I watched The Bitcoin Standard video that had Saylor on recently.
I thought the realist perspectives were laid out well taking into account present day and the long road towards hyperbitcoinization and a world living on a Bitcoin Standard
Saylor: +4 points
Ammous: -1 point
And, both can use #bitcoin in a way that fit their world view
I always respect your view but I offer a rebuttal.
I listened to this episode of RPB and I think it misses the mark on what was being discussed regarding and why.
In what way? I’ve heard a good amount of criticism about it but it mainly comes down to the fact that I don’t value fiat gains.
Always appreciate you Vic.
Why would you not value fiat gains or gains of any kind?
The sampling of yield consideration isnt intended for strictly fiat gains. That angle is only possible in the present due to lender of last resort.
The goal is increasing ones wealth overall, as measured in Bitcoin terms. If you start with 100000 sats, and earn either 5000 sats directly (5%) or earn an equivalent of 5000 sats in fiat terms beyond the delta in fiat value in the sats lent then you still earn, presuming you get a return of the interest and the principal. Obviously any lending and counterparties represents a risk, thats what interest on that lending is for and why seeking such isnt for everyone.
Saylor's hypothetical is based on assuming we still have the dollar, we still have the USG and the Fed and the big banks. He's working within the system to speculatively attack the dollar ala Pierre Rochard (2014), but as time goes on he looks for more ways to grow, or cover expenses without selling. Hence, some yield, on a portion may be acceptable depending on risk.
Ammous perspective lies more in Bitcoin Standard extremism. No USG or lender of last resort. No JP Morgan. Somehow loans are either bad, or at virtually 0% interest (because it costs more to hold an asset then the risk lending it out). I just felt like Saif was reaching hard in this one for some mental gymnastics that make huge assumptions on the future from weak data points. He brought up the book A History of Interest Rates, and a chart showing long term downtrend but neither him nor that book adequately cover reasons for declining rates.
I didnt participate in the BlockFi/Celsius/FTX fiasco. I lean risk averse. But Im not opposed to leveraging portions of wealth in an effort to garner more return or pull value forward. This is why people buy houses with mortgages instead of paying in cash. On a Bitcoin Standard, a loan would still be viable provided the earning or funds flow is verifiable.
I'm with you.
Saylor took a lot of shit for this but I agreed with almost everything he said.
We need more realistic takes in bitcoin.
What is realistic? Basically the contention comes down to nominal versus real "gains" and what can be measured.
Saylor is using the dollar as a measuring stick. That is an impossible, and at the very least innaccurate measure. Saying "5%" doesn't mean anything realistically when you have some sort of ever expanding pizza. It makes no sense to say I want 5% of a pizza that is expanding in volume but becoming less calorie dense with each expansion per square inch.
Saylor is saying people want more pizza and will continue to want more pizza.
Saif is saying people want calories and will make the choices that meet that end.
Which one is the realist? Well, the people who chase the ever expanding slice will STARVE to death and are therefore inconsequential to the future. Those who chase calories will still be alive in the future and thus be important to analyze.
This is the same problem as when people say "The government and blackrock having Bitcoin will be bad."
How?
When they fail to produce value they will have their holding siphoned away but productive people. How will they gather more when they are the least efficient and most wasteful entities? They won't they will just spend their Bitcoin until there's nothing left trying to keep their charade afloat.
Saylor seems to think that the fiat paradigm is just "not efficient." He is incorrect. It is a sinkhole of human production that is only alive through the sheer volume of of social cohesion. Think of a blown tire going 80MPH. The only thing keeping your car from flying off of the road is that this stretch is fairly straight and you have momentum. The moment there is a(n economic) curve in the road, the crash will be quick and it will be violent.
Sorry for the diatribe but the buzz of "Realist" sticks in my brain. The people who dropped bombs on civilians in Japan were Realists. We need to search your bags be fore you get on the plane are Realists. It always seems to give cover to moral misgivings because if we stop the car with the blown tire we might lose control. I reject that.
Kudos for both a pizza and a car analogy in a single response, though I don't think either made much sense. But seriously ...
