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Bitcoin The Almighty Buck

Bitcoin Could Either Become Preferred Currency For International Trade Or Face a 'Speculative Implosion,' Citi Says (reuters.com) 114

Posted by BeauHD from the what-to-expect dept.
An anonymous reader quotes a report from Reuters: Bitcoin rose nearly 7% on Monday as risk assets rallied after last week's bond rout cooled, with Citi saying the most popular cryptocurrency was at a "tipping point" and could become the preferred currency for international trade. With the recent embrace of the likes of Tesla and Mastercard, bitcoin could be at the start of a "massive transformation" into the mainstream, the investment bank said. Goldman Sachs, meanwhile, has restarted its cryptocurrency trading desk and will begin dealing bitcoin futures and non-deliverable forwards for clients next week, a person familiar with the matter told Reuters.

Bitcoin, which hit a record high of $58,354 in February, could in the future become the preferred currency for international trade or face a "speculative implosion," Citi said. "There are a host of risks and obstacles that stand in the way of bitcoin progress," Citi's analysts wrote. "But weighing these potential hurdles against the opportunities leads to the conclusion that bitcoin is at a tipping point."

Bitcoin's recent performance has come with the growing involvement of institutional investors in recent years, contrasting with its heavy retail investor focus for most of the past decade, Citi said. If businesses and individuals gain access via digital wallets to planned central bank digital cash and so-called stablecoins, bitcoin's global reach, traceability and potential for quick payments would see it "optimally positioned" to become the preferred currency for international trade, Citi added. Such a dramatic transformation to the de facto currency of world trade -- a status currently held by the dollar -- would depend on changes to bitcoin's market to allow wider institutional participation and closer oversight by financial regulators, Citi said. Still, shifts in the macroeconomic environment could also make the demand for bitcoin less pressing, it added.
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Bitcoin Could Either Become Preferred Currency For International Trade Or Face a 'Speculative Implosion,' Citi Says More

Bitcoin Could Either Become Preferred Currency For International Trade Or Face a 'Speculative Implosion,' Citi Says

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  • I favor the implosion (Score:4, Insightful)

    by fustakrakich ( 1673220 ) on Monday March 01, 2021 @06:10PM (#61113256) Journal

    So the lights can stay on without needing a million more smokestacks

    • Can't we just offshore all international trade transaction processing onto China? Hey it worked for manufacturing..

    • Re: (Score:1)

      by Anonymous Coward

      I guess no bitcoin miners live in Texas, LOL

      • Got that right. Aside from us having unregulated rates here, which canâ(TM)t help, mining occurs where itâ(TM)s cold and with cheaper power. Hence, mining is done in some Scandinavian countries and Russia.

    • Re: (Score:3)

      by fazig ( 2909523 )
      As long as they use PoW instead of PoS, I hope they all do crash and burn.

    • Re: (Score:2)

      by JeffSh ( 71237 )

      Bitcoins cost of operation will exactly match the value of processing. Moreover, its energy use will seek the cheapest source of energy. It will literally be the direct driver of incentives to continue to drive down the cost of energy by correlating our financial systems with our energy systems.

      The cost of bitcoin, even in a future of a $10 tril or $100 tril valuation, is still far less than the world spends to mine gold, which derives about 80% of its value not from market demand but from store of value ut

  • Just like the fairy tale about the king with no clothes, these analysts are afraid to point out the obvious which that Bitcoin is at this point a scam. Not that it was when it was created, it was an idea where the future was unknown. Now we know that anyone buying bitcoin has to find a bigger fool who is willing to pay more for what they brought which has no intrinsic value and arguably little to no utility. However the hunt for the bigger fool seems to have been successful to date.
    • No, it was a scam then, too. People correctly pointed out its invalidities and issues, including its eventual insane power consumption, literally from the moment it was shown to the public. There were just a million sockpuppets pushing it and another million dumbasses who can't do basic math rambling about how anonymous and revolutionary it was.

    • One can legitimately question Bitcoin's intrinsic worth and whether it is in a bubble, but for me a "scam" implies something fraudulent. In Bitcoin it's all in the open about what you're getting, and it's your problem to value the token correctly, whatever that means. In comparison in pyramid schemes there are no actual investments from which profits are paid from.

