Are Crypto-Currencies a Hedge against the Dollar? -

[Distant Stare]

I love the idea of having a liberty enforcing distributed method of transferring money. However during recent times, the price of many crypto currencies has followed the wider market. During the 2020 March crash, the price of many tokens plummeted. Investors and users did not see bitcoin and tokens as a hedge against decline. While established standards like gold and silver exploded.

price of BTC

Price of Gold

Why arent users adopting tokens like BTC for the same purpose they use gold?
Can tokens and BTC be used to hedge against the dollar?

 

[twozero]

I think for the non-institutional investor, bitcoin is a more readily available hedge against the USD. Historically, purchasing BTC at near any timepoint over the last 5 years will have netted a significant return in USD value.

BTC compared to gold (again, for the non institutional investor) provides access to immediate liquidity without losing a significant amount of value, which imo might be causal for the crash in March (COVID induced rush for liquidity across the markets). Worth factoring in too that cryptocurrency markets are open 24/7 and haven't any mechanisms to suspend trading (excluding coinbase crashing) on significant volatility.

 

[Distant Stare]

I think for the non-institutional investor, bitcoin is a more readily available hedge against the USD. Historically, purchasing BTC at near any timepoint over the last 5 years will have netted a significant return in USD value.

This is one problem I see. 99% of transactions are conducted for speculation and investment. The only people who use bitcoin for transactions are using it for donations to internet personalities. And the drug market is probably larger that that. I think that the reason for that is the volatility. To spend bitcoin I need to buy it, and that comes at a large cost. And if I just keep 1000 dollars in a wallet for everyday uses, It could fluctuate 30% in a day. The time it takes for a transaction to clear is forever, and as we saw in 2018, it can get far worse: Unverified transaction skyrocket, and so do fees.

 

[Vecr]

This is one problem I see. 99% of transactions are conducted for speculation and investment. The only people who use bitcoin for transactions are using it for donations to internet personalities. And the drug market is probably larger that that. I think that the reason for that is the volatility. To spend bitcoin I need to buy it, and that comes at a large cost. And if I just keep 1000 dollars in a wallet for everyday uses, It could fluctuate 30% in a day. The time it takes for a transaction to clear is forever, and as we saw in 2018, it can get far worse: Unverified transaction skyrocket, and so do fees.

Hopefully the Lightning network gets to a place where payments can be routed to your favorite Internet personalities without having to constantly create new channels. Rate me optimistic, if you like.

 

[knobslobbin]

Gold is a safe bet. Crypto is the speculative one. You should cover both to some degree. The younger you are the riskier your bets should be.

 

[knobslobbin]

BTC has already been nerfed by the powers that be, rather cheaply I might add. Look into how they hobbled it with an enforced 1mb blocksize limit. If you want to speculate I'd hedge more with ETH & BCH, with the understanding that they are even more volatile than bitcoin core.

If crypto is still around in 10 years and has caught on for something in the economy besides drugs, hiding money from shady gubmins, and sending money across borders then who knows which one it will be. My bet is not BTC though.

But given how fucked governments worldwide have been acting in response to corona, and will likely be ramping up the crazy with the depression they are actively causing, even just those above use cases are probably enough to keep crypto growing for the foreseeable future.

 

[Vecr]

BTC has already been nerfed by the powers that be, rather cheaply I might add. Look into how they hobbled it with an enforced 1mb blocksize limit. If you want to speculate I'd hedge more with ETH & BCH, with the understanding that they are even more volatile than bitcoin core.

If crypto is still around in 10 years and has caught on for something in the economy besides drugs, hiding money from shady gubmins, and sending money across borders then who knows which one it will be. My bet is not BTC though.

But given how fucked governments worldwide have been acting in response to corona, and will likely be ramping up the crazy with the depression they are actively causing, even just those above use cases are probably enough to keep crypto growing for the foreseeable future.

The block size is not really one megabyte, depending on how many segwit transactions are included, it can get over two, if I recall correctly.

 

[knobslobbin]

The block size is not really one megabyte, depending on how many segwit transactions are included, it can get over two, if I recall correctly.

~2 MEGAbytes sometimes! Our scaling is solved

 

[Distant Stare]

Gold is a safe bet. Crypto is the speculative one. You should cover both to some degree. The younger you are the riskier your bets should be.

I sold all of my gold and silver a few weeks ago. I bought it all when it was 2016-2018. I wish I had kept 1 or 2 ounces of gold now

I got into stocks a month ago and made 600. But I pulled out because the growth is irrational.

Now I am thinking about going back into crypto but everything good is up 20-50% this month.

 

[alreadyhome]

BTC has already been nerfed by the powers that be, rather cheaply I might add. Look into how they hobbled it with an enforced 1mb blocksize limit. If you want to speculate I'd hedge more with ETH & BCH, with the understanding that they are even more volatile than bitcoin core.

If crypto is still around in 10 years and has caught on for something in the economy besides drugs, hiding money from shady gubmins, and sending money across borders then who knows which one it will be. My bet is not BTC though.

But given how fucked governments worldwide have been acting in response to corona, and will likely be ramping up the crazy with the depression they are actively causing, even just those above use cases are probably enough to keep crypto growing for the foreseeable future.

Iran, North Korea will keep the btc dream alive, and all of you of course