The Case that Bitcoin Is a Bubble (economist.com) 264
An anonymous reader shares an excerpt from the Economist: It seems that every day, Bitcoin seems to hit a new high. But the reported price can move up and down by $1,000 or so within a few hours. This might have made it a great investment for those who got in at the right price and are nimble enough to get out in time. But it doesn't make it a useful means of exchange (Editor's note: the link could be paywalled; alternative source). When the price is rising fast, those who use bitcoin will be reluctant to part with it; when the price falls, those who sell goods will be reluctant to accept it.
The big boys aren't playing (Score:3)
I found this part of TFA a bit more illuminating than the summary:
The arrival of bitcoin futures on the CBOE and the CME might have been expected to bring maturity to the market, and to establish a reliable price. But the FT reports that some of the biggest banks including JP Morgan and Citigroup are unwilling to act as market-makers. That is not too surprising. Any market-maker has to hedge its own positions and that looks very hard when the underlying market has such wild swings.
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And that means no stability and basically anything can trigger the inevitable crash, just as before. The hope was that the big players that actually have enough financial clout to ensure stability would do so. That seems to have failed, likely because the big players actually understand what is going on. Might be because they have some experience with bubbles.
No future as it stands now (Score:3, Interesting)
Bitcoin, with the limitation is has on the final number which can be issued, has no real future. Governments are reluctant to legislate it right now for several reasons. One reason is because of the lobby of exchanges who are currently making a killing off it. The other is that legislators, as stiff and out of touch as they may seem on the outside, are quite well aware of the ability of this to go underground and they don't want that. However, once bitcoin's ability to increase is exhausted, it has no real future. Legislators will have no choice but to step in and either modify it, or ban it.
To see this, look at the best case scenario for bitcoin. Let's say that it is 100% successful and becomes the de facto world currency. Can you really have a world currency where a few individuals control a set percentage of the world wealth? Owning even one bitcoin in that scenario means you own one 21 millionth of the entire wealth of the world. Now think of those individuals and institutions that own chunks of this.
No, bitcoin cannot continue without an extension. The split that was going to happen was averted when greed got the better of common sense of those who were going to expand it. They think if they can just hold on, if they can just get it accepted by enough people, that they will have a shot at becoming fabulously nouveau riche - as in world-class monetary controlling rich. Not going to happen. The existing money structure will kill it from behind the scenes before this happens. You'll see a sudden spate of exchange breaches financial manipulations (or both) that make it volatile and end up tanking the value, then legislators will step in to protect the market from the failed experiment.
Re:No future as it stands now (Score:4, Funny)
>Bitcoin, with the limitation is has on the final number which can be issued
Also the incredible resource wastage, no way to adjust it to affect the economy, lack of mechanisms for consumer protection, impossibility to use securely in any practical way, the transaction rate limit, the transaction time problem, the transaction cost issue, the storage needs, and bandwidth requirements.
But if you can get past all that, it's ALMOST as good as a debit card.
The CASE? (Score:2)
It doesn't even need to be argued; if you're not willfully blinded by greed or some bent philosophy, it's obvious.
And I'm kind of happy regulators aren't doing much about it. There are people who know it's gambling and I don't care about them. So long as Bitcoin isn't big enough to harm the economy in general, the bag holders can suffer for their stupidity (it's not like they haven't been repeatedly warned).
On the other hand, I'm not particularly keen on letting the scammers 'get away with it'. The peopl
Re:The CASE? (Score:5, Interesting)
You're right it doesn't need to be, because everything like this has a bubble of some kind. The real question is just what will the ripple be when this bubble pops. How many people have say mortgaged off equity in their house to try riding the bubble? You can bet your ass that people have. How many companies have sunk short-term possible high-loss futures into this as well?
30 years ago people were selling equity in their homes at high interest rates to try cashing in on the condo bubble happening in major cities around the world. Believing that they could "sell out" and still get a head. Now just think what happens if you have a several thousand people in a major city who've done the same with the stupidly low interest rates we have and were already say $50-100/mo difference from going under, but believed they saw this as a quick way to cash out. And directly lied on the line of credit for this. People did the same thing with NORTEL stocks.
Not really gonna know just how much of a mess this is going to be until that bubble pops, but as a warning to anyone who knows someone who's done something stupid like buy into this believing that "it can only go up" when they've lost all that money, they'll probably become suicidal.
