Bitcoin Q&A + Learning Resources

[craig]

Hi, I've been lurking around here for a while and noticed a few posts about Bitcoin. A few people seem to have an understanding of it, but most appear to cast it aside as a speculative asset too risky to bother with. I strongly believe Bitcoin is the future of money. The reason I'm starting this thread is because I want to help with Bitcoin education in general, but particularly for foreigners living in Japan (where I have been living since 2014). To learn about and understand the importance of Bitcoin, you may have to unlearn a lot of your established views of money, investing and how the financial system works - particularly if you are over 40.

If you are willing to put the effort in, you will be rewarded: not simply monetarily, but with new ways of viewing the world and living your life. I know it sounds like a sales pitch. The only way to find out if it is true or not is to learn. Since this is a retirement/financial forum, I assume that most people here are willing to put the effort in.

So if you have a question, please ask and I'll do my best to answer and provide some resources.

For anyone who wants to jump right in, here is a great website with some basic questions and answers.

In terms of books, you absolutely cannot go past The Bitcoin Standard.

If you prefer learning in video format, these are two excellent series that cover a lot of ground: The Booth Series, The Saylor Series.

[RetireJapan]

Hi craig

Welcome to the forum. I approved your post, but please remember commercial content and attempts to contact/sell things to people are not allowed here. Make sure you stay on the right side of that line

[Established]

If you are willing to put the effort in, you will be rewarded: not simply monetarily, but with new ways of viewing the world and living your life. I know it sounds like a sales pitch.

It is speculation by definition, just like FX trading and commodities and options trading. There is a large amount of risk involved in the crypto sphere, and lots of concerns about security, environmental impacts, and negative social consequences. Not to mention all of the scams and lack of transparency that plagues this unregulated sector, (I am looking at your tether).

Bitcoin does not have the utility of coins like ether, or the eco-friendly approach of proof-of-stake systems. They call it "digital gold" but it actually has less utility.

I consider my small allocation of bitcoin, ether, and XRP to be pure gambling and speculation, and I would not recommend crypto to ANYONE who is specifically saving for retirement.

[adamu]

You're a bit late, Ethereum is the future.

*gets coat and runs*

PS I've been involved with Bitcoin since 2011.

[mighty58]

While I suspect this post is nothing more than an attempt to drive traffic somewhere, as someone who has already "put the effort in", let me put my two cents in:

Bitcoin is the "future of money"? Really? To achieve that, it will need to have the technical capability, functionality to work as a currency, and political backing.

• Technical - Some cryptocurrencies appear (unproven) to have solved many of the technical requirements needed to be the "future of money". But not Bitcoin. Bitcoin specifically suffers from slow transaction processing speeds and massive energy consumption, despite making up a mere fraction of the global movement of money. I won't dwell much here because these issues are solvable, and indeed have been solved by other cryptocurrencies.
• Functional - to work as an everyday substitute for the money we currently use, it needs to be relatively stable. Currencies maintain stability with government backing, and public trust in those governments. Bitcoin advocates argue that trust in the immutable nature of the blockchain will beget trust and thus result in stability, but we have yet to see that. Quite the opposite, volatility is off the charts. And that's because nobody (apart from true believers) actually believe it will be the future of money... everyone sees it for what it is, a speculative asset.
• Political - the biggest problem I have with true believers is that they downplay or outright ignore the political buy-in necessary for mass adoption. This is probably because much of the narrative revolves around disrupting the current global financial system (a "f**k them, who needs them" mentality) and is driven by programming geeks without deep knowledge of the how currencies and monetary policy work or how they are of utmost importance to a functioning government. Massive reality-checks are needed if you think governments are going to cede control. It's hard enough just opening a bank account with a middle name.

I've put money into cryptocurrencies over the last five years. I don't call it an "investment", because there are no fundamentals underlying it, it's just a bet that it will go up in value, because I think more and more people will come piling on, creating demand. I've not entirely been wrong thus far. But I certainly don't "invest" because I think it's the future of money... indeed, if it was, the upside speculative potential would be severely diminished! I may as well invest in the Thai Baht or the Turkish Lira at that point.

