seems to run, approximately, 「Yeah, so, good luck with all that, and we'll let you know if we figure out anything useful.」
____________________
Notes:
Polizu, Cristina, et al. "A Deep Dive Into Crypto Valuation". S&P Global. 10 November 2022. SPGlobal.com. 17 November 2022. https://bit.ly/3OiVQRO
Seattle
Valued Senior Member
It's true that Bitcoin hasn't yet provided counter-cyclical returns to balance out negative stock market returns. It's still reasonable to refer to it as gold 2.0 since it has been a good long term (if you can use that term over it's short life) store of value. It's done that much better than gold for that matter.
It just hasn't had the expected inverse correlation to the stock market returns. It's still early in its adoption though. Gold hasn't actually been a great store of value if you go back to the inflation of the 80's. When I got out of grad school gold was higher than it is even today. Yet if you average things out over the last 100 years, it's a decent store of value.
Stablecoins may have a role but it's not anything I'd be interested in. It misses the whole point of something like Bitcoin. Bitcoin is a store of value as a counterpoint to the reduced buying power of the dollar over time due to government policies. A stablecoin is pegging value to a depreciating asset (the dollar). That's what Bitcoin is trying to get away from (as is gold).
Most traditional financial institutions can't deal in Bitcoin yet so of course they aren't all that favorable to it. Just wait until there is a US ETF for Bitcoin permitted and see how fast their "opinions" change.
Warren Buffett calls Bitcoin "rat poison squared", now there is an informed (not) opinion. He was against "tech" stocks until Gates convinced him to buy some Apple and now he is largely successful these days due to Apple stock.
When you don't understand, don't want to understand or attempt to learn, it doesn't really matter how famous you are, your opinion still isn't that meaningful. Plenty of people had similarly ignorant opinions about "Japanese" cars, electric vehicles and it's the same with Bitcoin in many cases.
Bitcoin adoption is early and the future isn't entirely predictable but that doesn't excuse ignorant comments by people who don't understand the subject that they are attempting to lecture others about.
The point is blockchains will be impactful, Bitcoin is decentralized and the others are not. That's a big distinction that gives it value in a world where fiat money is constantly being debased by government spending and something like the FX fiasco, in the long run should be a positive thing for a decentralized store of value like Bitcoin. Everything else is controlled and usually held by someone other than "you".
The Ether blockchain, while centralized, will have value in efficiency with "smart contracts". It can eliminate a lot of the middleman fees and inefficiencies in many industries as time goes on. People didn't see the value in "home computers" or the "internet" initially either. It was just seen as a toy for rich people.
There is a lot of stupidity out there as we all know and much of it is willful.
It just hasn't had the expected inverse correlation to the stock market returns. It's still early in its adoption though. Gold hasn't actually been a great store of value if you go back to the inflation of the 80's. When I got out of grad school gold was higher than it is even today. Yet if you average things out over the last 100 years, it's a decent store of value.
Stablecoins may have a role but it's not anything I'd be interested in. It misses the whole point of something like Bitcoin. Bitcoin is a store of value as a counterpoint to the reduced buying power of the dollar over time due to government policies. A stablecoin is pegging value to a depreciating asset (the dollar). That's what Bitcoin is trying to get away from (as is gold).
Most traditional financial institutions can't deal in Bitcoin yet so of course they aren't all that favorable to it. Just wait until there is a US ETF for Bitcoin permitted and see how fast their "opinions" change.
Warren Buffett calls Bitcoin "rat poison squared", now there is an informed (not) opinion. He was against "tech" stocks until Gates convinced him to buy some Apple and now he is largely successful these days due to Apple stock.
When you don't understand, don't want to understand or attempt to learn, it doesn't really matter how famous you are, your opinion still isn't that meaningful. Plenty of people had similarly ignorant opinions about "Japanese" cars, electric vehicles and it's the same with Bitcoin in many cases.
Bitcoin adoption is early and the future isn't entirely predictable but that doesn't excuse ignorant comments by people who don't understand the subject that they are attempting to lecture others about.
The point is blockchains will be impactful, Bitcoin is decentralized and the others are not. That's a big distinction that gives it value in a world where fiat money is constantly being debased by government spending and something like the FX fiasco, in the long run should be a positive thing for a decentralized store of value like Bitcoin. Everything else is controlled and usually held by someone other than "you".
The Ether blockchain, while centralized, will have value in efficiency with "smart contracts". It can eliminate a lot of the middleman fees and inefficiencies in many industries as time goes on. People didn't see the value in "home computers" or the "internet" initially either. It was just seen as a toy for rich people.
There is a lot of stupidity out there as we all know and much of it is willful.
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