Why Investors Get BTC So Wrong, and What it Says About its strenghts

[acquafredda]

It is frustrating. But at the same time, interesting.

Over the past couple of weeks, I’ve heard two well-respected investment managers say that they don’t believe in bitcoin’s supply limit. If it’s easy to spin up another Bitcoin (BTC, +0.84%), they claim, then there is really no limit. Most of you reading this will be rolling your eyes at this stage, but since it seems to be a firmly held view by some smart people, we should dig deeper.

We’ll find that it’s about more than a lack of research.

First, let’s look at what the two investment managers I’m referring to actually said.

This is from investment researcher and former hedge fund manager Jesse Felder’s blog post of a few weeks ago (my emphasis):

“Bitcoin believers rely entirely on the idea that bitcoin is limited in supply making it far more attractive than fiat currencies that are being printed like mad by central bankers around the world. However, Bitcoin has already hard forked several times, multiplying the number and type of bitcoins in circulation. In fact, if you put together all the hard forks Bitcoin has undergone since it was first created, the number of total bitcoins has actually grown faster than the number of dollars. That’s a fact.”

Read the article @ https://www.coindesk.com/bitcoin-supply-investors-get-wrong

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[odolvlobo]

Saying "it's easy to spin up another Bitcoin" is like saying "it's easy to spin up another Apple or Google".

[Lucius]

Investors are not necessarily smart people, and in this particular case to say that the max supply of Bitcoin is not the final 21 million because we have xx cases of forks is completely meaningless. Well, for one man who has an average IQ it shouldn’t be hard to understand that anyone can make their own version of Bitcoin, the whole thing is free and requires only little technical knowledge. All this, of course, does not change the fact that copies are just copies and there can be thousands of them - all of them will eventually lose even the little meaning they still have.

Why do these smart investors think that most would opt for the alt BTC just because its price is lower than the original, so the investment is cheaper? We know who is Roger Ver Judas or Faketoshi CW - they can literally stab their versions with a fork and swallow them with all those lies they packed them into.

[Karartma1]

Investors are not necessarily smart people, and in this particular case to say that the max supply of Bitcoin is not the final 21 million because we have xx cases of forks is completely meaningless. Well, for one man who has an average IQ it shouldn’t be hard to understand that anyone can make their own version of Bitcoin, the whole thing is free and requires only little technical knowledge. All this, of course, does not change the fact that copies are just copies and there can be thousands of them - all of them will eventually lose even the little meaning they still have.

Why do these smart investors think that most would opt for the alt BTC just because its price is lower than the original, so the investment is cheaper? We know who is Roger Ver Judas or Faketoshi CW - they can literally stab their versions with a fork and swallow them with all those lies they packed them into.

The copies have already shown the world how valueless they are: those copycats have not brought any value to the ecosystem (actually they were only another good way for bitcoiners to get some more coins!), they drained some volume, liquidity and dominance from the big guyBTC which slowly catching up.
Investors were fooled into believing that there could be better bitcoins: they have learned nothing in 11 years. And the media continues to write this crap!

[cr1776]

Investors are not necessarily smart people, and in this particular case to say that the max supply of Bitcoin is not the final 21 million because we have xx cases of forks is completely meaningless. Well, for one man who has an average IQ it shouldn’t be hard to understand that anyone can make their own version of Bitcoin, the whole thing is free and requires only little technical knowledge. All this, of course, does not change the fact that copies are just copies and there can be thousands of them - all of them will eventually lose even the little meaning they still have.

Why do these smart investors think that most would opt for the alt BTC just because its price is lower than the original, so the investment is cheaper? We know who is Roger Ver Judas or Faketoshi CW - they can literally stab their versions with a fork and swallow them with all those lies they packed them into.

I have to agree.  