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> they'll probably become suicidal.
In which case I feel for their family, but I have an amazing lack of sympathy for them.
"Ignore the world telling me this is a bad idea, I could get rich quick. If it fails, instead of taking responsibility I just kill myself and leave my dependents to suffer for my stupidity".
I really don't miss people like that when they die.
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I don't think anything like a systemic critical mass of people have been buying BTC on leverage. People buy BTC with credit cards, sure, but that's just because that's how people buy everything. The rumblings of a leveraged BTC collapse are probably specious. Every step of the way, everyone and everything is warning you that BTC prices can crash at any moment. Not too many people have the balls to risk their house on something like that.
30 years ago, people thought of real estate and telecoms as a safe
Hat Trick (Score:3)
Comment removed (Score:5, Funny)
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The third will be people moaning about losing their BTC wallets.
#nomorebitcoinstories
My non-investor view (Score:2)
Full disclosure: I dont invest in btc, but have seen some friends get in on the action and make some safe cash by exitting precautiously. I don't have any regrets not investing myself, as I don't have that much cash to gamble, even now that I knew it raised so much from the moments I considered it. I always saw it as gambling my family's future in a feeling, and being in IT, I like more deterministic ways of spending my hard-earned savings.
Opinion: I think cryptocurrency is being the victim of professional
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"crypto" as shorthand for cryptocurrency
GET OUT
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Bitcoin also has a very inefficient blockchain. Remove the ideology from it and many of the other crypto currency schemes look a lot better.
The Great Bitcoin "Bubble" (Score:2)
http://thegreatbitcoinbubble.c... [thegreatbi...bubble.com]
Right conclusion but wrong reasoning (Score:5, Insightful)
The fundamental problem with BitCoin is not its volatility. The volatility will eventually go away if the underlying technology turns out to be sound.
The fundamental problem with BitCoin is that the number of transactions it can handle is orders of magnitude below what is necessary for a reasonably liquid currency with a total value in the billions of dollars. As it is, BitCoin only works as long as most of that money either sits still or moves around in huge transactions of at least thousands of dollars at a time.
It is entirely possible that the problems get solved. However, a quadrupling like BitCoin Cash has done is just nowhere near orders of magnitude improvement.
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The world has $7 trillion worth of gold, most of it sitting quietly in vaults. Bitcoin could survive in a similar fashion.
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Eventually mining mostly dries up and the miners have to make money from transactions instead
There will always be transactions of course. At 100 sat/byte, a full 1MB block is worth 1 BTC in transaction fees. Make the blocks a little bigger, the coin price a bit higher, and that's plenty of money to secure the network.
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The software algorithm is part of the tech, and the designers of bitcoin chose poorly for making a scalable system. The crash of bitcoin will make most people think the other better designed systems are too risky. Bitcoin will ruin the concept of "cryptocurrency" even though it never attained the status of a real currency.
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>> The fundamental problem with BitCoin is that the number of transactions it can handle is orders of magnitude below what is necessary for a reasonably liquid currency with a total value in the billions of dollars.
Parent is spot on. The root problems are that there aren't enough transactions in blocks and the blocks aren't frequent enough. The people that insist that Bitcoin should just be a settlement mechanism are stunting the most revolutionary technology in the last 20 years.
I can't understand
Gold standard (Score:2)
The next time you're casting around for arguments against fixed-supply currencies, you can just reprint this line: "When the price is rising fast, those who use bitcoin will be reluctant to part with it; when the price falls, those who sell goods will be reluctant to accept it."
It's not backed by anything !!!! (Score:2)
It's not a fiat currency. It's a matter of when it pops, not if.
It is not backed by gold. It is not backed by the faith of a government (The US dollar is backed by the faith in the US government). This thing is backed by nothing. We don't even know who created it.
It's going to tank and in splendid fashion. Just wait for the panic selling to start at some point.
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This sentence has zero information content without proper definitions for the following terms:
"backed"
"faith"
"US government"
While you are working on that, please consider that once upon a time, the US dollar was "backed", in gold, by the "US government", and despite our "faith" that our notes could be redeemed for money (gold) at any time, that faith (and backing) was broken nearly 50 years ago.
