Investing in bitcoin is a valid use, one of many in my book
It's subject to debate but turning Bitcoin in a cash cow isn't really was it was supposed to be. So we wanted to be out of the finance industry but we 're replicating the same thing with the crypto market :/
When someone is investing in something, buying it at $xx,xxx and reselling it later at $xx,xxx, I call it speculating. If you're investing in something to use it later, you're investing.
Just to be clear, putting money in gold or bitcoin to preserve one's assets from the ravages of central bank induced fiat inflation is a great use for bitcoin. That is a "real use" of bitcoin and a critical one.
So by saying this, your point is to say Bitcoin can be used as a store of value? I don't think it should be considered as it... as we agree, the goal is to preserve your asset right? How investing in Bitcoin is supposed to protect it? Imagine someone who invested back at $20,000? I know what you're going to say:
'Its value will increase in the future so no problem hold'. Which I agree too, but it's again speculating, we're not protecting anything doing this. Yes, some people use it as a store of value, it doesn't mean they're good at accounting, they just take a risk to use it as SOV.
Look at the threads from Cyprus 6 years ago, Venezuela, etc
I wanted to look through the news to remind me when the crisis started in Venezuela, but I found something else, and I see why you're talking about it today.
Yes, maybe they wanted to leave the system to protect their currency against the crisis (when it was? 1-2 years ago?). We come back to what I was saying, their goal was to protect their asset. But what would have happened if it was in the period of late 2017? Losing 50% is not at all what we call protecting an asset.
I know you mentioned this country because the news reported an increase in the volume on LBC since 2018 (
here) but check again and see the situation today, the volume decreased by 80%...in 3-4 months...
Also, we don't know if they're using it to speculate to for their daily needs. At least I haven't heard about thousands and thousands of
merchants turning to Bitcoin. Show me otherwise.
That is not why I mentioned Venezuela. I actually mentioned Venezuela because they've had (a) tremendous inflation over the course of the last decade plus, (b) had totalitarian socialists/communists/fascists in charge for more than 20 years, (c) had tremendous seizures of businesses and assets (like Cyprus in 2013) over the last two decades, and (d) capital controls (like Cyprus) over long periods. Even if someone who did purchase bitcoin using Venezuelan bolivars for $20000 each in December 2017 would be way ahead of the game at $10000. Keeping it in the bolivar would've meant losing roughly 50-100% plus per MONTH. (
https://tradingeconomics.com/venezuela/inflation-rate-mom) And "Venezuela's Inflation Rate Projected to Hit 10,000,000% in 2019" (
https://fee.org/articles/venezuelas-inflation-rate-projected-to-hit-10-000-000-in-2019/). Anything kept in the bolivar is lost.
The choice was: keep your money and business there, find someway to protect oneself from the authoritarians in the government or attempt to get them out of the country. Many people couldn't get out and lost everything because they couldn't transfer money overseas (like Cyprus limiting it to $5000/month at one point).
Precious metals are a fine store of value, but they are less portable than a private key, particularly if one is attempting to fly out of, say, Caracas or Nicosia (Cyprus). Anyone in Venezuela who had the foresight to purchase bitcoin at any time between 2010 and now has found bitcoin to be a great store of value compared to pretty much everything in Venezuela, even in December 2017. Obviously purchasing when there is a mania going on is more problematic, but a few years from now the probability that even those who purchased in Dec 2017 are ahead of the game even in non bolivar terms is quite high.
As far as LBC, I hadn't looked at it. I don't know if any merchants there are using bitcoin, I doubt it would show up in any official figures anyway since Venezuela has essentially collapsed. If I had converted assets to bitcoin in Venezuela, I wouldn't convert back while in Venezuela, I'd leave and go almost anywhere else. Suppose you had purchased $200000 of bitcoin at $10000 or $20000. At worst, you could leave Venezuela now and go anywhere and have $200,000 or $100,000 in bitcoin (depending on when you purchased) or you didn't purchase it you'd have nothing. I know my choice.
Look at Cyprus in 2013, they gave plenty of "haircuts" (a % of the money taken by the politicians) to people's and company's bank accounts (see, e.g.
https://bitcointalksearch.org/topic/my-bank-accounts-got-robbed-by-european-commission-over-700k-is-lost-160292 ) - this guy lost a ton of money because the government "robbed" everyone there. In my view, most people should own some crypto, 0.1 or 1 (preferably more) bitcoin to protect themselves from future events like this. It is similar to home owners insurance, sure you pay a few thousand dollars per year and hope you never need it, but you still do it. With crypto, you can buy your insurance once and have it for you and your family as long as you don't sell.
I agree with you though, given the halving in ~9-10 months, additional use cases, and more vehicles that allow people to invest or use bitcoin, the future looks bright - but as always, it seems a pretty binary proposition: it will eventually be worth a lot of money or very little.
