Merged Bitcoin - Part 3

[psionl0]

Clearly Bitcoin has a designed use, which is to replace fiat currencies (if we take the inventor's statements at face value).

BZZZT! Wrong.

The 2008 GFC may have been a motivation for designing a crypto currency in the first place but that is not a "designed" use. It is the ability to transfer large sums of cryptos around the world in minimal time at low cost and without being blocked by hostile dictators that gives cryptos their value.

This is only the 12,447th time I have had to point this out.

 

[jeremyp]

BZZZT! Wrong.

You need to read this: Bitcoin: A Peer-to-Peer Electronic Cash System

It was written by some guy called Satoshi Nakamoto. I understand he had something to do with the design of Bitcoin.

The 2008 GFC may have been a motivation for designing a crypto currency in the first place but that is not a "designed" use.

I don't recall saying it was.

It is the ability to transfer large sums of cryptos around the world in minimal time at low cost and without being blocked by hostile dictators that gives cryptos their value.

I would dispute the low cost aspect of Bitcoin and what you are saying is that it is good to evade government currency controls i.e. this is an illegal activity.

So I ask again, what can you use Bitcoin for that is legal and for which fiat currencies are not better?

ETA: I forgot to mention why Bitcoin is a bad design. The main problems with Bitcoin are:

- it is monumentally inefficient: proof of work is horrifically wasteful

- it does not scale: it currently handles only a tiny fraction of the amount of transactions that fiat currencies can handle

- Bitcoin is inherently deflationary.

- it's impossible to reverse a fraudulent transaction

 

[FatherLukeduke]

Are you really unable to distinguish between short term and long term trading?

It is an arbitrary distinction. It doesn't matter how many are holding for 5 years and how many 5 days, the net effect is the same. It's a zero sum game, no matter how much you wave your hands about. In fact it's possibly a negative sum game, as trading involves miners' fees which they will partly use to pay their electricity bills. But whatever, let's just call it zero sum for now.

* SIGH * How often do I see it claimed on this forum that bitcoin has no designed use whatsoever?

Just to remind you we are discussing bitcoin as a commodity and specifically talking about trading it. I pointed out that "the trading is purely gambling and speculation without any other net benefit." - which is true. Unlike useful products like steel, grain copper etc, where the trading sets an an efficient price.

Bitcoin itself may have some marginal utility in bypassing capital controls or sanctions. Though given the highly traceable nature of it, I wonder how useful that really is. We will see. I personally can't get excited about that and anyway the same function could be done by any number of tokens.

 

[psionl0]

It's a zero sum game, no matter how much you wave your hands about.

This is just so much nonsense. You act as if bitcoin is an island unto itself and totally unaffected by trades in other commodities.

In the real world, the values of commodities fluctuate relative to one another and value can be transferred from one commodity to another (one commodity price goes up and another commodity price goes down). And since many commodities are produced and consumed at varying rates, there is no way to conclude that it is a zero sum game either for an individual commodity or the whole market of commodities and not in the short term nor the long term.

 

[jeremyp]

This is just so much nonsense. You act as if bitcoin is an island unto itself and totally unaffected by trades in other commodities.


In the real world, the values of commodities fluctuate relative to one another and value can be transferred from one commodity to another (one commodity price goes up and another commodity price goes down). And since many commodities are produced and consumed at varying rates, there is no way to conclude that it is a zero sum game either for an individual commodity or the whole market of commodities and not in the short term nor the long term.

Is Bitcoin traded directly for legal commodities? Or do you turn it into fiat currency first and then use the fiat currency to buy the commodity?

Trading in Bitcoin is a zero sum game because after a trade, the amount of Bitcoin is the same and the amount of fiat currency is the same. Nothing of value has been created. and nor will it ever.

 

[psionl0]

Is Bitcoin traded directly for legal commodities? Or do you turn it into fiat currency first and then use the fiat currency to buy the commodity?

Trading in Bitcoin is a zero sum game because after a trade, the amount of Bitcoin is the same and the amount of fiat currency is the same. Nothing of value has been created. and nor will it ever.

Way to not have a clue what somebody is saying.

 

[FatherLukeduke]

This is just so much nonsense.

OK....

In the real world, the values of commodities fluctuate relative to one another and value can be transferred from one commodity to another (one commodity price goes up and another commodity price goes down). And since many commodities are produced and consumed at varying rates, there is no way to conclude that it is a zero sum game either for an individual commodity or the whole market of commodities and not in the short term nor the long term.

Well, this is all incredibly vague and hand wavy. Can you take me through the mechanisms of how someone buying some bitcoin with their dogecoin (or dirty fiat) on cyrpto.com somehow effects the price of crude oil, steel, grain, copper or whatever? Or vice versa? You are saying they do, but not providing any evidence.

