Merged Bitcoin - Part 3

Still no big change BTC/ETH balance. Seems like proof of work isn't really an issue for investors. That can change quickly though, as it's the most likely axis of possible regulation.
 
psionl0 said:
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.
Click to expand...

But he did characterise your argument correctly. Trading in Bitcoin is a zero sum game. In fact, because of transaction fees and the enormous energy consumption, it is less than zero sum. If somebody makes money out of Bitcoin, it's because somebody else has lost the same amount of money.
 
jeremyp said:
But he did characterise your argument correctly. Trading in Bitcoin is a zero sum game. In fact, because of transaction fees and the enormous energy consumption, it is less than zero sum. If somebody makes money out of Bitcoin, it's because somebody else has lost the same amount of money.
Click to expand...

Isn't it the same with stock market ? And to large extent with commodities ?
 
psionl0 said:
Feigning ignorance (in an attempt to show that the arguer is posting nonsense) is not a good strategy.
Click to expand...
I am pointing out your ignorance, not feigning any of my own. Your arguments are just empty handwaving at this stage. You still can't show how trading in bitcoin is non-zero. That is, how it generates any wealth for the traders.

I am not about to give you an entire lesson on economics.
Click to expand...
Don't worry, nobody is asking...

Suffice to say that there is no such thing as a "zero sum game"
Click to expand...
Oh right, guess we can throw out that entire concept because you have stated that it does not exist. I'll be helpful and link the wiki, so you can update it with "there is no such thing" or some other sophisticated take down :

https://en.wikipedia.org/wiki/Zero-sum_game
 
Dr.Sid said:
Isn't it the same with stock market ? And to large extent with commodities ?
Click to expand...

How much petroleum do you think you have consumed in the last year through travel, energy consumption or use of products made available to you by using petroleum?

Compare that number to the amount of Bitcoin you have consumed in the last year. In either barrels or gallons.
 
Dr.Sid said:
Isn't it the same with stock market ? And to large extent with commodities ?
Click to expand...
Commodities futures trading is zero sum - for every long there is an equal short and vice versa. However the commodities market itself isn't, because people can produce more grain, more steel, copper or whatever.

The stock market isn't zero sum because the companies that being traded can grow in the real world, they can generate profits and pay out dividends to those invested in the stock. The entire world economy can grow and with it the stock markets...everyone can get a bit richer.

Bitcoin trading is just moving entries round on a public ledger. There is nothing analogous to company growth. No labour is input, no value added. Wealth is just redistributed, not generated. You can argue that the trading sets the right price for whatever it is you might want do with bitcoin and is therefore useful, but that doesn't mean it is positive sum.
 
FatherLukeduke said:
Commodities futures trading is zero sum - for every long there is an equal short and vice versa. However the commodities market itself isn't, because people can produce more grain, more steel, copper or whatever.

The stock market isn't zero sum because the companies that being traded can grow in the real world, they can generate profits and pay out dividends to those invested in the stock. The entire world economy can grow and with it the stock markets...everyone can get a bit richer.

Bitcoin trading is just moving entries round on a public ledger. There is nothing analogous to company growth. No labour is input, no value added. Wealth is just redistributed, not generated. You can argue that the trading sets the right price for whatever it is you might want do with bitcoin and is therefore useful, but that doesn't mean it is positive sum.
Click to expand...

I mean from a investor standpoint. Sure, company issuing shares will get money for them. But for investor, you can also only win what others lose. Same with commodities. Producers get money for commodities, sure. And holder of commodities can do something with them directly .. produce something .. or eat it. But for investors it's just zero sum game. You can only take money from other investors.
 
Samson said:
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.
Click to expand...


Please don't relent. I have been following your analysis since the beginning, and let's just say I am doing quite well for myself. Cha-Chang! Dolla dolla bill, y'all! No fomo, just mo and mo and mo and mo!
 
FatherLukeduke said:
Commodities futures trading is zero sum - for every long there is an equal short and vice versa. However the commodities market itself isn't, because people can produce more grain, more steel, copper or whatever.

The stock market isn't zero sum because the companies that being traded can grow in the real world, they can generate profits and pay out dividends to those invested in the stock. The entire world economy can grow and with it the stock markets...everyone can get a bit richer.

Bitcoin trading is just moving entries round on a public ledger. There is nothing analogous to company growth. No labour is input, no value added. Wealth is just redistributed, not generated. You can argue that the trading sets the right price for whatever it is you might want do with bitcoin and is therefore useful, but that doesn't mean it is positive sum.
Click to expand...

True, but the value of long/short positions may have different value to producers or consumers. Eg a farmer who sells a grain future gets a know set price for her grain when she harvests it. While she looses out on some profit if the price of grain goes up, it's still more important to remove the chance of taking a loss because grain prices drop. Similarly a consumer of a commodity can benefit from having a known, stable price they will be paying.

In such cases all three parties (producer, futures speculator and consumer) benefit even though in dollar terms it may have been a zero sum transaction. In the case of crypto the sellers are primarily speculators, the middlemen are speculators and the buyers are speculators. It's fundamental different than a commodity.
 
jeremyp said:
But he did characterise your argument correctly. Trading in Bitcoin is a zero sum game. In fact, because of transaction fees and the enormous energy consumption, it is less than zero sum. If somebody makes money out of Bitcoin, it's because somebody else has lost the same amount of money.
Click to expand...
You might think that this is a useful contribution but it is just ignorance.

