Crypto Currency

I'm down 14% in my stake. :|

 

You know cryptocurrency has officially jumped the shark when okies start investing in it.

 

I'm trying to spread the taint.

 

Today sucks but it's oversold! We found a bottom today, I think.

 

The Biden Admin is expected to release the first US guidance on Crypto currency regulation. The US is behind in regulating Crypto currencies compared to places like Russia and China.

https://www.usnews.com/news/busines...ve-order-on-cryptocurrency-expected-this-week

 

If Congress doesn't act, Treasury will. And if you own crypto, that may or may not result in what you want. We are going to a CBDC for sure. The question is who makes the rules.

 

From what I've read, Biden will direct the Treasury Dept to create rules. Regulation is coming. The Wild Wild West of Crypto will be...less wild.

 

Executive order signed today by Biden. Basically, its just a strong implication that crypto regulation is coming, the Treasury is on board, and a CBDC is going to happen. Some of you might be interested in this video. Relevant part begins about 3:45 and goes to the end. Video speculates on how gold, oil, the IMF SDRs, and a global stablecoin could figure into the architecture.

 

All I will say is that signing a law saying they will regulate crypto is much different than actually controlling. Cryptos have been built to be unregulatable. I'm sure that isn't 100% true but it will be a battle back and forth.

 

As long a real $$ is exchanged for Crypto to buy and sell it can be regulated. The fact that Crypto has evolved from everyone storing their own keys on their private PC to the safety of Crypto "banks" makes it easier to regulate. Popular exchanges like Coinbase and Crypto.com are public meaning they'll bow to whatever rules the Treasury puts in place.

Could exchanges flee offshore? Yes, there are already some shadier less safe exchanges. If you have lots of $$ in crypto do you want to keep it in a shady exchange or more secure (and regulated) exchange?

 

Link to the Executive Order here
I only read a little of it but the response from some in the industry seems to be favorable so far

 

This guy is Coinbase head of Global Policy. Bitcoin jumped 9% after Biden's EO. Light regulation give Crypto Currency some legitimacy.

 

You can buy things with crypto today. The more that expands the more it is to regulate. The infrastructure is growing.

You act like that has to gone into the future. Exchanges are used for convenience. That goes away once the government sticks their hand in it.

Ooo. Offshore means shady. Very biased and discriminatory of you. I guess you wouldn't want ferners to handle your money, huh? But what would actually happen is people would pull their money out of the exchanges.

 

AC, Coinbase and other exchanges working like that with the government is a way to capture crypto without having to actually get into the weeds of how they work.

 

I am mining Bitcoin and will buy it peer to peer outside of exchanges. My Bitcoin is left on Kraken for like 5 minutes before I put it offline in my cold storage wallet which I hold the keys for. Unseizable!!!

 

So you agree that Crypto currency can be regulated?

Convenience equals consumer. The exchanges have made crypto currency accessible to consumers. Take those away and all you have are hackers and those with a desire to live off the grid. It also means less overall investment in crypto with vastly reduces the value of said currencies. Investors need some measure of safety.

Please don't put words in my mouth. There have been multiple instances of exchanges getting hacked or simply taking the crypto. This is what regulation should be geared to prevent.

Given how often we swap out our computers, nobody but those fearful of government wants to have large sums of wealth at the mercy of their personal PC. It's the modern version of putting your money in a coffee can and burying it in the backyard. Forget where you buried it (or your crypto keys) and your wealth is gone.

 

I think there is a misunderstanding here. You said crypto can be regulated because people can't buy things with it. I was pointing out you can buy things with crypto today, so that makes it very difficult to regulate.

You are missing a big part of the picture. That is a factor. But it most likely will be a diminishing factor.

Regulation doesn't change that. It just gives government power to tax and take away your money when they want to. See Canada.

Not sure the Venn diagram of the statement and reality has much overlap.

