OT: Crypto Currencies
News recently broke that Russell Okung will be the first US professional athlete to be paid a portion of his salary in Bitcoin:
"The Carolina Panthers will pay half of Russell Okung's $13 million contract for 2020 in Bitcoin, according to NFL Network's Ian Rapoport.
The two-time Pro Bowler signaled his desire in May 2019 to be compensated in the form of the popular cryptocurrency and confirmed he got his wish Tuesday."
I've been very bullish on cryptos for years and it's been a fun little run. Inflation associated with the pandemic's stimulus plans have further pushed the value. Here is a short video from earlier today that helps explain this value. Tough to take a guy in a hoodie all that seriously, but he knows his stuff.
What say you, already involved, skeptical yet intrigued, or just not interested?
December 30th, 2020 at 10:12 PM ^
Russell is banking on a sustained bubble.
December 30th, 2020 at 11:52 PM ^
Maybe, or maybe the dollar is the bubble and not bitcoin. That's the main counterpoint to calling stocks/crypto/real estate a bubble -- it's totally possible the dollars those assets are priced against aren't an even bigger bubble. Of course, in 2007/2008 it really was equities/real estate that had their bubble popped, but since then the bears have gotten pretty consistently hammered outside of march 2020. And yes, inflation hawks have also gotten hammered.
December 31st, 2020 at 1:02 AM ^
Bitcoin already was a bubble. It crashed hard. Thankfully I had sold almost all of it before that crash. I wish I had bought back in. I thought about it when it was 4 or 5k, but I also enjoyed not looking at it and thinking about it all the time. I should have just put some money in and had a set price like sell if it hits 20k again without worrying too much about the rest. I'm sure there's some kind of long-term future for crypto, but it's rising at an astronomical rate just like it did before when it crashed.
December 31st, 2020 at 3:09 AM ^
Difference now is that it has consolidated at higher levels and institutional investors are coming on board. If it crashes again, it would most likely be due to the US Government trying to sabotage it to keep the Federal Reserve Note as the World's Reserve Currency. If everyone got onboard with Bitcoin (or another crypto out of control of the government), it would be a major disaster for the banks and their economies.
Here's Charles de Gaulle talking about how the US benefits from having the dollar as the world reserve currency in 1965.
December 31st, 2020 at 9:51 AM ^
The greenback's fiat currency status has engendered a very reckless combination of tax and fiscal policy in the US since Reagan. Honestly, we don't deserve it given our profligate ways.
The Chinese have been trying to get oil priced in yuan. If that happens there could be the mother of all runs on the greenback.
December 31st, 2020 at 9:17 PM ^
Maybe we don't deserve it but do you really want that outcome?
Fiscal discipline might be a virtue but having it forced on us would not a great thing.
December 31st, 2020 at 9:12 PM ^
This is exactly why it will eventually be discouraged or controlled. No sovereign entity wants competition for it's legal tender, especially when it is the world's reserve currency and derives all of the benefits of that status. Eventually the acceptance of a non-government issued currency is an invitation to anarchy.
December 31st, 2020 at 3:21 AM ^
In retrospect wouldnt of just holding until you needed the cash be the way to go? It seems like if cash (the US dollar) is its competition its a pretty safe investment.
December 31st, 2020 at 4:17 AM ^
Basically. Saving in fiat is basically subsidizing the wealthy who have the greatest access to cheap loans and being bailed out when things turn sour. Also, the real interest rates for savers are not the 0.1% the bank offer but a negative rate due to inflation. That is why you will be able to buy less with $1,000 next year. In many cases in our economy today, "price increases" are a derivative of inflation and NOT market demand.
As more and more people figure out how banks are screwing them, they will need to resort to more and more government force to force people to use their currency.
December 31st, 2020 at 5:20 AM ^
I’m ok with most of your post. Where I want to draw some distinction is with the concept that “banks” are screwing people. We are individuals who freely enter into contracts. The FED (which is a private bank of banks) has a boss appointed by the President and confirmed by the Senate. Therefore, again, we the people choose our representatives who then choose the head members of the FED. The Fed stabilizes our deficit spending. The Fed doesn’t create deficit spending, WE the people do, via congress. We are in a mess and one day the music will stop. Bitcoin is a hedge against that, similar to the VIX hedging against a market correction. The concern I have with Bitcoin is that if it threatens the power of the federal government, the government will try to intercede. (Will fail, but failure isn’t always sudden).
December 31st, 2020 at 9:32 AM ^
Firmly disagree about having a "choice" to vote in a rigged system. The real choice is to opt-out, which is what people are realizing and why they are drawn to crypto.
I also don't ever recall signing a contract or electing anyone to force me to accept Federal Reserve Notes in business transactions or only be allowed to use them to buy anything. That is not a free-market economy.
December 31st, 2020 at 9:41 AM ^
Thought that was Whitey Bulger.
