Jemima Kelly, Financial Times columnist, recently highlighted some misconceptions regarding Bitcoin's singularity and decentralization.
This opinion editorial is by Stephan Livera. Stephan Livera is the host of "Stephan Livera podcast" and managing director at Swan Bitcoin International.
Jemima Kelly, a Financial Times columnist published an article entitled "Don't Believe the 'Maximalists': Bitcoin Can't be Separated from Crypto" earlier today. I'd like some Bitcoiner reactions. Below is the entire Kelly article.
"If you've ever tried to criticize the crypto world, you are likely to have received charming rebukes." Most likely, you were told to "have fun staying poor '…"."
It's not serious. I think the "have fun staying impoverished" meme is a joke. Why? We all remember Bitcoiners telling Elon Musk (the richest man in the entire world at the time) to "have fun staying poor", as he backed away from his public support for Bitcoin. This is clearly not intended to be a serious rebuke.
"But I am now receiving a more sophisticated form of counter-criticism with increasing frequency in my email inbox. It starts with an appeasement, some sort of agreement that crypto is illegal, a scam or some form of Ponzi scheme. It quickly changes its mind, explaining that bitcoin is not affected by any of these.
This is the main disagreement I have with the article. Many Bitcoiners, including myself, believe we shoulddraw a distinction between Bitcoins and "crypto" because Bitcoin is unique in many aspects:
- It does not have any pre-mines or "dev. It does not have a pre-mine or "dev.
- It is a culture that values decentralization of the ecosystem.
- It allows for cheap blockchain participation and validation (i.e. it is relatively simple to run a fully-validating Bitcoin Node). While maintaining a robust open-source, scalable, trust-minimized, and open system,
- It favors soft forking, and it retains backwards and forwards compatibility to older Bitcoin node software.
- It continues to grow in acceptance and mindshare all over the globe. This does fluctuate with bear and bull markets. However, if you zoom out, you will see that bitcoin liquidity is only increasing and acceptance is only going up.
These points will be clear once you really look into them. onlyBitcoin also meets these criteria. Altcoins often hard fork which indicates that they have some centralization in their development. Altcoins can do things that are not easily scaleable if they have the same level of Bitcoin or the amount of transactions. Altcoins can do more things, which makes them not as open system as Bitcoin.
While you might argue that one altcoin does more than Bitcoin, are they making any meaningful improvements to the overall system? It doesn't seem so to me, which is why Bitcoin is considered a distinct category. The question of whether Bitcoin should be able to have these other features or things is another. This could also lead to negative tradeoffs in one of its other valuable qualities (robustness and decentralization, scalability. verifiability, verifiability etc. ).
Kelly appears to believe that Bitcoin arguments don't hold up, as she is against any financial incentive. Take, for example:
"First, bitcoin's origins don't matter — people who promote it now have the same financial incentives that those who push any other cryptocurrency token."
This is a justifiable attack on Bitcoin promotion. Imagine you are an investor and promote the company openly. This is a problem?
Imagine that fraudsters are competing in the same industry. You encourage people to use your product instead. What is the ethical problem? What would you think? It doesn't, unless your grasping at straws.
Bitcoin is not a business. However, Bitcoin's promise is not that there were "no people who got in cheaper" than you. This is an absurd and impossible standard. Bitcoin promises an open, decentralized and robust, programmable, programmable monetary platform without any rulers. Kelly's criticism falls apart because the product does exactly what it says on its tin.
"Second: Bitcoin is not decentralized. Not only are miners grouped together to form'mining pool', but wealth is also extremely concentrated."
Kelly isn't correctly summarizing what the relationship is between miners, pools and other entities. The miners are separate entities from the pools and can quickly re-point their hashrate to another pool. Although there are fewer pools than in other markets, miners can switch between them because it is extremely competitive. This screenshot is from the Braiins Dashboard as of September 23, 2022. It shows the locations of different pools around the globe.
