Get Ready For Most Cryptocurrencies to Hit Zero, Goldman Says (bloomberg.com) 276
An anonymous reader shares a report: The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group's global head of investment research. Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they're replaced by a small set of future competitors, Goldman's Steve Strongin said in a report dated Feb. 5. While he didn't posit a timeframe for losses in existing coins, he said recent price swings indicated a bubble and that the tendency for different tokens to move in lockstep wasn't rational for a "few-winners-take-most" market. "The high correlation between the different cryptocurrencies worries me," Strongin said. "Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."
Good. I could finally buy a new graphics card (Score:5, Insightful)
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Precisely why I'm rooting for cryptocurrencies to disappear.
The cryptocurrency won't disappear though. It also won't hit $0. It can't hit $0, for it to hit $0 someone would have to be offering their BTC for $0 and no one would do that. You'd hold on to them, or ignore them before giving them away.
The bitcoin can, and probably will drop lower still- but it won't hit zero because there will always be nerds and idealists holding onto the coin for what it represents, even if for no other reason. How far will it go? And will it rebound again? Who knows- could be $5
Re:Good. I could finally buy a new graphics card (Score:5, Insightful)
Of course they can hit 0, if no one is willing to buy them. You can say your trash is worth 1 million dollars and not give it away for any less but if no one will pay you anything for it, it is worth 0. If all the miners stop mining you won't even be able to sell them.
I see no reason why it wouldn't hit 0, since it is actually useless as a currency, it is just taking up space on your computer.
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While I'm not a bitcoin investor, I buy it and use it weekly to pay my contractors around the world. Years ago I had to use wire transfers, which would cost a fortune and frequently get lost, and take over a week if they did arrive. Paypal and similar services were okay, but then they started freezing the accounts of my contractors and employees for no reason.
You don't work with Nigerian princes do you?
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The problem is that Bitcoin specifically offers no unique benefit. At the most glaring - I'm free to take the bitcoin stack and start a brand new blockchain for "ImmCoins", which are based on *exactly* the same technology, and differ only in relative uptake and problematic histories (many/most Bitcoins have never been traded, and it's unknown whether they were simply lost early on, or are being hoarded against possible future cash-in or intentional market destabilization, either of which could be very prob
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We have had shifts in the market before, making a popular item become history. Geocities -> Livejournal -> MySpace -> Facebook come to mind where the first version of a technology was strong... but got end run around another.
Yes, Bitcoin is the standard, because it is the biggest. However, it is a "v1.0" cryptocurrency. It is becoming more expensive (either in time or money) to do transactions with. The blockchain is going on 200 gigs. It can only really be mined by very specialized hardware,
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Bitcoin is most useful for the black market. A way to launder money, or make trades with less scrutiny (which isn't really as true as they think), and so forth. If that market for bitcoin dries up then bitcoin will seriously diminish in price.
By the home grown economic theory of Bitcoin enthusiasts, anything can be "currency" as long as it is tradable. But bitcoin is hard to trade with by most people. It's not very useful for using to buy a loaf of bread at the store.
For paying your contractors, you're not
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i promise i will buy all the bitcoins before it hits zero.
No you won't, because there'll be people who still insist that their coins are worth $10,000 and refuse to sell them. What you'll have is a giant gap between sellers and buyers, zero trading, no way to judge the worth of the coins (because there's no transactions), and thus no effective net worth as a currency or store of value.
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Re:Good. I could finally buy a new graphics card (Score:4, Insightful)
Bitcoin's fundamental problem is that if it doesn't crash & lose its value anyway, it'll eventually become too valuable to use as actual currency.
Bitcoin's proponents point to its decentralized nature and lack of government control, but overlook the fact that its blockchain can't scale. It's ALREADY staggeringly huge (something like 200 gigabytes the last time I checked). Sure, you can delegate responsibility for checking it to some other device (or third party) instead of hauling the whole thing around on your phone, but THEN you become dependent upon your ability to trust that third party AND its ability to keep bad guys from hacking them (to show that a spent bitcoin is still available, long after it has ceased to be). The second part is what fucks you if you try using YOUR OWN off-device infrastructure (like a server at home) or run by some public-spirited organization (that nevertheless assumes zero liability for anything that Goes Wrong)... not even large banks that actively TRY to prevent hacking attacks are able to succeed with only technical defenses. The entire credit card industry works because they have enough capital to absorb losses & use the legal systems of their respective countries to keep crime down to a tolerable slow burn. Your personal long-term ability to keep your own server hackproof (while nevertheless keeping it accessible to you when you're away from home) is approximately zero... eventually, someone will find a way to compromise your phone, your server, the PKI it depends upon, and/or anything in between... unless (or quite probably, EVEN IF) you dedicate your life to maintaining its security and integrity.