An example of nominal and then adjusted for inflation
I deposit 100000 sats in some Bitcoin Bank at a time when 1 BTC is worth 100,000 USD. A year from now, I'm paid the fiat equivalent of 100000 sats + 5% gains when BTC is worth 85,000 USD. I end up with $89.25 fiat, and would immediately convert to Bitcoin getting 105000 sats. However, I owe say 20% of the 5% earnings in taxes (85 cents, horribly rounded up to 1 USD), so I'm actually left with $88.25 fiat, which gets me 103823 sats. My effective post tax rate of return is 3.82% after conversions. In the meantime, a year also cost 3% inflation, leaving my overall effective yield at less than 1%. If I had done nothing, I would have still lost relative value against inflation, but would have foregone all the counterparty risk.
I don't understand why people are jumping all over Saylor about yield. Putting a value on Bitcoin and lending it, like any other asset, makes sense to me.
In this world where does the 5% come from? Why would a bank give you anything to hold BTC? The answer is rehypothication. They loan your bitcoin to others. If you actually care about the value proposition of Bitcoin this is akin to naked short selling. Infinite downside marginal upside. As for the chide about my analogies, remember if you happen upon two people speaking a foreign language and you don't understand them, that doesn't mean they are speaking gibberish. Maybe you might need the humility to realize YOU don't understand something that is clear to others. I am not saying Saylor is incorrect about things that might happen. I am saying they are economically illiterate. People do things that cause market failures all the time. But the Yield paradigm he is predicting is just as foolish as printing dollars and just as disasterous.
The 5%, or whatever amount, comes from the proceeds the borrower is making in the regular course of business.
This is not unique to fiat, gold, or bitcoin.
It’s 5% above the fiat appreciation rate. There isn’t a bank that can currently deliver 52.5%(+) on their loans.
That’s the 5% nostr:npub15dqlghlewk84wz3pkqqvzl2w2w36f97g89ljds8x6c094nlu02vqjllm5m is referencing.
Right. And what is that regular course of business for a bank? Lending.
What do they lend? Deposits.
And what did you deposit? Bitcoin.
We're literally reillustrating why gold failed.
If they lend fiat, they can print more.
If they lend gold, they issue coupons in a ponzi scheme.
What do you think happens when they lend your bitcoin out?
Banks are a vestigal contrivance of when they were gold warehouses. Banks don't DO anything. They don't even store an appreciable amount of fiat notes which is their ostensible purpose. So the course of their business is stealing (borrowing without permission) people's money and giving it to others. When they lose that money they just print more. How can they do that with Bitcoin. That is why I ask where the 5% comes from. It's especially farcical when Saylor claims that it would be a "Risk-Free" return. So at the end of it all I know it's not Unique what banks WILL do in the future. I am saying if you value your bitcoin you would never give it to a bank.
Banks provide services to borrowers and lenders, spreading risk across multiple borrowers.
They also provide transaction reports for review and reconciliation.
Again, this doesnt mean there isnt risk. Your claims that banks do nothing may be misguided.
More likely a failure of language. I listed several things that banks "do"
When i say a bank doesn't do anything i am referring to value created.
Banks leverage value entrusted to them to bestow value upon others. They nearly never return that value to the depositors because of material inflation. I know there's risk. It seems that is only something Saylor doesn't understand which is why many have panned him for that interview.
Ironically Saifedean also implied there was such low level of risk or no risk that borrowing on a bitcoin standard would be free, without yield, or risk which was a key aspect Saylor was taking issue with.
If you dont think banks provide a service of value, then Id recommend not using them. And similarly you may want to avoid all value custodians and intermediaries, including zeuspay.
Saifedean implied that the appreciation of Bitcoin over time would be the yield. Saylor misunderstood Saifs point because they were trying to compare apples and oranges. Receiving 1 million sats 10 years from now would hold more value than 1 million sats today. Saylor basically said no, that's still only 1 million sats on a balance sheet.
Banks and intermediaries in Bitcoin are vastly different, it's a bit hard to take the suggestion seriously. Fee's taken for literally facilitating a peer to peer trade and fees taken by handing one person's money to another person as a loan are completely different. No bank today puts up their own capital as the liquidity layer of transfer. They literally just edit a ledger and any discrepencies are loaned from the fed. The only value Banks used to offer was holding your gold for you and transferring it to your associate's bank.
I don't use banks. I use intermediaries when I cannot do something myself (which is rare). Zeuspay doesn't hold MY coins. People pay them, they pay me.