The case that Bitcoin is a bubble is simple (Score:5, Interesting)
Corollary: When everyone - usually including your neighbor or friend down the street, or your grandma - is trying to buy in and ride the wave, but they can't really explain how commodity X works or will make money, it's over. It's time to get out. You've missed the wave as an investor, and you're going to get burned joining too late.
Bonus: If the "everyone" people wanting to buy commodity X can't even really explain how or why it will make money, it's going to get REALLY ugly.
The following fit the pattern:
Microsoft and other internet/tech stocks (2000)
Housing (2007)
Gold (2012)
Bitcoin (2017) will likely be the next big entry to the list.
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We are so far away from the shoeshine boy [fortune.com] stage that it isn't even funny. Also, bitcoin is an odd blend of tech-adoption, which follows an S-curve, and an investment, which does not. (Note that I don't consider bitcoin to be an investment and don't encourage it, I'm discussing a conceptual model used by "the masses" here.)
Usage of bitcoin for commerce is growing by leaps and bounds, still very early in the S-curve. In other words, more people are buying bitcoin to use as money than ever before. I don't
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I don't mean this as any kind of attack on this poster, but there are just too many red flags here. I mean, replace "Bitcoin" with whatever you want below (tulips, gold, whatever).
* _______ is "growing by leaps and bounds."
* It's "still very early". (buy in now - you're not too late)
* "more people are using ______ than ever before". (Bitcoin? Not in my neck of the woods yet. Nobody I know would even know what it is, let alone how to use it anywhere the average suburbanite would go.)
* "I don't know how to
The history of currency (Score:2)
bitcoin failed. what is next? (Score:2)
It might be a bubble. It might not be. (Score:2)
If Bitcoin manages to be successful and achieve widespread adoption, it will necessarily need to increase in value, due to it's scarcity.
What we are seeing could be a bubble, but it could also be due to adoption. Volitility was very low for 2015 and 2016, and with the exception of a few short dips, has been fairly consistently up in 2017.
If Bitcoin is successful, it will eventually find an equilibrium, and plateau, much like gold has.
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>If Bitcoin manages to be successful and achieve widespread adoption, it will necessarily need to increase in value, due to it's scarcity.
But here's the funny thing nobody seems to notice - Bitcoin is just a ledger, nothing about it really cares what 'a bitcoin' is. You divide by ten and move on. There's no real scarcity so long as you can move the decimal place.
Currency (Score:2)
I think the entire sentiment of "it's rising, so no one will spend" is overblown. I spend BTC most when it's rising towards what I expect to be a peak or crash. It's a cheap and easy way to take a bit of profit without bothering to move BTC onto an exchange. When it's stable, I'm more likely hodling for the future or completely divested.
People don't understand money (Score:2)
Money is an umbrella term for things that have certain properties. An instance of money generally meets all or most of the desired properties. Other than that, the only sensible definition that I've ever seen is the circular definition that money is what people use as money. What gets used as money can be predicted, somewhat, by understanding the desirable properties.
Bitcoin is an electronic system that attempts to implement as many of the properties of the abstract platonic concept of money as it practi
Re:News For Bitcoin.. (Score:4, Informative)
Stuff that matters?
Yes, if only to teach the less savvy not to get into a market at the peak of a bubble.
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Yes, if only to teach the less savvy not to get into a market at the peak of a bubble.
Don't get into a market before the peak either, unless you're an unscrupulous jerk who like to take money from others who don't understand as much as you do. Anyone with an iota of sympathy for fellow man will steer clear of anything that smells like a bubble.
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It does matter. Like tulips, Beenz, and Flooz, this is history in the making. Bitcoin has a useful place, but where its value winds up stabilizing at... who knows.
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$2m at least. Then I'll pay my mortgage off and send my kid to private school because I'm no longer paying a house off. kthx.
Do you realize that if bitcoin reaches $2M/coin that the amount of electricity consumed by mining would be more than double the total amount of electricity currently used in the USA?
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Are you taking into account the regular halving of the reward ?
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It is infinitely divisible, but each blockchain transaction can be expensive, especially if you want to see it posted anytime in the next few days. Things like the Lightning Network are trying to help with that... but stuff like that is still alpha quality.
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It is infinitely divisible, but each blockchain transaction can be expensive, especially if you want to see it posted anytime in the next few days. Things like the Lightning Network are trying to help with that... but stuff like that is still alpha quality.