And in the meantime, you're going to spend more and more time waiting for transactions to clear unless you pay someone to expedite the transaction and assume at least some risk.
So, we get to problem #2... Bitcoin transactions can't be added to the blockchain until someone else manages to mine a new Bitcoin. As time goes on, this will become exponentially more expensive and difficult, so the fees they'll charge will go up & overwhelmingly impact otherwise-small transactions. If the cost of completing a transaction approaches something like 0.1 Bitcoin, it'll cease to be cost-effective to trade anything less than several Bitcoins at once. At best, Bitcoin becomes a virtual backing currency that only large traders can afford to exchange. To an extent, this has already happened with companies that use commercial wallets to handle microtransactions. And the companies running those microtransaction wallets are just as vulnerable as everyone else, except they're even BIGGER targets and even MORE hopelessly outgunned (think: homeowner vs armed burglar, compared to small business vs organized crime shakedown).
Long-term, Bitcoin will probably survive and pivot to new primary users when others fall, but it's hopelessly naive to think Bitcoin will EVER be usable for casual purchases. Commercial services that absorb risk to expedite transactions will end up costing as much as Visa or Mastercard, and be every bit as regulated by governments. As an almost-free guerrilla alternative to Paypal, Bitcoin is a long-term failure by design. As a virtual reserve currency, it might survive... but whether Bitcoin will ever become more cost-effective for businesses and banks to use for real trade than US Dollars, Euros, or any other currency is far from certain.
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> the currency only will get more valuable over time
That presumes that the amount of real wealth traded in Bitcoin increases over time. If Bitcoin were the only currency in use, and economic activity continued to grow, then the value of Bitcoin would continue to grow alongside it, and it would indeed be the deflationary currency its early adopters envisioned.
However, the reality is that there's lots of alternatives to Bitcoin, and that changes things considerably. There's no particular reason why Bitco
Re:Good. I could finally buy a new graphics card (Score:4, Insightful)
I also would like a reasonably priced GPU, but I am seriously more concerned about the power requirements of all of this mining. Globally the power consumption must be huge, and as I understand how BC is designed, it will only get larger, that cannot be good on the whole global warming front as it increases the demand for non-renewable energy sources along side the renewables just to keep up.
I really think that cryptocurrencies like the current ilk were created by power companies just trying to sell more power. ;-P
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When this happens ... power consumption will drop significantly.
Apart from all those hundreds of KWh needed to process every single transaction.
PS: The big miners are already next to power stations and only mine with surplus power.
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Self destruct. Or turn into SKYNET!
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Exactly how many "new coins" will be created? Is the number of news coins the market can take as unlimited as their investment value?
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All burned out from being run too hard for too long. However there will be plenty of brand new unsold ones available.
You actually nailed the problem (Score:5, Interesting)
There are a lot of complaints one can lob at cryptocurrencies but I want to address just one that at the moment I see as ultimately fatal to all proof of work systems. Since this fatality hasn't actually materialized yet I have to wonder if I'm wrong about it being unavoidable in the end. But I don't yet see how I am wrong so here goes:
The ENTIRE magic and near Genius solution that bitcoin and others perform is the avoid the "double spend" problem when there is no central authority to manage a secret signing key. Solving the double spend with distributed signing is the magical part.
The DOuble spend problem is that in an a normal distributed ledger that anyone can write to a bad actor could spend a coin, see it entered in the ledger as beloging to the seller, then after getting the benefit of the sale from the seller, re-write a newledger in which that spend never happened. The bad actor can then re-spend the same coin.
Block chain by itslef doesn't solve this. it's just a ledger format. But when you add the proof of work part then you have an escalating difficulty barrier. The seller waits to see the transaction is confirmed. If they are paranoid, they could even wait for several more epochs of chain extension. At that point if the bad actor wanted to re-write history they would have to create a new block chain that was longer than the currently accepted one. And that would be hard because of the multiple epochs of proof of work.
this is exactly why the fear in bitcoin is that if one person accumulated enough mining power they could execute a double spend. But since this is addative: it takes 3x more mining power to unwind 3 layers of the block history (and N-1 x more mining power than the world, to unwind N layers), it's hard.
Or rather it's hard, but only if the world has a lot of miners. If miners lose interest two things happen. First it becomes easier for the bad actor to accumulate enough CPU power to overwhelm the rest of the world's miners. Additionally, since Bitcoin in particular scales the difficulty to the transaction rate it also requires less and less CPU power to do this. (as miners lose interest and so the POW difficulty goes down)
Thus Cryptocurrencies only protect all that capitalized outstanding wealth only as long as their's an active pool of miners. If that goes away then the protection of the blockchain is gone and the double spend re-emerges. at that point it gets crazy.