  • Hard limit of 7 transactions a second (Score:4, Informative)

    by FeelGood314 ( 2516288 ) on Monday March 01, 2021 @06:20PM (#61113298)
    There are good things about bitcoin but it can never be widely used. Each block is mined about every 10 minutes (600 seconds). Each block holds about 4000 transactions. So you can only do 7 transactions a second. VISA can do 15000 last time I checked. Sure their are lightning networks and other work arounds but at the end of the day it will never scale 2000x. There are other technical problems. Every bitcoin transaction is public, so from a privacy perspective it is also doomed. Monero (the only crypto currency that actually is used as a currency) has privacy but the verification cost is insane since you can't have an unspent transaction pool like in Bitcoin.

    • high fees as well and the mining drop out as block pay outs go down.

      • Re: (Score:1)

        by Anonymous Coward

        What was the last Bitcoin transaction you made, Joe? I made one yesterday, the fee was 50 cents on a $10 transaction. It went through in just over an hour. If you are transferring large quantities of Bitcoin the fees are vanishingly small.

        • Note that high bitcoin transaction fees will eliminate high frequency trading.

          • Re: (Score:2)

            by ceoyoyo ( 59147 )

            High frequency trading currencies is a good thing. It's called "buying stuff."

            • Re: (Score:2)

              by dryeo ( 100693 )

              I have a cousin who makes (made? lost contact) his living buying and selling currencies, buy a million dollars in London and sell it in New York for 1.002 million a second later kind of thing, basically he was just taking advantage of slightly different exchange rates over the world. Sure didn't seem to produce anything besides profit.

        • Re: (Score:3)

          by cusco ( 717999 )

          A 5% fee and it took an hour? Holy carp, I had no idea it was that bad. I'm happier ever day that I have avoided it like the plague that it's turning out to be.

          I sold a lamp on Saturday on CraigsList for $50. I handed her the lamp and she handed me the money and it was in my pocket without any fee or any tracking in 10 seconds. I was so happy that it wasn't a BitCoin transaction that I gave her some iris tubers.

          (Actually I just gave them to her because I like making people happy.)

          • When I hear "preferred currency for international trade," that sounds more like Iran selling a tanker of oil, than somebody selling a lamp last Saturday for $50.

            But I agree with you in a sense - who could argue that having the US Dollar be the world's reserve currency isn't great - for the US? It is, for the US and for Americans.

            Now, pariah nations aside, let's say inflation takes hold and the dollar is losing its value. Again, great for us - our debt is shrinking. Not great for our creditors.

            • Re: (Score:2)

              by ceoyoyo ( 59147 )

              There's no way the US will allow Bitcoin to become the international reserve currency. The US gets unprecedented benefits from that and there's no way they're going to hand that off to some Chinese server farms. That's how you get some capital F Freedom delivered.

        • Re:high fees as well and the mineing drop out (Score:5, Insightful)

          by Entrope ( 68843 ) on Monday March 01, 2021 @06:48PM (#61113424) Homepage

          Bitcoin charges more than credit cards, takes a thousand times as long to clear a transaction, and requires a computation network that is designed to throw away almost all the work it does? Which part of that is supposed to be a selling point?

          • Every transaction is recorded and not under the control of any government or corporation.

            • Great so a system that has no government economic handles to enact a bail out.

              The GP asked for "selling points". All you're doing is giving us more reasons not to use it.

            • Re: (Score:2)

              by Entrope ( 68843 )

              I assume all my credit and debit card transactions are recorded anyway. (As a result, I prefer cash for transactions less than about $100.) As for control, I'm not sure I understand your assertion. Is that good or bad? I kind of like having the ability to roll back fraudulent transactions, even if I don't personally use it, which requires an authority that can decide which transactions to roll back. The only company that might pre-emptively block one of my card transactions is the credit union that issue

          • Ever tried lightning?
            Ever tried rolling back a bitcoin transaction?
            Ever tried a fiat currency over a longer period?

