Bitcoin - Part 2

[gabeygoat]

The information that a particular entity (identified by a public key) owns bitcoins is preserved on the blockchain. If the owner loses the matching private key then those coins can never be transferred to a new owner.

The encryption keys are typically stored in "wallet" software that requires a password to access. If the wallet file or it's password are lost you are SOL.

Eventually bitcoin owners will die. Perhaps some will include keys in their will. Most probably won’t.

 

[Craig B]

The point was actually that some things which have no wealth generating capacity and no intrinsic value in and of themselves can be worth obscene amounts of money to some people. Stamps are one of these things. Art is another. Bitcoin is yet another.


Norm

I suppose we can frame Bitcoin or put it in an album along with South Sea Company share certificates or old bus tickets. To be collectible things really need to have a physical form.

 

[psionl0]

To be collectible things really need to have a physical form.

Why?

 

[fromdownunder]

I suppose we can frame Bitcoin or put it in an album along with South Sea Company share certificates or old bus tickets. To be collectible things really need to have a physical form.

Some people collect and/or buy and sell stamps.
Some people collect and/or buy and sell art.
Some people collect and/or buy and sell Bitcoin.


What is the difference, especially when many of these things at the top end of the market are purchased for investment only (e.g. the last owner of the British Guiana One Cent Magenta purchased it, put it in a Bank Vault, and probably never saw it again)?



Norm

 

[Craig B]

Some people collect and/or buy and sell stamps.
Some people collect and/or buy and sell art.
Some people collect and/or buy and sell Bitcoin.


What is the difference, especially when many of these things at the top end of the market are purchased for investment only (e.g. the last owner of the British Guiana One Cent Magenta purchased it, put it in a Bank Vault, and probably never saw it again)?



Norm

Stamps have a physical form.
Collectable art has a physical form.
Speculators buy and sell Bitcoin. Objects of speculation don't need to have a physical form, but speculators buy and sell for gain, not aesthetics.

 

[Roger Ramjets]

What is the difference, especially when many of these things at the top end of the market are purchased for investment only (e.g. the last owner of the British Guiana One Cent Magenta purchased it, put it in a Bank Vault, and probably never saw it again)?

Wrong.

Public display

In November 2014, the National Postal Museum of the Smithsonian Institution announced that the then-anonymous owner of the stamp had agreed to display it at the museum in Washington, DC, beginning 4 June 2015 and running through 2 December 2018.[17] Next to the Postal Museum exhibit is a copy of a Donald Duck comic book, The Gilded Man, (OS 422) from 1952 whose central plot element revolves around Donald and his nephews, Huey, Louie and Dewey, going to British Guiana to try to find another copy of the stamp. The comic is written and drawn by Carl Barks.[18]

The stamp was exhibited in the Court of Honor at World Stamp Show-NY 2016 in New York City from May 28 to June 3, 2016.

Without any practical use, a 'collectable' has only psychological value. Having a physical presence is a huge psychological boost over only existing in abstract form. While Bitcoins themselves may become 'rare', the blockchain they reside in is anything but. Even if the number of devices it is stored on dwindles to the point of being hard to find, there is no reason it couldn't be duplicated as many times as you want at virtually no cost (especially since storage devices of the future will almost certainly have vastly greater capacity than today).

You can't 'frame' a Bitcoin. The closest you could get would be a printout of its cryptographic keys, which is like making a poster print of the Mona Lisa only cheaper. I doubt that something with little psychological impact that anyone can make an identical copy of for virtually no cost will ever become a more valuable 'collectable' than a mass-produced poster.

I am a collector of 'vintage' home computers. Machines that are still working well enough to invoke the 'retro' experience are becoming quite valuable, and original software with working physical media is also highly sought after. But circuit diagrams, manuals, and electronic copies of software are not. Many titles have become 'abandonware' which copyright holders have placed into the public domain or given up defending. These can be download from websites such as the Internet Archive for free, and their commercial value is virtually zero.

As a 'collectable' Bitcoin is like electronic software, only worse. You can't copyright a number, and few would want to pay for one anyway once its utility is lost. In reality Bitcoin is about as valuable as your bank balance - the numbers themselves being worthless if the bank doesn't honor them.

 

[Roger Ramjets]

Is this the final Stake through the Heart of Bitcoin?