SO why might this not have happened yet. I think maybe it's because the cost of mining a coin is so high that the cost of mining 2,3, or 4 coins to unwind 1,2, or 3 layers might not have been worth the gained value of the doublespend. But that' now. As the coin becomes increasingly capitalized then a lot of wealth will be transacted in each epoch (and the lightning network is amplifying this now). Thus the temptation for a fouble spend will eventually exceed the cost.
At that point there is a total heat death of the currency as no one can trust it.
Once the miners stop buying as you put it, things will normalize to zero
How this heat death gets triggered (Score:2)
How might this come about?
well I see four scenarios as nearly certain to come along at some point There are probably many others I haven't considered.
1. Due to distorted economics like subsidized electrical power or cheap cooling, some countries accumulate a dominant share of the mining. Then for some reason the government of that country kills the market (e.g. remove power subsidies or siezes the machines) for mining. Suddenly there's void of miners that someone with a big cluster (amazon?) could step
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How might this come about?
well I see four scenarios as nearly certain to come along at some point There are probably many others I haven't considered.
1. Due to distorted economics like subsidized electrical power or cheap cooling, some countries accumulate a dominant share of the mining. Then for some reason the government of that country kills the market (e.g. remove power subsidies or siezes the machines) for mining. Suddenly there's void of miners that someone with a big cluster (amazon?) could step into.
BTC is mined with ASICs these days. Amazon does not have the ASICs needed.
2. due to geopolitical tensions (a war?) one country with a small number is cut off from the rest of the world's miners. Again now some small player witha lot of CPUs can dominate the ledger for that country. We see internet cut offs in Iran and Syria and other places now and then. And there's growing numbers of firewalls around countries. IMagine if China and the US came to blows in the south China sea or North korea executed a cyber blitz kreig on south koreas. Isolations of the internet would occur.
Yes, possibly but so what? Who are they going to double spend BTC with in the middle of a war? The BTC network outside their country is not going to see their new found wealth or BTC transactions and once their country BTC network rejoins the rest of the world their chain would be behind the other network's chain and not followed which would cause them to lose any transactions that had occurred.
3. The reward system for bitcoin changes with time with fees replacing mining. What if the fees don't attract enough miners? that is say, as fees rise the number of transactions will fall. there is some equliubrium there. That equilibrium sets the POW difficulty and the number of miners who can make a profit. Do we know that equilibrium is sufficient to protect the transaction value of a double spend? I don' think there's anything built into the model to assure this.
The miners will only leave if the percei
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4. Someone, maybe etherium can, will figure out how to make the wasted effort of the POW actually valuable in itself
The protocol makes it very hard to make a proof of work that is actually useful, because the proof of work problem has to include the current state of the blockchain itself. For example, if the proof of work was protein folding, solutions for protein folding don't depend on the current state of the blockchain, so there's nothing tying a particular solution to a particular block. That's why foldingcoin is based on bitcoin and not the folding problem itself.
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Miners are only going to stop mining if there's no perceived value in what they mine. If they've left then there's no perceived value in BTC to be "stolen" by a double spender. A potential double spender is a miner too. Why would they chase 51% hashing capacity of a coin worth nothing when they could put that hashing power to use mining a different more valuable coin? Also remember for the double spend to work, they have to actually spend. Who will accept BTC in your scenario where there are almost no miner
well no, your arguments don't hold up (Score:2)
consider the rational miners for the sake of argument and we can mop up the edge cases later.
You are right that there's no rational reason to chase 51% of the bitcoin hash rate just for the value of the coins/fees. But that actually is why it is profitable for the double spender to do just that. To see this realize that the mining coins or fees are going to be far less in value than the amount of value being transacted in the mining event. vastly so when it becomes fee based-- otherwise you would be pay
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Note that I did not address your argument that all the potential double spenders would keep each other at bay. this isn't logical. If they are held at bay, no one is making a profit by double spending. Yet they are also overinvested in mining gear and so can't make a profit on fees either. That situation can't persist. People won't just invest in excess mining gear just to ward off some other potential double spender at no profit to themselves.
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How is this any different than any other currency? If people stop using the dollar as a currency, it doesn't have any intrinsic value. So what keeps that from collapsing in on itself? As long as blockchain coins have value, miners will be incentivized to mine. Maybe there should be some additional safeguards put in place to keep the mining pool distributed and healthy, but I think that's a more easily solved problem than things like counterfeiting or abuse of central bank manipulation powers.
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If people stop using the dollar as a currency, it doesn't have any intrinsic value. So what keeps that from collapsing in on itself?
