back to article The bank of Bitcoin: MicroStrategy's share price rides high on the back of cryptocurrency investment

MicroStrategy, a company once well known for making enterprise software, has extended its investment in Bitcoin, buying 19,452 units of the cryptocurrency for around $1.026bn in cash at an average price of about $52,765 per coin, including fees and expenses. With users of its "intelligence everywhere" software including Hyatt …

  1. Flak
    Stop

    Investment? Speculation!

    The final paragraph says it all: crypto-casino.

    And we know that the house always wins in the long term.

    1. Paul Herber Silver badge

      Re: Investment? Speculation!

      This time next year when I'm a millionaire I'll invest all my funds in the derivative tulip futures market.

      1. Roger Kynaston Silver badge

        Re: Investment? Speculation!

        I'll raise your tulips with some vanilla pods in the South Seas.

        1. Yet Another Anonymous coward Silver badge

          Re: Investment? Speculation!

          Bitcoin = an imaginary made-up currency with strict mathematical controls on how much can be produced and a value set by the market

          Dollar (or Pound) = an imaginary made-up currency with politicians controlling how much can be produced depending on what their poll numbers look like and a value set by the unemployment figures going into the next election

          1. Throatwarbler Mangrove Silver badge
            Holmes

            Re: Investment? Speculation!

            Dollar (or Pound) = a made-up currency that you can readily exchange for a wide variety of goods or services

            Bitcoin (or Dogecoin) = a made-up currency that you can readily exchange for mostly-illegal goods or services

          2. doublelayer Silver badge

            Re: Investment? Speculation!

            Bitcoin = A mathematical construct which can't really be used as currency very often because it takes a long time and a large fee to spend any of it and is deflationary so people often choose not to. And also it takes some technical knowledge to use properly or trusting a company to hold all your resources to use dangerously, so few people go to the effort.

            Dollar (or Pound) = an imaginary made-up currency which is used by a bunch of real people to make real transactions, is held by people and financial entities in large amounts so it's not that easy to devalue quickly, and is easily converted into goods, other currencies, or other commodities.

            Unlike some here, I want to see a cryptocurrency that can be used as currency and think it's possible to create one. However, Bitcoin has failed in all the necessary steps to be that. It is not feasible to transact in it. It's hideously inefficient. It does not offer the kind of privacy that is necessary. It's just a random commodity for people to gamble on now, the dreams of enthusiasts broken.

            1. NerryTutkins

              Re: Investment? Speculation!

              I see the biggest problem with crypto currencies, especially bitcoin, is that they're kind of a victim of their own success.

              The idea of a digital asset that has the properties of gold (limited supply, large liquid market, can be subdivided, can potentially be traded between two sides without any knowlege of central authorities) with the advantages of being digital (transferrable via the internet, zero weight, can be backed up) is revolutionary.

              The problem is, that these properties also make it desirable to the point where the price balloons and nobody is crazy enough to actually spend it, instead it becomes a speculative asset, hoarded as a means to make vast quick profits, thereby undercutting any real utility it had which justified its value. It's like a catch 22 situation.

              That said, governments aren't exactly helping. There are plenty of other speculative bubbles, such as the UK housing market or the stock market, which the authorities not only tolerate, but positively feed, effectively underwriting risk by always stepping in to reduce the price of borrowing and hose money into the market whenever the bubble looks like popping. Such actions only feed the price of gold, crypto and other assets which also benefit when the fiat currency is being debased.

      2. Chris G Silver badge

        Re: Investment? Speculation!

        " I'll invest all my funds in the derivative tulip futures market."

        So that'll be bloom or bust then?

      3. Anonymous Coward
        Anonymous Coward

        Re: Investment? Speculation!

        The analogy to tulip mania is a very poor one.

        https://s3.cointelegraph.com/uploads/2021-02/57f2cef9-5c71-4508-8eb9-8d10f8c2045c.jpg

    2. Snake Silver badge

      Re: Investment? Speculation!

      This exactly. What Bitcoiners miss is that the more they drive speculation the less function Bitcoin is as an actual currency. You can't use such an unstable fiscal device long-term; short term, sure, people are thrilled to spend their newfound speculative-accumulated wealth.

      But when the music stops, and losses are accrued, people will abandon Bitcoin as a transaction device because they can't depend upon receiving the value they expected from it.

      1. Michael Wojcik Silver badge

        Re: Investment? Speculation!

        Yes, which is why there's all that interest in "stablecoins", and in cryptocurrencies like Ether that are tied to some function, and in proof-of-stake and other alternatives to proof-of-work. Personally I'm not interested in participating in any of it, but some of the research is very interesting.

    3. Danny 14 Silver badge

      Re: Investment? Speculation!

      I diuno, i found i had 24mBTC and that was sold for £800 this week. Rather chuffed as that was change from some web hosting years ago. I was surprised i still had the wallet info.

    4. jgarbo
      Boffin

      Re: Investment? Speculation!

      But there is no "house". The creator, Satoshi, never sold his original BTC and let loose his software for anyone to mine BTC. The other cryptos could not match those criteria, ie iffy stuff.

