Bitcoin is winning. Period. In fact, it may have already won and the people arrayed against it, no matter how powerful, are finally beginning to realize this.
This week saw a slew of major announcements which all point in this direction.
Of course the big news was Elon Musk’s announcement of Tesla Corp. having a $1.5 billion position in bitcoin.
But that news came on the heels of a lot of other news, like VISA saying it was ready to embrace bitcoin to help banks build crypto-payment and trading services.
VISA-backed debit cards have been around for a while now, like BitPay’s offering, but this announcement by VISA is different as it highlights the the futility of fighting the market when the market chooses something better.
And speaking of BitPay the most important announcement of the week, in my opinion, is Apple’s allowing BitPay’s Mastercard to be added to ApplePay wallets. Google and Samsung are next.
Later in the week MasterCard followed VISA now saying it will allow a handful of cryptocurrencies to flow across its network.
Lest I forget that no less than three major pillars of the banking community gave up fighting the bitcoin wave.
- Bank of New York Mellon announced custodial services for its institutional clients. They wouldn’t do that if the demand wasn’t there.
- J.P. Morgan, which has tried no less than four times in as many weeks to create a psychological break of the latest bull wave (H/T Zerohedge),
- Morgan Stanley’s investment arm is now considering taking a position, directly after buying up a ton of MicroStrategy, which is itself a proxy for bitcoin.
But still there is no ‘use-case’ in the words of perma-skeptics like the venerable Peter Schiff who is becoming increasingly desperate to make his case while trashing his bona fides as an Austrian-style economic thinker.
This tweet proves what I said about Schiff last fall.
To deny that Bitcoin has any value is to deny the fact that information is a commodity. And that’s truly facile when, at its essence, that’s all an economy actually is, information. The goods that move can only do so efficiently with good information about their production and distribution.
Price is the value of the information being transacted.
Peter Schiff makes his living getting paid to dispense opinions on markets. His entire life is built on the idea that information concentrated in one man’s mind is worth something to someone else who is ignorant of that information.
That people like Peter Schiff deny this simple process by which something acquires and builds commodity value through time is also irrelevant.
It means that while Peter studied Austrian economics he just didn’t understand it.
But it’s not just Schiff, it’s otherwise really smart people, who I normally respect, making the dumbest arguments imaginable in public.
It must be the hypoxia. It eventually rewires everything. Because Mr. Antifragile himself continues to miss the reasons why humans desire antifragility and expects that to occur on his time schedule not theirs.
So, he falls back on insults defended by dubiously-applicable math rather than admit to the paradigm shift happening in front of his eyes.
Bitcoin’s volatility isn’t as much a bug in its design but a feature of its adoption curve.
Because in any appreciable sense when viewed against other major assets as a function of its US dollar price moves, Bitcoin isn’t really all that volatile.
Bitcoin’s price is volatile, certainly. More volatile than any of the other assets here when comparing the weekly range from low to high versus the standard deviation of that range… call it internal volatility.
But that volatility is a function of it being in a bull market, operating in far less mature trading platforms than these other assets and about twenty other variables that do not apply to Apple, Gold, Silver or the Dow Jones Industrials, making any statistical comparison between them, frankly, puerile.
Mr. Taleb should know comparing statistical data from sets with different boundary conditions is the height of intellectual weak sauce.
And yet, given those caveats, on a week-to-week basis, trading 24/7 without arbitrary halts like the others, bitcoin measured against itself is only slightly more volatile than any of these other assets with higher internal volatility.
It’s an asset rapidly expanding its userbase, it’s acquiring monetary character daily as more of the old monetary system sees the opportunity to make a vig, in VISA and Mastercard’s case, or provide explosive returns for investors looking to hedge against the chaos of a ruling class gone equal parts crazy and moronic.
It’s a growth stock that is just finding the sweet spot of its growth curve as conditions for its value proposition increases daily.
Which brings me to the following observation:
If you are an asset manager today and you saw the brazen display of incompetence, pettiness and cluelessness in Congress and the Senate…
If you are an asset manager today who sees the draconian and willful destruction of the U.K. economy by a Prime Minister who should literally be dragged out of 10 Downing St. by his hair and thrown into the Thames…
If you are an asset manager today and see the ruthless political shenanigans perpetrated on the major economies of Germany, France, Italy and Spain…
… and you aren’t buying the living shit out of bitcoin right now, you should lose all your business!
What argument can you make to pile up more dollar-denominated assets in your client’s portfolios in a world literally drowning in dollars and dollar liabilities, knowing the policy responses will be to create more dollars, undermine the confidence of the system and accelerate a fundamental shift in the monetary system?