          • Re: (Score:2)

            by JeffSh ( 71237 )

            there's no clearing house between you and your recipient, no authority to apply friction or cost to your transaction, and it is border-resilient.

        • How? Everything I read says that the current fee is around $15.
    • BitCoin probably shouldn't be the main vehicle for transfers then, just like no one goes around exchanging T-Bills on a daily basis for all of their needs. Other systems, particularly those that don't rely on proof of work, wouldn't have those limitations.

      Additionally, any system that's decentralized ultimately needs to have a public ledger because there is no single trusted source to verify transactions. If privacy is a concern there a probably ways to add that, but it's going to have some type of cost

      • BitCoin probably shouldn't be the main vehicle for transfers then

        Two important things you need for an international trade currency are that it has to be easy to transfer to wherever you need money and it has to be a reliable store of value so that you know when it gets there it will be worth about the same as when you sent it.

        You agree that Bitcoin is extremely hard and expensive to transfer but it is also utterly useless as a store of value: it has no intrinsic value and no government (or indeed anyone) backing it so it is only worth what people will pay for it henc

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        Particularly since bitcoin is at best an alpha release.

    • Try 65,000 transactions per second. According to their fact sheet...

      https://usa.visa.com/dam/VCOM/... [visa.com]

    • Re: (Score:1)

      by rootb ( 6288574 )
      http://thatsbtcnotbitcoin.com/ [thatsbtcnotbitcoin.com] Bitcoin (BSV) current record transactions per second is 14775: https://bitcoinscaling.io/stat... [bitcoinscaling.io]

    • Re: (Score:2)

      by JeffSh ( 71237 )

      Bitcoin will never scale for everyone in the globe to transact on it. it isnt intended to and people wont use it for that because transaction costs will be too high. but it will function as a store of value basis for global currencies.

  • How this prediction be ever wrong? (Score:5, Insightful)

    by xwin ( 848234 ) on Monday March 01, 2021 @06:22PM (#61113316)
    They predict that bitcoin will be great or will be not so great. How can they be wrong? That is why one should not pay any attention to the predictions of these "analysts". I predict that sun will rise tomorrow and water will be wet for years to come. Also that market will go up, down or stay the same.
    • I predict that your comment is 100% correct or not 100% correct.

    • Also that market will go up, down or stay the same.

      Ahhh but that's where you didn't understand Citi. "Staying the same" was not an option, and that's precisely their point. Bitcoin is either going to elevate to greatness, or get relegated to the dustbin of shitty ideas of history. Whatever happens, what is going on now is a pointless activity that will not be in any way any kind of end state.

    • How can they be wrong?

      Well, it might not become useful for international trade (it's hard to transfer and its value is insanely unstable so it is hard to see how it ever would) but it might also not speculatively implode but instead just slowly decrease in value over years until it's only value is as a historical collector's item as the world's first cryptocurrency: like a Penny Black, the world's first postage stamp has a value of a few $100 today (but probably worth less since it's hard to show off!)

  • Or somewhere in between (Score:3)

    by Sebby ( 238625 ) on Monday March 01, 2021 @06:23PM (#61113320)

    I see it as becoming another one of the run-of-the-mill financial tools - used/controlled by the rich (usually the top 1%), and generally inaccessible to most individuals. Just like we have now.

    • Maybe in the sense that you need either specialized mining hardware or a powerful GPU that's out of the price range of 90% of the world's population, but there are plenty of people using GPUs to mine who aren't part of the elite or so wealthy as to be part of those circles.

      Quite frankly the common person has better access to participating in the cryptocurrency market than the existing banking industry. At a minimum all you need is some hardware capable of mining and to download the software to participat

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        Uh, to participate in the banking industry you have to walk down to a branch (there are a half dozen within a 10 minute walk of me), walk in, and say "I'd like to open an account please."

        I think you might need to be able to write your name as well.

  • BREAKING NEWS! Bitcoin to go either UP or DOWN, says analyst.

  • Consider these two scenarios:

    1) A government or sizeable organization performs a series of 51% attacks to take every Bitcoin and starts cashing out every coin they can until the value of Bitcoin goes to 0 and nobody will accept Bitcoin anymore.

