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RE: Thinking about Shorting Bitcoin (BTC)
I agree that BTC will not end up as the "money" of the internet. Personally, I can see it being the store of value for the reason you mentioned. It is known and had the belief of many tied to it.
A short makes sense after a long run, if the run is over. What indicators did you use? Is it simply you bias against BTC that leads you to believe that it will reverse course? I can agree it is over extended yet cannot say that it will pullback soon....it could easily go over $6K.
I am just curious why the short now?
Moving averages , Stochastic RSI and MACD.
Ah ok...so your technicals are giving you a buy signal.
Very good.
After the run up, you could be in for a sensational trade. Something that moves up that fierce will pull back hard at some point. The billion dollars question is when?
Since I do believe in BTC long term, I hope you are right because I will add to my position on a hard pullback....
Then we both win. :)
I don't think BTC will in any way become a store of value. Cryptos are not Real. All of the worth it has is purely utilitarian. Better tech and better features create better value. It's stupid to think of anything as a form of "Digital Gold". The term itself is a contradiction. If it's not real; it doesn't "hold" any value. It's the function as a medium of exchange that gives BTC it's value. For ETH it's running smart contracts effectively.
Cryptos are made of codes. Software can only loose value as time progress. Old VHS tape may increase in value under some conditions. But a pure set of lines of code and only end up in a museum archive for software.
The only thing that has value is what people agree is valuable. People seem to think there is inherent worth to stuff. Take gold. What makes gold valuable? The fact people agree upon it. Oh I know, it is physical and it is scare. Well I have a 1982 Mike Vail baseball card that is scarce and physical...how come it isnt valuable? Or how about cabbage patch kids? How come they arent valuable anymore?
As for BTC, you think it stupid to think it a form of digital gold.... perhaps it is foolish to look at something physical as having value in a digital world. Have you ever wondered why aluminum was the dinnerware for royalty a couple hundred years ago instead of gold? Because at that time, the value of aluminum was more valuable than gold. Ironic how what people put value in changes over time.
All your examples are physical objects. Cryptocurrencies are a piece of software. Does anybody use Windows 98 or even XP these days? How about using the web pages in old ways with just text, images, embedded videos(maybe) and a bunch of hyperlinks. Do you use dial-up internet? How many servers can you find for old multiplayer games?
Technology has no store of value. Something better comes and kill the old. This happened with Netscape, Internet Explorer, Steam Engines, Nokia, CRT monitors, command line interface, Myspace etc.
BTC has no physical existence. All of its worth is in the utility. When Other products provide a better utility the value of BTC will simply fade away. I'm not saying it'll go to Zero. But It will go down. Not many keeps around Floppy Disks with 1.44MB storage capacity.
I think you miss the entire point of bitcoin. Perhaps you should investigate the underlying technology. How much is TCP/IP worth? Hundreds of trillions of dollars.
The value in Bitcoin is the fact that the bitcoin blockchain has, by far, the most development on it. Its value exceeds everyone else simply for the fact that developers have created more applications on it (and are continuing to do) than any other blockchain. Ethereum, which is second, isnt even close.
So when you have a business that is built upon a blockchain, that, in essence is locked in. Why would you switch? And, as with your example of windows, notice how it evolved with each updated version. Blockchains do that also.
And the idea of thinking about physical existence in a digital world is completely off base. There is very little physical about Facebook yet it is valued at almost $500B.
Let me ask you this question: how often do businesses in your town up and move their location? Do they do it on a whim? Does a store move three times in a year? Of course not. And why not? Because, to start, it is a major pain in the ass to move. Secondly, ones business, especially retail, often depends upon location whether it be for client convenience of so customers can find them. Either way, moving to another location is a huge business decision.
It is the same with blockchain. Companies that develop on one blockchain arent going to up and move to a completely different blockchain. It is akin to a retail location suddenly picking up and moving across town. Now there might be a legit reason for doing it but it will be considered long and hard.
Bitcoin is the platform, the protocol....everything you mention is an application. That is the difference. Windows is an app. Facebook an app. All built upon TCP/IP which is the protocol. Bitcoin is the protocol.
Bitcoin isn't the protocol. Blockchain is the protocol. BTC is more like the prototype/Minimum Viable Product. Think of it as the first iPhone. It's a piece of garbage at the moment which cannot even run most of our apps. But the smartphones live on. Some are from Apple, some from other companies. The original however is nothing but a relic after a decade. It'll be the same for BTC. It's like an old videogame. BTC will have a historical value. But 99.999% will not use it. You can barely find anyone still playing the COD:MW games. In few years BTC will simply fade away like Nokia or Internet Explorer.