Is Elon Musk trying to destroy Bitcoin?

See the latest Australian dollar analysis here:

Macro Morning

The news today for the world’s greatest ever ponzi-scheme is not good. Elon Musk has declared that you can now buy a Tesla with BTC, continuing his recent narrative that BTC is for transacting not substituting for gold:

Why is this bad news for BTC? The price initially jumped but then faded to new lows. To be honest, I expect this rollover to continue as the US dollar rally continues:

The great BTC ponzi

The great BTC ponzi

I will let Treasury Secretary Janet Yellen explain it:

I don’t think that bitcoin … is widely used as a transaction mechanism. To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.

There’s the rub. Any shift towards widespread use of BTC as a substitute exchange of value for the dollar is an implicit threat to the government tax take. It is incredibly naive to think that the state will allow this to continue. And that’s the problem with the Musk drive to make it so.

The only viable future for BTC is as a store of value that exists, like gold, outside of the existing fiat money regime.

That is also a pretty silly idea while volatility remains so high but at least the argument can hold water because it doesn’t prod the state Godzilla sleeping beside it.

David Llewellyn-Smith

Comments

    • Not all are pegged against the US or other fait currencies, a new one called GSX is pegged against gold/commodities. I think once more stablecoins are pegged against a basket of commodities/companies it will somewhat break the reliance on fait. Also, a few advantages of crypto is you can transfer across borders without incurring expensive bank fee’s etc and once in the crypto echo system there are many ways to spend it. Telsa is the most resent example but here are more https://99bitcoins.com/bitcoin/who-accepts/ Mastercard now accepts it, PayPal etc. The idea was to get away from centralized banks, that’s slowly happening, and if market cap is anything to go by the market is getting bigger not smaller. I could be wrong but it does seem more places are adopting it. Japan and it’s government seem to be embracing it as well as many other countries.

      • Peter PanMEMBER

        I’d think you’d find BTC is still pegged against traditional currency. Really funny that anyone would think it is not. We have everyone that owns BTC glued to their screens watching it fluctuate against the USD. For any transaction to take place it is still converted back to USD or whichever currency is valid for the trade.
        If you buy a Tesla, then there would be a currency conversion at the time of placing your order. BTC did not suddenly become a currency in which goods/services is being priced. It would be stupid to do so in any case. No business will price goods where the price can change by 10%+ on any given day. All trade still happen in “real” world currencies.
        For BTC to be accepted as a means of payment the value would have to stabilise(meaning not move much up or down). This in itself would kill BTC because the reason people buy it is in the first place because they expect it to rise in value against traditional currencies. Can’t have both. So either it remains a speculative ponzi scheme where you hope the next person will push the price up or it becomes an acceptable means of trade, stabilizes in price and loses its perceived purpose(speculative trade).

          • Peter PanMEMBER

            Sorry. I wasn’t thinking clearly. Pegged means fixed. I meant that mentally people value BTC againt a traditional currency. They don’t think, ok my BTC is now worth 10000 carrots. Instead they price it in USD.
            Your local supermarket is not going to price goods in BTC any time soon. So you still have to convert it back to AUD if you want to buy anything. Maybe just call it the bank of BTC instead of thinking it will actually be used as currency.

        • “For BTC to be accepted as a means of payment the value would have to stabilise(meaning not move much up or down). This in itself would kill BTC because the reason people buy it is in the first place because they expect it to rise in value against traditional currencies”

          No, this is why early adopters are buying bitcoin. Eventually, volatility drops out of the asset once enough users are in the system. At this stage, it will have completed its journey to a store of value. At what market cap this, who knows. From here all of the technology that is being built on it (remember it’s only 11 years old) will shine through and allow a massive network of users to continue to using it.

          • True Believers aside, why would anyone hold Bitcoin other than the potential for speculative, wildly disproproportionate returns ?

      • DingwallMEMBER

        “The idea was to get away from centralized banks, that’s slowly happening”

        Question will always remain whether this will be allowed to occur. The fanbois, of course, scream yes, others tend to be somewhat cynical.

    • mikef179MEMBER

      If I am measuring the value of the Australian Dollar in US Dollars that does not mean that the Aussie Dollar is pegged to the USD Dollar. BTC is free floating, not pegged.

  1. I think the dip is partly the future’s contracts expiring and by the end of this month we should see movement back up, we have seen dips like this before and is there a correlation with dips and MBs negative outlook on crypto, it does seem when there is a dip you often write a negative opinion piece.

  2. Any financial system is going to take a ton of energy. I mean, who doesn’t engage with money on a daily basis? The question is, how does Bitcoin compare with the current banking system in this regard? And that doesn’t just mean the servers and routers that banks use, it means the buildings that the banks are housed in, their branches, etc, the fuel that their employees use to drive to work, etc, etc…. I mean just look at the massive costs of the banking system. Rich bankers everywhere feeding off of it.

    As for illicit financing, that has already been debunked as the rise of blockchain analytics firms makes it very risky for these groups to have their transactions on an immutable ledger as opposed to just using physical cash, etc which leaves no long-term trace.

