Bitcoin - Part 2

[Samson]

With bitcoin trading at 13161 there has been just one daily close lower since december 7. This in itself means little, but the news cycle keeps deteriorating with Warren Buffet laughing at bitcoin. It really does look an urgent matter to cash up bitcoin. Only a tiny fraction of holders can ever convert to greenbacks if I understand the concept.

 

[Eddie Dane]

With bitcoin trading at 13161 there has been just one daily close lower since december 7. This in itself means little, but the news cycle keeps deteriorating with Warren Buffet laughing at bitcoin. It really does look an urgent matter to cash up bitcoin. Only a tiny fraction of holders can ever convert to greenbacks if I understand the concept.

Why would that be? Too many people cashing out resembling a bank run on the exchanges?

I've seen several websites claim that 4% of holders own 90% of the Bitcoins out there. If Bitcoin is a Ponzi scheme, these guys are the Madoffs.

Can anybody confirm this statistic?

https://howmuch.net/articles/bitcoin-wealth-distribution

 

[Craig B]

Why would that be? Too many people cashing out resembling a bank run on the exchanges?

I've seen several websites claim that 4% of holders own 90% of the Bitcoins out there. If Bitcoin is a Ponzi scheme, these guys are the Madoffs.

Can anybody confirm this statistic?

https://howmuch.net/articles/bitcoin-wealth-distribution

What we don't know is the average price at which these various holdings were acquired, so if the motive for holding is speculative capital gain, we don't know what an x% holding is "worth". Was it bought at a fraction of a dollar per coin, or at 3 dollars, or at 19 thousand dollars?

In the case of Madoff's swindle the motive for holding was a pretty stable return of twelve or so percent per year. Not even the appearance of an emolument like that is enjoyed by holders of cryptos.


Now trading just under $13,000.

 

[psionl0]

It sounds like an Onion article, but it's clear why they won't use Bitcoin.

It's impossible to do business with a currency this volatile.
Steam also dropped Bitcoin.

If you read the article you will find the real reason. At current prices, bitcoin transaction fees are too high.

 

[PartSkeptic]

If you read the article you will find the real reason. At current prices, bitcoin transaction fees are too high.

At ANY bitcoin price, the fees are high per TRANSACTION.

Low fees were another myth about bitcoin being the common man's coin.

It is also taking too long to clear the transactions - one more myth that they are quick and easy.

 

[psionl0]

At ANY bitcoin price, the fees are high per TRANSACTION.

Low fees were another myth about bitcoin being the common man's coin.

It is also taking too long to clear the transactions - one more myth that they are quick and easy.

All strawman arguments put up by anti-bitcoiners.

Everybody else knows that it takes at least 10 minutes to get a payment confirmed (1 hour if you want the confirmation to be absolute) and that depends on what you offer as a transaction fee. Everybody else also knew that as the block rewards decrease and the number of transactions increased that the transaction fees would also increase.

On the transaction time front, you can't pay for your groceries at the supermarket with bitcoin (unless the supermarket is willing to accept 0 confirmations) but bitcoin is a darn sight faster (and only recently just as costly) than an international telegraphic transfer which can take weeks. (International telegraphic transfer was the only way that I could get money from overseas several years ago).

 

[Eddie Dane]

What we don't know is the average price at which these various holdings were acquired, so if the motive for holding is speculative capital gain, we don't know what an x% holding is "worth". Was it bought at a fraction of a dollar per coin, or at 3 dollars, or at 19 thousand dollars?

We don't know that, but it is far more likely that they were acquired when they were cheap then when they were expensive.

The current market cap is 230 billion dollars, 90% of that is in the hands of only 4% of the holders. And I suspect that we're talking about 4% of the wallets, not people. It stands to reason that people who have a lot of Bitcoin would spread these out over multiple wallets. So, that makes the elite of Bitcoin holders a very small group of very rich people indeed.

 

[PartSkeptic]

All strawman arguments put up by anti-bitcoiners.

Everybody else knows that it takes at least 10 minutes to get a payment confirmed (1 hour if you want the confirmation to be absolute) and that depends on what you offer as a transaction fee. Everybody else also knew that as the block rewards decrease and the number of transactions increased that the transaction fees would also increase.

On the transaction time front, you can't pay for your groceries at the supermarket with bitcoin (unless the supermarket is willing to accept 0 confirmations) but bitcoin is a darn sight faster (and only recently just as costly) than an international telegraphic transfer which can take weeks. (International telegraphic transfer was the only way that I could get money from overseas several years ago).

In Africa there is a cellphone service where people can transfer their cash almost instantly between countries. I can pay for my groceries with confidence with a bank debit card.

People in England are surprised when a South African makes a card payment and his cell-phone rings to alert him to the payment going through.

This is just a matter of technology catching up. Not some scheme run by a bunch of shadowy unknowns who can change the rules as they (who is they anyway?) feel like. And by "exchanges" who can set the rules as to when they pay in fiat currency. If they don't run away with your money first.

I personally think the blockchain concept is great. But not cryptocurrency.

Another myth "Bitcoin is the first decentralized currency". No it is not. Gold is and still is.

 

[Eddie Dane]

In Africa there is a cellphone service where people can transfer their cash almost instantly between countries. I can pay for my groceries with confidence with a bank debit card.

People in England are surprised when a South African makes a card payment and his cell-phone rings to alert him to the payment going through.

This is just a matter of technology catching up. Not some scheme run by a bunch of shadowy unknowns who can change the rules as they (who is they anyway?) feel like. And by "exchanges" who can set the rules as to when they pay in fiat currency. If they don't run away with your money first.

I personally think the blockchain concept is great. But not cryptocurrency.

Another myth "Bitcoin is the first decentralized currency". No it is not. Gold is and still is.

I recently talked to a guy who works in Africa, I think it may have been Kenya. Smartphones have effectively made the carriers the biggest banks in the country. People not only transfer money from phone-to-phone, they also crowdfund using social networks. So, if grandma needs an operation, you get friends and family to chip in.

I regret not asking him what currency they used.

The question is; do you need something like bitcoin for this? You could use digital dollars or some variation of Airmiles, litecoin or whatever.

The jury is very much out on this and it is clear that things are shifting. But in the end, money is a trust issue and I suspect that countries will be more trusted than decentralised currencies (but this is a human psychology issue and attitudes may change completely). I think that a Coin issued by a huge blue-chip corporation might work too. I'm thinking Google, Apple, IBM.

 

[Craig B]

I personally think the blockchain concept is great. But not cryptocurrency.

Another myth "Bitcoin is the first decentralized currency". No it is not. Gold is and still is.

Why gold? What about earlier standards like silver, which was the basis of many currencies by weight.

Or cowrie shells, if it comes to that.

 

[Samson]

I recently talked to a guy who works in Africa, I think it may have been Kenya. Smartphones have effectively made the carriers the biggest banks in the country. People not only transfer money from phone-to-phone, they also crowdfund using social networks. So, if grandma needs an operation, you get friends and family to chip in.

I regret not asking him what currency they used.

The question is; do you need something like bitcoin for this? You could use digital dollars or some variation of Airmiles, litecoin or whatever.

The jury is very much out on this and it is clear that things are shifting. But in the end, money is a trust issue and I suspect that countries will be more trusted than decentralised currencies (but this is a human psychology issue and attitudes may change completely). I think that a Coin issued by a huge blue-chip corporation might work too. I'm thinking Google, Apple, IBM.

But euros greenbacks are trusted by all. And they have infinitessimal fees at the community level.

Will a consortium pay a trillion for cryptos?
Oh wait, a trillion whats?

 

[Samson]

The algo just said buy bitcoin.
Last 13919

That is computer driven, no emotion.....

 

[psionl0]

The question is; do you need something like bitcoin for this? You could use digital dollars or some variation of Airmiles, litecoin or whatever.

Ideally you would have a blockchain technology based on the national currency. If you could transfer currency between your bank account and your digital wallet then cash would become near obsolete. You would probably need a consensus model (like ripple) to avoid the power consumption problems that bitcoin engenders.

Unfortunately, the banks won't go for it. I have seen proposals for central banks to issue digital wallets but they are proposing something that is even more centralized than the current banking system.

 

[Samson]

This beast is driven by greed.
Greed we all suffer from, so give it reign, it will end badly but when?

 

[PartSkeptic]

Why gold? What about earlier standards like silver, which was the basis of many currencies by weight.

Or cowrie shells, if it comes to that.

You are right about silver. I thought of mentioning it, but gold was the accepted "gold standard" of the ancient world, and still is today.

China backs its reserve currency (trying to take over from the dollar in oil sales with Russia) by saying you can exchange it for real gold if you wish.

 

[PartSkeptic]

I recently talked to a guy who works in Africa, I think it may have been Kenya. Smartphones have effectively made the carriers the biggest banks in the country. People not only transfer money from phone-to-phone, they also crowdfund using social networks. So, if grandma needs an operation, you get friends and family to chip in.

I regret not asking him what currency they used.

The question is; do you need something like bitcoin for this? You could use digital dollars or some variation of Airmiles, litecoin or whatever.

The jury is very much out on this and it is clear that things are shifting. But in the end, money is a trust issue and I suspect that countries will be more trusted than decentralised currencies (but this is a human psychology issue and attitudes may change completely). I think that a Coin issued by a huge blue-chip corporation might work too. I'm thinking Google, Apple, IBM.

In South Africa the tribal people have long used "stokvels" as a savings and as an insurance. One in every two black adults. They pool their money, and then a "committee" invests it in a savings bank like the Post Office where it is very secure. Or keep it in a safe place.

They then pay out for funerals or house purchases and the like. There are many different types, and some professionals try to make a business out of it by collecting "fees".

The investors will suffer if they cross the community. They do not have the assets to run and hide.

They use the local currency.

 

[PartSkeptic]

This beast is driven by greed.
Greed we all suffer from, so give it reign, it will end badly but when?

There are some exceptions to greed. Quite a few Christians I know of. And me.

Otherwise I agree.

 

[Tippit]

It sounds like an Onion article, but it's clear why they won't use Bitcoin.

It's impossible to do business with a currency this volatile.
Steam also dropped Bitcoin.

If you took the time to actually read the article you linked, you would notice that the reason was "network fees and congestion", not volatility.

 

[Tippit]

Why gold? What about earlier standards like silver, which was the basis of many currencies by weight.

This is actually a good point. In fact, the more I learn, the more I realize that the demonetization of silver by the Coinage Act of 1873, often referred to as the crime of 1873, was perhaps the most devastating blow to sound money in the United States. Silver was known as the "money of the people", and this act at once demonetized it, shrinking the money supply and devastating the economy, as well as concentrating monetary power in the hands of elites (gold, and the "gold standard").

 

[Craig B]

This is actually a good point. In fact, the more I learn, the more I realize that the demonetization of silver by the Coinage Act of 1873, often referred to as the crime of 1873, was perhaps the most devastating blow to sound money in the United States. Silver was known as the "money of the people", and this act at once demonetized it, shrinking the money supply and devastating the economy, as well as concentrating monetary power in the hands of elites (gold, and the "gold standard").

Silver was losing value against gold. Various agencies demonetised it; not only the USA.

Here's the Latin Monetary Union^WP

In 1873 the value of silver dropped significantly, followed by a sharp increase in silver imports in the LMU countries, particularly in France and Belgium.[12] By 1873, the decreasing value of silver made it profitable to mint silver in exchange for gold at the Union's standard rate of 15.5 ounces to 1. Indeed, in all of 1871 and 1872 the French mint had received just 5,000,000 francs of silver for conversion to coin, but in 1873 alone received 154,000,000 francs. Fearing an influx of silver coinage, the member nations of the Union agreed in Paris on January 30, 1874, to limit the free conversion of silver temporarily. By 1878, with no recovery in the silver price in sight, minting of silver coinage was suspended absolutely​