And to the point, the more people use bitcoin for actual purchases, fragmenting it more and more while adding to the chains, the longer the transactions are going to take. Large scale speculation where people primarily sit on the bitcoins and don't make a large amount of purchases is what keeps it from collapsing completely.
If panic breaks out, the system will likely collapse to the point that even if you find buyers, they can't buy, because the transaction time is so long that the value changes significa
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If panic breaks out, the system will likely collapse to the point that even if you find buyers, they can't buy,
Most of the trade is done on exchanges, not on the blockchain. They just update their internal database when someone is doing a trade, just a bank does when you transfer money. You only need the blockchain if you want to move your coins to the exchange to sell. The buyer just needs to transfer fiat money, so there's plenty of liquidity on the buyer's side.
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It's infinitely divisible, so if the transaction fees are small enough I can still use bitcoin to buy a pack of gum.
Not if it takes an hour for the transaction to be verified.
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You can buy a pack of gum... However after a year it would be the cost of a nice lunch. After an other year a fancy dinner, Then a oversea trip. The growth rate it too fast be buy stuff with it.
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However if you were the guy who bought a Pizza for 20 bitcoins a decade ago, I expect you are kicking yourself.
As I have stated over and over... BitCoin prices are rising too fast for anyone to intelligently trade them for a goods and services. It isn't a case like other commodes like Gold, if you traded something for a goods and service then the price went up 5% over a year, you would be kicking yourself so hard, sure the value of your purchase + inflation is less then what selling gold would had been, bu
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the guy who bought a Pizza for 20 bitcoins a decade ago
It was 10000 bitcoins.
But he got 2 pizzas.
Do you mean a method of transmitting dollars? (Score:3, Interesting)
You can't possibly mean "medium of exchange" in the normal sense of that term, can you? This is what "medium of exchange" normally means:
Someone wants a car and has firewood.
With BARTER they'd have to find someone willing to trade a car for firewood. That would suck.
Instead they look at Craigslist and find the kind of car they want sells for $8,000
They make arrangements to sell $8,000 worth of firewood.
After the people come pick up the firewood and payments clear, they contact Craigslist sellers and buy a
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Someone wants a car and has firewood.
They look at Craigslist and find the kind of car they want sells for 2 BTC.
Actually 1.8BTC now.
No, wait, 2.2 BTC.
They make arrangements to sell 2.2BTC worth of firewood.
After the people pick up the firewood and the payments clear, they contact Craigslist sellers, who now want 3BTC for a car.
Isn't what's happening the opposite, though? As the value of 1 BTC goes up, the sticker price of the car goes down.
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"Bitcoin has established itself as a viable medium of exchange."
It has? That's news to me.
To me, it's far too unstable to be a viable medium of exchange. Its value in fiat currency is far from immaterial as long as we live in a system where you have to convert it to and from fiat currency to make it more than marginally useful.
It has only one use that I can see: "speculative investing" a/k/a gambling.
Re:Makes stable pricing impossible. (Score:4, Interesting)
But that is only because stuff has been nominally priced in dollars. If we instead had stuff nominally priced in 10th oz gold units, or something you'd make the same argument about accepting dollars.
The fact is gold and silver are stable enough in terms of total supply, liquidity ( in the sense people are willing to part with it ), and distribution, that either could probably work as medium of exchange either directly or backing some paper/electronic system. We can have a debate about if a gold standard would be good for our society not. I see both positives and negatives of that but that is a tangent. It could be made to work through.
Btc on the other hand has some major problems. The total supply is fixed, as a practical matter there will always be more gold to mine, if deflation gets strong enough to justify it; on the other hand all practically discoverable bitcoins will be found at some point. The money supplies growth isn't just limited it essentially has a hard cap. The next problem is because its new its kinda illiquid and forces of volatility, deflation, and block-chain limitations in terms of settlements, isn't helping. People can't gain trust in for trading real tangible property beyond a speculator class. Finally the distribution is entirely to narrow currently with 1000 or so people controlling most of the market. It over incentivized the early adopters.
I don't Btc is ever going be the currency Joe Sixpack, actually buys a six pack with for these reasons. Blockchain tech is her to stay. Some future crypto currency might become ascendant and see wide use, but Btc aint going to be it.
