@Rob7Lee Robert Armstrong argues, quite concisely, that Bitcoin is not a currency, no matter what its proponents claim:
That is where a lot of bitcoin believers have made a mistake. They think when the price of bitcoin goes up, that is itself evidence that the technology is closer to working, and becoming money. It’s not! Lots of things, from baseball cards to cases of Château Lafite, go up in value. That does not make them money. It makes them assets. Assets are fine things, but the value of the said bitcoin comes from the possibility that it becomes a specific kind of asset, namely money. Evidence that bitcoin is becoming money would involve people transacting in it more, in more places and more smoothly (whether there is any evidence of that is a topic for another day).
Having written that, he got a lot of fans coming back at him with the line that it's a "store of value" like gold. To which he has responded
The most common reply I received was that bitcoin is not trying to be money. Money has two key properties. It is a store of value and a medium of exchange. Most of the people who think I am wrong think bitcoin is all about storing value. That is why its finite supply is so important. If it’s a bit costly to trade, a bit illiquid, and so on — who cares. It is akin to gold and diamonds, commodities whose salient feature is their rarity and how much they are prized, not their ease of use. I am not convinced. Gold and diamonds have uses in industry and jewellery, they have millennia of convention supporting their preciousness. The only thing supporting bitcoin as a store of value, as a precious commodity, is that it might be both a store of value and an especially good medium of exchange — one that can transact widely, frictionlessly, at a low cost, and (here is the real key) without third-party oversight or government control. And I don’t think we yet know that this is so. Bitcoin is scarce, but so are the watercolours I painted in high school. That does not make them a store of value.
Anyone want to argue with that? And then there is another emerging problem with Bitcoin, the way it is "made" is environmentally catastrophic. It's taken Elon Musk (whom I otherwise wouldn't trust to tell me the time) to bring that into the public consciousness. Now that he's done so, I think the consequence is that anyone who believes they are investing ethically, via the burgeoning "sustainable" funds etc, and is also trading in bitcoin, needs to have a word with themselves.
@Rob7Lee Robert Armstrong argues, quite concisely, that Bitcoin is not a currency, no matter what its proponents claim:
That is where a lot of bitcoin believers have made a mistake. They think when the price of bitcoin goes up, that is itself evidence that the technology is closer to working, and becoming money. It’s not! Lots of things, from baseball cards to cases of Château Lafite, go up in value. That does not make them money. It makes them assets. Assets are fine things, but the value of the said bitcoin comes from the possibility that it becomes a specific kind of asset, namely money. Evidence that bitcoin is becoming money would involve people transacting in it more, in more places and more smoothly (whether there is any evidence of that is a topic for another day).
Having written that, he got a lot of fans coming back at him with the line that it's a "store of value" like gold. To which he has responded
The most common reply I received was that bitcoin is not trying to be money. Money has two key properties. It is a store of value and a medium of exchange. Most of the people who think I am wrong think bitcoin is all about storing value. That is why its finite supply is so important. If it’s a bit costly to trade, a bit illiquid, and so on — who cares. It is akin to gold and diamonds, commodities whose salient feature is their rarity and how much they are prized, not their ease of use. I am not convinced. Gold and diamonds have uses in industry and jewellery, they have millennia of convention supporting their preciousness. The only thing supporting bitcoin as a store of value, as a precious commodity, is that it might be both a store of value and an especially good medium of exchange — one that can transact widely, frictionlessly, at a low cost, and (here is the real key) without third-party oversight or government control. And I don’t think we yet know that this is so. Bitcoin is scarce, but so are the watercolours I painted in high school. That does not make them a store of value.
Anyone want to argue with that? And then there is another emerging problem with Bitcoin, the way it is "made" is environmentally catastrophic. It's taken Elon Musk (whom I otherwise wouldn't trust to tell me the time) to bring that into the public consciousness. Now that he's done so, I think the consequence is that anyone who believes they are investing ethically, via the burgeoning "sustainable" funds etc, and is also trading in bitcoin, needs to have a word with themselves.
no it isn't - this has repeatedly been debunked. It's like saying electric cars are environmentally catastrophic, or that computers are environmentally catastrophic, your fridge, your phone is environmentally catastrophic even if you ignore the fact that large scale miners use renewable energy. If the grid is green, so is bitcoin.
As for elon musk, this is a guy who claimed he was in "talks" with "dogecoin devs" - to artificially pump the price of a ponzi. There are no dogecoin devs, its a litecoin fork thats had zero dev work from the date of it's fork.
