LeBron James

LeBron James used to be a big fan of Warren Buffett and even starred in Berkshire Hathaway annual meeting skits.

LeBron James is now endorsing cryptocurrency. In fact, there have been MULTIPLE crypto-related commercials during the Super Bowl.

How did LeBron James end up being led astray?

Could all this heavy crypto promotion be an indicator that the peak is here?

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The world has created opportunities for everyone to come along crypto in many capacities.

Paid spokesman (Lebron / Will Smith)

Middle men (Coin base, cryoo,com, others) Fat margins when players are winning big. Thing of tips at a craps table.

Plus owners of crypto.

The first two groups have minimal to no risk. It may be different for owners. So far all 3 are winning big. Very big. Trillions with a capital T. Likely a big contributor to our current inflation circumstances.

I listen on Bloomberg where they interview young men and ladies and they are 100% convinced that there is a perfectly explainable reason for the rise in cryto’s. They have started firms and consider themselves esteemed money managers.

I am equally 100% convinced that this is all a bunch of crap.

We will see how this plays out.

Fortunately, BRK is holding up well in the meantime.

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I listen on Bloomberg where they interview young men and ladies and they are 100% convinced that there is a perfectly explainable reason for the rise in cryto’s. They have started firms and consider themselves esteemed money managers.

I live in Colorado ski country. I recently met a 50 something woman on the chairlift here who claimed she was mining crypto in her home. She said she had three servers ginning up “coins” 24/7.

I told her that I did not understand crypto and asked her to explain it to me.

She looked at me for a while and then admitted that she didn’t understand crypto either.

One positive was that the servers generated a lot of heat. She was able to keep her house warm with heat from the servers. She did complain that her electric bill was high - $500/month.

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“I listen on Bloomberg where they interview young men and ladies and they are 100% convinced that there is a perfectly explainable reason for the rise in cryto’s. They have started firms and consider themselves esteemed money managers.”

I was watching Super Bowl last night with a guest who ia a 22yo engineering student at a nearby university. He personally feels Crypto is part of the greater fool theory, as do I, but he said he has a Lot of friends are trading crypto, but not many trading stocks. I wonder how widespread this is?!

Trillions with a capital T

Either Crypto’s are the biggest, global level Ponzi scam or we are just not getting it. I want to consider myself in the camp 2. When I find sometime I am going to learn more about it. Until then, given the size of its market place, world wide how much resources are being spent, from Saudi oil money to college kids lunch money in it, makes me not to dismiss it as a scam.

I will put it too-hard pile and move on.

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Either Crypto’s are the biggest, global level Ponzi scam or we are just not getting it. I want to consider myself in the camp 2. When I find sometime I am going to learn more about it. Until then, given the size of its market place, world wide how much resources are being spent, from Saudi oil money to college kids lunch money in it, makes me not to dismiss it as a scam.

I don’t see it as a Ponzi scheme or a scam. It does have every sign of a being a speculative bubble, however. The reason I say that is there are very few legal use cases where crypto is preferable to traditional currency. Because there is no utility for most people, the only reason to own it is if you think the price will go up. So it functions much more like a collectable than a currency.

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there are very few legal use cases where crypto is preferable to traditional currency… So it functions much more like a collectable than a currency

I think this argument is debunked like store of value argument. Currently you can use your credit card and then pay the balance by transferring money from you bank account. Similarly you can pay your credit card from your crypto account.

For all practical purposes, the only time I use actual paper dollar is when I buy lotter ticket.

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there are very few legal use cases where crypto is preferable to traditional currency.... So it functions much more like a collectable than a currency

I think this argument is debunked like store of value argument. Currently you can use your credit card and then pay the balance by transferring money from you bank account. Similarly you can pay your credit card from your crypto account.

It is possible to do that, but is it preferable? You scenario requires two additional transactions and the accompanying fees to pay your credit card bill. Which is free to you if you don’t use crypto.

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It is possible to do that, but is it preferable? You scenario requires two additional transactions and the accompanying fees to pay your credit card bill. Which is free to you if you don’t use crypto.

OK, the narrative is already shifting. It is not possible to it is less than optimal. Soon the fees will come down. If you don’t realize there is a significant fees associated with credit cards, that is included in things you buy. Hence you get the cash back, etc.

At some point you will get a credit card that is not associated with dollars, but with crypto.

Again, none of that means I understand crypto or predicting it is going to survive, flourish, valid etc. None of it, I still don’t understand. I have learned to say “I don’t know”, and also learned that things I don’t know are not necessarily evil, bad, etc, they are just I don’t know.

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OK, the narrative is already shifting. It is not possible to it is less than optimal. Soon the fees will come down. If you don’t realize there is a significant fees associated with credit cards, that is included in things you buy. Hence you get the cash back, etc.

I didn’t say “not possible.” I said “not preferable.” Don’t believe me? Roll the tape. Should be quick. I only made two prior posts in this thread.