[captainspoke]

...
If you prefer learning in video format, these are two excellent series that cover a lot of ground: The Booth Series, The Saylor Series.

Videos like those are a significant part of the reason that I won't touch crypto.

[craig]

Hi craig

Welcome to the forum. I approved your post, but please remember commercial content and attempts to contact/sell things to people are not allowed here. Make sure you stay on the right side of that line

Thank you Ben. Understood.

[craig]

It is speculation by definition, just like FX trading and commodities and options trading. There is a large amount of risk involved in the crypto sphere, and lots of concerns about security, environmental impacts, and negative social consequences. Not to mention all of the scams and lack of transparency that plagues this unregulated sector, (I am looking at your tether).

Bitcoin does not have the utility of coins like ether, or the eco-friendly approach of proof-of-stake systems. They call it "digital gold" but it actually has less utility.

I consider my small allocation of bitcoin, ether, and XRP to be pure gambling and speculation, and I would not recommend crypto to ANYONE who is specifically saving for retirement.

All investment is speculation by definition. When you research and buy a stock, you are still speculating that the company will be successful. If you research Bitcoin and the existing monetary system enough, you will eventually come to the conclusion that Bitcoin is the safer bet. Particularly since most traditional asset classes have now been so hideously overvalued through support such as quantitate easing (money printing) that most metrics have lost their meanings. Bitcoin has the most consistent, unalterable monetary policy of any asset to ever exist, enforced by thousands of network participants around the world.

Bitcoin is not "crypto". You are correct in saying that the "crypto sphere" is full of scams and high risk. Platforms such as Ethereum made it extremely easy for scammers to create tokens, sell them, and run away with people's money. This is perhaps Ethereum's best use case. In terms of security, the Bitcoin network has never been hacked. Security flaws have only been in exchanges and wallets, phishing etc. This is not the Bitcoin network.

As I mentioned above, Ethereum's best use case is "rug-pull" technology. I.e. making it easy for anyone to scam people. Its tokens' utility can be replicated 100x faster using a MYSQL database. Ethereum is not decentralised. It is controlled by the Ethereum Foundation. The response to the DAO hack proved this: the "owners" of Ethereum decided to re-write to blockchain history to cover up their mistake. You can find an archive of many hacks that have occurred on platforms such as Ethereum on this website: https://www.rekt.news/. Bitcoin has never suffered such an event.

Proof-of-stake perpetuates the current failing economic system: the rich stay rich and get richer. Proof-of-work (which Bitcoin uses) is the fairest possible way to determine who gets what. Want an example? Look at nature: it's proof-of-work. An animal wants to eat? It can't get more animals just because it has 10 carcasses lying around. It has to do the work to get another one.

Contrary to what detractors like to say, energy use in Bitcoin is a non-issue. Most of society's problems have arisen due to the debasement of money (money printing causing inflation). The wealth gap and losses in standards of living are caused by inflation. Our money loses its value every year. Peoples savings are diminished. We can't buy as much as we used to with the same money. Bitcoin is an incorruptible, unstoppable monetary network. In my opinion, considering the amount of good it can bring to the world, that's worth any amount of energy. Have a look at this article if you want to actually compare Bitcoin's energy usage to various industries: https://bitcoinmagazine.com/business/bi ... e-industry.

Finally, here's the 2020 shareholder letter from Stone Ridge, an $11B+ alternative asset manager. It's all about Bitcoin and why they recommend it specifically: https://www.microstrategy.com/content/d ... Letter.pdf

[craig]

While I suspect this post is nothing more than an attempt to drive traffic somewhere, as someone who has already "put the effort in", let me put my two cents in:

Bitcoin is the "future of money"? Really? To achieve that, it will need to have the technical capability, functionality to work as a currency, and political backing.

