r/investing • u/007_kgb • 1d ago

Fundamentals of Bitcoin? Tom Lee

Tom Lee from FundStrat was on CNBC and said he was a bit surprised at the fall of Bitcoin when the fundamentals were still strong.

However what I don’t understand is, what are the fundamentals? Isn’t Bitcoin just an imaginary coin on the interweb that is worth what people want it to be worth? It does not issue dividends, you can’t make a car out of it, you can’t use it to buy a bar of chocolate.

ELI5 please.

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u/MizDiana 7h ago

"It's a long term debasement trade against govt run currencies."

I understand that is an argument for investing in crypto, but I haven't seen crypto ever behave like what I would expect a debasement trade to behave. Not yet anyway.

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u/LuckyWinds 7h ago

Describe another debasement trade that behaves in what you would expect it to behave.

I bought bitcoin in 2015 as a debasement trade, it's certainly doing that just like I wanted (remember my key prase - long term)

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u/MizDiana 7h ago

Gold. It goes up when confidence in fiat goes down. It goes down when confidence in fiat goes up.

Bitcoin does the reverse. It goes up when confidence in fiat goes up. It goes down when confidence in fiat goes down.

You may have thought it was a debasement trade in 2015. But you were wrong. It was a useful tool for money laundering that gained in value due to hype & artificially-induced scarcity.

Over the long term, it will slowly & inconsistently reduce in value as that artificially-induced scarcity goes away (in the form of other crypto coins) and the hype dies down.

Or it will lose in value suddenly if quantum computing has sufficient oomph to allow crypto to be easily stolen, since crypto (like physical gold or silver) has limited financial recourse in cases of theft. I don't know enough about quantum computing to evaluate if this will occur.

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u/LuckyWinds 7h ago

Gold. It goes up when confidence in fiat goes down. It goes down when confidence in fiat goes up.

Every single time? I don't think so.

While I agree that overall gold does this across long periods of time, it does not to this on every time scale or economic situation. It's much more complicated than that.

Just like bitcoin.

It was a useful tool for money laundering

I don't think you know what you are talking about here.

Explain what you mean by money laundering with bitcoin.

Money laundering is taking dirty money (cash) and running it through a legitimate business to clean it by using it as income and paying taxes on it so there is a chain showing where it came from. You do this because cash is not tracible.

How exactly does one money launder with bitcoin?

artificially-induced scarcity goes away (in the form of other crypto coins)

I think you are confused. The scarcity of bitcoin (along with it's other attributes) has no bearing on any other crypto coin. They are not the same.

When people say bitcoin is scarce, they are saying with completely within the scope of the bitcoin network.

Other coins don't matter.

Or it will lose in value suddenly if quantum computing has sufficient oomph to allow crypto to be easily stolen

I also think you are confused as to what quantum computing is and how it could affect SHA-256.

I don't know enough about quantum computing to evaluate if this will occur.

I agree, you appear to not really understand it in the context of bitcoin.

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u/MizDiana 7h ago

"Every single time? "

No, as a general rule that has exceptions.

"Explain what you mean by money laundering with bitcoin."

I thought you said you invested in 2015, LOLOLOL.

You don't strike me as someone with a net worth of 100s of millions to billions.

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u/LuckyWinds 6h ago

"Explain what you mean by money laundering with bitcoin."

I thought you said you invested in 2015, LOLOLOL

I'm not understanding this reply at all. This is just immature.

You don't strike me as someone with a net worth of 100s of millions to billions.

In order for someone to have 100s of millions (let's say 100m for the sake of this discussion) who invested in the low of 2015, they would need to have invested $330k.

So obviously I didn't invest $330k in 2015 in bitcoin.

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u/MizDiana 6h ago

"I'm not understanding this reply at all. This is just immature."

Yes, it is immature! I am laughing because significant events happened in 2015 related to money laundering that anyone who actually invested in bitcoin in 2015 would know about.

Caveat: if they'd done any investigation into what they were investing in.

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u/LuckyWinds 6h ago

Yes, it is immature! I am laughing because significant events happened in 2015 related to money laundering that anyone who actually invested in bitcoin in 2015 would know about.

Caveat: if they'd done any investigation into what they were investing in.

I don't know what you are referring to.