Bitcoin latest: It's NOT WORTH mining BTC anymore

BITCOIN'S descent below $3,400 yesterday has now confirmed that it is no longer profitable to mine the cryptocurrency.

“Although damaging to the bitcoin mining community this will not mean the end of bitcoin, at least in the short to medium term...

“However, hardware expenditure - mining rigs etc - are a material outlay and critically are a sunk cost meaning that miners may continue with their efforts for longer than perhaps expected.”

He warned: “The aggregate effect of this will be more keenly felt not in a sharp decline in the price of bitcoin but rather in the size, or depth, of the bitcoin mining community which by extension will weaken the decentralisation of the underlying bitcoin blockchain.

He said: “Such a shift will only increase the pre-existing criticism about the extent to which bitcoin is truly decentralised, and therefore represents an inherent flaw, in turn exposing the network to potential attacks.

But hey, what would a 'senior lecturer in finance at Manchester Metropolitan University' know about Bitcoin, the electronic peer-to-peer currency which will topple the coercively funded fascist control grid you call the modern State?

 

[fromdownunder]

Stamps have a physical form.
Collectable art has a physical form.
Speculators buy and sell Bitcoin. Objects of speculation don't need to have a physical form, but speculators buy and sell for gain, not aesthetics.

Speculators buy and sell anything if they are convinced that there is a profit to be made. Not just Bitcoin. The dot.com bubble in the 1990's is an example of buying the future potential of 000s and 111s (like Bitcoin). It did not have a physical form either. The stamp bubble of the 1980's, the Phonecard bubble of the 1990's. Going further back, tulip bulbs in 1600's, the Stock Market in 1929, silver in 1980, property market bubbles on and off forever. Gold to a much smaller extent. The Bitcoin bubble in 2017.



Aesthetics have nothing to do with it. Greed and perceived easy profit for doing nothing more than buying today and selling again next week, everything.


Norm

 

[Craig B]

Speculators buy and sell anything if they are convinced that there is a profit to be made. Not just Bitcoin. The dot.com bubble in the 1990's is an example of buying the future potential of 000s and 111s (like Bitcoin). It did not have a physical form either. The stamp bubble of the 1980's, the Phonecard bubble of the 1990's. Going further back, tulip bulbs in 1600's, the Stock Market in 1929, silver in 1980, property market bubbles on and off forever. Gold to a much smaller extent. The Bitcoin bubble in 2017.



Aesthetics have nothing to do with it. Greed and perceived easy profit for doing nothing more than buying today and selling again next week, everything.


Norm

I think we're saying the same thing. Speculative objects don't need to have a physical presence. But they may have one. Bubbles are inflated by significant price rises without input of labour. Tulips were physical objects in 1637, but the dot.com bubble was different. My point is that Bitcoin may be a good speculative object, though I think it's had its day, and is going to languish to a final value approaching zero. It's not a collectible speculative object. Collectible objects, whether they are speculative or not, do need to have a physical presence in my opinion. Not all speculative objects are collectible, but I agree that some are, just as some collectible objects are speculative.

 

[fromdownunder]

I agree, and will just add that every speculative purchase can be profitable if you know what you are doing and get in and out at the right time. It is an interesting subject but I fear it would move too far from the topic at hand to continue along these lines. Maybe a new thread, but not today.



Norm

 

[fromdownunder]

Wrong.

Public display

I wasn't talking about the current owner. I was talking about John Du Pont, who purchased the stamp in 1980, stuck it in a Bank Vault, then eventually went to prison for murder and died there in 2010.



Norm

 

[Samson]

Speculators buy and sell anything if they are convinced that there is a profit to be made. Not just Bitcoin. The dot.com bubble in the 1990's is an example of buying the future potential of 000s and 111s (like Bitcoin). It did not have a physical form either. The stamp bubble of the 1980's, the Phonecard bubble of the 1990's. Going further back, tulip bulbs in 1600's, the Stock Market in 1929, silver in 1980, property market bubbles on and off forever. Gold to a much smaller extent. The Bitcoin bubble in 2017.



Aesthetics have nothing to do with it. Greed and perceived easy profit for doing nothing more than buying today and selling again next week, everything.