A nation's military, political, and manufacturing power. Things that Bitcoin lacks.
So let's look at it from Bitcoin's point of view:
Unless you and a lot of other people are willing to go to war for Bitcoin, or you pass laws regarding the mandantory use of Bitcoin for all government transactions, or you refuse to buy goods and services unless it's a Bitcoin transaction ..... we
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This is incorrect.
You can't rewrite the ledger. The ledger is what everyone agrees on, and the "seller" in your scenario can simply wait until the ledger is distributed wide enough that rewriting history would be impossible.
In theory however, you could create a transaction (that fits on top of the currently accepted ledger) that assigns yourself a lot of wealth (either from thin air or from other people's wallets). However, this will fail as well, as new coin creation requires the proof of work.
Transferri
Re:Mod parent up (Score:4, Informative)
Somebody rebut this or I'll need to dump my bitcoins fast!
Sorry, it's true.
There was a delicate point in Bitcoin history where anybody with a lot of computers could have taken every Bitcoin in existence, simply by having more computers (you need to own 51% of the computers in the block chain).
If large mines start dropping out and people can organize themselves into gangs (or somebody has a vary large Botnet) then we might go back there.
Re:Mod parent up (Score:5, Interesting)
Joce640k
I'm the grand parent poster here and you raise an interesting suggestion that I have considered thoughtfully and think maybe is not true. While the Double Spending scenario is correct, the "taking other people's bitcoins" argument may not be correct. I am pretty sure there's only two things you can do under the double-spend attack. One is to recover your own coins and the other is to vandalize other people's transactions. But what you cannot do it re-direct anycoin you did not own at some point to yourself. you can't take other people's coins (if they did not originally come from you).
here's why. When you spend a coin two things have to be true. 1. the blcok chain shows the coin is assigned to your public crytpto key 2. you can sign the transfer with the transfer you want to intitate with your private key.
a double spender doesn't know your private key. so they cannot take your coin.
what they can do is erase that transaction (so you never spent it) or they could erase the transaction where that coin came into your wallet in the first place (so you lose it). But that erasure won't in general transfer the coin to the doublespender but just to some previous holder of the coin.
The double spender can "steal" but it can only do so by resetting it's wallet back to an earlier state. So it's possible the erased transactions might take coins you got from the double spender. but the double spender can't actually make that historical wallet size bigger.
Caveat: I suppose one strategy would be for the doublespender to briefly buy every coin in existence (borrow some money to do it then sell the coins to pay back the borrowed money). then they could continually reset the chain back to that time when they owned it all.
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here's why. When you spend a coin two things have to be true. 1. the blcok chain shows the coin is assigned to your public crytpto key
Correct.
The thing you're missing is that if you have enough computers you become the block chain. You can assign whatever ownerships you like to any known coin. If my computers say the coins in your wallet belong to me, then... how do you prove otherwise? It's a majority vote.
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Stock up cat food, ammo and guns now and you'll be rich when their prices spike due to the bitcoin apocalypse.
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No you won't, because all the buyers will have to offer is millions and millions of useless crypto-coins.
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Once the miners stop buying, the prices should normalize
Once the miners stop buying, PC GPU development will stagnate. The PC market is shrinking. Gamers can't get the latest cards because miners are buying the bulk of production, while there used to be eventual sales on stock of even current GPUs because gamers didn't buy them all at MSRP. So right now, the miners are providing not just the bulk of the demand in the market, but also more total demand than all the gamers in the world. Just chew on that for a minute.
While I abhor the waste of power that the typic
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That's just not true, you're completely making it up. Gamers buy the latest cards just fine.
Bullshit, son. [businessinsider.com]
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One of my favorite SiFi books had soldiers abandoned on the planet of the
How is this any surprise? (Score:4, Interesting)
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At least with Beanie Babies you got some fluff to hold onto. With crypto you just get a bunch of numbers that don't even have stitches and cloth baking them.
Re:How is this any surprise? (Score:5, Funny)
At least with Beanie Babies you got some fluff to hold onto. With crypto you just get a bunch of numbers that don't even have stitches and cloth baking them.
Sounds like the problem is you aren't storing your bits in a cuddly medium. I think we can have it both ways by encoding the bits straight into the cloth and fluff. Gives new meaning to holding your crypto, plus has the benefit of cute cat video viral advertising. I expect 100 fluff coin as payment for unleashing this cuddly genius upon the world, and given the beanie baby craze should be enough to buy a nice island somewhere.
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Sounds like the problem is you aren't storing your bits in a cuddly medium.
I see... so cuddly currencies are better. That must be the idea behind DogeCoin.
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Print off your key and stick in a teddy bear.