The recent Poolin news that the company had stopped withdrawing funds is also of interest. Many miners pointed their hash rate away from Poolin. You can see that Poolin's global bitcoin mining hash rate share has dropped from 12% to 4% as of this writing.
MicroStrategy announced Tuesday that it had purchased another 301 bitcoins. This means that this company now has almost 0.7% of the total supply.
Kelly claims she is "steelmaning the argument" but, unfortunately, her knowledge of the topic of bitcoin ownership is not up to scratch. She would be able to grasp the libertarian and cyberpunk ethos of Bitcoin and understand the need to create a monetary system that is free from coercion. Given this, it is likely that some people will get it first. It will be easier to mine, buy, or earn bitcoins than others. It is irrelevant that a single company controls 0.7% of bitcoin's circulating supply.
Bitcoin is therefore far more decentralized that the "crypto” coins.
"Third, a first-mover advantage" does not always hold.
This is true for a business context. However, to truly understand why Bitcoin is so special, we need to know why it beats other alternatives such as fiat money or gold. You need to create something that is ten times more valuable to replace another product. Bitcoin is not ten times more than possible. Here's a quote from my friend Gigi, in his recent thread on Twitter:
It is impossible to improve the monetary properties by Bitcoin tenfold because of its limited design space. It is possible to marginally improve one thing but not by drastically reducing trade-offs in others (verifiability and scalability; robustness; accessibility).
Kelly writes about Maximalists' incentive:
Bitcoin maximalists are trying to seperate bitcoin from all of crypto to create an illusion of scarcity in a world that isn't there.
Bitcoin Maximalists are motivated to differentiate bitcoin from "crypto," but the real question is, Are they right? They are.
Bitcoin is clearly distinguished from altcoins. However, it takes much research and reading to fully understand why. Kelly is not doing the necessary research and only presents a superficial understanding.
Stephan Livera contributed this guest post. These opinions are not necessarily those of BTC Inc.
Frequently Asked Questions
How much of your portfolio should you hold in precious metals
To answer this question, we must first understand what precious metals are. Precious metals have elements with an extremely high worth relative to other commodity. This makes them valuable in investment and trading. Gold is today the most popular precious metal.
But, there are other types of precious metals available, including platinum and silver. The price volatility of gold can be unpredictable, but it is generally stable during periods of economic turmoil. It is also not affected by inflation and depression.
The general trend is for precious metals to increase in price with the overall market. They do not always move in the same direction. For instance, gold's price will rise when the economy is weak, while precious metals prices will fall. Investors are more likely to expect lower interest rates making bonds less attractive investments.
However, when an economy is strong, the reverse effect occurs. Investors choose safe assets such Treasury Bonds over precious metals. Because they are rare, they become more pricey and lose value.
Therefore, to maximize profits from investing in precious metals, you must diversify across multiple precious metals. Because precious metals prices are subject to fluctuations, it is best to invest across multiple precious metal types, rather than focusing on one.
Can I hold a gold ETF in a Roth IRA?
A 401(k) plan may not offer this option, but you should consider other options, such as an Individual Retirement Account (IRA).
An IRA traditional allows both employees and employers to contribute. You can also invest in publicly traded businesses by creating an Employee Stock Ownership Plan (ESOP).
An ESOP gives employees tax advantages as they share the stock of the company and the profits it makes. The money in the ESOP can then be subject to lower tax rates than if the money were in the individual's hands.
You can also get an Individual Retirement Annuity, or IRA. An IRA allows you to make regular payments throughout your life and earn income in retirement. Contributions made to IRAs are not taxable.
What Should Your IRA Include in Precious Metals?
You should remember that precious metals are not only for the wealthy. You don't have to be rich to invest in them. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You might consider purchasing physical coins, such as bullion bars and rounds. Also, you could buy shares in companies producing precious metals. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
No matter what your preference, precious metals will still be of benefit to you. Although they aren’t stocks, they offer the possibility for long-term gains.
Their prices rise with time, which is a different to traditional investments. This means that if you decide on selling your investment later, you'll likely get more profit than you would with traditional investing.