"Bitcoin is not a store of value" except, it is being used as a store of value. Forgive me if i take any FUD with a large helping of salt - this is all the same rubbish that came out in 2017-2018 on the last bull run of the cycle. We're now up 2x from the top of that cycle on the back of a "crash". Ponzis and pyramid schemes go up until they can't go up any more, they then crash and disappear. They don't get stronger and stronger throughout their entire existence, downturn after downturn.
meanwhile silver and gold look pretty good atm - when they looked terrible when bitcoin was going up and up. It might just be that traders are rotating their store of value investments...
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
Yer appreciate it's not pure gold, it's people like Barrick Gold Corp so yes miners of gold rather than gold itself. I save that for my sovereigns!
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
This is incorrect. Even if it was, isn’t this simply just a case of we need the grid to go green? Bitcoin is “alive” regardless of if miners are on or not. Is the internet not just servers being kept on to keep it “alive”? If the amount of miners go down the transaction times go up... briefly. The beauty of bitcoin is it can never be truly “switched off”
How much energy is used mining gold, and maintaining the wasteful banking and financial sector?
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
This is incorrect. Even if it was, isn’t this simply just a case of we need the grid to go green? Bitcoin is “alive” regardless of if miners are on or not. Is the internet not just servers being kept on to keep it “alive”? If the amount of miners go down the transaction times go up... briefly. The beauty of bitcoin is it can never be truly “switched off”
How much energy is used mining gold, and maintaining the wasteful banking and financial sector?
What is wasteful ?
I agree all companies / activities consume electricity so not sure the accusation (not from people on this forum) of Crypto being a particular drain is accurate or remotely relevant.
The general concern that people don't really know what they are investing in or why its so volatile (relative to other investments) is however pertinent.
I think its right to be suspicious / cautious of something new that some seem to think is perfectly reasonable to rise in 'value' and make people rich way in excess of more traditional investments.
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
This is incorrect. Even if it was, isn’t this simply just a case of we need the grid to go green? Bitcoin is “alive” regardless of if miners are on or not. Is the internet not just servers being kept on to keep it “alive”? If the amount of miners go down the transaction times go up... briefly. The beauty of bitcoin is it can never be truly “switched off”
How much energy is used mining gold, and maintaining the wasteful banking and financial sector?
What is wasteful ?
I agree all companies / activities consume electricity so not sure the accusation (not from people on this forum) of Crypto being a particular drain is accurate or remotely relevant.
The general concern that people don't really know what they are investing in or why its so volatile (relative to other investments) is however pertinent.
I think its right to be suspicious / cautious of something new that some seem to think is perfectly reasonable to rise in 'value' and make people rich way in excess of more traditional investments.
The old adage if its too good to be true...
... are we really thinking that modern day banking isn't a hugely wasteful use of energy? Crypto uses mathematics and code whilst banking uses human beings and legal regulations. Which one do you think consumes more energy? Crypto and bitcoin isnt a get rich quick scheme, it's a get rich in 10 years scheme. If you would have bought $100 of bitcoin 10 years ago, you'd be a millionaire by now.
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
This is incorrect. Even if it was, isn’t this simply just a case of we need the grid to go green? Bitcoin is “alive” regardless of if miners are on or not. Is the internet not just servers being kept on to keep it “alive”? If the amount of miners go down the transaction times go up... briefly. The beauty of bitcoin is it can never be truly “switched off”
How much energy is used mining gold, and maintaining the wasteful banking and financial sector?
What is wasteful ?
I agree all companies / activities consume electricity so not sure the accusation (not from people on this forum) of Crypto being a particular drain is accurate or remotely relevant.
The general concern that people don't really know what they are investing in or why its so volatile (relative to other investments) is however pertinent.
I think its right to be suspicious / cautious of something new that some seem to think is perfectly reasonable to rise in 'value' and make people rich way in excess of more traditional investments.
The old adage if its too good to be true...
... are we really thinking that modern day banking isn't a hugely wasteful use of energy? Crypto uses mathematics and code whilst banking uses human beings and legal regulations. Which one do you think consumes more energy? Crypto and bitcoin isnt a get rich quick scheme, it's a get rich in 10 years scheme. If you would have bought $100 of bitcoin 10 years ago, you'd be a millionaire by now.