Any material exchange could be said to be "zero sum". If item A is exchanged for item B then the items change hands but nothing is created nor destroyed. The reason it is not zero sum is because it affects what other trades are possible. Money spent on cryptos or art or used stamps etc is money that not available to be spent on oil or wheat etc so those commodities have a lower demand. The opposite scenario happens if cryptos are sold.

Of course, this is an oversimplified analysis.
 
Last edited:
Dr. Keith said:
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.
Click to expand...


Exactly the problem I had with Bitcoin.

I know with orange juice the production, the consumption, the reserves.
I know how it will behave in different market conditions, boom time and
bust, even the effects of changing tastes.

Bitcoin, I know nothing about these important parameters at all. I cannot
make a prediction about price because I get a zero time horizon. What will
someone pay for it one second into the future? Anything.

I consider Bitcoin as an iCommodity to distinguish it from real commodities.
Similar to the Digital Horse Armor I get in a ten year old game few people
play anymore. (Kind of pixellated looking these days.)
 
FatherLukeduke said:
Commodities futures trading is zero sum - for every long there is an equal short and vice versa. However the commodities market itself isn't, because people can produce more grain, more steel, copper or whatever.

The stock market isn't zero sum because the companies that being traded can grow in the real world, they can generate profits and pay out dividends to those invested in the stock. The entire world economy can grow and with it the stock markets...everyone can get a bit richer.

Bitcoin trading is just moving entries round on a public ledger. There is nothing analogous to company growth. No labour is input, no value added. Wealth is just redistributed, not generated. You can argue that the trading sets the right price for whatever it is you might want do with bitcoin and is therefore useful, but that doesn't mean it is positive sum.
Click to expand...


Futures trading isn't quite zero sum either, at least from a larger economic perspective, because it does play a legit role in price discovery. In fact, that's kind of the whole point of it. (In theory, at any rate. And in practice as well, unless of course it runs away with itself, as it sometimes/oftentimes tends to do.)


eta: I realize this doesn't have much to do with your larger argument, which I happen to be in agreement with. A nit, more like.
 
Last edited:
Solitaire said:
Exactly the problem I had with Bitcoin.

I know with orange juice the production, the consumption, the reserves.
I know how it will behave in different market conditions, boom time and
bust, even the effects of changing tastes.

Bitcoin, I know nothing about these important parameters at all. I cannot
make a prediction about price because I get a zero time horizon. What will
someone pay for it one second into the future? Anything.

I consider Bitcoin as an iCommodity to distinguish it from real commodities.
Similar to the Digital Horse Armor I get in a ten year old game few people
play anymore. (Kind of pixellated looking these days.)
Click to expand...


Exactly. Assuming Bitcoin serves a purpose, how many Bitcoin are needed by the market to serve that purpose?

As you say, that question is easier to attack for actual commodities. We can disagree on whether oil will be at $70 or $130 per barrel a year from now, but no one is talking about $4,000 or $40,000 because we know the market and the production forecasts.

Maybe that armor will come back into style? Don’t lose hope.
 
porch said:
Please don't relent. I have been following your analysis since the beginning, and let's just say I am doing quite well for myself. Cha-Chang! Dolla dolla bill, y'all! No fomo, just mo and mo and mo and mo!
Click to expand...
Great to hear you are not a round tripper.
Most crypto traders are at the moment.
 
Charlie Munger is being deemed correct by a huge crash in crypto currently underway.
I am glad he is surviving to see the rats carry the poison to their final resting place.
Let us hope the unbanked find a corner far removed from the scams, the greed, and the morally bankrupt to move their pitiful earnings to the even more pitiful members of the human race.
 
Samson said:
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.
Click to expand...

By 2050, a single Bitcoin will sell for north of $12 million. :boxedin:
 
Dr.Sid said:
Isn't it the same with stock market ? And to large extent with commodities ?
Click to expand...

To an extent, yes but not exactly. With commodities some people are actually buying them to use and generate some value for themselves. If I',m a jeweller and you sell me some gold, you have all the money, but I have the gold and it is probably worth more to me than the money I paid for it.

Similarly the stock market. When you buy shares in a company, you are not just buying a piece of paper, you are buying a piece of a company. If that company does well, your piece of it becomes more valuable.
 
psionl0 said:
You might think that this is a useful contribution but it is just ignorance.

Any material exchange could be said to be "zero sum". If item A is exchanged for item B then the items change hands but nothing is created nor destroyed. The reason it is not zero sum is because it affects what other trades are possible. Money spent on cryptos or art or used stamps etc is money that not available to be spent on oil or wheat etc so those commodities have a lower demand. The opposite scenario happens if cryptos are sold.

Of course, this is an oversimplified analysis.
Click to expand...

You might think this is a useful contribution, but it's just not thinking carefully.

You've just said "when you buy Bitcoin you have less money available to buy other stuff but when you sell Bitcoin you have more money available for other stuff". This is true. On the other hand, if I buy Bitcoin, the money I buy it with doesn't vanish. The person I bought it from now has it and they have exactly* the extra amount available to buy oil or wheat that offsets the amount I no longer have to buy oil or wheat.

If you'd thought about your example for even a second, you'd have realised that.

*excepting any transaction fees.
 
Last edited:
You must log in or register to reply here.

Back
Top Bottom