Are you really that enamored of Christine Lagarde at the ECB? Jerome Powell at the Fed? Kuroda at the BoJ?
Personnel is policy after all.
Are these the best and brightest the world has to offer us for stewardship of our future as a species?
Or are you finally willing to listen to what your clients are telling you and now have to pile in to save face?
Most of you have already missed the greatest wealth transfer from the rich to the middle class in history but, hey, past results don’t guarantee future returns, right?
The point is that bitcoin, and cryptocurrencies in general, are still assets in their infancy. But as technology anyone with an ounce of intellectual honesty can tell you where this is all headed.
And this week’s mass of announcements is the dam breaking down of adoption. It’s the clearest signal yet that the overreach and arrogance of the political class has reached its limit of power.
We don’t buy it anymore. And the whole system is now accelerating towards a catastrophic crisis of confidence.
Making arguments about historical volatility or intrinsic versus extrinsic value is, at best sophistry, and, at worst, egoism.
Bitcoin’s total addressable market just jumped psychologically by an order of magnitude last week. That’s why it’s winning.
We’re reaching the inflection point that I’ve talked about before. It is the moment when a critical mass of people stop valuing their portfolios in terms of dollars but in terms of bitcoin.
Years ago, before bitcoin, when I was an advocate for the Liberty Dollar, I used to go everywhere with two one-ounce silver rounds in my pocket. And when I walked into a place where I could spend money I would reach in and hold them in my hand for a minute.
I asked myself one simple question each time, “Would I spend these coins to buy that thing.” And more often than not the answer was, “No.”
It was a great exercise in teaching myself fiscal restraint. Today people are doing the same thing with bitcoin. They’ll spend their dollars or euros but they are HODLing their bitcoin because they KNOW it’s more valuable to them than those dollars or euros.
Christine Lagarde called bitcoin, “Funny business money,” in her latest attempt at both wit and to warn us what her plans were. It failed to impress us on both fronts.
Because Lagarde, like Schiff and Taleb, believe they know what real money is. They think because they have the power (Lagarde) or the pulpit (Schiff and Taleb) that they can define for the market what money is or what it will be in the future.
These aren’t dumb people, but they are being dumb here. Because, at least for Taleb and Schiff they are supposed to know that the market is bigger than any one person or group of people.
Lagarde will learn this lesson in the hardest way imaginable.
Bitcoin will rise to some new, seemingly astronomical high that will be “unthinkable.” Eventually, sentiment will get so out of whack and supply will balance demand.
That will set off a correction of major proportions, think 50-60%, maybe more.
That’s fine. Been there, done that, got the alt-coins to prove it.
I’ll have to fend off the slings and arrows of people who think they’ve won some kind of victory because bitcoin went from $14,000 to $100,000 and corrected back to $50,000 when it was $8,500 at the beginning of 2020.
And I’ll do what I’ve been doing for four years now, calling them losers.
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Bitcoin *does* have objective intrinsic value. It is held and communicated with integrity .. the volume will fix at 21 million Bitcoin, and no outside interference can mess with communicating Bitcoin.
But, for those in love with Fiat, Integrity has no value.
sure “money” that you cant hold in your hand and that is dependent on electricity sounds like a great idea🙄
Us losers that know a world war will kill the internet bc electricity will be rare, not to mention the destroyed infrastructure.
I am SURE a few conversations with Serbs that lived trough the u.s/eu/nato terror war can set your mind straight.
Then we have the problem that the banana republic you live in DO NOT have ANY defense against modern weapons and admited it was relying on its nuclear triad to “defend” der heimat…
So sorry mr Luongo, i do not share your optimistic rosy dream future vision on btc or other e-money🤷♂️
Calling people losers bc they do not trust something NO ONE knows who really created it is hyperbolic and childish.
For all you/i know it is a cia asset/invention and i wold not trust it no matter what.
Barter and tilling the soil is our future NOT the 4th industrial revolution and btc 😉
So at best you are naive and worse case scenario is shilling for “the man”, war is certain now.
Your accept of election theft and circus courts/impeachment made sure off that, you live in a 3rd world shithole banana republic, just like the eu and western Europe will become shortly.
Read Martyanov`s books and you migh learn a few things about modern warfare and why “we” in the nato sphere are fucked when your cheater in in the white house greenlight the move that kills us all or destroy us conventionally.
I’m glad I read your comment – very informative.