December 31st, 2020 at 9:05 AM ^
The dollar is primarily a form of currency, not a speculative asset
bitcoin is a speculative asset that claims it’s value is as a currency , even though less than 1% of it is ever used as currency
December 31st, 2020 at 2:27 PM ^
Bingo. Bitcoin is a very poorly designed currency, and should be viewed solely as a speculative asset.
December 31st, 2020 at 9:20 PM ^
^This.
December 30th, 2020 at 10:16 PM ^
I'm sure the mutual funds I'm in are exposed to them in some way, so I hope they go crazy. I dabbled a little bit a few years ago but ended up going the more conservative route.
December 30th, 2020 at 10:23 PM ^
fantastic idea
December 30th, 2020 at 10:31 PM ^
It’s no different than any other speculation.
The nice thing about stocks is that even if the whole world ditches country specific currency and adopts Bitcoin, I still own tiny pieces of companies and they’ll just adapt to the new normal.
December 30th, 2020 at 10:35 PM ^
I would definitely take half my salary in Bitcoin.
December 31st, 2020 at 1:04 AM ^
I wouldn't right now. It's due for a big correction.
December 31st, 2020 at 7:15 AM ^
simple solution: i'll take ill_legal's salary in bitcoin. that way he'll be totally insulated from any risk of crashes or those distracting rises in value.
This post hasn't aged well...
December 31st, 2020 at 9:45 AM ^
I mean, anyone can convert their dollars to bitcoin.
I think Russell did this for the attention. Otherwise, he'd have just converted it himself. I am sure his contract pegs the total amount of compensation to a certain number of dollars, rather than bitcoins.
December 30th, 2020 at 10:47 PM ^
I hold a number of cryptos including Bitcoin. The institutional demand for BTC from sources such as PayPal, square, greyscale, and others seems to be really driving the current bull run. As it appears that more and more institutional investors will be entering the market, the outlook is very bright. Glad I got in when I did and really enjoying this run.
December 30th, 2020 at 10:47 PM ^
A couple years ago I thought about creating an MGoCrypto for use on this site but decided to pass. Maybe someday.
December 30th, 2020 at 10:54 PM ^
You mean my MgoPoints aren't a crypto currency? Damn! I thought they were worth something.
December 30th, 2020 at 10:51 PM ^
I dont understand how bitcoin works so you can sign me up
December 30th, 2020 at 10:55 PM ^
They're not for me.
December 30th, 2020 at 10:59 PM ^
Suuuure they aren’t, I believe you
December 30th, 2020 at 11:08 PM ^
I am heavily invested in Bitcoin. Bitcoin is only a small fraction of the nearly $100 Trillion world currency market at less than 1% (about $0.6T). That market is expanding as the US and China print money for their economic competition. If Bitcoin challenges the US dollar, Euro, or Chinese Yuan, the upside is 50x its current value or more. There will only be 21 million bitcoin.
I also take the view that Bitcoin is the only “Moral Money” as the Federal Reserve and other central banks have manipulated currencies to fund wars, Wall Street corruption, etc. Not to mention that it will end the inflation tax which disproportionately harms the poor. Bitcoin will radically change the world for the better once it is adopted.
December 30th, 2020 at 11:31 PM ^
I also take the view that Bitcoin is the only “Moral Money” as the Federal Reserve and other central banks have manipulated currencies to fund wars, Wall Street corruption, etc
Hope your investments work out for you (I sincerely mean that). But before you settle too comfortably on that moral high horse, just keep in mind that cryptocurrencies (including Bitcoin) are used extensively in the black market, funding everything from the illegal drug trade (especially fentanyl), illegal sex trade, arms market, murder for hire, money laundering etc. Of course the same can be said for the USD, but there is nothing about bitcoin that makes it immune from abuse.
People can be moral or immoral. Currencies know no morality.
December 31st, 2020 at 9:58 AM ^
I agree that Bitcoin like all currencies has been used for crime. Where I draw the distinction is that Bitcoin is decentralized while fiat is centralized. Central control leads to more corruption and abuse. Bitcoin may be the first currency in world history that cannot be debased (by pure mathematics). Gold coins were often debased by kings to increase the king’s profits. The kings would mix in subpar metals into the gold pour and take the difference. Because of that, an argument exists that Bitcoin is a better store of value than gold.
December 31st, 2020 at 1:09 AM ^
"Bitcoin will radically change the world for the better once it is adopted."
No, it won't. You can control how many bitcoins you have but you have no control over the value. There was a big bitcoin cash scam when things were going up a couple years ago. The value got jacked up high and people were going nuts buying it and then the whole thing crashed. I don't understand the details of mining and all that enough, but basically a few rich people in Chinese were operating at a loss to mine bitcoin cash and buy in and drive up the value and then once it exploded they sold out and took a lot of people's money with them.
