I woke up early this morning & stumbled upon Seetee's "letter to shareholders" and oh boy is it an alphabet soup of nonsensical Bitcoin memes.
To quote Wolfgang Pauli, "it's not even wrong"
I guess Nic Carter must have had a strong influence over whoever wrote it.
Let's dive in.
TL;DR: "I've watched Bitcoin go up tenfold in a year and that gave me confidence that it's very valuable so I jumped in".
Of the 19 advisors that were consulted, only one, Mike Green, is a critic, and also the only one who understands finance and doesn't have a vested interest.
Let's start with the "Bitcoin is like the early Internet" meme. The letter references Tim Berners Lee - maybe they should have talked to him. Since Tim said 6 years ago that Bitcoin was getting ahead of itself, the number of daily transactions has barely gone up threefold.
By the time the Internet had millions of users (let's pretend Bitcoin bagholders are "users", although they don't use Bitcoin, instead just hold it waiting for the promised moon), it had plenty of applications. Investments in infrastructure were bringing costs DOWN, not UP.
Central bankers have not magically decided inflation should be at 2%. In "A Term at the Fed: An Insider's View", Laurence H. Meyer recalls the meeting when Janet Yellen argued to Alan Greenspan that the neutral rate of inflation should be above zero to help the economy adapt.
Positive inflation is that it helps adjust wages to technological progress. It's hard to make an employee accept a wage cut, even if his relative productivity is going down. With positive inflation, employers instead can focus on raising salaries of jobs that are more productive.
"The government owes everyone money & they want to inflate their way out of their debt" meme.
Inflation is neither good nor bad. It doesn't help debtors as interest rates compensate for inflation. High inflation means high interest rates means you spend a lot of money on coupons.
"80% of my portfolio was in oil and gas" wow that's awful risk management, and a sign that you don't really know what investing is about.
Who advised you on that strategy? Maybe you're not listening to the right people (not only for oil, I mean in general)?
I didn't invest in the Internet (but with 30 year hindsight I now understand that it's amazing) or in mobile communications (hindsight again) but hey this Bitcoin thing I really get it and at $1 trillion market cap I'm ready to go all in!
Dude, maybe stick to fishing?
"If you're not long Bitcoin, you're short Bitcoin" meme. It's directed at gamblers who can't stand seeing red come out at the roulette without having a bet on.
That's a sure way to lose all your money. Good investors don't focus on making money, they focus on not losing it.
"Bitcoin could become the core of of monetary architecture" seriously Nic Carter did you write this pile of dung?
Bitcoin can't be used a a layer for global settlements because transactions are never guaranteed or final. Not being able to correct errors is very, very bad.
Proof of Work can't be used to secure a hypothetical global settlement layer because there's not enough electricity in the world to pay for insurance against attacks when you have to transact hundreds of billions of dollars per day. It's the stupidest idea ever.
"The more people believe in something, the more valuable it becomes, it's the network effect" - no, that's not what the network effect is.
A thing isn't valuable because of beliefs, but because people need it to the point of paying money for it. Beliefs come and go, needs stay.
"Bitcoin is a battery that stores energy" meme. No it's not. That's just stupid. Bitcoin doesn't store anything beyond a number on a database.
If you mean it in some bullshit metaphorical sense, then don't put it next to real batteries and to the Paris Climate Agreement.
"Bitcoin can be used to send real dollars from bank account to bank account more efficiently" meme.
Ripple claimed that same crap & they had to pay Moneygram to use XRP because it didn't work. If you're using Bitcoin to send money you're just adding another layer of risk & costs.
"Banking the unbanked" meme.
Telecom operators are way ahead of you pal. People without bank accounts use their phones to pay for stuff. We didn't wait for your Ponzi beans to save them - and nobody in the Bitcoin industry ever tried, because the "unbanked" don't have much money.
"What about gold mining" meme.
Bitcoin isn't gold. It's computer code and we decide how it works. To decide that it should be wasteful is incredibly, mind-numbingly stupid. You can have scarcity without waste. And we're not using gold for payments. Its main use case is jewellery.
"All that's needed for Bitcoin is the cheapest electricity" dude you don't understand Bitcoin. No matter the price of electricity, you'll need to spend the same amount on it.
If electricity is cheap, you'll use more of it. Bitcoin's purpose is to burn as much cash as possible.
And you don't only need electricity, you need ASICs too - and because we come up with a new, more powerful version of those, the ASICs you just bought have a lifespan of 3-4 years max, after that you must throw them out.
One Bitcoin transaction produces 130g of electronics waste.
No you don't. You've been brainwashed by shills who have drowned your logic & common sense under a tsunami of bullshit you don't understand & you think you'll look smart & hip if you join in on this Potemkin revolution.
Your $50M will pay for 1 day of mining costs.
Thanks, sucker