I saw an article (https://www.coindesk.com/first-mover-mohamed-el-erian-bitcoin-19k) and it was discussing Metcalfe's law from an investment perspective and in the article they are discussing the number of bitcoin addresses and say:
"Cipolaro’s price projection does require assumptions about how fast bitcoin’s network grows during the first half of the 2020s. Over the past 12 months, the number of Bitcoin addresses has grown by 18%. So he assumes growth rates of 5% to 25% over the coming years. "

Now they are claiming that bitcoin addresses are the measure of the network effect and to me that sounds only tangentially related to the uses of the network.  Perhaps they are simplifying it for ease of calculation, but addresses don't seem to be a good indicator of the network effects.  If they are arguing that the number of active users is represented by X addresses, then perhaps it is understandable.

Speaking of Metcalfe, I most recently saw Metcalfe speak about 2.5 years ago and he was discussing ethernet and some of the people at the place I heard the talk (Maine, US) were just completely ignorant, two example questions.  "If there is ether, how can you say you invented ethernet?" Of course it is just a name. "If there is no ether, how can ethernet work?"  He seemed to be amused at first, and finally he said that he "wasn't able uphold his end of the conversation, but he'd be happy to talk to these people afterwards."  It was a very polite and astute way of handling what was degenerating into nonsense.

[acquafredda]

Investors are not necessarily smart people, and in this particular case to say that the max supply of Bitcoin is not the final 21 million because we have xx cases of forks is completely meaningless. Well, for one man who has an average IQ it shouldn’t be hard to understand that anyone can make their own version of Bitcoin, the whole thing is free and requires only little technical knowledge. All this, of course, does not change the fact that copies are just copies and there can be thousands of them - all of them will eventually lose even the little meaning they still have.

Why do these smart investors think that most would opt for the alt BTC just because its price is lower than the original, so the investment is cheaper? We know who is Roger Ver Judas or Faketoshi CW - they can literally stab their versions with a fork and swallow them with all those lies they packed them into.

I have to agree.  

I saw an article (https://www.coindesk.com/first-mover-mohamed-el-erian-bitcoin-19k) and it was discussing Metcalfe's law from an investment perspective and in the article they are discussing the number of bitcoin addresses and say:
"Cipolaro’s price projection does require assumptions about how fast bitcoin’s network grows during the first half of the 2020s. Over the past 12 months, the number of Bitcoin addresses has grown by 18%. So he assumes growth rates of 5% to 25% over the coming years. "

Now they are claiming that bitcoin addresses are the measure of the network effect and to me that sounds only tangentially related to the uses of the network.  Perhaps they are simplifying it for ease of calculation, but addresses don't seem to be a good indicator of the network effects.  If they are arguing that the number of active users is represented by X addresses, then perhaps it is understandable.

My personal take is that "smart investors" and those gullible advisers who try to turn them into smart investors, have no clue why they should buy some bitcoins. I have a friend who made a fortune with stocks and I remember when he was studying everything was publicly available (financials, employment, budget for R&D etc...) before investing in his selected shares: he ended up transforming 25k € in almost half a million. He said he had no luck but he simply studied and researched about what to invest into. When I asked him about bitcoin he said it is too difficult for him and he does not invest in something he does not understand.

Long story short, we know that very few people understand why investing in bitcoin is a great move because the amount of time and effort it takes to get the true reasons for investing require to get deep into the rabbits' hole.

[Lucius]

Karartma1, so-called investors who base their opinion on data from CMC really have a big problem, because if a coin is in the top 10 and has Bitcoin in its name, it automatically means that it is relevant for them. One might thus conclude that the max supply of Bitcoins is not actually 21 million, but that if we consider only the two most famous forks we have 63 million Bitcoins. If all BTC copies were taken into account, the max supply would probably be over a billion coins.


cr1776, The number of addresses, i.e. their increase and activity have always been an interesting topic to discuss, but they have never been a precise indicator of what is actually happening, especially when speculating on the number of users. Each of us can generate countless addresses every day, this does not automatically mean that the number of users has increased - just as the number of newly opened accounts on some crypto exchanges does not mean that they are all unique users.