No
It isn’t. It’s actually a very ignorant argument because if we’re dealing with that scenario none of these arguments matter
Be careful about citing Martanyov though. And I understand Russia’s advantages very well and have written about them extensively
We are in an elaborate bluff between the Powers That Be against the people. It will be ugly and difficult. But if you don’t understand what just happened and why you should be cheering it I can’t help you
Volatility reflects the small size of the Bitcoin market. And volatility is also an indicator of price discovery happening. You do not see volatility in most other small markets (eg. small cap shares) because price discovery is actively suppressed by the manipulation of central banks and their minions.
The more Bitcoin is rising the more people want to jump onto the gravy train. It’s greed, plain and simple. The more entities like Musk and other billionaires will get huge stakes the more volatile it will become. My question, what happens when those people exit with their entire stake? Bitcoin can go to below 1 in a very short time.
For me it looks like Bitcoin is just another tulip, driven by greed and eventually destroyed by fear.
If after all this time, and the tens of thousands of words I’ve written explaining why Bitcoin /= tulips, then I can’t help you.
I suggest you continue to do the due diligence and learn the foundations of money (start with Rothbard, then read Ammous’ The Bitcoin Standard) before making that comparison in public again.
Seriously, this isn’t a pump and dump for me. I’ve been on and off the bitcoin train since 2010. This isn’t tulips, this is a paradigm shift back to private money in an age of greed, not by the people, but by the oligarchs.
The people are starving.
Well written, appreciate you taking the time to share your thoughts. I was a big sceptic of BTC/crypto for a long time, partially because I listen to Schiff’s podcast and talks quite regularly. I realized in the recent past that guys like Schiff (and others you mentioned), while smart, fail to take into account new variables in the world. They have built their reputation and mindset around a certain paradigm and have fixated on that as the source of their success – for a long time (5+ years) I also fell into that trap but am slowly opening myself to monitor new variables that arise. Actually went long BTC about a year ago and very glad I did. Everyone who mentions that it has no inherent value fails to also realize that the USD itself is a joke with the astronomical printing presses in the last 10 years – all value is created when you can convince enough people the value is there and like you, i’ve changed my mind to see the value.
Good for you. This is the hallmark of an enlightened person. What bothers me about Schiff is that he should be smarter than this and should stop talking his book like every other Wall St. Punter
The gold only argument vs. The Fed is outdated. It was a good position to take 5-7 years ago but it isnt today, thanks to bitcoin
If central banks launch their own cryptocurrency (which they clearly plan to) and try to ban private crypto (which they clearly will) and then demand the personal details of everyone who bought private crypto (which the exchanges will obviously hand over) and the owners of private crypto then get prosecuted or windfall taxed (which would be the most obvious ways to stampede them into the CBDC), how will owners of private crypto resist this process when the central bankers can change laws on a whim?
I get that your Bitcoins can’t be confiscated Tom, but YOU can be taxed or arrested for owning them, yes?
I also get that this is true of gold and silver, and I fully expect the same treatment for those holding metal. Coin dealers can expect to be shut down, for example?
There are risks to everything. They tax everything and believe all of your income by the definition belongs to them. Decide your risk accordingly. That still doesn’t mean bitcoin isn’t stressing that system to its limit however
Yes I agree with that – stressing it to the limit. Which will just bring forward the transition, surely?
But your point appeared to be that Bitcoin was winning, not that it would mean we all lose a bit earlier.
Are there not more tangible assets that we could move to, that unscrupulous central bankers are less unhappy to see grow in value?
After all, this isn’t an ideological war – just investment.
It is both investing and an ideological war, Ivordeacon. It comes down to private money and a free market for it or central control over money and its issuance.
Those that don’t understand this continue to see it as gambling, a scam, etc.
It also doesn’t mean that those in power won’t pull out every trick in the book to stop what’s happening, but in the long run they will fail.
Meaning, be prepared for everything. Bitcoin is important. Gold is important. The paradigm shift is occurring and bitcoin is in the process of repricing the world because you can’t counterfeit it and confidence in the people running the old system has collapsed… all that’s left is people running around trying to figure out how to hide from the fallout.
Bitcoin is one of those avenues.
I do not believe that Rothbard would have invested in Bitcoin. One cannot rationally justify these kind of price levels. It is always a “paradigm shift” until it isn’t anymore …
The ironic thing is that I did own 1,000 Bitcoins (bought in the 20 cents range) when it was mostly unknown. I did not like the huge exchange rate (back then there was no ETF) but wanted to figure it out on my own. I sold all of it when it moved close to the 80 cents range.
I’d never dreamed that it could go to the two digit Dollar level – not to talk about hundreds or thousands (soon Millions? :-D ) of Dollars.