Norm

I would consider gold exempt for a range of attributes
pretty
inert
malleable
limited supply
hurts when you drop it on your foot

and so on

 

[lomiller]

I agree, and will just add that every speculative purchase can be profitable if you know what you are doing and get in and out at the right time. It is an interesting subject but I fear it would move too far from the topic at hand to continue along these lines. Maybe a new thread, but not today.



Norm

Speculation in the absence of some underlying reason to own something is fundamentally zero sum game. Yes, people can still make a profit, but they do so because someone else is loosing money. If an item is desirable as a collectable can have underlying value based on how rare it is an how many people collect it.

 

[lomiller]

I would consider gold exempt for a range of attributes
pretty
inert
malleable
limited supply
hurts when you drop it on your foot

and so on

Over the long term gold tracks more or less with inflation so making real, current, $ on it is still basically zero sum.

 

[psionl0]

Speculation in the absence of some underlying reason to own something is fundamentally zero sum game. Yes, people can still make a profit, but they do so because someone else is loosing money. If an item is desirable as a collectable can have underlying value based on how rare it is an how many people collect it.

As usual, you are providing a pile of self made-up nonsense. It is a zero some game only if the same people are always trading - and that applies to any commodity.

Meanwhile, in the real world, . . . .

 

[Roger Ramjets]

I wasn't talking about the current owner. I was talking about John Du Pont, who purchased the stamp in 1980, stuck it in a Bank Vault, then eventually went to prison for murder and died there in 2010.

Not such a good investment for him then, was it?

And perhaps not a good example for your assertion that "many of these things at the top end of the market are purchased for investment only". Considering that he was a paranoid schizophrenic who spent 13 years in prison for murder, it seems more of an outlier than typical behavior. And hiding his stamps in a bank vault may not have been his choice anyway. Wikipedia says:-

In 1986, competing as "John Foxbridge", he won the Grand Prix d'Honneur in the FIP Championship Class at the STOCKHOLMIA 86 international stamp exhibition for his display of "British North America".[17] While du Pont continued to buy stamps while in prison, he was not allowed to bring them there.

A collectable 'investment' that is hidden away in a bank vault is probably not as good as one which which put on public display, since the fewer people know about it the less its perceived value may be.

This even applies to Bitcoin! For years most bitcoins were 'stuck in a bank vault' and the price languished because only a few libertarians thought it might eventually be worth something (some even forgot about their 'investment', resulting in about 20% becoming lost). The price only took off once it captured the eye of the general public. And like a famous painting that turns out to be a fake, the price collapsed when the public found out that it was a fraud.

 

[Belz...]

And like a famous painting that turns out to be a fake, the price collapsed when the public found out that it was a fraud.

I wouldn't go that far. It's just a badly-designed currency.

 

[fromdownunder]

Not such a good investment for him then, was it?


A collectable 'investment' that is hidden away in a bank vault is probably not as good as one which which put on public display, since the fewer people know about it the less its perceived value may be.

He purchased it in 1980 for under $1M it sold in 2014 for around $8M (hammer price). Not a bad return. So being hidden away for 24 years did not seem to do the value a whole lot of harm. In fact it increased interest when it finally did reappear.

This even applies to Bitcoin! For years most bitcoins were 'stuck in a bank vault' and the price languished because only a few libertarians thought it might eventually be worth something (some even forgot about their 'investment', resulting in about 20% becoming lost). The price only took off once it captured the eye of the general public. And like a famous painting that turns out to be a fake, the price collapsed when the public found out that it was a fraud.

Bitcoin took off for the same reason that other bubbles happen. People thought there was an easy profit to be made for no effort. It was no different to any other bubble.



Norm

 

[psionl0]

The price only took off once it captured the eye of the general public. And like a famous painting that turns out to be a fake, the price collapsed when the public found out that it was a fraud.

Bitcoin took off for the same reason that other bubbles happen. People thought there was an easy profit to be made for no effort. It was no different to any other bubble.

Why the past tense? Are you trying to sneak in another woo prophecy without getting busted?

 

[fromdownunder]

Why the past tense? Are you trying to sneak in another woo prophecy without getting busted?

Of course I am. (I can't speak for Roger Ramjets though). We have to get up early in the morning to fool you, you old Sherlock you. But you are far too smart for we mere mortals, and I bow to your incredible intellect and acumen.


Norm