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More from @Tr0llyTr0llFace

10 Mar
A lot of people, some of them extremely smart and knowledgeable in fields other than finance, believe that there isn’t much difference between Bitcoin and stocks or any other financial asset as an investment because “you need someone to buy it from you” in both cases. A thread.
When you buy a stock, the reasoning goes, you do it because you expect you’ll sell it to someone else at a higher price. It’s exactly the same as for Bitcoin. Hence, it’s the same game, right?
Obviously not.
A stock is a share of ownership of a company. This company has assets.
This company has people working hard to generate profits that compound to its assets. Think of your stocks as a claim on a percentage of a bag in which the company’s employees are putting the money they earned for the company every quarter. The bag gets bigger and more valuable.
Read 11 tweets
8 Mar
The meme of Bitcoin as a hedge against inflation and central bank money printing is stupid and perfectly tailored to stick in the brains of financially illiterate bagholders.
First, it seems intuitive that inflation should push Bitcoin up, as everything goes up with inflation.
Except Bitcoin isn't bacon or milk, it's a financial construct. Not all assets go up with inflation. Bonds go down with inflation as interest rates rise. Stocks can go down with inflation if input costs exceed the company's pricing power.
Bitcoin's input costs would rise.
Bitcoin costs money to exist - it needs ASICs and electricity, and those will definitely go up with inflation. Of course miners are free to reduce the hash power to counter-balance that, but then the security of the network will decline, so how is that good for the price?
Read 8 tweets
7 Mar
Remember when Paul Tudor Jones invested in Bitcoin, in May 2020? In his letter to investors, he explained that Bitcoin would be a good "hedge against inflation and money printing", without going into much specifics.
But he did one very weird thing. He didn't buy Bitcoin.
Instead, he bought Bitcoin futures. That's very, very weird for one reason - Bitcoin futures have a very negative carry as their term structure is in contango. A Bitcoin future a few months out costs much more than Bitcoin spot, and PTJ was willing to give up that spread. Why?
Some said that it was "easier than buying Bitcoin", but come on - a multibillion dollar hedge fund can figure out how to buy Bitcoin and store it in a wallet.
I can tell you that in funds like those, an army of PhDs spends their days figuring out the best way to make every bet.
Read 11 tweets
6 Mar
Nic Carter still tries to spin Bitcoin's mind-numbingly stupid energy and cash burn as a "debate". It's not a debate: Bitcoin's energy energy and cash burn is mind-numbingly stupid.
Let's dissect the desperation of a hypocrite who's backed into a corner.
The opening salvo sets the tone.
Nobody's debating if it's worth to spend "any" energy on Bitcoin. Sane people are simply saying that it's stupid to spend 100+ TWh/year because it's an insanely large amount and much more efficient systems could be set up to the same effect.
Then there's the assumption that Bitcoin is, or enables, "a non-state monetary system" and "sound money". It's not, and it doesn't. Bitcoin, in itself, is just a database - a distributed ledger, like tens of thousands of other databases, only much slower and more expensive.
Read 16 tweets
5 Mar
Michael Saylor's stated strategy to load up $MSTR with debt to buy Bitcoin is a mathematical guarantee of bankruptcy.
Remember $XIV, the "short volatility" ETF that went bust when the VIX jumped 100%? HSBC had written in the prospectus of the fund that was going to happen.
In the case of $XIV, you knew that an event where the VIX goes up by 100% in a single day is very unlikely, however, over a very long period of time, it's a certainty. Let's say the probability of that happening on any given day was only 0.1%. This means that the probability...
of it NOT happening is 99.9%, on any single day. But if you intend to hold your ETF for longer periods, the probability of the ETF not going bust over 10 days is down to 99% (99.9% ^ 10), over 100 days - down to 90.5% (99.9% ^ 100), and over 1000 days - down to 37%.
Read 5 tweets
5 Mar
I've been ranting about this for almost 2 months now.
To answer all those who are asking "how can I arbitrage this", the answer is, you can't.
Because the SEC doesn't want a Bitcoin ETF, it only allowed $GBTC to exist with one huge caveat: it's a closed-end fund.
A consequence of that is that $GBTC can't redeem shares. They never got that "exemptive relief" from the SEC (excerpt from their IPO prospectus below). Which means that you can buy $GBTC at a discount to NAV feeling smug, but what are you going to do if the discount goes to -30%?
The only way to milk a discount is to buy a very large stake in $GBTC, and then vote to liquidate the trust in the next shareholder GA - you'll then get your bags of Bitcoin. But then the market will know that you got a crapload of Bitcoin that you probably intend to sell.
Read 5 tweets

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