 

You don't understand how this works
Hardware wallets (eg, Trezor, Ledger) are one way (among others) to gain exclusive control over digital assets, and this also requires a little strategic thought on how to secure one's private keys, succession/inheritance planning, etc
Any reasonably intelligent person can do it or get qualified professional assistance

 

How much and what can you buy? Black market commodities? Great! Cars? Not so great. Elon Musk found this out the hard way. As a public company SEC reporting challenges conflict greatly with crypto currency faith based assets.

Ease of access to the currency and usage of it will be a diminishing factor that won't need exchanges? Please explain.

Who knows how far the regulations will go but security of the assets, reporting requirements for exchanges do give some level of credibility. I can understand how a libertarians see crypto as some sort of anti-government utopia but things like ensuring banks (or exchanges) are properly capitalized in the event of market crashes, protecting consumers and other regulations do add value to the market. Yes, taxation is likely coming especially if the usage of crypto increases dramatically. If you're looking for a corollary check the evolution towards taxation of internet sales.

Not surprised you'd take issue with that given your espouse libertarian roots. There is a reason your views are a minority. They are more idealist than reality based.

 

I fully understand how hardware wallets work. They aren't much different than hiding your cash in the mattress or backyard. Ask yourself who is typically trying to hide their $$, what is the volume and therein lies the answer to whether it's restricting to the growth of crypto or not. Compare the barrier to entry of setting up a hardware wallet vs. using an exchange. Coinbase setup took minutes when I did it.

 

More and more people will want to set up wallets "in their back yard" if you can buy things with crypto and you want to avoid regulation. It is small now, but it will grow. Especially if governments keep seizing people's assets. I mean, people pull their money out of a bank when it is failing. People change behavior all the time.

 

I can only speak for myself but I use a HW wallet to secure and manage digital assets, not "hide" them although that is part of the security equation
Your phrasing seems to suggest guilt or some sinister intent with buyers

Not your keys, not your coins
Nobody who is serious about it leaves their assets on an exchange

Some things of value require time and effort, yes

 

Somewhat related, thinking about crypto exchanges.. I don't own any gold but I wonder about those who buy gold and take physical custody of it themselves versus having a custodian hold it and give them essentially a paper claim on it. Can you feel confident that you "own" the gold if you don't have physical control over it? Does the custodian actually have the reserves they claim to hold, and can you verify this?

 

I know that's the hope which begs the question of who is worried about the government "seizing people's assets"? Isn't that reinforcing my point a bit about hardware wallets vs. exchanges?

It will grow but as fast as those who access crypto exclusively w/o exchanges? Not sure history supports that supposition. Not saying that behavior can't change but I wonder if your opinions here are more hopeful than based on reality.

 

Let me be clear. I will never speak in generalizations that like everyone that uses a hardware wallet is sinister. Are a high percentage? Likely. That's why I included people that distrust government. I'm certain there is a small subset that want full control or simply prefer the purity of how crypto was initially intended. Different strokes for different folks.

Still, there is not debate that crypto exchanges, especially those that have become public companies have greatly opened up access to crypto currency to the masses. If you are a crypto investor you're currently reaping benefits by more consumers in the market. Ease of access (investing and spending) is the most critical aspect to future growth of crypto, IMHO.

That reinforces my point.

 

That's a good question. I'd wager the large majority of "gold" or nearly any commodity investor doesn't actually have the assets in hand but rather is being held on paper through a broker. Crypto started without the exchanges, required users to keep their own personal copies of the keys. Of course, 150yrs ago people had gold on hand too. Now? Not so much.

 

The pyramid scheme begins to fall. Inflation hedge? No. Store of value? No. Currency? A little.

Down 5.35% in a day, 19.24% in a week, 28.38% in a month, 41.7% in a year.

Cabbage patch doll.

Will it rebound? Yes

Will the cycle repeat until the value is 0? History and fundamentals say, Yes.

 

The cycles have been up long term so this is a false statement. It won't go away because El Salvador is using it and many other countries in South America and Africa are working towards using it. That will make it more stable.

 

I guess having the value of their money drop 41.7% in a year surprised El Salvador. Thank goodness for that country's stabilizing effect on bitcoin. I'm sure the citizens are thrilled with their cabbage patch dolls.