• Technical - Some cryptocurrencies appear (unproven) to have solved many of the technical requirements needed to be the "future of money". But not Bitcoin. Bitcoin specifically suffers from slow transaction processing speeds and massive energy consumption, despite making up a mere fraction of the global movement of money. I won't dwell much here because these issues are solvable, and indeed have been solved by other cryptocurrencies.
• Functional - to work as an everyday substitute for the money we currently use, it needs to be relatively stable. Currencies maintain stability with government backing, and public trust in those governments. Bitcoin advocates argue that trust in the immutable nature of the blockchain will beget trust and thus result in stability, but we have yet to see that. Quite the opposite, volatility is off the charts. And that's because nobody (apart from true believers) actually believe it will be the future of money... everyone sees it for what it is, a speculative asset.
• Political - the biggest problem I have with true believers is that they downplay or outright ignore the political buy-in necessary for mass adoption. This is probably because much of the narrative revolves around disrupting the current global financial system (a "f**k them, who needs them" mentality) and is driven by programming geeks without deep knowledge of the how currencies and monetary policy work or how they are of utmost importance to a functioning government. Massive reality-checks are needed if you think governments are going to cede control. It's hard enough just opening a bank account with a middle name.

I've put money into cryptocurrencies over the last five years. I don't call it an "investment", because there are no fundamentals underlying it, it's just a bet that it will go up in value, because I think more and more people will come piling on, creating demand. I've not entirely been wrong thus far. But I certainly don't "invest" because I think it's the future of money... indeed, if it was, the upside speculative potential would be severely diminished! I may as well invest in the Thai Baht or the Turkish Lira at that point.

You are right to be suspicious. There are a lot of snake oil salesmen around.

• Technical - Yes, most cryptocurrencies claim to have solved problems such as slow transaction speeds. They do so via centralisation, which simply gets us back to where we are now with the current economic system. The problem with cryptocurrencies (i.e. all expect Bitcoin) is that they can be controlled, their supply can be easily changed. They can be stopped, etc. Just like regular banking. Bitcoin cannot. The Bitcoin Lightning network has already solved this problem for Bitcoin. Near-instantaneous, practically free Bitcoin transfers are already a reality.
• Functional - It's true that Bitcoin cannot yet be used as a substitute for everyday money. But wouldn't you rather your savings went up in value, rather than down? I know I would. In regards to government backing and public trust, here is a website you may find interesting: https://www.usdebtclock.org/. Bitcoin is currently establishing itself as a store of value. Zoom out. In 10 years it has gone from having no value to being worth USD$50,000. Daily or weekly volatility is irrelevant.
• Political - The problem with current monetary policy is how complicated governments have made it by thinking they can manage it better than free market forces. If you think they are in control, I ask you to again refer to the link provided above. It is true that we have a large fight on our hands in countries such as the US, where the establishment bankers will do anything to try and prevent Bitcoin supplanting them. But in the end they won't have a choice. Game theory will decide it for them. Countries that embrace the technology will flourish economically through both a hard money economy and increased innovation brought about by the people moving there to build the ecosystem in a friendly environment. Did you know that in 20 days Bitcoin becomes an official currency in El Salvador? And they'll be utilising the Lightning Network to make it happen. So there's one country with buy in for you. Game theory will do the rest. In the US there are already a number of senators who support Bitcoin and are gaining a lot of followers. Approximately 46 million US residents now own Bitcoin, and many of them are quickly becoming single-issue (Bitcoin) voters. Politicians will need a proactive Bitcoin policy if they wish to gain popular support.

[craig]

Videos like those are a significant part of the reason that I won't touch crypto.

You are right to be skeptical of youtube crypto videos. The videos I linked are not about crypto and are not by "crypto influncers". They are about Bitcoin. Michael Saylor is the CEO of MicroStrategy (MSTR), a billion dollar company with its entire balance sheet in Bitcoin. Saylor (an MIT grad) wrote The Mobile Wave, in which he predicted the rise of the mobile / smart phone years before they became mainstream. Jeff Booth wrote The Price of Tomorrow. He is also a visionary and very successful entrepreneur who now devotes most of his free time to helping educate people about Bitcoin.

Anyway, I recommend watching them if you have time.