You created the scenario where you use crypto to pay off your credit card. The means the merchant fees have already been charged by the credit card company. In your scenario, you must also pay the transaction fee to go from your dollars to crypto, and then from crypto to dollars to pay the merchant. To me, paying two extra sets of fees is not preferable to no fees.

The reason why Lebron James is appearing Superbowl ads for crypto.com is because crypto.com makes fees from trading crypto. Based on the size of their marketing budget, it seems to be a lucrative business.

Don’t get me wrong, if you think paying unnecessary extra fees is preferable then knock yourself out. Lebron James’ wallet thanks you.

At some point you will get a credit card that is not associated with dollars, but with crypto.

That someday is today. You can get Visa debit cards like that right now. They are a great way to go if you feel like you have just a little too much money.

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In your scenario, you must also pay the transaction fee to go from your dollars to crypto, and then from crypto to dollars to pay the merchant

This is where Square, Paypal, even visa’s of the world come in. If you are in US your credit card is denominated in USD, if you are in London then in Euro, assume you are living “globally” and your currency is “crypto”.

Not really that difficult. When you travel you buy in local currency and the card company automatically (for a fee) convert it into your “home” currency. So, the technology, network, everything is in place. It is very easy and quickly they can add Crypto. They are waiting for the wider adoption. It may or may not come, but it is not that difficult and if you choose to maintain your crypto account also with these card companies, they are going to make all this seamless and easy.

Square (which already changed its name to block), and Paypal are much closer to the above scenario than you think.

Some 90 year old’s may think crypto is primarily used for illegal transactions. All I can tell them is, in the very early days of internet, the site we did stress test is “sex.com”. Crypto is evolving rapidly, I don’t understand the technology, all that goes behind it. I may end up using it just like I use a credit card without understanding all that goes behind it.

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Wow. Seriously. Do we really need these kind of childish posts?

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This is where Square, Paypal, even visa’s of the world come in. If you are in US your credit card is denominated in USD, if you are in London then in Euro, assume you are living “globally” and your currency is “crypto”.

Not really that difficult. When you travel you buy in local currency and the card company automatically (for a fee) convert it into your “home” currency. So, the technology, network, everything is in place. It is very easy and quickly they can add Crypto. They are waiting for the wider adoption. It may or may not come, but it is not that difficult and if you choose to maintain your crypto account also with these card companies, they are going to make all this seamless and easy.

I agree, it is really simple. If you live in the US and use your credit card in Europe, your credit card company will charge you a currency conversion fee.

If you have cryto debit card, you have to pay the conversion fee for every transaction, not just when you are overseas. A crypto credit card is a great way to go if feel you just aren’t paying enough in fees.

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I live in the area where we had the Zeeker’s pyramid scheme thing that luckily the state of NC shut down fairly quickly a few years ago. It had developed into nearly a billion dollars of “investment”. Apparently according to my neighbor who is on the board of the local schools, staff/faculty meetings in the schools had become a Zeeker’s investment club shortly before the shutdown because as she said, “of 32 school principals we had most heavily invested in Zeeker’s.”

Now this board member tells us that the school board has had to forbid facuty/staff having crypto clubs and discusssions at the schools. Comparatively, even as much as people obsess over tech stocks from time to time my guess is the schools have never had to forbid the development of stock clubs.

We have two adjoining pubs downtown in our small city and on Tuesday night my wife and I play trivia at one. These pubs are in the old furniture buildings area where the city acquired then sold huge buildings/areas cheaply to get these businesses going. The outside area at the adjoining pub is very large and again even on the coldest of Tuesday nights the crypto meetings fill these areas.

People here are absolutely obsessed with crypto and I have never seen anything like it in my life. M

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Further reading:

https://blog.dshr.org/2022/02/ee380-talk.html

I am sure LeBron is fully aware of all this.

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If you live in the US and use your credit card in Europe, your credit card company will charge you a currency conversion fee.

No longer true, as it happens.
Wise (TransferWise) offers a Mastercard which carries a balance in multiple currencies, tied to an account at Wise which can hold multiple currency balances.

You can pay the card charges off with one currency, meaning you pay their (extremely low) FX charges on the parts not charged in that currency.
Or you can pay off each currency’s balance using that currency, no FX to pay at all.

Not available everywhere.

Their separate money transfer service is quite smart–sort of a mix of modern lateral thinking and old-style Hawala transfers.
When you use TransferWise to transfer money between countries, they don’t move anything, bypassing a lot of sclerotic infrastructure.
They just put your money into their account in your home country, and simultaneously pay the payee out of their existing account in the payee’s destination country.