    2) A government or sizeable organization makes an announcement that they want to permanently shutdown Bitcoin for ecological reasons and will perform a series of 51% attacks to take every Bitcoin next week? Everyone is going to run for the exits which will result in

    • Re:Will implode with ease. (Score:5, Informative)

      by phantomfive ( 622387 ) on Monday March 01, 2021 @06:48PM (#61113426) Journal

      1) A government or sizeable organization performs a series of 51% attacks to take every Bitcoin and starts cashing out every coin they can until the value of Bitcoin goes to 0 and nobody will accept Bitcoin anymore.

      That's impossible, it's not how the 51% attack works. The 51% attack allows you to rollback some recent transactions. It doesn't allow you to redirect the money into your own account.

      • That's impossible, it's not how the 51% attack works. The 51% attack allows you to rollback some recent transactions. It doesn't allow you to redirect the money into your own account.

        Doesn't the 51% 'decide' which transaction are valid? So if I own 51% and write a transaction I can effectively move BTC back and forth whenever I like (since I can keeping rolling back my own transactions to re-spend the same BTC over and over)? I can also invalidate other transactions, and possibly re-mine someone else's coins?

        • The transaction validity is checked independently by each node. To transfer money, you need the private key to encrypt something that can be checked with a public key.

          The longest complete, valid, chain is accepted by all the other nodes (it's a P2P network so it can take time to propagate). So really you don't need 51% of the nodes, you just need to create a chain faster than anyone else. If transactions are not valid, then none of the other nodes will accept your chain.

          You can try to create an invalid tr

          • so the P2P network will be divided into two: those who accept your transaction and those who don't.

            So how do those other 49% decide who to trust? If 51% of the network is saying A, and 0.0001% says B, who do you trust?

            • They trust the longest valid chain. It's not uncommon for a small percentage to be "more" correct than the rest of the network. In fact, each new extension to the chain starts with a single node, and then it spreads out to the rest of the network.

              Each node is usually connected to several other nodes. They send messages to each other like, "Hey, here is a longer chain!" and "No! This chain is longer, spread the word!"

              • They trust the longest valid chain.

                Sorry for the 20 questions, but how do you validate the longest chain? If you have 51%, and let's assume that some gov security agencies got in on the act early and therefore have been around longer than a lot of others, wouldn't they then be more trusted? They can then pollute a significant chunk of the network over a long period of time, then use their weight to disrupt it when required?

                They send messages to each other like, "Hey, here is a longer chain!" and "No! This chain is longer, spread the word!"

                So if you have 51% you can corrupt these validation requests, because as the network gets sufficiently large the diverga

                • If you have 51%, and let's assume that some gov security agencies got in on the act early and therefore have been around longer than a lot of others, wouldn't they then be more trusted? They can then pollute a significant chunk of the network over a long period of time, then use their weight to disrupt it when required?

                  I'm not sure I understand this question.

                  So if you have 51% you can corrupt these validation requests

                  If I understand what you are saying, the answer is no. Each node validates it independently, and if a node is acting weird you can disconnect and find a different node to connect to.

                  • If I understand what you are saying, the answer is no. Each node validates it independently, and if a node is acting weird you can disconnect and find a different node to connect to.

                    And if that node has the same answer as the last one, and then the next one does too? How many times do you retry?

  • Citbank is SOOO brave in making useless predictions.
    They must be either Gartner or JD Powers.

  • Or both, and it will be glorious!

  • But other pump and dump schemes don't use near the electrical power or prevent people from buying GPU's

  • It won't easily become the international currency (Score:4, Interesting)

    by rsilvergun ( 571051 ) on Monday March 01, 2021 @06:55PM (#61113462)
    there's a reason the dollar is used and it's not just our stability as a nation. [duckduckgo.com]

    That said I could see it becoming a 21st century company script. You get paid in BTC instead of cash. Your car loan and mortgage are in it. You savings, etc, etc. This would be highly desirable to the folks at the top since BTC is a finite currency (e.g. there's only so many coins to be mined and the more you mine the harder it is to mine more) meaning currency manipulation is pretty easy. And like Uber since it's "On The Internet" nobody thinks it can be regulated.