I totally agree that one should refrain from trying to show that we are an expert in something, and in fact we don’t even know the basics. It is much more correct to admit that we are not familiar with something and ask for an explanation than to be publicly embarrassed.


acquafredda, your friend is an obvious example of a smart investor, who is not ashamed to admit that he does not understand something - and the stock market has been present for a much longer time, and I dare to say that it is much easier to understand than cryptocurrency trading. All you need is money, a broker and a good knowledge of the market and companies in which you invest.

[bryant.coleman]

Saying "it's easy to spin up another Bitcoin" is like saying "it's easy to spin up another Apple or Google".

Couldn't explain any better than this in just 20 words. Bitcoin came in to existence in 2008, and it was first mined in 2009. Thousands of altcoins/shitcoins/tokens came in to existence from that time onwards. But none of them was able to overtake Bitcoin, in terms of acceptability and market cap. Bitcoin was the original cryptocurrency, and nothing can change this fact.

[davis196]

This is plain stupid.Hardforking Bitcoin doesn't mean creating new Bitcoins.
Hardforking creates new versions of the Bitcoin Core Blockchain,which are working in a different way and have different features.
Hardforking creates altcoins,which have the name "Bitcoin" but they aren't actual Bitcoins.
Too sad that the name "Bitcoin" isn't legally connected to Bitcoin Core only.Unfortunately,this can't be done.
It's like a Chinese factory creating fake iPhone smartphones and claiming that those are original iPhone smartphones.

[Coinsfera]

How can such a thing be believed? More than that, by an investor. One of the most obvious things about Bitcoin is its limited supply. It is easily understandable by all calculations. Please check out the blog we wrote about it. BTC

https://coinsfera.com/why-bitcoin-btc-supply-is-a-finite-number-why-21-million/

[acquafredda]

To me it sounds totally straightforward that there is only one Bitcoin protocol that has a max supply of approximately 21 M coins, which are mined every ten minutes on average etc. The problem is that since the arrival of shitforks, noobs and critics, tend to believe that bitcoin can be inflated at will (with every new fork). This sounds very stupid if you are into bitcoin but the amount of fooled shitcoiners/noiconers is astonishingly big.

[Karartma1]

That's it for you and you correctly point out that the number of fools who believe in those silly shitcoin forks is damn too high. I don't care about that much from the moment I know very well the real Bitcoin mechanics. Let the fools believe what they want, if they don't get that there's only one BTC, that's their problem, not ours.

[cr1776]

That's it for you and you correctly point out that the number of fools who believe in those silly shitcoin forks is damn too high. I don't care about that much from the moment I know very well the real Bitcoin mechanics. Let the fools believe what they want, if they don't get that there's only one BTC, that's their problem, not ours.

Agreed.  When Lite Coin forked the source code with the faster blocks tweak, there were a lot of the same comments about it.  It was an interesting experiment (and still is), but it didn't really impact bitcoin.  Today's forks are even worse since they really add little or nothing of value.

[Harlot]

But will you really consider Bitcoin hard forks liked Bitcoin Cash and Bitcoin Gold as the original Bitcoin? I don't think it should be treated that way because when we look at the US dollar being printed in one way they are still creating more and more US dollars not some kind of different kind of US dollar making its total supply more and more. Bitcoin on the other hand still stays true with their original supply without increasing it's 21,000,000 limit.

[Karartma1]

That's it for you and you correctly point out that the number of fools who believe in those silly shitcoin forks is damn too high. I don't care about that much from the moment I know very well the real Bitcoin mechanics. Let the fools believe what they want, if they don't get that there's only one BTC, that's their problem, not ours.

Agreed.  When Lite Coin forked the source code with the faster blocks tweak, there were a lot of the same comments about it.  It was an interesting experiment (and still is), but it didn't really impact bitcoin.  Today's forks are even worse since they really add little or nothing of value.

Remember that pity attempt of Bitmain when after the bcash fork was asking its clients to pay for antminers in bch? What a stupid move it was.

There will be flippenings, hard forks, faketoshis etc. but the real deal is out there en plein air. It's called bitcoin and it's gonna be better and better with age. Like scotch.