…The writer over-simplifies the financial crisis. He also over-simplifies the danger of the US sliding into a hyperinflation, like his examples, Venezuela and Zimbabwe. He also makes off-point comparisons, like: “In comparison, the early history of the US dollar makes the relative volatility of bitcoin in these first 9 years look like peanuts.” This is a false comparison. One can’t compare the history of the US dollar – the Continental currency – with crypto because they occurred in two completely different monetary contexts. His treatment of currency inflation is an oversimplification. He overstates the nature of anonymity in Bitcoin and ignores the tracing capacity and vulnerability individuals open themselves up to by dealing through crypto exchanges.
He also has some great insights, like: “It is our shared collective trust and belief in a currency that gives it value, not its intrinsic tangible utility or anything else…The moment that collective trust collapses, so too does the currency, no matter what its intrinsic ‘tangible’ value.” He also summarizes come quite sane crypto investing advice in Part II – except for the fact that value investing, per se, does not really apply to crypto investing because there is no direct correlation between the cryptocurrencies and any product (tangible value). Still, in general, the principles are good.
Part III contains some valuable instructions on how to trade, for example, immediate trading on GDAX, Coinbase’s sister trading exchange: “You can trade immediately as much as you want by sending a wire (only applicable for US customers) to your account following their deposit instructions. There’s a $10 fee for this that GDAX charges, on top of whatever your bank charges to send wire transactions. This is the fastest method to deposit any amount of money you want and trade immediately with no limits, but not the cheapest.”
All in all, a very long, but valuable overview for understanding the nature, operation and value of cryptocurrency.
Seaborn Hall 7/12/18