So you are agreeing with me that many industries are consuming energy not that banking and crypto are guilty is specific way beyond normal operations ?
You’ll find after all the number of people in banking is fewer today than previous years as technology prevails.
If however you are suggesting banking is in some way using human beings unnecessarily (whilst at the same time employing and generating tax revenues) then I struggle to agree.
Crypto and banking can co-exist at least for now.
You may not see crypto as get rich quick but it seems to me a good number do and therein lies the risk.
My gold fund (in my SIPP) is almost back in profit
EDIT, I'm in profit!
But that fund doesn't invest in Gold, in invests in companies that mine gold and other precious metals. It's an equity fund - not a commodity fund.
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
This is incorrect. Even if it was, isn’t this simply just a case of we need the grid to go green? Bitcoin is “alive” regardless of if miners are on or not. Is the internet not just servers being kept on to keep it “alive”? If the amount of miners go down the transaction times go up... briefly. The beauty of bitcoin is it can never be truly “switched off”
How much energy is used mining gold, and maintaining the wasteful banking and financial sector?
What is wasteful ?
I agree all companies / activities consume electricity so not sure the accusation (not from people on this forum) of Crypto being a particular drain is accurate or remotely relevant.
The general concern that people don't really know what they are investing in or why its so volatile (relative to other investments) is however pertinent.
I think its right to be suspicious / cautious of something new that some seem to think is perfectly reasonable to rise in 'value' and make people rich way in excess of more traditional investments.
The old adage if its too good to be true...
... are we really thinking that modern day banking isn't a hugely wasteful use of energy? Crypto uses mathematics and code whilst banking uses human beings and legal regulations. Which one do you think consumes more energy? Crypto and bitcoin isnt a get rich quick scheme, it's a get rich in 10 years scheme. If you would have bought $100 of bitcoin 10 years ago, you'd be a millionaire by now.
So you are agreeing with me that many industries are consuming energy not that banking and crypto are guilty is specific way beyond normal operations ?
You’ll find after all the number of people in banking is fewer today than previous years as technology prevails.
If however you are suggesting banking is in some way using human beings unnecessarily (whilst at the same time employing and generating tax revenues) then I struggle to agree.
Crypto and banking can co-exist at least for now.
You may not see crypto as get rich quick but it seems to me a good number do and therein lies the risk.
i completely agree with this, my (admittedly small) investments are based around this hypothesis. Banks will be what brings crypto, specifically DEFI to the mainstream, much to the annoyance of traditional investors and bitcoin maximalists.
On the Bitcoin/environment thing, again the FT (which has no reason to be irrationally anti-crypto; no ther major medium has so many writers who actually know their stuff when it comes to the finance. The clue is in the name).
They've just done a Big Read on the environmental issue. The FT is paywalled, although I think you can get some articles for free each month. Some clips:
“Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.”
"Economic authorities are starting to take notice. The European Central Bank on Wednesday described cryptoassets’ “exorbitant carbon footprint” as “grounds for concern”. In a paper earlier this month, Italy’s central bank said the eurozone’s payments system, Tips, had a carbon footprint 40,000 times smaller than that of bitcoin in 2019. Measuring precisely how dirty bitcoin is has become a cottage industry in itself. The latest calculation from Cambridge university’s Bitcoin Electricity Consumption index suggests that bitcoin mining consumes 133.68 terawatt hours a year of electricity — a best-guess tally that has risen consistently for the past five years. That places it just above Sweden, at 131.8TWh of electricity usage in 2020, and just below Malaysia, at 147.21TWh."
n.b. that's Sweden, the entire country!!!
The true figure for bitcoin could in fact be much higher; Cambridge’s extreme worst-case scenario calculation, based on miners using the least energy-efficient computers on the market as long as the process is still profitable, has peeled away from its central estimate sharply since November last year as the price of bitcoin has rocketed. The rationale: a rising bitcoin price attracts new miners, and also means that mining with older, less efficient equipment, makes financial sense. The higher price also means the machines producing bitcoin are forced to complete ever-tougher puzzles in search of their quarry. At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year. The UK consumes 300TWh. About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.
Naturally, there is space for disagreement on these statistics, and all studies on the issue accept elements of uncertainty. “There’s a lot of shades of grey,” says Michel Rauchs, a research affiliate who works on the Cambridge index. Rauchs points out that a slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season. That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist, Rauchs says.