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At least with Beanie Babies you got some fluff to hold onto. With crypto you just get a bunch of numbers that don't even have stitches and cloth baking them.
What, don't you cuddle up next to your mining rig on these cold winter nights? Speaking of baking, I'm using mine to cook my breakfast right now...
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I tried to get my dealer to accept beanie babies, but it turns out he's more partial to Zhu Zhu Pets
Re:How is this any surprise? (Score:5, Insightful)
The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.
I think it more likely that Goldman and/or their buddies went short on cryptocurrencies.
It is strange that the markets can be moved by the analyses/opinions of those who stand to benefit from making the markets move in a particular direction, no?
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How is it any different from a business promoting itself in the hopes of increasing revenue?
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I think it more likely that Goldman and/or their buddies went short on cryptocurrencies.
It is strange that the markets can be moved by the analyses/opinions of those who stand to benefit from making the markets move in a particular direction, no?
How is it any different from a business promoting itself in the hopes of increasing revenue?
Show me one business that promotes itself in the hopes that someone ELSE will change the price of either their product or their raw materials (stuff they buy). Promoting a product in no way shape or form is analogous to pump&dump or deprecate&short.
#areyoureallythatstupid
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This is what I think too, though how do you short a cryptocurrency? Are brokerages actually trading in these?
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It is strange that the markets can be moved by the analyses/opinions of those who stand to benefit from making the markets move in a particular direction, no?
My favourite example was Warren Buffet who went on the radio to announce he was buying bank stocks because he expected the government to bail them out and that if he didn't think they would do a bailout he'd be selling.
https://www.youtube.com/watch?... [youtube.com]
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The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.
I think it more likely that Goldman and/or their buddies went short on cryptocurrencies.
It is strange that the markets can be moved by the analyses/opinions of those who stand to benefit from making the markets move in a particular direction, no?
I thought one of the central points of cryptocurrency is that it can't be manipulated in this way? That's why it's so inflexible to any sort of monetary policy (that libertarians believe is bad). If it's possible to do this then what is the point?
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If that were the case, expect an SEC investigation next month.
Realistically, the investment branches of such firms are kept completely separate from the advisory branches, but they both work off of the same data from the analysis branches. If indeed Goldman were shorting something they advised against buying, the two actions would have come from separate interpretations of the market analysis, and would not come from knowledge of what the other branch was doing. As I understand, that would still be perfectl
Don't conflate value with utility (Score:5, Informative)
That said, most cryptocurrencies are substantially overvalued because the underlying value of any currency - crypto or otherwise - has to be backed up by some type of economy. The USD used to be on the gold standard, and only started inflating substantially after it was taken off even though a not-insubstantial portion of that value is in services and intellectual property rather than goods. The inflation of the value of the currency is a natural side-effect of a number of factors, but the ones that are most relevant in this discussion are disparate classes of valuable assets (physical and non-physical), the participants interacting with the currency, and speculation. Also remember that the value of cryptocurrencies is also being exchanges for other currencies, so there are also transaction costs and the actual value of those currencies relative to the cryptocurrency.
In any event, if we use those measures, the inherent value of any currency is the value of the actual goods and services tempered by these factors. That there has been speculation driving up the price is obvious. More importantly, we cannot state the value of all cryptocurrencies is zero strictly because of speculation, because cryptocurrency value is based on the fact that there are people are still willing to exchange goods, services and other valuables including paper currencies in exchange for cryptocurrency!
Goldman is wrong. Blockchain-based cryptocurrencies are here to stay. What isn't wrong is the analysis that states there is overinflated value in the cryptocurrency. We can, of course, also say that of the inflated value of today's normal paper currencies backed by central banks, including speculation with various instruments and the perception of their underlying value. It's the same reason I can purchase currency futures and forwards for common currencies versus requiring special instruments like letters of credit for currencies of little value or with little trade with the currency of question (e.g. try to find a forward for Turkish Lira versus Burundian Francs). The only real difference is how that transaction happens.
And since Goldman is cut out, you better believe that they and JP Morgan and all of the investment banks are doing anything they can to keep themselves relevant in this brave new world of cryptocurrency. Spread FUD, use existing political connections to regulate or shut down cryptocurrency use, whatever. It's just that this time it really may not work.
Re:Don't conflate value with utility (Score:5, Insightful)
Goldman is wrong. Blockchain-based cryptocurrencies are here to stay.
I don't know whose argument you are trying to rebut, but it isn't the one presented in the article.
In the article, the argument was that most block-chain based currencies will eventually become worthless, because everyone will eventually standardize on a small number of successful currencies and the market will lose interest in the also-rans. (Think VHS vs BetaMax)
That's completely different from the idea that all blockchain currencies will go away, which is the straw man argument that you seem to be trying to refute.