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Funny you should mention Silver, because the only thing I recall in the past six decades that remotely resembles the cryptocurrency whackiness was the Hunt Brother's abortive attempt to corner the Silver markets in 1979. See https://en.wikipedia.org/wiki/... [wikipedia.org] I think anyone seriously considering playing this stuff should strongly consider the possibility that these markets are being manipulated and that some somebodies somewhere are planning to (or very likely already have) make off with pallets of non-cr
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Yes. Bitcoin does come with some risk associated with it. You can get hacked and lose everything. The value could drop. But why is Wallstreet and the traditional currency peddlers putting in so much effort to denounce it? Hmmmm...
That many are against it for their own greedy reasons does not constitute evidence that it isn't flawed.
If it looks like a tulip and smells like a tulip...
Bitcoin are not tulips (Score:2, Insightful)
From Twitter [twitter.com]:
Tulips are not durable, not scarce, not programmable, not fungible, not verifiable, not divisible, and hard to transfer. But tell me more about your analogy...
Re:Bitcoin are not tulips (Score:5, Funny)
You forgot that you can't tiptoe through bitcoins
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From Twitter [twitter.com]:
Tulips are not durable, not scarce, not programmable, not fungible, not verifiable, not divisible, and hard to transfer. But tell me more about your analogy...
The idea that bitcoin is scarce is the biggest lie there is. Every other item you list is something that all cryptocurrencies share. There are over 100 cyptocurrencies and that number is rapidly growing. A person could easily create their own cryptocurrency. All it takes is a handful of other people to also agree to settle debts with your new cryptocurrency and you've got a new currency. The only thing that makes bitcoin slightly unique is the first mover advantage so it has higher acceptance but there
The bigger lie is that all cryptocurrencies equal (Score:2)
The idea that bitcoin is scarce is the biggest lie there is. Every other item you list is something that all cryptocurrencies share.
Yes that is true, but just like plutonium also being rare does not diminish the value of gold, other cryptocurrencies being scarce does not diminish the value of bitcoin... bitcoin being scarce is just a necessary condition enabling a whole infrastructure that supports people using Bitcoin. It's not the entire REASON for value, it's what enables value to be held.
How many othe
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This to infinity.
According to this 1 source more than 4000 cryptocurrencies already.
https://cryptocoincharts.info/... [cryptocoincharts.info]
There is no actual scarcity, or any restrictions on scarcity at all. Its pure unregulated speculation with no foundation, maybe its just gambling, or some combination of an mlm/ponzi/pyramid scam with the net effect of a bubble.
People who have bought in already have a vested interest in keeping the fever pitch high. Maybe Slashdot editors need to disclose if they have any coins and are usin
Re:Bitcoin are not tulips (Score:5, Insightful)
All of that completely misses the point of the argument comparing the Bitcoin bubble to the tulip craze.
It is precisely not about the nature of the commodity being traded. It could be fidget spinners, beanie babies, futures contracts in mortage-backed securities, it doesn't matter.
What does matter is lots of ordinary investors with no understanding of what they are investing in believing that because others find this commodity desirable, it must be valuable and the price will continue to rise - and importantly, that they will be able to extract that value before the price crashes leaving them "holding the bag" of something now worth much less than they've invested in it.
Re:Bitcoin are not tulips (Score:4, Informative)
The tulip market was by design an annual market, with traders fighting over the rarest cultivars on a seasonal cycle.
Rare tulips were indeed scarce. Each year, new cultivars of tulips were developed and only available in small numbers, while the demand for the rarest tulips was huge. The rarest types of tulip were rare because of a virus (tulip breaking virus) that was only transferred from an infected plant to its buds; since only a few buds formed per year, only a few new tulips of that variety could be formed per year. This guaranteed an enforced scarcity.
Tulips of the same cultivar were fungible, for whatever that's worth.
Tulips were verifiable in that they were purchased in formalized markets, even futures markets, with enforceable contracts (although short selling was made illegal).
I'm not sure what the point of tulips being divisible is. Neither are yen, but people seem to have no problem using them.
Most importantly, tulips were actually in demand in and of themselves . There was a lull in the Thirty Years War, and tulips were a highly in demand luxury item at wealthy estates. What's the value of bitcoin in and of itself? What's that? An alternative payment system to credit cards? Yeah, how is that going for you? Backwards, is how - the few places that had previously started experimenting with accepting bitcoin as payment are one by one backing out of it. Even if you ignore the volatility, the overhead in bitcoin transaction processing makes it stupid as an alternative. And it always runs the risk of governments cracking down on it due to the one thing that people actually value bitcoin for in and of itself: illegal purchases and money laundering. Don't think governments can crack down on it in a way that utterly crashes its value? Yeah, good luck with that notion.
Bitcoin is currently in the "greater fool" investment mode. We know how these things end.
Tulip bulbs not truly scarce (Score:2, Interesting)
I'm not sure what the point of tulips being divisible is.
Because when something grows to some very large amount of value, if it's not divisible it essentially locks out the possibility of trade to all but a handful of people.
As the price of Bitcoin grows it does not matter because anyone can still use .001 bitcoin for a transaction. If you have a 15k tulip bulb the ability to extract value from it is far more limited and thus the market or users will shrink.
Rare tulips were indeed scarce.
Not really though
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And there were both higher and lower value tulips.
1. Tulips are not freaking potatoes. You can't just cut a bulb into pieces and have each bulb grow a new tulip.
2. It was an *annual, seasonal market*. Most people were buying tulips to sell *that year* to consumers
Don't know much do you (Score:2)
And there were both higher and lower value tulips.
Are you being purposefully obtuse? A) The lower value tulips were not scarce in any sense, and B) it's not like you can magically turn a very expensive bulb into a cheaper one, you have to find someone willing to trade. I can take a bitcoin and instantly use .001 of it if I like.
Tulips are not freaking potatoes. You can't just cut a bulb into pieces and have each bulb grow a new tulip... It was an *annual, seasonal market*.
Tulips will replicate over time i
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Ummm... so what? How does any of that speak to whether or not the tulip analogy is apt?
Re:Makes stable pricing impossible. (Score:4, Insightful)
Bitcoin is not valuable. Gold and silver are valuable because it has uses outside of money, but bitcoin does not. That is the difference between gold/silver and fiat currency.
Unstable is a matter of degree. Is the dollar unstable? relative to what? Relative to bitcoin it is one of the most stable things you can get. I doubt you will see a price swing of nearly 50% ever, as we have seen with bitcoin.
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Only 10% of gold that's mined is going to industry. The rest is for investing. Explain why we are paying $1200 for an ounce that only cost $400 to get out of the ground, while supply is 10x bigger than demand, and we already have 50 years worth of above-ground stockpiles.
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No. 50% of gold is used in jewelry [oilprice.com]. The 40% that's used for investments is backed by the fact that people want it for jewelry and similar.
How's your new bitcoin necklace looking?
This said, it's not that bitcoin doesn't have a base market. It does. Buying illegal things, paying ransoms, and laundering money. Of course, that's not exactly the sort of base you want if your hope is that governments will never take measures against your "currency".
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I count jewelry as investment. If you just wanted a pretty necklace, there are plenty of cheaper materials that look just as nice.
When aluminum was just invented, people made jewelry out of it. Now that aluminum is plentiful and cheap, it has lost its attractiveness as jewelry.
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Jewelry on the secondary market often trades even with or slightly below raw materials value.
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Which is a good reason for people to want real gold jewelry. When things go bad, you always have the option of selling/pawning it.
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Why don't you go and mine gold if you know how to get the ounce for $400?
I don't own any gold bearing property. And nobody's selling theirs for $400/ounce.
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Gold and silver (to a lesser degree) are almost unique suited for jewelry since they are naturally anti-septic and non-reactive.
Titanium, brass, copper, (anodized) aluminum, stainless steel, tungsten. Or if you don't want to restrict yourself to metals: plenty of plastics, rubber, or minerals. All cheaper than gold. There are stainless brass alloys that look like gold. And of course, if you really want to look at gold, there's always gold plated.
but enough people do that it legitimizes the price.
A lot of people care about the price. They don't want to get married with a cheap plastic ring, even if it looks really nice and shiny. They want *real* gold. Not because it's nice to look a
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Gold looks like gold from every angle and does not change color. Brass changes color with angle.
Ah, so that's why people prefer rings with pieces of cheap window glass, because it looks like glass from every angle, and does not change color. Diamond changes color with angle.
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http://www.usdebtclock.org/gol... [usdebtclock.org]
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Bah the last post messed up.