Do I regret selling? Not at all since I’d have sold it sooner or later not expecting this kind of mania. It is certainly a mania for somebody who paid cents for it since nothing has changed about the Bitcoin, It is the same Bitcoin when it traded for cents. What has changed is human perception and that can change very quickly again.
Anyway, I do not feel that I am missing out and for all Bitcoin fans best of luck to you!
Loser! haha. It’s OK. I once bought Apple at $7 when they only had a few weeks of operating cash left. Three weeks later Microsoft bought in and the price doubled. Sell!
Beautiful move, I applaud it. doesn’t invalidate the people continuing to shit on bitcoin because they missed a 2 million bagger.
Nothing has cganged? Someone hasn’t been watching what’s going on in the world. Ostriches gonna ostrich…
Tom, as an economic ignoramus (I’m going to have to read your archive!), I agree that anything that takes control of money away from the evil buggers of the Deep State is good. But what do you say to India’s decision to ban cryptocurrencies? Can the DS stop this or hijack it? This must be one of the first time in history when a new decisive technology has started off in the hands of the plebs and not those of the “elites”.
One of Gary North’s major criticisms of bitcoin was that the only thing it can buy is “real” currencies, and thus crypto currencies aren’t “real” currencies. I wonder if he will have a different take on it now. Schiff has a financial stake in pushing gold. North is one of the only other prominent Austrian Econs that is so negative on crypto, and I don’t think it’s from any financial stake. Maybe he just doesn’t want to be colosally wrong like he was with Y2K.
I greatly appreciate Dr. North and consider him one of my mentors and heroes. That said I don’t think he is correct about bitcoin. And it’s a shame
Soooo. Following you for quite a while. 1.) i like cryptos a lot. Love the technology. 2.) btc as proto-crypto did an extremely important thing: showing that one can pay w/ cryptos/buy something. It works. 3.) blockchain/transaction is slow, relatively(!) insecure, inefficient.
So btc will never be used widely as money. There are great projects which are 1-2 generations further. Btc would not win cryoto-competion in a free market (you know what i am referring to: denationalization of money). My guess is: hbar (hedera hashgraph) would win (but hashgraph is so much more than “just” currency. Some interestings things to discover for you, i think).
In a nutshell: btc won for (all) cryptos against useless fiat fake money but already lost in a competition against other cryptos (sure, one can still make gains with speculation).
I read that for btc price of $500k it must absorb about 50% (if i am not mistaken) of world’s gdp. Realistic? Getting tough in those regions. Moreover i own precious metals and some stocks as well. I love silver :)
(I am germany, sorry for my bad english here and there)
No worries about your english, it’s a damn sight better than my German.
And, in so many ways, I agree with you about Bitcoin itself. It is alpha code that went viral.
It doesn’t have to win the big race against the other crypto-projects. It has to perform the mission it’s on now, to tear down the centrally-planned society.
What happens after that is another story, I think, for another decade. Let’s not get ahead of ourselves. One fight at a time.
The only constant is change.
Great comment!
thanks!
“to tear down the centrally-planned society”
well, that’s true. it’ much more than “just” currency/money.
and yes, the transition will take some years.
p.s.: i’m a bit jealous of you down there in florida. you have #GoFuckYourselfJoe-DeSantis and great wheater, we have merkel (the “ministerpräsidenten” respectively, who are 100% hand-picked merkel-soldiers) and -15°celsius w/ snow despite the “climate-change” :D (they say it is BECAUSE OF the “climate change”…totally sick). hoping for secession ;)
anyway. great work as usual. keep it up!
Mike Shedlock is another Austrian economic blogger that usually has his head screwed on pretty tight about most things economic but we have to relegate him to complete idiot about cryptos. His arguments against crypto were so pathetic and strained that I had to stop reading his blog. I remember he was making some sort of ad-hominem argument against Dogecoin many years ago. If he had bought Doge instead of the childish name-calling he could probably retire today.
I felt the same way after a while. It’s a shame Mike went down the TDS route as well. His stance on crypto is truly inane.
BTC is a prototype, like the Newcommen engine was. It is deeply flawed and will never amount to anything but a fast moving candle chart that people can print on. That’s why it is now sold as ‘a store if value’.
If you transact once to buy your eco friendly Tesla with it, that’s 2500 miles of electricity use.
It is not a digital cash like the white paper dreamed of. You can’t use it as such because it takes an hour to confirm a transaction, costs $20 each time, and uses so much electricity even now, that it’s not feasible to use broadly. It is not decentralised because having miners is inherently centralising.
I would look at nano, it is exactly what Bitcoin set out to be, and dirt cheap. When crypto currency does start getting traction, it won’t be through bitcoin.. the great BTC replacement will be a hell of a ride for actual useful crypto tech.