    Imagine your a boss and you get to decide how much your employees assets are worth. That's what company script did. It's why it was outlawed too. Crypto currency could make a good backdoor for restoring it though if nobody is paying attention.

    • That said I could see it becoming a 21st century company script. You get paid in BTC instead of cash. Your car loan and mortgage are in it. You savings, etc, etc. This would be highly desirable to the folks at the top since BTC is a finite currency (e.g. there's only so many coins to be mined and the more you mine the harder it is to mine more) meaning currency manipulation is pretty easy. And like Uber since it's "On The Internet" nobody thinks it can be regulated.

      Are we talking Weylend-Yutani here, or what? Because if things get so bad that we're all working for one company, whatever we're using as money will be the least of our problems.

      If not, who is doing this manipulation to inflate/deflate the value of their employee's money? How is this easy, or even possible, if there are other companies trying to do the same thing with the same currency?

      The only possible scenario under which your fears about "company scrip" could manifest in the real world, or even

  • It's so-called 'value' fluctuates even more wildly than the stock market, how can it be a 'preferred currency' for international trade when it may become worthless the day after you accept it as payment for something?
    Then, as has been pointed out: it's environmentally hostile.
    Hey World, can we please end this 'cryptocurrency' meme already?

    • If it becomes widely used for non-speculative transactions, the value will become more stable.

      • If it becomes widely used for non-speculative transactions,

        Which it never will because it sucks at this very thing. Having owned some years ago, and trying to use it for transactions, it was extremely cumbersome and worse in every way than a debit card that comes with full support of a bank and a government to secure it.

        the value will become more stable.

        So it will never be stable then.

  • I did not understand how we are supposed to turn high volatile bitcoin into something stable.
  • Fiat currency could either become preferred for trade or face a 'speculative implosion'. Fiats also are a horrible value. :)

    • Fiat currency could either become preferred for trade or face a 'speculative implosion'. Fiats also are a horrible value. :)

      I know you are being funny, but the thing the anti-fiat people often miss is that is has value. Its value is being able to put 10x as much of the original value into circulation, which is the primary reason everyone is so wealthy these days.
      I know people like to cry poor all the time, but even an average person today lives better than the 1% did 100 years ago. Fiat currency did that. It has value.

  • Maybe I'm just not imaginative enough, but it's so damned unstable. How can you build any kind of legitimate market around a currency with no backing and so much fluctuation. Imagine buying a car 2 years ago that cost 100K that costs 1,000,000 today. Or a currency where any of the repo admins [sic] can up and run off with millions. Just seems like pure gambling to an outsider; not that the Dow is much better.

  • We have the 'brrr' situation for fiat `money`.
    And we have a currency that has an ever higher stock to flow ratio combined with a limited amount of coins.
    Which one would you rather have?
  • "Citi saying the most popular cryptocurrency was at a "tipping point" and could become the preferred currency for international trade."

    A currency in international trade MUST be stable by nature. All unstable currency get quickly dropped in favor of stable one, any econ 101 could tell you that, and I am reasonably sure Citi has one or two. Pretty much all other issues are linked to this. What sort of trip is this shit ? If this comes from Citi , the only thing I can think of is that they have people having
  • There are hundreds of other crypto currencies out there. Most have some advantage over bitcoin, be it lower energy use, faster transactions or some other unique selling point. Bitcoin is the most established, but it's also the first, so has problems that are addressed with newer coins.

    • There are hundreds of other crypto currencies out there. Most have some advantage over bitcoin, be it lower energy use, faster transactions or some other unique selling point. Bitcoin is the most established, but it's also the first, so has problems that are addressed with newer coins.

      None of them will prevail until they have the backing of governments and their law enforcement. The real reason that all stable fiat currencies have value is that they have country governments that are backing them, with their laws that mandate the use of their currencies in their countries (especially for paying taxes), and with their police and army forces that will enforce those laws. Bitcoin and all other cryptocurrencies (read: pseudocurrencies) have none of that.

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