“Davidson” submits:
Q3 2022 hedge fund letters, conferences and more
The cryptocurrency market is opaque with many claims that have yet proven true. These claims include better than gold for inflation, is the basis for untraceable transactions and will replace every global currency. Thus far none of these have held up to closer examination. What has occurred have been several liquidations of proponent offerings including FTX’s FTT and Celsius Network mentioned below. Several links to interviews and commentary describe cryptocurrencies as massive Ponzi schemes and items not holding the value attributed to them by the trading markets.
In my analysis, cryptocurrencies are tokens to which one can use to securely transfer digital material to another quickly and securely. Each transfer alters the token much like refreshing a blank check so that it can be reused endlessly. The value of these tokens is that the security for sender and receiver permits settling payments will less cost than current methods. Each transfer refreshes the value of the token as it incorporates a portion of each transaction into its code making it endlessly unique for the next use.
Since a transfer is required to renew the value of the token, it means both sender and recipient have added value without which the token becomes useless. The question is who owns that value and how is that value-creation distributed? The creation of a token has value but so does its use. In my opinion, a token with endless refresh opportunities for its viability does not supported claim of a limited pool of tokens claimed for high prices. Specifically, the argument of using the lifetime limited production as the basis for the high price of Bitcoin, for example, does not contribute to its value if each token has an unlimited number of daily uses. Limitless renewals effectively equates to an infinite number of tokens regardless of any limited supply, i.e., one should not add value for limited supply. Those buying this concept also fail to recognize that value must be shared with users who provide the renewal. What is that worth? Thus far, cryptocurrencies have not proven inflation protectors, stores of value, protectors of anonymity (transactions can be traced better than cash in most instances) nor have they entered the mainstream in banking. What we have experienced is hype and misperception of pieces of computer code. One can self-educate using the link below or examine the chart of FTX’s FTT token and the risk will prove apparent.
My recommendation is to avoid the cryptocurrency space. While there may eventually prove to be value in cryptocurrencies, since there are thousands of them, it is too early to understand how the market for these pieces of computer code will prove a benefit and be priced in commerce if ever. Certainly the current argument of scarcity does not hold up to scrutiny.
Sam Bankman-Fried and Matt Levine on How to Make Money in Crypto | Odd Lots
https://www.youtube.com/watch?v=KZYqL79GDXU
https://quoththeraven.substack.com/p/bitcoin-one-hubris-laden-interview report of a debate between anti-Crypto Peter Schiff and pro-Crypto Alex Mashinsky.an Israeli-American entrepreneur and business executive, founder and CEO of Celsius Network.
The debate link:
