Friend 1: Doesn’t any of this scare you?
Me:
Does this scare me?
I would say it is pretty much the only thing that scares me — BTC has beaten the odds and become successful, so successful that I do fear the bankers will want to kill it, and it’s not because it is misunderstood, its because they are finally realizing it is the undoing of everything they control.
For the first time in human history, we have a fair money system — supply is capped, the elite coterie of central bankers cannot just print more money then make others pay them to borrow what they printed for free.
For the first time in human history, we have a decentralized control of that fair money system. All of the miners would need to vote on policy changes to enact changes to how BTC works.
We all know the government is not smart, but bankers are. Bankers are very wise and will have figured this out by now.
It is my belief they have thus decided they cannot beat it and so they will join it and tax it so they can join it even more for free.
But I could be wrong. I wonder about these things…
- I wonder if they don’t kill it it is because they truly don’t get it yet. They still see it as this bubble that will burst on its own?
2. I wonder did they buy it during 2020 corona panic? Could they have done that without us knowing? Some say this is impossible that we would have seen BTC skyrocket (well first of all we have seen BTC skyrocket). Secondly, how much money do the banks have and what were the total volumes transacted last year? 27T in volumes in crypto in 1 year. That is enough I’d say to hide their buying yes. After all, there are only 19T USD in M2 money supply.
If they don’t kill it, it is only because they understand it and decided why kill it when we could crash it (2020 Corona Panic) and then buy it and get a permanent grapple on what is essentially the hardest eternal asset of the future. I mean, they grab it then let China and everyone else keep buying it as well afterwards and they keep devaluing the USD by printing money and causing the rest of the world to do the same, and it just pumps their own wealth in BTC up that much more.
Let’s say they didn’t buy it…
I wonder if they even CAN kill it, it seems to me that they are powerless to do that. It is a MASSIVE and decentralized asset class (1T market cap) and globally demanded and globally traded at this point. No one country or even a coalition will be able to bring it down. It doesn’t require government approval. It cannot be seized. It cannot even be made to be illiquid by regulating or outlawing exchanges and brokerages.
How?
AMM’s like Uniswap will keep the market going no problem. Uniswap’s volumes surpassed Coinbase last year. We are beyond being able to pull the plug on crypto.
Regulation in and of itself is not going to bring it down (and they don’t say they want to bring it down they just want to identify owners of accounts and be able to track it, but of course this could just be lies).
Let’s go back to Lagarde’s statement. Calling it “speculative and volatile” is completely unrelated. So are futures and options on commodities, but that doesn’t mean that people should not invent and trade in them. They are not outlawed. No way, in fact Glass‐Steagall was repealed in 1999 so these banks could take even more risk on conducting securities investments.
Investors should choose investments and trade within their means. “Volatile and speculative” means that governing bodies must add regulatory protection for consumers guarding them from brokers who sell these investments to consumers that are not qualified and do not understand them. That is the spirit of the law when it comes to securities regulation.
That being said, crypto does not require brokers or middle men so even this is going to be hard to regulate or especially to point blame at someone. You can go on Uniswap and trade with a robot. No one will be able to stop these DEX = decentralized exchanges. Crypto is not going away.
Let me be clear, I see these news articles and language by Lagarde and others as pure plays on scaring the public away so that the bankers and Wall St. elites can go on buying it first, and that is why this bull run will be unstoppable.
They will try to panic and crash it by shorting it with huge volumes of freely printed USD on futures exchanges and putting out news like this article above. They will start lawsuits like the one aimed at XRP and USDT, but BTC will just keep going back up. It is an avalanche and whirlpool sucking every asset into it, and it will continue to ruin the world.
I’ve said it before: Bitcoin is an economic disaster and it is ruining everyone who doesn’t buy it.
This may seem like I am against it — but RJ, you invest in it! I do, because I see the game theory behind it. It is a tragedy for those who stay afraid to go with the tide. They will be left with nothing, and they won’t even realize it until it’s way too late. It’s a crime what the bankers do to the public causing panics then buying their positions for pennies on the dollar.
Don’t let them scare you out.