What Is a Precious Metal IRA?
You can diversify your retirement savings by investing in precious metal IRAs. This allows you to invest in gold, silver and platinum as well as iridium, osmium and other rare metals. These rare metals are often called “precious” as they are very difficult to find and highly valuable. These are excellent investments that will protect your wealth from inflation and economic instability.
Bullion can be purchased via a variety of channels including online sellers, large coin dealers, and grocery stores.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. This ensures that you will receive dividends each and every year.
Precious metal IRAs have no paperwork or annual fees. Instead, you only pay a small percentage on your gains. Plus, you can access your funds whenever you like.
What Precious Metals Can You Invest in for Retirement?
These precious metals are among the most attractive investments. They are both easy to trade and have been around for years. These are great options to diversify your portfolio.
Gold: Gold is one the oldest forms currency known to man. It is very stable and secure. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: Silver is a popular investment choice. It's a good choice for those who want to avoid volatility. Silver, unlike gold, tends not to go down but up.
Platinium is another precious metal that is becoming increasingly popular. Like gold and silver, it's very durable and resistant to corrosion. It's also more expensive than the other two.
Rhodium – Rhodium is used to make catalytic conversions. It is also used in jewelry-making. And, it's relatively cheap compared to other types of precious metals.
Palladium: Palladium is similar to platinum, but it's less rare. It's also more accessible. This is why it has become a favourite among investors looking for precious metals.
How is gold taxed in Roth IRA?
An investment account's tax is calculated based on the current value of the account, and not on what you paid originally. Any gains made by you after investing $1,000 in a stock or mutual fund are subject to tax.
You don't pay tax if you have the money in a traditional IRA/401k. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
The rules that govern these accounts differ from one state to the next. In Maryland, for example, withdrawals must be made within 60 days of reaching the age of 59 1/2 in order to qualify. Massachusetts allows you to wait until April 1. New York allows you to wait until age 70 1/2. To avoid penalties, plan ahead so you can take distributions at the right time.
Can the government take your gold?
Your gold is yours and the government cannot take it. It is yours because you worked hard for it. It belongs exclusively to you. This rule may not apply to all cases. For example, if you were convicted of a crime involving fraud against the federal government, you can lose your gold. You can also lose precious metals if you owe taxes. You can keep your gold even if your taxes are not paid.
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement accounts
Investing in gold vs. investing in stocks
This might make it seem very risky to invest gold as an investment tool. This is because many people believe that gold investment is no longer profitable. This belief comes from the fact most people see gold prices falling due to the global economy. People believe that investing in gold would result in them losing money. In reality, however there are still many significant benefits to gold investing. Let's take a look at some of the benefits.
Gold is the oldest known form of currency. There are thousands of records that show gold was used over the years. It has been used as a store for value by people all over the globe. It continues to be used in South Africa, as a way of paying their citizens.
When deciding whether to invest in gold, the first thing you need to do is to decide what price per gram you are willing to pay. The first thing you should do when considering buying gold bullion is to decide how much you will spend per gram. You can always ask a local jeweler what the current market rate is if you don't have it.
It is important to remember that even though gold prices have dropped in recent times, the cost of making gold has risen. So while the price of gold has declined, production costs haven't changed.
When deciding whether to buy gold, another thing to consider is how much gold you intend on buying. It makes sense to save any gold you don't need to purchase if your goal is to use it for wedding rings. If you plan to do so as long-term investments, it is worth looking into. Selling your gold at a higher value than what you bought can help you make money.
We hope this article helped you to gain a better appreciation of gold as a tool for investment. It is important to research all options before you make any decision. Only after doing so can you make an informed decision.
By: Stephan Livera
Title: You Can Believe The Maximalists: Bitcoin Is Separate From Crypto
Sourced From: bitcoinmagazine.com/culture/bitcoin-separate-from-crypto
Published Date: Thu, 22 Sep 2022 19:48:21 GMT