Still, never stand in the way of a herd!
It’s funny to see a guy like Luongo join the herd at 11:59 PM.
You mean 11:59 on July 23rd, 2010 right?
https://www.lewrockwell.com/2010/07/thomas-luongo/the-ferment-in-alternative-currencies/
Fuck off.
I am astonished to read an arrogant Tom, no idea you had this in you. You write again and again “then I can’t help you”. Bitcoin is not a tulip. I like tulips. Bitcoin is an idea, which I do not believe in. Could I be mistaken? Yes. But I do not need bitcoins, I so not need a car, no smartphone, no fakebook… I am libertarian I seldomly do or need what others do or need. You are in the herd Tom and some of us do not feel well there. I wish you success with this belief.
Fin,
It’s fine that you don’t need them. I don’t care if you don’t buy them. You don’t have to believe in them to own them. You don’t have to love bitcoin.
But you cannot deny what is happening, nor can you mix your personal opinion into the discussion.
This is what I’ve been railing at Austrians/OnlyGold people for months now. You are letting your emotion and or opinion blind you to a massive opportunity. And I’m sorry if that comes off as arrogant, but I’ve been writing about bitcoin for 4 years here, educating on the finer points of monetary theory and how bitcoin fits into this and yet still you are unconvinced because {insert deunked argument here #12}?
You can imagine my frustration at that. And then the insanity of luddites like Schiff and, now, Taleb.
You do what you want, be who you are. But understand yourself for real and be honest about why you don’t believe in bitcoin or cryptos in general.
And if, in five years, a greater percentage of the world’s money flow is accounted for in bitcoin than it is today, ask yourself if you would still hold the same position?
If no, then suck it up and begin building a small position, 1%-2% of your assets , in the damn thing and stop trying to be right when the market is telling you something different.
The fact that so many people you purportedly respect feel different than you do might should give you pause. Bitcoin is great, right up until the moment it isn’t. Bitcoin fails about half of the tests of what constitutes “good money.” It may be a fun speculation, but so were tulip bulbs…right up until they weren’t. Oh, and by the way, don’t call your readers losers. Better to call them former readers…tool.
When you make the same argument about Bitcoin at $100 as you do 6 years later at $49,000????
You’re a fucking loser.
Come up with better arguments at least if you are going to hate.
And, if this wasn’t your first time here you’d know that I have delineated the risks to bitcoin multiple times. But, I wasn’t being kind on Saturday because the inflection point is here which destroys most of those concerns.
If that makes me a ‘tool’ so be it. I’d rather be a ‘tool’ that was years ahead of the curve helping people become wealthy than a ‘cuck’ who played it safe to simp to a bunch of monetary luddites.
Do you argue with Schiff on Twitter? It’s fun Tom
Not really Marcus, I don’t like to pick on cripples on Twitter, it’s gauche.
I only like to point out that Peter doesn’t understand the basics of money.
Well I took a butcher’s at Mises. It’s a bit theoretical. Money is a means of control in today’s world. Btc is decentralized = the peasant’s revolt. Its all about control. As a means of exchange BTC is actually a bit crap
Do you think a fair analogy for Schiff would be a man standing outside Broad Green Station from 1830 until 1845 with a double-sided body-billboard declaring that “One day it will crash and you’ll all stop using it” and “Steam locomotion is not real transport because real transport requires mammalian perspiration……a thousand guineas to anyone who can prove me wrong!”
Alright so now the thing is that the whole idea with capitalism, with the capitalist entrepreneur it all works because he can with some confidence calculate that his entrepreneurial activity will generate more wealth than what he borrowed to fund it. How is the entrepreneur going to finance his venture with X Bitcoin when for all he knows in a year he will owe 2X or 4X or 8X rather than X * ( 1.05) assuming he borrows at 5% ? Is that not Taleb’s point ? Yes there is an infrastructure for bitcoin which works in practice as it was designed to in theory. Fine. That is not in dispute. The question is how it will function within the infrastructure of capitalism itself. How would financing venture capitalist pursuits in Bitcoin serve to reduce rather than increase risk ?
Bitcoin isn’t done repricing the world so its becoming money and that process creates what we’re seeing
Moreover the lack of volatility we see today is an artificial construct which will fail spectacularly. There will come a rational repricing of gold in terms if bitcoin because of these two things. Gold is cheap. Bitcoin is winning, gerund not past participle. The dollar conveys false risk premia
But is it just a 2 horse race? Ethereum is fast catching up BTC… Crypto 2. 0 fast approaches
Bitcoin is a metaphor for cryto in general