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Goldman is wrong. Blockchain-based cryptocurrencies are here to stay.
I don't know whose argument you are trying to rebut, but it isn't the one presented in the article.
In the article, the argument was that most block-chain based currencies will eventually become worthless, because everyone will eventually standardize on a small number of successful currencies and the market will lose interest in the also-rans. (Think VHS vs BetaMax)
That's completely different from the idea that all blockchain currencies will go away, which is the straw man argument that you seem to be trying to refute.
I was at a Goldman presentation years ago where senior business and tech managers were talking about how blockchain tech could revolutionize their businesses.
Goldman and other banks are entering the cryptocurrencies and the crypto exchange and futures businesses. They could have done it a long time ago but the risk and regulatory environment is very unpredictable. Nobody wants to get arrested for money laundering like the CEO of BitInstant.
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Re:How is this any surprise? (Score:5, Interesting)
The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.
That sentiment usually comes from those who have little experience in this new technology arena. Understandable, but wrong. Slashdot has devolved so far that it really doesn't surprise me to see such a lack of technical information on new blockchain developments.
It's smart contract development and the more advanced use cases of blockchain technology that really bring utility to their corresponding tokens. Solidity is a very straightforward language for developing on the Ethereum platform and it has been a very interesting experience learning the nuances of interfacing with blockchains. Neo is another with some promise, using a Java-based smart contract system. The Ether token, combined with front-end widgets like MetaMask make the process of integrating token usage into web sites a straightforward exercise for the developer and an easy interface for the user.
Bitcoin has paved the way for many much more exciting uses of blockchain. A large number of business are popping up all over embracing the technology in various forms and this will only increase. I can understand the nay-sayers who believe that Bitcoin may have little intrinsic value, because though it has some small utility I can agree it is not the "store of value" that some want it to be. But look beyond Bitcoin and it's easy to find far greater applications in other cryptocurrency offerings.
Slashdot has devolved so far from its glory days that it really doesn't surprise me to see such a lack of technical articles here and an overall negative, ignorant perspective on the new advances in distributed ledger technologies. I challenge other developers here to spend the time to buy a small amount of Ether and explore some of the applications popping up before writing off any value in cryptocurrency. Check out sites like https://www.stateofthedapps.co... [stateofthedapps.com] to see what people are doing.
ignoratio elenchi argument [Re:How is this any...] (Score:2)
The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.
That sentiment usually comes from those who have little experience in this new technology arena. Understandable, but wrong.
Your argument does not show the statement made is wrong, but addresses a different topic. (Technically, this is an ignoratio elenchi argument.
The original post says that crytocurrency value is due to "Beanie Baby effect". Your reply says that blockchain technology does have a value... but for things other than currency.
But the original post did not say that blockchain has no value. The statement was about cryptocurrency, not blockchain. Not only did you not show that this is wrong, but you even seemed to
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Actually, regulation in this case will only serve to hasten mainstream adoption. Only outright banning would force it to the dark markets only.
What's the point of legal cryptocurrency transactions? Good question. Here's one example: Let's say I have bad credit and traditional banks don't want to deal with me. Instead, I can safely secure and transact with bitcoins without relying on approval from some third party.
Think about the individuals and businesses that find PayPal useful. But as we know, PayPal has
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There is absolutely a lot of hype and overvalued products in this new space, and we are currently witnessing some welcome relief from only the most recent bubble. Bubbles will continue to pop up but know that this is an entirely new technological and trading philosophy taking shape that over the long run will continue to expand.
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the idea that people are going to trust some nebulous "network" with their IRA rollover, with nobody to mediate or sue when it goes wrong, is just wrong.
I, for one, welcome the advancements that begin to make obsolete the lawyer and lawsuits. You can't sue for breach of contract when the contract cannot physically be broken. Lawyers are free to transition to the new blockchain rule codification techniques and earn their keep auditing and explaining the smart contract itself.
What else you got? Supply chains? Yeah, like any company wants it's supply chain information visible to multiple governments and various other actors.
Supply chains are an excellent example. But your assertion fails to consider that publicly readable information does not necessarily mean it is publicly understood. There are any number
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Well, up until now a value of zero wouldn't have surprised me, but not that Goldman Sachs has predicted it, I find myself dubious. To me they seem more manipulative than honest.
Re:How is this any surprise? (Score:5, Insightful)
That analogy would be perfect, if you could move a couple million dollars worth of Beanie Babies across borders without risk of detection or confiscation.
