One small detail though... The value of Bitcoin is based on a shared agreement only between those who actually holds them.
Not really.
We generally view that the market value of something is what a buyer and seller are willing to exchange it for.
That's how we value stocks, bonds, currencies, commodities and all other products.
Bitcoin is valued the exact same way, the prospective buyers and recent sellers are also part of this.
Only about 5% of the Canadian population holds Bitcoin. They are the ones that agree with its valuation, not the other 95% of the population.
Just because you're a holder doesn't mean you agree with the valuation.
For example, during a hostile takeover, I have been forced to sell at much less than the value of the stock I held.
I'd say most holders of Bitcoin feel it is worth more than the current price, which is why they are holding it.
I don't hold Bitcoin because I don't agree with its current value and with its volatility. I don't hold shares of Tesla because I don't agree with its current value. Though I do hold CAD like 100% of the Canadian population. How CAD is valued depends on how good the Canadian economy is doing and that also depends on the government the Canadians have voted for. We have a consensus agreement and I'm pretty sure my CAD won't lose -50% tomorrow (as it won't gain +100% either). If I fear my CAD will be slowly devalued, I'm much more confident when using those CAD to buy stocks (companies) which are productive assets generating wealth.
I agree with your valuation on Bitcoin and Tesla.
However I hold CAD as a convenience. I fully expect CAD to dramatically fall in value over the next few years.
Someone may disagree with the government's money printing, but I disagree even more with something that I can't value, that's highly speculative and that's highly volatile, held only by believers and speculators. All characteristics that CAD doesn't have.
You just described stock investing for the vast majority of the population.
When an non-productive asset that can't be valued soars too fast, at some point people who got rich holding it will sell to cash in to something safer and that leads to a bubble pop. If I had bought $100,000 of Bitcoin 2 years ago and it's now worth $1.5M, would I continue holding it? I'd sell it and retire. This kind of situation doesn't happen with my CAD.
No the value of CAD is almost certainly going to drop over time.
I prefer the risk of missing out on this one than the FOMO.
Me too.
and if I change my mind, there will be plenty of time later.
I figured it out and bought Google, Apple and Amazon a bit later, and still made a lot of money.
Anyways, that's my uneducated opinion from someone who doesn't really understand Bitcoin, but that's still how I see it at the moment. I'm posting this to be challenged because I'm open-minded and I like adverse opinions.
My first rule of investing is
1. If you don't understand how an investment will make you money, don't invest in it.
I think cryptocurrencies have a value. I can't figure it out, because the market is still young.
I also agree it's simply a widely shared delusion that there is value.
However this is the same case for Fiat currency and Company stock.
If the shared "delusion of value" in a particular currency is high, it will have value, if it is low, it won't.
This holds true for Crypto and national currencies.
In some circumstances Canadian Tire money was considered as good as Canadian dollars, which I understand.
Governments and companies, can basically print however much new currency/stock they want, and there are few options to actually stop them.
That's one advantage of cryptocurrencies, they CAN'T do that, without the agreement of the market participants. To change the rules of a cryptocurrency requires people to stop using the old system and start using the new system.
Everyone can choose if they want to move to the new system, or stay on the old system.
Lets say someone wants to use a "new" version of bitcoin, people can stay on the current bitcoin or move to the new one.
What actually happens is that for a period of time, both "old" and "new" bitcoin will exist, and one may die out. This has already happened many times.
Mostly people agree and simply abandon the old one and move to the new one.
Occasionally people stick to the old one and they both exist going forward.
TLDR.
I like crypto technology, I think it has some real uses.
I think Bitcoin is the least interesting of the "mainstream" coins.
I have a very very small amount of crypto to understand it ( < $20 for educational purposes)
I can't value it, so I'm not investing in it. (My Rule #1 of investing)
/https://www.thestar.com/content/dam/thestar/business/personal_finance/spending_saving/2011/06/08/why_cant_you_pay_cash_at_a_passport_office/bordercrossing.jpeg)
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