A greener version of bitcoin is, in theory, possible. Bitcoin’s code could switch to a less energy-intensive consensus mechanism, whereby a new section of the blockchain ledger underlying the cryptocurrency would follow different rules. However, every miner would need to switch for the new path to work. Industry insiders say it is hard to imagine the entire bitcoin community, which is peppered with disagreements, lending support to such a plan.
Lots more but I think that captures the key points, and the nuance of the issue.
On the Bitcoin/environment thing, again the FT (which has no reason to be irrationally anti-crypto; no ther major medium has so many writers who actually know their stuff when it comes to the finance. The clue is in the name).
They've just done a Big Read on the environmental issue. The FT is paywalled, although I think you can get some articles for free each month. Some clips:
“Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.”
"Economic authorities are starting to take notice. The European Central Bank on Wednesday described cryptoassets’ “exorbitant carbon footprint” as “grounds for concern”. In a paper earlier this month, Italy’s central bank said the eurozone’s payments system, Tips, had a carbon footprint 40,000 times smaller than that of bitcoin in 2019. Measuring precisely how dirty bitcoin is has become a cottage industry in itself. The latest calculation from Cambridge university’s Bitcoin Electricity Consumption index suggests that bitcoin mining consumes 133.68 terawatt hours a year of electricity — a best-guess tally that has risen consistently for the past five years. That places it just above Sweden, at 131.8TWh of electricity usage in 2020, and just below Malaysia, at 147.21TWh."
n.b. that's Sweden, the entire country!!!
The true figure for bitcoin could in fact be much higher; Cambridge’s extreme worst-case scenario calculation, based on miners using the least energy-efficient computers on the market as long as the process is still profitable, has peeled away from its central estimate sharply since November last year as the price of bitcoin has rocketed. The rationale: a rising bitcoin price attracts new miners, and also means that mining with older, less efficient equipment, makes financial sense. The higher price also means the machines producing bitcoin are forced to complete ever-tougher puzzles in search of their quarry. At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year. The UK consumes 300TWh. About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.
Naturally, there is space for disagreement on these statistics, and all studies on the issue accept elements of uncertainty. “There’s a lot of shades of grey,” says Michel Rauchs, a research affiliate who works on the Cambridge index. Rauchs points out that a slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season. That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist, Rauchs says.
A greener version of bitcoin is, in theory, possible. Bitcoin’s code could switch to a less energy-intensive consensus mechanism, whereby a new section of the blockchain ledger underlying the cryptocurrency would follow different rules. However, every miner would need to switch for the new path to work. Industry insiders say it is hard to imagine the entire bitcoin community, which is peppered with disagreements, lending support to such a plan.
Lots more but I think that captures the key points, and the nuance of the issue.
Once again, FT with poorly researched bitcoin articles. For such a well respected publication they don’t half write rubbish. Bitcoin is fairly regularly updated and forks tend to happen when they do (bitcoin cash being one such example) when some miners decide they don’t agree with the new update. Not all miners need to agree - plus it’s not up to them, it’s up to node operators who are the regulators of the network and approve blocks mined by the miners.
I think the issue this points out is that China needs to move away from coal - but we already knew that, and is utterly unrelated to crypto.
Plus, aren’t China meant to be banning crypto mining? In which case, in one fell swoop this FUD falls apart.
On the Bitcoin/environment thing, again the FT (which has no reason to be irrationally anti-crypto; no ther major medium has so many writers who actually know their stuff when it comes to the finance. The clue is in the name).
They've just done a Big Read on the environmental issue. The FT is paywalled, although I think you can get some articles for free each month. Some clips:
“Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.”
"Economic authorities are starting to take notice. The European Central Bank on Wednesday described cryptoassets’ “exorbitant carbon footprint” as “grounds for concern”. In a paper earlier this month, Italy’s central bank said the eurozone’s payments system, Tips, had a carbon footprint 40,000 times smaller than that of bitcoin in 2019. Measuring precisely how dirty bitcoin is has become a cottage industry in itself. The latest calculation from Cambridge university’s Bitcoin Electricity Consumption index suggests that bitcoin mining consumes 133.68 terawatt hours a year of electricity — a best-guess tally that has risen consistently for the past five years. That places it just above Sweden, at 131.8TWh of electricity usage in 2020, and just below Malaysia, at 147.21TWh."
n.b. that's Sweden, the entire country!!!