A couple million dollar's worth of beanie babies has never existed. 2 dollar's worth of beanie babies has never existed. You're making the common mistake, made by bitcoin and beanie baby "investors" alike, that price = worth. The truth is, price and worth are two different things, and large differences between the two are not sustainable. Either the worth has to rise to meet the price, or the price has to fall to match the worth. I don't see bitcoin's worth rising.
The only people who want to move a couple million dollars across borders without detection are, by definition, criminals.
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A couple million dollar's worth of beanie babies has never existed. 2 dollar's worth of beanie babies has never existed.
Who decides what is the "worth" of an item? You?
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If i'm buying it yes, i decide the worth of an item.
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Are they useful? too volatile to be a currency, not backed by anything, i'm not sure that they are.
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Bitcoins are scarce and useful. If you think that these properties don't make it worth something, you don't know economics at all.
Bitcoins can either be useful as currency or they can be scarce. They cannot be both at the same time.
--Econ 101.
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It's also expensive and stupidly slow. Not as bad as BTC, but still has issues to work out if it's going to scale significantly.
Well yeah when GS and Co... (Score:5, Interesting)
Are manipulating both the virtual assets themselves, as well as the regulatory environment around them thanks to lobbying.
What most people haven't realized yet is all the big banks plus tech firms (such as IBM) have been building up patent warchests in blockchain related technology, meaning if they can kill the open source virtual currency markets (where direct monetization and forms of centralized market manipulation are more difficult without direct community involvement and scrutiny) then blockchain technology can be leveraged to ensure the barrier between the haves and the have nots while allowing datamining to provably ensure the financial limitations of the have nots, the gotta gets, and the haves according to the sorts of game theory going on in MMOs today. Anybody who has played free to play and done calculations on either getting rare loot drops, or mining lootbox unlocks (for those games that have it) without just buying keys/experience accelerators will have some idea of what the endgame plan is for real life wage grinding.
You should be VERY afraid of the future that is coming, because if you don't band together now to defeat it, economically, socially, and politically, you or your descendants won't be in a position to do it in the future, assuming they haven't automated away your life before then.
Hot investment tip (Score:4, Funny)
When you see people without a ton of money eagerly running up debt to start buying an asset because they think it's going to double in value in a few months, your bubble is about to pop.
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Unfortunately this has been happening for too long. Although I am looking forward to BC totally tanking, I feel bad for people that invested their retirements, or will lose their homes because of this farce.
Yes, but when? [Re:Hot investment tip] (Score:4, Interesting)
When you see people without a ton of money eagerly running up debt to start buying an asset because they think it's going to double in value in a few months, your bubble is about to pop.
It's definitely a bubble... but whether it's "about" to pop is another question. A bubble pops when the supply of gullible people buying into the bubble starts to saturate. And there are probably a lot of gullible people out there who still haven't invested in cryptocurrency.
Or, to misquote John Maynard Keynes about betting against an irrational market, "the market can remain irrational for far longer than you or I can remain solvent."
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The challenge is that you might still be able to get 1000% returns before it pops. And shorting it in the hopes of it popping is dangerous.
The market can stay irrational longer than you can stay solvent.
No self awareness? (Score:4, Funny)
he said recent price swings indicated a bubble
wasn't rational for a "few-winners-take-most" market
How do you erase (Score:3)
something that never existed in the first place?
As a PC gamer looking at graphics card prices (Score:2)
I think most investors expect it (Score:4, Interesting)
Notice that he said "most cryptocurrencies", not "all".
The situation is that it is important to come early in the game of cryptocurrencies. Also, Bitcoin doesn't look like the end game. As a result, a strategy is to invest in many emerging cryptocurrencies and hope that one of them will become the next Bitcoin. Most people probably expect that most of these will soon become worthless, but they hope they invested in the good one, or that they can sell before the crash.
Lack of intrinsic value?? (Score:2)
> Strongin said. "Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."
Like paper money, you mean?
Now that I look at that sentence, I suddenly have multiple issues with it. The last part, "the currencies that don't survive will most likely trade to zero" isn't hard to imagine. Isn't that the definition of "not surviving"?
I really thought the economists got past the "intrinsic value" thought. Amazing that Goldman Sachs says this.
Re:Lack of intrinsic value?? (Score:4, Insightful)
Yes, like paper money. His point was, certain securities have soft landings built in. The price of gold might tank if people lose confidence in it as an investment, but it won't go to zero, because other people want to buy gold to manufacture things with. Paper money and cryptocurrencies, in contrast, are subject to dropping to basically-zero (hyperinflation). "Intrinsic value" may have been an inexact way to describe that, but it's a reasonable shorthand.
Duh! (Score:2)
"Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."