Here's a link to where all of the Gold goes... (Gold demand by country)
http://www.usdebtclock.org/gol... [usdebtclock.org]
Let's get real, golds value is scarcity (Score:2)
The real uses gold has (for example, conductivity or ornamentation) pale in comparison to the value that gold holds in relation to other currencies.
The vast majority of value people place on gold is the same reason bitcoin is valuable - scarcity.
All of the digital aspects of bitcoin just enable you to give someone a piece of bitcoin the same way someone could give you a piece of eight, and to ensure scarcity is real. Otherwise the value proposition is remarkably similar.
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If gold were 100x less valuable then it would be used far more often in commercial applications
Most commercial applications only require a tiny bit of gold. It's got a few nice properties, but it's also soft and heavy. Applying a thin gold plating to a lighter and stronger base metal is often preferred.
Re:Makes stable pricing impossible. (Score:5, Interesting)
That's the insane rambling of someone who read Ayn Rand as an undergrad and never got over it.
Banks and governments could easily manipulate Bitcoin. Just because banks and the government can't print Bitcoin doesn't mean they can't manipulate its value. Have you ever heard of the forex scandal? The United States has manipulated the currency of Japan even though the US Mint doesn't print Yen.
All it would take is a well-placed government regulation here or a series of derivative trades there to destroy Bitcoin utterly. The only reason it hasn't happened yet is that there are some powerful people trying to see if they can make a fortune or two before they pull the rug out.
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All it would take is a well-placed government regulation here or a series of derivative trades there to destroy Bitcoin utterly
If I hold one bitcoin, and someone starts messing with derivatives, I still have one bitcoin. What if I just simply choose to ignore the derivatives ?
Re:Makes stable pricing impossible. (Score:5, Informative)
What happens with derivatives affects the underlying value of instrument from which it is derived.
Remember the economic crash in 2007-2008? Look what the trading of derivatives in mortgages did to the value of a house. Yes, if you owned a house before the crash, you still owned a house after the crash. It was just worth a hell of a lot less.
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derivatives affects the underlying value of instrument from which it is derived
They can only affect the underlying asset if people trade that asset. And the asset price can only go down as long as people are selling it. While the big traders are selling, and pushing the price down, the real believers will accumulate the artificially cheap coins. At some point, the big traders are running out of coins to sell, and the market can go back to its normal value.
Re: (Score:2)
At some point, the big traders are running out of coins to sell, and the market can go back to its normal value.
And the normal value will be determined by people who are willing to accept it, who are not the "real believers" of bit coin, who has seen how the value has been manipulated downwards by other big players.
So what do you think the new normal will be?
Re: (Score:2)
And the normal value will be determined by people who are willing to accept it, who are not the "real believers" of bit coin
The real believers will use it amongst themselves. There are 7 billion people. If only 1% believes in bitcoin, that means 70 million people fighting over 21 million coins.
how the value has been manipulated downwards by other big players.
After the big players have dumped everything they can, they can't manipulate it again.
Re: (Score:2)
The financial markets over the past 20 years have proven every thing you said is wrong.
After telling us why Bitcoins are not like precious metals or stocks, you want to pretend that Bitcoins are just like precious metals or stocks. The value of Bitcoin can be manipulated without a big sell-off simply by making them impossible to sell.
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The value of Bitcoin can be manipulated without a big sell-off simply by making them impossible to sell.
How are you going to prevent me from sending my bitcoin to someone else in return for money or goods ?
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My guess, they make it a felony plus mandatory harsh sentencing similar to possession of certain substances on a certain list.
Yes, that's possible, but the argument was about destroying value with derivatives trading.
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The two things propping up the bitcoin bubble are ideologues and those with a need for a money laundering outlet. One group is pouring more money into it than the other group will ever see; and onegroup is doing more effort in marketing the legitimacy of bitcoin than the other has the capability of doing. Symbiosis.
Re: (Score:2)
I second this - almost.
If this is not a bubble yet, it may well become one. Even if there is a utility in this currency, there is a risk that the price goes higher than this utility dictates.
One day perhaps the pattern of usage stabilizes globally, and Bitcoin attains an equilibrium value. It's hard to say we have reached this point yet. As long as it's value is so volatile, it remains a vehicle of speculation, and that destroys it's stability.