The true figure for bitcoin could in fact be much higher; Cambridge’s extreme worst-case scenario calculation, based on miners using the least energy-efficient computers on the market as long as the process is still profitable, has peeled away from its central estimate sharply since November last year as the price of bitcoin has rocketed. The rationale: a rising bitcoin price attracts new miners, and also means that mining with older, less efficient equipment, makes financial sense. The higher price also means the machines producing bitcoin are forced to complete ever-tougher puzzles in search of their quarry. At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year. The UK consumes 300TWh. About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.
Naturally, there is space for disagreement on these statistics, and all studies on the issue accept elements of uncertainty. “There’s a lot of shades of grey,” says Michel Rauchs, a research affiliate who works on the Cambridge index. Rauchs points out that a slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season. That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist, Rauchs says.
A greener version of bitcoin is, in theory, possible. Bitcoin’s code could switch to a less energy-intensive consensus mechanism, whereby a new section of the blockchain ledger underlying the cryptocurrency would follow different rules. However, every miner would need to switch for the new path to work. Industry insiders say it is hard to imagine the entire bitcoin community, which is peppered with disagreements, lending support to such a plan.
Lots more but I think that captures the key points, and the nuance of the issue.
Once again, FT with poorly researched bitcoin articles. For such a well respected publication they don’t half write rubbish. Bitcoin is fairly regularly updated and forks tend to happen when they do (bitcoin cash being one such example) when some miners decide they don’t agree with the new update. Not all miners need to agree - plus it’s not up to them, it’s up to node operators who are the regulators of the network and approve blocks mined by the miners.
I think the issue this points out is that China needs to move away from coal - but we already knew that, and is utterly unrelated to crypto.
Plus, aren’t China meant to be banning crypto mining? In which case, in one fell swoop this FUD falls apart.
Well what the People's Bank of China did earlier in the week was "... warned financial institutions off accepting cryptocurrencies as payment or offering related services and products." Then late yesterday: "China’s vice-premier Liu He ... restated Beijing’s determination to curb cryptocurrency mining and trading triggered the latest decline". Seems to me they will find it far easier to curb the trading than the mining.
It's up to you how you address this issue. AFAIK you are generally somebody who appreciates the seriousness of the climate crisis. Whether its clean or not, if it takes more energy to produce Bitcoin than the whole country of Sweden needs to power everything, that really ought to be pause for thought. Sadly it seems to me that a lot of Bitcoin fans are also climate deniers and anti-vaxxer types. I don't share your faith that the "community" will move to address it.
Sooo, how do we see markets right now? I was going to write that FTSE 100, of interest to me only because of our competition (maybe time for a review @Rob7Lee as we enter the final month?) has been treading water but it has perked up today. Otherwise FTSE250 and Europe both look strong while tech is more mixed. But as usual, so many mixed signals. Have the vaccines triumphed over Covid yet? The answer to that question sounds different for any of us sitting in SE Asia, compared to here in Europe. Inflation is back? For how long? There are labour shortages and also materials shortages appearing. My Swedish buddy heads up a premium scaffolding manufacturer, he told me British Steel basically cannot deliver for months ahead. Here Skoda Auto has 20,000 cars it cannot finish and get out on sale due to the chip shortage, while the hospitlaity biz, finally opening up, finds that many of its staff have drifted off to more secure jobs in Lidl...
Right now it looks like my own FTSE100 forecast (I think it was 7100) may fall a bit short this time (and I'd rather than than the other way, of course), but there are some big new issues appearing. But then, when was that not true?
So, looking into pensions and SIPPs. from what i can tell, you get 20% added to what you put into an SIPP - to make up for the income tax you've paid. However, from my ltd company i can only pay into a pension, which would be pre corporation tax. I'm guessing paying into the pension directly from the Ltd company rather than paying dividends and then paying that into the SIPP is more tax efficient? (From what i've read, only I personally can pay into an SIPP).
Struggling to get my head round either of them to be honest!
So, looking into pensions and SIPPs. from what i can tell, you get 20% added to what you put into an SIPP - to make up for the income tax you've paid. However, from my ltd company i can only pay into a pension, which would be pre corporation tax. I'm guessing paying into the pension directly from the Ltd company rather than paying dividends and then paying that into the SIPP is more tax efficient? (From what i've read, only I personally can pay into an SIPP).
Struggling to get my head round either of them to be honest!