No shit Sherlock! If a currency have no intrinsic value, it is set to disappear ... that applies to all currencies, not only to crypt-currency
and anyone could see that the crypt-currency high prices was a bubble, specially with the transactions costs and technical problems in bitcoins.. and like all bubbles, only the strongest/healthiest survive
So basically this is useless, he not say anything importa
Became an investment strategy (Score:4, Informative)
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The point behind the currency was to be a way to transfer value without the regulations attached to fiat money. Somehow it turned into an investment strategy instead. People were buying them to take advantage of the price fluctuations. It kind of defeated the purpose behind them.
Well, yes. Those are basically the two options. The dollar has intrinsic value because I live in a country where it is how I pay taxes. There's mostly-nothing stopping me from performing my day-to-day transactions in painted rocks, but come April 15th, I'll need to pay Uncle Sam my dues in dollars, as will everyone with whom I exchange painted rocks for goods and services. The Federal Reserve, for good or for ill, decides how much a dollar is worth, so I know that exchanging my goods and services for dollar
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The Federal Reserve does not decide how much a dollar is worth. There isn't some committee collectively raising their pinkies and saying "Today, two Cox's apples will be worth one dollar". The government only has some fairly blunt tools to influence the value of currency (for example, interest rates and quantitative easing) but a dollar is worth whatever someone is willing to trade for it.
The problem with Bitcoin is not that it's value is set by what people are willing to trade for it, but virtually no one
Translated to (Score:2)
We are going to try to take all this over so we control it and thus make the most from it.
Tax reform and value backed currencies (Score:2)
So as things stand... If crypto-currencies had value besides their utility then they would be considered securities and would be subject to additional tax reporting requirements for every transaction and would have all the reporting overhead associated with running a mutual fund but with much higher numbers of transactions and ownership turnover.
Just as the dollar went off the gold standard... meaning there is no longer any specific amount of gold in a vault that you could cash in the dollar for. Cryptocur
Says a company with zero credibility... (Score:3)
Why would anyone pay attention to Goldman Sachs, really, on anything?
First, such a prediction is utterly self-serving: they have zero clue what to do with the cryptocurrency market, and wish that no one else did either. I expect they've had lots of inquiries from investment clients, asking questions they couldn't answer.
Second, they were an integral part of the 2008 crisis. In fact, Goldman Sachs admitted to having defrauded investors, and paid more than $5 billion as a settlement [fortune.com]
I think I'd trust the bum down the road more...
Correlation? (Score:2)
Does he have the same worry about stock markets? We just had a huge, highly correlated move, not just of stocks in a market, but also between markets.
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It's by intention. Back in the 80s you'd get corporate raiders who'd find a company that had net assets more than it's share value, buy a controlling share and asset strip it, leaving a non-functioning wreck behind.
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I'm thinking he's correct but alarmist ..... (Score:2)
The way this is worded, it makes it sound like an unprecedented disaster for all of crypto-currency. It's all going to crash to ZERO!
If you think about it though, what he's really describing is exactly what all the alt-coin permutations have done since all of this got started. People keep spinning off new alt-coins from code used to create a previous one. Occasionally, one comes along with an entirely new methodology behind it, but it's all the same for the people doing the buying and selling.
After initial
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So you're saying crypto-currencies are a cross between a ponzi scheme and gambling? I can accept that.
P.S.: I don't play the lotteries, either.
power cost no longer a problem (Score:2)
I've solved the cost/benefit problem of mining more coins. Instead of connecting to the grid, or depending on transient sources like the sun, I'm going to set up ten thousand treadmill generators. Then I'm going to import slaves and run them to death, then replace them with more slaves. There's 7 billion people in the world, so the market glut demands a very low price on slaves.
Gridcoin (Score:2)
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Nobody will be buying for any price. That is the point.
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...trade to [close to] zero means that there is no monetary reason to mine or process BC, so it very well could go all the the way to zero, or so close that it means nothing. if nobody is willing to spend the CPU cycles (and real world money for electricity) to confirm your BC transfers, did it really happen?
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... is because they feel the threat. And it's very real.
Bitcoin and other cryptocurrencies is a nightmare for the powers that be - especially Goldman Sachs who's used to being in control of your money for ages. Sure you can ridicule the cryptocurrencies for being a rollercoaster of the smart outsmarts the lesser, but at least those who are not in "power" stand a chance at the big bucks for a small time, if done right - and understood correctly.
Goldman is nervous as HELL about this, we're talking big bucks - and they want to be in control of it, and they're not.
This is completely wrong. They don't make money by controlling currencies. They make money in:
Trading and sales
Market making
Investment banking
Asset Management
Prime services
etc
Crypto is just one more product they can make money in, and they are going to make boatloads of it. But they are a regulated business and they have to be careful about their risk exposure and legality of the businesses they are in.