Re:Makes stable pricing impossible. (Score:4, Interesting)
So... probably not a bubble, unless the desire to move money around with no traceability ceases to be desireable
Seriously? Not traceable?
You just *might* want to take a look at how a bitcoin changes hands and how long the block chain exists. EVERY bitcoin transaction from the beginning of time is traceable and will be as long as it remains a "thing".
What BitCoin allows you to do is to remain anonymous, if you are careful, and if you never try to convert your BitCoin into something else that can be traced, and what's a BitCoin worth if you cannot convert it to something else?
So, the traceability idea is a misstatement and the anonymous ownership is not guaranteed. BitCoin may not be what you want to hold as a criminal or you don't want traceability for what you are doing. Cash might be better for you. Cash IS untraceable (assuming nobody knows the serial numbers in question), nearly universal and anonymous if you are careful.
Re: (Score:2)
It's very easy to maintain that anonymity between a wallet address and your identity, including when converting it to something else. Ransomware and illegal markets on the darknet couldn't operate otherwise.
There are already laws around cash, and moving large amounts of it quickly becomes impractical (less so with 500 Euro notes, which I think should be phased out for this reason).
Re: (Score:2)
Re:Makes stable pricing impossible. (Score:4)
What you're looking for if you want something with no traceability is called "cash". Last I heard, dollar bills and coins didn't have lists of IP addresses of people who used them permanently engraved upon them.
Even cash can be traced to some degree. Each bill has a unique serial attached to it. I'm positive each bill is tracked as it goes through the banking system. Once it hits the streets though all bets are off.
Of course we have heard rumors that the feds have attached RF tags to each bill. That they can tell how much and what individual bills you have in your pocket from stealth satellites in orbit. Personally, that is so much hogwash but I suppose if they wanted to track a single bill they could.
Re: (Score:2)
The fact that it's not backed by a government is a good thing. Name a government right now that isn't being run like shit?
Regardless of your personal opinion, the US generates a GDP of $18.5 Trillion (with a big T) per year. No amount of mismanagement is going to change that value overnight or even over several decades. The USD's ups and downs are like a straight line relative to bitcoin's. So why should anyone trust bitcoin? Because that's all money is, trust in solid form, even bitcoin. Why should any retailer take bitcoin as payment? Where is the guarantee that they can take that currency down the street and buy food
Re: (Score:2)
the US generates a GDP of $18.5 Trillion (with a big T) per year
You should look at the trade balance instead. Since the '70s the US has been a net importer of goods, and exporter of promises written on green pieces of paper.
Do you think that is sustainable forever ?
Re: (Score:2)
You should look at the trade balance instead. Since the '70s the US has been a net importer of goods, and exporter of promises written on green pieces of paper.
Do you think that is sustainable forever ?
Nothing is sustainable forever. But what makes you think this isn't a stable system? Have you studied this issue and determined that the US economy will collapse in the near future? Or do you just "feel" like it's unstable and untenable?
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written on green pieces of paper.
In fact, forget the green coloring. And the blackjack.
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But what makes you think this isn't a stable system?
Better question: what makes you think it is a stable system. You have two parties, one of them gives valuable stuff to the other, and they get intrinsically worthless tokens in return.
Have you studied this issue and determined that the US economy will collapse in the near future?
Yes, I have studied it. And no, the US economy isn't going to collapse in the near future.
Re: (Score:2)
You can bet that if BTC became illegal to trade in the USA (unlikely I know, but follow me) that the perceived value would crash, mining would stop and the currency would choke and die. BTC mining has to be profitable, or transaction fees enough to make BTC transactions happen fast enough to be reasonable. Right now, we are barely keeping transaction confirmation times short enough. There are too many other currencies that are more profitable to mine, sucking up all the hashing hardware.
Problem for BTC
Re: (Score:2)
Buy a time share instead... At least you will have a pace to take that yearly vacation when it's all over but the crying..
Re: (Score:2)
Maybe instead of talking about how much a "single" bitcoin is fluctuating, we should be talking about how much the smallest transferable unit is fluctuating. Or maybe how much $1 USD is worth in bitcoin.
The reports I see do exactly this. Not always in the headlines, but in the stories they talk about the percentage change in value. That percentage is the same whether you're talking about 1,000 bitcoins, 1 bitcoin, or $1 worth of bitcoin.