I generally hesitate to chip in as there are many far more knowledgeable than me on this kind of thing, but you certainly can have your limited co make a contribution directly to your SIPP, thus getting a CT deductible and not incurring any income tax on yourself. This is subject to limits, but assuming you're doing this in a modest way, they shouldnt trouble you.
If you do take a dividend you will be subject to income tax on it and of course there is no CT relief, but your SIPP provider can then reclaim income tax relief on the contribution at the basic rate, and if you are a higher rate tax payer you will get a deduction against income tax on the next tax band.
I stand to be corrected by the wise heads, but this is an outline of the general position as i understand it.
Just read I can contribute from my ltd company to an SIPP pre tax! Happy days. Anyone anyone recommend? I’m leaning towards vanguard, would rather have a stocks and shares isa somewhere else to play the market for now.
Just read I can contribute from my ltd company to an SIPP pre tax! Happy days. Anyone anyone recommend? I’m leaning towards vanguard, would rather have a stocks and shares isa somewhere else to play the market for now.
Yep, company to pension is pre corp tax so more efficient than paying divs and then paying in yourself.
Just read I can contribute from my ltd company to an SIPP pre tax! Happy days. Anyone anyone recommend? I’m leaning towards vanguard, would rather have a stocks and shares isa somewhere else to play the market for now.
Yep, company to pension is pre corp tax so more efficient than paying divs and then paying in yourself.
Just read I can contribute from my ltd company to an SIPP pre tax! Happy days. Anyone anyone recommend? I’m leaning towards vanguard, would rather have a stocks and shares isa somewhere else to play the market for now.
Vanguard is OK but restricted to their own funds from memory.
I use interactive investor (flat fee which is good if you have a decent amount saved) and also still have a bit left in fidelity.
Do not use Vanguard. There are many other "platforms" to choose from which have access to far more funds that are on Vanguard. Should be able to get the platform charge for less than 0.4% and then it's up to you what you invest in. However, crypto's aren't available. If you want my advice......then you need to pay 😄.
Sareum are doing some interesting research and I've invested in them on AIM. Their work is related to cancer and covid treatment - early days but shares have moved up steadily.
Comments
That is where a lot of bitcoin believers have made a mistake. They think when the price of bitcoin goes up, that is itself evidence that the technology is closer to working, and becoming money. It’s not! Lots of things, from baseball cards to cases of Château Lafite, go up in value. That does not make them money. It makes them assets. Assets are fine things, but the value of the said bitcoin comes from the possibility that it becomes a specific kind of asset, namely money. Evidence that bitcoin is becoming money would involve people transacting in it more, in more places and more smoothly (whether there is any evidence of that is a topic for another day).
Having written that, he got a lot of fans coming back at him with the line that it's a "store of value" like gold. To which he has responded
The most common reply I received was that bitcoin is not trying to be money. Money has two key properties. It is a store of value and a medium of exchange. Most of the people who think I am wrong think bitcoin is all about storing value. That is why its finite supply is so important. If it’s a bit costly to trade, a bit illiquid, and so on — who cares. It is akin to gold and diamonds, commodities whose salient feature is their rarity and how much they are prized, not their ease of use. I am not convinced. Gold and diamonds have uses in industry and jewellery, they have millennia of convention supporting their preciousness. The only thing supporting bitcoin as a store of value, as a precious commodity, is that it might be both a store of value and an especially good medium of exchange — one that can transact widely, frictionlessly, at a low cost, and (here is the real key) without third-party oversight or government control. And I don’t think we yet know that this is so. Bitcoin is scarce, but so are the watercolours I painted in high school. That does not make them a store of value.
Anyone want to argue with that? And then there is another emerging problem with Bitcoin, the way it is "made" is environmentally catastrophic. It's taken Elon Musk (whom I otherwise wouldn't trust to tell me the time) to bring that into the public consciousness. Now that he's done so, I think the consequence is that anyone who believes they are investing ethically, via the burgeoning "sustainable" funds etc, and is also trading in bitcoin, needs to have a word with themselves.
As for elon musk, this is a guy who claimed he was in "talks" with "dogecoin devs" - to artificially pump the price of a ponzi. There are no dogecoin devs, its a litecoin fork thats had zero dev work from the date of it's fork.
"Bitcoin is not a store of value" except, it is being used as a store of value. Forgive me if i take any FUD with a large helping of salt - this is all the same rubbish that came out in 2017-2018 on the last bull run of the cycle. We're now up 2x from the top of that cycle on the back of a "crash". Ponzis and pyramid schemes go up until they can't go up any more, they then crash and disappear. They don't get stronger and stronger throughout their entire existence, downturn after downturn.