Jim

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What’s missing from all of these examples is denomination in Bitcoin, or other cryptocurrency. When a bank agrees to accept a bitcoin payment on a debt denominated in US dollars, the time risk is small. It’s limited to the possible movement of bitcoin vs US dollars during the time it takes the bank to liquidate the bitcoin. Similarly, politicians making the news as being “paid in Bitcoin” are really having their salary converted to bitcoin on payday, they are not having their salary denominated in bitcoin. The distinction is important because Bitcoin doesn’t have the price stability that was promised. Sure politicians or Federal Reserve Banks can’t influence the going price, but the market actions have been just as brutal. See this example of what a salary denominated in Bitcoin would have done:

Say you hired a Chipotle worker in January 2017, who agreed to work for 1/100 of a bitcoin per hour, you would start with paying him a fair wage of $10 per hour. Here is his hourly rate in US dollars, when you continue to pay him the same 1/100 of a bitcoin:

January 2017: $10
June 2017: $29
December 2017: $142.83
June 2018: $66.15
December 2018: $39.64
June 2019: $111.21
December 2019: $74.61
June 2020: $94.71
December 2020: $299.45
June 2021: $362.69
December 2021: $584.55

Superbowl ads for crypto.com … Based on the size of their marketing budget, it seems to be a lucrative business.
Be careful with this thought process. I have two vivid memories of Superbowls. The first a party with extended family where a huge amount of the commercials were .com companies, and our host talked about wanting to invest in .com companies. After the crash, another Superbowl commercial with someone walking through a dusty field filled with discarded mascots of the .com companies that advertised in that earlier superbowl.

She did complain that her electric bill was high - $500/month.
This is the basic tradeoff: energy use and the value of the mined coin. It doesn’t always work out positively. You need cheap electricity rates, and energy efficient computing power. If crypto had come to life before I graduated college, I would probably own some -having turned free electricity in my student housing to bitcoin. I made the choice not to spend my electricity usage on Bitcoin because although I could follow the concept that limited creation of new bitcoins as mining continued, I saw nothing to stop new types of coins from being created. In fact, this is just what’s happened.

Does make you wonder if their allies might adopt it as well and whether Russia will price their oil in BTC.

The problem with this is BTC lacks price stability. It’s not due to the technicalities of the creating of new coins from the mining process, but due to the market movements associated with trades moving into and out of it. Russia can’t unilaterally decide to price their oil in BTC - they need a counterparty willing to accept the pricing, and the risk associated with it. The risk is not small. 2021 saw movements of 40% between the USD and BTC 3 or 4 times, but only 1 movement of 23% between the USD and the Ruble. You’re talking weeks for an oil cargo ship to make a delivery from Russia to, say, India. Add in some time for payment processing (even if BTC transfer is instant, accounts payable processing is not) and you’re talking significant exposure to the BTC market.

I think the only reason the erratic movements of BTC haven’t lead to a recession is the lack of contract denominated in BTC.

“Currently you can use your credit card and then pay the balance by transferring money from you bank account. Similarly you can pay your credit card from your crypto account.”

This is very different from your credit card carrying your balance in BTC and asking for more or less dollars to cover it. The credit card company’s risk is limited to the time from the BTC payment until they convert it to cash, but the debt is carried in USD.

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What’s missing from all of these examples is denomination in Bitcoin, or other cryptocurrency…

At the moment, priced in bitcoin, a Berkshire share costs BC10.73

Here’s a thought experiment for those who are musing about Bitcoin as a medium of account:

Would you agree to sell me a share of Berkshire at the price of 15 bitcoin three years from now?
Measured in bitcoin, I’m willing to buy at a 40% premium, or 11.8%/year.

If not at 15 bitcoin, then at what number would the deal be attractive? 17? 20? Or maybe just 10?

Secondary thought experiment:
What if I could trigger closing of the deal any time of my choosing in the next three years?
Would that make a difference to the decision, and if so, why?
If the unit of exchange is considered a useful unit of account, then the sooner I trigger the better for the counterparty,
so this variant should make them more, not less, willing to do the deal.

To come up with an answer, one rapidly starts considering the volatility and unpredictability of the purchasing power of a coin.

Jim

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OK, the narrative is already shifting. It is not possible to it is less than optimal. Soon the fees will come down. If you don’t realize there is a significant fees associated with credit cards, that is included in things you buy. Hence you get the cash back, etc.

At some point you will get a credit card that is not associated with dollars, but with crypto.

Again, none of that means I understand crypto or predicting it is going to survive, flourish, valid etc. None of it, I still don’t understand. I have learned to say “I don’t know”, and also learned that things I don’t know are not necessarily evil, bad, etc, they are just I don’t know.

That may be true some day, but a lot of things finance guys promote are based on short-term incentives.
As of now, there is very little money to be made by promoting stock trading.
There are massively huge amounts of frictional costs aka gas fees, paid by idiots/greedos/naives like college students and collected by crypto exchanges, in trading crypto and NFTs.
That’s why the Superbowl ads.

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Colorado’s governor just announced that the state will begin accepting BTC for taxes this summer.

Think about that.

Such a biased post.

They will accept bitcoins, immediately convert them to dollars, are looking for a low-transaction-cost crypto exchange who would oblige them.
He explicitly said they want to avoid holding onto it because it is so speculative.

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