    As for Yellen, a banking insider throwing out FUD about a competitor that has the potential to technologically disrupt the industry that she and others have fed off years to the tune of millions of dollars? Wow, I’m so surprised.

    Methinks there’s somewhat of a Stockholm syndrome from many Bitcoin critics. Do you really all love the current system so much?

    • DingwallMEMBER

      I don’t think crypto critics really all love the current system so much.
      Crypto supporters are backing that the central banks and their governments will just roll-over and welcome crypto with open arms. It makes sense to them so why not everyone else.
      My question continues to be “Are the big boys (ie countries) as well as the “rich bankers everywhere” going to allow something new unless they can control it, tax it, track it, monitor it, recover it etc?”
      So there’s a pragmatic view and a somewhat idealistic view.

      • mikef179MEMBER

        It won’t require idealism in the end. People will just make rational choices that are in there own best interests and that will lead to widespread adoption. Maybe you think that sounds ridiculous but you just have to game it out Governments are not as all-powerful as they are made out to be. The ones that fight it will be the big losers.

        • drsmithyMEMBER

          People will just make rational choices that are in there own best interests and that will lead to widespread adoption.

          There are zero reasons for the average punter to start using Bitcoin, either now or on the horizon.

          • Here’s an idea:

            Hold your “deposit” for a house in bitcoin instead of Aussie dollars.
            That way your deposit catches up with an Aussie house, stead of falling behind.

            Saving up from wages to buy a house appears to have ZERO chance of working for an ordinary worker.
            Does buying bitcoin give the shelter-wanter a greater chance of acquiring shelter?

  3. “Any shift towards widespread use of BTC as a substitute exchange of value for the dollar is an implicit threat to the government tax take.”
    No more so than cash. But why let realities get in the way.
    You do know that the ATO is taxing crypto’s.

    • Fabian AlderseyMEMBER

      How are they taxing cryptos? If I provide an online service, get paid in bitcoin, then spend that bitcoin on items which are shipped to me, what is the mechanism for the ATO to tax this income?

      • truthisfashionable

        It is bull how the ATO treat it, basically by trading a crypto for goods or services they say it is a CGT event:
        https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia—specifically-bitcoin/
        Transacting with cryptocurrency:
        A capital gains tax (CGT) event occurs when you dispose of your cryptocurrency. A disposal can occur when you:
        sell or gift cryptocurrency
        trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)
        convert cryptocurrency to fiat currency (a currency established by government regulation or law ), such as Australian dollars, or
        use cryptocurrency to obtain goods or services.

        • mikef179MEMBER

          They are basically saying that Bitcoin is equivalent to the Aussie dollar for transactions without actually saying it. It’s basically conceding that Bitcoin is going to be used as a currency alongside AUD, within Australia. They have to or they are going to forego too much tax as more people use it as such.

          Gee, I wonder where that might be heading…

          • drsmithyMEMBER

            They are basically saying that Bitcoin is equivalent to the Aussie dollar for transactions without actually saying it.

            No, they’re saying it’s an asset and treating it like any other asset.

      • The same as cash.
        It’s on the honour system.
        But note: THE SAME AS CASH.
        Or even bank transfer/paypal.
        They don’t monitor your bank account and send you a bill.

  4. Oh, btw, the gold narrative is because a lot of bitcoiners feel like the idea that telling people Bitcoin is to completely take over from the current system makes people nervous so they just stick with the Gold 2.0 idea as they feel like they can sell that, and then it will lead to it becoming more transactional. Personally I am happy with talking about it being a replacement system as are many others. There are different camps of people in Bitcoin.

    • Bitcoin doesn’t support a high enough transaction rate to be transactional in any meaningful way directly.
      At best it can “back” another system like gold did to $$ previously, or aguably $$ do now to electronic banking transactions.

      • I would have to agree, and it’s transaction speed is rather slow but there are plenty of other crypto coins out there that are better suited for the job. We all get too focused on Bitcoin and forget there are so many other cryptos in development or been used.

      • Major transactions will be settled on the main blockchain. For smaller transactions, secondary layers will be used. This is no different from the current system. Visa settles up with banks at the end of the day on the main bank to bank transaction layer.

        Sphinx is currently beta testing a chat tool using the lightning network which can settle to the bitcoin network. Much like Visa v Fedwire. No advertising. No censorship (decentralized). No spam.

        https://blog.sphinx.chat/2021/02/12/freedom-from-free/

  5. Ponzi scheme. Says the long-only equities fund.

    Through Bitcoin on chain analysis it is possible to tell at what price and how much Bitcoin is being actively traded versus sitting on cold wallets. If whales start moving out, that data will show up. Right now the data points to the opposite. Bitcoin is leaving exchanges into long term wallets.

    Would the macro business fund make their deposit and redemption data available live to the public?

  6. What about all the other digital coins? guy at work is about to release their coin, a group of them gone in together, saying it will be 40x within a year…why?

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