Friend 2:
I don’t think anyone in banking or asset management wishes to kill Bitcoin.
It’s an asset class. It’s volatile af. It’s value isn’t underpinned by anything but demand (I recognize that there is a scarcity argument, but I don’t believe that actual scarcity is driving the price as much as pure speculation).
No one cares enough to kill it as it represents no threat.
Me:
To the extent central bankers do not already own BTC and ETH themselves they should want to kill it. BTC and ETH end their reign and power to enslave the human race through debt.
However, I believe smart money (which I believe central bankers to be) moved into these during the corona pandemic panic / forced liquidations. But that is just a guess, I could be wrong of course.
“Speculation is Driving It”
That may be so, but let’s consider that for a minute. All derivatives are based on speculation — traders want to speculate and hedgers need assurance. Thus futures are born to allow hedgers to get rid of risk and traders to take that risk. Because there is so much demand to offload risk, futures and options (derivatives) have become the world’s largest market and most highly valued market by capitalization (market price). Derivatives are assets whose price is derived from the value of other assets.
Again, ask yourself what does “underpinning” even mean? What is “underpinning” the USD? It is actually FIAT currency like the USD that has nothing underpinning it except its universality — it is universally accepted as worth some agreed upon value. It is therefore a currency, a means of quantifying the value of Good 1 and Good 2 so they may be exchanged.
Speculation can drive price, sure. It does with every asset and produces every bubble and every crash.
Speculation to invest in anything whether that is gold or Apple stock. Yes you can say you have something when you buy Gold and you have a share of a company when you buy stock. Well you have a Bitcoin when you invest in Bitcoin. There is no difference. You have a digital commodity.
So the next question is what can you do with Bitcoin besides just hold it and hope to sell it for more later? What can you do with stock besides that? Nothing. You can’t do anything with your gold futures contract either. You can though get access to the entire world of Decentralized Finance with Ethereum, you can use so many great protocols and do amazing things that you just can’t do with a USD. You can’t do it with gold or apple stock either. And BTC is how you buy ETH.
On XRP & USDT
Friend 2:
For what it’s worth, Ripple is f*d because of the way they issue “currency”. None of that due to an agenda.
Me:
You don’t know that that has nothing to do with an agenda, but yes, by the “Howey Test” rule XRP is not decentralized and therefore is a security. That does make the issuance (ICO) illegal, and that will be the basis for the lawsuit against the issuer (Ripple the company) and the brokers / dealers (all US exchanges that facilitated trading). That doesn’t mean XRP will disappear only that centralized exchanges won’t let clients transact in it, and that means XRP liquidity will be reduced and that means — at least temporarily- a price drop (which we MAY for the most part have already seen?). That being said, I’ve never owned any XRP nor will I — there are plenty of other coins out there that have way more upside and less downside risk.
Decentralization is the Key
The key question here I believe is: which Alt coins have sufficient decentralization so as to make them similar to BTC and ETH which the SEC and other regulators have already stated are not at risk because of truly being decentralized at this point? I believe UNI and DOT are two of these, but I will need to do more research in this area as I am holding some Alt coins that are doing very well, and hate to see them hit hard bc of this regulatory technicality. Generally, anything that has a DAO (Decentralized Autonomous Organization) that manages governance can claim true decentralization. MKR is another one, and we have seen all of these Alts doing VERY well in the market which seems to indicate the market agrees with this. Big money (a16z) backs MKR too which I could see getting favors passed bc of this etc. Also, the Maker DAO devised the stable coin DAI which would like to see its enemy USDT killed another reason I expect USDT to be killed. The people behind MKR will have the legal friends to put that battle down. Ultimately though they may not want that simply because the collapse of USDT may really be bad for all of crypto and too systemic of a risk. I would put the collapse of Tether (USDT) as the #1 risk to BTC and crypto. However, I feel the reward is worth the risk. If one waits for this risk to be removed the opportunity cost is very high. The twitter community of security lawyers I’ve consulted although limited seems to believe nothing will be done to XRP or USDT for quite sometime, which gives BTC and crypto a lot of time to run still.