  2. osakajin Silver badge
  3. Throatwarbler Mangrove Silver badge
    Holmes

    Taxes

    I suspect that the reason these companies are putting their money into Bitcoin is for tax avoidance purposes. I am not a tax lawyer, but it seems like the tax status of gains made in Bitcoin is nebulous and probably not taxed in most jurisdictions. For entities with a sufficiently high appetite for risk, it therefore seems like Bitcoin is a good place to park your assets to protect them from the tax man. I assume that any gains made when cashing out the Bitcoins are subject to capital gains tax, but that's probably way less of a tax hit than the companies would have to pay under normal circumstances. The Bitcoins can also be converted to any other fiat currency where a buyer can be found, allowing the assets to be transferred overseas in a way that may evade the controls and scrutiny applied to regular currency.

    In other words, it elevates the sleaze of Bitcoin from relatively humdrum criminal activity to the realm of international capitalist skullduggery.

    Any tax attorneys care to weigh in?

    1. Chris G Silver badge

      Re: Taxes

      This from Bitcoin.org:

      "All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. ... Anyone can see the balance and all transactions of any address. Since users usually have to reveal their identity in order to receive services or goods, Bitcoin addresses cannot remain fully anonymous."

      Given the above I can see various authorities may be quite happy to let anyone buy bitcoin and establish wallets.

      I read recently that the Feds seized some $3billion in bitcoin from corrupt federal agents, if they decide they want to tax you they can, at minimum they can seize your wallet even if they can't open it.

      1. Throatwarbler Mangrove Silver badge
      2. doublelayer Silver badge

        Re: Taxes

        "at minimum they can seize your wallet even if they can't open it."

        No, they can't do that. Either they get the private key from you, in which case they can open it and transfer all of it away, or they don't, in which case they can't do much. If they can't get you to divulge the private key, then you still maintain control and can exchange the Bitcoin with someone else. Whether you can find someone else that wants to transact without turning you in may be another problem, but the government isn't seizing anything in that scenario. In the case where they seized Bitcoin from corrupt officials, they arrested them and indicated that their sentences would be a lot longer if they didn't give up the ill-gotten crypto.

    2. katrinab Silver badge
      Paris Hilton

      Re: Taxes

      https://www.gov.uk/government/publications/tax-on-cryptoassets

      If you just want the summary, then

      "Example

      V Ltd bought 100 token A for £1,000. A year later V Ltd bought a further 50 token A for £125,000. V Ltd is treated as having a single pool of 150 of token A and total allowable costs of £126,000.

      A few years later V Ltd sells 50 of its token A for £300,000. V Ltd will be allowed to deduct a proportion of the pooled allowable costs when working out its gain:

      Amount

      Consideration £300,000

      Less allowable costs £126,000 x (50/150) £42,000

      Gain £258,000

      V Ltd will have a gain of £258,000 and will need to pay CT on this. After the sale, V Ltd will be treated as having a single pool of 100 token A and total allowable costs of £84,000.

      If V Ltd then sold all 100 of its remaining token A then it can deduct all £84,000 of allowable costs when working out the gain."

    3. Yet Another Anonymous coward Silver badge

      Re: Taxes

      >I suspect that the reason these companies are putting their money into Bitcoin is for tax avoidance purposes.

      Microstratgy is basically a way to buy bitcoin in a share account (pension/IRA/ISA etc) by buying shares in a company whose only asset is bitcoin.

      Telsa is Musk taking the piss. He buys bitcoin, tweets about it, everyone else buys it, price goes up, he sells

  4. Throatwarbler Mangrove Silver badge
    Thumb Up

    Shine on, ransomware

    The ransomware scum must be overjoyed at the increase in their assets, to say nothing of international pimps, assassins, and drug dealers.

  5. Pascal Monett Silver badge
    Unhappy

    The only reason Bitcoin has any value whatsoever is because of blithering idiots like MicroStrategy fueling the fire.

    A national currency is guaranteed by the state, banks have a strict charter they are legally obliged to adhere to, and no bank can "lose" trace of your money. The amount of checks and balances surrounding a bank account would take your breath away. If your bank account has issues, all you need to do is provide your latest statement and the bank will set things right.

    Bitcoin Exchanges, on the other hand, are run either by incompetent idiots who lose everything through lack of security measures and getting hacked, or by outright criminals who planned on stealing everything from the get-go.

    And you have no legal recourse.

    The only light at the end of the tunnel is nationally-backed cryptocurrencies, which will hopefully be implemented with full securities and guarantees for the consumer. When that happens, funny money will become normal money, and suddenly everyone will start wondering why the heck we bothered.

    1. Claptrap314 Silver badge

      "A national currency is guaranteed by the state, banks have a strict charter they are legally obliged to adhere to, and no bank can 'lose' trace of your money. "

      Haha.. Hahahaha... Hahahahahahaha....

      Seriously, I'm no fan at all of coin, but that sentence contains more jokes than the average standup guest on a late night talk show. It is the historic unreliability and sleaziness of the fiat currency system that drove the initial discussions of coin on cypherpunks. I read them when they were posted, if you try, you can find the archives.

  6. DJ

    I'm not sure I follow their logic

    If I want to invest in bitcoin, et al, which I do not, why would I buy shares of Tesla, Micro Strategy (couldn't come up with a Mega Strategy?) instead of buying bitcoin? Or vice versa?

    I'm not an investment banker, but it seems to me Tesla and, possibly Micro Strategy, have inextricably linked their futures to bitcoin, for better or worse. Likely the latter.

    Which is one more reason I'm glad I'm not a Tesla shareholder.

  7. Anonymous Coward
    Anonymous Coward

    If it sounds too good to be true

    It’s probably too good to be true.

    Same goes for Ponzi schemes.

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