"since many commodities are produced and consumed at varying rates" - bitcoin isn't ever consumed and the generation of new coins isn't analogous to the production of actual real world commodities, as these require labour and add value to the economy. A bitcoin has value, but it doesn't add any.

Bitcoin trading can only ever be zero sum - it redistributes wealth, but in itself adds nothing.

 

[psionl0]

Well, this is all incredibly vague and hand wavy. Can you take me through the mechanisms of how someone buying some bitcoin with their dogecoin (or dirty fiat) on cyrpto.com somehow effects the price of crude oil, steel, grain, copper or whatever? Or vice versa? You are saying they do, but not providing any evidence.

This is just a simple application of the price mechanism. I refuse to believe that you can't see how somebody choosing to buy some bitcoin instead of "crude oil, steel, grain, copper or whatever" (or vice versa) would affect the relative price of bitcoin vs "crude oil, steel, grain, copper or whatever". You are just sticking your fingers in your ears and saying "LA LA LA LA LA".

"since many commodities are produced and consumed at varying rates" - bitcoin isn't ever consumed and the generation of new coins isn't analogous to the production of actual real world commodities, as these require labour and add value to the economy.

Ah, the old "bitcoin is different and not subject to the laws of supply and demand" argument.

 

[arthwollipot]

Well, this is all incredibly vague and hand wavy.

In the field of crypto? No way.

 

[psionl0]

In the field of crypto? No way.

I see you have put me on ignore. (Can't have you acknowledging that I addressed this "argument" - can we).

 

[arthwollipot]

I see you have put me on ignore. (Can't have you acknowledging that I addressed this "argument" - can we).

I don't have you on ignore, I'm just not as invested in this discussion as you are and am presently limiting my participation to irreverent quips.

 

[Dr. Keith]

I don't have you on ignore, I'm just not as invested in this discussion as you are and am presently limiting my participation to irreverent quips.

Proper level of investment.

 

[psionl0]

I don't have you on ignore, I'm just not as invested in this discussion as you are and am presently limiting my participation to irreverent irrelevant quips.

ftfy.

 

[arthwollipot]

Some say potato...

 

[psionl0]

Some say potato...

And some stick their fingers in their ears and say "LA LA LA LA LA".

 

[Samson]

I will stick my neck out and say bitcoin will get to about 4k, and not move for years.
I hope someone else will forecast, it is kinda lonely on this thread.

 

[jeremyp]

Way to not have a clue what somebody is saying.

Please tell me in your own words what your understanding is of the term "zero sum". I don't believe you you know judging from your comments here.

 

[FatherLukeduke]

This is just a simple application of the price mechanism. I refuse to believe that you can't see how somebody choosing to buy some bitcoin instead of "crude oil, steel, grain, copper or whatever" (or vice versa) would affect the relative price of bitcoin vs "crude oil, steel, grain, copper or whatever".

Wait...so you're just saying someone could sell some bitcoin and buy some oil futures. That's it? That's the mechanism? Oh, OK.

Your argument basically is that the world economy is non-zero and bitcoin trading is a part of the world economy therefore bitcoin trading is non-zero? Pretty weak stuff. Bitcoin trading in itself is zero sum - it just redistributes wealth, it doesn't create it. If you think it creates wealth, then please demonstrate with an example.

You are just sticking your fingers in your ears and saying "LA LA LA LA LA".

Well, one of us is

Ah, the old "bitcoin is different and not subject to the laws of supply and demand" argument.

You have a rude habit of putting arguments in other people's mouths. I simply did not say this. In fact I didn't even say anything like this, you just made it up out of whole cloth.

 

[psionl0]

Wait...so you're just saying someone could sell some bitcoin and buy some oil futures. That's it? That's the mechanism? Oh, OK.

Feigning ignorance (in an attempt to show that the arguer is posting nonsense) is not a good strategy. You run the risk of showing that you really are stupid and that your own arguments are nonsense.

I am not about to give you an entire lesson on economics. Suffice to say that there is no such thing as a "zero sum game" because no trade exists in isolation. Demand for one commodity affects demand for other commodities and the net effect may be positive or negative. If you remember what bitcoin is useful for then you might know the reason that there is a demand for it in the first place.

I might add that the crypto market is minuscule in the financial market which is riddled with trades in derivatives and derivatives of derivative which dwarfs any trade in commodities and consumables. The only reason for the existence of this is to enrich wealthy speculators.

 

[Dr. Keith]

I will stick my neck out and say bitcoin will get to about 4k, and not move for years.
I hope someone else will forecast, it is kinda lonely on this thread.

I tend to agree that it will find a plateau and hover there. I just don’t know why $4k is any more plausible than $4. Or $40k, if you want to be optimistic.

For any other commodity this is less of a mystery, be it oil or frozen orange juice concentrate.