EDIT, I'm in profit!
On the subject of bitcoin. I'm like Manuel on this - I know nothing. But on the subject of what it is, once again it is an equity. It's not cash, as you can not trade stuff with it. It is not a commodity, as it's not physical. It acts like an equity due to the volatility. I did read the other day that it is also not very environmentally friendly due to the amount of electricity is being used just to store it. Electricity which is mainly powered by coal. There are millions & millions of computers running 24/7 just to keep the thing "alive".
When one of the thousands of fund managers around the world start using it in their portfolios then I will take a look. Until then......
I agree all companies / activities consume electricity so not sure the accusation (not from people on this forum) of Crypto being a particular drain is accurate or remotely relevant.
The general concern that people don't really know what they are investing in or why its so volatile (relative to other investments) is however pertinent.
I think its right to be suspicious / cautious of something new that some seem to think is perfectly reasonable to rise in 'value' and make people rich way in excess of more traditional investments.
The old adage if its too good to be true...
You’ll find after all the number of people in banking is fewer today than previous years as technology prevails.
They've just done a Big Read on the environmental issue. The FT is paywalled, although I think you can get some articles for free each month. Some clips:
“Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.”
"Economic authorities are starting to take notice. The European Central Bank on Wednesday described cryptoassets’ “exorbitant carbon footprint” as “grounds for concern”. In a paper earlier this month, Italy’s central bank said the eurozone’s payments system, Tips, had a carbon footprint 40,000 times smaller than that of bitcoin in 2019. Measuring precisely how dirty bitcoin is has become a cottage industry in itself. The latest calculation from Cambridge university’s Bitcoin Electricity Consumption index suggests that bitcoin mining consumes 133.68 terawatt hours a year of electricity — a best-guess tally that has risen consistently for the past five years. That places it just above Sweden, at 131.8TWh of electricity usage in 2020, and just below Malaysia, at 147.21TWh."
n.b. that's Sweden, the entire country!!!
The true figure for bitcoin could in fact be much higher; Cambridge’s extreme worst-case scenario calculation, based on miners using the least energy-efficient computers on the market as long as the process is still profitable, has peeled away from its central estimate sharply since November last year as the price of bitcoin has rocketed. The rationale: a rising bitcoin price attracts new miners, and also means that mining with older, less efficient equipment, makes financial sense. The higher price also means the machines producing bitcoin are forced to complete ever-tougher puzzles in search of their quarry. At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year. The UK consumes 300TWh. About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.
Naturally, there is space for disagreement on these statistics, and all studies on the issue accept elements of uncertainty. “There’s a lot of shades of grey,” says Michel Rauchs, a research affiliate who works on the Cambridge index. Rauchs points out that a slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season. That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist, Rauchs says.
A greener version of bitcoin is, in theory, possible. Bitcoin’s code could switch to a less energy-intensive consensus mechanism, whereby a new section of the blockchain ledger underlying the cryptocurrency would follow different rules. However, every miner would need to switch for the new path to work. Industry insiders say it is hard to imagine the entire bitcoin community, which is peppered with disagreements, lending support to such a plan.
Lots more but I think that captures the key points, and the nuance of the issue.
I think the issue this points out is that China needs to move away from coal - but we already knew that, and is utterly unrelated to crypto.
It's up to you how you address this issue. AFAIK you are generally somebody who appreciates the seriousness of the climate crisis. Whether its clean or not, if it takes more energy to produce Bitcoin than the whole country of Sweden needs to power everything, that really ought to be pause for thought. Sadly it seems to me that a lot of Bitcoin fans are also climate deniers and anti-vaxxer types. I don't share your faith that the "community" will move to address it.
Right now it looks like my own FTSE100 forecast (I think it was 7100) may fall a bit short this time (and I'd rather than than the other way, of course), but there are some big new issues appearing. But then, when was that not true?
@PragueAddick I ain't a lady, but I can meet the other two criteria!!
Long way to go.
Struggling to get my head round either of them to be honest!
I use interactive investor (flat fee which is good if you have a decent amount saved) and also still have a bit left in fidelity.
Sareum are doing some interesting research and I've invested in them on AIM. Their work is related to cancer and covid treatment - early days but shares have moved up steadily.