How do people think bitcoin is going to end things like corruption? Funding wars has nothing to do with manipulating currencies.
December 31st, 2020 at 1:38 AM ^
Bitcoin and Ethereum (and gold) can't and won't "end corruption"... But they'll sure prevent a few insiders from rigging a system, creating debt instruments from nothing, and then funneling the proceeds to their buds in the so-called primary dealer banks.
Providing an alternative to the banking cartel is a positive thing. Aren't progressives all about "choice"? Ah yes, really just one choice.
Funding war has EVERYTHING to do with currency manipulation. Do you think the state would fund infinity wars if we had sound / scarce money?
December 31st, 2020 at 6:13 AM ^
It is no coincidence that the century of total war coincided with the century of central banking.
December 31st, 2020 at 6:54 AM ^
Countries had had central banks for centuries. . .
December 31st, 2020 at 7:41 AM ^
While that is certainly true, not to the extent as the 20th century though. The reason central banking is an instrument of war is that it is difficult to finance a war with taxes - taxes are unpopular. Central banks printing money (to buy government bonds) is the most palatable way for a government to fund war. People are not good at connecting the dots on why their living standards have decreased - it’s not obvious.
December 31st, 2020 at 10:49 AM ^
I may be missing your point, but wars have been funded for centuries. Europe was in an almost constant state of war between the 16th century and WW II. Granted most of the money needed came from loans and not central banks printing money but countries will alway find a way to make war if there is political will
January 1st, 2021 at 8:40 AM ^
Could you imagine there being a 30 year war before the 20th century? Impossible!
December 31st, 2020 at 1:41 AM ^
Not sure why people think there is a way to overcome the human condition. We're amazing at feeding our greed and manipulating situations/stations that elevate our egos and bank accounts.
We have a bit tossed into the bitcoin ring. I'm intrigued by the idea, but fully expect it to be perverted by someone smarter and greedier than me.
Cheers
December 31st, 2020 at 2:23 AM ^
That's the beauty of gold and silver. Timeless. Proven store of value. Incredible conductive properties (gold) and industrial / medicinal (silver). Gold does not corrode! Literally thousands of applications. Whenever the winklevoss twins say "gold will be falling from the sky" as some sort of witty retort to gold bugs vs crypto I laugh. If gold was so common we could pave our roads with it, we'd have the most prosperous society known to humankind.
December 31st, 2020 at 3:17 AM ^
I think the OP meant that how it's created (via mining) and that there is a maximum limit is more moral than the Federal Reserve robbing the publics bank accounts all day every day via inflation to fund wars, bailout their buddies, and fund other dark activities that violate the Geneva Conventions everyday. As MLK said, the US has socialism for the rich, and rugged free market capitalism for the poor.
When you sign up for Bitcoin, you know there's a cap, that it is being mined at a certain rate, and gasp, no one is forcing you to sign up for it or transact in it. With the Federal Reserve Note, thanks to legal tender laws, the Federal Reserve Bank created its own monopoly on money, shoving it down everyone's throats. There is a reason you cannot go to a store for example, and transact in gold or silver (legally). It's also why the US Government considers them "collectibles" so they can tax the hell out of people who hold them.
And also, the reason Bitcoins price fluctuates is based on supply on demand, like anything. The reason the USD does not fluctuate as much, is because the government makes it a crime to not use it domestically and invades and sanctions countries that refuse to use it for trade (Iraq, Libya, North Korea, Iran, and more recently, larger powers). Its "market demand" is mainly upheld through the use of force, like a mafia saying, "We're making you an offer you can't refuse."
December 31st, 2020 at 5:27 AM ^
Since the Civil war, the US has engaged in monetary warfare. Manipulating currencies is a tactic used to fund wars, and weaken friends and enemy states alike. Not trying to be not picky, and I kind of see what you are trying to say, but the fact is, currency is a tool of the state and can be utilized in wars.
December 31st, 2020 at 12:58 PM ^
Civil War was very abusive with the greenback dollar. Even during the Revolutionary war, the Continental currency was dramatically depreciated. Many of the founders of the country were quite skeptical of central banking:
“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” - Thomas Jefferson
January 1st, 2021 at 8:42 AM ^
Of course it can be a tool, but there have been wars before there were even currencies. The idea that bitcoin is going to end wars, or even long ones, is not based in reality.
December 30th, 2020 at 11:29 PM ^
Well the USD isn’t going to be worth anything in a few years.
December 31st, 2020 at 7:24 AM ^
I’ve heard this my entire adult life. I bet my kids will hear it too and then my grandkids.
December 31st, 2020 at 7:56 AM ^
We also haven’t been spending 30 trillion dollars a year
December 31st, 2020 at 9:43 AM ^
What does that have to do with anything?
December 31st, 2020 at 9:46 AM ^
Printing that much money makes every other dollar worth less. I didn’t think I’d need to explain inflation but this year is unsustainable to say the least.